Antitrust Alert : International Antitrust Attorneys: McDermott Will & Emery Law Firm

by Carrie Amezcua

The next step of the on-going Phoebe Putney litigation is completed.  On Wednesday, April 15, the district court for the Middle District of Georgia granted the Federal Trade Commission's (FTC) motion for a Temporary Restraining Order (TRO) in Federal Trade Commission v. Phoebe Putney Health System, Inc., No. 1:11-cv-58 (M.D. Ga.).  In its order, the court stated that the FTC "carried its burden of persuasion to establish the need for the imposition of the 'extraordinary and drastic remedy' of a TRO pending the outcome of the court’s decision on the [Preliminary Injunction] Motion."  The TRO prohibits Phoebe Putney Memorial Inc. from taking further steps to consolidate with Palmyra Park Hospital.  Further, the court stated "In response to Plaintiff’s request that the Court order Defendants to refrain from instituting any price changes, the Court ordered that Defendants are prohibited from making any price changes to existing contracts; however, said prohibition does not extend to the formation of any new contracts."  Richard A. Feinstein, Director of the FTC's Bureau of Competition issued a brief statement on the district court's ruling saying "We are pleased that the Court has issued a Temporary Restraining Order prohibiting any further steps to consolidate the two hospitals in Albany, and prohibiting any price changes to existing health-plan contracts, pending our Motion for Preliminary Injunction." 

The district court had granted a TRO the FTC filed in 2011 to stop the acquisition, but dissolved that TRO upon the district court's finding that the transaction was exempt under the state action immunity doctrine.  The 11th Circuit affirmed, but in February of this year, the Supreme Court reversed holding that Georgia's enabling statute did not clearly articulate an affirmatively expressed policy for displacing competition.    

The district court's grant of the TRO is another victory for the FTC in this long litigation.  Now that the Supreme Court ruled the transaction is not exempt from the antitrust laws, the hospitals will have to defend what the FTC calls a merger to monopoly.  The TRO will stay in place until a hearing on the motion for Preliminary Injunction, which is scheduled for June 14, 2013.  The FTC has a successful track record in getting preliminary injunctions granted in hospital mergers, so it would not be surprising if the district court also granted the Motion for Preliminary Injunction.  This case is further evidence of the high priority the FTC places on challenging health care mergers it views as anticompetitive and shows the FTC is willing to commit resources over an extended period of time to challenge such mergers.

The administrative hearing is scheduled to begin July 15, 2013.  More information on the district court and adjudicative proceedings can be found at http://www.ftc.gov/os/caselist/1110067/index.shtm and http://www.ftc.gov/os/adjpro/d9348/index.shtm.

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by Carla A. R. Hine

Earlier this week, the Federal Trade Commission (FTC) issued its Hart-Scott-Rodino (HSR) report for fiscal year 2012 (FY2012), which summarizes enforcement actions and key statistics regarding number of filings, second requests and challenges.  The press release and a link to the report can be found here.

Filings were relatively flat from 2011 to 2012.  There were fewer second requests and there wasn't a remarkable difference in the overall percentage of filings resulting in second requests (3.9 percent in 2011; 3.5 percent in 2012).  In 2012, the FTC issued more second requests than the U.S. Department of Justice (DOJ).  However, when looking at the number of second requests each agency issued as a percentage of the filings each agency was "cleared" to investigate, the FTC only issued second requests in 14.8 percent of the filings it was cleared to investigate, whereas the DOJ issued second requests in 40.8 percent of filings the agency was cleared to investigate.  Overall, it is hard to read too much into these statistics other than reportable transactions remain steady and there do not seem to be any wild swings in enforcement trends.

The report also notes that of 60 corrective filings (i.e., filings where the parties closed the transaction and later realized they should have filed), two resulted in enforcement actions with civil penalties ($500,000 and $850,000).

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by Jeffrey Brennan and Carrie Amezcua

On Tuesday, the North Carolina legislature has enacted into law, pending the governor's signature, a prohibition on the use of most favored nations (MFN) clauses in contracts between commercial health insurers and providers. 

The two-page bill, titled “Freedom to Negotiate Health Care Rates,” lists "prohibited contract provisions related to reimbursement rates."  The bill prevents a commercial health insurer from prohibiting a health care provider with which it contracts from entering into a contract with another insurer at equal or lower rates.  In addition, insurers are not permitted to require a provider to accept a lower rate from the contracting insurer, or to require a renegotiation of rates, in the event that the provider agrees to provide equal or lower rates to another commercial health insurer.  Next, the bill prohibits an insurer from terminating a provider that agrees to provide services at lower rates to another insurer.  An insurer is also prevented from requiring that a provider charge another commercial health insurer a higher rate.  Finally, insurers can no longer require that providers disclose the provider's contractual rate with another health insurer.  

MFN clauses have been attracting attention in recent years, particularly in the health care field.  North Carolina's bill follows closely on the heels of Michigan's ban on MFN clauses passed in March 2013.  That action led the Department of Justice (DOJ) to file a motion asking the court to dismiss an antitrust suit against Blue Cross Blue Shield of Michigan (BCBSM), in which the DOJ alleged the MFN clauses in BCBSM's contracts with hospitals stifled competition, raised health care costs and harmed consumers.  Ohio has a similar ban on MFN clauses. 

Last year, the DOJ and the Federal Trade Commission (FTC) held a public workshop specifically to discuss the competitive effects of MFN clauses.  The workshop featured panels discussing economic theories concerning MFN clauses and why they are used, and the legal treatment of and industry experiences with MFN clauses, among other topics. 

MFN clauses are evaluated under the antitrust law rule of reason, because, depending on the applicable facts and circumstances, such provisions have been found to have procompetitive or anticompetitive effects.  A recognized procompetitive feature of MFN clauses is lower transaction costs, which provides price stability over time and ensures that a buyer is not treated any worse than its rivals.  The DOJ argued in the BCBSM case, on the other hand, that the MFN clauses there reduced incentives to lower prices, facilitated coordination and prevented entry. 

Health care clients using or considering the use of MFN clauses should consult antitrust counsel to assess their legal risks in light of these developments.    

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by Hillary Webber

In remarks made this week at the International Competition Network annual conference, Federal Trade Commission (FTC) Chairwoman Edith Ramirez stated that health care will continue to be a top priority for the FTC.   Referring to health care and hospital mergers in particular, she said that the Commission will "guard[] against what we consider to be consolidation that may end up having adverse consequences for consumers."  The Chairwoman's comments indicate that the recent leadership change at the FTC from former Chairman Jon Leibowitz to Chairwoman Ramirez has not altered the Commission's priorities.

Recent months have seen a flurry of FTC activity in the courts related to health care.  For example, two FTC cases came before the U.S. Supreme Court this term -- the FTC's challenge to Phoebe Putney's acquisition of Palmyra Park Hospital in Georgia and the FTC's challenge to "pay-for-delay" patent infringement litigation settlements between branded and generic pharmaceutical manufacturers. 

In February, the Supreme Court ruled that the state action doctrine did not immunize Phoebe Putney's hospital transaction from federal antitrust scrutiny, and the FTC has subsequently filed renewed motions in federal district court to stop further integration of the two hospitals even as it prepares for a full administrative hearing on the merits that will begin in August. 

A decision on the "pay-for-delay" case is expected in June.  The Supreme Court’s ruling may have a large impact on further FTC efforts against what it perceives as anticompetitive efforts to delay generic drug entry.

Health care clients considering acquisitions are advised to consult antitrust counsel early in the transaction process.  Given the FTC and DOJ's close scrutiny of health care transactions, early advocacy before the antitrust agencies is often critical to a deal closing on schedule.  

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by Jeffrey Brennan and Glenn Engelmann

The Supreme Court’s ruling in Federal Trade Commission v. Actavis, Inc., will almost certainly have major implications for the viability of Federal Trade Commission and private suits alleging that pay-for-delay settlements are anticompetitive, and for the level of antitrust risk facing companies that enter into such settlements.

Click here to view Jeff Brennan discuss the case on PBS' “Nightly Business Report.” 

To read the full article, click here.

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by Jeffrey W. Brennan, Ashley M. Fischer, David Marx, Jr., Stephen Wu and Christine G. Devlin

The Supreme Court decision in FTC v. Phoebe Putney Health System, Inc., makes clear that state action immunity from federal antitrust laws is disfavored, and local governmental, quasi-public and private entities can only qualify for the immunity under certain specific conditions.

To read the full article, click here.

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by Ashley M. Fischer

In a February 13, 2013, advisory opinion, the Federal Trade Commission (FTC) Bureau of Competition stated that it has no present intention to recommend that the FTC challenge a clinical integration program proposed by Norman Physician Hospital Organization, a multi-specialty physician-hospital organization in Oklahoma.  The opinion is the fifth advisory opinion the FTC has issued concerning a clinically integrated managed care contracting network.  Four of the advisory opinions were favorable, and one was unfavorable to the respective requesting parties.  This White Paper summarizes the Norman Physician-Hospital Organization advisory opinion and its key takeaways, and compares the opinion to the FTC’s previous four advisory opinions on clinical integration programs.

To read the full article, click here.

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by Jon B. Dubrow, Carla A. R. Hine and Joseph F. Winterscheid

The Federal Trade Commission recently announced higher reporting thresholds for pre-merger notifications filed on or after February 11, 2013.

To read the full article, click here.

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by Stefan M. Meisner and Daniel Powers

Federal antitrust enforcement agencies are closely studying the growing activity of patent assertion entities (PAE).  At a recent joint workshop sponsored by the Federal Trade Commission (FTC) and U.S. Department of Justice (DOJ), participants from academia, industry and the legal world discussed the competitive impact of these organizations and considered whether antitrust law offers regulators any tools to grapple with potential anticompetitive activity.  No new policy prescriptions emerged during the daylong session, but the agencies continue to seek comment and study this rapidly developing area.

To read the full article, click here.

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by Jeffrey W. Brennan and Wilko van Weert

The Supreme Court of the United States has granted the government’s petition for a writ of certiorari in FTC v. Watson Pharmaceuticals, agreeing for the first time to address the antitrust and patent law implications of so-called “pay-for-delay” or “reverse payment” patent settlement agreements between branded and generic pharmaceutical manufacturers.  The Court’s ruling will likely resolve this contentious issue, which has divided the federal courts and which the Federal Trade Commission has pursued for more than a decade.

To read the full article, click here.

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by Jeffrey Brennan, Ashley Fischer, David Marx and Carrie Amezcua

In oral argument in FTC v. Phoebe Putney Health System, Supreme Court Justices focused on whether the state legislature clearly articulated a state policy to displace competition with regulation, in a case challenging the application of the state action doctrine to a hospital merger to monopoly.

To read the full article, click here.

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by David Henry, Wilko van Weert and Philipp Werner

Chief Economists from the US Federal Trade Commission, the US Department of Justice and the EU Directorate General for Competition, have agreed on a set of four, non-binding suggestions that should—if followed by standard-setting organizations - increase the level of protection afforded to consumers and promote innovation.

To read the full article, click here.

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by Jeffrey W. Brennan

The Federal Trade Commission (FTC) filed an amicus brief on October 9 in U.S. District Court (D.N.J.).  In it, the FTC spells out its arguments why, as part of a pharmaceutical patent litigation settlement agreement, a branded company's promise not to launch an authorized generic (AG) version of its product during the generic firm’s 180-day marketing exclusivity period is a "pay-for-delay" agreement in violation of the antitrust laws, if the agreement also contains the generic's promise to defer its entry.  The FTC argues that so-called "no-AG" agreements fail under the antitrust analysis recently articulated by the Third Circuit in the K-Dur decision, which is the subject of pending petitions for certiorari in the U.S. Supreme Court. 

The complaint in the underlying case, Louisiana Wholesale Drug Co., Inc. v. GlaxoSmithKline (GSK) and Teva Pharmaceuticals, can be found here. The GSK drug at issue is Lamictal, which is used in the treatment of epilepsy, bipolar disorder and other medical conditions.  The FTC does not take a position on the ultimate merits of plaintiff's allegations against GSK and Teva.

Under the Hatch-Waxman law, the first filer of an Abbreviated New Drug Application (ANDA) – i.e., an application to launch a generic version of a branded product – qualifies in certain circumstances for 180-day generic exclusivity. This means that the FDA cannot grant final approval to any other ANDAs for the same drug during that period.  Generic exclusivity is an incentive contained in Hatch-Waxman to spur generic companies to file qualified ANDAs as quickly as possible, to expedite competition to the brand from generics that do not infringe the brand’s patents.  Hatch-Waxman does not prohibit the branded company from launching a generic version of its own product – i.e., an AG – during that period.  

The launch of an AG creates substantial competition to the generic product and typically cuts deeply into the generic product’s revenues. The FTC contends that a branded company's promise not to launch an AG is tantamount to a "payment" to the generic firm, because the absence of AG competition results in substantially greater revenues for the generic product during its 180-day exclusivity period.  Under the FTC's pay-for-delay theory of patent litigation settlement agreements (which the Third Circuit adopted, albeit not in a no-AG case, in K-Dur), a branded company’s no-AG promise coupled with the generic company’s promise to defer its entry is anticompetitive. The FTC argues that, absent the no-AG promise, the generic firm would either (i) settle for sooner entry to obtain those revenues, (ii) launch at risk to obtain those revenues, or (iii) continue to litigate -- all of which are probabilistically better results for consumers than the agreement.

According to the FTC:

Indeed, the economic realities of no-AG commitments require that such promises be analyzed like other forms of compensation paid to generics. Practically, a no-AG commitment has the same capacity to purchase delay as a monetary payment. When a brand competes through an AG, it siphons substantial revenues from the first-filer generic company. When the brand agrees to forgo selling an AG, it essentially hands these revenues back to the first-filer generic company and, in return, gets a delayed generic entry date.

This amicus brief reflects the substantial boost given the FTC by the K-Dur decision (at least temporarily, depending on whether and how the Supreme Court addresses pay-for-delay agreements).  The FTC repeatedly ties its arguments to K-Dur, for example, in stating that "[a]llowing pharmaceutical companies to sidestep the K-Dur rule by simply making non-cash payments would elevate form over substance, in direct contravention of the K-Dur court’s instruction to credit 'the economic realities of the reverse payment settlement rather than the labels applied by the settling parties.'"

Interestingly, the FTC has not filed a lawsuit itself challenging a no-AG patent settlement agreement, even though it has been on record for some time opposing them.  The K-Dur decision fundamentally changed the risk landscape for brand-generic patent settlement agreements.  Companies contemplating such a settlement should obtain antitrust counseling very early in the process.

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by Stephen Wu

During an American Bar Association (ABA) program on antitrust and health care issues on October 1, 2012, U.S. Federal Trade Commission (FTC) Deputy Director for Health Care and Antitrust, Leemore Dafny, said that the FTC will focus on how patients purportedly react to price increases, as measured by "diversion ratios," when deciding which hospital mergers to investigate further for potential anticompetitive effects. 

Dafny stated that the FTC will focus on diversion ratios rather than geographic markets because relying on geographic market overlaps in hospital mergers may do a poor job of identifying the true source of potential competition problems.  Instead, the FTC has and will continue to evaluate hospital mergers to look at whether patients would be willing and able to substitute one hospital for the other if one hospital decided to raise prices for services, using the diversion ratio or the proportion of patients who would switch between them in response to a change in prices.  Importantly, the diversion ratio does not rely on any one particular geographic market definition to give the FTC what it believes to be an accurate idea of how a hospital merger might affect competition. 

To the extent the FTC considers geography, its staff begins by examining the primary service area of the hospitals – the area from which the hospitals draw about 75 percent of their patients – when conducting a preliminary evaluation of a merger to determine whether overlaps exist.  According to Dafny, the more significant the overlaps, the higher the likelihood of a potential competition problem.

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by Jon B. Dubrow and Carla A. R. Hine

Today the Federal Trade Commission (FTC) announced proposed changes to the Hart-Scott-Rodino (HSR) premerger notification rules that will impact the types of transactions for which pharmaceutical companies will be required to file HSR notifications with the Department of Justice and FTC.  The proposed rulemaking is meant to clarify when a transfer of exclusive rights to a patent in the pharmaceutical industry results in a potentially reportable acquisition of assets under the HSR Act.

Previously -- although never actually codified -- the FTC would determine whether the transfer of rights to a patent (usually in the form of a license) was a reportable event under the HSR Act by focusing on whether the licensor transferred the exclusive rights to "make, use and sell" under a patent.  The emphasis on the transfer of the exclusive right to manufacture would result in scenarios where parties would not be required to report the transfer of patent rights because although the licensor transferred the rights to commercialize the product, it retained the right to manufacture the product. 

In an effort to place substance over form, the proposed rulemaking instead suggests an "all commercially significant rights" test, where a transfer of "the exclusive rights to a patent that allow only the recipient of the exclusive patent rights to use the patent in a particular therapeutic area (or specific indication within a therapeutic area)" would constitute a potentially reportable acquisition of assets if the size-of-transaction and size-of-person (if applicable) thresholds are met, and no exemption is applicable.  The proposed rules further explain that all commercially significant rights are transferred even if the patent holder retains limited manufacturing rights to provide the licensee with product(s) covered by the patent, or co-rights to assist the licensee in developing and commercializing the product(s) covered by the patent.  Please note that this rule would only apply to patents within the pharmaceutical industry (as this is the industry in which these scenarios most often occur).

The text of the proposed rulemaking can be found here.  The FTC is accepting comments until October 25, 2012.
 

UPDATE:  The U.S. Federal Trade Commission’s new proposed Hart-Scott-Rodino Act rules will apply only to transfers of pharmaceutical patent rights and are expected to increase the number of filings.  Click here to read the full article, "FTC’s Proposed Rules Would Generate More HSR Filings for Transfers of Pharmaceutical Patent Rights."

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by Stefan M. Meisner and Daniel Powers

Recent testimony from the U.S. Department of Justice’s Antitrust Division and the Federal Trade Commission (FTC) before the Senate Judiciary Committee focused on issues relating to standard-setting activities and competition policy.  Antitrust Division Acting Assistant Attorney General Joseph Wayland and FTC Commissioner Edith Ramirez discussed the issue of injunctive relief to enforce standard-essential patents and emphasized the importance of pending actions before the International Trade Commission.

To read the full article, click here.

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by Stephen Wu

On June 12, 2012, the Federal Trade Commission (FTC) announced the appointment of Leemore Dafny to assume the newly created position of Deputy Director for Health Care and Antitrust, effective August 1, 2012.

Dafny is an Associate Professor of Management and Strategy at the Kellogg School of Management of Northwestern University, where she has served on the faculty since 2002.  She is a microeconomist whose research focuses on competition in health care markets.

Her appointment to a newly created position signals the FTC's continuing focus on the U.S. health care industry for antitrust scrutiny and, if anything, an effort to increase its expertise/jurisdiction over health care in relation to the U.S. Department of Justice.  According to economists with whom McDermott regularly works, clients should not expect a change in the FTC's enforcement posture as a result of her appointment, but Dafny should bring a broader perspective given her work with health insurance markets, experience the FTC is currently lacking. 

The FTC's press release announcing Dafny's appointment can be found here.

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by Jon Dubrow and Cerissa Cafasso

Public utilities could face different levels of scrutiny in merger reviews before the U.S. Federal Energy Regulatory Commission, and the Department of Justice and the Federal Trade Commission (the Antitrust Agencies).

To view the full article, please click here. 

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by Joseph Winterscheid

In December 2011, the United States Department of Justice (DOJ) announced that a public company chief executive officer (CEO) will pay a $500,000 civil penalty to settle charges that he violated Hart-Scott-Rodino Act (H-S-R Act) premerger reporting and waiting period requirements.  The DOJ, acting at the request of the Federal Trade Commission, charged the executive for failing to satisfy the H-S-R Act's requirements before acquiring common stock under the company's stock-based compensation program.  The CEO allegedly exceeded the H-S-R Act filing threshold ($59.8 million when the alleged violation occurred) upon the vesting of outstanding restricted stock units awards and the reinvestment of dividends and short term interest through his 401(k) account.

Violations of the H-S-R Act's reporting and waiting period requirements are subject to fines of up to $16,000 per day.  The DOJ's recent enforcement action illustrates the potentially costly consequences of a failure to consider H-S-R Act compliance in connection with investment planning for corporate executives (and other individuals) who will hold or acquire stock valued in excess of the H-S-R Act's notification threshold (currently $66 million and moving to $68.2 million effective February 27, 2012), and that violations may occur under somewhat obscure circumstances.  In this connection, it is also important to remember that the relevant valuation is determined by reference to the total value of the voting securities that will held following any given acquisition of shares.  Thus, for example, if an executive already holds shares valued at $65,999,999, a reporting obligation could be triggered by acquiring just one additional share.  Likewise, if the executive's existing holding has already crossed the $66 million valuation threshold through appreciation, any further acquisitions could trigger a reporting obligation.               

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by Jeffrey W. Brennan, Ashley McKinney Fischer, David Marx, Jr. and Hillary A. Webber

On October 20, 2011, the Federal Trade Commission and Department of Justice issued a final policy statement on accountable care organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP).  Significantly, the Agencies eliminated mandatory antitrust review of certain ACOs seeking to participate in the MSSP, but declined to adopt other stakeholder recommendations.

To read the full article, please visit: http://www.mwe.com/info/news/ots1111c.htm.  

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by William Diaz, Raymond A. Jacobsen, Joseph F. Winterscheid and Jeffrey W. Brennan

On October 31, 2011, a California state court of appeal affirmed a lower court's ruling upholding a "reverse payment" (pay-for-delay) settlement between Bayer (Bayer) AG and Barr Pharmaceuticals (Barr).  Bayer had sued Barr for patent infringement pertaining to the latter's planned production of a generic form of Bayer's Cipro.  The case was settled with Bayer paying Barr to delay entry until the expiration of Bayer's patent in 2004.  Thereafter, consumers filed a class action lawsuit challenging the settlement agreement under California's state antitrust laws.  The appellate court upheld the settlement agreement because it concluded that the agreement did not restrain competition beyond the scope of the Bayer patents.  This court's ruling is consistent with the predominant view among the courts that these agreements do not violate the antitrust laws when the period of the delay and products at issue are within the scope of the relevant patents.

For years the Federal Trade Commission (FTC) has expressed serious concerns about reverse payment settlements.  Most recently, on October 25, 2011, the FTC released the findings of its study into the prevalence of these agreements and their effects on consumers.  The FTC noted that "pharmaceutical companies continued a recent anticompetitive trend of paying potential generic rivals to delay the introduction of lower-cost prescription drug alternatives for American consumers …drug companies entered into 28 potential pay-for-delay deals in FY 2011 (October 1, 2010 through September 30, 2011).  The figure nearly matches last year’s record of 31 deals and is higher than any other previous year since the FTC began collecting data in 2003.  Overall, the agreements reached in the latest fiscal year involved 25 different brand-name pharmaceutical products with combined annual U.S. sales of more than $9 billion."  This latest report demonstrates the FTC's continued commitment to enforcement in this area.  Further, the FTC's Chairman has continued to urge Congress to pass legislation that restricts reverse payment settlements.

These recent events highlight the need to work closely with antitrust counsel to ensure that any settlement agreements are properly vetted and take into account the latest antitrust developments.

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by Joseph F. Winterscheid

On Wednesday, August 31, the Federal Trade Commission issued a report on "Authorized Generic Drugs: Short-Term Effects and Long-Term Impacts."  In the report, the Commission indicated that it would take a hard-line approach to pay-for-delay deals in which brand-name drug makers agree to defer introduction of their own generic formulations in exchange for competitors delaying entry into the market.  The report signals that the FTC pay-for-delay pharmaceutical patent settlements continue to be a "hot button" at the FTC, including deals that contain commitments by branded players to withhold generic versions of their own products.  

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by Gregory E. Heltzer

On July 19, 2011, President Obama announced his intent to nominate Maureen K. Ohlhausen to serve as a Commissioner on the Federal Trade Commission.  Ms. Ohlhausen would replace Commissioner Kovacic, whose term expires September 25, 2011.  Ms. Ohlhausen has previously served at the Federal Trade Commission in a number of leadership roles (from 1997 to 2008), including as Director of the Office of Policy Planning and, earlier, as an attorney advisor for Commissioner Orson Swindle.  Earlier in her career, Ms. Ohlhausen worked at the U.S. Court of Appeals for the D.C. Circuit as a law clerk for Judge David Sentelle and clerked for Judge Robert Yock of the U.S. Court of Federal Claims.  Presently, she is an attorney at Wilkinson Barker Knauer, LLP, where she is a partner in the firm’s privacy, data protection and cybersecurity practice.  She is also a senior editor of the American Bar Association Antitrust Law Journal and has taught privacy law and unfair trade practices as an adjunct professor at George Mason University School of Law.  Ms. Ohlhausen received a B.A. from the University of Virginia and a J.D. from George Mason University School of Law.

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by Jon B. Dubrow and Carla A. R. Hine

In recent years, the Federal Trade Commission (FTC) and the Department of Justice (DOJ)—the two US agencies responsible for reviewing and challenging transactions that may lessen competition—have increasingly challenged non-reportable and consummated transactions.  There have been several such challenges so far in 2011, and at least nine in 2010 (all but one of which resulted in a settlement).

To read the full article, click here.

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by Jon B. Dubrow, Joseph F. Winterscheid and Carla A. R. Hine

Companies should begin regularly collecting required data—in particular revenues by North American Industry Classification System code and information about “associates”—in advance of need to file Hart-Scott-Rodino notification.

To read the full article, click here.

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by Frank Schoneveld and Joseph F. Winterscheid

On June 24, 2011, Assistant Attorney General Christine Varney announced that the U.S. antitrust enforcement agencies will be signing a cooperation agreement with their Chinese counterparts.  As a consequence, companies can now expect to see the Chinese authorities participating in coordinated “dawn raids” and related cooperative enforcement initiatives with the U.S. and EU antitrust enforcers in international cartel cases. 

To read the full article, click here.

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by Stefan M. Meisner and James B. Camden

The FTC recently hosted a workshop on preventing patent “hold-ups” in standard-setting.  Panelists addressed and evaluated the three main tools currently used by SSOs to prevent patent hold-ups: patent disclosure rules, ex ante disclosure of licensing terms by patent holders, and RAND commitments.  The FTC has yet to formally comment on the workshop, but may prepare a report discussing the issues raised in this project.

To read the full article, click here.

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by Stefan M. Meisner

On May 10, the Federal Trade Commission announced that Sanofi-Aventis U.S. LLC and two generic drug makers had violated federal law by failing to notify antitrust authorities about agreements involving Sanofi’s insomnia drug Ambien CR. The FTC found no harm to consumers or competition in this instance and recommended no enforcement action, but the agency seized upon the opportunity to provide public guidance to the industry about the scope the filing requirement under the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA).

The MMA requires filing of certain types of agreements between a brand name drug company and a generic drug applicant that has submitted an Abbreviated New Drug Application that contains a certification that a patent asserted to cover the branded drug is invalid or not infringed (“Paragraph IV certification”). Failure to file within ten business days exposes the parties to penalties of up to $11,000 for each day the party is in violation of the notification requirement.

The Advisory Letters issued by the FTC analyze the Sanofi agreements and seek to clarify how the FTC interprets the Act. The FTC has signaled that it will recommend enforcement actions for future violations of the MMA. This announcement emphasizes the continuing concern that the FTC has shown for the anti-competitive impact of deals between brand name drug manufacturers and generic competitors. The FTC has in recent years repeatedly attacked so-called “pay-for-delay” deals.

For more information on the Sanofi settlement and to view the FTC Press Release with links to Advisory Letters, please visit:  http://ftc.gov/opa/2011/05/sanofi.shtm.

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by Stephen Wu

Earlier today, the FTC dismissed its complaint against LabCorp after failing to obtain a preliminary injunction in federal district court to prevent LabCorp from further integrating with WestCliff. 

LabCorp had acquired WestCliff, a bankrupt lab services competitor in Southern California, in 2010, but the FTC chose to challenge the transaction in front of one of its administrative law judges and had sought a preliminary injunction from a federal district court to prevent LabCorp from integrating WestCliff pending the outcome of the administrative trial. 

After losing its bid for a preliminary injunction at the district court, the FTC filed an emergency motion for an injunction pending an appeal that the Ninth Circuit Court of Appeals denied.  This meant that LabCorp was free to integrate WestCliff pending the outcome of any appeal of the denial of the preliminary injunction or the FTC's related administrative trial on the merits of the acquisition.

The FTC's press release can be found at:  http://www.ftc.gov/opa/2011/04/labcorp.shtm.

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by Jon B. Dubrow, Gregory E. Heltzer, Blake H. Winbourne and Carrie G. Amezcua

The U.S. Federal Trade Commission and the U.S. Commodity Futures Trading Commission signed a memorandum of understanding that will facilitate the sharing of non-public information for “official law enforcement purposes,” and increase investigation risks for firms.

To read the full article, please visit: http://www.mwe.com/info/news/ots0411i.htm.

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by Jon B. Dubrow, Joseph F. Winterscheid and Carla A. R. Hine

In M&A transactions, early involvement of antitrust counsel is essential to avoid unnecessary expense, delay and antitrust risks.  Failure to involve antitrust counsel early on in the process may not only jeopardize the parties’ ability to obtain antitrust clearance, but it can also give rise to potential exposure for independent antitrust violations and deal risk.  This article discusses five avoidable antitrust pitfalls to keep in mind early in any transaction planning process.

To read the full article, click here. 

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by Jon B. Dubrow, Joseph F. Winterscheid and Carla A. R. Hine

The Federal Trade Commission (FTC) recently announced revised thresholds for the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) and 2011 thresholds for determining whether parties trigger the prohibition against interlocking directors under Section 8 of the Clayton Act.  Increased reporting thresholds apply to pre-merger notifications filed on or after February 24, 2011.

To read the full article, please visit: http://www.mwe.com/info/news/ots0111g.htm.

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by Heather Egan Sussman and Carla A. R. Hine

The U.S. Federal Trade Commission’s recently proposed framework for offline and online businesses and policymakers may have a significant impact on entities that collect, maintain and use consumer data.  The deadline for public comment is January 31, 2011.

To read the full article, please visit: http://www.mwe.com/info/news/ots1210e.htm.
 

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by Jon B. Dubrow, David Marx, Jr. and Rachael Lewis

The Federal District Court in Minnesota recently decided Ovation Pharmaceutical did not violate federal or state antitrust laws when it acquired Indocin IV and NeoProfen, the only two drugs approved for treatment of a specific heart condition that primarily affects premature babies, because the challengers failed to establish that the drugs were in the same product market.  The decision raises significant issues to consider when evaluating antitrust risks in future transactions.

To read the full article, please visit: http://www.mwe.com/info/news/ots0910i.htm.
 

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