Making Sense of a Rare Robinson-Patman Act Plaintiffs’ Verdict

On May 20, 2024, US District Court Judge Michael W. Fitzgerald rejected a popular over-the-counter eyedrop seller’s bid for a new trial and granted a pricing injunction impacting two large wholesale membership clubs following one of very few Robinson-Patman Act (RPA) plaintiff-side jury verdicts in recent years.

The case, L.A. International Corporation v. Prestige Brands Holdings, Inc., centered around popular eye drops called Clear Eyes® (Clear Eyes) sold by Medtech Products Inc. (Medtech) to wholesalers. The plaintiffs – a group of regional wholesalers (Plaintiffs) who purchased Clear Eyes for resale to retailers – sued Medtech and its parent company, Prestige Consumer Healthcare Inc. (together, Medtech or Defendants), in the US District Court for the Central District of California in August 2018.

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New Developments in French Competition Law Pose Risk of Ex-Post Challenge to Non-Notifiable Transactions

In a significant development for French merger control, on May 2, 2024, the French Competition Authority (FCA) applied the jurisprudence laid down in the recent Towercast case to an alleged anticompetitive agreement matter in the meat-cutting sector.

In its Towercast ruling (C-449/21), the Court of Justice of the European Union (CJEU) held that a merger which is not notifiable (i.e., being below the European and national merger control thresholds) and which has not been subject to a referral under Article 22 of the Merger Regulation 139/2004 of 2004 may be challenged a posteriori by the European Commission or a national competition authority if an abuse of dominant position resulting from the merger but detachable from it can be established.

Less than a week after the Towercast ruling, the Belgian Competition Authority applied the principles set out by the CJEU by opening an ex officio investigation into the acquisition of the edpnet group by Proximus, ordering interim measures in June 2023 to ensure the continuity of edpnet’s activities and its operational and commercial independence from Proximus, ultimately leading to the sale of edpnet’s activities post-closing in November 2023. The president of the FCA, Benoît Cœuré, said that this instrument could “now be used, bearing in mind that its conditions of use are restrictive”. This has now been confirmed by the FCA’s May 2 decision, on which Cœuré said was an “important clarification for merger control”, particularly regarding Article 101 TFEU.

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Effecting M&A Diligence When Competitors Are Involved

Increased scrutiny of the healthcare industry from antitrust agencies such as the Federal Trade Commission and US Department of Justice emphasize the necessity of compliance measures to mitigate antitrust risk that can negatively impact the closing of transactions. This article explores the critical role of clean team agreements (CTAs) in managing anti­trust risks during the due diligence process of healthcare transactions. The paper provides a comprehensive analysis of how CTAs can be structured to securely handle competitively sensitive information, ensuring that such documents are only accessed by designated personnel under strict guidelines. Through a variety of hy­pothetical scenarios, the article demonstrates the application of CTAs in situations involving direct competitors, labor competition, and different geographic markets. These examples underscore the importance of tailoring CTAs to the specific com­petitive dynamics and regulatory environments of each transaction, ensuring both legal compliance and transactional efficiency in the healthcare sector.

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New DOJ Task Force to Target ‘Multisided Giants’ in Healthcare

The US Department of Justice’s (DOJ) announcement of the formation of a new healthcare task force signals an even stronger emphasis on addressing competition issues in the healthcare industry. Large, multisided platforms involved in multiple sectors (e.g., insurance companies acquiring physician practices and/or essential healthcare IT and data services) are a key target for enforcement.

WHAT HAPPENED:

  • On May 9, 2024, the DOJ announced the formation of the Antitrust Division’s Task Force on Health Care Monopolies and Collusion (HCMC). The HCMC will be tasked with guiding and developing policy advocacy and conducting investigations – and ultimately civil and criminal enforcement actions –in healthcare markets.
  • US Assistant Attorney General Jonathan Kanter stated that the HCMC “will identify and root out monopolies and collusive practices that increase costs, decrease quality and create single points of failure in the health care industry.” The press release specifically identified the following non-exhaustive set of issues that will be priority areas for the HCMC: payer-provider consolidation, serial acquisitions, labor, quality of care, medical billing, healthcare IT services, and the access to and misuse of healthcare data.
  • In announcing the formation of the task force at a Washington Post Live event, Kanter highlighted the changing nature of the healthcare marketplace. In what he coined the “platformization of healthcare,” patients and consumers now interact with “multisided giants, intermediaries that have a coordinated stack of businesses that flow together, including payers, including providers, including PBMs, claims processing, banks” which have become the “gatekeepers of our healthcare system.” According to Kanter, it is crucial that the Antitrust Division adapt its enforcement policies and strategies in healthcare to reflect these new market realities.
  • The HCMC will be led by Katrina Rouse, an antitrust prosecutor at the DOJ since 2011 who previously served as chief of the Defense, Industrials, and Aerospace Section and a trial attorney in the Healthcare and Consumer Products Section. Rouse will oversee a team of civil and criminal prosecutors, economists, experts in healthcare and technology, data scientists, investigators and policy advisors.

WHAT THIS MEANS:

  • The antitrust enforcement agencies have used similar task forces in the past to focus resources and accumulate subject matter expertise. For example, the DOJ’s Procurement Collusion Strike Force has been successful at investigating and pursuing government contracting cases.
  • The launch of the HCMC reflects the antitrust enforcement agencies’ increasing efforts to respond to changing dynamics in the healthcare space and address the potential harmful results of these changes on patients, healthcare workers and communities. In March 2024, the DOJ, Federal Trade Commission (FTC) and US Department of Health and Human Services (HHS) jointly launched a cross-government inquiry into the increasing role of private equity firms in healthcare transactions and whether such firms prioritize maximizing profits at the expense of healthcare quality and affordability.
  • Of note, the DOJ, rather than the FTC, typically investigates mergers involving health plans and contracting issues among health plans and providers. Therefore, healthcare industry participants, [...]

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Antitrust M&A Snapshot | Q1 2024

Topics covered in this edition:

  • The Federal Trade Commission (FTC) and US Department of Justice have begun implementing the 2023 Merger Guidelines in their enforcement actions
  • During a virtual workshop, the FTC highlighted its focus on private equity (PE) acquisitions of healthcare service providers and expressed concerns about PE in healthcare
  • Artificial intelligence’s antitrust implications continue to draw FTC scrutiny
  • The European Commission (EC) used its super-simplified procedure in about one-third of all merger decisions in Q1 2024
  • EC regulators are taking an increasingly vigilant approach to merger control review to ensure market dynamics remain pro-competitive and pro-consumer

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