On Feb. 11, the Federal Trade Commission announced that it had issued special orders to five large technology companies, requesting information on prior acquisitions completed by the companies during the past 10 years. The FTC’s announcement follows several recent high-profile events relating to technology mergers, including the FTC’s Hearings on Competition and Consumer Protection in
Jonathan Ende focuses his practice on antitrust and competition, with particular strength in regulatory matters. He has a great deal of experience in internal investigations, and has a keen insight on the manufacturing and biomedical industries in particular. Read Jonathan Ende's full bio.
- Recent developments indicate that pharmaceutical deals are attracting greater scrutiny from the Federal Trade Commission (FTC).
- In September 2019, FTC Chairman Joseph Simons reportedly stated that the FTC will more closely scrutinize deals with overlaps involving products that are still in clinical study or development. Because of the high failure rate of products in early phases of study, the FTC typically has focused on overlaps between marketed products or products near Federal Drug Administration (FDA) approval, g., products in Phase III of the FDA pipeline. Chairman Simons’s statement makes clear that the FTC plans to examine earlier stage products while reviewing deals.
- In 2018, the director of the FTC’s Bureau of Competition announced in a speech that the FTC would favor divestitures of marketed drugs over pipeline drugs in pharmaceutical deals. Traditionally, when the FTC has had a concern about overlapping products, it has allowed the merging parties to decide which of the overlapping products to divest to remedy the concern. The director explained that, unlike marketed products, pipeline products may be costly to transfer or never be brought to market, eliminating a potential source of future competition.
- Legislators on Capitol Hill have placed pressure on the FTC to scrutinize pharmaceutical deals with more vigor. Nine US senators wrote the FTC in September to voice concerns about the effect of pharmaceutical deals on innovation and prices. In their letter, the senators specifically highlighted divestitures of pipeline products, stating that such divestitures may not sufficiently address threats to competition because pipeline products may never make it to market.
- The Federal Trade Commission (FTC), along with the Antitrust Division of the Department of Justice (DOJ), approved amendments to the Hart-Scott-Rodino (HSR) Rules and the instructions for completing the HSR Form.
- After the amendments take effect on September 25, 2019, HSR filers will be required to use new 10-digit North American Product Classification
Last week, in Connecticut Fine Wine and Spirits LLC v. Seagull, the US Court of Appeals for the Second Circuit affirmed a lower court’s motion to dismiss a lawsuit from Total Wine & More challenging parts of Connecticut’s Liquor Control Act and related regulations. Though the decision represents a victory for state alcohol regulatory regimes, the Second Circuit’s ruling was decided on the basis of established antitrust law and did not raise or rely on state regulatory authority under the 21st Amendment. Nonetheless, state alcoholic beverages regulators will embrace the court’s ruling.
In Connecticut Fine Wine, Total Wine challenged three sets of provisions in Connecticut’s alcohol laws. First, Total Wine challenged “post-and-hold” provisions. Under the post-and-hold provisions, state-licensed wholesalers are required to post a “bottle price” and “case price” each month with the Connecticut Department of Consumer Protection. Those prices are then made available to industry participants. During the four days after prices are posted, wholesalers may “amend” their posted prices to match—but not drop below—lower prices offered by competitors. Wholesalers are then obligated to “hold” their prices for a month.
Second, Total Wine challenged the state’s minimum-retail-price provisions. The minimum-retail-price provisions require retailers to sell alcohol beverages to customers at or above a statutorily defined “cost,” which is determined by adding the posted bottle price and a markup for shipping and delivery. Combined with the post-and-hold provisions, the minimum-retail-price provisions bind retailer prices to wholesaler prices.
Third, Total Wine challenged the state’s price discrimination and volume discount provisions. The price discrimination/volume discount provisions preclude wholesalers from offering a given product to different retailers at different prices and from offering discounts to retailers who are high-volume purchasers.…
Continue Reading Second Circuit Rejects Total Wine Challenge of Connecticut Pricing Laws
In a December 7 speech before the Berkeley-Stanford Advanced Patent Law Institute, the US Department of Justice Antitrust Division (DOJ) Assistant Attorney General Makan Delrahim (AAG Delrahim) announced that the DOJ will withdraw its assent to the 2013 Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary FRAND Commitments (the Policy Statement) and elaborated…
The Federal Trade Commission (FTC) submitted comments supporting the Food and Drug Administration’s (FDA) guidance for assessing whether a pharmaceutical company petitioner is misusing the citizen petition process to delay approval of a competing drug.
- The FDA released revised draft guidance intended to discourage pharmaceutical companies from gaming the citizen petition process.
The Premerger Notification Office (PNO) of the Federal Trade Commission (FTC) recently formalized a new position on Hart-Scott-Rodino Act (HSR Act) reporting obligations for certain not-for-profit, non-stock transactions. The change is currently in effect and applies to transactions that have not yet closed. The change in position will require reporting of many hospital transactions…
The US International Trade Commission (ITC) issued an opinion dismissing United States Steel Corporation’s antitrust claim made under Section 337 of the Tariff Act of 1930 against several Chinese steel manufacturers or distributors, ruling that a complainant must show an antitrust injury even in a trade case.
- On Monday, March 19, three of the ITC’s four sitting commissioners upheld an administrative law judge’s (ALJ) decision to eliminate the antitrust claim from US Steel’s trade case against Chinese steel manufacturers.
- US Steel’s claims were made pursuant to Section 337 of the Tariff Act of 1930. Section 337 has primarily been used by US companies to bar the import of items that infringe upon intellectual property rights. A violation of Section 337 requires a showing of “[u]nfair methods of competition [or] unfair acts in the importation of articles.”
- US Steel took a rather novel approach and based one of its Section 337 claims on Section 1 of the Sherman Act. Specifically, US Steel alleged a conspiracy between the Chinese manufacturers to fix prices at below-market prices and control output and export volumes. Though US Steel based its claim on the Sherman Act, it argued before the ALJ and the ITC that it did not need to show antitrust injury to sustain its antitrust claim. US Steel reasoned that because Section 337 is designed to protect American companies and workers, it needed only show harm to those groups.
- In November 2016, an ALJ granted the Chinese manufacturers’ motion to dismiss the antitrust claims, confirming that US Steel is required to show antitrust injury to state an antitrust claim under Section 337.
- The ITC affirmed the ALJ’s dismissal of US Steel’s antitrust claim because it did not meet the pleading requirements of the Sherman Act under substantive federal antitrust law; such an antitrust claim requires antitrust injury to be alleged. The ITC explained that it relies on existing bodies of substantive federal law to avoid conflicts with federal precedent.
- Under US antitrust law, for US Steel to properly allege antitrust injury on the allegation that its competitors fixed prices at below-market prices, the below-market pricing must be predatory. That is, US Steel would be required to prove (a) below-cost pricing and (b) that the Chinese steel manufacturers had a dangerous chance of recouping their losses. US Steel did not—and conceded it could not—satisfy the pleading standard for predatory pricing.
The Federal Trade Commission (FTC) recently announced that it has challenged a merger between Wilhelmsen Maritime Services (Wilhelmsen) and Drew Marine Group (Drew) because of an overlap in service to “global fleet customers,” a narrow customer segment that purchases marine water treatment chemicals and services.
- The FTC issued an administrative complaint and filed
- Bruce Hoffman, acting director of the Bureau of Competition at the Federal Trade Commission (FTC), announced that the FTC will no longer accept divestitures of inhalant and injectable pipeline drugs in pharmaceutical mergers.
- Hoffman, speaking at the Global Competition Review Seventh Annual Antitrust Law Leaders Forum on February 2, 2018, explained that divestitures of pipeline products were not working well for complex pharmaceuticals, such as inhalants and injectables.
- Instead, in situations in which the parties to the transaction own both a successfully manufactured inhalant or injectable and an overlapping pipeline inhalant or injectable in a concentrated market, the FTC will seek a divestiture of the manufactured product.
- An internal study at the FTC revealed that the rate of failure was “startlingly high” for divestitures of certain complex pipeline pharmaceutical products. Hoffman blamed the high failure rate on the difficulty in actually getting the complex pipeline pharmaceutical to market by a divestiture buyer. He explained that a divestiture buyer, for example, could struggle to reliably manufacture an inhalant or injectable product, frustrating its ability to ultimately bring the product to market.