ANTITRUST ALERT
ANTITRUST ALERT
A Global Resource for Compliance Officers & Legal Advisors
ANTITRUST ALERT
A Global Resource for Compliance Officers & Legal Advisors
Consumer Protection/Privacy
Subscribe to Consumer Protection/Privacy's Posts

Customer Reviews: Five-Star Enforcement and the Expanding Regulations

By and on Feb 28, 2023
Posted In , ,

Does your company sell to consumers or businesses that can leave reviews or rate your products? Whether your customers can leave reviews on your website or another public-facing review platform, companies should be aware of new developments in the consumer review enforcement space that may impact how you publicize and conduct your product rating and review system.  If you are not aware of the expanding consumer review regulations, it could cost your company millions or even land you in jail.

CUSTOMER REVIEWS AND PROPOSED REVISIONS

Section 5 of the Federal Trade Commission (FTC) Act (the Act) prohibits unfair and deceptive acts and practices. Specifically, as the Act relates to customer reviews: negative customer reviews and ratings cannot be suppressed or hidden; any incentives for reviews must be disclosed; material connections between a reviewer and the reviewed product must be disclosed; and review gating is prohibited. The FTC has heightened its focus on consumer reviews as of late and proposed revisions to the Endorsement Guides for advertisers that would tighten enforcement against posting false positive reviews or manipulating consumer perception by suppressing negative reviews, among other things. The proposed guideline revisions would state that “in procuring, suppressing, boosting, organizing, or editing consumer reviews of their products, advertisers should not take actions that have the effect of distorting or otherwise misrepresenting what consumers think of their products.” See Federal Register, Guides Concerning the Use of Endorsements and Testimonials in Advertising, Section IV (C) (July 26, 2022), https://www.federalregister.gov/documents/2022/07/26/2022-12327/guides-concerning-the-use-of-endorsements-and-testimonials-in-advertising. In addition to broadening its Endorsement Guides, the FTC has already demonstrated a significant increase in consumer review enforcement—including pursuing increased penalties and new priorities like review hijacking.

CONSULTANT RECEIVES PRISON SENTENCE FOR BRIBED REMOVAL OF NEGATIVE REVIEWS

In February 2023, Hadis Nuhanovic, a merchant consultant, was sentenced to 20 months in prison for taking part in a global scheme in which he bribed employees of a technology platform to remove negative online reviews on his clients’ products and reinstate suspended accounts, among other illegal activities such as stealing sensitive company information related to product-review rankings and targeting his clients’ competitors on the platform. Nuhanovic, together with a co-defendant, reached out to platform employees in India and bribed them to obtain unfair advantages for his own business’ gain. For example, Nuhanovic admitted that he paid a platform employee to remove negative reviews and further admitted that he operated multiple sham accounts—created using false information—to purchase products from merchants and submit negative reviews about them, with the intention of deceiving consumers and harming the targeted accounts. Additionally, Nuhanovic used his sham accounts to leave positive reviews for his preferred accounts, further deceiving consumers and improving the placement of certain favored products in searches.

In addition to the review bribes, Nuhanovic was investigated for other related crimes to which he ultimately pled guilty. He was sentenced to three years of supervised release on top of the 20 months in prison and forced to forfeit $100,000 and pay $160,000 in unreported taxes.

COMPANY FORCED TO PAY FOR “REVIEW HIJACKING”

[...]

Continue Reading


European Competition Review 2022

By , , , , , , , , and on Feb 6, 2023
Posted In , , , ,

This Review provides legal counsel and their teams easy reference guidance on essential EU competition law developments covering key areas of law and policy. Topics covered include:

  • Cartels & Restrictive Agreements
  • Abuse of Dominant Position
  • Merger Control
  • State Aid
  • Legislative and Policy Developments

Access the special report.



2023 Regulatory Forecast: Antitrust & Competition

By , and on Jan 10, 2023
Posted In , , ,

The Federal Trade Commission (FTC) and the US Department of Justice (DOJ) pursued aggressive antitrust and competition enforcement agendas this past year and show no signs of slowing down in 2023. Prepare for the year ahead by reviewing our 2023 Regulatory Forecast for the antitrust and competition space.

Click the links below to download a one-pager of takeaways for each area.

Antitrust & Competition | Merger Control: The Biden administration prioritized aggressive antitrust merger enforcement in 2022, especially in the healthcare, labor, consumer and technology sectors. Learn how this trend will continue in 2023 as the FTC and DOJ expand their toolbox to challenge transactions.

Antitrust Litigation: In 2022, the DOJ and FTC took boundary-shifting antitrust enforcement positions and proved they are not afraid to pursue novel legal theories. The DOJ alone has more open grand jury investigations and charged more cases in 2022 than it has in decades. The DOJ and the FTC also requested historic budget increases to support their aggressive agendas. Additional resources mean more regulators are available to investigate and litigate alleged anticompetitive conduct. Find out more about the aggressive enforcement by the antitrust agencies and private plaintiffs that is expected to continue in 2023.

Consumer Protection: Enforcement by the FTC, among other consumer protection regulators, was particularly vigorous in 2022 and the trend is expected to continue in 2023. In light of the increased regulatory focus on social media, marketing and advertising, businesses should be aware of the ever-evolving guidance in this realm. Read about the proposed rulemaking and revisions on the horizon this year.



Antitrust M&A Snapshot | Q2 2022

By , , , , and on Sep 26, 2022
Posted In , , , , , , ,

In the United States, parties continue to be cautious in litigating challenged transactions. Since January 2021, the US Federal Trade Commission (FTC) and Department of Justice (DOJ) filed lawsuits (or threatened to sue) to block 16 transactions. Of those transactions, 12 were abandoned and six are in various stages of litigation. The data suggest that the FTC’s and DOJ’s aggressive merger enforcement policy is raising the stakes for parties to potential mergers and acquisitions, including an increased willingness by the agencies to litigate potentially problematic transactions.

Between May 6 and June 3, 2022, the European Commission (Commission) held a public consultation to seek views on the draft revised Merger Implementing Regulation (Implementing Regulation) and the Notice on Simplified Procedure. This consultation was launched in the context of the Commission’s review process of the procedural and jurisdictional aspects of EU merger control.

On April 20, 2022, the UK government proposed new measures to boost consumer protection rights and competition rules. In particular, the UK government’s reforms aim to strengthen the Competition & Markets Authority’s (CMA) powers and alleviate burdens on smaller companies.

Access the full issue.



International News Spotlight on Competition Law

By on Sep 21, 2022
Posted In , , , , , , , , , ,

In line with the evolution of the economy and the ongoing growth of online business and global trade, we’re seeing a corresponding increase in competition regulation and a rise in enforcement across all authorities. In our latest International News, we take a deep dive into the issues at play.

The growth of the online economy has triggered the US Federal Trade Commission’s (FTC) update of its 20 year old .com Disclosures: How to Make Effective Disclosures in Digital Advertising guide, and the development of an analytical framework for all digital distribution across the European Union. In just one seismic shift under the new EU Vertical Block Exemption Regulation 2022/720, dual-pricing, i.e., setting different wholesale prices for online/offline sales by the same distributor, is no longer considered a hardcore restriction unless its purpose is to prevent the effective use of the internet to sell the goods or services.

In the United States, there is an increased focus on anticompetitive mergers and acquisitions (M&A). The Biden Administration, the Department of Justice Antitrust Division, and the FTC have all stated that the regulatory landscape needs to be reshaped to better reflect dynamic markets, and their priority is the aggressive pursuit of litigation against offending parties rather than the granting of consent decrees. The tendency to “sin first and beg forgiveness later” will emphatically no longer work, as a recent French gun-jumping case demonstrates.

Both the United States and the European Union have also turned their attention to investigating wage fixing and no-poach labour market violations that are not connected with M&A or business collaborations. It’s clear that competition/antitrust authorities are determined to expand their remit.

Read our full Spotlight on Competition Law here.



FTC Flexes Its Muscle in Suit against Kochava (But May Not Like the Results)

By , and on Sep 1, 2022
Posted In , ,

On August 29, 2022, the Federal Trade Commission (FTC) filed a lawsuit against Kochava, Inc. alleging that Kochava engaged in unfair and deceptive practices by selling the “precise location information” of consumers. This suit comes on the heels of the FTC’s announcement earlier this month that it would “crack down” on “commercial surveillance practices” and July’s warning that the agency would be exercising its enforcement authority against the “illegal” use and sharing of sensitive consumer data.

IN DEPTH

The FTC alleges that Kochava amassed a large amount of sensitive data by tracking the mobile advertising IDs from hundreds of millions of mobile phones, and that such data could be used to track people visiting abortion clinics, domestic abuse shelters, places of worship and other sensitive locations. The FTC then said that Kochava sold that data without first anonymizing it, allowing anyone who purchased the data to use it to track the movements of the mobile device users. The FTC wants to not only block Kochava from selling such data, but also require them to delete and destroy it. In its complaint, the FTC relied on the FTC Act’s general prohibition against “unfair and deceptive acts or practices” and alleged that the company unfairly sold the sensitive data.

Kochava, which beat the FTC to the courthouse and preemptively filed a lawsuit against the FTC prior to the FTC’s complaint, asserted that all of the location data came from third-party data brokers who obtained the information from consenting consumers. Despite the alleged consent, Kochava says it is in the process of implementing steps to remove health services location data from its database. Kochava argued that the litigation was the outcome of the FTC’s failed attempt to implement a vague settlement that had no clear terms and made the problem a moving target.

The Kochava suit brings to the forefront several competing policy considerations, the determination of which could shape the scope of the FTC’s enforcement authority for years to come. The first and foremost issue that the Kochava suit raises is whether the FTC has the authority to effectively impose a consent-based regime for the sale of sensitive consumer information when no federal law enforced by the FTC (other than the Children’s Online Privacy Protect Act (COPPA), which applies to data collected about children under 13) expressly provides for that requirement. While it is not uncommon for the FTC to take expansive views of its enforcement authority, that authority has been successfully challenged in recent years. (See AMG Capital Management, LLC v. FTC, which held that the FTC does not have the statutory authority to seek equitable monetary relief under Section 13(b) of the FTC Act).) Now, Kochava will test the FTC’s authority to regulate in the privacy space—and the FTC may not like the result.

In the unlikely event that Kochava were to litigate against the FTC all the way to the Supreme Court of the [...]

Continue Reading



Cartel Corner | August 2022

By , , , and on Aug 31, 2022
Posted In , , , , ,

Without question, 2022 has been a remarkably busy time for the US Department of Justice’s (DOJ’s) Antitrust Division (Division). Over just a few months, the Division rolled out meaningful revisions to its leniency policy aimed at encouraging prompt reporting of criminal violations, announced that it will (for the first time in nearly  50 years) bring criminal monopolization cases under Section 2 of the Sherman Act, continued to increase enforcement resources, and brought a number of new cases and obtained multiple guilty pleas.

However, activity does not always mean success. If there is any theme that defines the Division’s efforts over the last quarter, it is this: If at first you don’t succeed, try, try again. That is exactly what the Division has done. It tried two labor markets cases, ultimately losing both on a new and untested legal theory. And, over strong objections from a district court, the Division pursued an unprecedented third trial against those in the broiler chicken industry, resulting in a full acquittal for all defendants. None of this, however, has deterred the Division from continuing to pursue new investigations and bring new cases under novel legal theories.

In this installment of Cartel Corner, we examine recent and significant developments in antitrust criminal enforcement and profile what the Division has highlighted as its key enforcement priorities. If the past is prologue, we are bound to see more aggressive antitrust enforcement in the months to come, testing the boundaries of current antitrust law. Whether the Division can ultimately shift those boundaries, however, remains to be seen.

Access the full report.



Heard on Day Two and Three of 2022 Antitrust Law Spring Meeting

By , , , , and on Apr 12, 2022
Posted In , , , , , , ,

On April 7 and 8, 2022, the American Bar Association’s Antitrust Law Section wrapped up its annual Spring Meeting. The event featured updates and remarks from several antitrust enforcers, including FTC Chair Lina Khan and US Assistant Attorney General for the Antitrust Division Jonathan Kanter. In this post, we share key takeaways from the final two days of the Spring Meeting.

FTC and DOJ Will Stay Focused on Litigation: Top officials at both US antitrust agencies highlighted the agencies’ full dockets and noted that litigation to enforce the antitrust laws will remain a top priority.

  • Three Directors from the Federal Trade Commission (FTC)—Holly Vedova, the Director of the Bureau of Competition; Samuel A.A. Levine, Director of Bureau of Consumer Protection; and Elizabeth Wilkins, Director of Office of Policy Planning—all emphasized that the FTC will work as one team and will not hesitate to initiate litigation.
  • Vedova noted the FTC’s recent success in several transactions being abandoned after the FTC initiated litigation. She expressed that the Bureau of Competition’s main focus will be litigation, where she believes her bureau will be most effective. Khan echoed these sentiments while speaking on a separate panel, emphasizing that two recently abandoned transactions were in the context of challenges to vertical transactions and that such challenges will continue to be a priority at the FTC.
  • Likewise, Kanter noted that the Department of Justice (DOJ) is not afraid to take on big cases or big companies and will not be afraid to litigate. He said the DOJ is just getting started and reiterated that the DOJ has more active cases than it has had in recent years.

Agencies Will Closely Scrutinize Potential Remedies in M&A: Both FTC and DOJ officials emphasized they will continue to examine the effectiveness of remedies and will only pursue strong remedies.

  • Kanter said that divestiture remedies will be the rare exception and will no longer be the norm. He further cautioned merging parties to avoid engaging in “regulatory arbitrage” and trying to leverage investigation outcomes in one jurisdiction against another because global cooperation among antitrust enforcers is high.
  • Vedova also indicated that the Bureau of Competition has no appetite for weak or uncertain settlements, especially those involving behavioral remedies, which have proven ineffective. The FTC will require meaningful structural relief to resolve competition concerns regarding a transaction.
  • Parties should also not expect the FTC to engage in long settlement discussions due to the unprecedented volume of merger reviews. Vedova noted that staff’s time is valuable and is much better spent preparing for litigation rather than negotiating remedies. She further indicated that the FTC will not engage in remedy discussions unless the Hart-Scott-Rodino (HSR) clock is stopped and timing agreements are tolled.
  • State attorneys general will similarly evaluate remedies and, if necessary, pursue additional remedies than those sought by federal antitrust enforcers. For example, in a recent dialysis acquisition, the state of Utah sought divestiture of a fourth clinic above the three divestitures required to [...]

    Continue Reading


Cartel Corner | March 2022

By , , , , , and on Mar 21, 2022
Posted In , , , , , ,

The US Department of Justice’s (DOJ) Antitrust Division (Division) has continued to actively investigate and pursue alleged criminal violations of antitrust laws and collusive activity in government procurement. US Attorney General Merrick Garland noted in a March 2022 speech at the ABA Institute on White Collar Crime that the Division ended last fiscal year “with 146 open grand jury investigations—the most in 30 years.” As we near the end of the first quarter of 2022, the Division has a record number of criminal cases either in trial or awaiting trial.

In this installment of Cartel Corner, we examine and review recent and significant developments in antitrust criminal enforcement and profile what the Division has highlighted as its key priorities for enforcement. For 2022 and beyond, those priorities are—and likely will remain—identifying and aggressively pursuing alleged violations involving the labor markets, consumer products, government procurement, and the generic pharmaceutical industry.

Access the full report.



FTC Announces 2022 Reviews of Key Guides and Rules

By and on Dec 20, 2021
Posted In ,

The US Federal Trade Commission (FTC) has announced a series of new reviews scheduled for 2022 regarding key FTC guides and rules. Consumer-facing businesses should pay close attention to these reviews. While FTC reviews are periodic and can be routine, they can also result in fundamental changes to how the FTC approaches enforcement of key issues. Review periods can also provide an opportunity for impacted businesses to submit public comment and opinion to the FTC for consideration.

The FTC’s ongoing and upcoming reviews were highlighted in the Biden administration’s recently released Fall 2021 Unified Agenda of Regulatory and Deregulatory Actions; this publication highlights federal agencies’ regulatory action plans for the coming year. The FTC’s Statement on Regulatory Priorities announced that the agency will undertake a thorough review and examination of the guidance provided in, and the enforcement of, the following key guides and rules:

  • Guides Against Deceptive Pricing: These Guides address types of pricing representations, such as marketer representations that a price is a “sale” or “discount,” comparisons to others’ prices or manufacturers’ retail prices and representations about special prices based on the purchase of other goods or services (e.g., “buy-one-get-one” offers).
  • Guide Concerning Use of the Word ‘Free’ and Similar Representations: This Guide sets forth requirements when using the promotional device of offering “free” merchandise or services. When making such offers, the Guide requires all terms and conditions be set forth clearly and conspicuously at the outset of the offer to avoid any reasonable probability that the terms might be misunderstood.
  • Guides for the Use of Environmental Claims (Green Guides): The Green Guides provide the general principles applying to all environmental marketing claims; how consumers will likely interpret certain claims and how marketers can substantiate such claims; and how marketers can qualify such claims to prevent deception of consumers.
  • Business Opportunity Rule: This Rule requires business opportunity sellers to give prospective buyers particular information to aid in their evaluation of a business opportunity. The FTC intends to initiate review of this Rule by late 2021.
  • Amplifier Rule: This Rule creates uniform test standards and disclosures for consumers to make more meaningful comparisons of amplifier equipment performance attributes. The FTC plans to submit a recommendation for further Commission action on review of this Rule by February 2022.

In addition to those newly announced reviews, the report also discussed the following ongoing FTC reviews:

  • Children’s Online Privacy Protection Rule (COPPA): COPPA imposes requirements on operators of websites or online services directed to children under age 13 as well as on operators of websites or online services that have actual knowledge that they are collecting personal information online from a child under age 13. FTC staff is continuing to analyze and review the public comments; however, the period for comment on COPPA ended in late 2019.
  • Guides Concerning the Use of Endorsements and Testimonials in Advertising (Endorsement Guides): These guidelines are designed to help businesses and other advertisers of TV, print, radio, blogs, [...]

    Continue Reading


BLOG EDITORS

Gregory E. Heltzer

STAY CONNECTED

Subscribe

TOPICS

ARCHIVES

Ranked In Chambers USA 2022
US Leading Firm 2022