FTC Developments Archives | Page 29 of 50

FTC Developments

CEO Fined for H-S-R Act Violation on Acquisition of Stock-Based Compensation

by McDermott Will & Emery | Jan 31, 2012 | DOJ Developments, FTC Developments

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.

FTC/DOJ Remove Mandatory Antitrust Review for MSSP-Participating ACOs in Final Policy Statement

by Emily Townsend | Nov 9, 2011 | DOJ Developments, FTC Developments, Healthcare Antitrust

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: https://www.mwe.com/info/news/ots1111c.htm.

Update on Reverse Payment Settlements

by McDermott Will & Emery | Nov 7, 2011 | FTC Developments, Healthcare Antitrust, IP Antitrust

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.

FTC Issues Report on Authorized Generics

by Emily Townsend | Sep 2, 2011 | FTC Developments, Healthcare Antitrust, IP Antitrust

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.

President Obama Announces Nominee for Commissioner, Federal Trade Commission

by Emily Townsend | Jul 20, 2011 | FTC Developments

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.

Increased Antitrust Scrutiny of Non-Reportable or Closed Transactions

by Emily Townsend | Jul 14, 2011 | DOJ Developments, FTC Developments

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.

FTC Announces Major Changes to Disclosure Requirements for Hart-Scott-Rodino Notification Rules and Form

by Emily Townsend | Jul 7, 2011 | DOJ Developments, FTC Developments, Mergers & Acquisitions

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.

U.S. and Chinese Antitrust Agencies to Sign Cooperation Agreement

by Emily Townsend | Jul 6, 2011 | Cartel Enforcement, Chinese Developments, DOJ Developments, FTC Developments

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.

FTC Hosts Workshop on Preventing Patent “Hold-Ups” in Standard-Setting

by Emily Townsend | Jun 23, 2011 | FTC Developments, IP Antitrust

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.

Generic Drug Settlement– FTC Enforcement Action

by Emily Townsend | May 11, 2011 | FTC Developments, Healthcare Antitrust

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: https://ftc.gov/opa/2011/05/sanofi.shtm.

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