Federal Trade Commission Archives - Page 9 of 29

Federal Trade Commission

THE LATEST: FTC Files Complaint Against Louisiana Real Estate Appraisers Board

by McDermott Will & Emery | Jun 2, 2017 | FTC Developments

This week, the Federal Trade Commission filed an administrative complaint against the Louisiana Real Estate Appraisers Board (LREAB). This complaint is the FTC’s first against a state licensing board since it prevailed in the Supreme Court in the decision in NC State Board of Dental Examiners v. FTC in 2015. There, the Court held that immunity from the antitrust laws under the state action doctrine does not apply to a state board that regulates an industry if: 1) a majority of the board members are active participants in the market they are regulating, and 2) the board has not been actively supervised by the state. McDermott reported in detail about the NC Board of Dental Examiners at the time of the decision. The complaint comes on the tail of a settlement agreement between the FTC and a trade organization, the American Guild of Organists, as reported this week.

FTC alleges that the LREAB violated Section 5 of the Federal Trade Commission Act by unreasonably restraining price competition for real estate appraisal services provided to appraisal management companies (AMCs) in Louisiana.

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THE LATEST: American Guild of Organists Reaches Settlement Agreement with the FTC over Challenged Professional Association Rules

by Gregory E. Heltzer and Katharine M. O'Connor | May 31, 2017 | FTC Developments

The two current commissioners of the Federal Trade Commission (FTC) approved a final order and consent agreement with the American Guild of Organists (AGO) after a public comment period of two months. The FTC alleged that the AGO violated Section 5 of the Federal Trade Commission Act by agreeing to restrain competition among its organist and choral conductor members. Under the terms of the settlement, the AGO agreed to make certain changes to its rules and policies.

WHAT HAPPENED

The AGO represents approximately 15,000 member organists and choral directors in 300 chapters in the United States and abroad.
The FTC initiated an inquiry into the AGO’s practices in late 2015 after receiving complaints from consumers and organists regarding guild rules.
Specifically, the AGO’s rules required a customer seeking to hire a musician who was not dedicated as the “incumbent musician” in a particular area to pay both the “incumbent musician” in the area as well as the hired musician. The AGO’s Code of Ethics stated that members should “protect themselves” through contracts that secured fees even when not performing.
Also, the AGO published compensation schedules and formulas, instructing its membership to use the formulas to determine pricing in their region.
Finally, the AGO’s rules prohibited a member from soliciting employment from an organization already employing an “incumbent musician.”
The FTC’s complaint alleged that these actions restrained competition by encouraging a fixed pricing schedule between and among the AGO’s membership, and by preventing members from freely seeking or accepting employment. It also alleged that the AGO’s rules and guidelines likely raised prices for consumers seeking to employ organists for special occasions, as well as the organizations that employed organists.
The settlement requires the AGO to change its rules and Code of Ethics, and mandates that each chapter of the AGO certify compliance in order to remain in the organization. In particular, the AGO no longer can publicize or endorse any standardized or suggested prices or interfere with any member’s ability to seek work as an organist or choral conductor.

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THE LATEST: Rohit Chopra, Progressive Student Loan Watchdog, Recommended for FTC Commissioner

by Gregory E. Heltzer and Katharine M. O'Connor | May 17, 2017 | FTC Developments

The Federal Trade Commission (FTC) is composed of five Commissioners each with terms of seven years. The Commissioners are appointed by the President with the advice and consent of the Senate. At any given time, no more than three Commissioners may be members of the same political party. Currently, Acting Chairman Ohlhausen (R) and Commissioner McSweeny (D) are the only FTC Commissioners. President Trump, therefore, can nominate two republican Commissioners and a democrat or independent commissioner. On May 9, United States Senate Minority Leader Charles Schumer (D-NY) formally recommended to President Donald Trump that Rohit Chopra fill the empty Democratic FTC Commissioner position. It is not clear how President Trump will proceed following the recommendation. Prior presidents have typically relied on recommendations from opposition leaders when deciding on a nominee for a minority commissioner.

WHO IS ROHIT CHOPRA?

Chopra is a Harvard University (BA) and Wharton School (MBA) graduate who has focused his career on consumer protection; specifically, advocacy for student loan forgiveness and better student loan servicing, and criticism of for-profit universities.
Chopra was one of the initial employees of the Consumer Financial Protection Bureau (CFPB), founded in July 2010 and proposed in 2007 by Elizabeth Warren (D-MA) in response to the Great Recession. There, Chopra served as Assistant Director and Student Loan Ombudsman, where he worked to improve student loan servicing and sued ITT Tech and Corinthian Colleges Inc. for consumer fraud.
In 2015, Chopra became a Senior Fellow at progressive think tank the Center for American Progress.
He then joined the Obama Administration as Special Advisor to the Secretary of Education, after having been critical of the Obama Administration’s work on student loan issues while at the CFPB. In particular, he encouraged the Secretary of Education to combat data showing that student loan debt doubled under the Obama Administration and the amount of student loans in default continued to increase.
Currently, Chopra serves as a Senior Fellow of the Consumer Federation of America, a non-profit consumer protection organization founded in 1968.

WHAT THIS MEANS?

If appointed, Chopra would be a non-lawyer FTC Commissioner without significant experience in antitrust issues, having worked solely in the consumer protection arena.
Chopra would replace former FTC Chairman Edith Ramirez, another progressive, who resigned her position effective February 10, 2017.

McDermott Releases 1Q2017 Antitrust M&A Snapshot

by Jon B. Dubrow and Joel R. Grosberg | Apr 21, 2017 | DOJ Developments, EC Developments, EU Developments, FTC Developments, Mergers & Acquisitions

McDermott’s Antitrust M&A Snapshot is a resource for in-house counsel and others who deal with antitrust M&A issues but are not faced with these issues on a daily basis. In each quarterly issue, we will provide concise summaries of Federal Trade Commission (FTC), Department of Justice (DOJ) and European Commission (EC) news and events related to M&A, including significant ongoing investigations, trials and consent orders, as well as analysis on the trends we see developing in the antitrust review process.

Read McDermott’s 1Q2017 M&A Snapshot.

Bag Fee Case Highlights Antitrust Risk Of Public Statements

by David L. Hanselman, Jr. and Lisa A. Peterson | Apr 12, 2017 | Cartel Enforcement, FTC Developments, Private Litigation, Uncategorized

For publicly traded companies, earnings calls are routine business events, as are press releases, speeches, investor conferences and trade association meetings. However, in the world of antitrust law, words uttered in these situations can provide fodder for plaintiffs to claim that instead of providing information for investors and the public, the communication’s purpose was to invite competitors to unlawfully collude. In the past several years, allegations that competitors used public statements to carry out a price-fixing agreement have been a common thread in antitrust class actions and multidistrict litigations.

Recently, a federal district court granted summary judgment in an antitrust case based on earnings calls in the airline industry. While the defendants ultimately prevailed, the case stands as a reminder to publicly traded companies to be mindful of antitrust considerations in earnings calls and other public communications.

Read the full article.

Originally published in Law360.com, April 11, 2017.

THE LATEST: Occupational Licensing—Do We Need to Protect “the Public from Rogue Interior Designers Carpet-Bombing Living Rooms with Ugly Throw Pillows?”

by McDermott Will & Emery and Gregory E. Heltzer | Mar 9, 2017 | FTC Developments, Healthcare Antitrust

The Federal Trade Commission (FTC) has looked at licensing boards many times in the past and advocated for regulations with less restriction that promote competition. There are numerous examples of antitrust regulators’ interest in occupational licensing and competition concerns, including Advanced Practice Registered Nurses in the VA, non-lawyers in the provision of legal services, and dental regulatory boards. Acting Chairman Maureen Ohlhausen recently gave a speech at the Antonin Scalia Law School addressing economic liberty, including a critique of occupational licensing where she stated, “I challenge anyone to explain why the state has a legitimate interest in protecting the public from rogue interior designers carpet-bombing living rooms with ugly throw pillows.”

WHAT HAPPENED:

Acting Chairman Ohlhausen reiterated her view that occupational licensing inhibits economic liberty. “Market dynamics will naturally weed out those who provide a poor service, without danger to the public. For many other occupations, the costs of added regulation limit the number of providers and drive up prices. These costs often dwarf any public health or safety need and may actually harm consumers by limiting their access to beneficial services.”

In the 1950s, less than five percent of jobs required a license. Today, approximately 25 to 30 percent of jobs require a license.

Different states regulate different occupations, and licensing requirements for the same occupations often vary significantly among states.

In her speech, Acting Chairman Ohlhausen said she is creating an Economic Liberty Task Force within the FTC. This task force will focus on occupational licensing regulations.

WHAT THIS MEANS:

We will likely see an increase in FTC actions involving licensing boards, such as in North Carolina Dental, where it is not the state itself acting but self-interested active market incumbents who impose occupational licensing requirements that limit competition.

The FTC Task Force will seek to “eliminate and narrow overbroad occupational licensing restrictions that are not narrowly tailored to satisfy legitimate health and safety goals.”

The FTC will help states identify problematic occupational licensing and reforms that promote reciprocity among states. We could see a roll back of occupational regulations.

Licensing boards and those who are involved in licensing regulations should examine the ways in which the regulation affects or could affect competition, whether there is evidence that a regulation is necessary to achieve the targeted policy goal, whether the regulation is narrowly tailored to meet the policy goal, and whether a less restrictive alternative is available to achieve the policy goal and benefit competition.

THE LATEST: FTC Fixes Consummated Pharma Transaction Involving Pre-Phase 3 Product Because It Eliminated a “Nascent Threat”—Tacks on $100 Million Disgorgement Penalty

by McDermott Will & Emery and Gregory E. Heltzer | Mar 7, 2017 | FTC Developments, Mergers & Acquisitions, Monopolization/Abuse of Dominance

The Federal Trade Commission (FTC) challenged a consummated transaction using a monopolization theory to allege that the acquisition would eliminate “nascent” competition for therapeutic adrenocorticotropic hormones (ACTH) in the United States.

WHAT HAPPENED:

Questcor Pharmaceuticals, Inc.’s (Questcor) H.P. Acthar Gel (Acthar) is the only ACTH product sold in the US, is the standard of care for infantile spasms and is indicated for several other diseases.
In 2013, Questcor acquired the US rights to Synacthen Depot (Synacthen) from Novartis. Questcor was subsequently acquired by Mallinckrodt.
Synacthen is pharmacologically very similar to Acthar, as the active ingredient in both drugs is an ACTH molecule.
At the time of the acquisition by Questcor, Novartis’ Synacthen had been used safely and effectively for decades in Europe, Canada and other parts of the world to treat patients suffering from infantile spasms and other diseases. Synacthen had not yet begun US clinical trials.
The FTC alleged a monopolization theory—that Questcor had “extinguished a nascent competitive threat to its monopoly” by outbidding several other companies who were interested in bringing Synacthen to market in the US to compete with Questcor’s Acthar.
Then FTC Chairwoman Edith Ramirez (she has since resigned) noted that Questcor had a history of taking advantage of its monopoly, repeatedly raising the price of Acthar “from $40 per vial in 2001 to more than $34,000 per vial today—an 85,000 percent increase.”
The FTC settlement requires a $100 million monetary payment and that Mallinckrodt (Questcor was acquired by Mallinckrodt) license Synacthen for treating infantile spasms and nephrotic syndrome to an FTC approved licensee.

WHAT THIS MEANS:

In some circumstances, an action by a monopolist to block a nascent threat to its monopoly can violate the antitrust laws.
Typically, the FTC does not challenge pharmaceutical overlaps involving pharmaceuticals that have not yet entered Phase 3 clinical trials because there is still significant uncertainty that a product will ultimately come to market.
The FTC appears to have made an exception to its typical practice because Synacthen was anticipated to gain US approval easily and compete significantly with Acthar. Synacthen was approved outside the US for decades and was understood to be a safe and effective ACTH treatment.
The FTC may bring an action at any time under Section 7 to determine the legality of an acquisition. However, the FTC challenged this consummated transaction under a Section 2 theory of monopolization. The FTC has many tools to challenge actions under the antitrust laws.

THE LATEST: FTC Determines Behavioral Remedies are Sufficient to Fix Offshore Natural Gas Pipeline Overlap

by Gregory E. Heltzer | Mar 2, 2017 | FTC Developments, Mergers & Acquisitions

The Federal Trade Commission (FTC) recently granted US antitrust clearance for Enbridge’s acquisition of Spectra after the parties agreed to behavioral commitments to remedy an overlap for natural gas pipeline transportation from the wellhead in three markets off the coast of Louisiana (Green Canyon, Walker Ridge and Keathley Canyon).

WHAT HAPPENED:

The merging parties each own interests in competing natural gas pipelines – Enbridge is the sole owner of the Walker Ridge Pipeline; and Spectra holds a minority interest (~7.6%) in the Discovery Pipeline via its interests in DCP Midstream.

As part of Spectra’s minority interest in the Discovery Pipeline, Spectra had access to detailed information on the pipeline’s pricing and other competitively sensitive information. In addition, Spectra had board voting rights over the pipeline’s significant capital expenditures including expansions needed to connect to new wells.

FTC determined that in certain areas within each of the three geographic markets, the Walker Ridge and Discovery Pipeline were the closest pipelines to new wellheads in development and therefore the lowest priced options.

In granting antitrust clearance, the FTC required that Enbridge and Spectra erect firewalls such that information related to the Walker Ridge Pipeline would not be shared with any of Spectra’s partners in the Discovery Pipeline and that Discovery Pipeline information is not shared with any Enbridge individuals involved in the Walker Ridge Pipeline business.

The FTC also required any board members appointed by Enbridge or Spectra to DCP Midstream recuse themselves from any vote pertaining to the Discovery Pipeline, unless the vote involves expanding the Discovery Pipeline beyond natural gas pipeline services in the Gulf of Mexico or changing the entities’ ownership interests in the Discovery Pipeline.

WHAT THIS MEANS:

FTC could investigate and require remedies in overlaps involving minority ownership interests (even when less than 10%), particularly when the overlapping entities are close competitors and the acquisition would give access to competitively sensitive information and control over the entity.

The FTC continues to apply narrow product and geographic market definitions in oil and gas cases. Here the FTC alleged relevant markets involving natural gas pipeline transportation in particular areas in the Gulf of Mexico.

While the FTC has stated a strong preference for structural remedies when fixing horizontal overlaps, there are situations in which the FTC will conclude that a behavioral remedy is sufficient.

THE LATEST: Learnings from Merger Remedies Study Underscores FTC’s Heightened Focus on Remedy Packages and Proposed Buyers

by Bilal Sayyed and Gregory E. Heltzer | Feb 22, 2017 | FTC Developments, Mergers & Acquisitions

WHAT HAPPENED:

In early February, the FTC released its Merger Remedies Study (the Study), which focused on transactions from 2006-2012 in which the FTC found a competitive problem that did not require a block outright, and allowed the transaction to gain clearance so long as the merging parties agreed to what the FTC determined were appropriate remedies to restore competition to the impacted market.
Via case study method, questionnaires and data, the FTC analyzed the outcomes of 89 remedial orders and self-critiqued its success in restoring competition and used the learnings to refine its internal best practices.
The report serves as an update to practitioners for understanding what is required to develop an effective remedy package, what qualities the FTC seeks in a buyer of the remedy package and how the FTC will seek to implement the remedy.

WHAT THIS MEANS:

On balance, the Study supported the FTC’s current practices.
Remedy packages consisting of an ongoing business were all successful—which confirms FTC’s long-held conviction that these kinds of divestitures are highly likely to succeed in restoring competition.
There will be heightened focus when the remedy package consists of selected assets (that is, not an ongoing business) and a heightened focus on the financing/funding of the divestiture buyer.
In these situations, merging parties should expect a fact intensive inquiry by the FTC, the potential for the FTC to seek larger asset packages that include products outside of the competitive problem area (if needed to make the proposed buyer competitive) and increased information sharing with the proposed buyer (and future competitor) to transition the business.
FTC has a strong preference for proposed buyers with experience and strong financial commitment to the business. These kinds of proposed buyers are more effective at securing the right personnel, understanding what’s needed to effectively compete (e.g., assets, supply agreements, production processes) and implementing the transition.

The LATEST: FTC “Second Requests” to be Narrower in Scope under Ohlhausen’s Leadership

by Gregory E. Heltzer, Jon B. Dubrow and McDermott Will & Emery | Feb 17, 2017 | FTC Developments, Mergers & Acquisitions

Transactions that meet the Hart-Scott-Rodino thresholds for notification must be reported to the Federal Trade Commission (“FTC”) and Department of Justice. Where a notified transaction raises competition concerns, the reviewing agency may decide to launch an in-depth investigation and request additional information from the merging parties, known as a “Second Request,” which can take several months and cost companies millions of dollars to fully respond. Under FTC Acting Chairwoman Maureen Ohlhausen’s leadership, however, the burden of a Second Request may decrease, as she intends to narrow their scope.

WHAT HAPPENED:

Acting Chairwoman Ohlhausen has signaled that Second Requests will be more limited under her leadership, based on comments made on February 15, 2017 at a Washington conference.
The standard for initiating a Second Request will not change. However, once initiated, Second Requests will be narrower in scope, in terms of markets assessed and data requested from companies.

WHAT THIS MEANS:

The standard used by the FTC to initiate such investigations will not change; thus, complex transactions raising competition concerns will likely still face a Second Request.
However, the time and cost associated with complying with a Second Request may be reduced, which will be good news for companies who may face a shorter review at a lower cost.
This business-friendly approach is consistent with Commissioner Ohlhausen’s guiding principles of “regulatory humility, […] the power of competitive markets, and a devotion to empiricism” and her objective to “minimiz[e] the burdens on legitimate businesses”. As such, it may be one of further changes to come in FTC enforcement.

The FTC’s Path Ahead.

Statement of Acting FTC Chairman Ohlhausen on Appointment by President Trump.