On August 8, 2008, the FTC approved its preliminary consent order (with minor, immaterial modifications) from April 28, 2008 against Talx Corporation that remedied Talx’ anticompetitive acquisitions of competitor. See April 30, 2008 Post. As explained it that Post, this FTC action was of interest to practitioners because of the nature of Talx’ conduct and the use of a conduct remedy rather than divestitures to remedy acquisitions that violated the Section 7 of the Clayton Act.
Jul
29
Posted by : | On : July 29, 2008
Today, the D.C. Circuit reversed the district court’s decision that denied a preliminary injunction in the Whole Foods/Wild Oats merger. FTC v. Whole Foods Markets, Inc., No. 07-5276 (D.C. Cir. July 29, 2008) (Whole Foods decision). Crucial to the decision was the D.C. Circuit’s holding that the FTC might have been able to establish a submarket consisting of premium natural and organic supermarkets.
The case was remanded to the district court and one of the questions was whether there was some remedy available during the pendency of the FTC administrative proceedings. The D.C. Circuit noted that the FTC complained of adverse effects on competition in only eighteen different local markets. The D.C. Circuit also noted that neither party discussed whether sufficient distribution facilities were available for Wild Oats to remain a viable competitor and if only one Wild Oats store can re-open that would be better than nothing. The D.C. Circuit suggested a hold separate order, which seems to imply that the assets would be carved out and transferred from Whole Foods to a trustee. This begs the question, however, of who would (and could) manage the store(s) independent of Whole Foods.
Ultimately, it seems like Whole Foods can expect to lose the administrative proceedings. If it does, Whole Foods may have to divest stores in these markets. The Supreme Court long ago held that divestiture is the preferred remedy. Neither the courts nor the agencies favor rescission.
Jul
08
Posted by : | On : July 8, 2008
On June 30, 2008, the First Circuit held that leasees of motor vehicles could not recover under Section 4 of the Clayton Act because they were indirect purchasers of the vehicles. In re New Motor Vehicles Canadian Export Antitrust Litig., No. 07-1990, 2008 WL 2568457 (1st Cir. June 30, 2008). In Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), the Supreme Court held that only plaintiffs that purchased a product directly from a co-conspirator can recover treble damages under Section 4 of the Clayton Act for a violation of the antitrust laws. In an action brought by leasees of motor vehicles who claimed that the motor vehicle manufacturers had conspired to prevent the sale of motor vehicles in Canada to U.S. consumers for export into the U.S., the First Circuit held that the dealers and not the leasing companies or leasees were the direct purchasers under Illinois Brick. The Court held that because the dealers negotiate the terms of the sale in response to rates set by the leasing companies, the dealers were the direct victims of an antitrust violation by the manufacturers. An interesting question is whether consumers in this case have remedies under state antitrust laws if their claims are based on purchases in Canada. Followers of this litigation are directed to the April 14, 2008 Post discussing the First Circuit’s treatment of class certification.
Jun
09
Posted by : | On : June 9, 2008
On June 6, 2008, Inova Health System announced that it is has abandoned its merger plans with Prince William Health Systems. The FTC had commenced an action in the United States District for the Eastern District of Virginia on May 12, 2008, in which it sought a preliminary injunction to block the merger during the pendency of its adminstrative proceeding. After the motion for a preliminary injunction had been submitted, the hospitals’ abandoned their merger plans. Abandoning merger plans after litigating through a preliminary injunction hearing is rare. The parties must have incurred millions of dollars in legal fees and a decision on the injunction was due in only a month. If the hospitals had prevailed in district court and merged, it is possible that the FTC would have dropped its administrative challenge. The administrative proceedings in this case also were unusual because the FTC appointed one of its Commissioners (Thomas Rosch) to act as the administrative judge.