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.
Jun
24
Posted by : | On : June 24, 2008
On June 23, 2008, the Supreme Court granted certiorari in Pacific Bell Telephone Co. v. Linkline Communications, No. 07-512, 2008 WL 2484729 (U.S. June 23, 2008). In a highly unusual public disagreement, the Antitrust Division had filed an amicus curiae supporting certiorari while the FTC had issued a statement opposing certiorari. More on this disagreement is set forth in the June 3, 2008 post.
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.
Jun
04
Posted by : | On : June 4, 2008
On June 4, 2008, Electronic Arts (video game maker) gave the FTC an extension of time under the HSR Act to review the potential competitive effects of its $2 billion proposed acquisition of Take-Two (maker of Grand Theft Auto). Under the agreement, EA must give the FTC 45 days’ notice of its intention to close. Parties often grant the Antitrust Division and FTC more time to review their transactions with the hope of convincing the agencies not to challenge the merger or to allow them to negotiate a remedy.
Jun
03
Posted by : | On : June 3, 2008
On May 23, 2008, the FTC issued a statement explaining its reasons for its decision not to join the DOJ’s brief that seeks Supreme Court review of LinkLine Comm’n v. Pacific Bell Telephone Co., 503 F.3d 876 (9th Cir. 2007). The FTC “disagree[d] with DOJ’s analysis, and … [believed that] this case does not appear to be worthy of review at this time.” FTC Statement at 1. The FTC recognized that “[t]he Ninth Circuit is unquestionably correct: … claims of a predatory price squeeze in a partially regulated industry remain viable.” Id., at 3. The FTC also believed that because the Ninth Circuit’s decision resolved a motion to dismiss, it was premature for Supreme Court review. The lower court had yet to decide the appropriate measure of cost for the input. Therefore, the Supreme Court could not opine on this issue and any decision would be of limited value. The FTC Statement is attached. FTC Statement (linkLine)
May
23
Posted by : | On : May 23, 2008
The state attorneys general continue to be hostile to the Supreme Court’s decision in Leegin Creative Leather Products, Inc. v. PSKS, Inc., 127 S.Ct. 2705 (2007), which overruled Dr. Miles Medical Co. v. John D. Parke & Sons. Co., 220 U.S. 373 (1911), and made resale price maintenance subject to the rule of reason under Section 1 of the Sherman Act. 35 state attorneys general have written to Congress asking that it pass S. 2261 which would make resale price maintenance a per se violation of Section 1. State Attorney General Letter; S. 2261. The March 31, 2008 post reported that the New York, Michigan and Illinois attorneys general obtained a consent decree under state law against Herman Miller for its resale price maintenance scheme. The May 8,2008 post reported that although the FTC modified Nine West’s consent decree that had prohibited resale price maintenance, the FTC reminded Nine West that it was still subject to state restrictions. This most recent letter further confirms that counselors must be cognizant of state law when they advise clients about the legality of resale price maintenance. It would be prudent for clients to act unilaterally and follow the Colgate doctrine rather than rely on Leegin.
May
16
Posted by : | On : May 16, 2008
On May 14, 2008, the Fifth Circuit rejected North Texas Specialty Physicians’ petition for review of an order that found certain of its activities constituted price-fixing and therefore violated Section 1 of the Sherman Act and Section 5 of the FTC Act. North Texas Specialty Physicians v. FTC, No. 06-60023, 2008 WL 2043040 (5th Cir. May 14, 2008). The Fifth Circuit found that the agreement among the physicians met the commerce requirement because if successful, “the advantages of competition have been adversely affected for out-of-state employers and payors.” The court affirmed the FTC’s use of the “quick look” and the FTC’s holding that the fee setting provisions were unrelated to any of the organization’s procompetitive efficiencies. The court modified one provision in the FTC’s remedial order, however, that prohibited the NTSP from entering into an agreement with its members where they “deal[t with, refuse[d] to deal, or threaten[ed] to refuse to deal with any payor.” As the court observed, “it is difficult to see how the NTSP can both deal and refuse to deal with any payor.” The rest of the order was affirmed.