Antitrust

Joe Miller returns to Integrity Through Compliance to share his perspective on what changes president Biden may make, or encourage Congress to make, regarding antitrust enforcement.

Joe Miller and Bruce Sokler, Co-Chairs of Mintz's Antitrust Practice, discuss President Biden’s July 9 executive order, which called for a government-wide focus on antitrust competition issues and identified 72 initiatives across several industries.

In this episode, AMI’s Dionne Lomax speaks with Joe Miller. They discuss recent developments in antitrust compliance — specifically, compliance with government consent decrees and what might be occurring behind the scenes at federal enforcement agencies once a company has settled antitrust charges.

Last week was momentous for the Federal Trade Commission.  First, the campaign use antitrust to reign in “Big Tech” faced a setback as the United States District Court for District of Columbia dismissed the FTC’s suit against Facebook (as well as a similar suit brought by virtually all the State Attorney Generals).  In juxtaposition, on July 1, 2021, the FTC held an unusual open meeting of the Commission.  Clearly indicating that she intends to utilize her 3-2 Democratic majority while she has it1, Chair Lina Khan passed several agenda items foreshadowing broad, aggressive antitrust enforcement activity by the FTC.

Read about President Biden’s July 9 Executive Order with 72 initiatives to promote competition in the U.S. economy, including through actions directed at labor markets and the health care, technology, agriculture, and banking sectors.

On June 11, 2021, the U.S. Court of Appeals for the Second Circuit dismissed the Federal Trade Commission’s (FTC) administrative order against 1-800 Contacts, Inc. The Second Circuit found that the online retailer’s trademark settlements with competitor online contact lens sellers were not “inherently suspect” and, instead, should be evaluated under the traditional rule of reason analysis. The trademark settlements specified, among other things, that 1-800 Contacts’ competitors would not bid on the company’s name as a keyword in online search advertising. This ruling has significant implications for the “inherently suspect” standard—according to the Second Circuit, “courts do not have sufficient experience with this type of conduct to permit [the FTC’s] abbreviated analysis.”

On Tuesday, May 11, 2021, an international coalition of competition enforcement agencies including the Federal Trade Commission, the U.S. Department of Justice’s Antitrust Division, Offices of State Attorneys General, Canada’s Competition Bureau, the European Commission Directorate General for Competition, and the U.K.’s Competition and Markets Authority issued a notice seeking public input to inform their approaches to analyzing the competitive effects of pharmaceutical mergers. 

On April 22, 2021, in a unanimous decision authored by Justice Stephen Breyer, the U.S. Supreme Court ruled that the Federal Trade Commission (“FTC”) does not have the authority to seek monetary relief under Section 13(b) of the FTC Act. The decision in AMG Capital Management, LLC v. Federal Trade Commission has significant ramifications for the FTC’s enforcement authority in federal courts. Additionally, it is likely that this ruling will spur Congress to take a serious look at amending Section 13(b) to provide an express right to equitable monetary relief. Indeed, just today, in testimony before the House Energy and Commerce Subcommittee on Consumer Protection and Commerce, the FTC asked Congress to pass such an amendment.

Earlier this week, Stone Canyon Industry Holdings LLC (“Stone Canyon”) and its portfolio company SCIH Salt Holdings Inc. (“SCIH”) reached a settlement agreement with the Department of Justice (“DOJ”) to resolve its investigation of SCIH’s proposed acquisition of Morton Salt Inc. (“Morton”).  Under the terms of the settlement agreement, which is subject to Tunney Act review, Stone Canyon and SCIH are required to divest all assets relating to evaporated salt in order to proceed with the Morton acquisition.  This settlement agreement is noteworthy in that the divestiture was of the buyer to divest its own assets in order to proceed with the transaction, and the DOJ and the parties reached agreement without a divestiture buyer identified.

The Department of Justice (“DOJ”) announced yesterday a criminal indictment returned by a federal grand jury in Las Vegas, Nevada charging a health care staffing company and its former manager of entering into and engaging in a conspiracy with a competitor to allocate and fix the wages of employee nurses in violation of Section 1 of the Sherman Act (15 U.S.C. § 1).

Last week, Geisinger Health (“Geisinger”) and Evangelical Community Hospital (“Evangelical”) reached a settlement agreement with the Department of Justice (“DOJ”), resolving the DOJ’s ongoing litigation challenging Geisinger’s partial acquisition of Evangelical. Notably, the settlement agreement, among other terms, limits Geisinger’s ownership interest in Evangelical to a 7.5% passive investment and prevents Geisinger from exercising any control or influence over Evangelical.

Back in December, we wrote about a district court ruling rejecting the Federal Trade Comission’s (“FTC”) motion to enjoin the proposed combination of Thomas Jefferson University (“TJU”) and Albert Einstein Healthcare Network (“Einstein”) that would create an 18-hospital system in the Philadelphia area. The FTC and the Pennsylvania Attorney General had alleged the merger would lead to TJU/Einstein controlling at least 60% of the inpatient GAC hospital services market in a portion of Philadelphia. Following the district court decision, the FTC quickly appealed to the Third Circuit Court of Appeals and filed an emergency motion for a stay pending appeal. Days later, a three-judge panel denied the government’s motion without comment.

On February 18, 2021, the United States Court of Appeals for the Fourth Circuit upheld the divestiture order issued by the U.S. District Court for the Eastern District of Virginia in a private merger challenge brought by Steves and Sons Inc. (“Steves”) against Jeld-Wen Inc. (“Jeld-Wen”) relating to Jeld-Wen’s acquisition of CraftMaster Manufacturing Inc. (“CMI”) in 2012. While divestitures are the government’s preferred remedy when it challenges a merger, this case represents the first instance when this remedy was ordered in a private litigation.

The FTC, and antitrust enforcement in general, are having their moment. For example, in early January the Supreme Court heard oral argument in AMG Capital Management v. Federal Trade Commission, a case questioning the FTC’s authority to require defendants to pay restitution for money obtained as the result of illegal activities. In that case, there is significant doubt about whether the Court will uphold the FTC Act’s Section 13(b) provision allowing for the FTC to obtain this equitable relief, and such a ruling would drastically change the way FTC approaches enforcement.

This alert reviews the lower jurisdictional thresholds scheduled to be published by the FTC on February 2, 2021for premerger notification filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act).

Last week, the Department of Justice (“DOJ”) announced the criminal indictment of Surgical Care Affiliates LLC (“SCA”), an Alabama- and Illinois-based company, which owned and operated outpatient medical centers around the U.S., for its alleged agreements with competitors not to solicit senior-level employees. DOJ has been suggesting since 2006 that it would use the criminal provisions of the antitrust laws against into employee allocation agreements—commonly called no-poach agreements, and DOJ has now followed through on its warnings.

This alert examines a Philadelphia US district court decision that denied the FTC’s and Pennsylvania Attorney General’s request to preliminarily enjoin a proposed merger between Thomas Jefferson University and the Albert Einstein Healthcare Network.