February 2022 Greenberg Traurig Competition Currents: United States and Mexico
A. Federal Trade Commission (FTC)
FTC publishes inflation-adjusted civil penalty amounts for 2022.
On Jan. 6, 2022, the FTC announced increases to the maximum penalty for violations of the laws it enforces. For violations of Sections 5(l), 5(m)(1)(A), and 5(m)(1)(B) of the FTC Act, 7A(g)(l) of the Clayton Act, and Section 525(b) of the Energy Policy and Conservation Act, it increased the maximum civil penalty amount from $43,792 to $46,517.
FTC approves final order imposing strict limits on future mergers by dialysis service provider DaVita, Inc.
The FTC, on Jan. 12, 2022, approved a final order including a limitation on future mergers by DaVita, Inc. This final order followed the public comment period relating to its proposed order in October 2021 regarding DaVita’s purchase of certain assets of Total Renal Care, Inc.’s dialysis clinics. The complaint alleged that the acquisition would reduce dialysis clinic competition in the Provo, Utah area. The final order requires DaVita to divest three clinics in the area, and restricts it from entering into any non-compete agreements with employees of the seller. Additionally, the FTC requires DaVita to obtain prior approval, for 10 years, for the acquisition of any new interest in a dialysis clinic in Utah.
FTC approves final order requiring generic drug marketers ANI Pharmaceuticals, Inc. and Novitium Pharma LLC to divest rights and assets to generic antibiotic and inflammation markets.
On Jan. 12, 2022, the FTC approved a final order, settling charges that ANI Pharmaceuticals, Inc.’s proposed acquisition of Novitium Pharma LLC would harm competition in antibiotic and inflammation drug treatments markets. The order requires ANI and Novitium to divest rights and assets to generic SMX-TMP (a generic drug used to treat common infections) and dexamethasone (used to treat inflammation) to Prasco LLC. The proposed order also requires that the parties obtain prior FTC approval for any future related acquisitions in these markets.
Statement of Chair Lina M. Khan on ruling by Judge Denise L. Cote in FTC et al v. Vyera Pharmaceuticals, LLC et al.
On Jan. 14, 2022, in a ruling in a case brought by the FTC and seven states, a U.S. district court found Martin Shkreli liable for antitrust claims relating to raising the price of the drug Daraprim by 4,000% in 2015. The court banned Shkreli from participating in the pharmaceutical industry for life and also ordered him to pay $64.6 million in disgorgement. In response to the decision, FTC Chair Lina Khan commented: “Judge Cote’s decision to ban Shkreli for life from the pharmaceutical industry is a significant victory for American consumers. This precedent-setting relief should be a warning to corporate executives everywhere that they may be held individually responsible for the anticompetitive conduct they direct or control.”
FTC and Justice Department seek to strengthen enforcement against illegal mergers.
On Jan. 18, 2022, the FTC and DOJ jointly announced that they would seek public input as the agencies update their Merger Guidelines to better enable them to detect and prevent anticompetitive transactions in the modern market. The agencies noted that many industries are becoming more consolidated amid a surge in mergers, with the number of pre-merger filings doubling from 2020 to 2021. The agencies seek comments on changes in the modern-day economy and evidence of mergers’ effects on competition, as they consider revisions to the Merger Guidelines. Specifically, the agencies are looking at whether distinctions between horizontal and vertical transactions continue to be warranted, how to quantify presumptive anticompetitive transactions, whether market definitions should be updated to better address non-price competition, whether to update the guidelines with respect to potential and nascent competition, how to address monopsony power (or buyer power) including in labor markets, and how to address unique aspects of new digital markets in the guidelines.
FTC announces annual update of size-of-transaction thresholds for premerger notification filings and interlocking directorates.
On Jan. 24, 2022, the FTC published a notice in the Federal Register revising the premerger notification thresholds for mergers and acquisitions under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (HSR Act). Also on Jan. 24, the FTC published revisions to the thresholds that trigger, under Section 8 of the Clayton Act, a prohibition preventing companies from having interlocking memberships on their corporate boards of directors. These revisions are the annual adjustment of thresholds based upon changes in the gross national product, which are discussed in a separate GT alert: Revised Jurisdictional Thresholds Under HSR Act and for Prohibition of Interlocking Directorates.
FTC approves final order requiring northeast Supermarkets Price Chopper and Tops Market Corp. to sell 12 stores as a condition of merger.
On Jan. 24, 2022, following the public comment period, the FTC approved a final order settling charges that The Golub Corp.’s (owner of the Price Chopper chain) proposed merger with Tops Market Corp. likely would be anticompetitive in 11 local markets across upstate New York and Vermont. The order requires Price Choppers and Tops Markets to divest 12 Tops supermarkets to C&S Wholesale Grocers. In addition, the FTC’s order prohibits C&S from selling any of the divested stores for a period of three years without prior FTC approval and also, for an additional seven-year period, requires that C&S obtain prior approval to sell any of the divested stores to a buyer that operates one or more supermarkets in any of the 11 identified counties.
FTC approves Sartorius Stedim Biotech S.A.’s petition for prior approval of its acquisition of the chromatography equipment business of Novasep Process SAS.
On Feb. 1, 2022, the FTC announced, following a public comment period, that it had approved Sartorius Stedim Biotech S.A.’s acquisition of the chromatography equipment business of Novasep Process SAS. In May 2020, Danaher Corporation agreed to divest assets to settle charges that its proposed acquisition of General Electric’s biopharmaceutical business, GE Biopharma, violated federal antitrust law, with Sartorius as the approved divestiture buyer. At the time, Sartorius agreed to obtain prior approval if, in the future, it proposed to acquire Novasep’s chromatography business. The FTC determined that the proposed transaction would be unlikely to reduce competition in the relevant market under current market conditions, including an upcoming launch of a new product by MilliporeSigma into the market.
Department of Justice (DOJ)
Justice Department and Agriculture Department issue share principles and commitments to protect against unfair and anticompetitive practices.
On Jan. 3, 2022, the White House held an event on competition in agriculture, at which both Attorney General Merrick Garland and Agriculture Secretary Tom Vilsack announced their commitment to enforce federal antitrust laws and the Packers and Stockyards Act to protect agricultural producers and growers from unfair and anticompetitive practices. The DOJ and Department of Agriculture (USDA) already collaborate on enforcement efforts under these federal competition laws, and will continue to share information and cooperate on cases; prioritize enforcement relating to competition in agriculture; and will create a centralized, accessible process to submit complaints regarding potential violations of the antitrust laws, from which the USDA will report violations to the DOJ.
DOJ requires divestitures in Neenah Enterprises Inc.’s acquisition of US Foundry.
On Oct. 14, 2021, the DOJ announced that Neenah Enterprises Inc. would be required to divest more than 500 gray iron municipal casting pattern assets (which are customized molded iron products including manhole covers to access underground areas) in order to proceed with its proposed acquisition of almost the entirety of the assets of U.S. Foundry and Manufacturing Corporation. Both companies are two of three main suppliers of gray iron municipal castings in 11 states. The DOJ alleged the merger as originally structured would lead to higher prices, lower quality, and slower delivery times for the products.
In re: Packaged Seafood Products Antitrust Litigation, Case No. 3:15-md-02670, 2022 WL 228823 (S.D. Cal. Jan. 26, 2022).
The consumers, restaurants, and bulk tuna buyers leading class action litigation over an alleged industry-wide price-fixing scheme won preliminary approval from a San Diego federal judge for a trio of settlements with Chicken of the Sea International worth about $40 million. Judge Dana M. Sabraw preliminarily approved the agreements, which would resolve antitrust claims on behalf of “direct purchasers,” “end payers,” and “commercial food preparers” after more than six years of litigation. End payers will receive a settlement totaling $20 million, with $5 million used to cover administrative and notice-related costs, according to the order.
In re Bystolic Antitrust Litigation, Case No. 1:20-cv-05735 (S.D.N.Y. Jan. 24, 2022).
AbbVie Inc. and a group of generic drug manufacturers notched an initial victory against antitrust litigation over their alleged scheme to delay generic versions of the blood pressure medication Bystolic, when a federal judge in Manhattan tentatively tossed the consolidated case.
Judge Lewis J. Liman dismissed a pair of proposed class actions without prejudice, where a group of pension funds and retail pharmacies are pursuing claims on behalf of end payers and resellers, respectively. The judge dismissed complaints from both sets of plaintiffs, giving them until Feb. 22 to file an amended complaint. The decision is rooted in a 2013 Bystolic settlement with numerous generic drugmakers including Actavis, Alkem, Amerigen, Glenmark, Hetero, Indchemie and Torrent, many of which are also involved in the antitrust litigation. The settlement provided licenses for the companies to market their generic versions of Bystolic.
Staley v. Gilead Sciences Inc., Case No. 19-CV-02573, 2022 WL 126116 (N.D. Cal. Jan. 13, 2022).
Teva Pharmaceutical Industries Ltd. succeeded in scaling back its potential antitrust exposure for allegedly helping delay generic versions of Gilead Sciences Inc.’s blockbuster HIV drugs, when a federal judge in San Francisco ruled that some claims against Teva were filed too late.
Judge Edward M. Chen narrowed the allegations against Teva, one of several pharmaceutical companies accused of taking a “reverse payment” from Gilead to shelve its generic version of Truvada as part of a settlement resolving patent infringement litigation. Teva argued plaintiffs’ claims expired because any alleged anticompetitive acts occurred more than four years prior to the filing of the case on Sept. 21, 2021. Plaintiffs argued that because Teva was identified as a co-conspirator in a suit in September 2020, all claims against it were tolled. The court disagreed, stating that merely mentioning Teva in the 2020 suit, but not actually naming it as a defendant, was insufficient to toll the statute of limitations under the Supreme Court’s 1974 decision in American Pipe & Constr. Co. v Utah, which established a doctrine that stops the clock on claims against a defendant once they are named as a co-conspirator in an antitrust class action. During oral argument on the motion to dismiss, the court noted its disagreement with plaintiff’s interpretation of American Pipe: “It definitely seems a very substantial extension of American Pipeline, the rationale of which doesn’t jump out at me.”
Henry v. Brown Univ., 22-cv-125, (N.D. Ill. Jan. 9, 2022).
Plaintiffs sued more than a dozen top U.S. colleges for allegedly conspiring to manipulate the admissions system to hold down financial aid for students and benefit wealthy applicants. The proposed antitrust class action lawsuit alleges a “cartel” among universities of a long-running scheme to collectively adopt “a common formula for determining an applicant’s ability to pay” tuition, rather than competing freely over financial aid by trying to attract students through more generous aid offers. At the same time, according to the complaint, more than half of the schools have given preferential treatment to wealthy applicants by tilting the scales to favor the children of “past or potential future donors” and “through a largely secretive practice known as ‘enrollment management.’”
Salveson v. JPMorgan Chase & Co., Dkt No. 21-722, 142 S. Ct. 773 (Jan. 10, 2022).
The U.S. Supreme Court declined to revive consumer antitrust litigation over allegations that banks were involved in imposing heightened Visa and Mastercard “swipe fees.” The justices said they will not review a decision by the U.S. Court of Appeals for the Second Circuit which dismissed the plaintiffs’ complaint and held that the consumers are downstream “indirect” purchasers ineligible for federal antitrust damages. This Second Circuit reached this result after considering two recent rulings modifying the legal framework for antitrust cases involving credit cards. According to the Second Circuit, "Plaintiffs' complaint still failed to plausibly allege that they were direct payors of the interchange fees.” At the Second Circuit, the cardholders had pointed to the Supreme Court's 2018 decision in Ohio v. American Express Co., in which the high court invalidated the two-market principle that plaintiffs claimed that the district court had relied on. The following year, in Apple v. Pepper, the Supreme Court held that when a consumer buys from and directly pays an antitrust violator for a product manufactured by a third-party—and the antitrust violator takes an illegal commission from the consumer's payment—it is the consumer who pays the commission as a matter of law. However, the Second Circuit disagreed with the plaintiffs and said that the plaintiff cardholders had overstated the scope of the American Express decision, which "did not directly address antitrust standing at all." And as far as the Apple decision, that case "turned on the basic fact that the iPhone owner plaintiffs, who alleged they were injured by the 30% commission, also purchased the apps directly from Apple," the Second Circuit said. According to the Second Circuit, "[h]ere, we and the district court have repeatedly rejected as implausible plaintiffs’ allegation that cardholders pay the interchange fee directly to the defendant banks."
COFECE suspends enforcement decisions over lack of commissioners.
Mexico’s antitrust authority (COFECE) suspended several of its procedural deadlines, including for the investigation into whether effective competition conditions exist in clearinghouses in the country’s card payment system.
The Mexican Competition Law establishes that the affirmative vote of at least five commissioners is required to resolve these types of procedures, and the governing body currently has only four of the seven members required by constitutional mandate. Pursuant to the Mexican constitution, the president of Mexico is obligated to propose to the Senate individuals to fill the vacancies in the governing body of COFECE, which must be selected from the three lists that an evaluation committee (formed by the Bank of Mexico and the National Institute of Statistics and Geography), already sent to the president in November 2020, March 2021, and November 2021. The candidates are experts in economic competition who have passed a technical knowledge exam and undergone a rigorous evaluation process. In December 2021, COFECE filed a constitutional controversy before the Supreme Court to enforce the Constitution, and issued a communication urging the president and the Senate to make the appointments.