United States: Antitrust Agency Insights: Developments At The US Antitrust Enforcement Agencies - December 2018

Last Updated: December 20 2018
Article by Sonia Kuester Pfaffenroth and Peter J. Levitas

Successfully navigating antitrust agency investigations requires a familiarity with Department of Justice and Federal Trade Commission processes, as well as insight into those agencies and their leaderships' current priorities for enforcement and competition policy. This newsletter will provide periodic updates on both, offering an analytical look at how the antitrust agencies are approaching important competition issues and what current investigations may mean for potential future enforcement. We hope our experience—both inside and outside these agencies—will provide insights that help you make more informed decisions for your business.

LETTER FROM THE EDITORS: KEY AGENCY NEWS

FTC Orders Merging Companies Linde AG and Praxair, Inc. to Hold Separate All Assets Until They Complete Most Required Divestitures

On October 22, 2018, the FTC announced that it had reached an agreement with Linde AG (Linde) and Praxair, Inc. (Praxair), the second and third largest global industrial gas suppliers, to settle charges that their proposed merger would harm competition in multiple industrial gas markets in the United States.1 The settlement requires Linde to divest a number of assets to pre-approved buyers within four months of closing2, and also prohibits the parties from integrating their operations anywhere in the world until most of the required divestitures are completed.3

This provision is relatively unusual. The FTC commonly mandates that the parties preserve the divestiture assets, but does not require that they be held separate.4 In this case, not only is there a hold-separate requirement as to the divestiture assets, but the hold-separate order covers the assets to be retained by the combined company as well. In effect, the order delays the de facto consummation of the entire transaction until after most of the divestitures are completed.

The FTC Linde consent takes the same approach that the DOJ took in the Bayer-Monsanto merger consent, which required the merging companies to operate their entire businesses separately until divestitures to a preapproved buyer were completed.5 Although DOJ uses hold-separate orders more often than the FTC, they typically cover solely the divestiture assets.

Neither the FTC nor the DOJ explained publicly why it required broader hold-separate orders for these transactions. Both transactions involved divestiture packages that included assets from multiple businesses in multiple markets, but this has been the case in previous mergers as well. Companies considering a deal should watch carefully how the antitrust agencies approach upcoming transactions; if agencies begin to routinely require completed divestitures as a prerequisite to integration, timelines will be extended.

DOJ Releases Model Timing Agreement and Model Voluntary Request Letter

As previewed in our October issue of Antitrust Agency Insights, the Antitrust Division recently released a Model Timing Agreement (MTA) and Model Voluntary Request letter (MVR). DOJ's release follows closely the FTC's release of its own MTA (discussed in detail in our September issue). Key provisions in DOJ's new MTA include:

  • DOJ Review Period. The MTA requires that parties give DOJ 60 days from the time the parties substantially comply with the Second Request before the parties may close the transaction (as opposed to the 30-day statutory HSR waiting period). The MTA also reserves the right to extend the period beyond 60 days for more complex transactions.
  • 10-Day Notification Requirement. The MTA requires that the parties give DOJ 10 days' notice prior to closing.
  • Custodians. The default position is that DOJ will seek documents responsive to the Second Request from no more than 20 custodians, who will be specified as part of the MTA. DOJ reserves the right to add up to five additional custodians at any time and will require that the new custodians' documents be produced within fifteen days of adding the custodians. DOJ also reserves the right to demand additional custodians with the approval of the Deputy Assistant Attorney General responsible for that particular matter.
  • Rolling Production. All responsive documents must be produced at least 30 days before the parties certify substantial compliance with the Second Request. Certain categories of responsive data, including P&L reports and a description of certain databases, must be produced at least 45 days prior to certification.
  • Depositions. The default position is that no more than 12 depositions per party will be sought, but DOJ reserves the right to demand additional depositions with the approval of the Deputy Assistant Attorney General responsible for a particular matter.
  • TROs and Prohibition on Declaratory Judgment Actions. The MTA requires that the parties agree to refrain from consummating the deal if DOJ is going to challenge it and to refrain from closing for at least seven days following entry of judgment by the court. The MTA also provides for a minimum period of post-complaint discovery, and requires that parties agreenot to seek a declaratory judgment on the merits of the transaction.

Overall, DOJ's MTA envisions a review process that is largely consistent with the review process outlined in the FTC's MTA. The most significant difference between the two agencies' MTAs relates to the pre-closing notice, with the FTC requiring a 30-day notice and the DOJ requiring only 10 days. In addition, there is a difference in approach by the two agencies regarding custodians and investigational hearing (IH)/deposition provisions. While DOJ's MTA specifies the numbers of custodians and depositions that DOJ typically would seek, the FTC's MTA proposes commitments regarding the timeline for identification of the relevant custodians and completion of the IH process.

DOJ also released a Model Voluntary Request letter (MVR). The MVR is designed to give the parties a "head start" in identifying information that DOJ will likely request during the initial HSR waiting period for transactions that DOJ is interested in examining. The MVR categories include:

  • Details regarding product overlaps, sales, competitors, and customers
  • Win/loss data
  • Analyses of the transaction provided to analysts, investors or the government and other materials relating to the transaction
  • Documents analyzing efficiencies
  • Organizational charts

As we noted with regard to the FTC's Model Timing Agreement, parties should carefully consider whether entering into a timing agreement is ultimately in their best interest taking into account the facts of each specific deal.

ADDITIONAL AGENCY UPDATES

Cases and Proceedings

  • FTC v. Qualcomm, No. 5:17-cv-00220 (N.D. Cal.). On November 6, 2018, US District Judge Lucy H. Koh issued an order granting the FTC's motion for partial summary judgment on the issue of whether Qualcomm must provide licenses for its standard-essential patents (SEPs) to rival chipmakers. Qualcomm maintained that it is required to license its SEPs on fair, reasonable, and non-discriminatory (FRAND) terms only to manufacturers of end devices—not manufacturers of components. Judge Koh found that both the policies and guidelines of the standard-setting organizations support the conclusion that Qualcomm is obligated to license to competing chipmakers.

    Read the court's decision »
  • FTC to Decide on a Petition by Teva Pharmaceuticals to Reopen and Modify the Decision and Order Issued in Connection with Watson Pharmaceuticals Inc.'s Acquisition of Actavis Inc. in 2012. On October 23, 2018, Teva, in its capacity as a successor in interest to Actavis, requested that the FTC extend the term of a supply agreement under which Teva supplies to Pfizer the brand name drug Embeda, an abuse-resistant opioid pain killer. The supply agreement was part of a remedy package adopted in connection with Watson's acquisition of Actavis in 2012 that required, among other things, the divestiture of Embeda to Pfizer. In its petition, filed at the request of Pfizer, Teva claims that Pfizer will not be able to supply the drug to patients upon expiration of the supply agreement at the end of 2018 due to a delay in scheduled technology transfer to a third party. Teva also claims that the extension of the supply agreement will not delay its plans to introduce a generic version of Embeda.

    Read Teva's petition and the 2012 consent agreement package »
  • DOJ Settled a Civil Lawsuit Against Six Broadcast Television Companies to Terminate and Refrain From Unlawful Sharing of Competitively Sensitive Information. On November 13, 2018, DOJ announced a settlement agreement with six broadcast television companies that allegedly engaged in unlawful exchanges of non-public spot advertising data. DOJ claimed that the data sharing enabled each company to better anticipate whether its competitors were likely to raise, maintain, or lower spot advertising prices and to adjust its own pricing strategies and negotiations with advertisers. DOJ stated that the unlawful activity was uncovered while the DOJ reviewed the now-abandoned Sinclair-Tribune merger.

    Read the DOJ announcement and related court filings »
    Read Arnold & Porter client advisory about the settlement »
  • DOJ Settles a 2016 Lawsuit Against Atrium Health Challenging Steering Provisions in its Contracts with Health Insurers. On November 15, 2018, DOJ announced that Atrium Health, formerly known as Carolinas HealthCare System, agreed to refrain from using anticompetitive steering restrictions in contracts between commercial health insurers and its providers in the Charlotte, NC metropolitan area. DOJ alleged that Atrium, the dominant hospital system in the Charlotte area, used its market power to restrict health insurers' effort to encourage consumers to choose healthcare providers that offer better overall value. Under the terms of the settlement, Atrium Health agreed not to enforce steering restrictions in its contracts with health insurers, not to seek similar contract terms in future contracts, and to refrain from taking any action that would prohibit, prevent, or penalize steering by insurers in the future.

    Read the DOJ announcement and related court filings »
  • FTC Comments on FDA's Guidance on the Citizen Petition Process. On December 4, 2018, the FTC released a comment responding to the Food and Drug Administration's October 2, 2018 revised draft guidance titled "Citizen Petitions and Petitions for Stay of Action Subject to Section 505(q) of the Federal Food, Drug, and Cosmetic Act. In its Comment, which the FTC approved in a 5-0 vote, the FTC stated that it "shares the FDA's concerns about patient access to lower-cost generic drugs and biosimilars" and reaffirmed its "longstanding interest in sham petitioning and other abuses of government processes that may inhibit competition." As a result of these recent agency actions, citizen petitions submitted by pharmaceutical companies are likely to face increased scrutiny by both the FDA and the FTC.

    Read the FTC Comment on the Food and Drug Administration's Revised Draft Guidance on Citizen Petitions »
    Read Arnold & Porter client Advisory about the FTC Comment »

Policy

  • PDAAG Finch letter to the American National Standards Institute IP Rights Policy Committee (ANSI IPRPC). On October 11, 2018, Principal Deputy Assistant Attorney General Andrew Finch wrote to ANSI IPRPC to address the proposed "Sample Patent Letter of Assurance Form" currently under consideration by the Committee. He stated that the Division would not take a position for or against the adoption of such a model form, but encouraged ANSI to ensure that accredited standards developers remain free to choose whether to use the model form or to develop their own or not to use letters of assurance at all.

    Read the letter here »
  • New PNO Guidance about HSR Reporting Obligations for Combinations of Non-Profit Entities. On October 26, 2018, the PNO announced a change in its interpretation of the HSR filing requirements for transactions involving non-profit entities. In the past, the PNO had determined whether there was a change in "beneficial ownership" of non-profit assets by focusing exclusively on board control. From now on, the PNO will look to factors beyond board control to identify who will "hold" the assets or voting securities as a result of the transaction.

    Read the new PNO tip sheet here »
  • Hearings on Competition and Consumer Protection in the 21st Century. The FTC's Hearings Initiative continued with five additional hearings devoted to a variety of topics. In addition to antitrust law practitioners and scholars, speakers at these hearings included specialists in related areas of law, economists, and technology experts. The third hearing in the series took place on October 15-17, 2018 and addressed novel antitrust issues arising from the use of digital technology and the proliferation of digital marketplaces and technology-based platform businesses. Arnold & Porter Global Antitrust group chair and former Director of the Bureau of Competition at the FTC Debbie Feinstein participated in a panel discussing the review and investigations of acquisitions of nascent competitors in the tech sector. This hearing also included a session on antitrust analysis of labor markets. The fourth hearing in the series, which took place on October 23-24, 2018, was devoted to antitrust issues in the context of innovation and intellectual property. The analysis of vertical mergers was the subject of the fifth hearing, which took place on November 1, 2018. It also included a session about the role of the consumer welfare standard in US antitrust law. The sixth hearing in the series, held on November 6-8, 2018, examined competition and privacy concerns arising from the use of big data. Former Antitrust Division AAG and current Arnold & Porter partner Bill Baer participated in a panel on former enforcers' perspective on big data and antitrust, together with former acting FTC Chairman Maureen Ohlhausen and former FTC Commissioner Julie Brill. Finally, the seventh hearing, on November 13-14, 2018, addressed antitrust implications of algorithms, artificial intelligence, and predictive analytics. Arnold & Porter partner and former DAAG for Civil and Criminal Operations Sonia Pfaffenroth participated in a panel on algorithmic collusion.

Arrivals/Departures

  • DOJ Appoints new Chief of Staff. William Rinner has replaced John Elias as acting Chief of Staff. Formerly an associate at Latham & Watkins, Rinner joined the Antitrust Division in September 2017 as counsel to AAG Delrahim and is part of the DOJ team litigating the AT&T/Time Warner merger.

Speeches

  • Speech by AAG Makan Delrahim at the ABA Antitrust Fall Forum, November 15, 2018, Washington, D.C. AAG Delrahim's remarks focused on recent settlements of DOJ enforcement actions. He devoted significant attention to the Division's use of its authority under Section 4A of the Clayton Act (15 U.S.C. §15a) to remedy antitrust injuries to the American taxpayer in cases where the victim of bid-rigging or other collusive action is the US government. He stressed that the Division's leniency policy will apply in situations where the Division pursues parallel civil actions under Section 4A of the Clayton Act in connection with criminal violations of the Sherman Act. In particular, leniency recipients that cooperate with the DOJ's civil investigation team will be subject only to single damages and will not be subject to joint and several liability.

    Read the speech here »
  • Speech by DAAG Roger Alford at the College of Europe's Global Competition Law Centre, November 12, 2018, Brussels. DAAG Alford addressed how competition authorities can promote fundamental due process in investigations and enforcement. He described the effort by leading antitrust agencies to craft the Multilateral Framework on Procedures in Competition Law Investigation and Enforcement (MFP) and discussed the core principles and structures of the MFP.

    Read the speech here »
  • Speech by AAG Makan Delrahim at the Federal Telecommunications Institute's Conference, November 7, 2018, Mexico City. AAG Delrahim shared perspectives from the United States on competition law enforcement in the digital economy. He discussed challenges associated with detection of digitally supported collusive schemes, determining market power, assessing barriers to entry, and analyzing effects of vertical mergers.

    Read the speech here »
  • Speech by AAG Makan Delrahim at the University of Haifa, October 17, 2018, Haifa, Israel. AAG Delrahim addressed start-ups, innovation, and antitrust policy in the digital economy.

    Read the speech here »
  • Speech by AAG Makan Delrahim at the Federal Circuit Bar Association Global Series 2018, October 10, 2018, Ottawa, Canada. AAG Delrahim addressed antitrust policy in the context of intellectual property rights.He discussed the debate over balancing the rights of inventors and implementers and emphasized the need for a decentralized, market-based process for determining inventors' compensation.

    Read the speech here »
  • Testimony by AAG Makan Delrahim and FTC Chairman Joseph Simons Before the Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights, October 3, 2018, Washington, DC. At this congressional oversight hearing AAG Delrahim and Chairman Simons provided an overview of their respective agencies' efforts in enforcement of the antitrust laws over the past year. They also described recent policy initiatives to promote competition.

    Read the prepared statements and view a video recording of the hearing »

Footnotes

1 The case filings are available at https://www.ftc.gov/enforcement/cases-proceedings/171-0068/linde-ag-praxair-inc.

2 See Decision and Order {Redacted Public Version} at 10-11, In the Matter of Linde AG; Praxair, Inc. and Linde PLC, FTC Matter/File Number: 171 0068.

3 See Order To Hold Separate and Maintain Assets, Sec. II, at 5, In the Matter of Linde AG; Praxair, Inc.; and Linde PLC, FTC Matter/File Number: 171 0068. Two plants in Texas are carved out of the pre-closing divestiture requirement. See id., Decision and Order {Redacted Public Version}, supra note 2, at 10-11.

4 In the past two years, the FTC has issued only one other hold-separate order and that order covered the divestiture assets only. See Order To Hold Separate and Maintain Assets {Redacted Public Version}, In re Red Ventures Holdco and Bankrate, FTC Matter/File Number: 1710196.

5 See Stipulation and Order, Sec. VII, at 6-8, U.S. v. Bayer AG and Monsanto Company, No. 1:18-cv-01241 (D.D.C.).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions