“E-Commerce must live up to its promise…”

These are the words of Europe’s chief antitrust enforcer, Margrethe Vestager, introducing the Commission’s public hearing on October 6, 2016, on its preliminary findings of the e-commerce sector inquiry. The promise of e-commerce alluded to by the Commissioner for Competition means quite simply a wider choice of goods available for purchase online, at lower prices across the EU as well as cross-border access to digital content for consumers in the EU. The major concern for the Commission is that e-commerce still takes place nationally within the EU and not on a cross-border basis across the 28 Member States, because of contractual barriers erected by companies.

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On the Way to a European Digital Single Market: Whether You Sell Online or Offline – Listen Up!

The European Commission’s Directorate-General for Competition has issued a lengthy preliminary report of its ongoing sector inquiry into the e-commerce of goods and digital content. The sector-wide inquiry was launched on May 6, 2015, in the context of a wider legislative initiative by the Commission implementing its Digital Single Market strategy. The ongoing inquiry and impending future enforcement actions will have major implications on the law and enforcement of product distribution in Europe, both online and offline.

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Refusal to Sell Bulk-Size Packs, Without More, Is Not Price Discrimination – “Size is Not a Service”

Woodman’s Food Market, Inc. v. Clorox Co., No. 15-3001 (7th Cir.  August 12, 2016).

Clorox Sales Company and Clorox Company produce a range of consumer goods.  Clorox sold goods to Plaintiff Woodman’s Food Market, a local grocery store with locations in Wisconsin and Illinois.  Clorox also sold to discount warehouses such as Costco and Sam’s Club.  In 2014, Clorox unilaterally announced that it would sell its large packs only to wholesale discount clubs.  Thus, the large bulk-size packs, which had previously been sold to Woodman’s were no longer available to it by direct purchase from Clorox.

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FTC Stands Down in Latest Head-to-Head Battle Between Federal and State Oversight of Healthcare Collaborations

In what will undoubtedly be seen by all interested parties as a significant setback in the Federal Trade Commission’s active opposition to potentially anticompetitive healthcare collaborations, the FTC voted unanimously on Wednesday to dismiss its challenge to Cabell Huntington Hospital’s acquisition of St. Mary’s Medical Center – two hospitals serving patients in the Huntington area of West Virginia.  While the FTC continues to believe that the merger will result in significant anticompetitive harm, it chose to abandon the fight in light of the recent passage of West Virginia Senate Bill 597 (SB 597).

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Maximum Civil Penalties for HSR Violations to Increase to $40,000 per Day

For parties considering a merger or other transaction, the civil penalties for failing to comply with the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”) are about to increase significantly.

On June 29, 2016, the Federal Trade Commission announced that the maximum civil penalty for noncompliance with the premerger filing requirements of the HSR Act will increase from $16,000 per day to $40,000 per day, effective August 1, 2016.  The current maximum penalty of $16,000 per day has been in place since 2009.  Prior to 2009, the maximum penalty was $11,000 per day.

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Brexit, Here We Come (or Go)

The UK people have voted to leave the European Union. Although there is no constitutional duty to leave the Union as a result, politically this is likely going to happen. Change will not be immediate and happen over time.

Companies are well advised to react quickly to assess the impact Brexit might have on their business and current commercial decisions involving the UK if they have not already done so.

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U.S. Department of Justice Sues North Carolina Hospital System for Insisting on Anti-Steering Provisions in Insurance Reimbursement Contracts

On June 9, 2016, the Antitrust Division of the United States Department of Justice (“DoJ”) filed a complaint against the Charlotte-Mecklenburg Hospital Authority, d/b/a Carolinas Health Care System (“CHS”) in the United States District Court for the Western District of North Carolina. (United States of America and State of North Carolina v. Charlotte Mecklenburg Hospital Authority). The complaint accuses CHS of using “contract restrictions that prohibit commercial health insurers in the Charlotte area from offering patients financial benefits to use less expensive healthcare services offered by CHS’s competitors.” (Complaint, Preamble) In effect, the complaint is attacking a type of widely used contracting provision in which acute care hospital systems seek to prohibit insurance company payors from using “steering” restrictions, which would otherwise be used to steer their insured patients to lower cost healthcare providers, including lower-cost hospitals, in exchange for lower premiums in so-called “narrow network” insurance plans. The complaint then alleges that CHS has an approximately 50% share of the market for acute inpatient hospital care in the Charlotte metropolitan area, allegedly conferring market power on CHS.

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FTC Suffers Setback in Campaign to Slow the Rising Tide of Healthcare Consolidations

The FTC just suffered a major setback in its concerted efforts to challenge the ever growing number of consolidations in the healthcare industry, failing to secure a preliminary injunction to block a hospital merger in central Pennsylvania.  In a decisive and strongly-worded opinion, the Honorable John Jones III of the Middle District of Pennsylvania concluded that (1) the FTC had fatally alleged an unrealistically narrow geographic market; and (2) the merger was likely to benefit (not harm) consumers, in part by allowing the merged entity to remain competitive in the new healthcare environment which “virtually compels” consolidations.  Federal Trade Commission et al. v. Penn State Hershey Med. Ctr. et al., Case No. 1:15-cv-02362 (May 9, 2016, M.D. Penn).

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European Court of Justice to Rule on Legality of Online Sales Bans

An appeal court in Frankfurt has asked the European Court of Justice to clarify the application of the competition rules to online sales. The Frankfurt court made its request in the context of a dispute between a leader in beauty products with an extensive portfolio of beauty brands and its German distributor. The supplier of beauty products operates a selective distribution system in Germany to manage how its products are sold and has taken its distributor to court for selling products over online platforms, such as Amazon.com and eBay. The Frankfurt court is seeking guidance from the European Court of Justice on whether a supplier can prohibit its distributor from selling its goods on online marketplaces, regardless of whether the distributor has met the criteria of the selective distribution system. This question is highly topical in the EU and particularly in Germany, where the German competition authority and the courts have recently taken divergent positions. The German competition authority has issued rulings prohibiting suppliers of branded goods from restricting internet sales by retailers and, in particular, over third party platforms such as eBay and Amazon.com. These rulings have been in contradiction with the stance taken by the German courts, such as the Higher Regional Court of Frankfurt, which recently decided that a branded manufacturer acted lawfully when banning its authorized retailers within its selective distribution system from selling its products on online marketplaces. According to the Higher Regional Court, a manufacturer has a legitimate interest in ensuring that its branded products are perceived as high-quality products sold with the requisite level of sales advice and a manufacturer is, therefore, free in principle to decide under which conditions its products are sold, provided that these conditions are necessary to meet its quality standards. It is expected that the European Court of Justice will issue its ruling on this issue within the next 15 months or so.

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China’s Anti-Unfair Competition Law Is Poised For An Update

Since 2010, China’s State Administration for Industry and Commerce (SAIC) and the State Council Legislative Affairs Office (SCLAO) have been revising China’s Anti-Unfair Competition Law of 1993 (AUCL). This February the SCLAO released a draft revision of the AUCL for public comment. In general, the AUCL is broad, covering unfair trade practices that relate to intellectual property rights, anti-corruption and antitrust. Click here for the unofficial translation of the draft revision of the AUCL. Various organizations such as the American Chamber of Commerce, Beijing and American Bar Association will be submitting comments on behalf of companies and law firms, as well as other interested parties. Continue Reading