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• On December 27, the Commission approved the issuance of a final consent order in the matter concerning Johnson & Johnson's acquisition of Guidant Corporation, along with the transmittal of a letter to Medtronic Vascular, Inc. ("Medtronic"), the commenter of record. The Commission vote approving the final order and letter was 2-0, with Chairman Deborah Platt Majoras and Commissioner Pamela Jones Harbour recused. Medtronic sought certain modifications of the proposed settlement which were denied by the Commission.

• On December 22, Thomas B. Leary announced that he will resign his position as Commissioner of the Federal Trade Commission, effective December 31, 2005. Commissioner Leary, a Republican, was nominated by President Clinton, and served for over six years.

• On December 20, the Federal Trade Commission Chairman Deborah Platt Majoras announced that Susan Creighton, director of the Bureau of Competition for the past two-and-a-half years, will leave the FTC. The Chairman also announced that Jeffrey Schmidt, currently a deputy director in the Bureau, has been named director. Creighton joined the Commission in August 2001 as deputy bureau director, and was named director in July 2003. Schmidt has served as a deputy director of the Bureau of Competition since February 2005.

• On December 17, the United States Senate confirmed William E. Kovacic and J. Thomas Rosch to serve as Commissioners of the Federal Trade Commission in Washington, DC. It is anticipated that Kovacic, who will fill a seat vacated in June by Commissioner Orson Swindle, and Rosch, who will replace Commissioner Thomas B. Leary, will formally be sworn in at the Commission in January.

• On December 16, the Commission approved the filing of comments by the staffs of the Bureau of Competition, the Bureau of Economics, and the Office of Policy Planning with Rep. Bill Seitz of the Ohio House of Representatives concerning Ohio House Bill 306 (HB 306). According to the comments, HB 306, which would amend the operation of wine wholesale franchises in Ohio by, among other things, eliminating the current minimum markup on wine at the wholesale level, is likely to lead to lower wine prices for Ohio consumers and may increase the variety of wines from which the state's consumers can choose. Specifically, the comments state that HB 306 would increase wholesalers' incentives to lower wholesale prices and to undertake efforts to increase the demand for wine suppliers' brands, thereby likely decreasing the costs of wine distribution and increasing competition among both suppliers and wholesalers. The Commission vote approving issuance of the staff comments was 4-0.

• On December 16, following a public comment period, the Commission approved a petition for proposed divestiture from Procter & Gamble Company ("P&G") and Gillette Co. ("Gillette"). The Commission's consent order allowing P&G's acquisition of Gillette required the companies to divest certain assets after the transaction was consummated. In the petition, which was announced on November 8, 2005, the companies requested FTC approval to sell Gillette's Rembrandt toothpaste and tooth whitening business to Johnson & Johnson. That request has now been approved by a vote of 2-0, with Chairman Deborah Platt Majoras and Commissioner Pamela Jones Harbour recused.

• On December 16, following a public comment period, the Commission also approved a modified final consent order in the matter concerning Procter & Gamble Company's ("P&G") recent acquisition of Gillette Co. ("Gillette"). The final order approved by the Commission has been modified in two ways. First, it includes a revised agreement in Non-Public Appendix II, concerning the SpinBrush Asset Purchase Agreement. Second, at the request of P&G, Paragraph III.A. has been changed to require divestiture of the SpinBrush Assets not later than 15 days (instead of 10 days) after the European Commission's approval of the transaction. The Commission vote approving the modified final order was 2-0, with Chairman Deborah Platt Majoras and Commissioner Pamela Jones Harbour recused.

• On December 6, the Commission approved the publication of a Federal Register notice concerning final amendments to the Hart-Scott-Rodino ("HSR") Rules, 16 C.F.R. Parts 801 and 803. As detailed in the notice, the Commission is enacting a change to relieve the burden of complying with Items 4(a) and (b) of the Notification and Report Form. Currently, paper copies of annual reports, annual audit reports, and regularly prepared balance sheets and copies of certain documents, such as 10Ks filed with the Securities and Exchange Commission, must be provided in response to these Items. The modification will allow filing persons to provide an Internet address linking directly to the documents required by Items 4(a) and (b) in lieu of providing paper copies.

  The second amendment to the rules will specify that an acquiring person's notification, and an acquired person's notification in certain types of transactions, will expire after eighteen months if a second request to them remains outstanding. In addition, the Commission is making technical corrections to certain rules and to the form and instructions to address certain oversights in the final rules promulgated in connection with the treatment of unincorporated entities.

  The rulemaking has been drafted jointly with staff of the U.S. Department of Justice's Antitrust Division, and reflects their views as well as those of the staff of the FTC's Premerger Notification Office. The Commission vote approving publication of the Federal Register notice was 4-0.

• On December 2, the Commission announced it had authorized the filing of an amicus brief in In re Tamoxifen Citrate Antitrust Litigation, a case pending before the U.S. Court of Appeals for the Second Circuit. The case concerns a decision by a divided panel of the Appeals Court upholding the dismissal of an antitrust challenge to a patent litigation settlement between AstraZeneca, the manufacturer of tamoxifen citrate, the most widely prescribed drug for breast cancer treatment, and Barr Labs., a U.S. Food and Drug Administration applicant for a generic counterpart.

  According to the FTC's brief, the Appeals Court should rehear the case to correct its previous decision. The brief argues that the Appeals Court's panel did not properly consider the Hatch-Waxman Act, which encourages challenges to pharmaceutical patents to facilitate the early entry of generic drugs into the market. In addition, the brief states that the Appeals Court's decision, if not corrected, would permit the holder of a challenged drug patent to harm competition, and thus consumers, by unjustifiably paying a would-be generic rival to stay off the market. The Commission vote authorizing the amicus brief was 4-0.

• On December 2, the Commission announced it had issued a study entitled Report on Ethanol Market Concentration" that examines the current state of ethanol production in the United States and measures market concentration using capacity and production data. The study considers the possible effect on market concentration of marketing agreements between ethanol producers and ethanol marketers. The study concludes that U.S. ethanol production is not unduly concentrated and that existing concentration levels do not justify a presumption that one firm, or a small group of firms, could wield the market power necessary to coordinate on prices or output.

  The study also concludes that the likelihood of anticompetitive conduct is even lower than the production concentration levels might suggest because significant new entry in ethanol production and marketing will occur in the next year and is expected to continue for several more years. Furthermore, the likelihood of anticompetitive behavior would be even lower if ethanol is considered part of a larger antitrust product market that includes gasoline or certain gasoline blendstocks. The study, which is available now on the Commission's Web site and as a link to this press release, was submitted to Congress and the Administrator of the U.S. Environmental Protection Agency, as required by Section 1501(a)(2) of the Energy Policy Act of 2005, as codified at 42 U.S.C. Sec. 7545(o)(10). Similar studies will be produced annually. The Commission vote to issue the study, which was prepared by the staff of the Bureaus of Competition and Economics, was 4-0.

• On December 1, the Commission released its unanimous administrative opinion and order in the matter of North Texas Speciality Physicians ("NTSP"). The Commission ruled that NTSP, an association of independent physicians in the Forth Worth, Texas area, illegally fixed prices in its negotiations with payors, including insurance companies and health plans. The Commission opinion, authored by Commissioner Thomas B. Leary, affirmed a November 2004 ruling by Administrative Law Judge (ALJ) D. Michael Chappell, with some modifications, and issued an order that requires the respondent association to cease and desist from the illegal conduct and to terminate pre-existing contracts with payors for physician services. The Commission concluded that NTSP's contracting activities with payors "amount[s] to unlawful horizontal price fixing". The opinion states that, through a variety of mechanisms, NTSP was able to orchestrate price agreements among its physicians. The evidence in the case, the Commission found, "shows not only negotiation activity in aid of a collective agreement on a minimum fee schedule, but also specific enforcement mechanisms - such as the powers of attorney and collective withdrawal from payor networks - in order to coerce agreement from payers". These actions, when viewed as a whole, the Commission wrote, "leave no doubt that the overriding purpose behind NTSP's conduct was to fix prices".

• The Commission specifically addressed RTSP's claims on appeal and found that: (1) the FTC does have jurisdictional authority to review alleged anticompetitive conduct by NTSP, because it is a corporation that is "organized to carry on business for its own profit and that of its members"; (2) NTSP's argument that its physicians are not "members" under Texas law is invalid because it "elevates form over substance"; (3) NTSP satisfies the interstate commerce jurisdictional requirement, because its actions to maintain fee levels, if successful, could be expected to affect the flow of interstate payments from out-of-state payors to NTSP physicians; (4) NTSP is not a "sole actor" when it negotiates on behalf of the competing physicians who control it, but rather, under antitrust law, is the agent for the group, and thus, the member physicians conspired to fix prices even though they did not communicate directly with one another; and (5) NTSP's claims of teamwork, spillover, and other efficiencies were not legitimate and not supported by the evidence.

Authored by:
Robert W. Doyle, Jr.
202-218-0030
rdoyle@sheppardmullin.com