Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Agency heads tout enforcement records at ABA Spring Meeting, (Mar 28, 2014)

By Jeffrey May, J.D.

The world’s leading antitrust enforcers wrapped up the American Bar Association Section of Antitrust Law’s 62nd Annual Spring Meeting in Washington, D.C. today with a discussion of recent enforcement actions and priorities.

Bill Baer, Assistant Attorney General in charge of the Department of Justice Antitrust Division, was up first to provide an overview of some of the Antitrust Division’s major accomplishments since last year’s meeting.

The investments made in antitrust enforcement are paying off, according to Baer. The antitrust chief discussed how the agency’s enforcement efforts have benefitted consumers. Baer noted how this year’s accomplishments came in the face of a 16-day shutdown, hiring freezes, and other challenges.

One example of consumer benefit from antitrust enforcement is the drop in prices for e-books following the government’s case against Apple for engaging in a per se illegal price fixing conspiracy with book publishers, Baer said. Last year, the federal district court in New York City imposed a final judgment and permanent injunction on Apple for its antitrust violations.

The antitrust chief also pointed to the Antitrust Division’s success at trial in its challenge to Bazaarvoice’s consummated acquisition of PowerReviews. The Justice Department brought the case because the $190 million transaction looked like a merger to monopoly, Baer noted. The case shows that antitrust concepts are applicable in high tech markets. A decision on the remedy has not yet been rendered.

Baer also reassured attendees that the Antitrust Division remains focused on domestic cartels. Despite the attention paid to international cartels by the media, half of the Antitrust Division’s cartel cases filed over the last five years involved domestic cartels, Baer explained. The antitrust chief pledged to remain committed to investigating state, local, and regional anticompetitive conduct.

Baer hopes that some recent success in a trial in Sacramento against two real estate investors found guilty of conspiring to rig bids at public real estate foreclosure auctions will serve as a warning to auction participants who contemplate defrauding banks and homeowners.

FTC Enforcement. The FTC’s collusion action against the suppliers of Blue Rhino and AmeriGas propane exchange tanks—which was announced just yesterday—was identified by FTC Chairwoman Edith Ramirez as one of the significant recent enforcement developments for the agency. On the merger front, Ramirez noted the FTC’s win in the federal district court in Boise earlier this year in a challenge to St. Luke’s Health System, Ltd.’s acquisition of Saltzer Medical Group physician practice. The federal district court in Boise has ordered St. Luke’s—the largest health care system in Idaho—to divest Saltzer—the state’s largest independent, multi-specialty physician practice.

“We feel strongly that the antitrust laws are compatible with the Affordable Care Act,” Ramirez said in response to questions about the potential conflict between the ACA and antitrust laws identified in the St. Luke’s case. The parties in the St. Luke’s matter had argued that the transaction was in line with the policy objectives of the ACA.

On the consumer protection side, Ramirez pointed to some milestones in the areas of privacy and data security. The agency announced its 50th data security settlement within the last year. Two new data security cases were disclosed yesterday against Fandango and Credit Karma, Ramirez pointed out.

In the mobile sphere, the FTC brought two cases involving mobile cramming—placing charges on cell phone bills. Also highlighted was the agency’s case against Apple Inc. for allegedly charging consumers for in-app purchases incurred by children without their parents’ consent.

Ramirez highlighted the agency’s cooperation with foreign counterparts. She pointed to the coordination with the European Commission in the investigation of Thermo Fisher Scientific Inc. $13.6 billion acquisition of Life Technologies Corporation as a prime example.

In addition, Ramirez provided an update on the agency’s study of patent assertion entities (PAEs), under the agency’s FTC Act section 6(b) authority. The agency has received comments from a wide-range of stakeholders, the chairwoman said. The FTC is also getting feedback from the Department of Justice. The study needs to go through another round of comment. Once the study has been approved by the Office of Management and Budget, the FTC can consider issuing compulsory process orders seeking information from the PAEs.

European Commission enforcement. Joaquín Almunia, the European Commission’s Commissioner for Competition, addressed his final Antitrust Spring Meeting , as his term will expire on October 31. Almunia commented that competition issues in the financial sector will continue to remain at the top of the EC’s competition agenda even after his departure. Almunia also stressed the importance of the progress made on private enforcement in the European Union in recent years.

As in the United States, the EC is actively pursuing cartels in the automobile parts industry. The EC has announced fines related to cartels involving automotive bearings, automobile wire harnesses, and flexible foam used in car seats. Almost all of the other pieces of the car are under investigation, Almunia quipped.

The EC is close to announcing new cases in the pharmaceutical industry, involving alleged pay-for-delay agreements. Almunia noted the recent fines imposed on Johnson & Johnson and Novartis in this area.

State enforcement. California Senior Assistant Attorney General Kathleen Foote identified the U.S. Supreme Court’s decision in Mississippi v. AU Optronics Corp. as an important state antitrust enforcement victory in the past year. The High Court reaffirmed the states’ parens patriae authority, in holding that a Mississippi price fixing action was not a “mass action” under the Class Action Fairness Act, even though the state sought restitution for injuries suffered by its citizens, as the defending manufacturer argued. The Court concluded that the case had to be remanded to state court. Forty-eight state AGs filed an amicus brief supporting Mississippi’s position, Foote noted. Foote also mentioned the State of Idaho’s role in the successful challenge to the combination of St. Luke’s Health System and Saltzer Medical Group.

In addition, Foote discussed some “unique” state enforcement actions involving software piracy. According to Foote, six states have now filed challenges under state antitrust and/or consumer protection laws challenging software piracy by foreign corporations that negatively impacts U.S. firms. Oklahoma has brought the most recent complaint, Foote pointed out.

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