Antitrust Law Daily Wrap Up, TOP STORY: FTC, Antitrust Division heads testify before House Subcommittee, (May 15, 2015)

By Greg Hammond, J.D.

FTC Chairwoman Edith Ramirez and Assistant Attorney General William J. Baer testified before the U.S. House of Representatives Subcommittee on Regulatory Reform, Commercial and Antitrust Law today, concerning “Oversight of the Enforcement of the Antitrust Laws.”

Assistant Attorney General Baer noted that while the President requested that the Antitrust Division receive roughly $165 million for Fiscal Year 2016, roughly 50 percent of the Division’s funding is offset by Hart-Scott-Rodino premerger filing fees paid by companies planning to merge, and the criminal fines the agency obtains routinely amount to over 10 times the Antitrust Division’s annual direct appropriation.

Last year, the Antitrust Division obtained approximately $1.3 billion in criminal fines and penalties, which represent the largest amount ever in a single fiscal year, Baer noted. He then highlighted a number of actions demonstrating the Antitrust Division’s efforts over the course of the previous five years. Most recently, according to Baer, Deutsche Bank agreed to “own up to its involvement in a criminal conspiracy to rig the London Interbank Offered Rate (LIBOR)” and to pay $775 million in criminal penalties. In the auto parts industry, the Antitrust Division, to date, has charged 35 companies and 52 individuals for price fixing, bid rigging, and market allocation, resulting in 30 executives and 35 corporations pleading guilty or agreeing to plead guilty and to pay over $2.5 billion in criminal fines.

With regard to civil enforcement, Baer highlighted that over the past two months, three major mergers were abandoned after the Antitrust Division expressed competitive concerns, including the Comcast/Time Warner Cable merger, the $10 billion proposed merger between Applied Materials Inc. and Tokyo Electron Ltd., and the merger between National Cinemedia Inc. and Screenvision LLC. “Our record sends a strong message that the antitrust division will challenge those who engage in conduct that stifles competition or pursue mergers that may substantially lessen competition,” Baer stated in his prepared testimony.

“The Antitrust Division’s dedicated public servants continue to work hard to make sure that American consumers and businesses reap the benefits of our free-market economy,” Baer said. “We use our tools—criminal and civil enforcement, together with focused and effective competition advocacy—to do so. We are committed to ensuring that the American consumer continues to benefit from vigorous competition for products and services. I am honored to be part of this hard-working team.”

FTC Chairwoman Ramirez also discussed the Commission’s competition enforcement work over the last five years, noting that the Commission challenged 17 mergers in Fiscal Year 2014 after evidence showed they would likely be anticompetitive, and 11 additional merger enforcement actions in the first half of Fiscal Year 2015. Of note is the Commission’s pending preliminary injunction action to block the proposed merger between Sysco Corp. and US Foods.

The FTC also received a number of important, significant rulings from the U.S. Supreme Court and federal courts of appeals, upholding the Commission’s decisions in key aspects of antitrust doctrine. Specifically, Ramirez discussed N.C. Dental, where the Supreme Court agreed with the Commission that “a state board on which a controlling number of decision-makers are active market participants in the occupation the board regulates must satisfy [the] active supervision requirement in order to invoke state action antitrust immunity.” Last month, the Eleventh Circuit affirmed the FTC’s decision and order in a monopolization case involving McWane, Inc., in which the court upheld the Commission’s ruling that a monopolist’s exclusive dealing practices violated antitrust laws because they prevented would-be market entrants from becoming meaningful competitors in the market for domestic pipe fittings, resulting in higher prices for municipalities and other waterworks customers.

In the health care sector, the Commission obtained favorable decisions from the Sixth and Ninth Circuit Courts. The Sixth Circuit upheld the Commission’s decision requiring ProMedica Health System to divest its rival, St. Luke’s Hospital, because the merger would have given ProMedica the leverage to demand higher rates from health plans. The Ninth Circuit’s decision in St. Luke’s agreed that Idaho’s dominant health care system’s acquisition of the state’s largest independent physician practice group would have given the combined entity the power to demand higher rates in the market for adult primary care services in Nampa, Idaho.

“Throughout its history, the FTC has tackled the complex competition issues of the day, guiding antitrust policy from a time of horses and buggies to our modern interconnected, global economy,” Ramirez stated in her prepared testimony. “As the Commission enters its second century, it does so buoyed by recent federal court victories that affirm the FTC’s role as a champion of the national policy of fair and vigorous competition to benefit consumers.”

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