Antitrust Law Daily Wrap Up, WORTH NOTING—Other Antitrust and Trade Regulation developments, (Aug 2, 2024)

By WK Editorial Staff

A periodic roundup of other items of interest to the Antitrust and Trade Regulation community.

ANTITRUST NEWS: The European Commission announced a public consultation inviting all interested parties to comment on draft Guidelines on exclusionary abuses of dominance. The draft Guidelines provide guidance on various key issues concerning exclusionary abuses by dominant companies, including: (1) The purpose of competition law enforcement and the concept of consumer welfare under EU law, including in relation to exclusionary abuses; (2) The main principles applicable to the assessment of single and collective dominance; (3) The application of general principles to determine if a conduct by a dominant company is likely to constitute an abuse and, in particular, on the concepts of “competition on the merits” and “exclusionary effects”; (4) The evidence necessary to show that a conduct is capable of producing exclusionary effects; (5) The substantive legal standard to establish a conduct's capability to produce exclusionary effects; (6) The analytical framework applicable to certain types of conduct by dominant companies; and (7) The general principles applicable to the assessment of objective justifications that the dominant company may argue.

ANTITRUST NEWS: The Senate Banking Subcommittee on Economic Policy held a hearing on the FTC’s decision to ban noncompete agreements, hearing testimony from a surgeon and small-business owner. Dr. Heidi Shierholz, President of the Economic Policy Institute, testified that noncompetes reduce business formation and worker mobility, and allow big corporations to pay workers less and prevent workers from being able to find better jobs. Dr. R. James Toussaint, a specialized orthopedic surgeon, shared his story with a noncompete agreement he entered into when his medical practice was bought by a private equity company. The agreement restricted him from practicing orthopedic surgery for two years within 25 miles of any facility in which his previous employer did business, any facility where they’d previously done any business, and any facility his former employer was targeting for expansion. He was also required to provide a copy of his noncompete agreement to any potential future employer, making clear that any potential employer would need to buy out his agreement to hire him. This agreement severely restricted his ability to provide care to the communities – rural, underserved areas – that relied on his specialty. Hayley Paige, a bridal gown designer and small business founder shared that her previous employer sued her to enforce a noncompete agreement that prevented her from practicing her trade designing wedding dresses for years.

ANTITRUST NEWS: The chairman/co-owner of d3i Systems, Inc., a Maryland-based engineering services provider, was sentenced to probation and ordered to pay a fine after pleading guilty to a charge of making a false statement to a government agency in violation of 18 U.S.C. §1001(a)(3). Ashok Saxena had been engaged in contracting with NASA for years, through a variety of business entities. According to the charge, around May 2020, Saxena knowingly and willfully made a false statement to the Department of Defense that d3i had been awarded a subcontract on a NASA contract requiring Top Secret clearance. The federal district court in Greenbelt, Maryland, accepted the government's recommended sentence of no prison time. Saxena was sentenced to probation for 18 months and a fine of $9,500. Attorneys for the Department of Justice Antitrust Division prosecuted the case (U.S. v. Saxena, No. 8:24-cr-00094-TDC (D. Md. July 25, 2024)).

ANTITRUST NEWS: In the Antitrust Division’s investigation into bid-rigging schemes within the asphalt paving services industry in Michigan, Al’s Asphalt Paving Company, Inc. of Taylor, Michigan (Al's Asphalt), pleaded guilty and was sentenced on July 31 to pay a fine of $795,661.81 and an assessment of $800. On December 27, 2023, a criminal information had been filed against Al’s Asphalt and its president, Edward D. Swanson. Al’s Asphalt pleaded guilty to both counts of the information charging two counts of Sherman Act Section 1 per se illegal conspiracy violations (U.S. v. Al’s Asphalt Paving Co., Inc., Case No. 2:23-cr-20699-GAD-DRG).

ANTITRUST NEWS: Australian Competition & Consumer Commission (ACCC) Chair Gina Cass-Gottlieb welcomed the appointment of Dr. Philip Williams AM as a Commissioner, proposed by Treasurer Dr Jim Chalmers in April. A distinguished scholar and a former Professor of Law and Economics at the University of Melbourne, Williams is also a former executive chair of Frontier Economics and has previously advised the ACCC and National Competition Council on competition and regulatory issues. Williams has been appointed for a 5-year term at the ACCC, commencing from 27 June 2024.

ACQUISITIONS & MERGERS NEWS: The European Commission issued a statement on International Consolidated Airlines Group S.A.'s announcement that it has decided to terminate its agreement with Globalia to acquire sole control over Air Europa. The Commission opened an in-depth investigation into the proposed transaction on 24 January 2024 and sent a Statement of Objections to IAG on 26 April 2024. Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “Our in-depth analysis indicated that the merger would have negatively affected competition on a large number of domestic, short-haul and long-routes within, to and from Spain on which the two airlines compete closely. We were concerned that the transaction may have led to adverse effects for passengers – business customers and consumers alike – in terms of increased prices or decreased quality of services. IAG offered remedies but, taking into account the results of the market test, the remedies submitted did not fully address our competition concerns.” In response to the news of the abandoned deal, Michael Kades, Deputy Assistant Attorney General at the Department of Justice Antitrust Division, expressed gratitude to the European Commission “for its close and constructive collaboration with our staff” on the investigation. He added that “[a]s a result of this abandonment, travelers between the United States and Europe will benefit from an industry rivalry that lowers prices, boosts quality and promotes choice.”

ACQUISITIONS & MERGERS NEWS: The European Commission has approved unconditionally the proposed acquisition of Juniper Networks, Inc. by Hewlett Packard Enterprise Company (HPE). The Commission investigated the impact of the transaction on the following markets: (i) the worldwide market for the supply of wireless local area network equipment; (ii) the worldwide market for the supply of wireless access points; (iii) the European Economic Area (EEA)-wide market for the supply of Ethernet campus switches; and (iv) the worldwide market for the supply of datacenter switches. The Commission concluded that the transaction would raise no competition concerns in the EEA.

ACQUISITIONS & MERGERS NEWS: The Uniform Law Commission (ULC) announced on July 24 the approval of a new Uniform Antitrust Pre-Merger Notification Act. According to the ULC, under the Act, covered entities would be required “to provide their [Hart-Scott-Rodino Act] filing to the [state attorney general] contemporaneously with their federal filing.” Attorney generals who receive the HSR materials would be able to share them with any other AG whose state also adopted the Act, it was noted. An attorney general could impose civil penalties for non-compliance under the measure.

ACQUISITIONS & MERGERS NEWS: The European Commission approved the proposed acquisition of Viterra Limited by Bunge Global S.A., conditional upon full compliance with the commitments offered by the parties. Bunge and Viterra are both vertically integrated global agribusinesses, active in the origination, trading and processing of agricultural products, with significant overlaps in the sector of oilseeds. To address the Commission’s competition concerns, the parties offered to divest the entirety of Viterra’s oilseed businesses in Hungary and Poland and a number of logistical assets linked to these operations. These commitments fully address the competition concerns identified by the Commission, by removing the horizontal overlaps and vertical links between the parties‘ oilseed businesses in the concerned territories.

ADVERTISING—D. Haw.: In an action brought against mainland suppliers and Hawaii milk distributor Meadow Gold Dairies Hawaii, LLC (MGDH) alleging they used phrasing and imagery suggesting that the Meadow Gold brand products are sourced in Hawai`i, and these activities are misleading and deceptive because the Meadow Gold products contain milk and other products, a motion to exclude expert reports and testimony of plaintiff milk supplier Hawaii Foodservice Alliance, LLC’s expert witness was granted in part and denied in part. The motion was granted to the extent that the expert’s testimony and reports relied upon or contained reference to the Hawaii Themed Images and Phrases in evidence. The defendants successfully argued that such evidence was irrelevant since it involved claims for which partial summary judgment had been previously granted in their favor (Hawaii Foodservice Alliance, LLC v. Meadow Gold Dairies Hawaii, LLC, No. 21-00460 LEK-WRP (D. Haw. July 29, 2024)).

AGENCY NEWS: The FTC hosted a virtual open meeting to discuss the Pharmacy Benefit Managers Report and the FTC’s work to protect servicemembers and veterans from scams. The Staff from the Office of Policy Planning provided a presentation on the Interim Report on Pharmacy Benefit Managers (PBMs). To close out Military Consumer Month, staff from the Bureau of Consumer Protection’s Division of Consumer and Business Education provided a presentation on the FTC’s work to protect servicemembers, veterans, and their families addressing the FTC’s consumer outreach and education efforts, network of partnerships with military organizations, and recent enforcement work.

FRANCHISING & DISTRIBUTION—D. Utah: A franchisor of property management services businesses under the “Real Property Management” (RPM) brand was entitled to a preliminary injunction enjoining a former franchisee from enjoined from performing, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the franchisor’s marks or franchise system during the remaining term of the parties’ 10-year Franchise Agreement and to take certain corrective actions. After the franchisee notified the franchisor that it was terminating the Franchise Agreement to pursue his own business endeavors, the franchisor discovered that the franchisee was operating a competing business in violation of a noncompete covenant in the Agreement. The competing business was providing the same property management services in the same California territory the franchisor’s RPM franchise serviced—Alameda County. Furthermore, the competing businesses’ website claims that it is a continuation of the franchisee’s RPM franchise. The court found the franchisor was substantially likely to succeed on its breach of contract claim, noting that the Franchise Agreement contains valid and enforceable in-term non-compete covenants that are reasonable in their time and geographic restrictions by prohibiting the franchisee from operating a competitive business within his assigned territory during the term of the Franchise Agreement. The franchisor showed the risk of irreparable harm by clearly establishing that if the court did not enforce the noncompete provision, the resulting domino effect could jeopardize the entire RPM franchise system. Finally, the franchisor satisfied the remaining requirements for injunctive relief, justifying the injunction (Real Property Management SPV LLC v. Truitt, No. 2:24-cv-00184-DAK (D. Utah July 29, 2024)).

Attorneys: Kelly G. Laporte (Cades Schutte LLP) for Hawaii Foodservice Alliance LLC. Paul Alston (Dentons US LLP) for Meadow Gold Dairies Hawaii LLC and Heritage Distributing Co. d/b/a Ninth Avenue Foods. Kacie Phillips Tawfic (Faegre Drinker Biddle & Reath LLC) for Real Property Management SPV d/b/a Real Property Management. Brennan H. Moss (Parkinson Benson Potter) for Aaron Truitt.

Companies: International Consolidated Airlines Group S.A.; Globalia; Air Europa; Hawaii Foodservice Alliance LLC; Meadow Gold Dairies Hawaii LLC; Heritage Distributing Co. d/b/a Ninth Avenue Foods; Real Property Management SPV d/b/a Real Property Management; Juniper Networks, Inc.; Hewlett Packard Enterprise Company; Viterra Limited; Bunge Global S.A.; Uniform Law Commission

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