Tuesday, January 02, 2007

FTC Enforcement: 2006 Highlights

This posting was written by Jeffrey May, editor of CCH Trade Regulation Reporter

At the FTC, 2006 began with the swearing in of Commissioners William E. Kovacic and J. Thomas Roach on January 4 and 5, respectively. Shortly thereafter, the agency approved its first mega-merger of 2006. The FTC cleared Teva Pharmaceutical Industries Ltd.’s proposed $7.4 billion acquisition of IVAX Corporation, creating the world’s largest generic pharmaceutical supplier.

More Mergers

Before the year was through, the Commission would also conditionally approve generic drug company combinations involving Watson Pharmaceutical, Inc. and Andrix Corporation, and Plivva d.d.

Also in the health care arena, Boston Scientific Corp. completed its $27 billion acquisition of the Guidant Corp, after agreeing to the terms of an FTC consent order. Johnson & Johnson was permitted to proceed with its proposed $16.6 billion acquisition of Pfizer’s consumer health care business, under a consent order. The agency also challenged a non-reportable, consummated merger by Hologic, Inc., a provider of diagnostic and digital imaging systems.

In the “death care industry,” the FTC approved Service Corporation International’s proposed acquisition of Alderwoods Group Inc. in December. Also on the merger front, the FTC announced the implementation of an electronic filing system for premerger notification filings, as well as merger review process reforms.

Oil Industry Report

The Commission released a report in May, following an investigation into market manipulation and price gouging in the oil industry. In the report, the FTC said it found no instances of illegal market manipulation that led to higher prices after Hurricane Katrina. The findings were met with skepticism from some members of the Senate Commerce, Science, and Transportation Committee.

Around the same time, the FTC was dealt a blow when the U.S. Solicitor General urged the U.S. Supreme Court to deny review of a decision by the U.S. Court of Appeals in Atlanta, concluding that the agency failed to establish that settlements of patent infringement litigation between pharmaceutical companies restrained trade. The Court ultimately rejected the FTC’s petition.

In July, a unanimous Commission concluded that Rambus, Inc., a developer and licensor of computer memory technologies, illegally abused the process for setting industry standards for dynamic random access memory chips, vacating an administrative law judge’s initial decision dismissing the agency’s complaint.

Consumer Protection

Among the significant consumer protection developments in 2006 were: (1) a proposed rulemaking for a business opportunity rule; (2) a record civil penalty against a magazine subscription seller for violation of a consent order; (3) a record $1 million civil penalty against social networking web site Xanga.com for alleged violation of the Children’s Online Privacy Protection Act and rule; (4) a court determination that the marketers of the “Q-Ray ionized bracelet” violated the FTC Act through false and misleading advertising; and (5) a settlement with the companies that developed and marketed the Grand Theft Auto: San Andreas video game prohibiting deceptive marketing.

As 2006 came to a close, the enactment of the US SAFE WEB Act promised to improved the FTC’s ability to cooperate with its foreign counterparts to combat spam, spyware, and other cross-border consumer fraud

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