Monday, March 30, 2009

New FTC Chair Promises Continuity in Enforcement Activity

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

FTC Chairman Jon Leibowitz told attendees of the American Bar Association’s Section of Antitrust Law Spring Meeting in Washington, D.C. that they can expect continuity at the agency as he begins his term as chairman.

Speaking at the enforcement roundtable on March 27, Leibowitz said that he intends to build on the accomplishments of past FTC chairs. He said that there will be continuity in merger enforcement and health care enforcement.

Leibowitz discussed a number of merger successes, including the blocked merger between two hospital providers in Northern Virginia and the preliminary injunction against the combination of CCC Information Services Inc. and Mitchell International Inc.—the first preliminary injunction won by the agency in six years.

Pay-for-Delay Drug Agreements

One of Leibowitz’s highest priorities will be stopping pay-for-delay agreements between brand name drug makers and generic competitors. The use of these agreements under which brand name companies pay generics to stay out of the marketplace will be stopped either through litigation or legislation, according to Leibowitz.

The chairman noted that Christine Varney, the nominee for Assistant Attorney General in charge of the Department of Justice Antitrust Division, considers pay-for-delay agreements to be anticompetitive. He predicted that that the two federal antitrust agencies will be much more in sync going forward.

Standard Setting

The Commission will continue to stay active in challenging anticompetitive standard setting activity. The agency suffered a significant defeat before the U.S. Court of Appeals in Washington, D.C. in this area. The appellate court vacated a Commission decision finding that technology company Rambus Inc. engaged in deceptive conduct as a participant in the standard setting process.

Consumer Protection

On the consumer protection front, Leibowitz forecast that the Commission would continue to be active, especially with respect to sub-prime lending. He noted that the FTC action against Bear Stearns Companies, LLC and its subsidiary, EMC Mortgage Corporation for allegedly engaging in unlawful practices in servicing consumers’ home mortgage loans. The companies agreed to pay $28 million to settle to settle the FTC charges.

Two of Chairman Leibowitz’s collegues—Commissioners Paula Jones Harbour and J. Thomas Rosch—also spoke during the Spring meeting.

Competition/Privacy Nexus

Commissioner Harbour said that one of her priorities for the remainder of her term will be developing an understanding of the interplay between privacy and competition. Firms compete on price and nonprice dimensions, and privacy could be one of those dimensions.

Harbour discussed the issue during a March 25 program, entitled “Section 2 and Article 82 Circling the High-Tech Sector: Will They Coordinate or Collide.” She also discussed datasets as antitrust markets, referring to her dissent in the Commission’s 2007 decision not to challenge the Google/DoubleClick combination. In the dissent, she questioned the impact on competition from the combination of the two companies’ datasets and the corresponding privacy concerns.

Roles of Federal Antitrust Agencies

Commissioner J. Thomas Rosch defended the FTC’s record—as well as Section 5’s prohibition on unfair methods of competition—during a March 25 program, entitled “FTC’s Section 5 Hearings: New Standards for Unilateral Conduct.”

Rosch answered the question of why there are two federal antitrust agencies by distinguishing the FTC from the Department of Justice Antitrust Division. Rosch said that the Department of Justice is an arm of the Administration. By contrast, the FTC is: (1) independent and not beholden to the Administration; (2) an expert agency; and (3) a prosecutor and a judge.

Commission’s Partiality?

Responding to criticism of the Commission’s record of siding with complaint counsel, Rosch remarked that he had some concerns with what could appear to be a lack of impartiality. However, he noted that Commission opinions were appealable to federal appellate courts, and that this appealability prevented the commissioners from “indulging themselves.”

In addition to making these comments, Rosch gave an update on the agency’s progress in issuing a report on unilateral conduct. He said that it was coming and was about three-quarters finished.

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