This bulletin summarizes recent developments and activities of the Federal Trade Commission and enforcement priorities under the new administration.
New Administration Pursues Its Merger Enforcement Priorities
In the new administration, the FTC has focused its merger enforcement efforts on industries that most directly affect consumers and in which the agency has particular expertise, including healthcare, energy, chemicals, technology, and consumer goods and services. In the healthcare markets, the FTC has challenged mergers involving medical devices, pharmaceuticals, hospitals and medical facilities. In the energy sector, the FTC actively monitors retail and wholesale prices of gasoline and diesel fuel nationwide in an attempt to identify unusual price movements that might result from anticompetitive conduct. On November 4, 2009, new rules prohibiting market manipulation in the wholesale petroleum industry went into effect. In the chemicals industry, the FTC has challenged mergers involving such products as rust inhibitors, acrylics, de-icing salt, battery separators, and high-performance pigments. Other merger enforcement actions in the new administration have involved high-tech industries, including software products and electronic records. The FTC also has continued to focus its merger enforcement efforts on certain consumer goods and services, including retail industries. For example, after more than a year of extensive federal court litigation, the FTC entered into a settlement with Whole Foods, which requires the grocery store chain to sell 32 supermarkets and related assets that it acquired through its 2007 takeover of its closest rival. Finally, under Chairman Jon Leibowitz, the FTC has expressed a strong interest in reviewing and, where appropriate, challenging consummated acquisitions, and actively monitoring consent decrees to ensure that parties adhere to the terms.
Section 5 of the FTC Act Used to Challenge Unilateral Conduct
Challenges to unilateral conduct — monopolization and attempted monopolization — historically have been brought under Section 2 of the Sherman Act. Now, however, the FTC is also using Section 5 of the FTC Act, which is broader than the antitrust laws and prohibits unfair methods of competition and deceptive acts and practices in commerce, to challenge unilateral conduct. On December 16, 2009, the FTC sued Intel Corp., the world’s leading computer chip maker, charging that the company has illegally used its dominant market position to stifle competition and strengthen its monopoly. In its complaint, the FTC challenges Intel’s conduct as an unfair method of competition in violation of Section 5 of the FTC Act. In a statement issued regarding the suit, Chairman Leibowitz addressed the FTC’s use of Section 5, stating that there has been “an increasing amount of potentially anticompetitive conduct that is not easily reached under the antitrust laws, and it is more important than ever that the Commission actively consider whether it may be appropriate to exercise its full Congressional authority under Section 5.”
President Obama Nominates Two as FTC Commissioners
On November 16, 2009, President Obama announced two nominees for the FTC: Julie Brill, a consumer protection regulator, and Edith Ramirez, a business litigator specializing in antitrust and intellectual property issues. The U.S. Senate Committee on Commerce, Science and Transportation held a committee hearing on the nominations on December 15, 2009, and approved the nominations on December 17, 2009. If confirmed, Brill and Ramirez each would serve seven-year terms on the five-member commission. A vote before the U.S. Senate is still pending.
FTC Announces Revised and Reduced Premerger Notification Filing Thresholds
On January 19, 2010, the FTC announced reduced thresholds for premerger notification filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“the HSR Act”). The new thresholds will become effective 30 days after publication in the Federal Register, and will apply to all acquisitions that have not closed by the effective date. The HSR Act requires parties engaging in certain mergers or acquisitions to file a notification and report form with the FTC and the U.S. Department of Justice, and to observe the statutorily prescribed waiting period prior to closing, if the parties meet the threshold requirements. The filing thresholds are revised annually, based on gross national product. Under the new lower thresholds, premerger notification filing is required for the acquisition of securities or assets valued at $63.4 million or more (“size-of-transaction test”) if either the acquiring or the acquired party has at least $12.7 million in assets or sales, and the other party has at least $126.9 million in assets or sales (“size-of-person test”). The size-of-person test is not required if the value of the securities or assets acquired is at least $253.7 million.