April Antitrust Bulletin

April 19, 2011

Antitrust Agencies Release Annual Reports

On April 1, 2011, the Federal Trade Commission (FTC) and the U.S. Department of Justice’s (DOJ) Antitrust Division issued their annual reports. The FTC report describes the Commission’s accomplishments during the previous year, including its litigation in the healthcare industry, revisions to the Horizontal Merger Guidelines issued jointly by the FTC and DOJ that provide more clarity and predictability for businesses, its report on privacy issues that proposes a framework for balancing consumer privacy with industry innovation, and its efforts to combat cross-border fraud by using the information-sharing provisions of U.S. SAFE WEB Act of 2006. The DOJ newsletter highlights the Antitrust Division’s enforcement actions over the past year, including the filing of 60 criminal cases and obtaining fines in excess of $550 million against corporations and individuals, as well as its competition advocacy initiatives, including its activities relating to the agriculture industry.

Agencies Release Draft Guidance for ACOs

On March 31, 2011, the FTC and DOJ released a joint Proposed Statement of Antitrust Enforcement Policy governing accountable care organizations (ACOs) under the Patient Protection and Affordable Care Act. The Affordable Care Act contemplates that ACOs – networks of healthcare providers sharing responsibility for patients – would manage the healthcare needs of Medicare beneficiaries and, potentially, those of commercially insured patients.

The agencies’ recent guidance addresses the antirust implications of competing providers collaborating within an ACO by, among other things, applying a rule of reason analysis to activity by qualifying ACOs, establishing an antitrust “safety zone” for ACOs with a combined share of 30% or less of each common service within the primary service area, and providing guidance concerning agency review of ACOs that fall outside the safety zone. Public comments on the proposed rules will be accepted through May 31, 2011. Additional information is available from McGuireWoods here and here.

SEC Charges Brokerage Executives for Failing to Protect Confidential Customer Information

On April 7, 2011, the Securities and Exchange Commission (SEC) charged three former brokerage executives with failing to protect confidential information about their customers. According to the SEC, the executives improperly transferred customer records to another firm during the winding down of their company’s business operations. The record transfer violated Regulation S-P of the Securities Exchange Act (the Safeguard Rule) because the customers were not notified in advance and given reasonable time to opt out. This marks the first time the SEC has assessed financial penalties against individuals charged solely with violations of Regulation S-P.

Ban on Online Distributor Sales Not Permitted in EU

An advocate general (adviser) to the European Court of Justice recently opined that an absolute ban on Internet sales by a distributor will usually be an automatic infringement of EU competition law. Though this opinion was given in the context of selective distribution agreements, the same principle would apply to such a restriction included in other types of vertical (supplier/purchaser) agreements, such as exclusive distribution agreements. Additional information is available in our April 2011 EU/UK Competition Law Newsletter.

For more information, please contact the lawyers in the Antitrust & Trade Regulation Department at McGuireWoods.