August Antitrust Bulletin

August 23, 2012

New Legislation Would Provide Whistleblower Protections for Reporting Criminal Antitrust Activity
On July 31, 2012, federal legislation that would provide whistleblower protection for employees who report criminal antitrust activity was introduced.  The proposed Criminal Antitrust Anti-Retaliation Act would amend the Antitrust Criminal Penalty Enhancement and Reform Act (ACPERA) – which reduced civil liability for successful leniency applicants and significantly increased antitrust penalties – by extending whistleblower protection to employees who report conduct reasonably believed to be a violation of the antitrust laws to the U.S. Department of Justice’s (DOJ) Antitrust Division.  Such employees would be protected against retaliation by their employers.  The proposed legislation, which has been referred to the Senate Judiciary Committee for consideration, creates incentives for employees that could have an impact on corporate compliance programs and the Antitrust Division’s leniency program, which offers immunity to a corporation or individual that is the first to report criminal antitrust activity.
Disgorgement Remedy Approved in $4.8 Million Antitrust Settlement against Morgan Stanley
On Aug. 7, 2012, a district court ordered disgorgement in a case described as DOJ’s “first attempt to obtain disgorgement from a financial services firm that used derivative agreements to facilitate anticompetitive behavior.”  DOJ had alleged that Morgan Stanley engineered an electricity price-fixing scheme between two electricity generators operating in New York City by acting as a counterparty to agreements with each company and aiding efforts to manipulate electricity prices.  In approving the settlement, the court noted that the $4.8 million settlement was a “relatively mild sanction” in light of the “stark allegations of manipulative conduct” against Morgan Stanley, but concluded that judicial deference to DOJ’s decision to settle was appropriate and declined to “second-guess the wisdom of [DOJ’s] decision to pursue a disgorgement remedy rather than restitution.”
Changes to HSR Reporting Requirements for Pharmaceutical Industry Transactions Proposed
On Aug. 13, 2012, the Federal Trade Commission (FTC) announced proposed changes to the premerger notification rules that would require pharmaceutical companies to report proposed acquisitions of exclusive patent rights.  The proposed changes clarify when a transfer of exclusive rights to a patent in the pharmaceutical industry must be reported as an asset acquisition under the Hart-Scott-Rodino (HSR) Act.  Public comments on the proposed changes will be accepted until Oct. 25, 2012.
Antitrust Agencies Examine Competition Issues Involving MFNs
On Sept. 10, 2012, the FTC and DOJ will hold a public workshop to address antitrust issues relating to most-favored-nation clauses (MFNs).  Among other topics, the workshop will explore economic theories, legal treatment and industry experiences with MFNs.  MFNs have been the subject of several recent antitrust enforcement actions.  In October 2010, DOJ filed a civil antitrust action against Blue Cross Blue Shield of Michigan alleging that the insurer’s use of MFNs had stifled competition and raised prices on healthcare services and insurance.  In April 2012, DOJ filed a civil antitrust action against Apple Inc. and five publishers alleging a conspiracy to fix the sales prices of e-books through the use of distribution agreements with “unusual” MFNs.  Public comments may be filed until Oct. 10, 2012.
UK Court Awards Damages in Private Competition Suit
In a case that may encourage potential plaintiffs, a UK court awarded exemplary (punitive) damages for a competition law infringement in a private action between competing bus operators.  Additional information is available in our August 2012 EU/UK Competition Law Newsletter.