DOJ Reverses Longstanding Practice of Naming Carveouts in Cartel Plea Agreements
On April 12, 2013, the U.S. Department of Justice’s Antitrust Division, under the leadership of Bill Baer, announced that it would limit carveouts from the protections afforded by corporate plea agreements to individuals the DOJ has reason to believe were involved in criminal wrongdoing. The names of the individuals excluded from a corporate plea agreement’s prosecution immunity will no longer be publicly disclosed, but instead will be kept in a separate, sealed court filing. The change will provide welcome relief for executives, given the potential for public disclosure to damage reputations and expose executives to follow-on civil litigation. Baer noted that “[a]bsent some significant justification, it is ordinarily not appropriate to publicly identify uncharged third-party wrongdoers.”
Carfax Sued by 120 Dealerships in $200 Million Antitrust Lawsuit
On April 23, 2013, the owners of 120 auto dealerships filed an antitrust suit against Carfax in the U.S. District Court for the Southern District of New York alleging that Carfax entered into exclusive agreements with automotive companies and automotive-related websites to become a “monopolist in the sale of vehicle history reports.” As alleged in the complaint, Carfax is the provider of records for 37 out of 40 manufacturers’ certified pre-owned programs, meaning that a dealer who wants to participate in the certified pre-owned program must use Carfax reports. The complaint further alleges that Carfax has 90 percent market share for vehicle history reports. The dealerships are seeking $50 million in damages on each of the four claims alleged in the complaint.
District Court Grants Temporary Restraining Order in FTC’s Case Involving $195M Phoebe Putney Merger
On May 10, 2013, less than three months after the U.S. Supreme Court ruled against the hospital systems in FTC v. Phoebe Putney Health Sys., 133 S. Ct. 1003 (2013), the Eleventh Circuit issued an order remanding the case to the District Court of the Middle District of Georgia. A month earlier, on April 9, the FTC had filed with the district court an amended complaint and motions for a temporary restraining order (TRO) and a preliminary injunction to enjoin any further integration of the assets and operations of Phoebe North and Phoebe Putney hospital systems. On May 14, after hearing argument from all sides regarding the propriety and scope of the TRO, the district court granted the FTC’s TRO motion. Pursuant to the TRO, the defendants are not to take any further steps to consolidate Phoebe North and Phoebe Putney. The FTC’s motion for preliminary injunction is scheduled to be heard on June 14.U.S. Senate Judiciary Committee Discusses MFN Clauses at Antitrust Oversight Hearing
On April 16, 2013, the Senate Judiciary Committee held a hearing titled “Oversight of the Enforcement of the Antitrust Laws.” Witnesses included Assistant Attorney General Bill Baer and FTC Chairwoman Edith Ramirez. Most favored nation (MFN) clauses were a key issue at the hearing. Highlighting the efforts of the FTC to partner with other antitrust enforcers, Chairwoman Ramirez noted a recent workshop cohosted by the FTC and Department of Justice that explored the antitrust implications of MFN clauses. Baer commented on MFN clauses in the healthcare industry specifically, stating that “such provisions potentially distort the competitive process by raising the costs of health insurance and hospital services, preventing other insurers from entering the market and discouraging discounts.” The recent emphasis on MFN clauses has prompted many state enforcers to take a careful look at the practice.
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