AAI’s Geoff Kozen summarizes the proceedings from AAI’s Annual Energy Roundtable Disruptive Electricity Technologies: Challenges for Competition.
Diana Moss Talks Mergers on Nightly Business Report
AAI President Diana Moss discussed whether mergers are good for consumers on CNBC’s Nightly Business Report on July 7, 2015. Watch here.
Donald I. Baker Receives Antitrust Lifetime Achievement Award
Today the American Antitrust Institute (AAI) honored Donald I. Baker with the 2015 AAI Alfred E. Kahn Award for Antitrust Achievement. This lifetime achievement award was presented at the AAI’s 16th Annual Conference in Washington D.C.
AAI President Diana Moss said, “Don’s dedication to the antitrust enterprise is an inspiration to current and prospective practitioners, enforcers, scholars, and policymakers. The AAI is honored to recognize such an esteemed and accomplished individual — we thank him and are deeply grateful for his remarkable contributions to antitrust advocacy.”
During the luncheon presentation, Mr. Baker was introduced by colleague Molly Boast, an antitrust attorney with Wilmer Hale, who reviewed his dedication to antitrust and comprehensive contributions to the evolving antitrust conversation.
Specializing in antitrust, competition policy, and international law issues, Mr. Baker is a former Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice and founding partner of Baker & Miller PLLC. He has worked as an unofficial pro bono counselor and is a former member of the AAI Advisory Board (1997-2005). Mr. Baker’s efforts have included aspects of antitrust counseling, representing complainants, as well as targets in various government investigations, corporate internal investigations, major arbitrations, and several private antitrust cases for plaintiffs and defendants.
Mr. Baker is the 17th recipient of the Alfred E. Kahn Award for Antitrust Achievement and joins past honorees: Joel Klein, Robert Pitofsky, F. M. Scherer, Alfred E. Kahn, Lloyd Constantine, Thomas B. Leary, Senators Herb Kohl and Mike DeWine, Maxwell Blecher, John Shenefield, Eleanor M. Fox, Steven Salop, Mario Monti, Roger G. Noll, Kathleen Foote, and John M. Connor.
AAI Advocacy and Antitrust Wins in 2015
2015 is turning out to be a good year for antitrust advocacy. Below are some of the notable “wins” involving pubic and private antitrust enforcement in the United States in which the American Antitrust Institute played an important advocacy role with amicus briefs, white papers, letters to the agencies and Congress, or comments in regulatory proceedings.
In re Nexium (Esomeprazole) Antitrust Litigation
The First Circuit Court of Appeals held in January that an injury to each and every class member was not a requirement for class certification. The AAI filed an amicus brief last September in the case in support of the position adopted by the court. The brief argued that the Court should not re-interpret the Rule 23(b)(3) “predominance” requirement to create an extra-statutory “uniformity” requirement.
Sysco Corp.-US Foods Inc.
The Federal Trade Commission (FTC) filed a lawsuit in February to challenge the merger of the nation’s two largest broadline food distributors. The FTC’s concerns center on the loss of competition in the national and regional broadline food distribution markets. In advance of the merger challenge, the AAI submitted a detailed letter to the FTC regarding the competitive effects of the transaction.
North Carolina Board of Dental Examiners v. FTC
In a 6-3 decision in February, the U.S. Supreme Court sided with the FTC in finding that a state dental board dominated by market participants did not enjoy state-action antitrust immunity. The Court held that such a board must be actively supervised to satisfy the requirements of state-action immunity under Parker and Midcal. The AAI filed an amicus brief last August in the case in support of the FTC.
Partners HealthCare-South Shore Hospital
The parties to a Massachusetts hospital merger abandoned the transaction in February after a state court rejected a settlement proposed by the Massachusetts Attorney General that would have allowed the transaction to proceed subject to a conduct remedy. The court found that the proposed remedy—primarily price caps—would not adequately prevent price increases and would be difficult to monitor and enforce. The AAI filed two sets of comments late last year opposing the settlement, including analysis by Northeastern University Professor of Economics John Kwoka. The judge extensively cited the AAI’s analysis.
Comcast-Time Warner Cable
After over a year, the two largest cable companies in the United States abandoned their proposed merger in the face of opposition from the Federal Communications Commission (FCC) and the Department of Justice (DOJ). Leading up to the merger’s abandonment in April, the AAI produced a white paper analyzing competitive issues raised by the transaction, submitted comments to the FCC, and drafted letters to the Department of Justice and the House and Senate Judiciary Committees.
Oneok, Inc. v. Learjet. Inc.
In a 7-2 decision in April, the U.S. Supreme Court held that state law antitrust claims are not preempted by the federal Natural Gas Act, allowing antitrust claims alleging price fixing to proceed. In amicus briefs submitted to the Ninth Circuit and the Supreme Court, the AAI developed the basic legal theory on which the Supreme Court’s decision rested.
McWane, Inc. v. FTC
The FTC prevailed in April in the Eleventh Circuit against a monopolist using anticompetitive exclusive dealing arrangements. The Court found the arrangements used by the incumbent hampered a newcomer’s entry into the market for iron pipe fittings and rejected a high evidentiary bar for showing competitive harm. The AAI filed an amicus brief last September in the case in support of the FTC.
In re Cipro Cases I & II
Interpreting California antitrust law, the California Supreme Court followed the U.S. Supreme Court’s decision in Actavis with respect to “reverse payment” agreements. Such agreements involve a payment by a branded drug company to a generic competitor in return for the generic dropping its challenge and delaying its entry. The California Court ruled in May that such agreements are evaluated under a structured rule of reason in which the merits of underlying patent litigation are irrelevant. The AAI filed an amicus brief in March 2014 in support of the position adopted by the California court.
New York v. Actavis
In May, the Second Circuit Court of Appeals upheld a preliminary injunction in the first “product hopping” case to be decided by a court of appeals. The court found that New York was likely to succeed in demonstrating that the manufacturer of a popular Alzheimer’s drug violated Section 2 by withdrawing the drug from the market and forcing consumers to switch to a reformulation in order to prevent impending generic competition. The AAI filed an amicus brief in February 2015 in support of the position adopted by the Second Circuit.
Newsweek Features John Connor’s Cartel Work
AAI Senior Fellow John Connor’s international price-fixing work was featured in Newsweek’s EU Price Fixing Costs Households Billions. Connor’s findings show the scale of overcharging, with illegal cartels across Europe costing each EU household the equivalent of three-and-a-half years of bread, rice, and cereals. In June 2014, Connor was awarded the AAI’s Alfred E. Kahn Award for Antitrust Achievement for his work as the world’s leading cartel researcher.
Moss on Pepco-Exelon Merger in Washington Examiner
From Zach Colman’s Washington Examiner article Opponents call on feds to stop Pepco-Exelon merger:
“A merged Exelon-Pepco would possess an enhanced ability and pre-existing, powerful incentive to engage in vertical foreclosure and block entry by rivals. If unaddressed through antitrust remedies, the proposed merger stands not only to harm competition and consumers but also to reverse some of the gains from restructuring,” American Antitrust Institute President Diana Moss wrote in a Wednesday letter to William Baer, assistant attorney general for the Justice Department’s Antitrust Division….
… She noted the Department of Justice in the past has encouraged divestiture of electric generation assets, the most recent being Exelon’s 2012 acquisition of Constellation Energy, parent company of Baltimore Gas and Electric Co.
“I think the fact that DOJ is still looking into it is indicative that they have concerns,” Moss told theExaminer. “The deal is problematic.”
AAI Praises Supreme Court’s State-Action Decision
The American Antitrust Institute (AAI) applauds the Supreme Court’s ruling today in North Carolina State Board of Dental Examiners v. Federal Trade Commission. The AAI had filed a brief supporting the position adopted by the Court.
The Court held that “a state board on which a controlling number of decisionmakers are active market participants in the occupation the board regulates must satisfy Midcal’s active supervision requirement in order to invoke state-action antitrust immunity.”
“This is a tremendous victory for the FTC,” said the AAI Vice President and General Counsel Richard Brunell.
In a 6-3 decision written by Justice Kennedy, the Court not only affirmed the FTC’s decision to hold the North Carolina dental board liable for excluding competing non-dentist teeth whitening providers, but it confirmed the FTC’s long-held bipartisan consensus that unsupervised state regulatory boards controlled by market participants should be subject to antitrust scrutiny.
The Court also offered a ringing endorsement of the antitrust laws, declaring: “Federal antitrust law is a central safeguard for the Nation’s free market structures.”
“Today’s decision is the culmination of a project to narrow and rationalize the state-action doctrine that began with Chairman Tim Muris and was brought to fruition by successive Republican and Democratic commissions,” Brunell explained. In a state-action decision two years ago, cited by the Court today, the Court made it more difficult for defendants to establish the other requirement for state-action immunity, namely that the state “clearly articulate” a policy to displace competition.
The Court accepted the argument made by the AAI and others that the “clear articulation” requirement and the “active supervision” requirement work hand in hand to ensure that an anticompetitive policy “is indeed the policy of a State.”
The clear-articulation requirement alone is insufficient, according to the Court, because “a policy may satisfy this test yet still be defined at so high a level of generality as to leave open critical questions about how and to what extent the market should be regulated,” questions that may be answered by self-interested boards to further their own interests rather than the State’s. In this case, while North Carolina law barred the unlicensed practice of dentistry, it was silent as to whether teeth whitening constituted the practice of dentistry.
The Court rejected the argument that immunity is needed because otherwise full-time professionals would be reluctant to volunteer on state boards, noting that the States may provide for the defense and indemnification of agency members, and that immunity would still be available if States adopt clear policies to displace competition and supervise market participants when they enforce or interpret those policies. The Court also suggested, but pointedly did not decide, that sovereign immunity might shield board members from damages in some circumstances.
Notably, the Court did not limit the supervision requirement to state boards whose members are elected by their peers, which the lower court had thought was significant. Nor did the Court specify what constitutes active supervision, leaving it up to the FTC and the lower courts to flesh out the particulars based on general principles articulated in other cases, including the principle that the “supervisor must have the power to veto or modify particular decisions to ensure they accord with state policy.”
The Court did not say whether judicial review might satisfy the active-supervision requirement. However the Court did note that the North Carolina board had failed to rely on “any of the powers at its disposal that would invoke oversight by a politically accountable official,” which included going to court to seek an injunction.
In dissent, Justices Alito, Scalia and Thomas claimed that the decision “will spawn confusion.” The dissenters noted that many issues were also left open by the Court including whether supervision may be required when something less than a majority of the board is comprised of active market participants, whether professionals who temporarily withdraw from practice are “active market participants,” and whether active market participants who do not engage in the particular conduct at issue (say, dentists who do not practice teeth whitening) would require active supervision.
Media Contact:
Richard Brunell
rbrunell@antitrustinstitute.org
202-600-9640
AAI Applauds FTC’s Challenge of Sysco and US Foods Merger
The American Antitrust Institute (AAI) today applauded the Federal Trade Commission (FTC) for challenging the proposed merger of broadline food distributors Sysco and US Foods. “Kudos to the FTC for taking a stand to block this deal,” said AAI President Diana Moss.
The Complaint, issued today, lays out in detail how the proposed combination would harm competition and consumers, both on a national level and in a number of regional markets. Notably, the Complaint explains how proposed divestitures are inadequate to restore competition lost by the merger. The AAI has advocated against the proposed merger since it was proposed, starting with a letter to the FTC in February 2014.
“We are impressed on two counts,” said Moss. “The FTC has recognized that not all deals can be fixed, and the Commission is moving to protect competition in our critical food supply chain, which has suffered from undue concentration and ‘domino-like’ consolidation.”
Media Contact:
Diana Moss
dmoss@antitrustinstitute.org
202-379-4662
AAI Praises Massachusetts Judge for Rejecting Hospital Merger Settlement
The American Antitrust Institute (AAI) praised yesterday’s decision by a Massachusetts Superior Court Judge to reject a proposed settlement that would have allowed the Partners Healthcare System hospital merger to move forward. Partners, the dominant hospital system in Eastern Massachusetts, proposed acquiring two community hospital systems in suburban Boston.
AAI Vice President and General Counsel Richard Brunell said, “The decision should send a signal to state and federal antitrust enforcers that they shouldn’t settle for remedies that do not provide adequate protection for competition and consumers.”
The rejected settlement purportedly addressed former Massachusetts Attorney General (AG) Martha Coakley’s concerns over the anticompetitive effects of combining the hospital systems. But the Court ruled that the settlement was not in the public interest because it did not resolve such concerns and would be difficult to enforce.
The Judge, Janet Sanders, cited the AAI’s filings “as among the most valuable” of the public comments.
“We were pleased that the Court accepted AAI’s and other opponents’ arguments that complex and hard-to-enforce price caps are other conduct remedies are not an effective way to resolve harmful mergers,” said AAI President Diana Moss. “Conduct remedies in antitrust cases do not involve reducing the share of the merged firm or concentration in the market – only that the merged firm adhere to certain conditions.”
The AAI filed two sets of comments opposing the settlement, including analysis by Northeastern University Professor of Economics John Kwoka. Judge Sanders rejected the former AG’s argument that the AAI filings should be given little weight because the AAI favors strong enforcement of the antitrust laws. “[T]his does not diminish the value of AAI’s input,” the Court said.
The Court made particular reference to the AAI’s criticisms of the proposed price caps and “component-contracting” mechanism, as well as skepticism of conduct remedies. Among other things, the Court noted the complexity of the price cap methodology and difficulty of a court supervising a decree that makes it an “ad hoc regulatory agency.”
Brunell noted, “We hope this decision emphasizes to courts that they are not rubber stamps when they review proposed consent decrees.” Earlier in the week, the incoming Attorney General announced that she would withdraw from the settlement and seek to block the deal if the judge rejected it, so there will be no basis for an appeal.
Media Contacts:
Richard Brunell
202-600-9640
rbrunell@antitrustinstitute.org
Diana Moss
202-379-4662
dmoss@antitrustinstitute.org
FTC Commissioner McSweeny Speech from AAI Antitrust Enforcement Awards Dinner
On Tuesday, December 2, FTC Commissioner Terrell McSweeny addressed the attendees of the American Antitrust Institute’s 2nd Annual Antitrust Enforcement Awards dinner. The dinner took place JW Marriott in Washington DC. Read the Commissioner’s remarks here.
