Legal Library: Cases and Proceedings

The Commission authorized a preliminary injunction to block Thoratec Corporation’s proposed $282 million acquisition of rival medical device maker HeartWare International, Inc., charging that the transaction would substantially reduce competition in the U.S. market for left ventricular devices (LVADs), a life-sustaining treatment for patients with advanced heart failure. The FTC’s administrative complaint alleges that Thoratec seeks to maintain its monopoly by acquiring HeartWare, thus eliminating the only significant threat to Thoratec’s continued dominance of the LVAD market.  In August of 2009, the parties announced they would not to proceed with the proposed acquisition, and the Commission dismissed the Administrative Complaint without filing an motion for preliminary injunction in federal court.

Alta Bates Medical Group, Inc., a 600-physician independent practice association serving the Berkeley and Oakland, California, area, settleed Commission charges that it violated federal antitrust law by fixing prices charged to health care insurers. The consent order prohibits Alta Bates from collectively negotiating fee-for-service reimbursements and engaging in related anticompetitive conduct. In addition to price-fixing of fee-for-service reimbursements, the FTC’s complaint alleges an unlawful concerted refusal to deal.

The FTC authorized a lawsuit to block CSL Limited’s proposed $3.1 billion acquisition of Talecris Biotherapeutics Holdings Corporation, charging that the deal would would substantially reduce competition in the U.S. markets for four plasma-derivative protein therapies – Immune globulin (Ig), Albumin, Rho-D, and Alpha-1. These therapies are used to treat patients suffering from illnesses such as primary immunodeficiency diseases, chronic inflammatory demyelinating polyneuropathy, alpha-1 antitrypsin disease, and hemolytic disease of the newborn. In approving the administrative complaint seeking to block the deal, the Commission also authorized the staff to seek a preliminary injunction in federal district court in Washington, D.C., to stop the transaction pending completion of the administrative trial.  Following the FTC's lawsuit to block the transaction, CSL Limited announced that it would not proceed with its proposed acquisition.

The Commission filed an administrative complaint charging that between 1991 and 1996 Rambus, Inc. joined and participated in the JEDEC Solid State Technology Association (JEDEC), the leading standard-setting industry for computer memory. According to the complaint, while a member of JEDEC, Rambus observed standard-setting work involving technologies which Rambus believed were or could be covered by its patent applications, but failed to disclose this to JEDEC. In 1999 and 2000, after JEDEC had adopted industry-wide standards incorporating the technologies at issue and the industry had become locked in to the use of those technologies, Rambus sought to enforce its patents against companies producing JEDEC-compliant memory, and collected substantial royalties from several producers of DRAM (dynamic random access memory).

The administrative law judge dismissed all charges against Rambus, finding that Rambus’ conduct before the JEDEC standard-setting organization did not amount to deception and did not violate any extrinsic duties, such as a duty of good faith to disclose patents or patent applications. Upon review, the FTC issued an opinion concluding that Rambus unlawfully monopolized markets for four computer memory technologies that have been incorporated into industry standards DRAM chips. The Commission found that, through a course of deceptive conduct, Rambus was able to distort a critical standard-setting process and engage in an anticompetitive “hold up” of the computer memory industry. In a separate opinion on the appropriate remedy, the Commission barred Rambus from making misrepresentations or omissions to standard-setting organizations, and required Rambus to license its SDRAM and DDR SDRAM technology and setting limits to the royalty rates it can collect under the licensing agreements.Tp>

Rambus appealed the Commission’s order to the U.S. Court of Appeals for the District of Columbia Circuit, and in April 2008, the appellate court set aside the Commissions final orders. The Supreme Court denied the Commission's Petition for Writ of Certiorari, and on May 14, 2009 the Commission formally dismissed the complaint.

The National Association of Music Merchants (NAMM), a trade association with more than 9,000 members nationwide, settled charges that it violated federal law by enabling and encouraging the exchange of competitively sensitive price information among its members. The FTC alleged that NAMM organized meetings at which its members were encouraged to communicate, and did in fact share, information about prices and business strategy. To the detriment of consumers, NAMM’s conduct enhanced the members’ ability to coordinate price increases for musical instruments. In settling the complaint, NAMM agreed to stop engaging in such conduct.

The Commission challenged Getinge AB’s proposed $865 million acquisition of rival Datascope Corporation as anticompetitive in the market for endoscopic vessel harvesting devices (EVHs). EVHs are used during coronary artery bypass graft surgery where a vein is removed from a patients leg or arm to replace a damaged or blocked coronary artery. According to the Commission’s complaint, the acquisition as proposed would give Getinge nearly a 90% market share and the ability to unilaterally increase prices while reducing the likelihood of innovation. The Commission issued a consent order requiring that Datascope divest its EVH assets to Sorin Group USA within 10 days of consummating the transaction.

In November 2008, the Commission issued an administrative complaint charging that the acquisition of CCC Information Services by Mitchell International, a transaction valued at $1.4 billion, would be anticompetitive in the market for “estimatics”, a database system used by auto insurers and repair shops to generate repair estimates for consumers. According to the complaint, the transaction would also harm competition in the market for total loss valuation (TLV) systems, used to inform consumers when their vehicle has been totaled. The transaction would create a new entity with well over half of the market share for these systems, allowing for unilateral price increases, and facilitating coordination among the remaining smaller competitors in the market. The Commission concurrently authorized staff to file a complaint in Federal District Court. On March 9, 2009, the US District Court for the District of Columbia ordered a preliminary injunction and temporary restraining order preventing the parties from consummating the transaction pending a full administrative trial on the merits. On March 13, 2009, since the respondents announced that they decided not to proceed with the proposed merger the Commission dismissed the Administrative Complaint.

In November 2008, the Commission authorized staff to file a complaint in Federal District Court, charging that the acquisition of CCC Information Services by Mitchell International, a transaction valued at $1.4 billion, would be anticompetitive in the market for “estimatics”, a database system used by auto insurers and repair shops to generate repair estimates for consumers. According to the complaint, the transaction would also harm competition in the market for total loss valuation (TLV) systems, used to inform consumers when their vehicle has been totaled. The transaction would create a new entity with well over half of the market share for these systems, allowing for unilateral price increases, and facilitating coordination among the remaining smaller competitors in the market. The Commission concurrently issued an administrative complaint. On March 9, 2009, the US District Court for the District of Columbia ordered a preliminary injunction and temporary restraining order preventing the parties from consummating the transaction pending a full administrative trial on the merits. On March 13, 2009, since the respondents announced that they decided not to proceed with the proposed merger the Commission dismissed the Administrative Complaint.

The Commission challenged the conduct of AllCare IPA, alleging that AllCare restrained competition in fee-for-service contracts by fixing prices and other contract terms with payers, engaging in collective negotiations over the terms and conditions of dealing with payers, and preventing group members from negotiating with payers except on terms approved by All Care. The Commission issued a consent order prohibiting All Care from entering into agreements between or among physicians: 1) to negotiate on behalf of any physician with any payer; 2) to refuse to deal, or threaten to refuse to deal, with any payer; 3) to designate the terms, conditions, or requirements upon which any physician deals, or is willing to deal, with any payer, including, but not limited to price terms; 4) not to deal individually with any payer, or not to deal with any payer through any arrangement other than one involving All Care.