Legal Library: Cases and Proceedings

According to the FTC's complaint, Bi-Lo’s proposed $265 million acquisition of the Delhaize supermarkets would likely harm consumers through higher grocery prices, diminished quality and reduced service levels in 11 local markets in three states. The consent order requires the merged Bi-Lo/Delhaize to sell 12 stores to Rowes IGA Supermarkets, HAC, Inc., W. Lee Flowers & Co., Inc. and Food Giant. Under the terms of the purchase agreement, Bi-Lo will acquire the Delhaize stores on a rolling basis, through eight separate deal closings over a 10-week period. Each supermarket divestiture must be completed within 10 days of the respective Bi-Lo/Delhaize closing date. The FTC settlement preserves supermarket competition in 11 local markets in three states.

The FTC’s complaint against the Music Teachers National Association, Inc. (MTNA), which represents over 20,000 music teachers nationwide, alleges that the association and its members restrained competition in violation of the FTC Act through a code of ethics provision that restricted members from soliciting clients from rival music teachers.  The proposed order requires MTNA to stop restricting or declaring it unethical for its members to solicit teaching work from other music teachers.  The order also requires MTNA to maintain an antitrust compliance program. In addition, MTNA is an umbrella organization for more than 500 state and local music teaching association affiliates throughout the country. Some of these affiliates have codes of ethics that restrain their members from charging fees that are lower than the average in the community, offering free lessons or scholarships, or advertising free scholarships or tuition. The proposed settlement requires MTNA to, among other things, stop affiliating with any association that MTNA knows is restricting solicitation, advertising, or price-related competition by its members.

The FTC challenged Pinnacle Entertainment, Inc.’s proposed $2.8 billion acquisition of rival casino operator Ameristar Casinos, Inc., alleging that the proposed deal would reduce competition and lead to higher prices and lower quality for casino customers in the St. Louis, Missouri and Lake Charles, Louisiana areas. In St. Louis, the two companies operated competing casinos, and in the Lake Charles area, Pinnacle operates one casino, and Ameristar is constructing a new casio to open next year. The FTC issued an administrative complaint against the two companies alleging that the deal would substantially lessen competition for casino services in the St. Louis and Lake Charles areas. The FTC also authorized staff to seek a temporary restraining order and preliminary injunction, but parties agreed to divest two casinos, one in St. Louis and another in Lake Charles, to settle the administrative charges.

On 4/8/2013, Bosley, Inc., the nation’s largest manager of medical/surgical hair restoration procedures, settled Federal Trade Commission charges that it illegally exchanged competitively sensitive, nonpublic information about its business practices with one of its competitors, HC (USA), Inc., commonly known as Hair Club, in violation of Section 5 of the FTC Act. In settling the FTC’s charges, Bosley has agreed not to communicate such information in the future, and will institute an antitrust compliance program. The FTC alleged that for at least the past four years, Bosley exchanged competitively sensitive, nonpublic information about its business operations with Hair Club. The information exchanged by the companies’ CEOs included details about future product offerings, surgical hair transplantation price floors and discounts, plans for business expansion and contraction, and current business operations and performance.

The largest U.S. supplier of diagnostic testing products used by small animal veterinarians, IDEXX Laboratories, Inc., agreed to drop its exclusive-dealing arrangements with a top distributor, resolving FTC charges that it was using the exclusive arrangements to stifle competition. IDEXX has agreed to a settlement order that prohibits concurrent exclusive distribution arrangements with the three national distributors of point-of-care (POC) diagnostic testing products. According to the FTC’s complaint, IDEXX has used its dominant market power to reduce competition by threatening to drop the distributors if they carried other companies’ products that compete with IDEXX products.

Koninklijke Ahold N.V., the parent company of Giant Food Stores, LLC, agreed to sell a supermarket outside of Philadelphia, Pennsylvania, to settle charges that its proposed acquisition of the Genuardi's supermarket chain from Safeway Inc. otherwise would be anticompetitive. The transaction, if completed, would eliminate competition between Giant and Genuardi's.  To preserve competition in the local grocery market, the consent order requires Ahold to sell a supermarket in Newtown, Pennsylvania to McCaffrey's supermarkets.

The FTC filed an administrative complaint challenging OSF Healthcare System’s proposed acquisition of Rockford Health System, charging that the acquisition would substantially reduce competition among hospitals and primary care physicians in Rockford, Illinois, and significantly harm local businesses and patients. The FTC filed a separate complaint in federal district court seeking an order to halt the transaction temporarily to preserve competition for Rockford area residents pending the FTC’s administrative proceeding and any subsequent appeals. On 4/5/2012, the U.S. District Court ruled granting the FTC's request for a preliminary injunction. On 4/13/2012, the FTC dismissed the complaint in light of OSF Healthcare's decision to abandon the proposed transaction.