Legal Library: Cases and Proceedings

The Federal Trade Commission filed an administrative complaint, and authorized a suit in federal court, to block the proposed $350 million acquisition by Memphis-based Methodist Le Bonheur Healthcare of two Memphis-area hospitals, known as Saint Francis, owned by Dallas-based healthcare system Tenet Healthcare Corporation. The complaint alleges that the proposed acquisition would substantially lessen competition in the Memphis area for a broad range of inpatient medical and surgical diagnostic and treatment services that require an overnight hospital stay, known as inpatient general acute care services, sold to commercial insurers and their insured members.  According to the complaint, if the proposed acquisition is consummated, healthcare costs will rise, and the incentive to expand service offerings, invest in technology, improve access to care, and focus on quality of health care provided in the Memphis area will diminish. On Dec. 23, 2020, the parties announced that they were abandoning the acquisition.

The Federal Trade Commission required medical device companies Stryker Corp. and Wright Medical Group N.V. to divest all assets related to Stryker’s total ankle replacements and finger joint implant products to remedy concerns, as alleged in the complaint, that Stryker’s proposed $4 billion acquisition of Wright would harm competition in these two markets. Under the consent order, Stryker and Wright must divest all assets associated with Stryker’s total ankle replacements and finger joint implants to DJO Global, allowing it to become an independent, viable, and effective competitor in these markets.  After a period for public comment, the Commission issued its final order on December 11, 2020.

The Federal Trade Commission has filed an administrative complaint challenging a proposed joint venture between Peabody Energy Corporation and Arch Coal. The transaction would combine their coal mining operations in the Southern Powder River Basin, located in northeastern Wyoming. The complaint alleges that the transaction will eliminate competition between Peabody and Arch Coal, the two major competitors in the market for thermal coal in the Southern Powder River Basin, and the two largest coal-mining companies in the United States. On Sept. 29, 2020, the U.S. District Court for the Eastern District of Missouri granted the FTC’s request for a preliminary injunction, and the parties abandoned their transaction.

Casino operator Eldorado Resorts, Inc. has agreed to divest assets to settle charges that its $17.3 billion acquisition of Caesars Entertainment Corporation likely would be anticompetitive in the South Lake Tahoe area of Nevada, the Bossier City-Shreveport area of Louisiana, and the Kansas City area of Kansas and Missouri. According to the complaint, the proposed acquisition would harm competition for casino services in these three local markets, increasing the likelihood that Eldorado would unilaterally exercise market power, which in turn would lead to higher prices and reduced quality. In August 2020, the Federal Trade Commission approved a final order resolving those charges.

Announced in June 2019 as part of a crackdown on illegal robocalls against operations around the country responsible for more than one billion calls, the FTC’s complaint against six corporate and three individual defendants jointly doing business as Second Choice Horizon and CSG Solutions, alleges Raymond Gonzalez, Carlos S. Guerrero, and Joshua Hernandez ran a maze of interrelated operations that used illegal robocalls to contact financially distressed consumers with offers of bogus credit card interest rate reduction services. The FTC contends many of the consumers targeted were seniors. In July 2020, the FTC announced the defendants had settled the Commission’s complaint, and are banned from telemarketing and selling debt relief services.

The operators of a scheme that targeted new businesses across the country with bogus threats of government fines will pay $1.2 million and be banned from sending unsolicited direct mail under a settlement with the Federal Trade Commission and the State of Florida.

In September 2017, a group of online marketers agreed to pay more than $2.5 million to settle FTC charges that it deceived consumers with “free” and “risk-free” trials for cooking and golfing products. According to a complaint filed in March 2017, the defendants offered “free” products, without clearly disclosing that by accepting the “free” product consumers were agreeing to be charged each month for a subscription if they did not cancel. They also allegedly misrepresented their return, refund and cancellation policies. The order setting the FTC’s complaint barred the defendants from misrepresenting the cost of any good or service, that consumers will not be charged, that consumers can get something for a processing or shipping fee with no further obligation, and that a product or service is free. In April 2020, the FTC announced it was sending refund checks totaling $488,629 to defrauded consumers.

Texas-based energy company Par Petroleum Corporation agreed to terminate its storage and throughput rights at a key gasoline terminal in Hawaii, to settle FTC charges that Par’s proposed $107 million acquisition of Koko’oha Investments, Inc.’s wholly-owned subsidiary Mid Pac Petroleum, LLC would likely be anticompetitive. According to the FTC’s complaint, the proposed merger would reduce competition and lead to higher prices for bulk supply of Hawaii-grade gasoline blendstock, ultimately increasing the price of gasoline for Hawaii consumers. As a result of the proposed acquisition, Par gained Mid Pac’s rights to Aloha’s Barbers Point terminal, which it does not need for importation because it produces its own blendstock, but which it could exercise in a manner that impairs Aloha’s use of its terminal. If Par were to hamper Aloha’s import capability, it would weaken Aloha’s ability to negotiate lower bulk supply prices from Par and Chevron, and thus reduce Aloha’s ability to compete effectively in the bulk supply market. Potential new competitors would be unable to deter or counteract the anticompetitive effects resulting from the acquisition, according to the complaint. The consent agreement requires Par to terminate the Barbers Point terminal storage and throughput rights it acquires from Mid Pac within five days after the merger is completed. Par will retain rights to load a limited number of tanker trucks at the Barbers Point terminal, and must obtain prior FTC approval to modify these rights or enter into any new agreement at the Barbers Point terminal. In January 2020, the FTC sought public comment on Par’s application to modify the agreement to store petroleum products at Barbers Point terminal.

The Federal Trade Commission has filed an administrative complaint challenging a proposed joint venture between Peabody Energy Corporation and Arch Coal. The transaction would combine their coal mining operations in the Southern Powder River Basin, located in northeastern Wyoming. The admininstrative complaint alleges that the transaction will eliminate competition between Peabody and Arch Coal, which are the two major competitors in the market for thermal coal in the Southern Powder River Basin, and the two largest coal-mining companies in the United States. This civil case seeks a temporary restraining order and preliminary injunction enjoining the defendants from consummating their joint venture. The Commission votes to issue the administrative complaint and to authorize staff to seek a temporary restraining order and preliminary injunction were both 4-1. The administrative trial is scheduled to begin on Aug. 11, 2020.

The FTC is mailing refund checks totaling more than $2.6 million to small businesses who lost money to a New York-based office supply scam operated by a business known as A-1 Janitorial.