Legal Library: Cases and Proceedings

Polyurethane foam producers FXI Holdings, Inc. and Innocor, Inc. have agreed to divest polyurethane foam pouring plants in three regional markets to Future Foam, Inc., to settle Federal Trade Commission charges that FXI’s proposed $850 million acquisition of Innocor would violate federal antitrust law. The FTC alleges that the combination of FXI and Innocor would substantially lessen competition for low-density conventional polyurethane foam used in home furnishings in three regional markets: the Pacific Northwest (Oregon and Washington); the Midwest states of Indiana, Michigan, and Ohio; and Mississippi. To remedy the proposed transaction’s anticompetitive effects, the proposed order requires the companies to divest FXI’s foam-pouring plant in Kent, Washington and Innocor’s foam-pouring plants in Elkhart, Indiana and Tupelo, Mississippi to Future Foam no later than 10 days after the close of the acquisition. On April 20, 2020, the Commission voted 5-0 to approve the final order settling the charges.

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 Federal Trade Commission authorized an action to block Post Holdings, Inc.’s proposed acquisition of the private label ready-to-eat ("RTE") cereal business of TreeHouse Foods, Inc.  In an administrative complaint issued on December 19, 2019, the Commission alleges that the proposed acquisition would harm retailers and end consumers by eliminating head-to-head competition between the Respondents in the United States market for private label RTE cereal. The Commission vote to issue the administrative complaint and to authorize staff to seek a temporary restraining order and preliminary injunction was 5-0. The administrative trial is scheduled to begin on May 27, 2020. The parties announced they had abandoned the transaction on Jan. 13, 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.

LifeLock paid $100 million to settle Federal Trade Commission contempt charges that it violated the terms of a 2010 federal court order that requires the company to secure consumers' personal information and prohibits the company from deceptive advertising. 

Chemical companies Quaker Chemical Corp and Houghton International Inc. have agreed to divest assets to a subsidiary of French multinational corporation Total S.A., to settle Federal Trade Commission charges that Quaker’s proposed $1.4 billion acquisition of Houghton would violate federal antitrust law. According to the complaint, the proposed acquisition would harm competition in the North American market for aluminum hot rolling oil and associated technical support services; and in the North American market for steel cold rolling oils, and associated technical support services. Steel cold rolling oils include sheet cold rolling oil, pickle oil, and tin plate rolling oil. Under the proposed settlement agreement, Quaker must divest Houghton’s North American aluminum hot rolling oil and steel cold rolling oil product lines and related assets to Total. On Sept. 12, 2019, the FTC announced that it has approved a final order in this matter.

In December 2018, officers of a company that marketed and sold Nobetes, a pill they claimed treats diabetes, settled an FTC complaint alleging that the advertising claims for the product are false or unsubstantiated. The order settling the FTC’s complaint prohibits the company and its officers from undertaking future deceptive practices, including making unsubstantiated health claims, misleading consumers about the terms of “free trial” offers, billing consumers without their consent, and other practices related to the use of “expert” endorsements and consumer testimonials. In addition, it requires them to pay money to provide refunds to consumers who bought the product. In August 2019, the FTC returned $60,791 to these consumers.

The FTC is mailing 53,595 refund checks totaling $748,070 to consumers nationwide who signed up for an online auction kit that was supposed to be free, but wasn’t. The kit actually cost consumers up to $59.95 per month if they failed to cancel a trial membership in a business opportunity program called Online Supplier.