Legal Library: Cases and Proceedings

The FTC required healthcare companies Fresenius Medical Care AG & KGaA and NxStage Medical, Inc. to divest all rights and assets related to NxStage’s bloodline tubing set business to B. Braun Medical, Inc. as part of a settlement resolving charges that Fresenius’s proposed $2 billion acquisition of NxStage likely would be anticompetitive. The FTC’s complaint alleges that the proposed merger would harm competition in the U.S. market for bloodline tubing sets that are compatible with hemodialysis machines used in clinics that treat chronic renal failure. Bloodline tubing sets are single-use plastic tube sets used during hemodialysis treatments. Fresenius and NxStage are two of only three significant suppliers of bloodline tubing sets used in open architecture hemodialysis machines in the United States. Fresenius and NxStage together control 82 percent of the market for bloodlines.The settlement requires Fresenius and NxStage to divest to B. Braun all assets and rights to research, develop, manufacture, market, and sell NxStage’s bloodline tubing sets.

Ronnie Montano, Hyong Su Kim (also known as Jimmy Kim), Martin Schranz and their related companies, settled Federal Trade Commission allegations that they deceived consumers by falsely claiming they could earn big money working online by using products marketed as "secret codes." 

The Federal Trade Commission is sending refund checks totaling more than $7 million to people deceived by the operators of an alleged business opportunity fraud that targeted seniors and others living on a fixed income. The refunds stem from a settlement the FTC reached in 2017 with Advertising Strategies, LLC, under which the defendants surrendered virtually all their assets to provide consumer refunds.

The FTC's complaint alleges that Endo Pharmaceuticals Inc. and several other drug companies violated antitrust laws by using pay-for-delay settlements to block consumers’ access to lower-cost generic versions of Lidoderm.  The agreement not to market an authorized generic – often called a “no-AG commitment” – is the form of reverse payment.  The FTC’s complaint alleges that Endo paid the first generic companies that filed for FDA approval – Watson Laboratories, Inc. – to eliminate the risk of competition for Lidoderm, in violation of the Federal Trade Commission Act.  Lidoderm is a topical patch used to relieve pain associated with post-herpetic neuralgia, a complication of shingles.  Under federal law, the first generic applicant to challenge a branded pharmaceutical’s patent, referred to as the first filer, may be entitled to 180 days of exclusivity as against any other generic applicant upon final FDA approval. But a branded drug manufacturer is permitted to market an authorized generic version of its own brand product at any time, including during the 180 days after the first generic competitor enters the market. According to the FTC, a no-AG commitment can be extremely valuable to the first-filer generic, because it ensures that this company will capture all generic sales and be able to charge higher prices during the exclusivity period.  The FTC is seeking a court judgment declaring that the defendants’ conduct violates the antitrust laws, ordering the companies to disgorge their ill-gotten gains, and permanently barring them from engaging in similar anticompetitive behavior in the future.

Endo agreed to settle the charges in a proposed stipulated order to be entered by the court.

FTC Bureau of Competition Director Bruce Hoffman issued the following statement regarding the U.S. District Court ruling today that granted the FTC’s request for a preliminary injunction in the proposed merger of Tronox Limited and Cristal. The companies are top suppliers in the United States and Canada of chloride process titanium dioxide (TiO2), a white pigment used in paints, industrial coatings, plastic and paper:

10 Companies and 10 individuals settled Federal Trade Commission allegations that their deceptive and unfair tactics violated the FTC Act and the Fair Debt Collection Practice Act. The action is part of the FTC's continuing crackdown on all players involved in phantom debt schemes, including those who sell fake debt portfolios and those who harass consumers to collect the phony debt. 

The Federal Trade Commission is sending payments totaling more than $1 million to 1,966 consumers who were harmed by a debt collection scheme that conned consumers into paying debts they did not owe. The defendants used several names including GAFS Group, Global Mediation Group, and Mediation Services.

Soundboard Association sued the Federal Trade Commission alleging that the agency violated the APA by not issuing the regulation following notice-and-comment rulemaking, and that it was infringing on telemarketing companies' First Amendment rights.

The FTC is mailing 227,995 checks totaling more than $6 million to consumers who purchased health products from three individuals and the 19 companies they controlled—collectively known as Tarr, Inc. Affected consumers will receive their refund checks, which average $26.57, soon.

Office supply distributors Staples Inc. and Essendant Inc. have agreed to a settlement as part of the companies’ proposed $482.7 million merger in order to resolve Federal Trade Commission allegations that the deal may have harmed competition in the market for office supply products sold to small- and mid-sized businesses.

In 2018, the FTC and State of New York alleged that Campbell Capital, LLC and its owner, Robert Heidenreich, along with a number of other related companies, collected payments on debts from consumers that exceeded the amounts they allegedly owed. The defendants in the case were able to collect these funds by allegedly using tactics such as threatening that consumers would be arrested or served with legal papers at work if they did not make payments immediately. In some cases, according to the suit filed by the FTC and New York, the collectors pretended to be sheriff’s office employees or process servers when making such threats in phone calls with consumers.

Heidenreich agreed to a settlement with the FTC and New York in February 2020 that permanently banned him from the debt collection industry and required him to turn over funds to be used to provide refunds to affected consumers. In total, $19,826.64 will be sent to consumers, with each receiving a check for $32.88.

Entrepreneur Mitchell P. Rales agreed to pay $720,000 in civil penalties to resolve charges that he violated the Hart-Scott-Rodino Act by failing to report his purchases of shares in two industrial companies, Colfax Corporation and Danaher Corporation.  The FTC alleged that Rales violated the HSR Act by failing to file as required when his wife purchased shares in Colfax in 2011. The shares, which are attributed to Rales under the applicable HSR Rules, were above the filing threshold. According to the complaint, Rales was in violation of the HSR Act from 2011, when the shares were purchased, to 2016, when he made a corrective filing and observed the waiting period. The complaint also alleged that in 2008, Rales violated the HSR Act by buying shares of Danaher that exceeded the filing threshold and failing to file. Rales was in violation of the HSR Act between 2008, when he bought the shares, and 2016, when he made a corrective filing and observed the waiting period. Although Rales contended that the violations were inadvertent, the Commission determined to seek penalties because, as noted in the complaint, Rales had paid civil penalties to settle an earlier HSR enforcement action brought by the Department of Justice in 1991.

American Air Liquide Holdings, Inc. and Airgas, Inc., agreed to divest certain production and distribution assets to settle charges that their proposed $13.4 billion merger likely would have harmed competition and led to higher prices in several U.S. and regional markets. The companies will sell assets used to produce and supply seven types of industrial gas: bulk oxygen, bulk nitrogen, bulk argon, bulk nitrous oxide, bulk liquid carbon dioxide, dry ice, and packaged welding gases sold in retail stores. These gases are used in a number of industries, including oil and gas, steelmaking, health care, and food manufacturing, according to the complaint. Under the proposed settlement order, Air Liquide will sell these assets to a Commission-approved buyer within four months after it acquires Airgas. The proposed consent agreement includes an asset maintenance order to ensure that Air Liquide and Airgas continue to act independently and maintain the relevant assets until they are divested.

German cement producer HeidelbergCement AG and Italian producer Italcementi S.p.A. agreed to divest a cement plant in Martinsburg, WV and up to 11 cement distribution terminals in six other states to settle charges that their proposed $4.2 billion merger would likely harm competition in five regional markets for cement in the United States. Heidelberg and Italcementi are the second and fourth largest producers of cement in the world, and in the United States, the two companies compete through their respective U.S. subsidiaries, Lehigh Hanson and Essroc Cement Corp., to sell portland cement – an essential ingredient in making concrete. According to the FTC complaint, the merger as proposed would harm competition for portland cement in five metropolitan areas: Baltimore-Washington, DC; Richmond, Virginia; Virginia Beach-Norfolk-Newport News, Virginia; Syracuse, New York; and Indianapolis, Indiana. In each of these markets, the FTC alleges the merger as originally proposed would have reduced the number of competitively significant suppliers from three to two. The proposed consent agreement requires the merged company to divest to an FTC-approved buyer an Essroc cement plant and quarry in Martinsburg, West Virginia; seven Essroc terminals in Maryland, Virginia and Pennsylvania; and a Lehigh terminal in Solvay, New York. At the buyer’s option, the order also requires the merged company to divest two additional Essroc terminals in Ohio. Under the proposed order, these divestitures must occur within 120 days after the merger is complete. In addition, the merged company has ten days after the merger is complete to divest Essroc’s terminal in Indianapolis to Cemex, Inc.

Energy companies Energy Transfer Equity, L.P. (“ETE”), and The Williams Companies, Inc., agreed to divest Williams’ interest in an interstate natural gas pipeline to proceed with ETE’s proposed acquisition of Williams. According to the complaint, the proposed merger, if consummated, would have reduced competition in the market for “firm” – i.e., guaranteed – pipeline capacity to deliver natural gas to points within the Florida peninsula. In Florida, natural gas is extensively used for electric power generation, making competitive access to constant and reliable sources of supply critical. The complaint alleges that absent a remedy, the acquisition would eliminate the competition between FGT and Gulfstream, which historically has enabled Florida customers to obtain lower transportation rates and better terms of service. It also would have resulted in a pipeline monopoly at many natural gas delivery points within the peninsula.  The complaint also alleges that the proposed merger likely would harm future competition from a new interstate pipeline, Sabal Trail Transmission LLC, which is scheduled to start transporting natural gas to parts of the Florida peninsula in May 2017. According to the complaint, Sabal Trail and its future customers will rely on leased access to a segment of the Transco Pipeline, a Williams-owned, large interstate pipeline, for natural gas supply. The complaint alleges that the newly merged company would have an incentive to deny Sabal Trail additional capacity expansions on Transco because ETE’s FGT pipeline is a closer competitor to Sabal Trail than was Williams’ Gulfstream pipeline.

Invibio agreed to settle charges that it used long-term supply contracts to exclude rivals and maintain its monopoly in implant-grade polyetheretherketone, known as PEEK, which is sold to medical device makers. The FTC’s complaint alleges that two other companies,Solvay Specialty Polymers LLC and Evonik Corporation, later entered the implant-grade PEEK market, but Invibio’s anticompetitive tactics impeded them from effectively competing for customers. Through these exclusive contracting practices, the complaint alleges that Invibio has been able to maintain high prices for PEEK, despite entry from Solvay and Evonik; to prevent its customers from using more than one source of supply, despite their business preference to do so; and to impede Solvay and Evonik from developing into fully effective competitors. Under the consent order, Invibio, Inc. and Invibio Limited, along with their corporate parent, Victrex plc, are generally prohibited from entering into exclusive supply contracts and from preventing current customers from using an alternate source of PEEK in new products. In addition, the companies must allow current customers meeting certain conditions to modify existing contracts to eliminate the requirement that the customer purchase PEEK for existing products exclusively from Invibio.

Generic drug manufacturers Lupin Ltd. and Gavis Pharmaceuticals LLC agreed to sell the rights and assets for two generic drugs, in order to settle FTC charges that Lupin’s proposed $850 million acquisition of Gavis would likely be anticompetitive.The merger would have combined two of only four companies that currently market generic doxycycline monohydrate capsules in two dosage strengths, used to treat bacterial infections, likely resulting in higher prices. The merger also would have eliminated one of only a few companies likely to enter the market for  generic mesalamine extended release capsules, used to treat ulcerative colitis, in the near future, thereby delaying beneficial competition and the prospect of price decreases. Under the terms of the order, Lupin is required to transfer to G&W Laboratories all of Gavis’s rights and assets related to generic doxycycline monohydrate capsules no later than ten days after the acquisition is consummated. The order also requires that Gavis divest its rights and assets related to generic mesalamine capsules to G&W before the acquisition takes place.

The FTC filed a complaint in federal district court alleging that Endo Pharmaceuticals Inc. and several other drug companies violated antitrust laws by using pay-for-delay settlements to block consumers’ access to lower-cost generic versions of Opana ER and Lidoderm with an agreement not to market an authorized generic – often called a “no-AG commitment” – as a form of reverse payment. The complaint, filed in the Eastern District of Pennsylvania, alleges that Endo paid the first generic companies that filed for FDA approval – Impax Laboratories, Inc. and Watson Laboratories, Inc. – to eliminate the risk of competition for Opana ER and Lidoderm, in violation of the Federal Trade Commission Act. Opana ER is an extendedrelease opioid used to relieve moderate to severe pain. Lidoderm is a topical patch used to relieve pain associated with post-herpetic neuralgia, a complication of shingles. The FTC is seeking a court judgment declaring that the defendants’ conduct violates the antitrust laws, ordering the companies to disgorge their ill-gotten gains, and permanently barring them from engaging in similar anticompetitive behavior in the future.  Teikoko Pharma USA and Teikoku Seiyaku Co., Ltd. agreed to a stipulated order resolving FTC charges.

In November 2016, the FTC voluntarily dismissed the complaint in this action.  On January 23, 2017, the FTC refiled charges related to the Lidoderm agreements in federal court in California (Federal Trade Commission vs. Allergan plc; Watson Laboratories, Inc., et al) and refiled charges related to the Opana ER agreement in a Part 3 administrative proceeding.  (In re Impax Laboratories, Inc.)

Three affiliated hedge fund companies and their management company, Third Point LLC, have agreed to settle FTC charges that they violated premerger reporting laws in connection with their 2011 acquisitions of stock in Yahoo! Inc. The complaint alleges that Third Point Partners
Qualified L.P., Third Point Ultra, LTD, and Third Point Offshore Fund, LTD failed to observe the filing and waiting requirements of the Hart-Scott-Rodino Act before purchasing shares in Yahoo. According to the complaint, the three defendant funds claimed that they were exempt from reporting to the U.S. antitrust authorities because the purchases were made solely for investment purposes. At the time of the stock purchases, however, defendant Third Point LLC, which made investment decisions on behalf of the funds, was taking actions inconsistent with an investment-only intent. Under the terms of the proposed stipulated five-year federal court order, the defendants are prohibited from relying on the investment-only exemption if they have contacted third parties to gauge their interest in joining the board of the target company, communicated with the target company about proposed candidates for its board, or engaged in other specified conduct in the four months prior to acquiring voting securities above the HSR Act threshold. In this case, the agencies determined not to seek civil penalties based on several factors, including that the violation was inadvertent and short-lived, and this was the defendants’ first violation of the HSR Act.

Pharmaceutical companies Endo International plc and Par Pharmaceuticals, Inc. agreed to divest all of Endo’s rights and assets to generic glycopyrrolate tablets and generic methimazole tablets in order to settle FTC charges that Endo’s proposed $8 billion acquisition of Par would likely be anticompetitive. New Jersey-based generic drug marketer Rising Pharmaceuticals will acquire the divested assets. Under the settlement, Endo must supply Rising with the divested products for two years, while it transfers the manufacturing technology to Rising’s chosen third-party manufacturer. Endo also must provide technical assistance, training, and other transitional services to help Rising establish manufacturing capabilities. Without the divestitures required by the proposed order, the FTC alleges that the acquisition would combine the two most significant suppliers in the market for generic glycopyrrolate tablets, which are used with other drugs to treat certain types of ulcers, and two of only four active suppliers in the market for generic methimazole tablets, which are used to treat the body’s production of excess thyroid hormone.