Legal Library: Cases and Proceedings

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 staff of the Bureau of Competition to file suit to enjoin Edgewell Personal Care Company’s proposed $1.37 billion acquisition of its key competitor, Harry’s, Inc. The Commission’s complaint alleged that the proposed combination would eliminate one of the most important competitive forces in the shaving industry. The loss of Harry’s as an independent competitor would have removed a critical disruptive rival that has driven down prices and spurred innovation in an industry that was previously dominated by two main suppliers, one of whom is the acquirer. On Feb. 10, 2020, the FTC issued a statement on the parties’ announcement that they had abandoned the acquisition.

The Federal Trade Commission authorized an action to block Illumina Inc.’s proposed $1.2 billion acquisition of Pacific Biosciences of California, alleging in an administrative complaint that Illumina is seeking to unlawfully maintain its monopoly in the U.S. market for next-generation DNA sequencing systems by extinguishing PacBio as a nascent competitive threat. The Commission vote to issue the administrative complaint and to authorize staff to seek a temporary restraining order and preliminary injunction was 5-0. On Jan. 2, 2020, the parties abandoned the transaction.

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 Federal Trade Commission authorized an action to block Evonik Industries AG’s proposed $625 million acquisition of PeroxyChem Holding Company, alleging the merger of the chemical companies would substantially reduce competition in the Pacific Northwest and the Southern and Central United States for the production and sale of hydrogen peroxide, a commodity chemical used for oxidation, disinfection, and bleaching.

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.

Food distributor US Foods, Inc. has agreed to divest assets to settle Federal Trade Commission charges that US Foods, Inc.’s proposed $1.8 billion acquisition of Services Group of America, Inc. would violate federal antitrust law. The complaint alleges that, in Eastern Idaho, Western North Dakota, Eastern North Dakota, and the Seattle area, the transaction would eliminate a key broadline distributor and limit customers’ ability to switch between distributors to obtain better pricing and service. Under the proposed consent agreement, within 30 days of the acquisition closing, US Foods must divest three FSA distribution centers: one in Boise, Idaho; another in Fargo, North Dakota (FSA competes in both Eastern and Western North Dakota out of this facility); and a third in the greater Seattle area. On Nov. 19, 2019, the FTC announced that it has approved a final order settling the charges.

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. 

The FTC issued an administrative complaint charging that Fidelity National Financial’s proposed $1.2 billion acquisition of Stewart Information Services would violate the antitrust laws by significantly reducing competition for title insurance underwriting for large commercial transactions in 45 states and the District of Columbia, and for title information services in 14 local markets. The FTC alleges that if consummated, the merger would reduce an industry dominated by “the Big 4” players to the Big 3. Post-merger, Fidelity would control more than 43 percent of all title insurance sales nationwide, and over 40 percent of sales for large commercial transactions in most state-level markets. The FTC also authorized staff to seek in federal court a temporary restraining order and a preliminary injunction to prevent the parties from consummating the merger, and to maintain the status quo pending the administrative proceeding. On Sept. 10, 2019, the parties abandoned the transaction.

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.

The Federal Trade Commission has imposed conditions on UnitedHealth Group’s proposed acquisition of DaVita Medical Group. In its complaint, the FTC alleged that the proposed $4.3 billion acquisition would harm competition in healthcare markets in two Nevada counties, Clark and Nye. Under the proposed settlement, the FTC required UnitedHealth Group to divest DaVita’s HealthCare Partners of Nevada to Intermountain Healthcare. The Commission announced on Aug. 22, 2019 that the settlement was made final.

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.