Legal Library: Cases and Proceedings

Pharmaceutical companies Pfizer Inc. and Mylan N.V. have agreed to divest assets and abide by other conditions to settle Federal Trade Commission charges that the proposed combination of Upjohn Inc. and Mylan N.V. will harm current or future competition in ten generic drug markets. The FTC’s complaint alleges that the proposed combination would harm current U.S. competition in seven product markets by reducing the number of existing suppliers, and that it would harm future U.S. competition in three additional product markets. The proposed consent order requires divestitures in all 10 markets.

The Federal Trade Commission took legal action against three ticket brokers based in New York who allegedly used automated software to illegally buy up tens of thousands of tickets for popular concerts and sporting events, then subsequently made millions of dollars reselling the tickets to fans at higher prices.

The three ticket brokers will be subject to a judgment of more than $31 million in civil penalties for violating the Better Online Ticket Sales (BOTS) Act, under a proposed settlement reached with the FTC. Due to their inability to pay, the judgment will be partially suspended, requiring them to pay $3.7 million.

This is the first case brought under the BOTS Act, which was enacted in 2016 and gives the FTC authority to take law enforcement action against individuals and companies that use bots or other means to circumvent limits on online ticket purchases.

The DOJ, at the FTC’s request, filed suit in federal district court charging that satellite television provider Dish Network, directly and through its authorized dealers, called numerous consumers whose numbers are on the National Do Not Call Registry. The United States also charged Dish Network, previously known as EchoStar, with violating the Telemarketing Sales Rule (TSR) by assisting and supporting its authorized dealers in telemarketing Dish Network services via “robocalls” that deliver prerecorded telemarketing messages when consumers answer their phones.  

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.

In December 2020, Voice over Internet Protocol (VoIP) service provider Alcazar Networks Inc. and its owner settled FTC charges that they facilitated tens of millions of illegal telemarketing phone calls, including some calls from overseas and some that displayed spoofed caller ID numbers. The proposed settlement bars the defendants from similar misconduct in the future, imposes a monetary penalty, and requires them to screen and monitor their customers. This was the FTC’s second case against a VoIP service provider.

The FTC issued an administrative complaint challenging the merger of two prosthetics manufacturers that are top sellers of prosthetic knees equipped with microprocessors. According to the FTC’s complaint, Otto Bock’s consummated acquisition of FIH Group Holdings (owner of Freedom Innovations) harmed competition in the U.S. market for microprocessor prosthetic knees by eliminating head-to-head competition between the two companies, removing a significant and disruptive competitor, and entrenching Otto Bock’s position as the dominant supplier. Microprocessor knees, which use microprocessors to adjust the stiffness and positioning of the joint in response to variations in walking rhythm and ground conditions, provide a stable platform for amputees. Compared to other products, microprocessor prosthetic knees reduce the risk of falling, cause less pain, and promote the health and function of the sound limb. In addition to issuing an administrative complaint, the Commission authorized agency staff to seek a temporary restraining order, preliminary injunction, and ancillary relief in federal court, should doing so be necessary to ensure the Freedom Innovations business remains viable and to preserve the Commission ability to order effective relief. On Dec. 1, 2020, the Commission announced approval for the divestiture of the Freedom assets.

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.

In September 2016, nutritional supplement marketer NutraClick agreed to settle FTC charges that it lured consumers with “free” samples of supplements and beauty products and then violated the law by charging them a recurring monthly fee without their consent. Four years later, in September 2020, the FTC filed a complaint alleging the company and its two principals were continuing to deceptively market their products, in violation of the FTC order. The settlement order, announced simultaneously with the complaint, bans the defendants from negative option marketing and requires them to pay more than $1 million for consumer redress. 

A Florida-based company that has promoted its Isoprex supplement to older adults as a miracle cure for pain and joint inflammation has agreed to a settlement with the FTC that bars the company from continuing to make its unproven claims. In September 2020, the FTC announced it was sending refunds totaling more than $76,000 to consumers who bought the deceptively marketed product.

Approximately $147 million is being mailed to 33,000 consumers in the second distribution of refunds resulting from the law enforcement actions brought against Western Union by the Federal Trade Commission (FTC), the U.S. Department of Justice (DOJ), and the U.S. Postal Inspection Service. Affected consumers are receiving compensation for 100 percent of their verified losses. This is the second refund distribution resulting from the agencies’ actions against Western Union. DOJ is still reviewing petitions from consumers who were harmed by Western Union’s practices, and will be providing opportunities for consumers who have not yet applied for refunds to file claims.

In April 2019, the FTC announced that a federal district court judge ordered Srinubabu Gedela and his companies to pay more than $50.1 million to resolve FTC charges that they made deceptive claims about the nature of their conferences and publications, and hid steep publication fees. The court ruling resolved a 2016 Commission complaint alleging that Gedela and the companies falsely advertised online scientific and medical academic journals and international conferences, and deceptively claimed the journals provided authors with rigorous peer review and editorial boards comprised of prominent academics.

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.