International Monthly: August/September 2019

 
 U.S. Competition, Consumer Protection and Privacy News
 

AUGUST/SEPTEMBER 2019

Highlights

FTC Chairman Announces Output from Hearings and Highlights Recommendations for SAFE WEB Act Renewal and Enhanced Cooperation Tools from International Hearing

FTC Chairman Joe Simons announced several important outputs from the FTC hearings, described below. Regarding the international hearing, Chairman Simons highlighted staff recommendations for Congressional reauthorization of the U.S. SAFE WEB Act, a key mechanism facilitating cross-border consumer protection cases, and pursuing mechanisms for enhanced information sharing and investigative assistance in antitrust investigations. In remarks delivered at the 46th Annual Fordham Conference on International Antitrust Law and Policy, Chairman Simons focused on these key takeaways from the FTC’s March hearing, “The FTC’s Role in a Changing World.” He also identified three other important takeaways from the international hearings: continuing FTC leadership internationally, expanded initiatives to build strong relations with counterparts, including through the FTC’s technical assistance and International Fellows programs, and continued support for the FTC’s role in formulating broader U.S. government policies that involve international issues within the agency’s mandate.

In addition to the international highlights, Chairman Simons identified that the FTC is preparing guidance addressing a number of other issues covered by the hearings. This includes a framework for evaluating technology platforms as well as guidance on vertical merger enforcement. As the Chairman explained, the latter will clarify that “anticompetitive vertical mergers are not unicorns, and there should not be a presumption that all vertical mergers are benign.” The Chairman also announced that staff is developing an addendum to the 2006 Horizontal Merger Commentary addressing the analysis of mergers involving nascent competitors and how staff accounts for non-price factors in horizontal merger analysis. Finally, the Chairman noted that the FTC’s Office of Policy Planning is engaged in projects assessing current thinking on common ownership as well as a review of the consumer welfare standard and its alternatives.

Consumer Protection and Privacy

Google and YouTube Will Implement Compliance System and Pay Record $170 Million for Alleged Violations of Children’s Privacy Law

google - youtube

Google LLC and its subsidiary YouTube, LLC will ensure that child-directed content can be identified and pay a record $170 million to settle allegations by the FTC and the New York Attorney General that the YouTube video sharing service illegally collected personal information from children without their parents’ consent in violation of the Children’s Online Privacy Protection Act (COPPA) Rule. This is the largest penalty by far under COPPA. The proposed settlement requires Google and YouTube to develop, implement, and maintain a system that permits channel owners to identify their child-directed content on the YouTube platform so that YouTube can ensure it is complying with COPPA.

The complaint alleges that YouTube violated the COPPA Rule by collecting personal information, in the form of persistent identifiers that are used to track users across the Internet, from viewers of child-directed channels without first notifying parents and obtaining their consent. YouTube earned millions of dollars by using the identifiers, commonly known as cookies, to deliver targeted ads to viewers of these channels, according to the complaint. The COPPA Rule requires that child-directed websites and online services provide notice of their information practices and obtain parental consent prior to collecting personal information from children under 13, including the use of persistent identifiers to track a user’s Internet browsing habits for targeted advertising. Third parties, such as advertising networks, are subject to COPPA when they have actual knowledge they are collecting personal information directly from users of child-directed websites and online services.

Five Companies Settle FTC Allegations That They Falsely Claimed Participation in the EU-U.S. Privacy Shield

privacy shield

Five companies have reached settlements with the FTC over allegations that they falsely claimed certification under the EU-U.S. Privacy Shield framework, which establishes a process to allow companies to transfer consumer data from European Union countries to the United States in compliance with EU law. The settling companies include: management software provider DCR Workforce, Inc.; cloud-based file transfer software provider Thru, Inc.; LotaData, Inc., which provides analysis of mobile users’ data; facial recognition software provider 214 Technologies, Inc.; and statistical analysis and support services provider EmpiriStat, Inc. One of the companies also falsely claimed that it was a certified participant in the Swiss-U.S. Privacy Shield framework, which establishes a data transfer process similar to the EU-U.S. Privacy Shield framework.

FTC Obtains Preliminary Injunction Halting Online Beauty Product Sellers’ Deceptive “Free Trial” Offers

The operators of a deceptive negative option scheme have agreed to a court-ordered preliminary injunction temporarily barring them from a wide range of conduct. The preliminary injunction stops the defendants from misleading consumers about supposedly “free trial” offers, enrolling them in unwanted continuity plans, billing them without their authorization, and making it nearly impossible for them to cancel or get their money back. According to the FTC, defendants operated an online subscription scam that pitched at least eight different product lines to consumers, primarily cosmetics and dietary supplements. Rather than the small shipping and handling fee for the trial, usually $4.99 or less, defendants ultimately charged unsuspecting consumers around $90 for the trial product and enrolled them in unwanted subscription plans with additional monthly charges.

Competition

FTC Challenges Proposed Merger of Hydrogen Peroxide Producers

evonik

The FTC has challenged Evonik Industries AG’s proposed $625 million acquisition of PeroxyChem Holding Company, alleging the merger of the chemical companies would substantially reduce competition in two regional markets for the production and sale of hydrogen peroxide, a commodity chemical used for oxidation, disinfection, and bleaching. The complaint alleged that the acquisition would increase the likelihood of coordination and would eliminate significant head-to-head competition, leaving only one other hydrogen peroxide producer in the Pacific Northwest and three other producers in the Southern and Central United States.

Title Insurance Firms Abandon Transaction in Face of FTC Challenge

The FTC filed suit to block title insurance provider Fidelity National Financial’s $1.2 billion acquisition of Stewart Information Services, alleging the merger would substantially reduce competition for title insurance underwriting for large commercial transactions, and for title information services. The parties subsequently abandoned the proposed transaction. The complaint alleged that the proposed acquisition would have reduced the number of significant competitors from 4 to 3 and eliminated significant head-to-head competition. The Commission vote to issue the administrative complaint and authorize staff to seek a temporary restraining order and preliminary injunction in federal district court was 3-1-1. Chairman Joseph Simons was recused and Commissioner Christine Wilson voted no. Bureau of Competition Director Bruce Hoffman called the abandonment “good news for everyone who requires title insurance when purchasing real estate in the United States. These customers will continue to benefit from vigorous competition for title insurance underwriting and title information services.”

FTC Conditions Quaker Chemical Corp.’s Acquisition of Houghton International

quaker houghton

Chemical companies Quaker Chemical Corp and Houghton International Inc. agreed to divest certain products and related assets to a subsidiary of Total S.A., to settle FTC 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 markets for aluminum hot rolling oil, steel cold rolling oil, and associated technical support services. The complaint alleges that Quaker and Houghton are the only two commercial suppliers of aluminum hot rolling oil and the two largest commercial suppliers of steel cold rolling oil in North America.

Funds Pay Civil Penalties for Failing to File Premerger Notifications

third point

Investment advisor Third Point LLC and three funds that it controls agreed to collectively pay $609,810 in civil penalties to settle FTC charges that the funds violated the premerger notification and waiting period requirements after they acquired the voting securities of DowDuPont Inc. The three funds and Third Point LLC are already under a 2015 federal court order stemming from allegations that the defendants violated the HSR Act in connection with acquisitions of voting securities of Yahoo! Inc.

FTC Requires Divestitures and Imposes Conditions on Boston Scientific Corp.’s Acquisition of BTG plc

boston scientific

Medical device company Boston Scientific Corp. agreed to divest its drug eluting beads (DEB) business to Varian Medical Systems to settle FTC charges that its proposed $4.2 billion acquisition of BTG plc would harm consumers in the U.S. market for DEBs, which are microscopic beads used to treat certain liver cancers. Boston Scientific Corp. is also required to divest its product line of bland beads, which are used to block the flow of blood to liver tumors, in order to ensure the divestiture’s effectiveness.

In Other News

coppa

FTC Seeks Comments on Children’s Online Privacy Protection Act Rule

In light of continued rapid changes in technology, the FTC is seeking comment on the effectiveness of the amendments the agency made to the Children’s Online Privacy Protection Act (COPPA) Rule in 2013 and whether additional changes are needed.

The COPPA Rule, which implements the Children’s Online Privacy Protection Act, requires certain websites and other online services that collect personal information from children under the age of 13 to provide notice to parents and obtain verifiable parental consent before collecting, using, or disclosing personal information from these children. The comment period closes on October 23. The FTC will hold a public workshop on the COPPA rule on October 7. Click here for details.

explore data

FTC Announces New Public Web Page with Interactive Do Not Call and Robocall Data

The FTC announced the debut of a new interactive public web page containing a wealth of information about the National DNC Registry and unwanted telemarketing robocalls. The page allows consumers to search the data interactively, for example, by clicking on a specific state or county. The information will be updated quarterly. In the past, similar DNC and robocall complaint data was only available to the public annually in the FTC’s Do Not Call Data Book.

class actions

FTC to Hold Workshop on Consumer Participation in Class Action Cases

On October 29, the FTC will hold a public workshop in Washington, DC on improving class action settlement notices for consumers. The event will address current practices and research related to class action notices, redress methods, claims rates, check-cashing rates, and similar issues. The workshop will include several panels of experts representing a wide range of perspectives, including consumer groups, defense and plaintiff attorneys, class action administrators, and government agencies. For details on the workshop and the Commission’s decade-old Class Action Fairness Project, click the headline above.

FTC to Hold Workshop on Made in USA Advertising and Marketing Claims

made in usa

On September 26, the FTC will hold a half-day public workshop in Washington, DC to consider “Made in USA” and other types of U.S.-origin claims made by domestic and foreign sellers, consumer perception of such claims, the need for any changes to the FTC’s existing guidance, and other issues. Click the headline above for details.