International Monthly: December 2015

 U.S. Competition, Consumer Protection and Privacy News



FTC Challenges Merger of Staples and Office Depot

The FTC challenged the proposed acquisition of Office Depot by Staples. The FTC’s administrative complaint alleges that the acquisition would significantly reduce competition nationwide in the market for “consumable” office supplies sold to large business customers for their own use. The FTC worked closely with the Canadian Competition Bureau, which filed its own action to block the merger on the same day, as well as the European Commission and the Australian Competition and Consumer Commission. The FTC is also seeking an order from a federal court to preliminarily enjoin the merger.

FTC Requires Divestiture in Semiconductor Acquisition

NXP Semiconductors N.V. has agreed to sell its RF power amplifier assets to settle FTC charges that its proposed $11.8 billion acquisition of Freescale Semiconductor Ltd. is anticompetitive. The proposed consent order preserves competition by requiring NXP to divest all NXP assets used primarily for manufacturing, research, and development of RF power amplifiers to the Chinese private equity firm Jianguang Asset Management Co. Ltd. Throughout the investigation, FTC staff cooperated with staff of the antitrust agencies in the European Union, Japan, and Korea, including on the analysis of the proposed transaction and potential remedies, to reach compatible approaches on an international scale.

FTC Challenges Proposed Merger of Two Pennsylvania Hospitals

The FTC, jointly with the state of Pennsylvania, filed a complaint in federal district court seeking a preliminary injunction to stop Penn State Hershey Medical Center’s proposed merger with Pinnacle Health System, pending an administrative trial. According to the administrative complaint, (a public version of which will be made available here), the merger would create a dominant provider of general acute care inpatient hospital services sold to commercial health plans in the area of south-central Pennsylvania. The FTC charged that the merger would likely lead to increased healthcare costs and reduced quality of care for more than 500,000 local residents and patients.

Consumer Protection and Privacy

Wyndham Hotels Settles Charges that It Put Consumers’ Payment Card Information at Risk

Wyndham Hotels and Resorts has agreed to settle FTC charges that the company’s security practices unfairly exposed the payment card information of hundreds of thousands of consumers to hackers in three separate data breaches. Under the terms of the settlement, the company will establish a comprehensive information security program designed to protect cardholder data – including payment card numbers, names and expiration dates. In addition, the company is required to conduct annual information security audits and maintain safeguards in connections to its franchisees’ servers. The settlement concludes federal court litigation initiated by the FTC in 2012. It follows an August 2015 opinion by the Third Circuit Court of Appeals upholding the FTC’s authority over data security practices it charges are unfair pursuant to Section 5 of the FTC Act.

Coordinated Sweep Targets Dietary Supplement Claims

As part of a multi-agency sweep targeting deceptive claims in the marketing of dietary supplements, the FTC charged that a Florida company’s claims for its “scientifically formulated opiate detox supplement” were false and unsubstantiated. The sweep, which included criminal charges against a Texas company stemming from the manufacturing and marketing of popular workout and diet supplements, included actions by the Justice Department, the Department of Defense, the U.S. Postal Inspection Service, and the U.S. Anti-Doping Agency. The FTC complaint centered on marketing claims that Elimidrol, marketed by Sunrise Nutraceuticals, would provide the relief needed to overcome physical and mental symptoms associated with opiate withdrawal.

FTC Cracks Down on Tech Support Scams

At the FTC’s request, a Federal court has shut down a tech support scam that allegedly bilked consumers out of more than $17 million by pretending to represent Microsoft, Apple, and other major tech companies. According to a complaint< filed by the FTC, joined by the states of Pennsylvania and Connecticut, Click4Support LLC and affiliated firms and individuals used internet advertisements and popups that appeared to be from well-known technology companies to lure consumers into calling them. When consumers called the defendants’ phone numbers, they were further misled into thinking their computers were riddled with viruses, malware, or security breaches, and were given a high-pressure sales pitch for unnecessary tech support services.

Telemarketing Sales Rule Amended to Prohibit Payment Methods Favored by Scammers

The FTC has approved final amendments to its Telemarketing Sales Rule that will help protect consumers from fraud by prohibiting several types of payment methods favored by con artists and scammers. Among the amendments are rules that will stop telemarketers from dipping directly into consumer bank accounts by using certain kinds of checks and “payment orders” that have been “remotely created” by the telemarketer or seller; will bar telemarketers from receiving payments through traditional “cash-to-cash” money transfers provided by companies like MoneyGram, Western Union, and RIA; and will prohibit telemarketers from accepting as payment “cash reload” mechanisms, such as MoneyPak, Vanilla Reload, or Reloadit packs used to add funds to existing prepaid cards.

In Other News

Ginger Jin Named Director of FTC’s Bureau of Economics; Alison Oldale Named BE Deputy Director for Antitrust

FTC Chairwoman Edith Ramirez has appointed Professor Ginger Zhe Jin as Director of the Bureau of Economics, succeeding Francine Lafontaine, who is returning to the University of Michigan. Jin earned a doctorate in Economics from UCLA, master’s degrees in economics from UCLA and the Graduate School of the People’s Bank of China, and a bachelor’s degree in economic management from the University of Science and Technology of China. Chairwoman Ramirez also named Alison Oldale as the Bureau’s Deputy Director for Antitrust. Prior to re-joining the FTC, Oldale was an Executive Vice President at Compass Lexecon. Oldale previously worked for the FTC as the Bureau’s Deputy Director for Antitrust on a detail assignment from the United Kingdom’s Competition Commission, where she was Chief Economist. She earned a doctorate in economics and a master’s degree in econometrics and mathematical economics from the London School of Economics, and a bachelor’s degree in economics from the University of Cambridge.

Lorrie Cranor Appointed FTC Chief Technologist

FTC Chairwoman Edith Ramirez has appointed Lorrie Faith Cranor as the agency’s Chief Technologist, succeeding Ashkan Soltani. Cranor will join the FTC staff in January and be primarily responsible for advising on developing technology and policy matters. She is currently a Professor of Computer Science and Engineering and Public Policy at Carnegie Mellon University, where she directs the CyLab Usable Privacy and Security Laboratory.

FTC and Federal Communications Commission Sign MOU

The FTC and the Federal Communications Commission have signed a Memorandum of Understanding to further the agencies’ ongoing cooperation on consumer protection matters. The MOU formalizes the existing cooperation between the agencies, outlining how the FTC and FCC will coordinate consumer protection efforts. The memorandum also outlines methods by which the agencies will share information and recognizes the agencies’ expertise in their respective jurisdictions.

FTC Files Amicus Brief in Reverse-Payment Settlement Case

The FTC filed an amicus brief urging the U.S. Court of Appeals for the Third Circuit to reverse a district court ruling that insulates pharmaceutical manufacturers from antitrust scrutiny. The case concerns allegations that Wyeth Pharmaceuticals agreed not to launch an “authorized generic version” of the antidepressant drug Effexor XR to induce Teva Pharmaceuticals Ltd. to abandon its patent challenge and refrain from selling generic Effexor XR for two years. The court ruled that an alleged reverse-payment settlement of patent litigation did not violate the antitrust laws, in part because the FTC did not object to the proposed settlement when the companies submitted it to the agency. The amicus brief argues that neither submission of a patent litigation agreement to the FTC nor the FTC’s decision not to take action insulates the settling parties from antitrust liability.

Do Not Call Registry Data Book Issued

Do Not Call graphic

The FTC has issued the National Do Not Call Registry Data Book for Fiscal Year 2015. The FTC’s National Do Not Call Registry lets consumers choose not to receive telemarketing calls. According to the Data Book, at the end of FY 2015, the Do Not Call Registry contained 222,841,484 actively registered phone numbers, and the FTC received 3,578,720 consumer complaints about unwanted telemarketing calls during the same period, a slight increase from the previous year.