The FTC and the Department of Justice Antitrust Division have issued draft vertical merger guidelines, which are open to public comment for 30 days. They outline the agencies’ principal analytical techniques, practices, and enforcement policy for vertical mergers, adopting principles and analytical frameworks in the agencies’ Horizontal Merger Guidelines, including on market definition, entry, acquisition of a failing firm or its assets, and acquisition of a partial ownership interest. Specifically, the draft guidelines: describe potential anticompetitive effects resulting from vertical mergers; identify foreclosure, raising rivals’ costs, and access to competitively sensitive information as potential elements of antitrust harm under unilateral effects; describe an analytic framework for analyzing potential anticompetitive effects of foreclosure and raising rivals’ costs; discuss how the elimination of double marginalization may mitigate or completely neutralize potential anticompetitive effects; discuss cognizable merger efficiencies that are specific to vertical mergers; and provide examples to provide clarity about the agencies’ analytical methods.
The FTC issued an administrative complaint challenging Axon Enterprise, Inc.’s consummated acquisition of body-worn camera systems competitor VieVu, LLC. According to the complaint, by eliminating direct and substantial competition in price and innovation between dominant supplier Axon and its closest competitor, VieVu, to serve large metropolitan police departments, the merger removed VieVu as a bidder for new contracts and allowed Axon to impose substantial price increases. The complaint also challenged bans on VieVU’s parent company, including a ban on its competing with Axon on any of Axon’s products, which the FTC alleged were not related to any legitimate business interest.
Following the FTC’s administrative complaint challenging Post Holdings, Inc.’s proposed acquisition of TreeHouse Foods, Inc.’s private label ready-to-eat cereal business, the parties abandoned the transaction. Post and TreeHouse are two of only three significant manufacturers and distributors of private label ready-to-eat cereal in the United States. The acquisition would have given Post more than a 60 percent share of an already highly concentrated market and eliminated the vigorous competition between the two firms to serve grocers across the country.
Illumina Inc. has abandoned its proposed $1.2 billion acquisition of Pacific Biosciences of California after the Commission voted to file an administrative complaint and ask a federal court to block the transaction. The FTC charged that the proposed transaction would likely have eliminated nascent competition in the U.S. market for next-generation DNA sequencing systems and allowed Illumina to maintain its monopoly in that market.
The FTC closed its investigation of Roche Holding AG’s proposed acquisition of Spark Therapeutics, Inc. after an exhaustive, 10-month investigation into whether the merger would lessen potential competition in the U.S. market for hemophilia A therapies. According to the Commission’s statement, the evidence “did not indicate that Roche would have the incentive to delay or terminate Spark’s developmental effort for its hemophilia A gene therapy, or that the acquisition would affect Roche’s incentives regarding [its hemophilia treatment drug] Hemlibra.”
Consumer Protection and Privacy
The FTC filed suit against a company that sells fuel card services to businesses, alleging that it has charged tens of thousands of customers at least hundreds of millions of dollars in hidden fees after making false promises about helping customers save on fuel costs and protecting them from unauthorized charges. The complaint outlines a broad array of fees that the defendants have charged customers in ways that customers did not detect. For more details, click the headline above.
The FTC entered into a settlement agreement with a mortgage broker that allegedly violated the Fair Credit Reporting Act and other laws by revealing personal information about consumers in response to negative reviews posted on the review website Yelp. The settlement prohibits the defendants from misrepresenting their privacy and data security practices, misusing credit reports, and improperly disclosing personal information to third parties. The corporate defendant must also implement a comprehensive data security program designed to protect the personal information it collects and obtain third-party assessments of its information security program every two years. The Department of Justice filed the complaint on behalf of the FTC.
The operators of a work-from-home scheme and the CEO of their main affiliate marketing network will pay nearly $1.5 million to settle FTC allegations that they used misleading spam emails and websites to lure consumers into buying work-from-home services. The FTC complaint alleges that Effen Ads, LLC and its owners worked with an affiliate marketing network called W4 LLC to promote their work-from-home scheme. The emails and websites previewed and displayed fake news stories and false celebrity endorsements using names of well-known news outlets and finance experts. For details, click the headline above.
Three individuals and a telephone call center that helped Grand Bahama Cruise Line LLC and others to make millions of illegal robocalls to consumers entered into a settlement that permanently bars them from making telemarketing robocalls. The FTC will litigate in federal court against Grand Bahama and six other defendants involved in the massive operation, who have not agreed to settle. For details click the headline above. For a blog post on “free” cruises with an upsell, click here.
At the request of the FTC, a federal court ordered the operators of several online rental listings websites aimed at vulnerable consumers to pay more than $6 million after the FTC alleged that they made false and unfounded claims about their listings. The order also permanently bans the defendants from offering rental listing services. Defendants falsely claimed on their website targeting low-income, disabled, and older adults that the site had accurate, up-to-date listings that were approved for government housing vouchers. Defendants also falsely claimed that consumers could access hundreds of thousands of accurate, up-to-date, and available listings on their other subscription websites, and that they had exclusive rights to list rental properties that consumers could not find on free websites.
In Other News
FTC Chairman Simons announced the appointment of University of Maryland Economics Professor Andrew Sweeting as the Director of the FTC Bureau of Economics. Sweeting replaces Bruce Kobayashi, who will return to George Mason University.
The FTC has released the final agenda for a January 28 workshop that will examine voice cloning technologies, which enable users to make near-perfect reproductions of a real person’s voice. The workshop will examine the benefits and potential misuses of voice cloning technologies. It will include three panel discussions focused on the pros and cons of voice cloning, the ethics of voice cloning, and authentication, detection, and mitigation. It will take place at the FTC’s Constitution Center office, 400 7th St., SW, Washington, DC, and will be webcast live on the FTC’s website and live tweeted from the FTC’s Twitter page (@FTC) using the hashtag #voicecloningFTC. Click the headline above for more details.
The FTC will host its fifth annual PrivacyCon on July 21. For PrivacyCon 2020, the FTC is seeking research presentations on any topic related to consumer privacy and security. However, the conference will focus on the privacy of health data collected, stored, and transmitted by mobile applications (“apps”). PrivacyCon is free and open to the public. It will be held at the FTC’s Constitution Center Office, located at 400 7th St., SW, Washington, DC. PrivacyCon will also be webcast live. For details, including the questions regarding which the agency seeks empirical research, click on the headline above.
The Bureau of Consumer Protection has published a blog post for business looking at notable FTC cases and initiatives from the past year to suggest topics likely to be important in 2020. The topics include: consumer privacy; the Children’s Online Privacy Protection Act; data security; endorsements, certifications, and influencers; consumer reviews; health claims; FinTech; financial injury; and telemarketing. For details, click the headline above.
The FTC ranked second overall out of 25 mid-sized agencies surveyed by the non-profit, non-partisan Partnership for Public Service, maintaining its position among the top-rated places to work in the federal government for 2019. The Commission earned the top spot in six categories: effective leadership; employee skills-mission match; strategic management; teamwork; innovation; and performance-based rewards and advancement. In addition, the FTC’s Bureau of Consumer Protection and Bureau of Competition both ranked in the top 10 out of a total of 420 subcomponents from all federal agencies.
FTC staff submitted comments to state legislatures in Kansas and Ohio on the impact of legislative proposals to modify the supervision requirements imposed on advanced practice registered nurses, or APRNs. Comments to the Kansas and Ohio legislatures urge ending requirements for APRN’s to have collaborative practice agreements with physicians (or, in the case of Ohio, podiatrists) to prescribe medications and, in Ohio, therapeutic devices. Both comments note research by the Institute of Medicine and by FTC staff on the effects of APRN regulations. Both comments also suggest that granting APRNs full practice authority would benefit healthcare consumers, because expanding APRN scope of practice may “improve access to care, contain costs, and expand innovation in health care delivery.”