International Monthly: July 2017

 
 U.S. Competition, Consumer Protection and Privacy News
 

JULY 2017

Competition

FTC Conditions Broadcom’s Acquisition of Brocade Communications Systems

Semiconductor manufacturer Broadcom Limited agreed to establish a firewall to remedy the FTC’s concerns that its proposed $5.9 billion acquisition of Brocade Communications Systems, Inc. is anticompetitive. These concerns arise because of Broadcom’s current access to the confidential business information of Brocade’s major competitor, Cisco Systems, Inc., that could be used to restrain competition or slow innovation in the worldwide market for fibre channel switches. Fibre channel switches are part of storage area networks that transfer data between servers and storage arrays in data centers. Brocade and Cisco are the only two competitors in the worldwide market for fibre channel switches, and Broadcom supplies both companies with application specific integrated circuits (ASICs) to make fibre channel switches.

FTC Challenges Merger of Daily Fantasy Sports Sites

The FTC authorized legal action to block the merger of DraftKings and FanDuel, alleging that the combined firm would control more than 90 percent of the U.S. market for paid daily fantasy sports contests. According to the complaint, the merging parties are each other’s most significant competitor, battling head-to-head to offer the best prices and product quality, including the largest prize pools and greatest variety of contests. Consumers of paid daily fantasy sports contests are unlikely to view season-long fantasy sports contests as a meaningful substitute, due to the length of the contests, the limitations on number of entrants, and several other issues. Attorneys General in California and Washington, DC joined the FTC in filing for a temporary restraining order and preliminary injunction pending an administrative trial. The court granted the temporary restraining order on June 20.

Retail Fuel Stations Operator Divests 71 Stations as Condition of Merger

Retail fuel station and convenience store operator Alimentation Couche-Tard Inc. (ACT) agreed to divest up to 71 retail fuel stations with convenience stores to settle FTC charges that its proposed $4.4 billion acquisition of competitor CST Brands, Inc. would result in a monopoly in ten local markets and reduce the number of competitors in the rest to two or three. Retail fuel stations compete on price, convenience store format, product offerings, and location, and they pay close attention to nearby competitors. The complaint alleges that without the divestiture, the merger would allow the combined entity to raise prices unilaterally in markets where CST is ACT’s only or closest competitor and increase the likelihood of coordinated effects in markets in which only two or three competitors would remain.

Consumer Protection and Privacy

FTC Halts Operation That Unlawfully Shared and Sold Consumers’ Sensitive Data

blue mobile

The operators of a lead generation business have agreed to settle FTC charges that the company misled consumers into filling out loan applications and sold those applications – including consumers’ sensitive data – to virtually anyone willing to pay for the leads, while selling very few to lenders. The FTC complaint alleges that Blue Global Media, LLC and its CEO Christopher Kay operated dozens of websites that enticed consumers to complete loan applications that the defendants then sold as “leads” to a variety of entities without regard for how the information would be used or whether it would remain secure. The settlement prohibits defendants from misrepresenting that they can assist in providing loans on favorable rates and terms, that they will protect and secure personal information collected from consumers, and the types of businesses with which they share consumers’ personal information. Under the stipulated order, the defendants also are required to investigate and verify the identity of businesses to which they disclose consumers’ sensitive information, and must obtain consumers’ express, informed consent for such disclosures. The settlement includes a judgment for more than $104 million, suspended based on defendants’ inability to pay.

Paint Companies Settle FTC Charges That They Misled Consumers About Safety and Freedom from Emissions and VOCs

The FTC has reached agreement with four paint companies, Benjamin Moore & Co., Inc., ICP Construction Inc., YOLO Colorhouse, LLC, and Imperial Paints, LLC, to settle FTC charges that they deceptively promoted products as emission-free or containing zero volatile organic compounds (VOCs), including during and immediately after application. Some promotions also made explicit safety claims regarding babies, children, pregnant women, and other sensitive populations. However, the FTC alleged, the companies had no evidence to support these claims. The proposed settlement would bar them from making unqualified emission-free and VOC-free claims unless emissions from their paints are actually zero or at “trace levels” and requires them to send corrective notices to distributors. For links to the FTC complaints, click here.

FTC Provides Comments Supporting Federal Communications Commission Initiatives to Allow Providers to Block More Illegal Calls

The FTC provided a comment to the Federal Communications Commission (FCC) expressing support for the FCC’s efforts to enable telecommunications providers to engage in call blocking at the network level to protect consumers from illegal calls. Provider-based call blocking at the network level is the most effective and efficient type of call blocking, as it stops illegal calls before they reach consumers, and does so regardless of whether they have the newest cell phone or a traditional landline. The FTC comment also suggests the FCC consider clarifying that not only robocalls should be allowed to be blocked, but all illegal calls, including calls made by a live operator that are abusive, fraudulent, or unlawful.

In Other News

FTC and Other Consumer Protection Agencies Unveil Updated Website for International Consumer Protection and Enforcement Network

ICPEN

The FTC and consumer protection agencies in more than 60 other countries that are part of the International Consumer Protection and Enforcement Network (ICPEN) unveiled an update of ICPEN’s website – www.icpen.org – to help members identify and respond to consumer challenges that cross international borders. ICPEN’s updated website, which includes a mobile-friendly version, provides consumers with information on how to avoid scams and shop safely online. The site also includes information about how consumers can find help and file a complaint in cross-border disputes. Consumers who believe they have been a victim of an international scam can file a complaint at www.econsumer.gov, ICPEN's online complaint site, available in eight languages.

FTC Announces Agenda for Military Consumer Financial Workshop

military

The FTC has announced the agenda and speakers confirmed to date for its upcoming workshop in San Antonio, Texas on July 19 on financial issues and scams that can affect military consumers. The 2017 Military Consumer Financial Workshop: Protecting Those Who Protect Our Nation, will feature opening remarks by FTC Acting Chairman Maureen K. Ohlhausen. Key issues include: auto purchase, financing, and leasing; student and other lending, including installment credit practices; debt collection; legal rights and remedies; and financial literacy and capability, including identity theft and financial resources. The event will also be tweeted live from FTC’s Military Consumer Twitter account (@Milconsumer) using hashtag #MilFinancialWorkshop.

FTC Economic Liberty Task Force to Host Roundtable on Initiatives to Enhance Occupational License Portability

license portability

On July 27, the FTC Economic Liberty Task Force will host a roundtable in Washington, DC to examine ways to mitigate the effects of state-based occupational licensing requirements that make it difficult for license holders to obtain licenses in other states. License portability restrictions often prevent otherwise qualified people from marketing their services across state lines or when they move to a new state. These types of restrictions are especially hard on military families who often face the financial and administrative burdens of applying for a new license with each move across state lines. An agenda is available on the FTC website.

FTC Announces Regulatory Reform Measures Ranging from TVs and Textiles to Energy Labels and CAN-SPAM

As part of FTC Acting Chairman Maureen K. Ohlhausen’s regulatory reform initiative, the FTC announced regulatory reforms to ensure that its rules and guides keep pace with technological advances in the marketplace while continuing the agency’s mission to protect consumers and promote competition without unduly burdening legitimate business. The rules addressed include the FTC’s Picture Tube Rule, Textile Rules, Energy Labeling Rule, and the CAN-SPAM (Controlling the Assault of Non-Solicited Pornography and Marketing Act) Rule.

Acting Chairman Ohlhausen Names Markus Meier Acting Director of FTC Bureau of Competition

FTC Acting Chairman Maureen K. Ohlhausen named Markus H. Meier, who has served as Acting Deputy Director of the Bureau of Competition since November 2015, to replace recently retired Abbott (Tad) Lipsky as Acting Director of the Bureau of Competition. Alan Devlin, an Acting Deputy Director of the Bureau of Competition, also left the Commission on July 3, for private practice. Acting director Meier has led the Health Care division of the Bureau of Competition since 2006. Acting Chairman Ohlhausen also appointed Haidee L. Schwartz as an Acting Deputy Director of the Bureau of Competition. Marian R. Bruno will continue to serve as Deputy Director, a position she has held since 2008.