International Monthly: May 2016

 
 U.S. Competition, Consumer Protection and Privacy News
 

MAY 2016

Competition

President Obama Issues Competition Call to Action

President Obama

President Obama recently issued an executive order calling on all executive departments and agencies in the United States “to promote competition, arm consumers and workers with the information they need to make informed choices, and eliminate regulations that restrict competition without corresponding benefits to the American public.” The President requested agencies to recommend specific actions to detect and address anticompetitive conduct, identify undue regulatory burdens on competition, and otherwise promote greater competition within the next two months. Read more about it on the FTC’s blog.

U.S. Antitrust Agency Officials Meet with Officials of Chinese Antitrust Agencies

China meeting pic

FTC Chairwoman Edith Ramirez and Assistant Attorney General Bill Baer of the U.S. Department of Justice’s Antitrust Division met in Washington with senior officials of China’s three anti-monopoly agencies, the National Development and Reform Commission (NDRC), Ministry of Commerce (MOFCOM), and State Administration for Industry and Commerce (SAIC). At the meetings, the participating agencies exchanged information and views on antitrust developments and priorities and discussed the role of competition enforcement and advocacy in promoting innovation.

Staples and Office Depot Abandon Merger After Successful FTC Challenge

Staples and Office Depot abandoned their proposed $6.3 million merger following a ruling by the United States District Court that the merger was likely to substantially impair competition in the sale and distribution of consumable office supplies to large business-to-business customers. The same court had blocked an earlier proposed merger between the two firms in 1997. “Today’s court ruling is great news for business customers in the office supply market,” said FTC Bureau of Competition Director Debbie Feinstein. “This deal would eliminate head-to-head competition between Staples and Office Depot and likely lead to higher prices and lower quality service for large businesses that buy office supplies.” The FTC coordinated its investigation with other competition agencies around the world, including Canada’s Competition Bureau, which challenged the merger on the same day as the FTC.

Chairwoman Ramirez Participates in ICN’s Fifteenth Annual Conference

The ICN held its 15th annual conference, hosted by the Competition Commission of Singapore (CCS), on April 26-29. The conference showcased the achievements of ICN working groups on unilateral conduct, agency effectiveness, mergers, cartels, and competition advocacy. ICN members approved new guidance related to merger remedies, agency assessment and performance measurement, cartel investigative powers, market studies, competition agency ethics programs, and advocacy to the business community. Chairwoman Ramirez spoke on a panel about disruptive innovation and competition advocacy, highlighting the FTC’s advocacy in markets being reshaped by new forms of competition, including emerging internet peer-to-peer platforms and telehealth. The results of a survey of ICN members and private sector advisors were presented as part of its Second Decade initiative.

Supplier of High-Performance Polymer for Medical Implants Settles FTC Charges That It Monopolized Sales to World’s Largest Medical Device Makers

Invibio, which supplies medical device makers with a high-performance polymer known as PEEK, agreed to settle FTC charges that it unlawfully maintained a monopoly by using long-term exclusive contracts. PEEK is used to make spinal and other medical implants. The complaint alleged that two other companies entered the implant-grade PEEK market, but that Invibio’s anticompetitive tactics impeded them from effectively competing for customers, with the result that Invibio retained approximately 90 percent of PEEK sales worldwide. Under the proposed consent order, Invibio is prohibited from entering into exclusive supply contracts and from preventing current customers from using an alternate source of PEEK in new products. It is also prohibited from including terms that set minimum purchase requirements, condition discounts or important services on a purchase from Invibio of a specified percentage of a manufacturer’s PEEK requirements, and providing retroactive volume discounts. In addition, the companies must allow certain current customers to modify existing contracts to eliminate exclusive purchasing requirements. For more details, see the analysis to aid public comment on the FTC website.

FTC Staff Submits Comment on Proposed Health Care Legislation in Alabama

FTC staff submitted written comments opposing proposed legislation in Alabama that purports to immunize “authorities” formed by any public university operating a medical school in Alabama, and their collaborative activities “with all types of health care providers,” from the federal antitrust laws. As stated in the comment, the proposed bills seek to immunize potentially anticompetitive conduct from federal antitrust scrutiny. If effective, these bills could shield anticompetitive mergers, price fixing, boycotts, and a wide variety of other anticompetitive conduct that harms consumers.

Consumer Protection and Privacy

Federal Court Finds Amazon Liable for Billing Parents for Children’s Unauthorized In-App Charges

A federal judge has granted the FTC’s request for summary judgment against Amazon, Inc., for billing consumers for unauthorized in-app charges incurred by children. The judge’s order finds that Amazon received many complaints about these charges, and that the company’s disclosures about the possibility of in-app charges within otherwise “free” apps were not sufficient to inform consumers about the charges. The order requires the parties to submit briefs on the final amount of monetary relief Amazon owes consumers and grants a partial summary judgment requested by Amazon regarding injunctive relief. The FTC filed its case against Amazon in July 2014. The FTC previously reached settlements with Apple, Inc. and Google, Inc. related to unauthorized in-app charges incurred by children, requiring the companies to fully refund consumers for such charges, resulting in refunds to consumers totaling over $50 million.

FTC Alleges Companies Deceived Consumers with Fake Subscription Notices for Newspapers

The FTC has filed a complaint to stop a group of related individuals and companies from deceiving consumers through fake newspaper subscription notices. According to the FTC’s complaint, the defendants sent out mailers that looked like real notices from major daily newspapers and well-known magazines asserting that people’s subscriptions would automatically renew if they paid, and claiming to offer the lowest available rates. The rates, however, were actually up to 40 percent more than the newspapers typically charge, and some consumers never even got their papers. When consumers tried to cancel their payments, they either were unsuccessful or received only a partial refund, according to the complaint. More than 375 newspapers have told the defendants to stop, and many have placed “alerts” on their websites and/or in their publications to warn consumers. The FTC’s lawsuit seeks to stop the operation and obtain money for return to consumers.

Hand-Held Vaporizer Company Settles FTC Charges It Deceived Consumers About Participation in Asia-Pacific International Privacy Program

A manufacturer of hand-held vaporizers has agreed to settle FTC charges that it deceived consumers about its participation in the Asia-Pacific Economic Cooperation (APEC) Cross-Border Privacy Rules (CBPR) system. According to the FTC complaint, Very Incognito Technologies, Inc., doing business as Vipvape, represented on its website that it was a participant in the APEC CBPR system. Companies that seek to participate in the APEC CBPR system must undergo a review by an APEC-recognized accountability agent, which certifies companies that meet the standards. According to the FTC complaint, the company was not certified. See the FTC website for the settlement and a blog post with more details.

FTC Charges Education Lead Generator with Tricking Job Seekers by Claiming to Represent Hiring Employers

In the agency’s first enforcement action against an education lead generator, operators of Gigats.com have agreed to settle FTC charges that the company claimed it was “pre-screening” job applicants for hiring employers when it was actually gathering information for other purposes, including lead generation for post-secondary schools and career training programs. According to the FTC’s complaint, the operators of Gigats.com steered consumers that responded to false or unauthorized job listings on its website to “education advisors” and “employment specialists” who then used the personal information consumers submitted in response to the job listings to connect them with schools or programs that had paid the defendants for consumer leads. The proposed stipulated order prohibits the defendants from engaging in these misrepresentations and prohibits defendants from transferring consumers’ sensitive personal information without their express consent.

In Other News

FTC To Host June 9 FinTech Forum on Marketplace Lending

FinTech

The FTC will host a forum in Washington, DC on June 9 to explore marketplace lending models and their potential benefits and concerns for consumers. Marketplace lenders are typically nonbank online financial platforms that leverage technology to reach consumer and small business borrowers. Check the FTC’s website for a full agenda for the forum and topics and dates for more FINTECH events in the fall of 2016.

FTC To Study Mobile Device Industry’s Security Update Practices

To gain a better understanding of security in the mobile ecosystem, the FTC has issued orders to eight mobile device manufacturers requiring them to provide the agency with information about how they issue security updates to address vulnerabilities in smartphones, tablets, and other mobile devices. The eight companies receiving orders from the FTC are: Apple, Inc.; Blackberry Corp.; Google, Inc.; HTC America, Inc.; LG Electronics USA, Inc.; Microsoft Corp.; Motorola Mobility, LLC; and Samsung Electronics America, Inc.

FTC, DOJ Issue Joint Statement on Preserving Competition in the Defense Industry

The FTC and the Department of Justice issued a joint statement reaffirming the importance of preserving competition in the defense industry. The statement describes the agencies’ framework for analyzing defense industry mergers and acquisitions and emphasizes that the antitrust agencies work closely with the Department of Defense, which is in a unique position to assess the impact of proposed defense industry consolidation on its ability to fulfill its mission.

FTC Workshop Will Examine Competition and Consumer Protection Issues in the Rooftop Solar Business

rooftop solar

The FTC will hold a workshop in Washington, DC on June 21 to examine competition and consumer protection issues raised by consumers’ growing use of rooftop solar panels to generate their own electric power. The agency invites comments from the public on the topics to be covered by this workshop. More details will be posted on the event webpage.

FTC Provides Testimony About Competition in the Pet Medications Industry

Testifying before Congress on behalf of the FTC, the Deputy Director of the FTC’s Office of Policy Planning described the state of competition in the pet medications industry, as well as the FTC’s work in this area. In 2012, the FTC conducted a public workshop to examine competition and consumer protection issues in the pet medications industry. The testimony outlined the FTC’s research into two related issues that could impact competition for the sale of pet medications: the limited availability of portable pet medication prescriptions that would give consumers the option to purchase prescription pet medications from somewhere other than the prescribing veterinarian’s office, and manufacturers’ use of exclusive distribution policies, which limit the supply of pet medications to veterinary practices as opposed to other outlets such as pet supply retail stores. In 2015, FTC staff issued a report that summarized input from industry stakeholders and consumer advocates, made recommendations, and identified areas for further study.