International Monthly: November 2016

 
 U.S. Competition, Consumer Protection and Privacy News
 

NOVEMBER 2016

Competition

FTC and DOJ Seek Public Comment on Proposed Revisions to International Antitrust Guidelines

Antitrust Guidelines

The FTC and the Department of Justice Antitrust Division seek public comment on proposed Antitrust Guidelines for International Enforcement and Cooperation, which update guidelines the Agencies issued in 1995. The updated guidelines provide information on the Agencies’ antitrust enforcement policy with respect to international activities, related investigative tools, and cooperation with foreign authorities. The proposed revisions describe the current practices and methods of analysis the Agencies employ when determining whether to initiate and how to conduct investigations of, or enforcement actions against, conduct with an international dimension. The revised guidelines also add a new chapter that discusses the Agencies’ international cooperation practices. Interested parties may submit comments electronically until Thursday, Dec. 1.

FTC Wins Another Hospital Merger Appeal

The United States Court of Appeals for the 7th Circuit reversed a district court’s finding against the FTC in the Advocate/North Shore Hospital Merger case on grounds of geographic market definition, and remanded the case to the district court for further action. The Court of Appeals determined that the trial court should have used the “small but significant and non-transitory increase in price,” or SSNIP test and rejected the Elzinga-Hogarty test. The case is the second reversal within a month of a district court’s refusal to block a hospital merger on grounds of geographic market definition. (See “Court of Appeals Reverses Lower Court and Upholds FTC Challenge to Pennsylvania Hospital Merger” in our October issue.)

FTC and DOJ Release Joint Guidance for HR Professionals on Antitrust and Employment

Antitrust HR Guidelines

The FTC and Department of Justice Antitrust Division issued guidance for human resource professionals and others involved in hiring and compensation decisions on the application of the antitrust laws in the employment arena. The guidance helps protect workers against anticompetitive conduct and puts firms on notice that DOJ will proceed criminally against naked wage fixing and no-poaching agreements. The document also discusses how the antitrust laws apply to firms’ decisions to share sensitive information, such as compensation information, with competing employers, either directly or through third party entities.

FTC and DOJ File Amicus Brief in Supreme Court Cases Involving Visa and MasterCard

The FTC joined the DOJ Antitrust Division in an amicus brief urging the Supreme Court to affirm an appellate court’s ruling that plaintiffs’ complaints adequately alleged an agreement among Visa and MasterCard’s member banks. The cases concern access fee rules that Visa and MasterCard adopted when they were owned and operated as joint ventures of retail banks. The Visa and MasterCard rules in question prohibit ATM operators, including banks, from offering discounted ATM access fees to consumers who use debit cards linked to certain networks (such as STAR and NYCE) that are cheaper to use than the competing Visa and MasterCard networks. The FTC and the DOJ Antitrust Division’s brief argues that the rules constitute concerted action subject to Section 1 of the Sherman Act.

Investment Firm Founder Pays $720,000 for Pre-Merger Notification Violation

Investment firm founder, Fayez Sarofim, agreed to pay $720,000 in civil penalties to resolve FTC allegations that he violated pre-merger filing requirements by failing to report stock purchases from several issuers between 2001 and 2012. The FTC alleged that because Sarofim was serving as a board member at each company for which he acquired voting shares, he was ineligible for an investment-only exemption from filing, and his failure to report a series of transactions to the FTC and DOJ violated the HSR Act.

Healthcare Provider Settles Charges That Its Acquisition of Rival Would Likely Lessen Competition by Eliminating “Non-Compete” Contract Clauses

CentraCare Health, a healthcare provider in St. Cloud, Minnesota, agreed to release some physicians from “non-compete” contract clauses under a proposed consent order to lessen potential anticompetitive effects of its proposed merger with St. Cloud Medical Group (“SCMG”). The FTC found that the acquisition would combine the two largest providers of adult primary care, pediatric, and OB/GYN services in the St. Cloud area, with likely price increase and the potential result in a loss of quality and service benefits to patients. However, it also identified that SCMG was failing financially, could not identify alternative purchasers after a multi-year search, and that physicians had already begun to leave the practice, with others potentially considering leaving the geographic market altogether. The Commission’s proposed consent order allows the acquisition to proceed with an agreement that allows physicians to join competing practices, recognizing that one local provider expressed interest in expanding its practice by hiring some of SCMG’s physicians. The Commission believes that this will account for concerns regarding disruptions to patient care and possible physician shortages in the St. Cloud area, while lessening the acquisition’s potential anticompetitive effects. Commissioner Maureen K. Ohlhausen issued a concurring statement.

Consumer Protection and Privacy

FTC Charges Multinational Tech Support Companies with Using Deceptive Pop-Up Ads to Scare Consumers into Purchasing Unneeded Services; FTC Teams Up with International and Domestic Law Enforcement Partners to Combat Such Imposter Frauds

The FTC has charged the operators of Global Access Technical Support, a multinational tech support company, with using deceptive pop-up internet ads to scare thousands of consumers into paying hundreds of dollars each for unnecessary technical support services. A federal court has issued an order temporarily stopping the defendants’ practices and freezing their assets. The FTC’s complaint alleges that the defendants used affiliate marketers to place ads that were designed to deceive consumers into thinking they originated from legitimate technology companies like Apple or Microsoft. The ads, which often included loud alarms or recorded messages, warned of viruses or malware, and “hijacked” consumers’ browsers, preventing navigation around the ads or closing them. The ads prompted consumers to contact a toll-free number, which connected to a call center in India. The FTC is also working with other law enforcement agencies in the United States and abroad to combat tech support frauds and other types of imposter scams. The U.S. Department of Justice just indicted 61 individuals and entities who allegedly victimized tens of thousands of U.S. consumers through fraudulent IRS imposter scams that resulted in hundreds of millions of dollars in losses. Next month, staff from the Commission’s Office of International Affairs will meet for the fifth time with industry, trade groups, law enforcement, and tech experts to continue efforts to thwart such fraudsters operating in India. A recent police raid on nine call centers in India shows the benefit of this type of collaboration.

Federal Judge Approves FTC Order for Owners of Certain Volkswagen and Audi “Clean” Diesels to Receive Compensation

VW diesel

A federal district court judge signed a $10 billion settlement order, starting the formal process for owners of certain Volkswagen and Audi 2.0 liter diesel cars to receive compensation for the vehicles they bought. Under the order, most owners of VW and Audi diesel cars fitted with illegal emissions-defeat devices will receive between $12,500 and $44,000 each, depending on the model, year, mileage, and trim of the car, as well as where the owner lives. The landmark settlement will enable 500,000 consumers across the country to sell back their tainted diesel-powered cars to Volkswagen. The FTC also issued a consumer blog post, VW Buybacks and Lease Terminations to Begin, which provides detailed instructions for affected owners regarding filing a claim, the claim-processing timetable, how and where to pick up a buyback check, and that checks do not have to be used to buy a new Volkswagen. The FTC has warned consumers about possible scams involving Volkswagen buybacks (VW Owners, Get the Facts) and posted a business blog emphasizing that it would be unwise for anyone, including VW dealers, to make separate offers to the owners of affected vehicles..

Sales Lead Generators Fined and Barred from Violating FTC’s Telemarketing Sales Rule

A group of telemarketers and lead generators known as Consumer Education Group has settled FTC charges that its campaign to collect consumers’ information and sell the information as leads to third party merchants violated U.S. telemarketing laws. According to the FTC’s complaint, defendants created websites that allowed consumers to complete an online form supposedly to get information about solar panels, reverse mortgages, walk-in bathtubs, and other products and then sold that information to third parties who made illegal calls – including robocalls – to consumers that did not comply with the requirements of the Telemarketing Sales Rule (TSR) and the national Do Not Call (DNC) registry. The proposed civil penalty order settling the FTC’s charges bars the defendants from violating the TSR, imposes a suspended civil penalty of more than $2 million, and requires them to pay $100,000 to the U.S. Treasury based on their inability to pay the full penalty amount.

In Other News

FTC Workshop Will Examine Changing Consumer Demographics

Demographics workshop

The FTC will host a workshop in Washington, DC, on December 6 to examine changing consumer demographics and how they will affect the FTC’s work in the years ahead. According to the U.S. Census Bureau, the population is getting older and more racially and ethnically diverse. Understanding changing communities will be necessary as the FTC continues its efforts to combat unfair and deceptive practices that affect all consumers. The workshop, which is free and open to the public, will be at the Constitution Center, 400 7th St., SW, Washington, DC. Preregistration is not required. A live webcast of the workshop will be available here on the day of the event.

FTC Issues Video and Guide for Businesses on What to Do When You Suspect a Data Breach

Data Breach

The FTC has issued a business guide on Data Breach Response and an accompanying video and business blog to help businesses that have experienced a data breach determine what steps to take and whom to contact. Among the key steps are securing physical areas, cleaning up the website, and providing breach notification. The guide also includes a model data breach notification letter. For related advice on implementing a plan to protect customer information and prevent breaches, see the FTC’s Protecting Personal Information: A Guide for Business and Start with Security: A Guide for Business. A new business blog on protecting personal information is available here.The guide and the video are both in the public domain, so businesspersons can share them with employees and customers, and through their websites and newsletters.

FTC to Hold Public Conference on Identity Theft in May 2017

The FTC will host an all-day conference, “Planning For the Future,” to examine the state of identity theft now and how it may evolve. The event will take place on May 24 in Washington, DC. 2017 will mark the ten-year anniversary of the executive order creating the federal Identity Theft Task Force, which the FTC co-chaired. Despite numerous advances in combating identity theft, it remains a top consumer complaint each year to the FTC, and Department of Justice statistics show that millions of consumers are victims of identity theft. The conference will examine how to quantify the impact of identity theft, from financial and economic harms to the broader impact on public safety. The conference will also assess what resources are available to identity theft victims and their effectiveness in helping victims recover. The conference will be free and open to the public, and will be livestreamed by the FTC. The FTC is also seeking public comment on these issues.