NOVEMBER 2019Competition The FTC ruled that the consummated acquisition of Freedom Innovations by Otto Bock HealthCare North America resulted in anticompetitive harm in the microprocessor prosthetic knee market, likely leading to higher prices and less innovation fo r amputee patients and prosthetic clinic customers. Both companies are top sellers of prosthetic knees equipped with microprocessors. The acquisition was not reportable under the Hart-Scott-Rodino Act. The Commission’s order, which affirms the decision of an Administrative Law Judge following a trial, requires Otto Bock to divest the Freedom Innovations assets to an FTC-approved buyer. |
An FTC Administrative Law Judge determined that two of the three dental supply companies named in the FTC’s administrative complaint violated U.S. antitrust law by conspiring to refuse to provide discounts to, or otherwise serve, buying groups representing dental practitioners. According to the complaint, respondents deprived solo and small-group dental practices of the benefits of participating in buying groups that purchase dental supplies from national, full-service distributors. The judge held that Benco Dental Supply Co. and Patterson Cos., but not Henry Schein Inc., were part of the conspiracy. When different types of anticompetitive harm are alleged, different markets may be relevant, and the law does not require that they be consistent, according to an FTC amicus brief. The brief on market definition was submitted to the U.S. District Court for the Northern District of California in Staley v. Gilead Sciences, Inc., a private case. The defendant, Gilead, had asked the court to dismiss the complaint, based in part on an argument that the overlapping markets alleged are “contradictory” and therefore improper as a matter of law. The FTC’s brief explains that “when multiple types of anticompetitive harm are alleged, multiple markets may be relevant.” Market definition always requires sufficient factual support, the brief observes, but defining different product markets to assess different theories of harm is neither “contradictory” nor legally deficient.  Chairman Simons, Assistant Attorney General Delrahim, and the heads of the antitrust agencies of Canada and Mexico held their annual meeting on antitrust enforcement and policy priorities. The discussions covered a range of topics including enforcement and collaboration involving digital markets, updates on agency developments, international cooperation, and challenges to antitrust enforcement faced by each agency. |
The FTC, with the concurrence of the Antitrust Division of the U.S. DOJ, proposed amendments that clarify whether a transaction is exempt from premerger notification under the Hart-Scott-Rodino Act because the entity involved is foreign. By simplifying the definitions of “foreign person” and “foreign issuer,” the amended rules will more accurately identify and exclude from the filing requirements transactions that have a limited nexus with the United States.
Consumer Protection and Privacy The FTC sued multi-level marketer Neora, LLC, formerly known as Nerium International, LLC, and its Chief Executive Officer alleging that the company operates as an illegal pyramid scheme and falsely promises recruits they will achieve financial independence if they join the scheme. The FTC also alleges that defendants deceptively promote “EHT” supplements as an antidote to concussions and chronic traumatic encephalopathy caused by repetitive brain trauma, as well as Alzheimer’s disease and Parkinson’s disease. |
The FTC halted the deceptive online marketing tactics of two companies and their principals. Devumi, LLC and its owner and CEO have agreed to settle the FTC’s first-ever complaint challenging the sale of fake indicators of social media influence, which are important metrics that businesses and individuals use in making hiring, investing, purchasing, licensing, and viewing decisions. In a second case, cosmetics firm Sunday Riley Modern Skincare, LLC and its CEO have agreed to settle an FTC complaint charging them with misleading consumers by posting fake reviews of the company’s products on a major retailer’s website at the CEO’s direction, and by failing to disclose that the reviewers were company employees.  After five years of litigation, AT&T Mobility, LLC one of the largest wireless carriers in North America, has agreed to pay $60 million to settle litigation with the FTC over allegations that it misled millions of its smartphone customers in the United States by charging them for “unlimited” data plans while reducing their data speeds. The $60 million will be deposited into a fund that the company will use to provide partial refunds to both current and former customers who had originally signed up for unlimited plans prior to 2011 but were throttled by AT&T. The FTC first alleged in 2014 that AT&T failed to adequately disclose to its unlimited data plan customers that if they reach a certain amount of data use in a given billing cycle AT&T would reduce—or “throttle”—their data speeds. According to the complaint, this throttling made many common mobile phone applications, such as web browsing and video streaming, difficult or nearly impossible to use. In addition to the monetary relief, the settlement prohibits the company from making any representation about the speed or amount of its mobile data, including that it is “unlimited,” without disclosing any material restrictions on the speed or amount of data. The disclosures need to be prominent, not buried in fine print or hidden behind hyperlinks. |
 The FTC sued RagingWire Data Centers, Inc. over allegations that it misled consumers about its participation in the EU-U.S. Privacy Shield framework and failed to adhere to the program’s requirements before allowing its certification to lapse. The EU-U.S. Privacy Shield framework establishes a process to allow companies to transfer consumer data from European Union countries to the United States in compliance with EU law. The Department of Commerce administers the framework, while the FTC enforces the promises companies make when joining the program. |
The FTC released the results of a comprehensive survey conducted in 2017 that examined the prevalence of mass-market consumer fraud, how it is perpetrated, and what factors are associated with a greater likelihood that a consumer may fall victim to fraud. The FTC conducted similar surveys in 2003, 2005, and 2011. The survey results show that 15.9 percent of the respondents were victims of fraud in 2017, which implies that approximately 40 million U.S. adults were defrauded. The most common types of fraud reported by the survey respondents were fraudulent weight-loss products, fraudulent computer repairs, and being falsely told that they owed money to the government.
In Other NewsChairman Simons announced his intention to appoint Ian R. Conner, Deputy Director of the Bureau of Competition, to succeed Bruce Hoffman as FTC Bureau of Competition Director. Conner has served as Deputy Director since September 2017. He came to the FTC from private practice after having served in the Antitrust Division of the Department of Justice.
 The FTC currently is hosting nine colleagues from counterpart agencies in Australia, Canada, Ecuador, India, Mexico, Ukraine, and the United Kingdom. These colleagues are working alongside staff of the Bureaus of Competition, Consumer Protection, and Economics, and the Office of Policy Planning as International Fellows and Interns. Since the program’s inception in 2007 under the staff exchange provision of the U.S. SAFE WEB Act, 129 international colleagues from 41 jurisdictions have had an opportunity to work with FTC attorneys, economists, and investigators, gaining first-hand experience of how the FTC carries out its enforcement and policy work. The FTC Office of International Affairs is now accepting applications for February 2020. For a brochure, including application instructions, click the headline above. |
 The FTC has released a new publication for online influencers that lays out the agency’s rules of the road for when and how influencers must disclose sponsorships to their followers. The new guide, “Disclosures 101 for Social Media Influencers,” provides influencers with tips from FTC staff about what triggers the need for a disclosure. It also offers examples of both effective and ineffective disclosures. The guide and accompanying videos, available in English and Spanish, underscore that the responsibility to make disclosures about endorsements lies with the influencer. |
The FTC's Bureau of Economics and the Tobin Center for Economic Policy at Yale are hosting a two-day conference through November 15 to bring together scholars working in areas related to the FTC's antitrust, consumer protection, and public policy missions. Those fields include industrial organization, information economics, health policy, behavioral economics, and quantitative marketing. Examples of potentially relevant topics include healthcare provider competition, vertical contracting, advertising, merger policy, industrial policies, innovation, privacy, intellectual property, bargaining, collusion, e-commerce, demand estimation, pharmaceutical markets, competition in technology markets, and consumer decision-making. Click the headline above for further details and conference materials.  FTC staff will host a public workshop on January 28 to examine voice cloning technologies, which enable users to make near-perfect reproductions of a real person’s voice. “You Don’t Say: An FTC Workshop on Voice Cloning Technologies” will examine both the benefits and potential misuses of voice cloning technologies. For example, voice cloning could be used to enable people who have lost the ability to speak to communicate using technology that simulates a cloned version of their own voice. However, scammers could misuse the same technologies to impersonate others. |
 The FTC, the National Association of State Charities Officials, and state charities regulators across the country joined with partners around the globe for International Charity Fraud Awareness Week (ICFAW). ICFAW is a coordinated international campaign to help charities and consumers avoid charity fraud and promote wise giving. International participants included the Charities Commission for England & Wales, Australian Charities and Not-for-profits Commission, Charity Commission for Northern Ireland, New Zealand Charities Service, and Office of the Scottish Regulator. |
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