drinker biddle aba antitrust section corporate counseling september october update

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Slides presented at ABA Section of Antitrust Law Corporate Counseling Committe September/October Update for In-house Counsel November 6, 2009


  • 1. Monthly Antitrust Update September/October 2009 ABA Section of Antitrust Law Corporate Counseling Committee November 6, 2009 Presenters: M. Howard Morse Joanne C. Lewers Paul H. Saint-Antoine Kenneth M. Vorrasi

2. Table of Contents

  • Mergers and Acquisitions
  • DOJ / FTC Civil + Criminal Initiatives
  • Legislative Developments
  • Intellectual Property Antitrust Developments
  • Private Litigation
  • Presenters

3. Mergers and Acquisitions

  • Merger Guidelines revisions
  • Pfizer / Wyeth
  • Merck / Schering Plough
  • Ovation
  • Carilion Clinic
  • K&S / Morton
  • AT&T / Centennial
  • Public reports of ongoing investigations
  • EU developments

4. Merger Enforcement U.S.

  • Pfizer/Wyeth Approved October 14, 2009
    • $68 billion acquisition will result in worlds largest pharma company
    • Divestitures of animal pharmaceutical and vaccine products required in U.S.
    • No remedies involving human health products
    • Private plaintiffs challenge continues on behalf of California pharmacies
  • Schering-Plough-Merck Approved October 29, 2009
    • $41.1 billion acquisition will result in second largest pharma company, behind Pfizer/Wyeth
    • Divestitures of animal and human health products required in U.S.
  • *FTC press releases included references to cooperation with other authorities that were investigating the mergers, e.g., EC, Canada

5. Merger Enforcement U.S.

  • AT&T/Centennial Approved October 13, 2009
    • $944 million acquisition involving mobile wireless telecommunication services in eight areas in southwestern and central Louisiana and southwestern Mississippi affected
    • DOJ joined by AG of Louisiana in filing complaint and proposed settlement
    • AT&T has already agreed to sell five of the Centennial service areas to Verizon
    • Transaction also subject to FCC review
  • K+S/Morton International Approved September 25, 2009
    • $1.68 billion acquisition involving bulk de-icing road salt assets in Maine and Connecticut
    • FTC identified state and local governments as primary purchasers of these products

6. Merger Enforcement U.S.

  • Carilion Clinic Post-merger enforcement
    • $20 million acquisition non-reportable
    • Administrative complaint issued in July which challenged 2008 acquisition of outpatient imaging center and outpatient surgical center located in Roanoke, VA
    • Carilion has three months to identify a buyer for the divested assets
    • Proposed consent order includes provisions in addition to divestitures

7. Merger Enforcement EU

  • Oracle-Sun EC Review
    • ECs concern involves a database market
    • DOJ completed its review in August, without requiring any remedies.DOJs focus was on Java programming language, not database software
  • Ticketmaster/Live Nation UK Review
    • Preliminary ruling identifies concerns over live music ticketing market
    • Next step is to consider how to address potential competitive concerns
    • DOJ review continues

8. Merger Enforcement Policy Considerations

  • Merger Guidelines Changes are on the horizon
    • Five workshops announced September 22, 2009
    • Regulators and practitioners agree this is a long-time in coming
    • Questions remain about what changes are necessary and how they will be implemented

9. Merger Enforcement Policy Considerations

  • Agencies continue to focus on innovation/potentialcompetition
    • Staff inquires about R&D and current overlaps at early stage in its review
    • Consider language in AT&T Competitive Impact Statement:[T]he loss of competition between AT&T and Centennial will increase the merged firm's incentive and ability in the relevant geographic markets to increase prices, diminish the quality or quantity of services provided, andrefrain from or delay making investments in network improvements

10. DOJ / FTC Civil & Criminal Initiatives

  • FTC Subpoena Enforcement
  • Interlocking Directorates
  • Criminal Antitrust Developments
  • Business Review Letters
  • Varney on Resale Price Maintenance

11. FTC Subpoena Enforcement

  • FTC v. Tarriff (D.C. Cir. Oct. 23)
    • Appeal from D.D.C. decision granting petition to enforce subpoenas requiring video testimony
    • Not moot despite completion of depositions
    • Objection utterly without merit
  • FTC v. Boehringer Ingelheim Pharmaceuticals (D.D.C, filed Oct. 23)
    • FTC seeking order to comply with subpoena within 10 days
    • When companies fail to respond promptly and completely to agency subpoenas, we will not hesitate to go to court to seek enforcement.

12. Interlocking Directorates

  • Levinson resigned from Google board, remains on Apple board (Oct. 12)
    • Leibowitz praised companies for their willingness to resolve our concerns without the need for litigation
    • Followed Google CEOs resignation from Apple board in August, and statement We will continue to investigate remaining interlocking directorates between the companies
    • Clayton 8 restricts interlocking directorates, subject to de minimis exceptions adjusted annually, 1 year grace period

13. Criminal Antitrust Developments

  • Municipal bonds
    • Firm and executives indicted for bid rigging in ongoing antitrust investigation into the municipal bonds industry (Oct. 30)
  • Insurance
    • 3 Marsh executives acquitted after 11 month bench trial, prosecuted by NYAG (Oct. 26)
  • Packaged ice
    • Firm agreed to pay $9 million, 3 executives pled guilty for allocating customers (Oct. 13)
  • Optical disk drives
    • Sony, Hitachi and Toshiba disclose subpoenas
  • Kickback / fraud schemes
    • Scott Hammond testimony, Follow the Money: An Update on Stimulus Spending, Transparency and Fraud Prevention (Sep. 10)
    • 9 DOJ press releases relate to defense contracting, government procurement, through National Procurement Fraud Task Force
  • DOJ updates fines chart
    • 72 fines > $10 million, 10 in 2009 (Oct. 16)

14. DOJ Business Review Letters

  • Less than truckload freight venture (Sept. 8)
    • Venture among firms serving distinct regions to bid jointly
    • Restrictions on expansion necessary to operate efficiently, to provide nationwide service, allowed where no member has a significant share in its respective region
  • Hospital joint purchasing agreement (Sept. 4)
    • Conduct withinHealth Care Policy Statement#7 safety zone
      • joint purchases less than 20% of total revenues from all products or services sold by each participant
      • joint purchases less than 35% of each suppliers' sales in market

15. AAG Varney on Resale Price Maintenance

  • Antitrust Federalism: Enhancing Federal/State Cooperation before NAAG (Oct. 7)
    • Leeginheld minimum RPM will be analyzed under rule of reason
    • Varney proposes new structured rule of reason approach
    • Would require plaintiffs to prove existence of the agreement and its scope and structural conditions under which RPM is likely to be anticompetitive
    • Burden would shift to the defendant to demonstrate that its RPM policy is procompetitive, showing it adopted RPM to compete with rivals

16. Health Care Legislation

  • Pharmaceutical settlement legislation
    • Senate Judiciary reported substitute bill, S.369, that presumes agreements unlawful if ANDA filer receives anything of value absent clear and convincing evidence that benefits outweigh anticompetitive effects (Oct. 15)
    • Pelosi health care reform


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