FTC Settles “Roll-Up” Case With Private Equity Firm

As part of a flurry of activity in anticipation of the imminent change in administration, the Federal Trade Commission announced a unanimous approval of a consent order settling its enforcement action against Welsh Carson, the private equity backer of U.S. Anesthesia Partners (“USAP”). Outgoing FTC leadership heralded the settlement as novel enforcement of the new Merger Guidelines and a win against private equity, whereas potential future FTC Chair, Commissioner Andrew Ferguson, characterized the result as a straightforward application of well-established antitrust law.

Welsh Carson had been accused of engaging in anticompetitive acquisitions of anesthesia practices through its portfolio company.  Initially, the FTC sued both Welsh Carson and USAP in federal court, but after Welsh Carson was dismissed on procedural grounds, the FTC threatened the private equity firm with an administrative complaint under Section 5 of the FTC Act on grounds that by serially acquiring previously independent anesthesia practices, Welsh Carson harmed competition for anesthesia services.  According to the FTC, by “rolling up” independent practices, Welsh Carson was able to increase the prices charged by each practice to match the highest rate that any of the practices garnered, thus harming consumers.

Continue reading “FTC Settles “Roll-Up” Case With Private Equity Firm”

FTC and DOJ Issue New Antitrust Guidelines for Business Activities Affecting Workers

The FTC and DOJ Antitrust Division issued joint Antitrust Guidelines for Business Activities Affecting Workers purporting to explain how both the FTC and DOJ assess whether business practices affecting workers violate the antitrust laws. The new guidance is intended to replace the 2016 Antitrust Guidance for Human Resource Professionals and focuses on activity affecting competition in labor markets. In particular, the guidance stresses that agreements between businesses not to hire each other’s workers or agreements to fix wages, including by use of a third-party algorithm, may constitute criminal violations of the antitrust laws. It also discusses other types of business practices that can carry antitrust risk, such as information sharing, non-compete agreements, and non-disclosure agreements. The agencies periodically issue non-binding guidance such as this one which is intended as readable, practical guidance that will assist businesses in complying with the existing antitrust laws.

The impact of the new guidance is unclear given the timing of the release and how it was passed by the FTC. The issuance comes just days before President-elect Trump is set to take office, and the FTC voted to issue the new guidance by a partisan 3-2 vote. In particular, current FTC Commissioner Andrew Ferguson, who President-elect Trump plans to appoint the new Chair of the FTC, issued a dissent taking the position that “the Biden-Harris FTC announcing its views on how to comply with the antitrust laws in the future is a senseless waste of Commission resources” because “the Biden-Harris FTC has no future.” Fellow Republican Commissioner Melissa Holyoak joined in the dissent. It is possible that the newly constituted Commission under the new Trump Administration could withdraw this guidance and return to the 2016 Antitrust Guidance until it has the time to issue guidance reflecting the new Commission’s enforcement position.

Large No-Poach Class Settlement Gets Preliminary Approval in District of Connecticut

A putative class of aerospace workers recently obtained preliminary approval of large settlements with several government contracting firms in antitrust litigation in the U.S. District Court for the District of Connecticut. The nine named plaintiffs are current and former employees of Pratt & Whitney, which is now a division of RTX Corp. (formerly Raytheon Technologies Corporation). Pratt & Whitney manufactures jet engines for commercial and military aircraft. The other five defendants are suppliers of engineering services to Pratt & Whitney.

In their class action complaint, the plaintiffs alleged that the defendants conspired to restrict the recruitment and hiring of each other’s employees in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. Such agreements are commonly referred to as no-poach agreements. Specifically, the plaintiffs alleged that there were three types of illegal no-poach agreements: (1) an agreement between Pratt & Whitney and the engineering services firm defendants not to recruit or hire each other’s employees, which Pratt & Whitney primarily enforced; (2) an agreement that Pratt & Whitney would not hire from the engineering services firms without their prior written approval; and (3) additional bilateral agreements between certain firms and Pratt & Whitney limiting Pratt & Whitney’s ability to recruit and hire employees from that firm. Plaintiffs argued that this conspiracy restrained competition in the labor market for aerospace workers and suppressed employees’ compensation.

In order to obtain dismissal of the case with prejudice and an exchange of releases, Pratt & Whitney has agreed to pay $34 million into a settlement fund for the benefit of the class. Similarly, the engineering services firm defendants have agreed to pay $26.5 million into a similar fund. A hearing has been set for May 7, 2025 to determine final approval of the settlement after any objections or opt-outs from class members.

FTC Reaches Record $5.6M “Gun-Jumping” Settlement Related To Oil Deal

It is extremely rare to see the Federal Trade Commission (“FTC”) pursue an enforcement action under the Hart-Scott-Rodino Act (“HSR Act”) for illegal pre-merger coordination, better known as “gun jumping.” Nonetheless, the FTC recently announced that certain crude oil producers will pay a record $5.6 million civil fine to settle allegations that they engaged in impermissible pre-merger conduct in violation of the HSR Act.

Continue reading “FTC Reaches Record $5.6M “Gun-Jumping” Settlement Related To Oil Deal”

New HSR Form Effective February 10, 2025

Earlier today, the FTC published its final rule changing the premerger notification requirements under the Hart-Scott-Rodino Act (HSR Act), making the effective date for using the new HSR Form February 10, 2025. The publication comes roughly a month after the FTC voted unanimously to issue a final rule making significant changes to the premerger notification process. Parties to certain mergers and acquisitions that are required to submit premerger notification forms may use the current HSR Form until February 10, 2025.

According to today’s press release, the premerger notification office (PNO) will publish a detailed overview of the HSR Form changes and will invite practitioners to submit questions of broad applicability and PNO staff will post answer to the website. As we previewed in our alert, front-loading the preparation of premerger notification materials will be critical to ensuring timely submission of the required materials under the new rule.

DOJ and 30 Attorneys General Bring Antitrust Suit Against Live Nation and Ticketmaster

On May 23, 2024, the Department of Justice Antitrust Division (DOJ) and Attorneys General from 29 states and the District of Columbia sued Live Nation and its wholly owned subsidiary, Ticketmaster, for violations of federal antitrust law in the U.S. District Court for the Southern District of New York. United States of America, et al., v. Live Nation Entertainment, Inc., et al., No. 1:24-cv-03973 (S.D.N.Y. May 23, 2024).  Among other relief, the government is seeking to require the divestiture of Ticketmaster, a little over a dozen years after DOJ allowed Live Nation to acquire Ticketmaster.

The Complaint alleges that Live Nation “serves as the gatekeeper for the delivery of nearly all live music in America today.” DOJ and the Attorneys General allege that Live Nation controls “around 60% of concert promotions at major concert venues” and that Ticketmaster “controls roughly 80% or more of major concert venues’ primary ticketing for concerts and a growing share of ticket resales in the secondary market.” With that control as leverage, the Complaint alleges that Live Nation and Ticketmaster have violated Sherman Act Sections 1 and 2 and various state competition laws.

DOJ and FTC Launch Public Inquiry into Serial Acquisitions

On March 23, 2024, the Justice Department Antitrust Division (DOJ) and Federal Trade Commission (FTC) jointly issued a Request for Information (RFI) on serial acquisitions and roll-up strategies, a consolidation strategy often used by private equity firms. The RFI seeks information from “any sector or industry in the U.S. economy, including, but not limited to, housing, agriculture, defense, cybersecurity, distribution, construction, aftermarket/repair, and professional services markets.  The RFI is intended to complement the federal government’s investigation into healthcare competition.

The public has 60 days to submit comments to the RFI, meaning until July 22, 2024. According to the RFI, public comments will inform FTC and DOJ enforcement priorities and future actions.

DOJ Announces Task Force Targeting Anticompetitive Conduct in Health Care Industry

The Department of Justice (DOJ) Antitrust Division’s newly formed Task Force on Health Care Monopolies and Collusion (HCMC) “will guide the division’s enforcement strategy and policy approach in health care, including by facilitating policy advocacy, investigations, and where warranted, civil and criminal enforcement in health care markets,” according to its May 9, 2024 announcement.

The HCMC announcement came on the same day that Assistant Attorney General Jonathan Kanter discussed DOJ’s antitrust enforcement efforts with the Washington Post. In that interview, AAG Kanter stated that “[t]he platformization of health care has resulted in multi-sided giants, intermediaries that have a coordinated stack of businesses that flow together, including payers, including providers, including PBMs, claims processing, banks.” The HCMC “will identify and root out monopolies and collusive practices that increase costs, decrease quality and create single points of failure in the health care industry,” according to DOJ’s press release. Katrina Rouse will lead the HCMC.

The HCMC is yet another effort in the so-called “whole-of-government” approach articulated by the Biden Administration to enforce the antitrust laws, in particular with respect to the health care industry. In March, DOJ, with the Federal Trade Commission and U.S. Department of Health and Human Services, jointly issued a Request for Information requesting public comment on transactions in the health care space. Earlier this month, the agencies extended the comment period by 30 days with the new deadline being June 5, 2024.

FTC Bureau of Competition Director Says Companies Should Assume Agency Looking at Potential Section 5 Cases

Speaking at the American Bar Association Antitrust Section’s annual Spring Meeting on Friday, April 12, Henry Liu, Director of the Bureau of Competition at the Federal Trade Commission, said that parties that are under an antitrust investigation by the FTC should assume that the agency is looking not only at whether the conduct being investigated violates the Sherman Act, but also whether the conduct may fall into a “gray zone” and thus be subject to the FTC’s authority to police “unfair methods of competition” under Section 5 of the FTC Act.

Liu described this “gray zone” as encompassing conduct where, for technical reasons, the existing case law shows that the Sherman Act is a less attractive theory for the agency.  Nonetheless, if the FTC determines that the conduct “harms the competitive process” through nefarious means such as deception or coercive tactics, bringing a Section 5 claim is a viable option.  Enforcement of “gray zone” conduct under Section 5 is consistent with the FTC’s 2022 Policy Statement expanding the scope of what the FTC considers unfair methods of competition.

A potential example he cited is an invitation to collude, where there is not yet a reduction in competition.  For cases involving such conduct that is “adjacent” to violations of Sections 1 and 2 of the Sherman Act, Liu said that the FTC will not hesitate to bring “standalone” cases under Section 5; however, such standalone enforcement actions remain rare.

DOJ and 16 State Attorneys General Sue Apple for Monopolization

Continuing the government’s antitrust enforcement campaign against the tech industry, the DOJ Antitrust Division, along with 16 states, today sued Apple Inc., in federal court in New Jersey, making sweeping allegations of a widespread scheme to monopolize the market for smartphones in the United States. Specifically, the government plaintiffs allege that Apple violated Section 2 of the Sherman Act as well as Wisconsin and New Jersey state antitrust laws. With this lawsuit, the U.S. antitrust agencies now have pending monopolization actions against all four “big tech” companies: Apple, Google, Meta and Amazon.

The complaint alleges that Apple has a monopoly in two markets, the “smartphone” market and the narrower “performance smartphone” market, and that it has maintained its monopoly in both markets by anti-competitive restrictions on app developers and potential rivals. According to the complaint, these restrictions have allowed Apple to “extract higher fees, thwart innovation, offer a less secure or degraded user experience, and throttle competitive alternatives.”

Like the other government cases against the tech industry, this case promises to be a long drawn-out battle.

© 2009- Duane Morris LLP. Duane Morris is a registered service mark of Duane Morris LLP.

The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

Proudly powered by WordPress