The Antitrust Division of the Department of Justice (DOJ) has indicated a recent interest in enforcing Section 8 of the Clayton Act, which prohibits individuals from serving on boards of competing corporations, known as “interlocking directorates.” (See 15 U.S.C. § 19.) Assistant Attorney General Jonathan Kanter has called Section 8 an “important but underenforced” antitrust law. After DOJ announced a focus on Section 8, the agency reported that seven board members announced their resignations in response. Since then, DOJ has continued its focus on Section 8, issuing civil investigative demands and confidential investigation letters to firms, including private equity funds and investors. Life sciences companies, and companies that invest in the life sciences industry, should be on the lookout for interlocking directorates, as there is empirical evidence suggesting that the industry is particularly at risk of a Section 8 investigation.
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On June 24, 2019, in response to a directive from Congress, the Federal Trade Commission (FTC) issued a report to the House and Senate Appropriations Committees on the use of the FTC’s standalone authority under Section 5 of the Federal Trade Commission Act to address high pharmaceutical prices. The committees had directed the FTC to examine, in consultation with the U.S. Food and Drug Administration, Congress’ intent regarding unfair methods of competition in Section 5 and in the FTC’s standalone Section 5 authority regarding unreasonable price increases, including those that occur over multiple years, on off-patent pharmaceutical drugs and biologics. The report broke down along party lines. The FTC’s Republican majority concluded that attempts by the Commission to rein in unreasonable drug prices using Section 5 alone, untethered from accepted theories of antitrust liability under the Sherman Act, are unlikely to find success in the courts. Democratic Commissioners Rohit Chopra and Rebecca Kelly Slaughter issued a dissenting statement in which they urged the FTC to examine ways to use its enforcement tools to restrain pharmaceutical pricing. Challenging high pharmaceutical drug prices has recently been a hotly debated political topic, and the report, along with the dissenting statement, will likely factor into that debate.
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