Update for In-House Counsel

Transcription

1 Update for In-House Counsel ABA Section of Antitrust Law Corporate Counseling Committee Presented by: Matthew Hendrickson Maria Raptis Marissa Troiano Ingrid Vandenborre December 2016

2 Skadden Antitrust Attorneys Maria Raptis Partner New York Matthew Hendrickson Partner New York Ingrid Vandenborre Partner Brussels Marissa Troiano Associate New York

3 Contents Antitrust Law Under the Trump Administration Trump s Antitrust Policy and Experience DOJ and FTC Administrative Changes Trump s Proposed Supreme Court Nominees Brexit Implications for Competition Law DOJ Litigation Update FTC Litigation Update DOJ and FTC Announcements

4 Antitrust Law Under the Trump Administration

5 Trump s Antitrust Policy and Experience

6 Donald Trump s Antitrust Experience As a plaintiff Backed the USFL s suit against the NFL in the 80s, alleging the NFL had engaged in exclusionary conduct to the detriment of the USFL The USFL claimed $1.7B in damages, but only won one dollar (trebled to three dollars) As a defendant Sued multiple times over anticompetitive conduct relating to his hotel and casino properties The cases were either settled or dismissed HSR Act Violation Settled an alleged HSR violation in 1988 for $750,000 following joint acquisitions with Bear Stearns; FTC accused Trump of using a ploy to avoid filing and the accompanying waiting period Complied with HSR in future acquisitions

7 Trump Campaign Antitrust Statements AT&T/Time Warner Merger Said he would block the deal if elected President: It s too much concentration of power in the hands of too few Called it an example of the power structure I m fighting Comcast/NBCU Transaction Promised to look into breaking up the merged company, and others like it Claimed it concentrated far too much power in one massive entity that is trying to tell the voters what to think and what to do Amazon.com, Inc. Once stated Amazon and CEO Jeff Bezos have a huge antitrust problem Possibly motivated by Bezos ownership of the Washington Post, a publication that was particularly critical of Trump s campaign

8 International Trade Trump Campaign General Positions Advocated less international cooperation and trade agreement participation May suggest less interest in collaborating with foreign antitrust watchdogs Healthcare Industry Proposed a repeal and replacement of the Affordable Care Act» FTC officials have said this will take away one justification of potentially merging hospitals (ACArequired cost reductions and streamlining) Pushed for repeal of McCarran-Ferguson Act, which would end federal antitrust immunity for the insurance industry Advocated for increased competition in the health insurance industry» Campaign website demanded Congress [m]odify existing law that inhibits the sale of health insurance across state lines. As long as the plan purchased complies with state requirements, any vendor ought to be able to offer insurance in any state. By allowing full competition in this market, insurance costs will go down and consumer satisfaction will go up. Energy Sector Has been critical of the Obama administration s treatment of coal, citing harm to the industry from excessive environmental regulation

9 Past Comments, Insider Opinions From Trump s 2011 book Time to Get Tough: Making America #1 Again We can start by suing OPEC for violating antitrust laws. Currently, bringing a lawsuit against OPEC is difficult.... The way to fix this is to make sure that Congress passes and the president signs the No Oil Producing and Exporting Cartels Act (NOPEC) (S.394), which will amend the Sherman Antitrust Act and make it illegal for any foreign governments to act collectively to limit production or set prices. If we get it passed, the bill would clear the way for the United States to sue member nations of OPEC for price-fixing and anti-competitive behavior.... Imagine how much money the average American would save if we busted the OPEC cartel. Quoted a former Reagan and Bush adviser, commenting that starting a lawsuit [is] better than starting a war[.] Transition Team Member Rudy Giuliani The last thing in the world you are going to see is an antibusiness administration. Bush administration senior antitrust lawyer and Trump supporter: [Trump s] views are in line with conservative antitrust policy. Under Trump, if there are antitrust issues, we can expect a greater push for divestiture rather than long-term corporate behavioral regulation.

10 DOJ and FTC Administrative Changes

11 Transition Team Members Joshua Wright Head of FTC Transition Jeffrey Eisenach Head of Telecom/FCC Transition Former FTC Commissioner Represented Google as outside counsel against FTC antitrust enforcement actions, and has received Google funding for academic papers Proponent of market consolidation; has often propounded the procompetitive benefits of mergers As an economist and economic consultant, has supported digital/technology deregulation, and has opposed net neutrality In 2000, recommended the breakup of Microsoft into separate applications and operating systems companies David Higbee DOJ Transition Team Member Peter Thiel Private Entrepreneur Antitrust partner at Hunton & Williams LLP Worked for George W. Bush s administration from , spending the last year in the Antitrust Division His involvement could signal a traditional Republican view of merger enforcement Silicon Valley billionaire is an outspoken opponent of strict antitrust enforcement His presence on the transition team could help calm fears of increased enforcement against tech industry

12 Overview of FTC and DOJ Management The FTC and DOJ, like many federal agencies, are led by presidential appointees who oversee career staff FTC has 5 appointed Commissioners who serve for terms of up to seven years, with one serving as Chairperson; additionally, the FTC is politically balanced by statute, so that no more than 3 commissioners may be from any one political party» The Chair has ultimate responsibility for determining who heads the FTC s constituent departments (including the Bureau of Competition)» A majority of the sitting Commissioners must vote affirmatively to initiate an enforcement action DOJ is headed by the Attorney General and Assistant Attorneys General, including for the Antitrust Division

13 Current Federal Trade Commission Commissioners Commissioner (Vacant) Commissioner Maureen Ohlhausen (R) Chairwoman Edith Ramirez (D) Commissioner Terrell McSweeny (D) Commissioner (Vacant)

14 Current FTC Commissioners Chairwoman Edith Ramirez (D) appointed 4/5/2010 by Obama, term expired 9/25/2015 Currently serving as a holdover candidate until her replacement is appointed» Obama re-nominated Ms. Ramirez in December 2015, but confirmation hearings were never held by the Senate» Media has speculated that Ms. Ramirez will leave office immediately upon Trump s inauguration Commissioner Terrell McSweeny (D) appointed 4/28/2014 by Obama, term expires 9/25/2017 Commissioner Maureen Ohlhausen (R) appointed 4/4/2012 by Obama, term expires 9/25/2018 As the only Republican currently on the Commission, Ms. Ohlhausen could immediately be made Chairperson once Trump is inaugurated

15 FTC Transition With two of the five commission seats currently empty, and the possibility of a Ramirez resignation, Trump will have an opportunity to put a significant stamp on the FTC early in his term Trump could appoint Commissioner Ohlhausen as Chair immediately No need for Senate approval Would give Ohlausen authority to adjust the leadership of the various Bureaus and departments Trump s level of control over FTC appointments at the beginning of his term is unprecedented in recent decades, as no recent President-elect had any more than one Commissioner to appoint at the beginning of his term Joshua Wright, a former Republican Commissioner who served during the Obama Administration, is employed as Trump s FTC Transition Head, and the press has speculated that he may return to the FTC under Trump

16 Current Antitrust Division Acting Assistant Attorney General Renata B. Hesse Chief of Staff Special Counsel Appellate Executive Office Policy DAAG Economic Analysis Nancy L. Rose DAAG Litigation Jonathan B. Sallet DAAG Criminal Enforcement Brent C. Synder DAAG Operations Sonia K. Pfaffenroth DAAG Civil Enforcement Juan A. Arteaga Competition Policy Foreign Commerce Chicago Litigation I Economic Litigation New York Litigation II Economic Regulatory San Francisco Washington I Litigation III Networks & Tech Washington II Telecomm & Media TE&A

17 Current DOJ Management All presidential appointees within the DOJ can be replaced by PEOTUS Trump Attorney General Loretta Lynch Deputy Attorney General Sally Yates Acting Associate Attorney General Bill Baer» Bill Baer is a former Assistant Attorney General of the Antitrust Division Acting Assistant Attorney General Antitrust Division Renata Hesse Trump has announced that Sen. Jeff Sessions will be his nominee for Attorney General, but has not yet announced nominees for the subordinate DOJ slots As this is a high profile appointment it will likely be a priority, with hearings and a vote likely to come within a couple of months of Trump s inauguration

18 DOJ Transition Unlike the FTC, all of Trump s appointees will likely be Republican and espouse Republican (or Trumpian) values Typical timelines for DOJ nominee Senate confirmation from the beginning of a President s term: Obama Bush Clinton Attorney General Holder: 13 days Attorney General Reno: 51 days Deputy Attorney General Ogden: 51 days Thompson: 110 days Heymann: 128 days Associate Attorney General Perrelli: 51 days Stephens: 292 days Hubbell: 128 days Assistant Attorney General Antitrust Division Varney: 90 days James: 145 days Bingaman: 147 days Although Trump has a friendly Senate, his politics and presidency are sui generis, and therefore assumptions regarding an easier nomination process for his Cabinet slate may be incorrect

19 Trump Antitrust Views Takeaways Pre-campaign Trump Experience in deal making and some experience with antitrust Pattern of litigiousness Candidate Trump Espoused populist, pro-consumer views Threat of antitrust enforcement against media companies PEOTUS Trump Transition team reflects traditional conservative antitrust approach FCC could be vehicle to disrupt media/telecom consolidation President Trump Return to traditional conservative enforcement? Populist-appeal strict enforcement? Personally motivated enforcement?

20 Trump s Proposed Supreme Court Nominees

21 Donald Trump s Supreme Court Short List Initially named eleven judges in May 2016 All eleven were white, eight were men Full list released in late September Ten additional names added in September 2016 prior to the first presidential debate» Increased racial and ethnic diversity List eased fears from Republican base about Trump s conservative credentials Two leading conservative policy groups, the Heritage Foundation and the Federalist Society, advised Trump on potential candidates

22 Nominees Have Wide Variety of Backgrounds Most nominees are either Circuit Court judges or State Supreme Court justices Nine State Supreme Court justices Two Federal District Court judges One Senator Nine Circuit Court judges Nominees reflect anti-elite rhetoric Located in the heartland, not the coasts Successful judges from less elite law schools No members on the short list from the D.C. Circuit

23 State Supreme Court Justices Nine State Supreme Court Justices Most from the middle of the country or from the South (Georgia, Florida, Iowa, Michigan, Colorado, Utah, Minnesota, and Texas) One former Scalia clerk (Joan Larsen, Michigan) Limited Antitrust Experience Issues addressing the federal antitrust laws rarely come before state supreme court justices Very little experience with state competition statutes Difficult to predict how these judges might rule on antitrust issues

24 District Court Judges and Senator Mike Lee Two district court judges Federico Moreno (S.D. Fla.) Amul Thapar (E.D. Ky.) Significant antitrust experience at the trial court level Senator Mike Lee Chair of the Antitrust Subcommittee of the Senate Judiciary Committee Stated that antitrust law should be non-partisan, doesn t believe that being conservative requires an anti-enforcement stance on antitrust law Introduced an FTC reform bill in September 2015 that would eliminate differences in the DOJ and FTC process for merger litigation

25 Circuit Court Judges Nine Circuit Court Judges Thomas Hardiman (3rd Circuit) Raymond Kethledge (6th Circuit) Diane Sykes (7th Circuit) Steven Colloton (8th Circuit) Raymond Gruender (8th Circuit) Timothy Tymkovich (10th Circuit) Neil Gorsuch (10th Circuit) William Pryor (11th Circuit) Margaret Ryan (Court of Appeals for the Armed Forces) Varying degrees of antitrust experience All of the circuit court judges (besides Margaret Ryan) have some experience with the federal antitrust laws

26 Antitrust Issues For The Supreme Court During a Trump Presidency Speculation About Multiple Appointments Trump may have the opportunity to appoint multiple justices Ginsburg (age 83), Kennedy (age 80), and Breyer (age 78) potentially nearing the end of their careers Multiple appointments may lead the court to adopt more conservative and defendantfriendly positions on issues impacting antitrust cases Key Antitrust Issues That Could Arise Clarification on the plus factors required for pleading under Twombly/Iqbal (current circuit split) Additional hurdles for class certification building on Wal-Mart Stores, Inc. v. Dukes and Comcast v. Behrend Antitrust Cases Currently Petitioning for Cert. In re Libor-Based Financial Instruments Antitrust Litigation State of Washington v. LG Electronics, Inc.

27 Plus Factors Required to Plead Antitrust Conspiracy Twombly and Iqbal heightened the pleading standards for antitrust plaintiffs alleging a conspiracy and described the plus factors that needed to be pled to survive a motion to dismiss There is rarely direct proof of conspiracy, so plaintiffs often allege parallel conduct and plus factors making agreement more likely Courts have reached inconsistent decisions on what plus factors are sufficient to plausibly state a claim of anticompetitive conspiracy under these cases In re Text Messaging Litigation (7th Cir.): allegations that defendants met in small groups, increased prices as costs fell, and abruptly changed their behavior to implement uniform pricing was sufficient In re Insurance Brokerage Antitrust Litigation (3d. Cir.): if independent economic selfinterest is an alternative for defendants common behavior, allegations of opportunity to conspire are not sufficient Supreme Court may revisit issue to clarify what plus factors are sufficient to satisfy the plausibility standard

28 Potential Changes to Class Certification Holding in Comcast v. Behrend Scalia opinion for the majority reversed Third Circuit decision affirming certification of the prospective class Found that damages model could not establish antitrust injury and damages on a classwide basis Did not isolate damages resulting from a specific theory of antitrust impact May have to examine the merits to conduct the required rigorous analysis» Okay to attack substance of the expert s damages model at the class certification stage

29 Potential Changes to Class Certification (cont.) Impact of Comcast v. Behrend Rigorous analysis of causation and damages required Broader Daubert inquiry at the class certification stage Increased scrutiny of damages models» Must align theory of antitrust liability with theories of causation and damages at class certification stage Increased focus on how class members are different, rather than on how class members are similar Inconsistent response by circuit courts may lead Supreme Court to revisit the topic

30 Lower Court Opinion (S.D.N.Y.) In re Libor-Based Financial Instruments Antitrust Litigation Court dismissed antitrust claims alleging that banks had colluded to manipulate the London Inter-Bank Offered Rate (Libor)» Libor represents an estimate of the average cost at which a bank can borrow funds from a peer bank Libor may effect price in financial transactions (if some aspect of a swap is tied to Libor), but it is not directly related to price Court found that plaintiffs lacked antitrust standing because they had failed to allege a valid antitrust injury» Process of setting Libor was never intended to be competitive» Plaintiffs injury was a result of misrepresentation, not harm to competition Lower Court Reversed by the Second Circuit Horizontal price-fixing is per se unlawful, so no need to separately plead harm to competition Consumers paid a higher price on account of horizontal competitors setting the financial benchmark, and this establishes a valid antitrust injury

31 In re Libor-Based Financial Instruments Antitrust Litigation (cont.) Questions presented in motion for certiorari: (1) Can plaintiff plead antitrust injury based on collusion in a non-competitive context and alleged injuries that do not stem from a restraint on a competitive process? (2) Can plaintiff plead antitrust conspiracy based on conduct that is equally indicative of parallel, non-conspiratorial activity? Potential Antitrust Impact Definition of antitrust injury Adjustment to the pleading standard Ability of financial institutions to collude when setting financial benchmarks that have some impact on price

32 State of Washington v. LG Electronics, Inc. Background Suit brought by the State of Washington against foreign electronics manufacturing companies alleging that companies conspired to fix prices on cathod ray tubes (CRTs) and then introduced CRTs into international streams of commerce Trial court dismissed for lack of personal jurisdiction over the foreign companies Court of appeals reversed, finding that allegations established personal jurisdiction and assertion of jurisdiction did not offend fair play and substantial justice State Supreme Court of Washington Opinion Affirmed the appellate court, found that foreign manufacturers had purposefully availed themselves of the United States market, including the State of Washington Companies dominated market for CRTs, sold CRTs into international streams of commerce, and intended their actions to raise the price of CRT products Potential Antitrust Impact Holding foreign companies liable in the U.S. under U.S. antitrust law for conspiracies outside the United States

33 Brexit Implications for Competition Law

34 Brexit Recent Developments UK PM Theresa May intends to trigger Article 50 of the Lisbon Treaty by end of March 2017 However, UK government lost High Court case regarding whether triggering Art. 50 requires legislation; Supreme Court ruling expected in the new year Requirement for primary legislation may delay the triggering of Art. 50 Art. 50 requires an agreement on exit terms and the member state s future relationship with the EU to be concluded within 2 years

35 Brexit Impact on EU Competition Law Dual London / Brussels merger filings possible, together with separate investigations UK s influence on European competition law will decline if it leaves the European Competition Network, possibly impacting: Leniency Guidelines on abuse of dominance Vertical merger guidelines Also likely that there will be trend towards object over effects based analysis

36 Brexit Merger Impact One stop shop may become a Two stop shop if the UK leaves the single market, increasing filing costs and complexity Possibility of divergence with the EC unlikely at first, but increases with time Vertical merger guidelines UK s Competitions and Markets Authority would need more resources, and would have to better focus on larger mergers and improve its turnaround times Revision of EU merger thresholds as a result of exclusion of the UK Coordination of merger control review procedures: Divergent decisions Consultation in ICN?

37 Brexit Impact on Investigations and Follow-on Actions If Arts. 101 & 102 no longer have direct effect in the UK, dual investigations in the UK and EC are likely EU Block Exemptions no longer applicable in UK Question on provisions driven by goal of integration, e.g. enforcement against geoblocking Leniency applications in EU and UK; fine exposure in EU and UK: Criminal offence in UK Director Disqualification Order Question of impact on EU enforcement and guidance: Leniency Guidelines on abuse of dominance

38 Brexit Impact on Investigations and Follow-on Actions Attractiveness of the UK as a forum for follow-on litigation, which has been increasing in recent years, likely to diminish if EC decisions are no longer binding Germany and the Netherlands would become more popular Certain features of the UK system (e.g. the disclosure regime) mean it's likely to remain an attractive forum Commission decisions would still be treated as highly relevant in the English courts The common law and pre-lugano rules would likely still mean that the relevant parties are joined to an action A number of current developments informing the UK s progress as a forum for followon litigation:» Pass-on and overcharge» The new fast track process at the Competition Appeal Tribunal for injunctions» The progress of various collective actions

39 Brexit Other Impact? Cooperation and information exchanges pursuant to Regulation 1/2003 would cease UK will no longer be a member of ECN ICN coordination Will UK enter into bilateral agreements with the EU to strengthen mutual assistance? EU Courts will not have jurisdiction in UK EU judgments and Commission decisions are likely to be persuasive but not binding What does it mean for companies? UK businesses operating in the EU still need to comply with EU competition law Divergence between UK competition law and EU competition law unlikely in the short term

40 DOJ Litigation Update

41 DOJ Litigation Update The Department of Justice is currently operating with a relatively full litigation docket, including with respect to merger litigation, but it has continued its aggressive approach Ongoing matters include: U.S. and Plaintiff States v. Aetna Inc., and Humana Inc. U.S. and Plaintiff States v. Anthem and Cigna U.S. v. EnergySolutions and Waste Control Specialists U.S. v. Deere & Company, et al. U.S. and Plaintiff States v. Amex, et al. U.S. v. DIRECTV Group Holdings, LLC and AT&T, Inc. U.S., et al. v. The Charlotte-Mecklenburg Hospital Authority U.S. v. Maruyasu Industries Co., Ltd. U.S. v. Tokai Kogyo Co., Ltd. U.S. v. BMI, Inc.

42 The Deal Anthem/Cigna Trial Background Proposed $54 billion merger between Anthem and Cigna announced in late July 2015» Anthem currently covers 40 million Americans, Cigna covers 13 million» The companies are two of the five major national health care providers» If permitted, the merger would produce the largest health insurer in the nation Department of Justice announced that it would challenge the merger in July 2016 The Trial Bench trial in the District Court for the District of Columbia overseen by Judge Amy B. Jackson The trial is split into two parts:» Part 1 began on November 21 and concluded on December 2. It addressed the effect on competition for national accounts from the country s largest employers. If the court finds that there is substantial harm to competition in this market, the merger will be prohibited. If not, the trial will proceed to part 2» Part 2 begins on December 12 and concludes on December 30. It will address the potential harm to large employers in local markets

43 Anthem/Cigna Trial Market Definition Department of Justice Position on Market Definition Product market for the first part of the trial is sales to the country s largest employers Geographic market is both the 14 states where Anthem currently has Blue Cross Blue Shield licenses and the United States as a whole Anthem Position on Market Definition The Department of Justice is improperly conflating the market for actual insurance policies with administrative-only products National accounts is too vague a term, and does not reflect realities in the marketplace The largest employers do not necessarily have to be serviced by insurers with nationwide networks, so smaller insurers should count as competitors The competitive landscape is different in the 14 states noted by the Department of Justice such that those states should not be considered a single market Anthem s ability to acquire licenses across all states within the country is not sufficient evidence to demonstrate that they compete nationwide

44 Anthem/Cigna Trial Anticompetitive Effects and Procompetitive Justifications Department of Justice s Position on the Anticompetitive Effects of the Merger Reduces choices that companies and consumer have when selecting health care plans Increased size will give Anthem greater leverage to raise prices and increase administrative fees Anthem will have less incentive to pass savings on to consumers after the merger Anthem s Position on the Procompetitive Justifications of the Merger Increased size will allow Anthem to negotiate better rates with health care providers, and those savings will be passed on to consumers Private health exchanges offer new sources of competition that mitigate any claimed negative effects of the merger Innovation is a key issue for both sides Cigna serves as a key driver of innovation in the health care market Anthem argues that the merger will help expand the scope of Cigna s business model, providing a broader platform for Cigna s innovations

45 Aetna-Humana Trial Background The Deal Proposed 37 billion dollar acquisition announced three weeks before Anthem-Cigna Merger in July 2015 Like Anthem and Cigna, the companies are two of the five largest health care insurers in the nation Department of Justice announced suit to challenge the merger in July 2016 The Trial Bench trial in the District Court for the District of Columbia overseen by Judge John D. Bates Began December 2, 2016, scheduled to end December 21, 2016

46 Aetna-Humana Trial Key Issues Do Medicare Advantage policies constitute a distinct market or do they compete with traditional Medicare plans? Department of Justice argues that the merger would increase premiums for seniors because the companies would no longer be competing to offer Medicare Advantage plans Companies argue that Medicare Advantage policies compete with traditional Medicare, and that the Medicare Advantage market is not a distinct market What impact does Aetna s decision to pull out of Affordable Care Act exchanges in three states have on the trial? Aetna pulled out of Florida, Georgia, and Missouri, three states where the government alleged competition for individual policies would experience the greatest harm following the merger Concern that action will set a precedent for companies to avoid antitrust scrutiny by stopping anti-competitive behavior when a lawsuit is likely Aetna contends decision to exit exchanges was made for business reasons Did the companies divestitures mitigate any competitive harm? Aetna and Humana divested just under 300,000 Medicare Advantage plans to Molina Healthcare

47 U.S. v. Energy Solutions, Inc., et al. The DOJ has sued to block Energy Solutions $367 million proposed acquisition of Waste Control Specialists LLC ( WCS ) The DOJ alleges the merger of the two low level radioactive waste ( LLRW ) disposal companies would eliminate that industry s competition in most of the country The DOJ claims Energy Solutions never saw competition in most of the country before WCS started operations in 2012 They also claim the two companies had been engaged in price wars from that time until the time of the merger proposal in 2015 According to the DOJ, the acquisition would lead to higher prices, lower quality service, and less innovation Energy Solutions has publically announced that it will defend the merger Energy Solutions denies the merger would result in anticompetitive effects on the industry They cite numerous other competitors for LLRW disposal, including storage on their customers own sites They also claim cost synergies will result from the merger and be passed through to utilities and consumers

48 FTC Litigation Update

49 FTC Litigation Update The FTC s list of ongoing matters includes: In the Matter of Contacts, Inc., a corporation In re: Volkswagen "Clean Diesel" Marketing, Sales Practices, and Products Liability Litigation FTC v. Advocate Health Care Network FTC v. Endo Pharmaceuticals, Inc., et al. FTC. V. AbbVie, Inc., et al.

50 FTC interpretation of the Noerr-Pennington Doctrine Amphastar Pharmaceuticals, Inc, et al. v. Momenta Pharmaceuticals, Inc, et al. FTC argued to 1st Circuit that lower court incorrectly applied Noerr-Pennington Doctrine when granting Momenta immunity to suit (though the FTC expressed no opinion on the merits) FTC says there had been no petitioning of the government, which is a prerequisite to Noerr immunity» Court may have been considering conduct before the US Pharmacopeial Convention as indirect petitioning of the FDA, but FTC says that theory is wrong because of Momenta s unethical conduct before the FDA

51 FTC interpretation of the Noerr-Pennington Doctrine In the Matter of Contacts, Inc., a corporation Original complaint accused Contacts of being a driving force behind a series of bilateral agreements between competitors which prevented competitive bidding for online ad space through Google Contacts asserted that the agreements were a result of the settlement of a trademark lawsuit and should therefore be protected under Noerr-Pennington as petitioning the government FTC argues that Noerr doesn t apply to settlements of suits between private entities (as opposed to the government) that restrain competition because those restraints result from a private agreement, not decision by the courts

52 DOJ and FTC Announcements

53 Proposed Revisions to International Antitrust Guidelines On Nov. 1, 2016, the DOJ and FTC sought public comment on Proposed Revisions to International Antitrust Guidelines Updated the 1995 Guidelines that provided information to businesses concerning the Agencies antitrust enforcement policy regarding international activities as well as their related investigative tools and cooperation with foreign authorities The proposed update reflect[s] the growing importance of antitrust enforcement in a globalized economy and the Agencies commitment to cooperating with foreign authorities on both policy and investigative matters. The proposed revisions attempt to reflect growing globalization, restructure the guidelines to improve accessibility, and emphasize issues most important to global businesses The Agencies are inviting interested parties, including attorneys, economists, academics, consumer groups, and the business community, to submit comments

54 FTC Item 4(c) and 4(d) Document Changes Item 4(c) and 4(d) documents Include documents that evaluate or analyze certain competition-related aspects of the notified transaction, as well as confidential information memoranda, documents prepared by third-party advisers and documents analyzing synergies FTC s prior position: No need to submit documents that otherwise meet the 4(c) and 4(d) criteria if the responsive portions relate only to foreign markets FTC s new position: All documents that meet the 4(c) and 4(d) criteria must be provided, even if they relate only to foreign markets The FTC stated given the increasingly interconnected global marketplace... excluding documents that discuss only foreign markets can impair the agencies initial competitive analysis. This change would require file searches of additional document custodians that held solely international documents or information unrelated to the US market This change, along with the new proposed international guidelines, show increased focus on international business

55 DOJ Model Second Request Update The DOJ announced on Nov. 28 an update to its Model Second Request Most changes were made to conform the model to existing agency practice Some changes allow for easier compliance with requests, like improved organization and elimination of duplication by grouping specifications by subject matter Also includes early requests to identify individuals and information that will better facilitate the DOJ s understanding of the transaction Exhibits an increased focus on e-discovery advancements by including instructions on predictive coding and search terms In general, this increased focus on organization, early planning, and e-discovery advancements could help reduce document review time and expenses, although its practical effect remains to be seen

56 FTC Sharing Economy Report FTC releases sharing economy report summarizing June 2015 public workshop Highlights competitive benefits and potential consumer protection challenges posed by disruptive business models, as evidenced by businesses like Uber and Airbnb Summarizes concerns of state/local regulators that sharing economy platforms enable new entrants to evade regulations designed to protect consumers and promote public safety FTC states that regulation should address particular problems but avoid regulating broadly in a way that would likely hinder competition Chairwoman Ramirez noted that the issuance of this report does not imply impending regulation

57 FTC on Data Security Standards FTC Interpretation of FTC Act Section 5 in relation to data security standards In a letter to senators, Chairwoman Edith Ramirez noted that companies are required to take reasonable steps regarding data security, depending on the size of their company, the sensitivity and volume of the data, costs, and other factors» The FTC has relied on Section 5 (a catch-all provision) to carry out data security compliance actions» Other than this statement, the FTC has not issued specific standards, instead pointing companies to previous precedent from past alleged violators The 11th Circuit in LabMD, Inc. v. FTC stayed an FTC enforcement order until the FTC s reliance on Section 5 could be examined. The court stated that intangible harms like those in a data security case may not be covered under the section, and that reliance on the FTC s interpretation that the section does apply may not be reasonable» This could result in a changed data security standard for companies going forward