The US Federal Trade Commission (FTC) is an independent law enforcement agency, committed to enforcing the US antitrust laws to protect consumers from anticompetitive mergers and business practices.
One of the FTC's principal responsibilities is to prevent mergers that may substantially lessen competition in violation of US law. In fiscal year 2017 (1 October 2016– 30 September 2017),
During 2017, the parties abandoned six transactions after FTC staff informed the parties of its antitrust concerns, but before litigation was initiated. The parties abandoned one merger transaction after the FTC authorised a preliminary injunction (Draft Kings/FanDuel
In two additional matters, both proposed hospital mergers, the merging parties abandoned their transaction after the FTC obtained a preliminary injunction on appeal in federal circuit court (Pinnacle/Hershey
In the other matter, the US Court of Appeals for the Seventh Circuit issued a significant ruling in FTC v Advocate Health System. The court reversed a lower court decision, ruling that the district court had mis-analysed the geographic market. It held that the district court had improperly:
• applied the hypothetical monopolist test;
• assessed evidence regarding patient preferences for local care; and
• focused on the number of patients who leave the market to receive care rather than the number who remain in the market.
In 2017, as in other years, many FTC merger enforcement actions resulted in negotiated settlements designed to maintain competition in the affected markets while allowing the merger to proceed. For instance, the FTC announced settlements in three mergers involving medical device products, such as a settlement with Abbot Laboratories and Alere Inc, requiring the divestiture of two point-of-care medical device product lines to remedy concerns that the acquisition would likely harm competition in the United States for those products.
The FTC also acts to preserve competition in energy markets. For example, in the proposed merger between Alimentation Couche-Tard and CST Brands,
Finally, the FTC also reviews vertical mergers and takes action when appropriate to preserve existing levels of competition. For instance, the FTC investigated concerns that semiconductor manufacturer Broadcom Limited's acquisition of Brocade Communications Systems would reduce competition in the worldwide market for fibre channel.
In addition to its merger enforcement programme, the FTC maintains a robust programme to identify and halt anticompetitive conduct. In 2017, the FTC launched approximately seven investigations into potential monopolisation and brought several cases.
For instance, the FTC obtained an injunction in federal court in which Mallinckrodt ARD Inc – formerly Questcor Pharmaceuticals, Inc – agreed to pay US$100 million in equitable monetary relief to settle charges that Questcor illegally acquired the rights to develop a drug that threatened its monopoly in the US market for adrenocorticotropic hormone drugs.
The FTC also charged Qualcomm Inc with using anticompetitive tactics to maintain its monopoly in the supply of a key semiconductor device used in cell phones and other consumer products. In a complaint filed in a federal district court, the FTC alleges that Qualcomm has violated the antitrust laws by using its dominant position as a supplier of certain baseband processors to impose onerous and anticompetitive supply and licensing terms on cell phone manufacturers and to weaken competitors.
The FTC also reached three settlements in 2017, including two involving trade association rules that restrained competition among the members. For example, in May 2017, the FTC approved a final order in which the American Guild of Organists agreed to eliminate rules that restricted its 15,000 member organists and choral members from competing for opportunities to perform.
International cooperation on competition cases under investigation in more than one jurisdiction can help to ensure compatible results and create efficiencies in the use of limited agency resources. In many cases, cross-border cooperation is greatly aided by international waivers of confidentiality from the firms under investigation. Confidentiality waivers enable communication that is more complete and allow coordination among competition agencies. This can expedite transaction review, saving agency resources and expediting transaction clearance.
In 2017, the FTC cooperated on 38 enforcement matters with counterpart agencies around the world, including in Australia, Austria, Belgium, Brazil, Canada, Chile, China, the European Union, Germany, Hungary, India, Ireland, Israel, Japan, Korea, Mexico, New Zealand, Singapore, South Africa, Taiwan and the United Kingdom. Those agencies reached compatible outcomes in all but one of the cases completed during the fiscal year. While the FTC will continue to strive for 100 per cent success, inconsistent outcomes remain possible, particularly as new antitrust agencies begin to assert their jurisdiction and cooperation on unilateral conduct matters expands.
Cooperation on merger cases can take many forms, including discussing industry context and background, comparing substantive approaches to market definition and competitive effects, participating in joint conference calls with the merging parties or third parties, and coordinating on merger remedies.
One recent and notable example of the FTC's cooperation efforts involved the proposed merger of Essilor International and Luxottica Group SpA in the optical industry.
Another example of significant international cooperation involved Abbott Laboratories' proposed acquisition of St. Jude Medical.
The FTC continues to cooperate with foreign counterpart agencies on investigations of potential anticompetitive conduct. In 2017, the FTC cooperated with foreign competition agencies on four conduct investigations.
Competition research and advocacy
The FTC shares its expertise on competition issues with interested policymakers and the public through competition advocacy. These written advocacies provide guidance and recommendations about how to incorporate competition principles into laws, regulations or policies.
In 2017, the agency hosted three public workshops in broad areas of competition policy, including one event in connection with the Economic Liberty Task Force related to occupational licence portability.
The FTC continued to respond to requests for comment from local, state and federal entities to provide policymakers with a framework to analyse the potential competitive implications of pending governmental actions that may have a major impact on consumers.
The FTC also pursues its competition goals through other methods, such as education, research and study. For example, the FTC issued its report evaluating patent assertion entities, presenting data gathered from its authority under section 6(b) of the FTC Act.
In 2017, FTC Commissioners and staff provided formal testimony before Congressional committees on competition issues on two occasions. In addition, FTC staff and Commissioners held numerous informal meetings with legislators and their staff.
Formal testimony included:
• on the competitive effects of occupational licensing (12 September 2017); and
• on the anticompetitive conduct in the pharmaceutical industry (27 July 2017).
In 2017, the FTC or FTC staff sent or filed 16 competition advocacy comments, including four amicus curiae briefs filed in federal court discussed above:
• four comments addressed occupational licensing issues;
• three comments expressed concerns about efforts to provide antitrust immunity to an otherwise anticompetitive hospital merger;
• one comment supported regulatory reforms that would allow licensed speech; pathologists and audiologists to determine whether and when to provide telepractice services;
• one comment supported the reform of certificate-of-need laws that limit competition in the health care sector;
• one comment addressed the regulation of broadband internet access services;
• one comment supported the reform of electricity generator interconnection procedures and agreements; and
• one comment addressed market power analysis in wholesale electricity markets.
In addition to the topics that were the subject of formal written advocacy comments, FTC staff also engaged in informal competition advocacy covering the full range of subjects in which it has expertise. Notable examples include intellectual property, pharmaceuticals and biologic drugs, and health information technology.
International policy engagement
In addition to promoting cooperation in cases such as those described above, the FTC, together with the DOJ, works to promote convergence toward sound, effects-based economic analysis and in support of procedural fairness in connection with investigations. The FTC does this through multilateral competition organisations, policy dialogues with counterpart agencies, our technical assistance and International Fellows programme, and competition chapters of trade agreements.
The FTC plays a lead role in multilateral organisations, including the ICN, the OECD, the United Nations Conference on Trade and Development and the Asia-Pacific Economic Cooperation (APEC).
In the ICN, the FTC:
• is a long-serving member of the Steering Group;
• co-chairs the Merger Working Group where it co-leads a project updating and implementing the ICN's Recommended Practices on Merger Notification and Review Procedures and Recommended Practices on Merger Analysis, providing sound benchmarks for merger rules and procedures;
• leads the ICN's work implementing its signature guidance on providing due process in competition investigations;
• co-chairs the Advocacy and Implementation Network; and
• leads the 'ICN Training on Demand' project, which produces video training materials on competition law and practice.
In the OECD, the agency plays a key role in developing the Competition Committee's long-term themes, including the current projects on procedural fairness, intellectual competition in the digital economy, and competitive neutrality. It also conducted and oversaw an APEC-sponsored series of workshops on procedural fairness.
The FTC, often in collaboration with other parts of the US government, maintains dialogue with counterpart agencies and governments on a variety of challenging issues, including the intersection of competition law and intellectual property rights, the role of industrial policy and other non-competition policies, the territorial scope of competition law and remedies, and due process in antitrust investigations. For example, through dialogue with the Chinese antitrust agencies and government and consultation with US stakeholders and other US agencies, the FTC addresses issues posed by enforcement of the Chinese Anti-Monopoly Law. In addition, the FTC participates in US delegations that negotiate competition chapters of trade agreements such as the North American Free Trade Agreement.
The FTC maintains a robust technical assistance programme that assists newer competition agencies in the design and implementation of sound competition policy. During the past year, the FTC conducted 38 competition missions in 22 countries. This included placing resident advisers in the competition agencies of India, the Philippines and Ukraine, and conducting hands-on workshops on investigational skills. The resident advisers' work focused on the application of economic analysis in investigations and on merger notification procedures. The FTC also conducted competition workshops in numerous countries, from Argentina to Vietnam, along with regional programmes for Africa, Central America, Southeast Asia and Southeast Europe. The FTC also hosted 'international fellows' from nine foreign competition agencies. The fellows work directly with FTC staff to gain first-hand understanding of and experience with the practices and approaches that the FTC uses in its enforcement, which they then bring back to their agencies.
In 2017, the FTC provided policy advice to foreign competition agencies in 111 instances through consultations, written submissions, and comments on proposed laws and guidelines. The FTC's policy advice remains highly regarded and sought after by new and experienced competition agencies and by participants in international competition organisations and conferences.
Finally, in January 2017, the FTC and DOJ issued revised International Antitrust Guidelines, which provide guidance to businesses and practitioners on the agencies' international enforcement policies and related investigative tools and cooperation with foreign agencies.
The FTC remains committed to working with its counterpart agencies in the Americas and around the world, and will continue to use the full range of its enforcement, research, and advocacy tools to protect consumers and promote competition in 2019 and beyond.
1 The FTC shares jurisdiction with the Antitrust Division of the US Department of Justice to enforce the antitrust laws of the United States.
2 Throughout this document, date references to 2017 are to fiscal year 2017.
3 See In re DraftKings, Inc and FanDuel Ltd, Dkt. 9375, available at www.ftc.gov/enforcement/cases-proceedings/161-0174/draft-kings-inc-fanduel-limited.
4 See In re The Penn State Hershey Medical Center and PinnacleHealth Sys. Dkt. 9368, available at www.ftc.gov/enforcement/cases-proceedings/141-0191/penn-state-hershey-medical-centerpinnaclehealth-system.
5 See In re Advocate Health Care Network et al, Dkt. 9369, available at www.ftc.gov/enforcement/cases-proceedings/141-0231/advocate-health-care-network-advocate-health-hospitals.
6 See In re Abbott Laboratories and Alere Inc, File No. 161-0084, available at https://www.ftc.gov/system/files/documents/cases/1610084_abbott_alere_analysis.pdf.
7 See In re Baxter Int'l Inc et al, Dkt. No. C-4620, available at https://www.ftc.gov/system/files/documents/cases/baxter_claris_complaint.pdf.
8 See generally Statement of the acting director of FTC's Bureau of Competition Regarding the Walgreens/Rite Aid Transaction, available at www.ftc.gov/news-events/press-releases/2017/06/statement-acting-director-ftcs-bureau-competition-regarding.
9 In re Alimentation Couche-Tard Inc and CST Brands, Inc Dkt. C-4618 (final order issued 14 August 2017).
10 In re Broadcom Ltd and Brocade Comm. Sys. Inc, FTC File No. 171-0027, available at https://www.ftc.gov/system/files/documents/cases/1710027_broadcom_brocade_agreement.pdf.
11 See Fed. Tr. Com'n et al v Mallinckrodt ARD Inc. et al, 1:17-cv-00120 (DDC), available at https://www.ftc.gov/system/files/documents/cases/170118mallinckrodt_stipulated_final_order.pdf.
12 FTC v Qualcomm No. 5:17-cv-00220 (ND Cal. 17 January 2017), www.ftc.gov/enforcement/cases-proceedings/141-0199/qualcomm-inc.
13 See In re Amer. Guild of Organists, Dkt. C-4617, available at https://www.ftc.gov/system/files/documents/cases/american_guild_of_organists_decision_and_order_c4617.pdf.
14 See In re Nat'l Assoc. of Animal Breeders, Inc, Dkt. 151-0135, available at https://www.ftc.gov/system/files/documents/cases/151_035_naab_complaint.pdf.
15 See generally Statement of Federal Trade Commission Concerning the Proposed Acquisition of Luxottica Group by Essilor, available at www.ftc.gov/news-events/press-releases/2018/03/statement-federal-trade-commission-concerning-proposed.
16 In re Abbott Laboratories and St Jude Medical, Dkt. C-4600 (final order issued 23 February 2017).
17 See Streamlining Licensing Across State Lines: Initiatives to Enhance Occupational License Portability, 27 July 2017, available at www.ftc.gov/news-events/events-calendar/2017/07/streamlining-licensing-across-state-lines-initiatives-enhance.
18 See Now Hear This: Competition, Innovation, and Consumer Protection Issues in Hearing Health Care, 18 April 2017, available at www.ftc.gov/news-events/events-calendar/2017/04/now-hear-competition-innovation-consumer-protection-issues.
19 See Ninth Annual Fed. Tr. Com'n Microeconomics Conference, 3 November 2016, available at www.ftc.gov/news-events/events-calendar/2016/11/ninth-annual-federal-trade-commission-microeconomics-conference.
22 See https://www.ftc.gov/system/files/documents/amicus_briefs/supreme-court-united-states-visa-inc-et-al-petitioners-v-sam-osborn-et-al-visa-inc-et-al-petitioners/p082105_united_states_amicus_brief_in_visa_v_osborn.pdf.
23 See id.
24 See Amphastar Pharmaceuticals, Inc et al v Momenta Pharmaceuticals, Inc, No. 16-2113, available at https://www.ftc.gov/system/files/documents/amicus_briefs/amphastar-pharmaceuticals-inc-et-al-v-momenta-pharmaceuticals-inc-et-al/161108amphastar_v_momentaftc_amicus_brief_.pdf.
25 See Mylan Pharmaceuticals Inc v Warner Chilcott PLC, et al No. 15-2236, available at https://www.ftc.gov/system/files/documents/amicus_briefs/mylan-pharmaceuticals-inc-v-warner-chilcott-plc-ftc-amicus-brief/2016-1019_mylan-v-warner_chilcott_doryx_ca3_ftc_amicus_brief_supporting_rehearing.pdf.
26 See Patent Assertion Entity Activity: An FTC Study, October 2016, available at https://www.ftc.gov/system/files/documents/reports/patent-assertion-entity-activity-ftc-study/p131203_patent_assertion_entity_activity_an_ftc_study_0.pdf.
27 See Antitrust Guidelines for the Licensing of Intellectual Property, 12 January 2017, available at https://www.ftc.gov/system/files/documents/public_statements/1049793/ip_guidelines_2017.pdf.
28 See The 'Sharing' Economy: Issues Facing Platforms, Participants & Regulators, November 2016, available at https://www.ftc.gov/system/files/documents/reports/sharing-economy-issues-facing-platforms-participants-regulators-federal-trade-commission-staff/p151200_ftc_staff_report_on_the_sharing_economy.pdf.
30 See Antitrust Guidelines for International Enforcement and Cooperation, 13 January 2017, available at https://www.ftc.gov/system/files/documents/public_statements/1049863/international_guidelines_2017.pdf.