United States: Federal Trade Commission

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This year, the US Federal Trade Commission maintained a busy competition agenda, with active enforcement, important advocacy and ongoing research projects. The Commission continued efforts to work with competition authorities throughout the world to promote competition and consumer welfare. This chapter details the Commission’s key enforcement efforts, as well as important policy efforts of the past year.


Merger activity is brisk, and merger review continues to be a core function for the Commission. In fiscal year 2015, the US antitrust agencies received notice of 1,801 transactions, up slightly from the year before.

Since February 2015, the Commission has litigated an unprecedented number of competition cases in federal court, including five trials seeking a preliminary injunction to prevent anticompetitive mergers. While not all challenges were successful, the Commission secured significant victories in Sysco/US Foods and Staples/Office Depot, resulting in federal court decisions on important aspects of merger analysis.

In June 2015, after an eight-day preliminary injunction hearing, a federal district court blocked the merger of the two largest foodservice distributors in the country, Sysco Corporation and US Foods, Inc.1 A key issue in the case was whether competitive dynamics are different for national customers – large businesses whose operations spanned several geographic regions – than for local customers. Based on many sources and types of evidence, the court found that to effectively compete for national customers, broadline distributors must offer a cluster of goods and services that can be delivered across a broad geographic area, and that the acquisition would likely substantially lessen competition for these targeted customers. Shortly after the court’s decision, Sysco announced it would not pursue the merger.

The Commission also successfully blocked Staples, Inc’s proposed acquisition of Office Depot. The Commission had challenged the same parties’ proposed merger 19 years ago, when the Commission’s case focused on the effects of the merger on retail sales of consumable office supplies by office supply superstores. This time, the Commission alleged that the proposed acquisition would significantly reduce competition in the market for the sale and distribution of core consumable office supplies and paper sold to large business-to-business customers for their own use, and that the prospective future competitive pressure from online retailers such as Amazon was not sufficient to restore the competition lost due to the merger.2 FTC staff worked closely with the Canadian Competition Bureau (CCB), which brought its own challenge to the merger on the same day, and the Canadian government detailed one of its attorneys to assist the FTC case team. FTC staff also worked closely with staff at the European Commission’s DG Competition, which also detailed a staff attorney to the case team.

The Commission also continues to review a growing number of hospital consolidations, which can threaten to increase prices and reduce quality of care in local healthcare markets. This year, the Commission challenged three hospital mergers.3

Outside of our litigation efforts, the Commission continues to accept negotiated settlements, which allow mergers to proceed with divestitures designed to eliminate the merger’s potential for anticompetitive harm. For instance, in the pharmaceutical sector, the Commission routinely requires divestitures to maintain competition for existing products, as well as for pipeline products in development when the merger would reduce competition in the future by eliminating a likely entrant.4

The Commission also accepted negotiated settlements in mergers involving stores that sell products that consumers buy every day. For instance, the Commission reviewed the effects of two competing proposals by Dollar Tree and Dollar General to acquire Family Dollar Stores. Each of these companies operate small-format, deep-discount retail outlets that sell an assortment of consumables and non-consumables, including food, home products, apparel and seasonal items, at prices under US$10. The Commission analysed each transaction on its merits. After Dollar Tree emerged as the successful bidder, the Commission required it to divest 330 Family Dollar stores to remedy likely anticompetitive effects in local markets in 35 states.5

International cooperation in merger review

The number of mergers that are subject to review in multiple jurisdictions has increased significantly in the past several years. Cooperation with antitrust officials in other countries during our merger review helps us reach compatible results, increases the predictability of outcomes, and facilitates more efficient use of limited agency resources. It has become standard practice to communicate and cooperate with competition authorities in other jurisdictions that are reviewing the same merger transaction.

In addition to the Staples/Office Depot case, three other cases from this year highlight the agency’s successful international cooperation with other competition agencies. After reviewing the proposed merger of global auto parts makers, ZF Friedrichshafen AG and TRW Automotive Holdings, the Commission concluded that customers located in North America typically rely on manufacturers with production facilities located in the United States, Canada and Mexico.6 The European Commission determined that the merger would reduce competition in a different market in Europe – chassis components for cars and trucks. FTC staff worked with competition authorities in Canada and Mexico as well as the EU. To resolve concerns in each of these jurisdictions, ZF decided to sell TRW’s entire suspension business in North America and Europe, a single divestiture that satisfied concerns raised in each region.

The proposed US$25 billion merger of cement manufacturers Holcim Ltd and Lafarge SA highlights a different issue that is more likely to occur in markets where there are substantial cross-border sales. Because cement products are heavy and relatively cheap, transportation costs limit competition to local or regional areas, but there is significant cross-border trade in cement with sources in Canada supplying customers in US border states, and vice versa. The Commission concluded that the merger was likely to harm competition in 12 US regional markets for portland cement, and in two US regional markets for slag cement.7 The CCB also determined that the merger would cause harm to Canadian customers. To address the concerns of the CCB and of the Commission, the companies agreed to divest a larger group of Holcim assets, most located in Canada but including some facilities in the United States. In addition, although most of the US divestitures were made to upfront buyers, we cooperated with Canadian authorities by allowing the assets that were included in the Canadian package to be sold after the Commission’s order was entered, subject to a hold-separate agreement and approval of the post-order buyer.

A third merger investigation with significant international cooperation involved the worldwide market for a technology product. To maintain competitive options for US customers, NXP Semiconductors NV agreed to sell its RF power amplifier assets in order to proceed with its proposed US$11.8 billion acquisition of Freescale Semiconductor Ltd.8 The Commission’s order required NXP to divest all its assets that are used primarily for manufacturing, research, and development of RF power amplifiers, including a manufacturing facility in the Philippines, another facility in the Netherlands, as well as all patents and technologies used exclusively or predominantly for the RF power amplifier business, and a royalty-free licence to use all other NXP patents and technologies required by that business. Throughout the investigation, FTC staff cooperated with staff of the antitrust agencies in the European Union, Japan and Korea, including on the analysis of the proposed transaction and potential remedies, to reach a consistent outcome on an international scale.

Non-merger enforcement and cooperation

For many years, one of the Commission’s top priorities has been to stop anticompetitive reverse payment settlements. This year produced a breakthrough in the Commission’s efforts when, one week before the trial in FTC v Cephalon,9 Cephalon’s new owner, Teva Pharmaceuticals, settled the FTC charges and agreed to stop using certain types of anticompetitive patent settlements. Teva also paid US$1.2 billion in ill-gotten gains to reimburse those who overpaid for the blockbuster sleep disorder drug Provigil due to Cephalon’s conduct. This landmark settlement represents the first monetary relief the Commission has obtained for purchasers harmed by reverse payment settlement agreements. Just as important, it contains broad injunctive relief restricting Teva, the world’s largest generic company, from entering into these illegal settlements in the future.10

The Commission continues to devote significant resources to other reverse payment cases pending in federal court,11 including its first case challenging an agreement not to market an authorised generic, also known as a ‘no-AG commitment,’ as a form of reverse payment.12 We have previously argued in amicus briefs – a position now adopted by two federal appeals courts – that a no-AG commitment can raise the same competitive concerns addressed by the Supreme Court in FTC v Actavis because it ensures that the first-filer will capture all generic sales and be able to charge higher prices during the exclusivity period.13

The Commission also scrutinises exclusive business arrangements that unreasonably restrict competition. In 2015, appellate courts upheld the Commission’s monopolisation decision in McWane, Inc v FTC.14 The case is important because it is one of the few litigated monopolisation decisions involving vertical restraints. Although it is well-settled US antitrust doctrine that exclusive dealing arrangements are generally procompetitive and can benefit competition by improving interbrand competition, when used by a company with monopoly power, exclusive dealing can be harmful when it enables the firm to maintain its monopoly by impairing the ability of rivals to develop into effective competitors.15

We also cooperate with competition agencies in other jurisdictions on conduct matters, discussing theories of competitive harm, economic analysis and tools, and possible remedies. As in the merger context, waivers of confidentiality, provided by parties and third parties to competition agencies, facilitate cooperation. To streamline the process of providing waivers, the US antitrust agencies created a joint model waiver for use in civil matters.16

Competition policy work

Competition authorities can play an important role in shaping the inevitable transitions caused by disruptive innovation, by advocating for regulatory responses that do not unduly restrain competition,17 enforcing competition rules that ensure incumbents do not foreclose new rivals from the market, and studying markets to better understand new technologies and business models. For instance, following a 2015 workshop examining the emergence of the ‘sharing’ economy,18 FTC staff continues to monitor competition and consumer protection issues arising on peer-to-peer platforms, and is drafting a report. We also shared our experience related to disruptive innovations in discussions with other competition authorities and in multilateral fora, such as the Competition Committee of the Organization for Economic Cooperation and Development (OECD) and the International Competition Network (ICN).19

The Commission also has two studies under way. The first is a study of patent assertion entities (PAEs), firms with a business model based on buying patents and then attempting to generate revenue by licensing, or litigating against, businesses that are alleged to be using the patented technology. Our study is designed to develop a better and more complete understanding of the PAE business model.20 FTC staff is now drafting a report to describe its findings. The second study is designed to evaluate the effectiveness of the Commission’s orders in past merger cases where it has required a divestiture or other remedy.21 This effort will expand on a similar remedy study conducted in the 1990s that led to important improvements to the Commission’s orders. The new study is broader, covering 90 orders entered between 2006 and 2012, and will benefit from information collected from customers and significant competitors.

International work

The Commission, with the US Department of Justice, continues to play a lead role in promoting cooperation and convergence toward sound competition policies internationally.

In the last year, we held bilateral meetings with senior officials from competition authorities in China and Korea, and held a trilateral meeting with the competition authorities in Mexico and Canada.22 These meetings provided important opportunities for agency leaders to discuss their ongoing work to ensure effective antitrust enforcement cooperation. FTC staff also participated in policy discussions and shared experiences with foreign counterparts, including a number of competition authorities in the Americas.

The US antitrust agencies also entered into arrangements to promote increased cooperation and communication with counterparts around the world, including a memorandum of understanding with the KFTC,23 and an antitrust cooperation agreement with Peru’s competition agency, INDECOPI.24 The Commission also continued to engage with foreign counterparts that are developing laws, guidelines, or rules regarding antitrust enforcement, including with respect to conduct involving intellectual property rights, and recently provided comments to authorities in Canada, China, Korea and Japan.

The Commission has also been an active contributor to the ICN since the network’s inception in 2001. Starting this year, the Commission will co-chair the ICN’s Merger Working Group, which will focus on potential projects to implement its Recommended Practices and provide practical advice on investigative techniques. Through our work in the OECD, the Commission contributed to the ongoing discussions related to disruptive innovations, merger review, and unilateral conduct cases. In addition, the Commission continues to participate in the Inter-American Alliance, which fosters cooperation in the Americas through regular conference calls on matters of mutual interest.

In the last year, the Commission continued its robust technical assistance programme, conducting programmes and workshops in various countries, including many in the Americas. The Commission resumed work with Argentina’s competition agency, as well as Brazil, Colombia, the Dominican Republic, El Salvador, Honduras and Mexico. We also continued to place resident advisors in sister competition authorities, most recently in El Salvador, Honduras, Mexico and Ukraine. Through our popular International Fellows and Interns Program, we have hosted 85 lawyers, economists, investigators and technical experts from 33 jurisdictions.

In 2016 and beyond, we look forward to continuing our work with foreign counterparts and further developing and strengthening our relationships with competition authorities in the Americas, and around the world.


  1. FTC v Sysco Corp., 113. F. Supp. 3d 1 (D.D.C. 2015).
  2. FTC v Staples, Inc., No. 15-cv-02115 (D.D.C. May 17, 2016).
  3. In re Cabell Huntington Hosp., Dkt. 9366 (complaint issued Nov. 6, 2015); FTC v Penn State Hershey Medical Center, No. 1:15-cv-2362 (M.D. Pa); FTC v Advocate Health Care Network, No. 1:15-cv-11473 (N.D. Ill).
  4. See, eg, In re Lupin Ltd., Dkt. C-4566 (complaint issued Feb. 19, 2016). Without a divestiture, the merger would have combined two of only four current competitors marketing two dosages of generic doxycycline monohydrate capsules, which are used to treat bacterial infections. In the market for generic mesalamine extended release capsules used to treat ulcerative colitis, the merger also would have eliminated a future competitor.
  5. In re Dollar Tree, Inc., Dkt. C-4530 (final order issued September 17, 2015).
  6. In re ZF Friedrichshafen and TRW Automotive, Inc., Dkt. C-4520 (final order issued June 18, 2015).
  7. In re Holcim Ltd. and Lafarge S.A., Dkt. C-4519 (final order issued June 16, 2015).
  8. In re NXP Semiconductors N.V., Dkt. C-4560 (final order issued Jan. 29, 2016).
  9. FTC v Cephalon, Inc., No. 08-cv-2141 (E.D. Pa. complaint filed Feb. 13, 2008).
  10. FTC News Release, ‘FTC Settlement of Cephalon Pay for Delay Case Ensures $1.2 Billion in Ill-Gotten Gains Relinquished; Refunds Will GoTo Purchasers Affected by Anticompetitive Tactics’ (May 28, 2015).
  11. See, eg, FTC v Actavis, Inc., No. 1:09-cv-00955 (N.D. Ga. Apr. 10, 2009); FTC v AbbVie, Inc., No. 2:14-cv-5151 (E.D. Pa. Sept. 8, 2014).
  12. FTC v Endo Pharmaceuticals Inc., No. 2:16-cv-01440 (E.D. Pa. Mar. 30, 2016). At the same time, we also filed a proposed stipulated order resolving allegations against Teikoku Seiyaku Co. Ltd. and Teikoku Pharma USA, Inc., Endo’s partner for Lidoderm patches.
  13. King Drug Co. of Florence Inc. v Smithkline Beecham Corp., 791 F.3d 388 (3d Cir. 2015); see FTC Brief as Amicus Curiae, In re Lamictal Direct Purchaser Antitrust Litig., No. 14-1243 (3d Cir. Apr. 28, 2014); In re Loestrin 24 FE Antitrust Litig., --- F. 3d. --- , 2016 WL 698077 (1st Cir. Feb 22, 2016); FTC Brief as Amicus Curiae, In re Loestrin 24 FE Antitrust Litig., No. 14-2071 (1st Cir. June 16, 2015).
  14. Opinion of the Commission, In re McWane, Inc., Dkt. 9351 (Feb. 6, 2014), aff’d, 783 F.3d 814 (11th Cir. 2015), cert. denied, 2016 U.S. LEXIS 2010 (Mar. 21, 2016).
  15. See also FTC News Release, ‘Cardinal Health Agrees to Pay $25.8 Million to Settle Charges It Monopolized 25 Markets for the Sale of Radiopharmaceuticals to Hospitals and Clinics’ (Apr. 20, 2015); FTC News Release, ‘Supplier of High-Performance Polymer for Medical Implants Settles FTC Charges that it Monopolized Sales to World’s Largest Medical Device Makers’ (Apr. 27, 2016).
  16. FTC-DOJ Model waiver of confidentiality for use in civil matters involving non-U.S. competition authorities, available at https://www.ftc.gov/system/files/attachments/international-waivers-confidentiality-ftc-antitrust-investigations/model_waiver_of_confidentiality.pdf. The Agencies also provide an FAQ regarding waivers, cooperation, and confidentiality, available at https://www.ftc.gov/system/files/attachments/international-waivers-confidentiality-ftc-antitrust-investigations/waivers_faq.pdf.
  17. See, eg, FTC Staff Letter to Senator Darwin L. Booher, Michigan Senate regarding Senate Bill 268 (May 7, 2015) (advocacy commenting on a bill in the Michigan legislature exempting a category of vehicles from that state’s prohibition on direct car sales by all manufacturers). See also Marina Lao, Debbie Feinstein, & Francine Lafontaine, FTC Competition Matters blog, Direct-to-consumer auto sales: It’s not just about Tesla (May 11, 2015).
  18. FTC workshop, ‘The ‘Sharing’ Economy: Issues facing Platforms, Participants, and Regulators;’ materials available at https://www.ftc.gov/news-events/events-calendar/2015/06/sharing-economy-issues-facing-platforms-participants-regulators.
  19. See, eg, FTC News Release, ‘Officials from the United States, Canada and Mexico Participate in 2016 Trilateral Meeting in Toronto to Discuss Antitrust Enforcement’ (May 20, 2016); Note by the United States, ‘Hearing on Disruptive Innovations,’ OECD Competition Committee, June 2015, available at https://www.ftc.gov/policy/reports/us-submissions-oecd-other-international-competition-fora; FTC News Release, ‘International Competition Network Marks Its Fifteenth Annual Conference Promoting International Convergence and Cooperation: Showcases Work on Merger Remedies, Unilateral Conduct, and Agency Assessment’ (April 29, 2016).
  20. FTC News Release, ‘FTC Announces Second Federal Register Notice with Revised Proposed Information Requests for Its Patent Assertion Entity Study; OMB Clearance Requested’ (May 13, 2014).
  21. FTC News Release, ‘FTC Proposes to Study Merger Remedies’ (Jan. 9, 2015).
  22. FTC News Release, ‘Officials from the United States, Canada and Mexico Participate in 2016 Trilateral Meeting in Toronto to Discuss Antitrust Enforcement’ (May 20, 2016).
  23. FTC News Release, ‘Federal Trade Commission and Department of Justice Sign Antitrust Memorandum of Understanding with Korea Fair Trade Commission’ (Sept. 8. 2015).
  24. FTC News Release, ‘Federal Trade Commission and Department of Justice Sign Antitrust Cooperation Agreement with Peru’s National Institute for the Defense of Competition and the Protection of Intellectual Property’ (May 26, 2016). 

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