FTC International Monthly - May

FTC International Monthly: U.S. Competition, Consumer Protection and Privacy News

MAY 2014


Terrell McSweeny Begins Term as FTC Commissioner

On April 28, Terrell McSweeny began her term as an FTC Commissioner.  She was confirmed by a 95-1 vote in the U.S. Senate on April 9, 2014, for a term ending on September 25, 2017.  Before joining the FTC, McSweeny served as Chief Counsel for Competition Policy and Intergovernmental Relations for the U.S. Department of Justice Antitrust Division.  She joined the Antitrust Division after serving as Deputy Assistant to the President and Domestic Policy Advisor to the Vice President from January 2009 until February 2012, advising President Obama and Vice President Biden on policy in a variety of areas, including health care, innovation, intellectual property, energy, education, women’s rights, criminal justice, and domestic violence.  Her government service also includes work as Sen. Joe Biden’s Deputy Chief of Staff and Policy Director in the U.S. Senate, and as Counsel on the Senate Judiciary Committee.  She also worked as an attorney at O'Melveny & Myers LLP. 


FTC Bureau of Competition Director Issues Report on Work of the Bureau over the Past Year

FTC Bureau of Competition Director Deborah Feinstein released the annual Director’s report, which highlights the work of the Bureau’s nearly 300 lawyers and support staff over the past 12 months.  The 24-page report discusses the Bureau’s work investigating, litigating, and negotiating settlements where appropriate in merger and conduct cases.  It also addresses the Bureau’s approach to important competition policy issues.  

International Competition Network Adopts Recommended Practices for Predatory Pricing Analysis and Advances Convergence on Confidentiality Protections

At its recent annual conference, the International Competition Network (ICN) adopted new recommended practices for predatory pricing analysis and competition assessment, and approved new work product on international merger enforcement cooperation, confidentiality protections during investigations, leniency policy, and digital evidence gathering.  More than 500 delegates from 90 jurisdictions, including competition experts from international organizations and the legal, business, consumer, and academic communities attended the 13th annual ICN conference, hosted by the Moroccan Competition Council on April 23-25.  FTC Chairwoman Edith Ramirez and Assistant Attorney General Bill Baer of the Department of Justice’s Antitrust Division led the U.S. delegation.  The conference showcased the achievements of ICN working groups on cartels, competition advocacy, competition agency effectiveness, mergers, and unilateral conduct.  More information is available on the ICN website.

FTC Decision in ProMedica Upheld by Court of Appeals

On April 22, the Court of Appeals for the Sixth Circuit upheld the FTC’s decision that ProMedica Health System’s acquisition of rival St. Luke’s Hospital was likely to substantially lessen competition and increase prices to consumers.   The services at issue were general acute-care in-patient hospital services and in-patient obstetric services sold to commercial health plans.  The Court also upheld the FTC’s order requiring divestiture of St. Luke's to an FTC-approved buyer. 

Generic Drug Manufacturers Agree to Divestiture

Akorn Enterprises, Inc. and Hi-Tech Pharmacal, Inc. have agreed to a divestiture to settle FTC charges that Akorn’s proposed $640 million acquisition of Hi-Tech would be anticompetitive and lead to higher prices for consumers.  The companies will sell the rights and assets to three generic prescription eye medications and two generic topical anesthetics to Watson Laboratories, Inc. to settle the charges.  The FTC alleged that the original transaction would result in a reduced number of suppliers in each relevant market that would have had a direct and substantial anticompetitive effect on pricing. The Commission alleged that entry would not be timely, likely, or sufficient in magnitude, character, and scope to deter or counteract the anticompetitive effects of the acquisition given costly and lengthy drug development times and regulatory requirements..  Information about each drug and relevant market can be found in the analysis to aid public comment.

Glass Container Maker Settles FTC Litigation

Ardagh Group SA has agreed to settle FTC charges that its $1.7 billion proposed acquisition of Saint-Gobain Containers, Inc. would likely harm competition in the markets for glass containers used to package beer and spirits.  The company will sell six of its nine glass container manufacturing plants in the United States.  The FTC has requested public comments on an application by Ardagh to sell the plants and related assets to Glass Container Acquisition LLC, an affiliate of KPS Capital Partners L.P., as required under an FTC order settling the charges.  

In July 2013, the FTC filed suit in court to halt the proposed acquisition, pending completion of administrative litigation to stop the transaction permanently.  The FTC’s administrative complaint alleged that the proposed transaction would have concentrated most of the $5 billion U.S. glass container industry in two companies, which would have controlled about 85 percent of the glass container market for brewers and 77 percent of the market for distillers, reducing competition and likely leading to higher prices for customers who purchase beer or spirits in glass containers.  The proposed order creates a strong, independent third competitor that is intended to fully replace the competition that would have been lost had the merger proceeded. 

Consumer Protection and Privacy

FTC Charges Operators of “Jerk.com” Website with Deceiving Consumers

The FTC has charged the operators of the website "Jerk.com" — a supposed social networking site and reputation service — with tricking people into paying for site memberships to dispute profiles.  According to the FTC, Jerk encouraged users to label people, including teens and kids, a “jerk” or “not a jerk.”  The more than 70 million profiles also had space for users to add information like someone’s age, address, phone numbers, school, employer, and more.  Some teens’ profiles included insults about their physique or sexual orientation.  Many people found out about the profiles when they searched for their name online and saw a profile pop up as a top result.  What’s worse, according to the FTC, most profiles weren’t created by real users, but by the company, which created websites on Facebook that they used to harvest Facebook users’ photos and information for its site. When people paid $30 for memberships in the hope of disputing the profile or having it deleted, they found their so-called memberships were worthless, and their profiles remained.  The FTC is seeking an order barring the defendants’ deceptive practices, prohibiting them from using the personal information they improperly obtained, and requiring them to delete the information.

FTC Notifies Facebook and WhatsApp of Privacy Obligations in Light of Proposed Acquisition

In light of Facebook, Inc.’s proposed acquisition of WhatsApp Inc., FTC staff has notified the companies about their obligations to protect the privacy of their users.  The letter notes that the companies must obtain permission from WhatsApp subscribers before making any material changes to how they use data already collected from them. They also must not misrepresent the extent to which they maintain the privacy of subscribers’ information.  In 2011, Facebook settled FTC charges that it deceived its users by failing to keep its privacy promises.

FTC Reaches Settlement With Home Security Company that Called Millions of Consumers on the National Do Not Call Registry

The FTC has settled a complaint against a home security company that illegally called millions of people on the National Do Not Call Registry (DNC Registry) to pitch home security systems. According to the FTC, Versatile Marketing Solutions (VMS) bought phone numbers from lead generators who falsely claimed those consumers had given VMS permission to contact them.  The lead generators used illegal means to compile their lists, including robocalls, fake surveys, and calls to phone numbers on the DNC Registry.  The FTC complaint alleged that the defendants’ conduct violated the Telemarketing Sales Rule.  The stipulated final order prohibits the defendants from making abusive telemarketing calls.  It also prohibits their calling any consumer whose number is on the DNC Registry unless they can prove that they have received written permission to make the call or that they have an established business relationship with that consumer.  Further, it bars defendants from calling any consumer who has previously told VMS not to call them again.  The order also places restrictions on how defendants can obtain and use lead-generated phone numbers.  Finally, the order imposes a $3.4 million penalty on the defendants, with all but $320,700 suspended due to their inability to pay.  

FTC Obtains more than $3.3 Million for Consumers; Defendants Agree to Be Permanently Banned from the Debt Collection Business

The two principal owners of Rincon Debt Management, a bogus debt collection operation targeting Spanish- and English-speaking consumers, have agreed to settle FTC charges.   The order imposes a $23 million judgment against the defendants, which, but for $3.3. million in frozen and personal assets, will be suspended due to their inability to pay.  The order permanently bans the two defendants from the debt collection business. Litigation continues against several companies that the settling defendants used as part of their scheme.  More information on the FTC’s efforts to curb illegal debt collection practices is available on the FTC website.

In Other News

FTC Testifies on Precious Metals Investment Scams Before Senate Special Committee on Aging

In testimony before Congress on April 30, the FTC described its efforts to stop precious metals investment scams and inform consumers how to avoid them.  Dama Brown, Director of the FTC’s Southwest Regional Office, testified on behalf of the Commission before the Senate Special Committee on Aging.  The Commission recently filed three law enforcement actions involving precious metals investment schemes.  In addition to stopping the alleged scams, the Commission expects to return approximately $5 million to consumer victims.

FTC to Examine Effects of Big Data on Low Income and Underserved Consumers at September Workshop

The FTC will host a public workshop entitled “Big Data: A Tool for Inclusion or Exclusion?” in Washington on September 15, 2014.  The workshop will further explore the use of “big data” and its impact on American consumers, including low income and underserved consumers.  It will build on the FTC’s Spring Privacy Seminar Series exploring how the use of big data may affect diverse and underserved populations.  The FTC invites comments, reports, and original research from the public on the proposed topics.  The submission deadline for pre-workshop comments is August 15, 2014, but the comment period will be held open until Oct. 15. The workshop will be held at the FTC Conference Center, Constitution Center, 400 7th Street SW, Washington, DC, 20024 and will be open to the public.

FTC and DOJ To Hold Workshop on Conditional Pricing Practices

The FTC and Department of Justice (DOJ) will hold a joint public workshop on June 23, to explore the economic and legal analysis of conditional pricing practices among firms in a supply chain.  Topics will include the law and economics of loyalty and bundled pricing.  The workshop will aim to advance the economic understanding of the potential harms and benefits of conditional pricing practices and to reexamine their treatment under the antitrust laws.  The FTC and DOJ have requested public comments, which interested parties may submit online.  The all-day workshop is free and open to the public.  Individuals are encouraged, but not required, to register in advance for the workshop by sending an email to CPPworkshop@ftc.gov.  Please include “RSVP” in the subject line.  The workshop will take place at the Constitution Center, 400 Seventh Street, SW, Washington, DC 20024.  An agenda and list of speakers will be published in advance of the workshop.

FTC Expanding Social Media Presence

Follow the FTC’s work through its expanding social media presence.  The FTC uses social media tools such as blogs, Twitter, Facebook, and YouTube to keep in touch with consumers and other stakeholders.  In fact, the FTC has four specialized blogs – Competition Matters, Tech@FTC, Business Blog, and Consumer Blog – with insights on the FTC’s work.  These include updates from Office of International Affairs lawyers on hot topics such as procedural fairness and Asia Pacific Privacy Awareness Week 2014. Also check out the FTC’s Twitter feed as well as the Commissioners’ individual Twitter feeds for up to the minute information on international events and issues as well as in-depth Twitter Chats. Tweets are available in Spanish, too.