AUGUST 2021
After the courts agreed that AbbVie used sham litigation to illegally maintain a monopoly, the FTC withdrew the remaining count in its complaint, ending the litigation. In September 2020, the U.S. Court of Appeals for the Third Circuit affirmed the district court’s finding that AbbVie violated the antitrust laws by using baseless litigation to delay generic competition, and reinstated a reverse payment claim, two important legal victories that protect competition in pharmaceutical markets. However, the Court reversed the district court’s nearly half-billion dollar monetary judgment for consumers, holding that the FTC is not entitled to disgorgement under section 13(b) of the FTC Act, a determination that was effectively affirmed by the Supreme Court’s decision in AMG Capital Management v. FTC. The Supreme Court declined to review the Court of Appeals’ ruling.
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The FTC voted to rescind a 1995 policy statement that had ended the Commission’s longstanding practice of requiring parties that proposed unlawful mergers to obtain prior approval of future transactions. By rescinding this policy statement, the FTC regains a valuable law enforcement tool. The Commission voted 3-2 to rescind the policy statement in an open Commission meeting live streamed to its website.
Berkshire Hathaway Energy Company’s Kern River Gas Transmission Pipeline announced that it has terminated its acquisition of rival Dominion Energy, Inc.’s Questar Pipeline. According to a statement by FTC Bureau of Competition Acting Director Holly Vedova, the FTC collected extensive testimonial, documentary, and economic evidence demonstrating that the acquisition would have eliminated the close competition between Kern River and Questar that has benefited customers in Utah. The FTC filed suit in 1995 to block the same combination when Questar Pipeline attempted to purchase a 50 percent share in the Kern River Pipeline, but the parties abandoned those plans shortly after the Commission’s suit. According to the statement, the Bureau of Competition will be actively exploring options on how to curtail this type of re-review to better deploy the Commission’s scarce resources.
The FTC unanimously adopted a policy to ramp up law enforcement against repair restrictions that prevent small businesses, workers, consumers, and even government entities from fixing their products. In May, the FTC released a report to Congress that concluded that manufacturers use a variety of methods—such as using adhesives that make parts difficult to replace, limiting the availability of parts and tools, and making diagnostic software unavailable—that have made consumer products harder to fix and maintain. In the policy statement, the Commission said it would target repair restrictions that violate antitrust laws enforced by the FTC or the FTC Act’s prohibitions on unfair or deceptive acts or practices.
Online lender LendingClub agreed to pay $18 million and to injunctive relief to settle FTC charges that the company deceived consumers about hidden fees. The FTC alleged that the company falsely told loan applicants that they were approved for specific amounts with “no hidden fees,” when in reality the company deducted hundreds or even thousands of dollars in hidden up-front fees from the loans. According to the FTC’s complaint, the company also withdrew double payments from consumers’ accounts and charged those who cancelled automatic payments or paid off their loan, which led to overdraft fees and prevented borrowers from making other payments.
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All five FTC Commissioners testified before the House Energy and Commerce Subcommittee on Consumer Protection and Commerce on legislation to modify the FTC’s authority and address other pressing issues facing the agency. Among the challenges noted are the Supreme Court’s AMG decision, which barred the agency from seeking monetary relief under Section 13(b) of the FTC Act, and which diminishes the Commission’s ability to tackle key challenges ‒ from COVID fraud to anticompetitive conduct. In addition, the agency testified that it is facing severe resource constraints as it works to address the soaring number of global mergers and acquisitions and a large numbers of consumer complaints about a broad range of pandemic-related marketplace abuses.
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In the context of a recent surge in merger filings, the FTC has been alerting companies whose deals it cannot fully investigate within the statutory timelines that the FTC’s investigation remains open, and reminding them that the agency may subsequently determine that the deal was unlawful. In a blog post, Bureau of Competition Acting Director Holly Vedova stated that companies that choose to proceed with transactions that have not been fully investigated do so at their own risk.
Acting Director of the Bureau of Consumer Protection Samuel Levine sent a letter to Mark Zuckerberg concerning “Facebook’s recent insinuation that its actions against an academic research project conducted by NYU’s Ad Observatory were required by the company’s consent decree with the Federal Trade Commission.” Levine explained, “The consent decree does not bar Facebook from creating exceptions for good-faith research in the public interest. Indeed, the FTC supports efforts to shed light on opaque business practices, especially around surveillance-based advertising.” The letter noted that the company has since acknowledged that its claims about compliance with the FTC’s consent decree were inaccurate.
The FTC voted to retain the FTC Care Labeling Rule to ensure that consumers continue to get accurate information on how to take care of their fabrics and extend the life of their clothes. The Care Labeling Rule, which has been in effect since 1971, requires manufacturers and importers to attach labels with care instructions for garments and certain piece goods.
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The FTC announced that Aristotle International, Inc., has been removed from the list of self-regulatory organizations that police for compliance with the Children’s Online Privacy Protection Act (COPPA). Aristotle was one of seven FTC-approved Safe Harbor organizations. It is the first to be removed from the list of FTC-approved children’s privacy self-regulatory programs under the COPPA Rule, which requires operators of commercial websites and online services that knowingly collect personal information from children under 13 years to obtain verifiable parental consent before collecting, using, or disclosing any personal information from children under the age of 13.
The FTC has posted transcripts, the agenda, and other materials from PrivacyCon 2021, which brought together a diverse group of stakeholders, including researchers, academics, industry representatives, consumer advocates, and government regulators, to discuss the latest research and trends related to consumer privacy and data security.
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