|
JUNE 2022
Competition
FTC Sues To Block Healthcare Mergers
The FTC authorized an administrative complaint and a lawsuit in federal court to block the proposed merger between Utah healthcare competitors HCA Healthcare and Steward Health Care System. The agency alleges that the deal would eliminate the second and fourth largest healthcare systems in the Wasatch Front region, where approximately 80 percent of Utah’s residents live. The complaint further alleges that the proposed transaction would result in the reduction of healthcare systems offering inpatient general acute hospital services in some Utah markets from three to two competitors, and the elimination of Steward as a low-cost competitor.
|
After the FTC authorized an administrative complaint and a suit in federal court to block the acquisition of Saint Peter’s Healthcare System by RWJBarnabas Health, one of the largest hospital systems in New Jersey, the parties abandoned the transaction. The complaint alleges that the acquisition would harm competition for inpatient general acute care services in Middlesex County and result in a combined healthcare system with a market share of approximately 50% for these services.
|
The FTC acted to protect competition in markets for specialty and emergency veterinary services by requiring the owner of a chain of veterinary clinics, JAB Consumer Partners, to divest clinics in California and Texas as a condition of its proposed $1.1 billion acquisition of competing clinic operator SAGE Veterinary Partners, LLC. The Commission also is imposing robust prior approval and prior notice requirements on JAB’s future acquisitions of specialty and emergency veterinary clinics. According to a statement by Holly Vedova, Director of the Bureau of Competition, “Private equity firms increasingly engage in roll up strategies that allow them to accrue market power off the Commission’s radar. The prior notice and approval provisions will ensure the Commission has full visibility into future consolidation and the ability to address it.”
The FTC required pipeline and storage companies Buckeye Partners, L.P. and Magellan Midstream Partners, L.P. to divest petroleum terminals in two states to U.S. Venture, Inc. as a condition of Buckeye’s $435 million proposed acquisition of 26 Magellan terminals. According to the complaint, without a remedy, the acquisition would harm competition for terminaling services both for all light petroleum products and for gasoline specifically in North Augusta, South Carolina; Spartanburg, South Carolina; and Montgomery, Alabama. In all three geographic markets, the FTC alleges that the acquisition would have eliminated the close competition between Buckeye and Magellan, increased the likelihood of collusive or coordinated interaction between the remaining competitors, reduced the number of terminaling options for third-party customers, and increased prices for terminaling services. Under the proposed order, Buckeye must seek prior approval from the Commission for a period of ten years before it acquires any light petroleum products terminal (including the divested terminals) within a 60-mile radius of the divested assets.
|
The FTC acted to restore competition in gasoline and diesel markets in Michigan and Ohio by requiring ARKO Corp. and its subsidiary, GPM, to roll back anticompetitive provisions of their acquisition of 60 Express Stop retail fuel outlets from Corrigan Oil Company last year. Under the FTC’s order, ARKO and GPM will limit an agreement not to compete that they imposed on Corrigan Oil Company, and Corrigan will be restored as the operator of five retail fuel outlets in five local Michigan markets. The FTC alleged that, as originally proposed, the agreement not to compete that ARKO and GPM required Corrigan to sign as part of the acquisition harmed customers in local retail gasoline and retail diesel fuel markets throughout Michigan and Ohio. Corrigan was required not to compete not only in the 60 local markets where ARKO and GPM acquired fuel outlets, but also in many other markets. The FTC also alleged that, even in the 60 markets where fuel outlets were acquired, the noncompete agreement was unreasonably overbroad in geographic scope and longer than reasonably necessary to protect a legitimate business interest.
The FTC announced that it will launch an inquiry into the prescription drug middleman industry, requiring the six largest pharmacy benefit managers to provide information and records regarding their business practices. The agency’s inquiry will scrutinize the impact of vertically integrated pharmacy benefit managers on the access and affordability of prescription drugs. As part of this inquiry, the FTC will send compulsory orders to CVS Caremark, Express Scripts, Inc., OptumRx, Inc., Humana Inc., Prime Therapeutics LLC, and MedImpact Healthcare Systems, Inc. The FTC is issuing the orders under Section 6(b) of the FTC Act. The companies will have 90 days from the date they receive the order to respond.
The FTC and the Department of Justice Antitrust Division hosted a two-day workshop to explore new approaches to enforcing the antitrust laws in the pharmaceutical industry. The workshop, organized by FTC and DOJ staff, offices of state attorneys general, and international enforcement partners, took place virtually on June 14 and 15. The workshop was the culmination of the Multilateral Pharmaceutical Merger Task Force, formed in March 2021 by then Acting Chairwoman Rebecca Kelly Slaughter to consider how to address the various competitive concerns that pharmaceutical mergers and acquisitions raise. Members of the Task Force include staff from the FTC, DOJ Antitrust Division, Canadian Competition Bureau, European Commission Directorate General for Competition, U.K. Competition and Markets Authority, and Offices of State Attorneys General. For event materials, including transcripts and videos, click here.
Consumer Protection and Privacy
The FTC is taking action against Twitter, Inc. for deceptively using account security data for targeted advertising. Twitter asked users to give their phone numbers and email addresses to protect their accounts. The firm then profited by allowing advertisers to use this data to target specific users. The FTC’s complaint alleges that Twitter’s conduct violates a 2011 FTC order that prohibited the company from misrepresenting its privacy and security practices. Under the proposed order, Twitter must pay a $150 million penalty and is banned from profiting from its deceptively collected data.
|
The FTC has announced that it will crack down on education technology companies if they illegally surveil children when they go online to learn. In a new policy statement, the Commission made it clear that it is against the law for companies to force parents and schools to surrender their children’s privacy rights in order to do schoolwork online or attend class remotely. Under the Children’s Online Privacy Protection Act (COPPA), companies cannot deny children access to educational technologies when their parents or school refuse to sign up for commercial surveillance. For more details on the policy, click on the headline above.
|
The FTC has taken action against R360 LLC and its owner for deceiving people seeking help for addiction about the evaluation and selection criteria for the treatment centers in their network. The case is the FTC’s first under the Opioid Addiction Recovery Fraud Prevention Act of 2018. The agency has secured a $3.8 million civil penalty judgment against the defendants and an order prohibiting them from continuing to make similar misrepresentations. The Opioid Addiction Recovery Fraud Prevention Act of 2018 authorizes the Commission to seek civil penalties for unfair or deceptive acts or practices with respect to any substance use disorder treatment service or product. “Substance use disorder treatment services” are services that purport to provide treatment, referrals to treatment, or recovery housing for people with substance use disorders.
The FTC has taken court action against Financial Education Services and its owners, as well as a number of related companies, for scamming consumers out of more than $213 million. The FTC’s complaint alleges that the company preys on consumers with low credit scores by luring them in with the false promise to remove negative information from credit reports and increase credit scores by hundreds of points. Their techniques, according to the complaint, are rarely effective and in many instances harm consumers’ credit scores. The FTC’s investigation found that the company’s scheme combined charging consumers for these worthless credit repair services with a hard sell to join a pyramid scheme selling the worthless services to more consumers. The complaint alleges that the company’s practices violate the FTC Act, the Credit Repair Organizations Act, and the Telemarketing Sales Rule.
FTC staff is seeking the public’s input on ways to modernize the agency’s business guidance titled “.com Disclosures: How to Make Effective Disclosures in Digital Advertising.” First published in March 2013, this resource provides guidance to businesses on digital advertising and marketing. FTC staff is seeking public input to ensure the guides are helping honest businesses treat consumers fairly rather than being used as a shield by firms looking to deceive. In seeking public comment on possible revisions, staff is interested in the technical and legal issues that consumers, the FTC’s law enforcement partners, and others believe should be addressed.
|
The FTC is considering changes to tighten its guidelines for advertisers against posting fake positive reviews or manipulating reviews by suppressing bad ones, and warns social media platforms about inadequate disclosure tools. The FTC is seeking public comment on the proposed updates to its Endorsement Guides, which reflect the new ways that advertisers now reach consumers to promote products and services, including through social media. The Endorsement Guides, first enacted in 1980 and amended in 2009, provide guidance to businesses and others to ensure that advertising using endorsements or testimonials is truthful. The guides provide, among other things, that advertisers need to be upfront with consumers and clearly disclose unexpected material connections between endorsers and a seller of an advertised product. The proposed changes reflect the extent to which advertisers have turned increasingly to social media and product reviews to market their products.
The FTC will host a virtual event on October 19 to examine how best to protect children from a growing array of manipulative marketing practices that make it difficult or impossible for children to distinguish ads from entertainment in digital media. The event will examine practices such as the rapidly growing “kid influencer” marketplace, in which the line between paid promotions and unsponsored influencer videos is often blurred. The FTC will bring together researchers, child development and legal experts, consumer advocates, and industry professionals to examine the techniques being used to advertise to children online, and what measures should be implemented to protect children from manipulative advertising. The FTC is seeking research papers and written comments by July 18. For specific topics and questions, and instructions on making submissions, click on the headline above.
|
The FTC is calling for research presentations on a wide range of privacy and data security topics such as commercial surveillance and automated decision making for its annual PrivacyCon event, which will take place virtually on November 1. PrivacyCon 2022 will bring together a diverse group of stakeholders to discuss the latest research and trends related to consumer privacy and data security. As part of this event, the FTC is seeking empirical research and demonstrations on a variety of topics. For more details, and information on how to submit presentations, click on the headline above. The deadline for submissions is July 29.
|
In Other News
Alvaro Bedoya was sworn in as a Commissioner of the FTC on May 16. President Joe Biden named Bedoya to a term that expires on Sept. 25, 2026. Bedoya was confirmed by the U.S. Senate on May 11. Bedoya was the founding director of the Center on Privacy & Technology at Georgetown University Law Center. He previously served as Chief Counsel to the Senate Judiciary Subcommittee on Privacy, Technology and the Law, and Counsel and Chief Counsel to former Senator Al Franken, of Minnesota. Bedoya graduated summa cum laude from Harvard College and holds a J.D. from Yale Law School, where he served on the Yale Law Journal and received the Paul & Daisy Soros Fellowship for New Americans.
|
FTC staff has launched an inquiry into the ongoing shortage of infant formula that has caused hardship for countless American families. The inquiry seeks information about the nature and prevalence of any deceptive, fraudulent, or unfair business practices aimed at taking advantage of families during this shortage. It also aims to shed light on the factors that have led to concentration in the infant formula market and the fragility of the supply chains for these crucial products. FTC Chair Lina M. Khan released a statement in conjunction with the public inquiry committing to a series of actions to confront this crisis.
Consumers reported losing over $1 billion to fraud involving cryptocurrencies from January 2021 through March 2022, according to a new analysis from the FTC. Fraud reports suggest cryptocurrency is quickly becoming the payment of choice for many scammers, with about one out of every four dollars reported lost to fraud paid in cryptocurrency. The FTC’s latest Consumer Protection Data Spotlight finds that most of the cryptocurrency losses consumers reported involved bogus cryptocurrency investment opportunities, which totaled $575 million in reported losses since January 2021. These scams often falsely promise potential investors that they can earn huge returns by investing in their cryptocurrency schemes, but people report losing all the money they “invest.”
|
|
