April 3, 2012 (Tuesday)
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Today’s Clips Alert is available at https://ftcintranet.ftc.gov/clips/pdfs/Clips 040312.pdf
COMPETITION
Opinion: Antitrust Enlightenment. WSJ 4/2 (pasted below)
F.T.C. Approves Merger of 2 of the Biggest Pharmacy Benefit Managers. NY Times 4/2
Regulator orders hospitals to undo a merger in Ohio. NY Times 4/2
Express Scripts deal creates national giant. STL Today 4/2
Sen. Paul looks to limit FTC's authority to enforce antitrust laws. The Hill 4/3
FTC Approves Express Scripts, Medco Merger. Super Market News 4/2
Express Scripts completes merger with Medco. Chicago Tribune 4/3
Indies Sue Over Express Scripts-Medco Merger. Business Week 4/2
Senate Judiciary Republican lauds FTC approval of Medco merger. The Hill 4/2
Express Scripts completes Medco acquisition. Philadelphia Inquirer 4/2
Express Scripts Cleared to Acquire Medco for $29.1 Billion. SF Chronicle 4/2
Federal Trade Commission okays Merger Between Medco and Express-Scripts. NPR 4/3
Roche lashes out at Illumina board. Daily Deal 4/3
CONSUMER PROTECTION
FTC targets alleged payday scam, race car driver. Fox News 4/2
FTC targets driver Scott Tucker. ESPN News 4/2
FTC files charges against payday lender tied to Johnson County race car driver. Kansas City Star 4/2
FTC sues state tribes over payday lending practices. Tulsa World News 4/2
FTC takes action against race car driver Scott Tucker. CBS News 4/2
FTC files suit against payday lending operation claiming tribal affiliation. Denver Post 4/3
FTC says payday lenders broke federal regulations. Las Vegas Review-Journal 4/3
Federal Trade Commission files lawsuit over payday loan companies. The Republic 4/3
FTC Sues 'Tribal' Payday Lender for Inflated Fees, Threats. eCredit Daily 4/3
Federal Trade Commission seeks to shut down tribes' online payday businesses. NewsOK 4/3
Tribal payday lender sued by Federal Trade Commission. iWatch News 4/2
Las Vegas auto racer sued by feds in alleged payday loan scam. Vegas Inc 4/2
FTC files complaint against race car driver. KTNV-ABC 13 4/3
Two Northeastern Oklahoma Tribes' Loan Companies Sued By FTC. News on 6 4/3
Cordray Seeks Payback for Payday Predators. Fiscal Times 4/2
FTC wins record penalty in robocalling case. The Hill 4/2
FTC Case Against Deceptive Robocallers Leads to Record $30 Million in Civil. Imperial Valley News 4/2
Three ways to protect your online privacy now. MSNBC 4/3
“Cash Grant” robocallers hit with record $30 million in penalties. The Consumerist 4/2
Australian court rules Google liable for misleading ads. Reuters 4/3
New FTC Guidelines Could Remake Internet Marketing Landscape. WSJ 4/2 (pasted below)
Stanford grad student investigates online privacy. San Jose Mercury News 4/3
TWEETS
Express Scripts / Medco
@TheHill: http://t.co/dw1nPHJP (247,200+ followers)
@thepharmer: What the @FTC has potentially done is ruin pharmacy and basically said you can work for nothing. @ExpressScripts pays the least of he PBMs (1,350+ followers)
@DaveMcCFO The FTC's decision to permit the combination of Medco and Express Scripts is not going to win many fans bit.ly/HPiuIX (200+ followers)
Express wins FTC clearance, closes Medco buy - Reuters: reut.rs/HBdbQd #Antitrust (250+ followers)
Sen. Herb #Kohl backs #FTC in its approval of Express Scripts, #Medco merger. #FTCWATCH (50+ followers)
May be oversimplified but does FTC see differences between providers and payers? nyti.ms/HGSyCo (4 followers)
Payday Lenders
@consumerist: FTC: Payday Lender Can't Avoid Prosecution By Claiming Tribal Affiliation bit.ly/HGAV5F (30,150+ followers)
@iWatch: Tribal payday lender making loans with up to 800% interest sued by FTC for deceiving borrowers: bit.ly/Hb4Qk4 (13,500+ followers)
@CBSInvestigates: FTC Takes Action Against Race Car Driver Scott Tucker: cbsn.ws/Hbv2im (6,150+ followers)
Privacy
@rww: FTChttp://t.co/Ryn9buLr(1,160,450+ followers)
@castrotech: My take on the #FTC #privacy report -- bit.ly/H4DM52 (300+ followers)
FTC Seeks Law to Expose Data Broker Holdings: It’s amazing some of the things that we miss that runs on that lit... bit.ly/HjWxPz (250+ followers)
RockYou
@ZDNet: FTChttp://t.co/veVpKyOg(69,900+ followers)
Miscellaneous
Regulator Orders Hospitals to Undo a Merger in Ohio - New York Times goo.gl/oKXgh (700+ followers)
TV HITS
Privacy
CSPAN3 - U.S. Cable
Cash Grant Institute
WTOP2-DC (Radio)
Child ID theft
WTIC-HFD (FOX) - Hartford-New Haven, CT
WCBI (CBS) - Columbus, MS
WPFO (FOX) - Portland, ME
WFLX (FOX) - West Palm Beach, FL
KSNW (NBC) - Wichita, KS
WSBT (CBS) - South Bend, IN
WLOS (ABC) - Greenville, SC
Medco/Express-Scripts
KOAB (PBS) - Bend, OR
NJN - Newark, NJ
New England Cable News - Boston, MA
KTVI-STL (FOX) - St. Louis, MO
KQET (PBS) - Monterey, CA
WTTW (PBS) - Chicago, IL
Grandparent scams
WSVN-MIA (FOX) - Miami, FL
Wal-Mart gift card scam
KFOR-OKC (NBC) - Oklahoma City, OK
Asia Pacific
WTOL (CBS) - Toledo, OH
Fresenius/DSI Renal
KGMB-HON (CBS) - Honolulu, HI
THE WALL STREET JOURNAL
Opinion: Antitrust Enlightenment
A market victory as the FTC approves a drug benefit merger.
Too often modern antitrust policy seems to exist to justify the existence of the antitrust cops, not to defend competition. Recall the Federal Trade Commission's dogging of the Whole Foods bid to buy Wild Oats—would consumers ever be able to buy arugula again? So a round of applause for the FTC for committing antitrust heresy and signing off Monday on the $29.1 billion Express Scripts acquisition of Medco Health Solutions.
Those are two of the three largest companies in the growing industry known as pharmacy benefit management, and the FTC didn't need to invent some novel legal theory to block the merger, as many consumer-political pressure groups were demanding. Conventional "three-to-two" antitrust doctrine would have been enough.
Instead, the FTC and Chairman Jon Leibowitz conducted a nuanced investigation of the business and concluded that consumers would benefit, even though the Express-Medco combine would control (for now) 40% of the market. Bravo.
Pharmacy benefit managers are basically specialty insurance companies for prescriptions, though in recent years they've been innovating to lower costs, better coordinate patient care and wring more value out of the health dollar. CVS Caremark is the other industry leader, but most of the large national health plans also offer such services, as do other stand-alone companies. Big private employers are the main clients, while competition has also been fierce in the Medicare prescription drug business, in which seniors use its defined-contribution model to choose the best deal.
The FTC's study found that price competition for corporate accounts is intense and that businesses will readily dump an incumbent benefit manager if another one comes along with a better bid. Medco lost a third of its business over the last year, largely to CVS Caremark. The commission also analyzed cost data and found that economies of scale have diminishing returns in the business, so Express-Medco will succeed or fail based on the quality of its product, not monopsony power.
The deal's opponents belonged to the pharmacy guild, which will lose revenue and dispensing fees as benefit managers drive down costs. Then there are the antitrust gnomes who favor on-off decisions on market share only, not observable reality. Using the traditional yardstick, the Herfindahl-Hirschman Index, industry consolidation jumps 1,300 points. Hide the children.
FTC Commissioner Julie Brill's lone dissent offers a guided tour through the cobwebs of the antitrust status quo. "The numbers literally and figuratively simply don't add up," she writes, adding that "Medco is positioned to play a maverick role in the marketplace." Perhaps Ms. Brill—for 20 years the consumer protection chieftain in Vermont—ought to apply her superior business judgment in the private sector. Alas, we hear she's angling to replace Mr. Leibowitz as FTC Chairman when his term expires.
For now, the FTC's approval is a win for competition and consumer choice.
THE WALL STREET JOURNAL – CIO JOURNAL
New FTC Guidelines Could Remake Internet Marketing Landscape
Joel Schectman, Reporter
April 2 2012
The Federal Trade Commission is recommending major changes in the way companies collect and analyze digital information gleaned from consumers’ online activities. The recommendations are not binding, but provide clues to what the FTC, a body that has broad powers of enforcement thinks is acceptable behavior by corporations.
FTC senior attorney Peder Magee, the lead author of the guidelines, spoke with CIO Journal last week about the intent of the commission, which has recently filed lawsuits over the online data collection practices of Google, Facebook and other companies. He says the new rules will benefit consumers and businesses alike. However, if the rules were to be widely adopted, many online business models might have to change.
Here are highlights of the initiative:
–The new rules ask companies to collect only information related to a particular transaction. The FTC doesn’t consider it invasive if a florist uses data mining to discover whether a customer who is buying begonias also likes roses. But the flower company doesn’t need to know what the person’s favorite sports team is, and ought not to collect that information through cookies, which can track a person’s web habits. If the flower vendor wants that information–to make a cross marketing deal with a sports franchise, for example — it should ask the customer explicitly, and tell her what third parties will have access to it.
–Companies should make it clear to people exactly which pieces of their personal data are being gathered, and let them know when that collection occurs.“Putting the policy in the middle of 20 pages of caveats and legalese just confuses the customer,” Magee said.
–The data that companies do collect should be discarded after the transaction is no longer relevant. Companies that have an ongoing relationship with customers, like Netflix and Amazon, can keep information and market products directly related to their past purchases, as long as they are not giving it to third-parties.
–Companies should be extra careful to purge data gathered through the monitoring of mobile apps, because that information can put “customers at risk for harm such as stalking… a wallpaper app or an app that tracks stock quotes does not need to collect location information,” the report says.
–Companies shouldn’t force customers into a “take it or leave it” option, on privacy, particularly when it comes to important services for which there are few alternatives, such Internet access in rural areas. Instead, companies should try to offer meaningful choices on which types of data will be collected from their online activities.
If the recommendations are implemented as a group, on a widespread basis, the implications for digital commerce and marketing could be huge. The online marketing practices of today–in which massive amounts of personal information are quietly collected in the background of digital life, unbeknownst to all but a few consumers who make it a point to guard their privacy–could become an anachronism.
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