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March 2024
Competition
The FTC sued to block the largest proposed supermarket merger in U.S. history – Kroger Company’s $24.6 billion acquisition of the Albertsons Companies, Inc. – alleging that the proposed deal would eliminate fierce competition between Kroger and Albertsons, leading to higher prices for groceries and other essential household items for millions of Americans. The loss of competition would also lead to lower quality products and services, while narrowing consumers’ choices for where to shop for groceries. Moreover, for thousands of grocery store workers, Kroger’s proposed acquisition of Albertsons would immediately erase aggressive competition for workers, threatening the ability of employees to secure higher wages, better benefits, and improved working conditions. If consummated, the combined company would operate more than 5,000 supermarkets and 4,000 retail pharmacies across 48 states and have over 700,000 employees. The FTC issued an administrative complaint and authorized a lawsuit in federal court to block the proposed acquisition pending the Commission’s administrative proceedings. A bipartisan group of nine attorneys general joined the FTC’s federal court complaint.
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In response to Qualcomm Inc.’s decision to abandon its proposed acquisition of Autotalks Ltd., FTC Bureau of Competition Director Henry Liu issued a statement noting that, based on its probe into this proposed merger, FTC staff had been concerned that the deal might harm competition in markets for vehicle-to-everything (V2X) chipsets and related products used in automotive safety systems. According to the statement, “The termination of this proposed transaction will preserve vigorous innovation and price competition in the market for vehicle-to-everything (V2X) chipsets and related products used in automotive safety systems. This is a win for car buyers seeking quality, affordable cars with V2X communication capabilities that promise to make driving easier and safer.”
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In response to Choice Hotels International abandoning its proposed acquisition of Wyndham Hotels & Resorts, FTC Bureau of Competition Director Henry Liu issued a statement noting that the FTC had been closely scrutinizing Choice’s tender offer as well as its efforts to replace the Wyndham Board of Directors with its own hand-picked slate of nominees. According to the statement, each of these actions posed serious competition questions and their abandonment is a win for consumers.
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Consumer Protection and Privacy
The FTC will require software provider Avast to pay $16.5 million and will prohibit the company from selling or licensing any web browsing data for advertising purposes to settle charges that the company sold such information to third parties after promising that its products would protect consumers from online tracking. The FTC alleged in its complaint that United Kingdom-based Avast Limited, through its Czech subsidiary, unfairly collected consumers’ browsing information through the company’s browser extensions and antivirus software, stored it indefinitely, and sold it without adequate notice and without consumer consent. The FTC also charges that Avast deceived users by claiming that the software would protect consumers’ privacy by blocking third party tracking, but failed to adequately inform consumers that it would sell their detailed, re-identifiable browsing data.
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Two tech support companies will pay $26 million to settle FTC charges that they bilked tens of millions of dollars from consumers, particularly older consumers, by duping them into buying computer repair services, regardless of the actual health of the consumers’ computers, in violation of the FTC Act and the Telemarketing Sales Rule. In a complaint filed in federal court, the FTC charged that Restoro Cyprus Limited and Reimage Cyprus Limited, both based in Cyprus, tricked consumers into signing up for computer repair services through deceptive marketing (fake Microsoft Windows pop-ups).
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The FTC is taking action against tax preparation company H&R Block for unfairly deleting consumers’ tax data and requiring them to contact customer service when they downgrade to more affordable online products, and deceptively marketing their products as “free” when they were not free for many consumers. These practices cost consumers time and money. In an administrative complaint, FTC staff alleges that H&R Block’s online tax filing products lead consumers into higher-cost products made for more complicated tax filings, despite many consumers not needing the additional tax forms and schedules offered by those products.
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The FTC is taking action against two companies – Biz2Credit and Womply – that made false promises to small businesses seeking to take part in the Paycheck Protection Program (PPP), delaying and sometimes preventing them from obtaining funds they needed to keep their businesses afloat during the COVID-19 pandemic. The companies have agreed to settle the FTC’s charges against them: Biz2Credit will pay $33 million and Womply will pay $26 million to the FTC for small businesses harmed by their deceptive conduct. These are the largest damages amounts ever secured by the agency under Section 19 of the FTC Act, and include money consumers lost because of the companies’ conduct, even if consumers made no payments directly to the companies.
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As a result of an FTC lawsuit, an individual defendant who defrauded consumers by falsely promising “next day” shipping of facemasks and respirators to consumers at the height of the COVID-19 pandemic, will be banned from selling personal protective equipment (PPE) and be required to turn over more than $145,000 to the FTC. The FTC first sued the defendant and his company, SuperGoodDeals.com in 2020, when the company sought to capitalize on the soaring demand for PPE from consumers worried about being exposed to the coronavirus.
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The owners of a money-making scheme that claimed to use artificial intelligence to boost earnings for consumers’ e-commerce storefronts have agreed to surrender millions in assets to settle the FTC’s case against them. In addition, all the businesses and two of their owners face a lifetime ban on selling business opportunities or coaching programs involving ecommerce stores. The FTC charged three individual defendants and multiple companies they controlled, including Automators AI, Empire Ecommerce, and Onyx Distribution, deceived consumers with unfounded promises of “passive investment income” in online storefronts, such as those on Amazon and Walmart, supposedly powered by AI.
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In Other News
The Senate confirmed Andrew N. Ferguson and Melissa Holyoak to serve as FTC commissioners and confirmed Commissioner Rebecca Kelly Slaughter to a second term. Ferguson and Holyoak were nominated on July 11, 2023, by President Biden to serve as FTC commissioners. Ferguson most recently served as solicitor general of the Commonwealth of Virginia. Prior to that, he served as chief counsel to U.S. Senator Mitch McConnell of Kentucky, the current Senate Minority Leader, and as a Republican counsel on the U.S. Senate Judiciary Committee. Holyoak most recently served as solicitor general with the Utah Attorney General’s Office. Before taking on that role, she served as president and general counsel of the Hamilton Lincoln Law Institute, a Washington, D.C.-based public interest law firm and with the Competitive Enterprise Institute and the Center for Class Action Fairness.
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The FTC and other member agencies of the International Competition Network (ICN) jointly issued a statement about how regulatory agencies can increase their tech capacity to keep pace with the increasing use of technology across industries. The joint statement grew out of a first-ever Technology Forum that was convened March 25-26 in Washington, DC by competition and consumer protection authorities who participate in the ICN and was hosted by the FTC. Separately, a number of U.S. federal and state agencies, including the FTC, released agency-specific action statements on tech capacity. These statements reflect concrete actions to increase tech capacity, including actively hiring technologists, which will help the agencies enforce existing laws and design remedies that work for consumers, workers, small businesses, and others. In conjunction with these events, the FTC also released a staff report detailing the evolution of the agency’s work to expand Its technological expertise and how the agency’s Office of Technology, created in early 2023, applies its subject matter expertise to assisting the agency’s enforcement and regulatory work.
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The FTC announced a final rule extending the telemarketing fraud protections of the Telemarketing Sales Rule (TSR) to businesses and updating the rule’s recordkeeping requirements in light of developments in technology and the marketplace. The Commission also announced a proposed rule that would provide the agency with significant new tools to combat tech support scams. Both actions are part of the Commission’s current review of the TSR, which includes the Do Not Call Registry (DNC) rules and provisions banning nearly all telemarketing robocalls to consumers. The FTC also affirmed the TSR’s prohibitions on robocalls using voice cloning technology.
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The FTC issued a report on the causes behind grocery supply chain disruptions resulting from the COVID-19 pandemic. The report reveals that large market participants accelerated and distorted the negative effects associated with supply chain disruptions. The FTC’s report also examines how supply chain disruptions affected competition among retailers, wholesalers, and producers, as well as the impacts on consumers and businesses. The report finds that consumers felt the negative effects of supply chain disruptions in the form of sharply higher prices for groceries and product shortages for essentials, like toilet paper. Notably, consumers are still facing the negative impact of the pandemic’s price hikes, as the Commission’s report finds that some in the grocery retail industry seem to have used rising costs as an opportunity to further raise prices to increase their profits, which remain elevated today.
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The FTC issued a report on market factors relevant to infant formula supply disruptions, which details aspects of the U.S. infant formula market that rendered it vulnerable to supply disruptions in 2022. The report also outlines considerations for policymakers to help create a more resilient infant formula supply going forward. The report follows a Request for Information in 2022 which solicited comments from members of the public, industry, trade groups, and academics on a variety of issues related to the disruptions and the infant formula market more broadly.
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The FTC and the Justice Department’s Antitrust Division will cohost the third annual Spring Enforcers Summit on April 8. FTC Chair Lina M. Khan and Assistant Attorney General Jonathan Kanter, as well as senior staff from both agencies, will gather with international competition enforcers and state attorneys general to discuss enforcement priorities and strategies for effective coordination. The morning plenary sessions will be livestreamed to the public on the FTC’s website. The agencies will meet in the afternoon for closed-door in-person discussions between international enforcers and state attorneys general on common issues. The Enforcers Summit agenda will be posted to the FTC’s website prior to the event. A link to view the summit’s open virtual session will be posted to the FTC’s website the day of the event.
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The FTC hosted its eighth annual PrivacyCon on March 6. PrivacyCon 2024 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. For the agenda, speaker bios, transcript, and videos, click here.
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During Fraud Prevention Month, the FTC joined with members of the Quebec Strategic Partnership, consumer protection and law enforcement agencies from the United States and Canada, to engage in public outreach aimed at combatting fraud. Members of the Partnership identify and combat cross-border fraud, such as imposter, investment, and prize winnings scams. The partnership’s collaboration includes sharing intelligence, complaints, and other relevant material, and providing investigative assistance. Along with the FTC, the partnership also includes Competition Bureau Canada, the partnership’s current chair, as well as the U.S. Postal Inspection Service, U.S. Secret Service, Canadian Anti-Fraud Centre, Canada Post, Canada Revenue Agency, and several local police departments in Quebec. The Quebec Strategic Partnership is one of several longstanding partnerships of U.S. and Canadian agencies centered in provinces across Canada in which the FTC participates.
The FTC is warning the public that scammers are pretending to be affiliated with the FTC to steal from consumers. The FTC will never tell consumers to move their money to “protect” it. The FTC will never send consumers to a Bitcoin ATM, tell them to buy gold bars, or demand they withdraw cash and take it to someone in person. The agency will also never contact consumers to demand money, threaten to arrest or deport them, or promise a prize. If someone claims to work for the FTC and makes any of these demands or threats, they are a scammer. Staff has received many calls directly from consumers reporting that scammers used the names of real FTC employees to convince them to move, transfer, send, or wire money.
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