Review your content's performance and reach.
Become your target audience’s go-to resource for today’s hottest topics.
Understand your clients’ strategies and the most pressing issues they are facing.
Keep a step ahead of your key competitors and benchmark against them.
Questions? Please contact [email protected]
FTC Launches 6(b) Inquiry into Pharmacy Benefits Manager Industry and Issues Enforcement Policy Statement 10 days later. On June 7, 2022, the FTC issued requests to six pharmacy benefits managers (PBMs) regarding certain pricing practices and PBMs’ effects on access to and affordability of prescription drugs. The inquiry will focus on fees, rebates and clawbacks; the prevalence of prior authorizations; use of specialty drug lists; and vertical integration between PBMs and insurance companies and pharmacies. On June 16, the FTC issued an enforcement policy statement, Rebates and Fees in Exchange for Excluding Lower-Cost Drug Products. The statement describes practices that could “exclude competitors from offering lower-cost drug alternatives” and could constitute exclusionary conduct under Section 1 or Section 2 of the Sherman Act, Section 5 of the FTC Act and Section 3 of the Clayton Act, or commercial bribery under Section 2(c) of the Robinson-Patman Act.
FTC Examining Consolidation Issues in Infant Formula Industry. On May 24, 2022, the FTC issued a request for public comments regarding the ongoing shortage of infant formula in the United States. Among other things, the inquiry seeks to gather information about concentration in the infant formula industry, state bidding processes for the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), and regulatory barriers that may be contributing to fragility in the infant formula supply chain.
DOJ Challenges Booz Allen’s Proposed Acquisition of EverWatch. On June 29, 2022, the DOJ filed a civil lawsuit challenging Booz Allen Hamilton’s proposed acquisition of EverWatch Corp. The DOJ alleges that the merger “threatens imminent competition” for a specific government contract with the National Security Agency (NSA) to provide operational modeling and simulation services to support the NSA’s signals intelligence data missions. Absent the transaction, the DOJ alleges that the parties would have competed head-to-head to win the NSA contract. Notably, the DOJ complaint not only seeks to block the acquisition under Section 7 of the Clayton Act but also claims pre-consummation harm to competition, alleging that the acquisition agreement itself has “already reduced Defendants’ incentives to compete in violation of Section 1 of the Sherman Act.” Merger challenges traditionally focus on the harm that would allegedly result from a consummated deal and do not separately allege harm before consummation. Booz Allen Hamilton has stated it strongly disagrees with the DOJ’s characterization of the transaction and believes the transaction would enhance competition overall in an industry that is highly competitive.
Verzatec and Crane Abandon Deal After DOJ Sues to Block the Transaction. On May 26, 2022, the DOJ announced that Grupo Verzatec SA de CV (Verzatec) abandoned its proposed acquisition of its competitor, Crane Composites, Inc. (Crane). Both companies produce and sell building materials and wall coverings, including pebbled fiberglass reinforced plastic (FRP) wall panels. The DOJ had filed a complaint to block the transaction on March 17, alleging that the proposed transaction would harm competition by “cement[ing] a monopoly in th[e] market.” The DOJ alleged that the combined entity would control about 80% of sales and production capacity for pebbled FRP walls in the United States.
FTC Challenged Two Hospital Mergers in June, Both of Which Were Quickly Abandoned.
RWJ Barnabas Health and Saint Peter’s Healthcare System: On June 14, 2022, New Jersey hospitals RWJ Barnabas Health and Saint Peter’s Healthcare System announced that they had abandoned their proposed merger after encountering an FTC challenge. The FTC filed a complaint on June 2, alleging that the acquisition would harm competition in New Jersey for inpatient general acute care services, which cover a broad range of surgical, diagnostic and other treatment services requiring overnight hospital stays. According to the complaint, the merged entity would have held about a 50% share of the relevant market.
HCA Healthcare and Steward Health Care System: On June 17, 2022, HCA Healthcare and Steward Health Care System abandoned their proposed merger following an FTC challenge. Notably, HCA previously agreed in 1995 to divest three of the five hospitals it sought to acquire from Steward. The FTC sued on June 2, alleging that the deal would combine two of only four large healthcare systems in Utah’s Wasatch Front region.
DOJ Emphasizes Need for “Vigorous” Enforcement in Healthcare. On June 3, 2022, Deputy AAG Andrew Forman delivered remarks at the ABA’s Antitrust in Healthcare conference and reiterated that protecting competition in healthcare remains a priority for the Antitrust Division. Most significantly, Forman said that in addition to merger enforcement, the Antitrust Division would focus on exclusionary conduct under Section 2 of the Sherman Act, the role of private equity in the healthcare sector and labor competition issues.
NY State Passes “Right to Repair” Law for Certain Electronics. On June 3, 2022, the New York State legislature passed Senate Bill S4104A (i.e., the Digital Fair Repair Act) requiring all manufacturers that sell “digital electronic products”—a broad category including almost all electronic devices and appliances, except for automobiles—within New York to make tools, parts and instructions for repair available to both consumers and independent repair suppliers. Governor Kathy Hochul is expected to sign this first-of-its-kind bill into law.
European Court Upholds Art. 22 EUMR Policy. On July 13, the European General Court (GC) dismissed Illumina’s challenge to the European Commission (EC) decision accepting jurisdiction under Article 22 EUMR over Illumina’s proposed acquisition of cancer screening startup Grail. Article 22 allows Member States to request EC review of transactions that (i) affect trade between Member States and (ii) threaten to significantly affect competition in the Member State(s) making the request (see our prior Alert). Grail had no EU revenues, and the transaction was not notifiable to the EC or any Member State. According to the GC, the EC had jurisdiction because Article 22 is a “corrective mechanism” for any unreportable transaction which “would otherwise escape control.” The GC also dismissed Illumina’s claims that the referral request was time barred, ruling that the 15-working-day statute of limitations for an Article 22 request to the EC only starts to run when information about the deal has been “actively transmitted” to the Member State. In this case, after receiving a complaint, the EC sent an “invitation letter” to the Member States to request a referral, which, according to the court, triggered the statute of limitations period. This ruling is a reminder that potentially controversial non-reportable transactions are at risk of an EC investigation by the EC, especially if there are potential complainants such as customers, competitors, or disappointed competing bidders for the target.
GC Overturns ~€1 Billion Qualcomm Fine. On June 15, 2022, the GC annulled the EC’s 2018 decision that found Qualcomm abused its dominance in long-term evolution (LTE) chipsets by requiring exclusivity payments that prevented Apple from sourcing third-party chipsets. The GC ruled that the EC had breached Qualcomm’s due process rights (according to the GC) by (i) failing to inform Qualcomm about all meetings and conference calls with third parties, which information could have enabled Qualcomm to better prepare its defense, and (ii) not giving Qualcomm a chance to modify its economic evidence once the EC narrowed its investigation from both UMTS and LTE chipsets to only LTE. The GC also found that the EC analysis on the merits was flawed because (again, according to the GC) it failed to consider all relevant evidence when concluding that Qualcomm’s payments prevented Apple from sourcing LTE chipsets from third parties because Apple had no alternative to Qualcomm’s LTE chipsets during the relevant period.
Political Agreement Reached on Europe’s Bill on Foreign Subsidies. On June 30, 2022, the European Parliament and the EU Member States reached a final political agreement on the Foreign Subsidies Regulation (FSR). The FSR will require notifications in some circumstances where they were not required before for certain transactions or participations in public procurements by companies operating in the EU that are subsidized by non-EC jurisdictions and give the EC power to investigate all such incidents. The EC will require notification for transactions where the acquired business, one of the merging parties or the joint venture (once created) has more than €500 million in EU revenue and at least one of the parties has received non-EU subsidies exceeding €50 million over the past three years. The type of notification has yet to be determined, but the review process and gun-jumping restrictions for transactions will mirror those for EU merger control. Additionally, companies receiving subsidies from non-EC jurisdictions may need to notify the EC when participating in certain EU public procurements valued above €250 million, following a separate procedure. The EC may also investigate unreportable transactions or public procurements under the FSR. The legislation is expected to be finalized and enacted by the end of 2022, and it will likely become applicable by mid-2023.
European Parliament Adopts Digital Markets Act (DMA) and the Digital Services Act (DSA). On July 5, 2022, the European Parliament adopted the DMA and the DSA. The DMA will give the EC sweeping powers to regulate “core platform services” (e.g., search engines or app stores) offered by “gatekeepers” (i.e., prominent digital platforms—generally ones that meet certain thresholds of market capitalization or revenues and users). The DSA will impose obligations on how certain suppliers of intermediation services (e.g., online platforms, hosting services, internet access providers) operate in areas such as content moderation, targeted advertising to children or steering users to affiliated platform services. The laws will next be adopted by the Council of the European Union, though the DMA will not be applicable until April 2023 and the DSA will not be applicable until at least January 2024.
European Agencies Ramp Up Dawn Raids. The EC and national antitrust agencies appear to be ramping up “dawn raid” efforts—i.e., unannounced inspections at companies’ premises to investigate suspected antitrust violations. Following the temporary hold due to the COVID-19 pandemic, agencies have raided companies in several sectors since the summer of 2021, including fashion, automotive, water infrastructure, online food delivery and defense. Companies are well advised to revisit their dawn raid procedures, especially in light of businesses increasingly common use of hybrid work-from-home models.
If you would like to learn how Lexology can drive your content marketing strategy forward, please email [email protected] .
© Copyright 2006 - 2022 Law Business Research