FTC and Illinois v. Advocate Health Care Network
The FTC administratively challenged the proposed merger of Advocate Health Care Network and NorthShore University HealthSystem, alleging it would create the largest hospital system in the North Shore area of Chicago. According to the complaint, the combined entity would operate a majority of the hospitals in the area and control more than 50 percent of the general acute care inpatient hospital services. The FTC and the State of Illinois filed for a preliminary injunction to prevent the merger before the FTC’s administrative trial. The district court denied the motion for preliminary injunction based on a finding that “plaintiffs ha[d] not shouldered their burden of proving a relevant geographic market.” The state and the FTC appealed. The 7th Circuit reversed and remanded the case. The court of appeals held that the district court’s geographic market finding was clearly erroneous, and approved the hypothetical monopolist test. The court also cited the “silent majority” fallacy, which overlooks the market power of the patients who are not willing to travel for hospital care.
State of Maryland v. Johnson & Johnson Vision Care (Cir. Ct. Baltimore Cty Feb. 29, 2016)
State alleged that defendant, responding to requests from eye care professionals to limit competition from discounters, implemented a resale price maintenance policy, which fixed minimum retail prices for all retail sellers of Johnson & Johnson contact lenses. After objections from Costco, a large discount retailer, defendant revised its policy. Under Maryland law, although not federal law, an agreement establishing a minimum retail price is an unreasonable restraint of trade and per se illegal. The parties entered into an Assurance of Discontinuance under which Johnson & Johnson permanently discontinued the RPM agreements alleged and agreed to pay $50,000 in civil penalties.
People of the State of New York v. Actavis, PLC et al., No. 14-CV-7473 (RWS)(S.D.N.Y filed Dec. 10, 2014)
Plaintiff state sued pharmaceutical manufacturer Actavis plc and its New-York based subsidiary Forest Laboratories seeking an injunction to prevent them from withdrawing the Alzheimer’s drug Namenda from the market and switching patients to a once daily version, Namenda XR. Namenda’s patent will expire in July 2015 and the company thereafter faces competition from generic drug makers. According to the complaint, Actavis planned to force patients to switch unnecessarily to Namenda XR because it had a longer patent. Once patients switch to Namenda XR, it would be difficult for patients to switch drugs again once generics become available. Normally, state substitution laws allow pharmacists to dispense generics without being forced to obtain physician approval. According to the complaint, even though Namenda and Namenda XR have the same active ingredient, pharmacists will not be allowed to offer generic Namenda to patients taking Namenda XR; a doctor’s approval would be required to make that switch. This means that most Alzheimer’s patients and their families will remain on Namenda XR. The lawsuit alleges that, by forcing patients to switch to Namenda XR, Actavis is gaming the regulatory system that governs pharmaceuticals and violating antitrust laws designed to encourage competition and keep prices down for consumers. In December 2014, the district court enjoined Actavis from ceasing production of Namenda, and the injunction was affirmed by the Second Circuit in May 2015.
In the Matter of Cabell Huntington Hospital, Inc.’s Acquisition of St. Mary’s Medical Center, No. 15-C-542, Cabell Cty. Ct., WV
The attorney general reached an agreement with two hospitals in the Huntington WV area who were merging. The agreement requires, among other things 1) that St. Mary’s Medical Center will be maintained as a free-standing, general acute care, faith-based organization for the seven-year period;2) Neither hospital will increase its service rates beyond the benchmark rate established by the West Virginia Health Care Authority; 3) If the combined operating margins of the hospitals exceed an average of 4 percent during any three-year period, the hospitals’ rates will be reduced by the amount of excess for the following three years; 4) Both hospitals will release employees from any non-compete agreements following the termination of their employment 5) The hospitals will maintain open staffs and grant privileges to all qualified physicians, and not terminate privileges to those who start offering services in competition to the hospitals (excluding groups that historically have operated under exclusive agreements) 6) The hospitals will not oppose the award of a certificate of need by the state Health Care Authority to any health care provider that seeks to provide services in their market area; 7) the hospitals will establish a fully integrated and interactive medical record system at both facilities so that patient encounters can be readily available to physicians at both hospitals; 8) they will notify the Attorney General’s Office within 90 days of any proposed addition or deletion of any health care service line.
Massachusetts v. Partners Healthcare System Inc. et al., no. 14-2033 (Mass. Super. Ct. June 24 2014)
State challenged by acquisition by Partners of South Shore, alleging that it would substantially lessen competition in portions of Eastern Massachusetts for the provision of general acute care inpatient health services in violation of state law. After extensive hearings, the Attorney General proposed a settlement. The court permitted extensive public comment and the settlement was ultimately rejected. The parties abandoned the transaction.
Puerto Rico v. Beltran et al.,
Puerto Rico filed administrative charges against 34 school bus contractors who provided services to the state Department of Education, alleging that they agreed to fix prices and reduce services to a number of municipalities, as well as limiting geographic markets. the parties paid $170,000 and agreed to injunctive provisions to prevent future violations.
Texas v. Benco Dental Supply Company, No. D-1-GN-15-001386 (Travis Cty. Dist. Ct. April 9, 2015)
Plaintiff state alleged that Benco, a dental supply company, and its competitors worked together to thwart the entry of a lower cost, online source of dental supplies provided by the Texas Dental Association. The State alleged that Benco and others colluded to discourage distributors and manufacturers from working with the TDA and its business partner and agreed not to attend the TDA’s annual trade show in 2014. The State’s agreement with Benco requires Benco not to participate in such anticompetitive activities in the future and institutes an antitrust training program for the company. Benco has also agreed to pay $300,000 to reimburse the Attorney General for investigative costs and attorneys’ fees in lieu of any civil penalty.
Maryland et al. v. Perrigo Company, No. 1:04CV01398 (D.D.C. Aug. 17, 2004)
The FTC and states alleged that the companies had entered into a “pay-for-delay” arrangement, whereby Perrigo paid Alpharma to withdraw its generic version from the market for Children’t ibuprofen.According to the complaint, in June 1998, Perrigo and Alpharma signed an agreement allocating to Perrigo the sale of OTC children’s liquid ibuprofen for seven years. In exchange for agreeing not to compete, Alpharma received an up-front payment and a royalty on Perrigo’s sales of children’s liquid ibuprofen. The FTC received $6.25 million to compensate injured consumers. The states received $1.5 million in lieu of civil penalties. the parties were enjoined from future agreements.
U.S. and Pennsylvania v. Sinclair Broadcast Group, Inc. (No. 14-cv-01186, D.D.C. 2014)
USDOJ and Pennsylvania filed suit to challenge the acquistion by Sinclair Broadcase Group of Perpetual Corporation, alleging that it would lessen competition in the sale of broadcast televlsion spot advertising in the south central Pennsylvania area. The merged companies would control 38 percent of the advertising market in that area. the parties agreed to the divestiture of a station in the marketing area.
US, Illinois, Iowa and Missouri v. Tyson Foods, No. 1:14-cv-01474, D.D.C. Aug. 27, 2014)
USDOJ and three states challenged the acquisition of Hilshire by Tyson. According to the complaint, Tyson and Hillshire compete against each other and against others to
procure sows from farmers in the United States. Tyson’s proposed acquisition of Hillshire would eliminate head-to head
competition between the companies and create a firm that would account for over a
third of all sows purchased from farmers in the United States. the merging parties agreed to divest all the assets of Heinold Hog Markets, including 8 buying stations, to a purchaser approved by USDOJ, after consultation with the states.
