BLOGS: Antitrust and Distribution Law Blog

Subscribe to the Antitrust and Distribution Law Blog by Email! (click)

Powered by Blogger
Add to Technorati Favorites

Tuesday, April 21, 2015, 4:25 PM

FTC Seeks to Secure First Disgorgement in Nearly a Decade

Authored by: Brian Hayles

The FTC announced yesterday that Cardinal Health, Inc. (“Cardinal”) has agreed to pay $26.8 million to resolve its investigation into the company’s alleged anticompetitive behavior.  If approved by a federal court, the settlement would mark the FTC’s first disgorgement obtained in a competition case in nearly a decade and would stand as the second-highest antitrust disgorgement deal ever.
In a Complaint filed in the Southern District of New York, the FTC outlined a pattern of conduct by Cardinal aimed at monopolizing the market for the sale and distribution of radiopharmaceuticals.  Radiopharmaceuticals -- drugs that are prepared by combining a radioactive isotope with a chemical agent -- are compounded and distributed by radiopharmacies.  These drugs are used in a variety of nuclear imaging procedures, such as cardiac stress tests.  Cardinal became the nation’s largest operator of radiopharmacies following its acquisition of Syncor International in 2003 and Geodax Technology in 2004. 

From 2003-08, Bristol-Myers Squibb (“BMS”) and General Electric (“GE”) were the only producers of heart perfusion agents (“HPA”), an essential input into certain radiopharmaceuticals.  According to the FTC, a radiopharmacy cannot profitably compete without obtaining the rights to distribute an HPA manufactured by either BMS or GE.  Cardinal allegedly engaged in a variety of tactics in order to secure de facto exclusive distribution rights to these BMS and GE products.  Such tactics included, for example, punishing BMS when it launched a plan to distribute its HPA product more broadly across the country.  This conduct, the FTC posited, impeded entry by other would-be radiopharmacy operators in 25 separate geographic markets and constituted a violation of Section 5 of the FTC Act.   
The Commission voted 3-to-2 to authorize the filing of the Complaint and pursue disgorgement.  Commissioners Ohlhausen and Wright issued separate dissenting statements noting their disagreement with the Commission’s approach.  In Commissioner Ohlhausen’s view, the evidence did not establish that Cardinal committed any antitrust violation, much less a clear one that required disgorgement.  Both Commissioners noted that, in 2012, the FTC withdrew its Policy Statement on Monetary Equitable Remedies in Competition Cases, leaving private parties with little meaningful guidance on when the agency would pursue disgorgement.      
Disgorgement has long been viewed as a remedy reserved only for the most egregious antitrust violations, such as price fixing.  In that sense, the Cardinal case could represent a sea change in the remedies sought by antitrust enforcement agencies.  On the other hand, the use of disgorgement here may turn on the unique facts underlying the Cardinal case -- including the fact that the alleged anticompetitive conduct ceased after 2008 -- making other conventional forms of relief impractical.  Time will tell.

 

Monday, April 06, 2015, 11:33 AM

Discussion of FCC's Effective Competition Rules

Authored by: Jason Hicks
Womble Carlyle attorney Mark Palchick along with American Cable Association President Matt Polka mull over the FCC’s proposal to make it substantially easier for cable companies to be found subject to effective competition and and thereby avoid rate regulations and its possible impact on cable television companies in the latest edition of Communications Daily. Palchick, who is a communications attorney and well-respected in the cable television industry, shares his thoughts on why changes to the FCC's effective competition rules could have ramifications beyond just rate regulation.

Palchick points out that a cable system that is found subject to effective competition would also have greater control over whether television broadcast stations must be carried on the Basic level of service.

“Sony, CBS, HBO and others are offering programming, including television broadcast programming, on over the top platforms. The proposed rule change will allow cable television operators to better respond to customer needs in this rapidly changing environment” Palchick said.

Labels: , , , , , ,

back to top