June 30, 2015

Sysco Scraps US Foods Merger After FTC Victory In Court

By Allison F. Sheedy

Sysco Corp. announced yesterday that it is abandoning its plans to acquire food service rival US Foods Inc., following last week’s setback to the deal in federal court.

In an opinion that closely tracked the FTC/DOJ Merger Guidelines, Judge Amit Mehta of the U.S. District Court for the District of Columbia granted the Federal Trade Commission a preliminary injunction to halt the proposed merger of nation’s two largest distributors of food and related supplies to restaurants and other foodservice establishments.  Sysco’s announcement that it was abandoning its plans to acquire its rival is no surprise, given the substantial hurdle imposed on the deal by the FTC’s victory in court.

The 18-month-old proposed deal encountered regulatory scrutiny from the start.  Last February, Sysco and US Foods proposed a divestiture of 11 US Foods distribution facilities to a smaller competing foodservice company, Performance Food Group (“PFG”), as a “fix-it-first” remedy designed to allay the FTC’s concerns.  The FTC was not swayed, however, and decided to sue Sysco and Us Foods to block the deal.

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Categories: Antitrust Litigation, Antitrust Policy

    March 2, 2015

    The Antitrust Week In Review

    Here are some of the developments in antitrust news this past week that we found interesting and are following.

    U.S. Asks If Comcast, Time Warner Cable Restricted Video Deals.  Federal regulators vetting Comcast Corp.’s proposal to buy Time Warner Cable Inc. want to know if the cable giants tried to restrict Walt Disney Co. and other entertainment providers from offering programs to rival online video outlets.  Among other avenues of inquiry, the FCC has asked eight media companies, including CBS Corp. and Discovery Communications Inc., to describe any limits to online distribution imposed by the two largest U.S. cable providers.

    F.C.C. Approves Net Neutrality Rules, Classifying Broadband Internet Service as a Utility.  The Federal Communications Commission voted to regulate broadband Internet service as a public utility, a milestone in regulating high-speed Internet service.  The new rules seek to ensure that no content is blocked and that the Internet is not divided into pay-to-play fast lanes for Internet and media companies that can afford it and slow lanes for everyone else.

    FTC Puts Conditions on Novartis AG’s Proposed Acquisition of GlaxoSmithKline’s Oncology Drugs.  Global pharmaceutical company Novartis AG has agreed to a proposed FTC consent decree that will require it to divest all assets related to its BRAF and MEK inhibitor drugs, currently in development, to Boulder, Colorado-based Array BioPharma to settle charges that Novartis’s $16 billion acquisition of GlaxoSmithKline’s portfolio of cancer-treatment drugs would likely be anticompetitive.  The FTC investigation is notable for its substantial cooperation with antitrust enforcers in Australia, Canada, and the European Union.

    Ninth Circuit Refuses to Rewind Netflix Win.  The U.S. Court of Appeals for the Ninth Circuit has agreed Netflix shouldn’t be on the hook for allegedly colluding with Wal-Mart Stores Inc. to divvy up the market for online DVD rentals.  The Ninth Circuit affirmed the dismissal of a lawsuit alleging that Netflix and Walmart ran afoul of antitrust laws in their 2005 deal that transferred customers of Walmart’s DVD-rental subscription service to Netflix in return for Netflix’s agreement to promote Walmart’s DVD sales business.

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    Categories: Antitrust Litigation, Antitrust Policy

      February 10, 2015

      European Antitrust Watchdogs Warn Of Uncertain Future For Pay-For-Delay Settlements

      A View from Constantine Cannon’s London Office

      By Irene Fraile

      A recent lively discussion with European Commission competition officials indicates that antitrust enforcement is continuing to evolve to deal with the thorny issues raised by so-called “reverse-payment” or “pay-for-delay” patent litigation settlements designed to delay the sale of generic drugs.

      On January 29, 2015, Brussels Matters (which hosts informal discussions with senior EU officials) hosted the first pan-EU discussion with officials from the European Commission’s Directorate General for Competition (“DG COMP”) after the Commission’s Lundbeck decision, which imposed hefty fines for entering into pay-for-delay agreements that violated EU antitrust rules that prohibit anticompetitive agreements.

      In that June 19, 2013, decision, the Commission imposed a fine of 93.8 million euros on the Danish pharmaceutical company Lundbeck and fines totalling 52.2 million euros on several producers of generic medicines for delaying generic market entry of the drug Citalopram.  This was the first EU infringement decision concerning pay-for-delay agreements.

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      Categories: Antitrust and Intellectual Property Law, Antitrust Enforcement, Antitrust Policy

        February 5, 2015

        Feds Green-Light Institute’s New Patent Policy For Wi-Fi Standards, Finding It Potentially Procompetitive

        By David Golden

        The Antitrust Division of the U.S. Department of Justice announced on Monday that it would not challenge recent revisions to the Patent Policy of the Institute of Electrical and Electronics Engineers Standards Association (“IEEE-SA”)—giving the green light to new Wi-Fi standards that computers, smartphones and tablets will follow in connecting to the Internet.

        The Antitrust Division’s decision removes one of the last barriers to the implementation of the revised Patent Policy, which governs the licensing of patents essential to IEEE standards, such as the ubiquitous Wi-Fi networking protocols.  The changes could lead to cheaper devices for consumers.

        We blogged about the IEEE-SA’s preliminary adoption of the changes earlier this year, following a Federal Circuit decision that required trial courts to consider a standard-setting organization’s patent-licensing policy when calculating patent royalty rates and damages.  The IEEE-SA submitted its revised policy to the government under the Antitrust Division’s Business Review  program.

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        Categories: Antitrust and Intellectual Property Law, Antitrust Policy

          November 12, 2014

          Net Neutrality – What’s In A Name?

          By Robert Schwartz

          Although President Obama has endorsed a specific approach to “net neutrality” – the principle that Internet service providers should treat all data on the Internet equally – the debate over whether and how the Federal Communications Commission should enforce that principle is still raging, and may well be decided by whoever wins the battle over defining “Internet access.”

          In politics, a basic rule is never to let the opposition define you.  So it is in public policy and regulation as well.  The term “broadband,” for example, makes sense only when compared to the old dial-up world based on thin copper telephone wires, where speeds are measured in K’s, not M’s or G’s.  Compared to the bandwidth devoted to multichannel home video by cable, satellite (“DBS”) or telco distributors, the bandwidth that these distributors make available to the Internet is puny indeed – a mere handful of channels out of the hundreds that they control.  Internet access is like a key mountain pass – whoever controls this turf is likely to emerge victorious.

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          Categories: Antitrust Policy

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