The Antitruster

• FTC and State AGs End Challenge to Amgen/Horizon Deal. On September 1, the FTC announced it has agreed to a proposed consent order with Amgen, settling its suit to block Amgen’s proposed acquisition of Horizon Therapeutics. In May 2023, the FTC and six state attorneys general alleged that the deal would enable Amgen to use its extensive drug portfolio to offer bundled discounts that would make it difficult or impossible for future competitors to challenge Horizon’s monopoly in two drug markets. This was the first time in over 40 years that a US antitrust agency has challenged a transaction based on a “conglomerate” theory of competitive harm. The proposed order will, among other things, prohibit Amgen from bundling Tepezza and Krystexxa with an Amgen product. This is the first time in more than five years that the FTC has agreed to accept a behavioral remedy to address competitive concerns. For more information on the FTC’s challenge, see WilmerHale’s alert here.

• ICE Completes Acquisition of Black Knight After FTC Agrees to Consent Order. On September 5, Intercontinental Exchange, Inc. consummated its $13.1 billion acquisition of Black Knight, Inc., a competing mortgage technology company, after the FTC approved a proposed consent order on August 31, requiring Black Knight to divest two businesses, Optimal Blue and Empower, that provide critical services in the mortgage origination process. The FTC had alleged the deal as previously structured would reduce competition in the mortgage origination industry, raising costs for lenders and homebuyers. This consent order provides “structural relief and a variety of tools to preserve competition in these critical markets,” according to Bureau of Competition Director Henry Liu.

• Glenmark and Teva Settle Criminal Antitrust Charges With DOJ. On August 21, Teva Pharmaceuticals USA, Inc. and Glenmark Pharmaceuticals, Inc. signed deferred prosecution agreements (DPAs) with DOJ to settle criminal antitrust charges regarding alleged price fixing, bid rigging, and market allocation of generic pharmaceutical products. As part of the DPAs, Teva agreed to pay $225 million and Glenmark agreed to pay $30 million, in addition to Teva’s promise to make an additional $50 million drug donation to humanitarian organizations. Both companies were also required to divest their pravastatin business, which the DOJ describes as an “extraordinary remedy” that is unprecedented in criminal antitrust cases and “forces the companies to divest a business line that was central to the misconduct.” Teva and Glenmark are the sixth and seventh companies, respectively, to settle criminal charges with the DOJ related to anticompetitive conduct affecting generic pharmaceuticals.

• Seven States Ask FTC to Challenge Kroger/Albertsons Grocery Merger. In an August 23 letter to FTC Chair Lina Khan, state treasurers from Colorado, Delaware, Maine, Massachusetts, Nevada, New Mexico, and Washington urged the Commission to challenge the proposed $24.6 billion merger between grocery store chains Kroger Co. and Albertsons Cos., which the FTC has been investigating since October 2022. The state treasurers’ complaint is unusual in the context of a merger because rather than focusing on concerns regarding higher prices or reduced quality or innovation, the treasurers’ “primary concern” is the impact on wage reduction for approximately 746,000 grocery store workers. The letter also raises concerns that the deal would exacerbate the problem of “food deserts.” The treasurers’ letter was sent one week after another seven secretaries of state wrote to the FTC urging it to block the deal, citing few pass-through savings to consumers.

• Class Action No-Poach Suit Against McDonald’s Revived. On August 25, in Deslandes v. McDonald’s USA LLC, the Seventh Circuit revived a proposed class action challenging McDonald’s use of “no-poach” provisions in its franchise agreements. A district court had previously entered judgment on the pleadings in McDonald’s favor, finding that there was too much competition among employers for labor to establish antitrust injury and that the no-poach provisions were ancillary restraints that promoted a procompetitive benefit of “increased output of burgers and fries.” In an opinion by Judge Frank Easterbrook, the Seventh Circuit reversed and remanded the lower court’s decision finding that the trial court had erred by crediting procompetitive benefits that helped consumers because of increased output, at the expense of employees who were injured by the constraint. Judge Easterbrook explained that more economic analysis was needed to determine if the restraint was reasonably necessary to generating more output, but that it was possible the no-poach agreements actually restricted output by suppressing employees’ skills. In a concurring opinion, Judge Kenneth Ripple clarified that the court’s opinion was not intended to provide a definitive explanation of the merits, and that a trial court could still determine the restriction was unjustified and not reasonably necessary to achieving the stated procompetitive objectives.

Policy

• Henry Liu Named FTC Bureau of Competition Director. On August 22, Chair Khan appointed Henry Liu, a former partner at Covington & Burling, as the FTC’s new Bureau of Competition Director. Liu replaces Holly Vedova who is retiring after more than 30 years with the agency. While at Yale Law School, Liu worked on the Yale Law Journal alongside Commissioners Rebecca Kelly Slaughter and Alvaro Bedoya.

Europe

• EC Accepts Second Article 22 Referral for Transaction That Was Not Reported to Any EC Member State. On August 21, the EC announced that it had accepted referral requests under Article 22(1) of the EU Merger Regulation (EUMR) by three EU Member States (Denmark, Finland and Sweden) and one European Free Trade Asociation (EFTA) Member State (Norway) to assess the proposed acquisition of Nasdaq’s European power trading and clearing business by EEX. The proposed acquisition does not reach the EUMR notification thresholds and was not notifiable in any EU Member State. Following Illumina/Grail and Qualcomm/Autotalks, this is the third time the EC has accepted a referral request under its new Article 22 policy, which authorizes the EC to accept referrals from Member States if a transaction was not notifiable.

• Microsoft Will Unbundle Teams From Office in Europe to Address EC’s Concerns. On August 31, Microsoft announced that it will unbundle Teams from Microsoft 365 and Office 365 suites in the European Economic Area (EEA) and Switzerland and will increase resources to enable competing video conferencing products to interoperate with Microsoft 365 and Office 365 apps and services. Microsoft is doing so to address the EC’s concerns “that customers should be able to choose a business suite without Teams at a price less than those with Teams included, and that we should do more to make interoperability easier between rival communication and collaboration solutions and Microsoft 365 and Office 365 suites.” For background, on July 27 the EC announced an investigation into alleged tying and bundling involving Teams and Microsoft’s Productivity Suites for Business.

• Vestager Steps Down From the EC. On September 5, EC Executive Vice-President and Competition Commissioner Margarethe Vestager temporarily withdrew from the EC to seek the presidency of the European Investment Bank (EIB). Current Justice Commissioner Didier Reynders from Belgium will take over as Competition Commissioner. If the EIB bid is unsuccessful, Vestager could return to her EC role.