A View from Constantine Cannon’s London Office

By Irene Fraile and Richard Pike

On 12 February 2016, the Competition and Markets Authority (“CMA”), UK’s competition regulator, fined a number of pharma companies for anti-competitive conduct and agreements in relation to the supply of paroxetine (an anti-depressant drug).

The anti-competitive conduct dates back to 2001, when pharmaceutical producers including Alpharma Limited (“Alpharma”) and Generics UK Limited (“GUK”) were preparing to launch their generic versions of paroxetine in the UK. At the time GlaxoSmithKline plc (“GSK”) held certain patents in relation to paroxetine and commercialised a branded version of the drug, Seroxat, which was a “blockbuster” product with annual sales over $130 million in the UK.

GSK commenced litigation proceedings against GUK and Alpharma for patent infringement. However, before the cases went to trial, GUK and Alpharma each entered into settlement agreements with GSK, which included terms prohibiting their independent entry into the UK paroxetine market in return for payments and other value transfers totalling over £50 million (c. $72 million).

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

Senate panel to hear from U.S. antitrust bosses. The Senate Judiciary Committee’s antitrust subcommittee will hear from the top U.S. antitrust enforcers next month to discuss a wave of of major, controversial mergers.  The Justice Department is investigating two large insurance mergers—Aetna buying Humana, and Anthem buying Cigna—to insure they comply with antitrust law.  The Federal Trade Commission is suing to block Staples from acquiring Office Depot.  The hearing will be conducted on March 9 by the Senate Judiciary Committee’s antitrust panel.

Staples-Office Depot Merger Approved in Europe, With Concessions. The European Commission has approved the $6.3 billion merger of Staples and Office Depot after the companies agreed to sell some of Office Depot’s operations in Europe to ease competition concerns.  The approval comes just over two months after the U.S. Federal Trade Commission sued to block the transaction over similar competition issues.  European regulators and the FTC both raised concerns that the combination of the office supply companies would significantly reduce competition for office supply contracts sold to large companies.

EU investigating possible rigging of debt market, sources say. European Union antitrust regulators are investigating several banks for possible rigging of the $1.5 trillion government-sponsored bond market, according to sources.  The investigation is the latest in a series of actions against suspected wrongdoing in financial services, including alleged attempts to rig the markets for Libor and foreign exchange.

UK watchdog fines GSK $54 million over ‘pay-for-delay’ drug deals. Britain’s Competition and Markets Authority has fined GlaxoSmithKline  37.6 million pounds ($54.4 million) for market abuse in striking deals to delay the launch of cheap generic copies of its former blockbuster antidepressant Seroxat.  Generic drug companies involved, including Germany’s Merck KGaA, were also fined smaller amounts, bringing the total penalties to 45 million pounds.  The CMA’s action is the latest example of regulators trying to curb “pay-for-delay” deals by drug companies, and follows previous actions by U.S. and European antitrust authorities.

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

EU antitrust chief considers lower fines for cooperating companies.  European Union antitrust chief Margrethe Vestager  is suggesting that companies that admit to breaking the law should be rewarded with lower fines to help speed up antitrust investigations.  The European Commission typically takes several years to wrap up cases, which critics say is not helpful for consumers or competitors.  According to the EU’s top antitrust regulator, the EU “should reward companies that admit to having broken the law, especially when they come up with remedies to make the markets more competitive, or companies that provide evidence voluntarily.”

Citigroup reaches $23 mln ‘ice breaker’ yen Libor settlement.  Citigroup will pay $23 million to end private U.S. antitrust litigation claiming that it conspired to manipulate the yen Libor and Euroyen Tibor benchmark interest rates.  Lawyers for the plaintiff investors are calling the agreement an “ice breaker” that could spur some of the roughly 20 other bank defendants to settle.  Court approval of the settlement agreement is required.  RP Martin, a brokerage whose main assets are now part of BGC Partners Inc, also settled, without making a payment.

Judge Deals Blow to New Rodeo Circuit, but Lets Antitrust Suit Continue.  Judge Barbara Lynn of U.S. District Court in Dallas has ruled that new bylaws meant to protect the long-established Professional Rodeo Cowboys Association from competing rodeo circuits are enforceable, a blow to a group of top rodeo athletes planning a satellite circuit this year.  But the court also denied the association’s motion to dismiss a broader antitrust lawsuit filed by Elite Rodeo Athletes, whose nine-city tour is scheduled to stretch from March to November.  The suit came after the P.R.C.A. rewrote bylaws, including one that said that anyone with a financial interest in a competing circuit would not be eligible to compete in any of the hundreds of P.R.C.A.-sanctioned rodeos held each year.

German competition watchdog wants ‘big data’ hoards considered in merger probes: paper.  The vast troves of consumer data held by big Internet companies should be scrutinized in merger probes because they have a big impact on competition, according to the president of the German antitrust watchdog.  “Until now, markets in which no money flows and in which no revenues are posted do not count as markets from a competition point of view. But that obviously goes against the logic of many Internet markets,” Andreas Mundt told the German newspaper Sueddeutsche Zeitung.

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

NY’s top prosecutor targets NFL in antitrust probe – source.  New York Attorney General Eric Schneiderman is reportedly conducting an antitrust investigation of the NFL and its practice of imposing “price-floors” on certain tickets as part of an ongoing probe into the online ticketing market.  The antitrust investigation grew out of a probe by the attorney general’s office into irregularities in the ticketing industry, which found that ticket brokers were using illegal software programs to snap up thousands of tickets and reselling them with huge price markups.

EU Slaps $150 Million Cartel Fine on Car Parts Producers.  The European Union is fining two Japanese car part producers $150 million for fixing prices for alternators and starters for more than half a decade.  Melco will have to pay the biggest fine of 110.9 million euros, with Hitachi having to pay 26.9 million euros.  A third company, Denso, was not fined since it disclosed the case to the EU’s antitrust office.  Although the collusion may have occurred outside of the 28-nation EU, EU Competition Commissioner Margrethe Vestager said that her office would still pursue the case since EU consumers were hurt by artificially high prices.

Exclusive: EU to give unconditional approval to Schlumberger deal – sources.  The world’s biggest oilfield services company, Schlumberger, is set to gain unconditional EU approval for its $14.8 billion bid for equipment maker Cameron International Corp, according to sources.  The acquisition will enable Schlumberger to offer a broader range of products at lower prices to oil companies, which are slashing spending in response to falling oil prices, and boost its market share.  Some antitrust experts have said the two U.S. companies offer complementary product lines, meaning the deal would draw less regulatory scrutiny.

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

Cable Acquisitions by Charter Communications Face Rising Opposition.  Comcast’s failed $45 billion merger with Time Warner Cable collapsed last year under pressure from regulators, who found that the combined company would have had both the power and incentive to inhibit the future of streaming video.  Now, as rival Charter Communications seeks approval for its $67.1 billion takeover of Time Warner Cable and Bright House Networks, critics point to the same potential for harm.  “If Comcast’s deal for Time Warner Cable was a Category 5 hurricane, Charter-Time Warner is a Category 4,” according to Jeff Blum, deputy general counsel of Dish Network, the satellite television provider.

European Antitrust Chief Takes Swipe at Privacy Issue.  Margrethe Vestager, the European Union’s antitrust chief, is warning that the collection of a vast amount of users’ data by a small number of tech companies like Google and Facebook could be in violation of the EU’s tough competition rules.  Ms. Vestager’s comments are the latest in a growing chorus of European criticism about the privacy practices of American tech giants, many of which rely on crunching data based on people’s social media posts, online search queries and e-commerce purchases to fuel their digital advertising businesses.  “If a few companies control the data you need to cut costs, then you give them the power to drive others out of the market,” Ms. Vestager said at a conference of digital executives and policy makers.

Hollywood studios, Sky spar with EU antitrust regulator.  NBCUniversal, Disney and four other U.S. studios together with Sky UK are pushing back against European Union charges of anticompetitive movie-licensing deals ahead of a decision later this year.  The companies’ defense comes six months after the European Commission accused them of preventing consumers outside Britain and Ireland from accessing films and other content broadcast by the British pay-TV group.  The accusations by the EU antitrust enforcer came amid a campaign to end restrictions hindering cross-border trade, aimed at boosting e-commerce and growth in the 28-country bloc.

U.S. FTC probes Turing over drug prices, Shkreli’s lawyer says.  The U.S. Federal Trade Commission is investigating Turing Pharmaceuticals for possible antitrust violations in connection with the company’s decision to hike the price of a life-saving drug by more than 5,000 percent, according to a lawyer for former Chief Executive Officer Martin Shkreli.  The investigation was disclosed in a letter to the U.S. House of Representatives’ Committee on Oversight and Government Reform from Baruch Weiss, Shkreli’s lawyer, as grounds for why his client would not answer questions about drug prices at a Jan. 26 hearing.  The committee had subpoenaed Shkreli, who has been indicted separately on securities fraud charges, to appear to discuss why, as Turing’s CEO, he decided to raise the price of Daraprim to $750 a tablet from $13.50.