By Allison F. Sheedy

The U.S. Federal Trade Commission announced yesterday that it is challenging the merger of the nation’s two largest food distributors, US Foods, Inc. and Sysco Corporation.

By a split vote, the FTC decided to file an administrative complaint and to authorize its staff  to go to federal court to seek a temporary restraining order and a preliminary injunction to prevent the parties from consummating the merger, pending the administrative proceeding.

The two Republican appointees on the FTC voted against the action.  The decision of the three Democratic appointees to challenge the merger was hardly unexpected.  The two foodservice giants had been in discussions with the FTC for more than a year trying to convince the consumer protection watchdog that their proposed deal would not pose competitive problems.

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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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A View from Constantine Cannon’s London Office

By Yulia Tosheva and James Ashe-Taylor

The European Commission (“EC”) has fined London-based ICAP, the world’s largest broker of interest-rate swaps, for facilitating bank cartels in the market for Yen-denominated interest rate derivatives.

The EC already imposed heavy fines of 669 million euros on UBS, the Royal Bank of Scotland, Deutsche Bank, Citigroup and the British broker, RP Martin, in December 2013, after they admitted their involvement in several cartels that manipulated the Yen Libor benchmark.  The cartels involved traders’ discussions on Japanese Yen Libor submissions and exchange of commercially sensitive information on trading positions and future Japanese Yen Libor submissions.  As part of the same investigation, the EC opened proceedings against ICAP, which refused to admit guilt and did not join the financial institutions in paying fines to settle the case.

The EC’s investigation concluded that ICAP facilitated six out of the seven Japanese Yen cartels, in particular by disseminating misleading information about expected Japanese Yen Libor rates, serving as a communications channel between traders and using its contacts at various banks in an attempt to influence their Yen Libor submissions.

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By Allison F. Sheedy

Sysco Corp. announced a divestiture plan this week that it claims should address concerns of the Federal Trade Commission (the “FTC”) about the food behemoth’s proposed acquisition of US Foods, which would combine the two largest food distributors in the United States.

Sysco, the nation’s largest food distributor, said on Monday that it is prepared to sell 11 US Foods distribution centers in the West and Midwest to smaller competitor Performance Foods Group, should the FTC approve its pending deal, which would give Sysco more than 25% of the national market, before divestitures, in the business of buying food and other supplies and selling them to restaurants, hospitals and other institutions. The company has been in discussions with the FTC for over a year with no resolution in sight. What does this proposed divestiture mean for the deal?

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A View from Constantine Cannon’s London Office

By Yulia Tosheva and James Ashe-Taylor

The European Commission has announced that the European Parliament and the European Council have reached a long-awaited political agreement on the Commission’s proposal for a Regulation on Interchange Fees for Card-based Payment Transactions.

The Regulation will introduce maximum fees for four-party card schemes’ consumer debit and credit cards, prevent card schemes from forcing retailers to accept all types of cards regardless of their fees, and establish transparency rules for all transactions. The Commission has already ruled that interchange fees set by MasterCard are in violation of EU antitrust laws and, after a seven-year court battle, MasterCard lost its final appeal before the European Court of Justice in September 2014.

Interchange fees represent about 70% of the approximately 13 billion euros a year retailers pay banks to handle payment card transactions. The Regulation is expected to have a profound impact on the card industry as a whole but its effect is likely to be particularly felt in markets such as Germany, where average credit card rates stand at 1.8%, and Poland, where average debit card charges are 1.6%.

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