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Tracking Antitrust Enforcement Trends Around the Globe
From scrutiny of the U.S. healthcare sector to heightened antimonopoly compliance in China and voluntary disclosure incentives in Brazil, a new analysis from the Policy and Regulatory Report entitled "2013 Global Antitrust Trends" [PDF] examines how regulators around the world are tackling antitrust enforcement.
In the U.S., authorities at the Federal Trade Commission and the Department of Justice will continue their focus on competition as it relates to price and quality in the healthcare space, according to the report. "There was a flurry of filings in the fourth quarter of last calendar year," Rich Feinstein, the FTC's top competition enforcement official, told PaRR. "There are plenty of things we're looking at."
And already, "When it comes to merger review in the healthcare sector, the FTC has managed to get parties to simply walk away from transactions," according to PaRR. Such was the case with Reading Health System's proposed acquisition of Surgical Institute of Reading last Novembereven though "small and specialty hospitals had previously been generally excluded from merger challenges," the authors note.
The FTC is also preparing for a number of U.S Supreme Court cases in 2013, such as FTC v. Watson Pharmaceuticals, over whether brand-name pharmaceutical companies can pay generic drug makers to delay putting their products on the market. In that case and others involving healthcare antitrust, PaRR notes that "however the court rules, the fact is that the courts provide the best route for modifications to antitrust policy. And the FTC will be especially invested in these cases' outcome, as a player in many of the cases coming before the court."
For the Justice Department, "illegal monopolization within the hospital industry has attracted attention," the report states. And in the health insurance arena, a DOJ suit against Blue Cross Blue Shield of Michigan is currently pending.
Overseas, Chinese authorities are ramping up antimonopoly enforcement. Three agenciesthe Ministry of Commerce, the National Development and Reform Commission (NDRC), and the State Administration for Industry and Commerce"are set to enhance their power by tapping into more high-profile antitrust cases, publishing more detailed implementation rules, and increasing enforcement efficient in 2013," according to the report.
Companies in the region, in turn, are increasingly seeking help with antimonopoly law (AML) compliance from local law firms. "AML compliance advisory is emerging as a burgeoning business for Chinese law firms," Xue Yi, a partner with Zhonglun Law Firm, told PaRR.
Antimonopoly enforcement isn't just a concern for China's state-owned companies, but for multinationals as well. As the Ministry of Commerce becomes "an increasingly important and high-profile merger review jurisdiction," the report states, "the NDRC is also making efforts to build up its authority in global antimonopoly enforcement."
Just last month, in an action against six international LCD screen makers, the NDRC levied the largest fine ever meted out in a Chinese antitrust case. Samsung Electronics, LG Display, Innolux, AU Optronics, Chunghwa Picture Tubes, and HannStar Display were ordered to pay $56.6 million over alleged price fixing between 2001 and 2006.
Brazil's antitrust regulator, meanwhile, is hoping to entice more voluntary disclosures by firms, while at the same time the agency also seeks "to bolster its cartel and single-firm conduct investigations throughout 2013," PaRR reports.
One way to do that would be expand the government's settlement policy. As is stands, the Administrative Council for Economic Defense's (CADE) leniency program affords "full immunity from administrative and criminal charges to the first company or individual" that reports a violation, notes PaRR.
However, the second or third company to come forward receives no such benefit, which is why, in part, CADE has tried to get rules on settlements changed. The downside is that "unlike leniency agreements, such settlements do not automatically grant immunity from criminal prosecution, and this may discourage parties to report infringements," according to the report.
In India, parts of the recently amended Competition Act are raising eyebrows among in-house counsel. Section 5A of the law allows the Indian government and the Competition Commission of India (CCI) "to set different thresholds for different industry segments" -- a departure from regulatory norms in other parts of the world.
"Initially, the insertion of section 5A was triggered by the need for greater vigilance of the Indian pharmaceutical sector, but in-house legal counsel fear that such an amendment means that other industries will now be fall under the shadow of CCI overreach," the report states, adding: "Nowhere else in the world have competition commissions introduced industry specific review thresholds, said Bharat Vasani, general counsel at Tata Sons Limited, the holding company for the Tata Group."
And in the European Union, in-house counsel need to continue to be mindful of separate enforcement objectives at both the E.U. and member state level.
"The [European Commission] is increasingly focusing on state aid and merger control, where if they do not act no one will, as well as E.U.-wide cartels and high-profile dominance cases," Cleary Gottlieb Steen & Hamilton antitrust partner Nicholas Levy told PaRR. "That leaves quite a significant part of competition policy that is largely being enforced at the national level, including joint ventures that do not meet the E.U. merger control criteria and vertical restraints."