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The Federal Trade Commission is asking the Supreme Court to strike down a lower court ruling that if upheld, would give judges more power to overturn the agency’s decisions. The outcome of the legal battle could affect a wide swath of the FTC’s jurisdiction, including cases where the agency conducts in-house administrative trials to break up completed mergers. The FTC late Monday petitioned the top court to review a decision the 11th U.S. Circuit Court of Appeals in Atlanta handed down March 8. At issue is an FTC ruling that found Schering-Plough Corp. violated antitrust laws by striking a deal with a generic drug maker over a Schering patent that was about to expire. As Shering’s patent for high blood pressure medication K-Dur 20 was nearing expiration, the FTC claimed Schering paid Upshur-Smith Laboratories Inc. to delay or refrain from marketing a competing generic version. Countering the FTC, the pharmaceutical companies claimed Shering’s payment was merely a settlement to avoid the cost of litigation of the patent. After the commission challenged Schering’s payment, an agency administrative law judge found in favor of the companies. The commissioners, however, rejected that ruling and stuck to their earlier opinion that the payment was a restraint of trade. The case then went to the 11th Circuit in Atlanta, which not only overturned the FTC, but said the FTC’s opinion failed to give enough weight to the ALJ’s findings. If that aspect of the 11th Circuit’s decision stands, future commissions will have a tougher time overturning rulings of their own administrative courts. The FTC, like most independent agencies, operate administrative law courts, in-house legal systems to adjudicate agency matters. By turning down the case or ruling against the FTC, the Supreme Court would knock down a perception held by many FTC critics that the agency enjoys a “home-court advantage” when conducting administrative hearings, said Stephen Calkins, a former FTC general counsel who teaches antitrust law at Wayne State University Law School. In its petition, the FTC asked the Supreme Court to “correct a gross misapplication” judicial review standards, arguing that Circuit Court’s decision “threatened the effective application of the antitrust laws.” The FTC said federal agencies have historically been given deference to reject their ALJs’ rulings. The FTC is pursuing this controversial case alone, without the U.S. Solicitor General, whose office must be asked to participate, Calkins said. If the SG declines to join, the agency may proceed by itself. The lack of outright support from the Solicitor General “must have hurt significantly,” Calkins said. “The SG is the lawyer for the U.S. He represents the United States of America and whatever the interest the government has.” The FTC decision to go it alone, however, has precedent. Twice before, it has asked the Supreme Court to hear antitrust cases without SG participation, and won. But those cases were focused squarely on antitrust matters, and didn’t involve administrative law matters that could have far-reaching ramifications for the nation’s federal agencies, many of which use the administrative law process instead of going to federal court, Calkins said. At the FTC, for example, completed mergers can be challenged using the administrative process, such as a case against hospitals in Illinois that concluded their merger years ago. Also, if the FTC loses an attempt to block a merger, it has the authority now to bring an administrative action to stymie the parties’ efforts to close a deal, though that rarely happens. Copyright �2005 TDD, LLC. All rights reserved.

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