Proskauer: Antitrust Update for In-House Counsel

Presenters:
Christopher E. Ondeck | Alicia J. Batts | John R. Ingrassia | Alyse F. Stach
May 5, 2015
ABA Section of Antitrust Law
Corporate Counseling Committee ‒
May Antitrust Update for In-House Counsel

Proskauer Antitrust Team
ABA Section of Antitrust Law 1
Christopher E. Ondeck | t: 1.202.416.5865
condeck@proskauer.com
Chris Ondeck is a partner in the Litigation
Department and vice-chair of the Antitrust
Group. He focuses his practice on representing
clients in civil and criminal antitrust litigation,
defending mergers and acquisitions before the
U.S. antitrust agencies, defending companies
involved in government investigations, and
providing antitrust counseling.
Alyse F. Stach | t: +1.212.969.3634
astach@proskauer.com
Alyse Fiori Stach is an associate in the Litigation
Department. Alyse is a commercial litigator with
a particular focus on antitrust, business torts and
intellectual property litigation. She appears in
both federal and state courts, as well as before
antitrust regulatory agencies, representing
clients from a wide variety of industries,
including financial services, technology,
entertainment, sports, health care and
telecommunications.
John R. Ingrassia| t: +1.202.416.6869
jingrassia@proskauer.com
John Ingrassia is a special counsel and advises
clients on a wide range of antitrust matters in
various industries. His practice includes a
significant focus on the analysis of Hart-Scott-
Rodino pre-merger notification requirements,
the coordination and submission of Hart-Scott-
Rodino filings, and the analysis and resolution
of antitrust issues related to mergers,
acquisitions, and joint ventures.
Alicia J. Batts | t: +1.202.416.6812
abatts@proskauer.com
Alicia Batts is a partner in the Antitrust Group
and the firm’s Litigation Department. An
experienced antitrust lawyer, she litigates cases
before federal courts throughout the United
States and represents clients before federal and
state agencies. Prior to joining the firm, Alicia
worked as an Attorney Advisor to Federal Trade
Commissioner Mozelle Thompson.

Class Action Updates
and Predictions
Christopher E. Ondeck
Partner
May 5, 2015

Class Certification After Comcast

Unresolved Post-Comcast Questions
• What kinds of analysis are required for a “rigorous analysis”
of damages at class certification?
• Are individualized damages issues relevant to predominance
at class certification?
• Must all class-members have Article III standing?
• Can statistical models that calculate only aggregate
damages and rely on an “average” overcharge satisfy the
Rule 23 predominance requirement?

Recent Post-Comcast Decisions
Deepen the Circuit Split
• In re Blood Reagents Antitrust Litig., No. 12-4067 (3d Cir.
Apr. 8, 2015)
– Vacated class certification for direct purchaser class of blood reagents
in price fixing suit against Ortho-Clinical Diagnostics
– District Court had determined, prior to Comcast, that challenge to the
merits of expert’s opinion was premature as damages model “could
evolve” over time
– 3d Circuit determined that the “‘could evolve’ formulation for the Rule
23 standard did not survive Comcast ” because putative class must
prove all of the Rule 23 elements are met before a class is certified
– 3d Circuit held that Comcast’s “rigorous analysis” at class certification
mandates that the district court conduct a Daubert inquiry before
determining if Rule 23 requirements have been met

Deepen the Circuit Split (cont’d)
• Roach v. T.L. Cannon Corp., 778 F.3d 401, 402 (2d Cir.
Feb. 10, 2015)
– Vacated ruling that denied class certification for group of
Applebee’s restaurant employees
– District court held that Comcast permitted class certification under
Rule 23(b)(3) only when damages are measurable on a classwide
basis. Because the damages in putative class were “highly
individualized” and because plaintiffs did not “offer a ‘model of
damages susceptible to measurement across the class,’” Plaintiffs
could not satisfy Rule 23(b)(3) and thus class certification was
denied

Deepen the Circuit Split (cont’d)
• Roach v. T.L. Cannon Corp., 778 F.3d 401, 402 (2d Cir.
Feb. 10, 2015) (cont’d)
– Second Circuit granted interlocutory appeal (more on this later)
– In examining Rule 23(b)(3)’s predominance factor, the Second
Circuit concluded that prior to Comcast, ascertainability of
individual damages would not defeat class certification, and
Comcast did not overturn that rule. The court thus held that:
“Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), does not
require that damages be measureable on a classwide basis for
certification under Rule 23(b)(3).”

Individualized Damages
Determinations and 23(b)(3)
Individualized
damages not
relevant to
predominance
under 23(b)(3)
2d, 5th, 6th 7th, 9th
Circuits
• Roach v. T.L. Cannon Corp., 778 F.3d 401, 402 (2d
Cir. 2015);
• In re Deepwater Horizon, 739 F.3d 790 (5th Cir.
2014), cert. denied No. 14-123 (Dec. 10, 2014)
• In re Whirlpool Corp. Front-Loading Washer Prods.
Liab. Litig., 722 F.3d 838 (6th Cir. 2013), cert.
denied, 134 S. Ct. 1277 (2014)
• Butler v. Sears, Roebuck & Co., 727 F.3d 796 (7th
Cir. 2013), cert. denied, 134 S. Ct. 1277 (2014)
• Jimenez v. Allstate Ins. Co., 765 F.3d 1161, 1167-68
(9th Cir. 2014)
Damages issues
are relevant to
predominance at
class certification
stage
D.C. and 10th
Circuits.
• In re Rail Freight Fuel Surcharge Antitrust Litig., 725
F.3d 244, 253 (D.C. Cir. 2013)
• Wallace B. Roderick Revocable Living Trust v. XTO
Energy, Inc., 725 F.3d 1213 (10th Cir. 2013)
See Pet. For a Writ of Cert., Carpenter Co. v. Ace Foam, Inc., No. 14-577 (U.S. filed Dec. 19, 2014) (describing circuit split)

Does a “Rigorous Analysis” Include a
full Daubert Analysis?
Full Daubert
Analysis
Required
3d, 7th and 11th
Circuits
• In re Blood Reagents Antitrust Litig., No. 12-
4067 (3d Cir. Apr. 8, 2015)
• Am. Honda Motor Co. v. Allen, 600 F.3d 813,
815-16 (7th Cir. 2010) (per curiam)
• Sher v. Raytheon Co., 419 F. App’x 887, 890
(11th Cir. 2011)
“Tailored” or
“Lesser”
Daubert
Analysis
Sufficient
8th and 9th
Circuits
• In re Zurn Pex Plumbing Prods. Liab. Litig.,
644 F.3d 604, 613 (8th Cir. 2011) (requiring
only a “tailored” Daubert analysis)
• Tait v. BSH Home Appliances Corp., 289
F.R.D. 466, 495 (C.D. Cal. 2012) (“district
courts [in the Ninth Circuit] are not required to
conduct a full Daubert analysis”)
See Pet. For a Writ of Cert., National Milk Producers, et al. v. Edwards, Matthew, et al., No. 14-1078 (U.S. Filed March 3, 2015 (describing circuit split)

Can Statistical Models that Aggregate
Damages for an Entire Class Satisfy
Rule 23(b)(3?)
Models that calculate only
aggregate damages and
rely on an “average”
overcharge can satisfy
the predominance
requirement
6th and
10th
Circuits
• In re Scrap Metal Antitrust Litigation, 527 F.3d
517 (6th Cir. 2008)
• In re Urethane Antitrust Litigation, 768 F.3d 1245
(10th Cir. 2014)
Aggregate damages
models that rely on
averaging cannot satisfy
predominance
2d, 4th,
7th and
9th
Circuits
• McLaughlin v. American Tobacco Co., 522 F.3d
215 (2d Cir. 2008)
• Broussard v. Meineke Discount
• Muffler Shops, Inc., 155 F.3d 331 (4th Cir. 1998)
• Espenscheid v. DirectSat USA, LLC, 705 F.3d
770, 773 (7th Cir. 2013).
• In re Hotel Telephone Charges, 500 F.2d 86 (9th
Cir. 1974)
See Pet. For a Writ of Cert., Dow Chemical Co. v. Industrial Polymers Inc. et al. No. 14-665 (U.S. filed Mar. 9, 2015) (describing circuit split)

Can a Class Containing Non-Injured
Individuals Be Certified Under Rule 23?
Yes 3d, 7th, 10th
Circuits
• Krell v. Prudential Insurance Co. of America,
148 F.3d 283 (3d Cir. 1998)
• Kohen v. Pacific Inv. Mgmt. Co., 571 F.3d 672,
677 (7th Cir. 2009);
• DG ex rel. Stricklin v. Devaughn, 594 F.3d
1188, 1198 (10th Cir. 2010).
No - All class-
members must
have Article III
standing
2d, 8th, 9th, D.C.
Circuits
• Denney v. Deutsche Bank AG, 443 F.3d 253,
264 (2d Cir. 2006)
• Halvorson v. Auto-Owners Ins. Co., 718 F.3d
773, 778 (8th Cir. 2013)
• Mazza v. Am. Honda Motor Co., 666 F.3d 581,
594 (9th Cir. 2012)
• In re Rail Freight Fuel Surcharge Antitrust
Litigation, 725 F.3d 244, 252 (D.C. Cir. 2013)
See Pet. For a Writ of Cert., Carpenter Co. v. Ace Foam, Inc., No. 14-577 (U.S. filed Dec. 19, 2014) (describing circuit split)

Why This Matters
• Interlocutory review of class certification decisions under
Rule 23(f) is exceedingly rare, and thus defendants in class
actions are forced to live with the consequences of the
district court’s decision. In most cases, this means
settlement.
• Because those decisions ultimately do not reach appeal,
decisions that may not undertake the analysis required by
Comcast and Rule 23 eventually become the law in those
jurisdictions, leaving defendants to deal with a mélange of
conflicting rulings.

Why This Matters (cont’d)
• Defendants and amici in Edwards v. National Milk Producers
Federation, a case in the Ninth Circuit, petitioned the
Supreme Court for a writ of certiorari on this very issue. The
Supreme Court denied the petition in April 2015, leaving this
issue unsettled for the time being. The Supreme Court also
denied a similar petition brought by Carpenter Company in In
re Polyurethane.

Cases To Watch & Predictions
• In re Processed Egg Products, No. 08-md-2002 (E.D. Pa.) – class
certification decision pending for direct and indirect purchasers of shell
eggs and egg products
• In re Urethane Antitrust Litigation, 768 F.3d 1245 (10th Cir. 2014)
– Dow ordered to pay $1.6B (post trebling). Petition to Supreme Court pending
– Argue court of appeals upheld two “shortcuts” by the district court that enabled
class certification,
• allowed inference of class-wide impact where prices were individually negotiated
• relied on damages model that calculated damages based on estimated averages
– Court has passed on the last few cert. petitions on this issue. Currently the
best chance for court to clarify Comcast
• Predictions – Courts moving closer to a consensus on Daubert at the
class certification stage. Deepening divide on other issues unlikely to
be resolved unless SCOTUS speaks.

Case Filings Post-Comcast
• Filings are up in the 6th Circuit
where plaintiffs have received
favorable rulings in Whirlpool and
In re Polyurethane Foam
• Expect an uptick in the 10th Circuit
following the Urethane decision
• The 9th circuit will continue to be a
favored district for the plaintiffs’ bar
• Expect filings to remain low in the
D.C. Circuit, in light of the In re Rail
Freight decision.
• Third Circuit remains a hotbed,
particularly in light of plaintiff-
friendly rulings in pay-for-delay
cases.ABA Section of Antitrust Law 15
Source: Global Competition Review, The Antitrust Review of Americas 2015

Agency Review ‒ Health Care
Alicia J. Batts
Partner
May 5, 2015

Impax Laboratories/CorePharma
Background:
• In October 2014, Impax entered into a $700M agreement
to acquire Tower and Lineage (includes CorePharma)
• FTC was concerned about two pipeline products:
1. Generic pilocarpine ‒ used to treat dry mouth
• Two current suppliers ‒ Lannett Company, Inc. and Actavis plc
• Though not currently in market, Impax and CorePharma each held
an approved Abbreviated New Drug Application (“ANDA”)
• No other suppliers are expected to enter

Impax Laboratories/CorePharma (cont’d)
Background: (cont’d)
2. Generic ursodiol tablets ‒ used to treat primary biliary cirrhosis
of the liver
• Four current suppliers ‒ Impax, Actavis, Par Pharmaceutical
Companies, and Glenmark
• Market has experienced supply shortages
• CorePharma is developing generic ursodiol and expected to be
next entrant
• No other suppliers are expected to enter market in the near future

Impax Laboratories/CorePharma (cont’d)
What’s New:
• April 2015 ‒ FTC approves Final Order
– Divest all of CorePharma’s rights and assets
to generic pilocarpine and generic ursodiol tablets
– Approved buyer ‒ Perrigo Company
Takeaways:
• FTC continues to be very aggressive in
pharmaceutical merger reviews
• Indication-specific analysis
• Pipeline products as important as marketed products
• Teva/Mylan will be generic pharma deal to watch for in 2015

Phoebe Putney
Background:
• In 2011, FTC challenged Phoebe
Putney’s acquisition of rival Palmyra
Park Hospital in Albany, GA
• Four-year fight litigated all the way
to Supreme Court
• Decision clarifies clear articulation
prong of the State Action antitrust
exemption

Phoebe Putney (cont’d)
What’s New:
• March 2015 settlement and
10-year consent order with FTC
permits the system to stay intact
• Due to the unavailability of
structural relief, the consent does
not require a divestiture
– Precluded by Georgia’s strict
Certificate of Need (CON)
requirements

Phoebe Putney (cont’d)
Settlement and Consent Agreement:
• Phoebe must give FTC notice before acquiring hospital
or health care providers in the Albany, GA area
• Phoebe is prohibited from opposing a CON application
in the Albany, GA area
• Stipulates that the effect of the transaction may be
substantially to lessen competition within the relevant
service and geographic markets alleged in the
complaint
Takeaway:
• Local and state laws can significantly impact result

St. Luke’s/Saltzer
Background:
• In 2012 St. Luke’s Health Systems acquired the
Saltzer Medical Group – both Nampa, ID health care
providers
• Private hospitals filed suit seeking to enjoin the merger – PI
denied
• Post-closing, FTC and Idaho Attorney General filed
a complaint
– Alleged the combination would have market power to
demand higher rates for health care services provided by
primary care physicians in the Nampa, ID area
• Divestiture ordered February 2014

St. Luke’s/Saltzer (cont’d)
What’s New:
• 9th Circuit affirms holding that the
acquisition violated Section 7 of
the Clayton Act and the Idaho
Competition Act
• En banc and panel rehearing
requests denied
• Potential next major antitrust matter
before Supreme Court

St. Luke’s/Saltzer (cont’d)
Takeaways:
• The 9th Circuit decision took efficiency
analysis a step backward
• Agencies are skeptical about
efficiency claims
• Places a heavy burden on parties
– must be verifiable, quantifiable,
documented, and merger specific
(not otherwise achievable)

Advocate/NorthShore
Background:
• 2014, Advocate Health Care
and NorthShore University
HealthSystem announced
intent to combine to create the
largest integrated health care
delivery system in Illinois

Advocate/NorthShore (cont’d)
• Few overlapping service areas
– despite large footprints in Chicago area
– located about 10 miles apart
• Illinois Health Facilities and Review Board
also will have a say
• Recall 2000 NorthShore/Highland Park
Hospital merger
– 2007 ruling required Highland Park’s contracts
with insurers be negotiated separately from
those of NorthShore’s other hospitals
– class action ongoing

What’s New:
• Second Request issued ‒ March 2015
• Transaction delayed ‒ FTC needs more time
to review the proposed merger
FTC
Chairwoman
Edith Ramirez
“We now also hear growing concern that
provider consolidation in non-overlapping
product or geographic markets may also lead
to higher prices . . . city hospital acquiring
smaller hospitals in outlying areas” Examining
Health Care Competition (February 2015)

Takeaways:
• Combination of health care providers in adjacent markets
and cross-market mergers can potentially be problematic
• Health care front and center, but
most deals still solvable, unless
– very high post-merger market shares
– factual evidence of likely future
rate increases
– absence of payor support

FTC v. North Carolina Board
of Dentistry
Background:
• The NC Dental Board, comprised of practicing dentists, oversees the
practice of dentistry in NC
• The Board sent cease-and-desist letters to nondentists, who offered
teeth whitening services at substantially reduced rates
• FTC sued, alleging that the Board’s actions to exclude nondentists
from the teeth-whitening market violated the FTC Act
• 4th Circuit affirmed ALJ ruling against the Board, holding that “the
Board can invoke state-action antitrust
immunity only if it was subject to active
supervision by the State. . .”

of Dentistry (cont’d)
What’s New:
• Supreme Court found that the Board
violated antitrust laws by preventing lower-
cost, nonmember providers from offering
discounted teeth-whitening services
“[a] state law or regulatory scheme cannot be the basis
for antitrust immunity unless, first, the State has
articulated a clear policy to allow the anticompetitive
conduct, and second, the State provides active
supervision of [the] anticompetitive conduct.”

of Dentistry (cont’d)
Takeaways:
• State Boards that are not actively supervised by the State
are subject to Agency oversight
• Potential areas for antitrust challenge
– Certificate of Need laws
– Professional licensure/requirements
• Risky nonsovereign regulation
– Excludes a competitor, or
– Increases health care costs/prices, or
– Stymies health care innovation

FTC Chairwoman Ramirez on
Recent Victories

Health Care Agency Review
• FTC continues to be very aggressive in health care industry
• Indication-specific analysis
• Pipeline products as important as marketed products
• Local and state laws can significantly impact result
• Agencies’ skepticism about efficiency claims bolstered by
9th Circuit decision
• Combination of health care providers in adjacent markets
and cross-market mergers can potentially be problematic
• Health care front and center, but most deals still solvable

Merger Review Updates – U.S. and Abroad
John R. Ingrassia
Special Counsel
May 5, 2015

Merger Review ‒ Introduction
• DOJ FY 2014 summary released
• HSR Act filings up
– rose sharply
– 1,326 in FY 2013
– 1,663 in FY 2014
• 25% spike
• Antitrust Division challenged, restructured, or saw the
abandonment of 20 proposed transactions in FY 2014

Merger Review Updates
United States

National Cinemedia/Screenvision
Background:
• Announced May 2014 – $375 million
• National CineMedia
– $426 million annual revenue
– integrated media company
• movie theaters advertising network
• online
• mobile
– 183 Designated Market Areas (88%)
– over 19,000 movie screens

– majority owned by three largest movie theater chains
• Regal Entertainment Group
• AMC Entertainment Inc.
• Cinemark Holdings Inc.
• “Founding Members”
– exercise “significant control and influence” over NCM’s actions

• Screenvision
– movie theaters advertising network
• on-screen advertising
• in-lobby promotions
• integrated marketing programs
– national
– regional
– local
– over 14,000 screens/2,200 + theaters nationwide
– 190 + Designated Market Areas (94%)

• Combination
– 210 DMA’s
– 50 states
– 34,000 screens
– serving 1.1 billion patrons/year
• DOJ sued to block transaction
– only two significant cinema advertising networks in the U.S.
– only “two national players in the preshow space.”
– combined 88 percent of movie screens in U.S.
– “merger-to-monopoly”

– Long-term, exclusive contracts
• Each keeps close tabs on the expiration dates of the other’s
exhibitor contracts
– Spotlight Cinema Networks
• only other national cinema advertising network
• niche player
• 700 screens in art-house and luxury theaters
• different target demographic
– Parties claimed to compete with other advertisers
• TV broadcasters
– Efficiency claims dismissed
• “bald assertion that bigger is somehow better”

• Relevant markets
– preshow services
– cinema advertising
• Competed aggressively
– lowered prices to advertisers
– Screenvision undercut NCM pricing by 50 percent or more
– other financial incentives to movie theaters
– non-price competition
• better products and services
• “it’s not just about price, [Screenvision] caves on every point and
gives clients/agencies everything they ask for and more.”

– Head-to-head competitors
• “we need to buy [Screenvision] before either us or [Screenvision]
does a stupid deal.”
• “control selling tactics,” including “pricing”
• “We woke the beast. In spite of fundamental differences in
strategy, NCM is quick to drop price.”
– Déjà vu all over again
• Bazaarvoice

What’s New:
• Parties abandoned transaction March 2015 as trial date
approached
– “victory for advertisers, movie theaters and consumers”
– “should never have been considered, much less publicly
proposed”
– “patently problematic”
– AAG Baer has said publicly, including at enforcers roundtable at
Antitrust Section spring meeting, that transaction should never
have seen light of day

Takeaways:
• It’s not all about market definition and efficiencies
• Bad documents kill deals (i.e., Bazaarvoice)
• Knowing when best advice is “no”

Waste Management/Deffenbaugh
Background:
• $400 million transaction announced October 2014
• Waste Management
– based in Houston
– $14 billion annual revenue
– residential, commercial, industrial and municipal disposal services
• collection
• transfer
• recycling
• resource recovery

• Deffenbaugh
– based in Kansas City
– disposal services
• Arkansas
• Iowa
• Kansas
• Missouri
• Nebraska
– municipal solid waste landfill
– construction and demolition landfill
– material recovery facilities
– transfer stations

What’s New:
• Department of Justice – March 2015
– parties to divest small container commercial waste service routes
(collecting solid waste from offices and apartment buildings)
• Topeka, Kansas
• Northwestern Arkansas
– transaction would have likely resulted in higher rates for customers
in those areas
Takeaway:
• Transactions with local markets can present easier solutions
if the parties are willing to divest

Par Petroleum/Mid Pac Petroleum
Background:
• Announced June 2014
– $107 million
• Par Petroleum
– Houston-based
– retail gas stations in Hawaii
– Hawaii’s largest oil refinery
• only one other is owned by Chevron
– bulk supplier of Hawaii-grade gasoline blendstock (“HIBOB”)
• only gasoline meeting specifications of Hawaii law
• no substitute for vehicles that must use Hawaii-grade gasoline

• Acquired Hawaii based Mid-Pac Petroleum
– exclusive licensee of the “76” brand in the state of Hawaii at 80
retail sites
– four terminals in Hawaii
– importer of bulk supply of HIBOB
• Barbers Point Terminal
– only terminal in Hawaii not owned by Par or Chevron
• long-term agreement

• Four competitors supplying HIBOB
– Par and Chevron
• operate refineries producing HIBOB on the Hawaiian Islands
– Mid Pac Petroleum and Aloha Petroleum
• share access to only terminal not owned by a refinery and capable
of receiving waterborne shipments of HIBOB ‒ Barbers Point
Terminal
– owned by Aloha
– Mid Pac shared access through a long-term storage and
throughput agreement
• Post transaction
– 116 combined gas stations combined
• Tesoro, 76, 7-Eleven brands

What’s New:
• Consent Decree ‒ March 2015
• No horizontal issues identified in complaint
• Vertical foreclosure and coordinated effects issues
– Par, Mid Pac, Chevron Corp. and Aloha provide Hawaii’s bulk
HIBOB supply
• Par and Chevron have refineries in Hawaii that produce HIBOB
• Mid Pac and Aloha buy bulk supply from Par and Chevron
– and rely on imports

– Combined Par/Mid Pac would have incentive and the ability to
“park” petroleum products at Barbers Point Terminal
• effectively reducing its throughput/capacity
– Effect would be to reduce or eliminate Aloha’s ability to discipline
bulk supply prices by increasing imports
• resulting in higher HIBOB prices
• ultimately passed on to Hawaii consumers at the pump
– FTC says Chevron, only other Hawaiian refiner, would follow Par’s
exclusionary strategy
• coordinated effects
• Parties agreed to terminate Barbers Point Terminal
Agreement to proceed with the transaction

• Commissioner Joshua D. Wright issued dissenting statement
– “[V]ertical transactions are generally, but not always,
procompetitive or competitively benign”
– Neither economic analysis nor record evidence gives reason to
believe it would be profitable for Par exclude Aloha to the
detriment of consumers
Takeaway:
• Transactions with vertical components require thorough
antitrust analysis

Reynolds American/Lorillard
Background:
• Announced July 2014 – $27 billion
• Reynolds
• second largest tobacco company in the U.S.
• Camel
• Pall Mall
• Natural American Spirit
• Grizzly
• VUSE
• Lorillard
– third largest tobacco company in the U.S.
• maker of Newport cigarettes

• Combination
– British American Tobacco to maintain 42% ownership of Reynolds
• Lorillard Shareholders to Hold 15% of combined company
– Over $11 billion in revenues
– 33% market share
• behind Altria – market leader
– 49% Market share
– Marlboro
– Transaction would leave two competitors with 90% market share

– offered to divest Salem, Winston, Maverick, Kool and Blu for $7.1
billion to Imperial Tobacco Group
– Includes manufacturing and R&D facilities in Greensboro, N.C.
• approximately 2,900 employees
• increases Imperial’s market share in the U.S. to 10 percent
– from 2.5 percent
• issue for agency
– viable competitor?
– recall Hertz/Dollar Thrifty – Advantage
» 2012 divestiture unsuccessful
• Second Request issued August 2014

What’s New:
• April 2015
– Staff has recommended blocking deal, but
– Bureau of Economics decided against recommending lawsuit
– Bureau of Competition director D. Feinstein reported to agree
– Consent Decree would likely contemplate divestitures very close
to original package with Imperial Tobacco as buyer
Takeaway:
– must demonstrate divestiture buyer will be viable competitor
– stay tuned

Tokyo Electron/Applied Materials
Background:
• First announced September 2013 ‒ $29 billion
• Applied Materials
– largest provider of non-lithography semiconductor manufacturing equipment
– $9 billion revenue in 2014
• Tokyo Electron
– second-largest provider of non-lithography semiconductor manufacturing
equipment
– $6 billion revenue in 2014
• Affected markets
– semiconductor manufacturing equipment
– development of equipment for next-generation semiconductors

• Antitrust division cooperated with
– Korean Fair Trade Commission
– China’s Ministry of Commerce
– Germany’s Federal Cartel Office
– competition agencies from several other jurisdictions
• Merger agreement
– parties would divest up to $600 million of assets to secure antitrust
regulatory approval
• Japan Fair Trade Commission initiated secondary review
April 2014

What’s New:
• DOJ rejected companies’ proposed divestiture remedy
• Transaction abandoned in April 2015
• Over 18 months after it was first announced
Takeaways:
• Divestiture commitments need to preserve existing level of
competition
• Multi-jurisdictional reviews can mean longer timeframes

Sysco-U.S. Foods
Background:
• Announced December 2013
– $8.2 billion
• FTC filed administrative complaint February 2015
• 3-2 split amongst commissioners
• Alleged the transaction will lead to higher prices and reduced
services
– national and local customers
– Broadline foodservice distributors ‒ “broadliners”

Sysco-U.S. Foods
– sell and deliver food and related products to variety of foodservice
operators
• restaurants
• hospitals
• hotels
• school cafeterias
• other places where people eat “food away from home.”
– Distinguished from other types of foodservice channels:
• systems foodservice distribution
• specialty foodservice distribution
• cash-and-carry stores
– lack critical attributes that customers of broadline distribution
require and that broadline distributors offer

Sysco-U.S. Foods
• Post-Merger
– 133 distribution centers
– 75% share of broadline foodservice distribution services to
National Customers
• next-largest distributor has 11% share
– market share would be 50% or higher in 32 local markets
• significant increases in concentration in already concentrated
markets
• parties proposed divestitures in 8 of the 32 local markets
– Performance Food Group

Sysco-U.S. Foods
– PI hearing before U.S. District for the District of Columbia Judge
Amit Mehta May 5 (today)
– FTC Administrative hearing scheduled to begin in July
– parties looking at impact regional distributors have on
competitiveness of market
• no national market
• competition from cash-and-carry stores (i.e., Restaurant Depot)
• efficiencies/cost savings to be passed on to consumers

Sysco-U.S. Foods
What’s New:
• Parties also battling with agency over access to information
• Identity of declarants
• March 31 – Court ruled FTC must reveal identities
Takeaways:
• Industries with local and national markets can present
remedy challenges (i.e. ATT/T-Mobile 2011)
• Active state enforcement can supplement fed efforts "boots
on the ground"

European Union

Siemens/Dresser-Rand
• Europe’s largest engineering group Siemens to acquire U.S. oilfield
equipment maker Dresser-Rand Group Inc.
– $7.6-billion
• EU ‒ Phase II investigation
• Deadline for clearance decision extended to July 14
• Concern that deal would reduce competition with respect to turbo
compressors and drivers for trains
– merged company would only compete with General Electric
• HSR early termination December 2014
Takeaway:
• Can be difficult to align multi-jurisdictional clearance timelines

Biomet-Zimmer
• Announced April 2014
• Orthopedic-device maker Zimmer Holdings Inc.’s acquisition
of Biomet Inc. ‒ $13.4 billion
• Both companies based in U.S.
• Combined company
– leader in products to repair muscles and bones
• Concerns that the deal could have led to higher prices for
orthopedic implants in some European countries

Biomet-Zimmer
• Approved by EC March 2015
– divestitures of three knee and elbow implant businesses
– Zimmer to divest knee-implant business in European Economic
Area
– Biomet to divest elbow-implant unit in European Economic Area
• and knee-implant business in Denmark and Sweden
• Suitable purchasers must be approved by the commission
• FTC investigation pending
Takeaway:
• U.S. deals can have impacts worldwide

GE/Alstrom
• General Electric Co.’s acquisition of Alstom SA ’s energy
businesses
• $17 billion
• EC Phase II investigation
• Off the table
– power-generation equipment for nuclear, coal-fired, wind and
hydro power plants
– electricity transmission equipment

GE/Alstrom
• Issue: geographic scope of the large-gas-turbine market
– transaction could limit competition in market for
heavy-duty gas turbines used in gas-fired power plants
• Four companies compete globally to produce heavy-duty gas
turbines
– GE
– Alstom
– Siemens
– Mitsubishi Hitachi Power Systems – less active in Europe

GE/Alstrom
• If market is European rather than global, merger leaves only two
strong competitors
• Would eliminate “one of the three main global competitors to GE” in
the market
• EU antitrust chief Margrethe Vestager
– “We are concerned that the proposed acquisition might not only lead to
higher prices but also result in less choice for customers and less
innovation in the sector”
• Final decision due August 6
Takeaway:
• Geographic market definition can significantly impact analysis and
result

Altice SA/PT Portugal
• Altice SA/PT Portugal transaction – $7.9 billion
• Acquisition of Portuguese telecommunication assets of PT
Portugal
• Concern merger would result in less competition and higher
prices for consumers in Portugal
• EC denied request to refer the case to the Portuguese
Competition Authority
• Cleared by EC with concessions – April 2015

Altice SA/PT Portugal
• Altice agreed to sell its existing assets in Portugal
– Portuguese businesses ONI and Cabovisao
• Cabovisao
– pay-TV, Internet and fixed-telephone service provider
• ONI
– serves business customers with telephone and Internet
service
Takeaway:
• EC concerned about local European markets
– not just community-wide impacts

Rest of World

China ‒ CNR Corp./CSR Corp
• China’s two largest rolling stock producers
• combined company – $31 billion in revenue
• creation of the world’s largest train maker
• cleared by multiple antitrust regulators
– China (MofComm)
– Australia
– Germany
– Pakistan
– Singapore
Takeaway:
• Notification requirements and active merger control regimes
worldwide

On the Horizon/Deals to Watch
• Dollar Tree/Family Dollar
– approximately 340 stores likely to be divested (mostly Family
Dollar locations)
• Staples/Office Depot
– second request issued March 2015
• Expedia/Orbitz
– second request issued in March 2015
• Nokia/Alcatel
– announced April 2015
• Teva/Mylan
– announced April 2015

Network Neutrality:
FCC Authority & Antitrust Law
Alyse Fiori Stach
Associate
May 5, 2015

Open Internet Order
General Overview
• Published in Federal Register on April 13, 2015
• New Rules cover both wired and wireless broadband
• Broadband reclassified under Title II of the Communications
Act (“light touch”)
The Rules:
• Bright Line Rules:
– No Blocking lawful content
– No Throttling lawful content
– No Paid Prioritization
• No Unreasonable Interference (case-by-case)
• Transparency Requirements
• Authority to examine interconnection agreements

Open Internet Order –
Reasonable Network Management
Exception
Reasonable network management permitted to manage the technical and
engineering aspects of a provider’s broadband networks.
• The no-blocking rule, the no-throttling rule, and the no-unreasonable
interference/disadvantage standard will be subject to reasonable
network management for both fixed and mobile broadband providers.
• No allowance for reasonable network management with respect to the
paid prioritization rule (which the agency views as having no technical
network management purpose).
A network management practice is a practice that has a primarily technical network
management justification, but does not include other business practices. A network
management practice is reasonable if it is primarily used for and tailored to achieving a
legitimate network management purpose, taking into account the particular network
architecture and technology of the broadband Internet access service.

Current Challenges
• Challenges to date:
– ISPs:
1. AT&T
2. CenturyLink
3. Alamo Broadband
4. Full Service Network, TruConnect Mobile, Sage Telecommunications LLC
and Telescope Communications Inc.
– Trade Groups:
1. CTIA (wireless operators)
2. NCTA (major cable companies)
3. American Cable Association (smaller cable operators)
4. U.S. Telecom Association
5. Wireless Internet Service Providers Association
• Considerations: Jurisdiction, Timing

Bases for Challenges
• FCC lacks statutory authority to issue the rules
• FCC lacks statutory authority to reclassify broadband services
under Title II
• Procedural challenges
– The rules are not the product of reasoned decision making
– FCC failed to give notice of the changes
• The rules are arbitrary, capricious and an abuse of discretion
• Challenges specific to mobile broadband providers
• Constitutional challenges

FCC Jurisdiction . . .
• Categorization or Broadband under the Communications Act
– Title I – Information Services
– Title II – Telecommunication Services (common carrier)
• National Cable & Telecommunications Association v. Brand X Internet
Services, 545 U.S. 967 (2005) (broadband regulated as “Information
Services” under Title I of the Communications Act
• Comcast Corp. v. FCC, 600 F.3d 642 (D.C. Cir. 2010) (FCC does not have
ancillary jurisdiction to stop Comcast from interfering in its users’ peer-to-
peer traffic)
• Verizon v. FCC, 740 F.3d 623 (D.C. Cir. 2014) (FCC does not have authority
to impose the 2010 Open Internet Order in its entirety)
• 2015: Reclassification under Title II

. . . at the Expense of Antitrust?
• Antitrust enforcement of Net Neutrality Principals
• Section 5 of the FTC Act
• Clayton Act Merger Review
• Commitment Letters
• Consent Orders
• Overlapping authority?
• No Unreasonable Interference
• “Just and reasonable” Interconnection Agreements
• Sponsored Data and Usage Allowances
• FTC v. AT&T Mobility LLC, No. 14-0785 (N.D. Cal. Filed Oct. 28, 2014)
• Common carrier designation would exempt FTC from enforcement authority over
broadband providers

Network Neutrality and Merger Review
• The Network Neutrality “Bargaining Chip”
– Comcast/NBCU
– Comcast/Time Warner
– AT&T/DirecTV
– Future?

Presenters:
Christopher E. Ondeck | Alicia J. Batts | John R. Ingrassia | Alyse F. Stach
May 5, 2015
The information provided in this slide presentation is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily
reflect the opinions of the firm, our lawyers or our clients. No client-lawyer relationship between you and the firm is or may be created by your access to or use of this presentation or any information contained
on them. Rather, the content is intended as a general overview of the subject matter covered. Proskauer Rose LLP (Proskauer) and the American Bar Association are not obligated to provide updates on the
information presented herein. Those viewing this presentation are encouraged to seek direct counsel on legal questions. © Proskauer Rose LLP. All Rights Reserved. © 2015 ABA, All Rights Reserved.
ABA Section of Antitrust Law
Corporate Counseling Committee ‒
May Antitrust Update for In-House Counsel

Proskauer: Antitrust Update for In-House Counsel

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