Legal Library: Cases and Proceedings

The FTC, together with the Idaho Attorney General, filed a complaint in federal district court seeking to block St. Luke’s Health System, Ltd.’s acquisition of Idaho's largest independent, multi-specialty physician practice group, Saltzer Medical Group P.A. According to the joint complaint, the combination of St. Luke’s and Saltzer would give it the market power to demand higher rates for health care services provided by primary care physicians (PCPs) in Nampa, Idaho and surrounding areas, ultimately leading to higher costs for health care consumers.   The federal district court held that the acquisition violated Section 7 of the Clayton Act and the Idaho Competition Act, and ordered St. Luke’s to fully divest itself of Saltzer’s physicians and assets.  The Ninth Circuit affirmed the district court ruling.

Discount retailers Dollar Tree, Inc. and Family Dollar Stores, Inc. agreed to sell 330 Family Dollar stores to a private equity firm, Sycamore Partners, to settle FTC charges that Dollar Tree’s proposed $9.2 billion acquisition of Family Dollar would likely be anticompetitive. Their stores compete head-to-head in terms of price, product assortment, and quality, as well as location and customer service in local markets nationwide. The FTC identified 330 stores in local markets from 35 states where competition would be lost if the acquisition went forward as proposed. Without a remedy, according to the FTC, the acquisition is likely to lessen competition by eliminating direct competition between Dollar Tree and Family Dollar, and increasing the likelihood that Dollar Tree will unilaterally exercise market power.

Hedge fund founder Ahmet H. Okumus has agreed to pay $180,000 in civil penalties to resolve charges that he violated the Hart-Scott-Rodino Act by failing to report his purchases of voting securities in the internet services company Web.com Group Inc. The FTC alleged that Okumus violated the HSR Act by exceeding the filing threshold and failing to file as required when he bought shares of Web.com through his hedge fund, Okumus Opportunistic Value Fund, Ltd. According to the complaint, he was in violation of the HSR Act from June 27, 2016, when he purchased the shares, to July 14, 2016, when he sold enough shares so that he did not exceed the threshold. Although the Commission found his HSR violation to be inadvertent, it determined to seek penalties because, as noted in the complaint, this was Okumus’s second HSR violation in two years regarding Web.com.

iSpring Water Systems, LLC, a Georgia-based distributor of water filtration systems, agreed to stop making misleading unqualified claims that its products are made in the United States, under a settlement with the Federal Trade Commission. In its complaint against the company, the FTC alleged that it deceived consumers with false, misleading, or unsupported claims that its water filtration systems and parts are made in the USA. The order prohibits iSpring from making unqualified “Made in USA” claims for any product unless it can show that the product’s final assembly or processing – and all significant processing – take place in the United States, and that all or virtually all ingredients or components of the product are made and sourced in the United States. iSpring also is prohibited from making any country-of-origin representation about its products unless it possesses and relies upon a reasonable basis for that representation. On April 18, 2017, the Commission announced that the proposed order had been made final.

Supermarket operators Albertsons and Safeway Inc. agreed to sell 168 supermarkets to settle FTC charges that their proposed $9.2 billion merger would likely be anticompetitive in 130 local markets in Arizona, California, Montana, Nevada, Oregon, Texas, Washington, and Wyoming. Under the settlement, Haggen Holdings, LLC will acquire 146 Albertsons and Safeway stores located in Arizona, California, Nevada, Oregon, and Washington; Supervalu Inc. will acquire two Albertsons stores in Washington; Associated Wholesale Grocers, Inc. will acquire 12 Albertsons and Safeway stores in Texas; and Associated Food Stores Inc. will acquire eight Albertsons and Safeway stores in Montana and Wyoming. It is expected that Associated Wholesale Grocers, Inc. will assign its operating rights in the 12 Texas stores it is acquiring to RLS Supermarkets, LLC (doing business as Minyard Food Stores) and that Associated Food Stores Inc. will assign its rights in the eight Montana and Wyoming stores it is acquiring to Missoula Fresh Market LLC, Ridley’s Family Markets, Inc., and Stokes Inc.