Venable partner Len Gordon was quoted in a July 31, 2012 Law360 article on a recent decision by the Federal Trade Commission (FTC) to revoke guidance limiting its use of monetary penalties for “exceptional” antitrust cases. The move came amid concerns that the nine-year-old policy statement on monetary equitable remedies in competition cases created a restrictive view of when regulators could seek disgorgement or restitution.
Commenting on the decision, Gordon, the former head of the FTC’s northeast regional office said, “I don't think this is a situation where tomorrow somebody's going to have a complaint land on their doorstep seeking disgorgement…But I would think that [for] companies that [are undergoing] conduct investigations at the commission that have a price effect alleged, this is something [they] are going to have to start thinking about, especially where consumers are involved.”
Gordon suggested part of the FTC’s rationale for the decision may be related to pay-for-delay suits which would have proven difficult for the FTC under the old rules. “My guess is that they want to use the disgorgement power more, and where I really think they want to use it is in the pay-for-delay suits,” said Gordon. “The commission's top priority on the antitrust side has been pay-for-delay, so I don't think it's a huge leap to think this has something to do with that.” Pay-for-delay cases have been a focus of the FTC for the past decade despite mostly unfavorable rulings and potentially good candidates for disgorgement because of their alleged price effect. “The first prong of the prior statement is that the violation be clear,” said Gordon. “Given that there currently is a circuit split on legality of pay-for-delay...my sense is there may have been some concern that the violation isn't clear.”
Gordon also noted a concern in pay-for-delay cases that considers whether remedies from other civil or criminal actions are sufficient. This is common in suits between brand-name and generic-drug manufacturers. “A lot of times consumers aren't able to bring those claims because they don't pay for their drugs directly,” added Gordon. “It may be an effort by the commission — and underline ‘may’ several times — to get funds to consumers rather than just pharmacies...or to pension funds.”