The Federal Trade Commission withdrew its Policy Statement on Monetary Remedies in Competition Cases on Tuesday. The Statement, which had been in effect since 2003, provided an analytical framework for determining when the FTC would seek equitable monetary remedies, such as disgorgement or restitution, in enforcement actions for alleged anti-competitive conduct brought by the Commission.

Decided by a 4-1 vote, the withdrawal marks a significant departure from the Commission’s position that disgorgement or restitution be reserved for “exceptional cases” and signals the intention to pursue these remedies more aggressively. Indeed, the FTC announced in its statement on the withdrawal that “[a]lthough intended to clarify past Commission views on this topic, the practical effect of the Policy Statement was to create an overly restrictive view of the Commission’s options for equitable remedies.”

In lieu of the Statement, the Commission asserts it will “evaluate the unique circumstances of each case” through the lens of existing case law and notes that many of the issues contained in the Statement will “continue to inform [its] future consideration of the use of monetary equitable remedies.”

According to Commissioner Maureen K. Ohlhausen, who issued a dissenting statement on the decision, the withdrawal indicates that the FTC “will be seeking disgorgement in circumstances in which the three-part test heretofore utilized under the Statement is not met.”  Commissioner Ohlhausen warns that broadening the use of monetary remedial remedies without the framework in the Statement risks decisions being made without the Commission “issuing any guidance whatsoever,” which “runs counter to the goal of transparency.”

The Statement had set forth three factors for determining whether disgorgement (and to some degree, restitution) was appropriate:

  • Whether the underlying violation was clear
  • Whether there was a reasonable basis to calculate the remedial payment
  • Whether remedies in other civil or criminal litigation were likely to accomplish fully the purposes of the antitrust laws

There is speculation that the FTC’s decision to step away from these factors officially was, at least in part, prompted by its desire to pursue monetary remedies in so-called “pay-for-delay” suits. These suits, which involve settlements between brand name and generic drug manufacturers, arguably failed to meet the Statement’s requirement that the violation be “clear” given the split among the circuit courts on the legality of these settlements.

The Third Circuit’s July 2012 decision in the K-Dur Antitrust Litigation, which departs from previous decisions finding these kinds of agreements lawful under the scope of the patent test, further highlights this division, thereby lending additional support for the view that the FTC is looking for ways to broaden its enforcement reach and take a firm position on pay-for-delay suits.

Attorneys in Ballard Spahr’s Antitrust Group advise clients on antitrust compliance and represent clients in proceedings before the FTC and in civil antitrust litigation. For more information, please contact Leslie E. John at 215.864.8212 or john@ballardspahr.com, Stephen J. Kastenberg at 215.864.8122 or kastenberg@ballardspahr.com, or Jessica M. Anthony at 215.864.8340 or anthonyj@ballardspahr.com.


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