Third Circuit Limits the FTC’s Authority to Challenge Ceased Conduct

Featured Expert Contributor, Antitrust & Competition Policy — Federal Trade Commission

M. Sean Royall, a Partner at Gibson, Dunn & Crutcher LLP, with Richard H. Cunningham, a Partner and Emily Riff, an Associate, both with the firm.

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On February 25, 2019, the Third Circuit issued a decision affirming the District of Delaware’s dismissal of the FTC’s “sham petitioning” case against Shire ViroPharma (Shire), the manufacturer of the branded drug Vancocin.  The Court of Appeals held that to proceed pursuant to § 13(b) of the FTC Act, the FTC must plead facts plausibly showing that Shire is “about to violate” the antitrust laws, but failed to do so because the challenged conduct ceased years before the lawsuit and the FTC’s allegations were otherwise insufficient to meet the “about to violate” standard.

The decision may substantially limit the FTC’s ability to invoke § 13(b) in cases where the challenged conduct is not ongoing.  This is significant because the agency has, for years, successfully used § 13(b) to challenge past conduct in both the antitrust and consumer-protection contexts in federal court to obtain injunctive and equitable monetary relief.   Continue reading “Third Circuit Limits the FTC’s Authority to Challenge Ceased Conduct”