"Federal Trade Commission Settles Illegal Information Exchange Allegations With Bosley, Inc."

by Skadden, Arps, Slate, Meagher & Flom LLP
Contact

On April 8, 2013, the Federal Trade Commission (FTC) announced a proposed settlement with hair restoration company Bosley, Inc. to resolve allegations that Bosley illegally exchanged competitively sensitive, nonpublic business information with competitor HC (USA), Inc., commonly known as Hair Club. According to the FTC, these exchanges facilitated coordination and endangered competition in violation of Section 5 of the Federal Trade Commission Act, which broadly prohibits unfair competition.

In its complaint, the FTC alleged that “[f]or at least four years, Bosley’s and Hair Club’s chief executive officers (“CEOs”) repeatedly exchanged … information regarding aspects of their firms’ surgical hair transplantation business.” The specific types of information allegedly exchanged included “detailed information about future product offerings, surgical hair transplantation price floors, discounting, forward-looking expansion and contraction plans, and operations and performance.” The alleged effect of such exchanges was reduced uncertainty regarding competitor product offerings, price discounting, marketing plans and operating strategies, all of which the FTC alleged facilitated coordination and created the potential for reduced expansion and price fixing. The FTC concluded that Bosley’s and Hair Club’s information exchanges lacked any legitimate business justification.

The FTC announced that its decision to take enforcement action was driven by “the types of information involved, the level of detail, the direct nature of the communication, and the absence of any related pro-competitive impact.” In addition, the FTC noted that Bosley “viewed these exchanges as business as usual” and had engaged in similar exchanges with other competitors, increasing the potential for harm.

Under the proposed settlement agreement, Bosley will be prohibited from “communicating any competitively sensitive, non-public information to any competitor,” and from “requesting, encouraging, or facilitating the communication of competitively sensitive non-public information from any competitor.” In addition, Bosley will be required to implement an antitrust compliance program to ensure ongoing compliance with U.S. antitrust laws, and to adhere to other customary notice provisions with respect to the terms of the settlement.

The proposed Bosley settlement highlights the continuing resurgence of enforcement actions under Section 5 of the FTC Act, which generally allows the FTC fairly broad discretion to challenge conduct the agency believes to be competitively unfair. It also is a sharp reminder that the U.S. antitrust agencies are watchful for the exchange of sensitive business information between rivals that may facilitate anticompetitive conduct. While an information exchange is not necessarily unlawful under the antitrust laws, Bosley affirms that “[c]ompetition may be unreasonably restrained whenever a competitor directly communicates, solicits, or facilitates exchange of competitively sensitive information with its rivals, particularly where such information is highly detailed, disaggregated and forward-looking.” The case reinforces the need for corporations to maintain an effective antitrust compliance program as a preemptive means of minimizing conduct that could result in government enforcement or private litigation, which often follows government enforcement. Moreover, corporations should consult with antitrust counsel before exchanging competitively sensitive information with rivals.

Download PDF

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Skadden, Arps, Slate, Meagher & Flom LLP | Attorney Advertising

Written by:

Skadden, Arps, Slate, Meagher & Flom LLP
Contact
more
less

Skadden, Arps, Slate, Meagher & Flom LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!