Parties to a deal undergoing antitrust review should weigh the benefits and risks of proposing a good-faith upfront remedy (known as a fix-it-first remedy) to the investigating agency, as demonstrated in the Department of Justice’s (DOJ’s) recent suit to stop the Anheuser-Busch InBev (ABI) purchase of competitive beer brewer Grupo Modelo (Modelo).

ABI and Modelo proposed a potential remedy to the Antitrust Division of the DOJ to eliminate the agency’s competitive concerns about the deal’s effects in the US market for beer. However, in an aggressive move by the DOJ under its new Assistant Attorney General William Baer, the agency rejected the remedy and filed suit to stop the transaction.

The parties’ upfront proposal has possible advantages and disadvantages. It may have disadvantaged ABI and Modelo because the DOJ alleges in its complaint that the parties must have known that their deal was anticompetitive, or they would not have suggested a competitive fix. However, the parties also gained a litigation advantage because they can shift the debate in front of the court to the competitive effects of their proposed remedy rather than the original transaction (called litigating the fix). By switching the focus of the case, the parties may force the DOJ to prove that both the original transaction and the proposed remedy are likely to substantially harm competition.

For more information on US merger review, see Practice Note, Corporate Transactions and Merger Control: Overview.

For more information on how the antitrust agencies analyze transactions, see Practice Note, How Antitrust Agencies Analyze M&A.

General counsel should consider both the rise in US antitrust suits and the upcoming changes to the UK class action regime when assessing the antitrust risk of certain behavior in the US and the UK.

According to statistics from the Administrative Office of the US Courts, all US antitrust civil cases (including both private and government actions) increased by approximately 52% from 2011 to 2012 after years of decline. Private antitrust cases alone increased at about the same rate during that period.

The increased threat of antitrust litigation is not exclusive to the US. The UK government recently announced that it is introducing its first opt-out collective actions regime, making it easier for businesses, consumers or their representatives (such as trade or consumer associations) to bring antitrust class actions. The UK government also announced certain safeguards to protect against potentially frivolous cases, including:

Most of the UK’s changes require new legislation to take effect.

For more information on private antitrust cases, see Practice Note, Private Antitrust Actions.

A recent case reminds advertisers and their counsel that the Federal Trade Commission (FTC):

On January 16, 2013, the FTC upheld an Administrative Law Judge’s decision that POM Wonderful LLC (POM) deceptively advertised its products because it did not adequately support its ad claims. In 2010, the FTC filed a complaint against POM alleging that 43 of its ads for POM Juice, POMx Liquid and POMx Pills contained unsubstantiated or under-substantiated claims that the products could treat, prevent or cure serious diseases like heart disease and prostate cancer.

POM argued that its ads convey only general health benefits, in part because the ads use parody, humor and other qualifiers. The Commission disagreed and held that 36 of the challenged ads contain serious and deliberate disease treatment or prevention claims that are not substantiated by sufficiently reliable evidence and are therefore false and misleading. The FTC’s order requires that POM support any disease-related claims in future food, drug or dietary supplement ads by at least two well-designed, well-conducted, double-blind, randomized and controlled clinical trials.

This case, taken together with other recent FTC settlements imposing similar requirements, warns advertisers and their counsel that the FTC continues to scrutinize both express and implied health and disease-related claims.

For more information on advertising regulation and compliance, see Practice Note, Advertising: Overview.

The Iran Threat Reduction and Syria Human Rights Act of 2012 (ITRA) requires any company that files periodic reports under Section 13(a) of the Exchange Act to include disclosure in annual and quarterly reports if it or any of its affiliates engaged in specified Iran-related activities. This applies to reports due after February 6, 2013.

Companies must disclose in each report, for each action taken during the period covered by the report:

In addition to the new disclosure, companies must concurrently file a separate report using the new EDGAR form type IRANNOTICE.

ITRA uses the standard definition commonly used by the SEC in Rule 12b-2 under the Exchange Act for the term “affiliate.” The definition is broad and includes persons and entities under common control. As an example, a non-US entity that is not subject to ITRA but is controlled by the same issuer or shareholder that controls a US public company could trigger the disclosure obligation.

Additionally, the SEC staff has informally indicated that portfolio companies of a private equity firm could potentially trigger the disclosure requirements for each other. With uncertainty regarding this question and many others, the staff has indicated that it intends to issue further guidance on this topic.

In the meantime, public companies should:

For more information on the disclosure requirements, see Legal Update, Reporting Requirements for Transactions with Iran Take Effect.

Institutional Shareholder Services Inc. (ISS) has introduced ISS Governance QuickScore (QuickScore), which will replace its GRId 2.0 ratings service in late February or early March for the top 3,000 US companies by market cap.

QuickScore will assess companies based on the degree of correlation between corporate governance attributes and performance and risk factors. Each company being assessed will receive a numeric, decile-based score indicating its relative governance risk compared to other companies in an index or region.

ISS has created a QuickScore website, which includes a link to the ISS Data Verification Site. ISS requested that companies review the data that ISS collected about them for assessing QuickScore factors and provide feedback before February 15 when the data site was set to close.

However, after QuickScore launches, companies will again be able to log in and verify their data. Companies with QuickScores should also consider providing information about QuickScore at the next meeting of their nominating and governance committee.

For more information on the new governance ratings service, see Legal Update, ISS Announces QuickScore to Replace GRId.

Employers that sponsor health plans may need to review and revise business associate agreements, notices of privacy practices (NPPs) and Health Insurance Portability and Accountability Act of 1996 (HIPAA) policies and procedures for changes under recently finalized HIPAA rules.

The final rules, which are effective March 26, 2013, are significant given recent Department of Health and Human Services (HHS) enforcement activity in this area. Covered entities, which include employer-sponsored health plans and business associates, must comply with most of the requirements by September 23, 2013.

The final rules address HIPAA’s privacy, security, breach notification and enforcement requirements. Highlights include:

In connection with the final rules, HHS provided sample business associate agreement provisions.

For a Toolkit of resources to assist employers in complying with HIPAA, see HIPAA Toolkit.

A recent US Supreme Court decision cautions trademark owners considering enforcement actions to carefully consider the strength of their claims and the risks of potential counterclaims.

In Already, LLC, d/b/a Yums v. Nike, Inc., the Supreme Court held that a broad covenant not to enforce a trademark against a competitor rendered moot an invalidity counterclaim. Nike, Inc. and Already, LLC both market athletic footwear. Nike sued Already for infringement of Nike’s Air Force 1 shoe design trademark. Already counterclaimed to have Nike’s mark declared invalid. In response, Nike issued a broad covenant not to sue and moved to dismiss the action.

In unanimously affirming the Second Circuit’s dismissal of the action, the Supreme Court held that Nike’s covenant mooted Already’s invalidity counterclaim. Applying the voluntary cessation doctrine, the Supreme Court:

In deciding whether to pursue enforcement actions, trademark owners should consider that:

Trademark owners seeking to issue a covenant not to sue in order to dismiss counterclaims should ensure the covenant meets the high standard articulated by the Supreme Court’s majority and concurring opinions. Otherwise, a trademark owner may face a situation where its infringement claims are dismissed, but the validity challenge survives.

For more information on trademark infringement, see Practice Note, Trademark Infringement and Dilution Claims, Remedies and Defenses.

To minimize the risk of litigation and enforcement actions and promote consumer trust, companies that provide or deliver information or services through mobile technology should consider implementing the mobile privacy recommendations recently issued by the FTC.

On February 1, 2013, the FTC issued a report, Mobile Privacy Disclosures: Building Trust Through Transparency, that aims to promote more effective privacy disclosures and sets out recommendations for best practices in the mobile arena. It comes less than a month after the California Attorney General’s report, Privacy on the Go: Recommendations for the Mobile Ecosystem.

The FTC report recognizes the unique privacy challenges associated with mobile technology, including:

The report provides specific recommendations for various businesses, including platform providers, app developers, ad networks and other parties that provide services for apps, and mobile developer trade associations. Key recommendations include:

For more information on mobile app privacy, see Practice Note, Mobile App Privacy: The Hidden Risks.

For more information on the recent mobile privacy reports, see Legal Updates, FTC Issues Mobile Privacy and Security Publications and California AG Releases Privacy Recommendations for Mobile App Market.

Employers that were issued adverse decisions in recent cases before the National Labor Relations Board (NLRB) should consider filing a petition for review in the DC Circuit.

In Noel Canning v. NLRB, the DC Circuit found that President Obama’s January 4, 2012 recess appointments to the NLRB were invalid, and vacated a challenged NLRB decision for lack of a three-member quorum. Cases that were decided by the Board since January 4, 2012 (and possibly as far back as August 27, 2011, when recess appointee Craig Becker was appointed to replace Board Member Wilma Liebman) must be reconsidered and re-decided by a validly reconstituted Board.

Employers involved in Board-related matters, including those challenging an adverse decision of an Administrative Law Judge (ALJ) or Regional Director, should consider raising the issue of the Board’s lack of quorum. Those employers with Board-related matters pending in circuit courts other than the DC Circuit should consider raising the issue by:

Although the enforceability of Board decisions from the past year remains uncertain, employers should not expect any significant changes. In deciding whether to follow Board decisions issued after January 4, 2012, employers should consider that:

For more information on this decision, see Article, The Impact of Noel Canning v. NLRB: Expert Q&A and Legal Update, DC Circuit Rules NLRB Recess Appointments Were Unconstitutional; Enforceability of All Recess Appointees' Decisions in Doubt.

Employers covered by the Family and Medical Leave Act (FMLA) should ensure their policies and practices regarding employee requests for time off to care for an adult disabled son or daughter comply with new guidance issued by the Department of Labor’s (DOL’s) Wage and Hour Division.

Released on January 14, 2013, Administrator’s Interpretation 2013-1 clarifies that:

Given the anticipated rise in these types of leave requests, employers should consider what type of documentation, if any, they will request. This includes, for example:

For more information on the FMLA, see Practice Note, Family and Medical Leave Act (FMLA) Basics.

For a Toolkit of resources to help employers comply with their employee leave obligations, see Employee Leave Toolkit.

New York’s Judiciary Law has been amended to strengthen the penalties for the unauthorized practice of law. Effective November 1, 2013, a person who impersonates an attorney or offers legal services to the public under a title other than attorney is guilty of a Class E felony when the damages caused by such conduct exceed $1,000.

Among other things, the amended Judiciary Law:

The enhanced criminal penalties do not appear to be directed at in-house attorneys who are employed full time in New York by a corporation or other entity, but not admitted to practice in New York. However, these attorneys must still comply with New York’s in-house counsel registration requirements, or risk being found guilty of professional misconduct under the Rules of the New York Court of Appeals.

Companies seeking to enforce a foreign arbitral award in the US may be subject to the three-year statute of limitations period under the Federal Arbitration Act (FAA), even if there is a more favorable statute of limitations for enforcement of the award under state law.

In Commissions Import Export S.A. v. Republic of the Congo, the plaintiff sought US recognition of a $31 million International Chamber of Commerce arbitral award from 2000, which was recognized by the English High Court in 2009. The US District Court for the District of Columbia dismissed the action as time-barred by the three-year statute of limitations in Section 207 of the FAA, implementing the New York Convention. The court refused to apply DC’s Uniform Foreign-Country Money Judgments Recognition Act, which has a 15-year statute of limitations for enforcing foreign money judgments, because it determined that the Act was pre-empted by the FAA. This means that the plaintiff’s foreign arbitral award was not recognized in the US.

This decision appears to conflict with the stated goal set out in the more favorable rights provision of Article VII(1) of the New York Convention. That provision guarantees by treaty that a party seeking enforcement is entitled to any broader rights under the law of the country where enforcement is sought.

The DC district court decision is currently on appeal. It is likely not the last word on the problems created by Congress’s enactment of the three-year statute of limitations. Therefore, counsel should continue to monitor developments on the applicable statute of limitations for foreign arbitral awards.

For more information on enforcing foreign arbitral awards, see Practice Note, Enforcing Arbitration Awards in the US.

The IRS and Treasury Department recently issued final Treasury Regulations (Final Regulations) addressing withholding and information reporting requirements under the Foreign Account Tax Compliance Act (FATCA). The Treasury Department has also developed an alternative framework for implementing FATCA for foreign financial institutions (FFIs) located in countries that enter into an intergovernmental agreement (IGA) with the US. The Final Regulations take a risk-based approach to implementing FATCA and generally coordinate the obligations for FFIs under the Final Regulations and IGAs.

FATCA imposes a 30% US withholding tax on “withholdable payments” made to certain FFIs and non-financial foreign entities (NFFEs) that do not meet specific information reporting requirements. The purpose of FATCA is not to collect the 30% US withholding tax. Instead, it is to force foreign entities to report information to the IRS about their US account holders and owners.

The Final Regulations incorporate changes to the FATCA proposed Treasury Regulations (Proposed Regulations) made in IRS Announcement 2012-42. However, the Final Regulations make several significant changes to the Proposed Regulations, including:

For more information on the Final Regulations, see Legal Update, IRS Issues Final Regulations on FATCA.