In 2012, the Federal Trade Commission withdrew its 9-year-old Policy Statement on Monetary Equitable Remedies in Competition, signaling more aggressive use of monetary penalties. The FTC issued the policy statement in 2003, establishing the factors it would consider in determining whether to seek monetary relief, following its decision to impose significant monetary penalties in two competition cases in the early 2000s. The FTC abruptly withdrew this policy statement in 2012, without a clear catalyst prompting it to do so, and over internal FTC dissent, on the grounds that it unnecessarily restricted the FTC's options for imposing monetary remedies. Over the period that the policy statement was in effect, the FTC sought “disgorgement,” or court-ordered repayment of illegal profits, in only two cases; in the 2½ years following withdrawal of the policy statement, the FTC has pursued disgorgement in three cases, all involving the healthcare industry.
In April, the FTC announced a settlement with Cardinal Health to resolve allegations that Cardinal had monopolized the markets for the sale and distribution of low-energy radiopharmaceuticals in 25 metropolitan areas. Cardinal had allegedly tied up the only two manufacturers of an essential product through a combination of contractual terms, threats to switch business from one to the other, and threats to enter into the supply of the product itself. The FTC alleged that Cardinal effectively prevented other distributors from entering the markets, and led to increased prices for customers.
The settlement requires Cardinal to pay $26.8 million into a fund for injured consumers, as “disgorgement” of its allegedly ill-gotten profits. Cardinal stated that it voluntarily entered into the settlement without admitting wrongdoing to avoid the costs and unpredictability of litigation, particularly in light of the time elapsed since the conduct at issue had occurred (from 2003 to 2008).
The FTC's pursuit of disgorgement and the size of the monetary settlement in the Cardinal case demonstrate an increasingly aggressive enforcement stance on a broader range of potentially anticompetitive conduct and heighten risks for consolidating healthcare entities.