Hunton Retail Law Resource

On Monday, the US Supreme Court agreed to consider whether a provision in an arbitration agreement that exempts certain claims from arbitration negates an otherwise clear and unmistakable delegation of questions of arbitrability to an arbitrator. It is a question on which circuits have been divided. On one hand, some courts have found that the gateway question of arbitrability—whether the claims fall within the scope of the carve-out provision—is for the arbitrator to decide. On the other, some courts have found that, where there is a carve-out provision, there is no clear and unmistakable evidence of the parties’ intent to delegate questions of arbitrability to an arbitrator, and questions of arbitrability are to be decided by the court. Undoubtedly, resolution is necessary.

Innovation and developments in technology bring both opportunities and challenges for the retail industry, and Hunton Andrews Kurth has a sophisticated understanding of these issues and how they affect retailers. On January 23, 2020, our cross-disciplinary retail team, composed of over 200 lawyers, released our annual Retail Industry Year in Review. The 2019 edition, Spotlight on Technology, provides an overview and analysis of recent developments impacting retailers, as well as what to expect in 2020 and beyond. Topics discussed include: braille gift cards as the next wave of ...

On January 17, 2019, Hunton Andrews Kurth’s retail industry team, composed of more than 200 lawyers across practices, released their annual Retail Industry Year in Review publication.

The 2018 Retail Industry Year in Review includes many topics of interest to retailers, including the use of artificial intelligence (AI), ITC investigations, product recall insurance, antitrust enforcement in the Trump Administration, the collection and storage of biometric data, consumer privacy, SEC and M&A activity in 2018, the #MeToo movement and the impact of cashierless stores.

On June 25, 2018, the Supreme Court upheld a Second Circuit opinion that American Express did not violate antitrust law by prohibiting merchants from encouraging customers to use non-American Express credit cards. As part of their agreements with American Express, merchants were required not to steer customers to use non-American Express credit cards (merchants could still express a preference for cash, checks or debit cards). The state of Ohio, the United States, and several other states brought suit alleging that these “anti-steering” provisions violated Section 1 of ...

Bumble Bee Foods’ woes continue to mount as its CEO, Christopher Lischewski, has been indicted for price fixing. The indictment alleges that Lischewski participated in the price fixing conspiracy from approximately November 2010 until about December 2013. Lischewski is not the first Bumble Bee executive to be charged: in late 2016 and early 2017, two Bumble Bee Senior Vice Presidents pled guilty to price fixing, and in May 2017, Bumble Bee agreed to pay $25 million in fines for price fixing. 

Recently, President Trump announced that he sent names of four nominees to serve as commissioners on the five-member Federal Trade Commission (“FTC”) to the Senate for approval. If all four of the nominees are confirmed, it will still leave one remaining vacant seat on the FTC, which has been operating as a bipartisan two-member interim agency since early last year. The nominees, three of whom were announced last fall, consist of three Republicans—Joseph Simons, Noah Phillips and Christine Wilson—and one Democrat, Rohit Chopra.

On January 18, 2018, Hunton & Williams LLP’s retail industry lawyers, composed of more than 100 lawyers across practices, released their annual Retail Year in Review publication. The Retail Year in Review includes many topics of interest to retailers including blockchain, antitrust enforcement in the Trump Administration, ransomware's impact on the retail industry, SEC and M&A activity in 2017, cyber insurance, vulnerability to class actions, and the reduced tax rate.

As consumers celebrated lower avocado prices at Whole Foods during the last week in August, views were mixed regarding the FTC’s decision not to challenge the Amazon/Whole Foods merger.

On August 23, 2017, the FTC’s Bureau of Competition issued a short statement that read, in its entirety: “The FTC conducted an investigation of this proposed acquisition to determine whether it substantially lessened competition under Section 7 of the Clayton Act, or constituted an unfair method of competition under Section 5 of the FTC Act. Based on our investigation we have decided not to pursue this matter further. Of course, the FTC always has the ability to investigate anticompetitive conduct should such action be warranted.”

In the early 1990s, before everyone could instantly buy almost anything from their smartphone, the proposed combination of QVC network and Home Shopping Network (“HSN”) reportedly was shuttered due to antitrust concerns.

On April 19, 2017, the Federal Trade Commission issued warnings to more than 90 brands and “influencers” that their social media posts should more clearly and conspicuously disclose brand connections. The warning letters follow petitions filed by consumer advocacy groups aimed at influencer advertising on Instagram. The FTC’s warning letters show that the agency is committed to capitalizing on its recent enforcement actions against brands and influencers, and will continue to scrutinize social media compliance with the Endorsement Guides.

Read the full client alert.

On April 3, 2017, the Antitrust Division of the U.S. Department of Justice announced that it completed its review of Danone S.A.’s acquisition of The WhiteWave Foods Company Inc. (“WhiteWave”). In order to allow the $12.5 billion acquisition to proceed, the Antitrust Division is requiring Danone to divest the Stonyfield Farms business to an independent buyer approved by the U.S. government.

When a merger raises competitive concerns, the Federal Trade Commission or Antitrust Division of the U.S. Department of Justice may require remedies or conditions before the proposed transaction can proceed. Such remedies may be structural, which require the divestiture of business units to a third-party buyer, and/or behavioral, which require a binding commitment regarding the future behavior of the merged firm. 

Gearing Up For Change in Antitrust Merger Enforcement

“Litigation readiness” was the unofficial theme of antitrust enforcement at the Antitrust Division of the U.S. Department of Justice and the Federal Trade Commission over the past eight years. Although determining whether this “litigation readiness” actually resulted in the two antitrust enforcement agencies’ bringing more merger cases than we might have otherwise seen is a complicated question, the practical effect was that deal review took longer, faced increased scrutiny, involved more non-parties, was more expensive and faced more uncertainty than in prior administrations. These effects were evident in the recent number of large-scale, high-profile litigated deals involving retail and consumer products companies, including the FTC’s challenges to the proposed mergers of Staples/Office Depot, Sysco/U.S. Foods and Dollar Tree/Family Dollar, and the Antitrust Division’s challenge to the proposed acquisition of GE’s appliances business by Electrolux.

The practice of incorporating use restrictions in leases is common by retailers to protect their investments in new stores and improvements to existing stores. However, retailers should consider both property and antitrust issues when drafting and enforcing use provisions of a lease. In addition, use restrictions could be used by disgruntled potential tenants as fodder for litigation if the terms have the effect of excluding tenants from prime locations.

On November 17, 2016, the Federal Trade Commission released a staff report assessing the issues confronting consumers and regulators stemming from the rise of peer-to-peer platforms such as Uber and Airbnb. The report, The ‘Sharing’ Economy: Issues Facing Platforms, Participants, and Regulators, describes how the Internet has allowed sellers and consumers to connect in order to provide services between individuals. For example, apps such as Uber and Lyft allow passengers to bypass traditional taxi services in favor of matching with an individual drivers. These services have had major disruptive effects on traditional industries.

DOJ Merger Investigation Opened a Whole Can of Worms

Retailers and consumers may have been paying out the gills for canned tuna. The Wal-Mart family of stores has alleged a price fixing scheme for canned tuna in Arkansas federal court. Wal-Mart’s complaint casts a wide net, alleging that Bumble Bee Foods, StarKist, Del Monte Foods (former owners of StarKist) and Tri-Union Seafoods (owners of Chicken of the Sea) engaged in large-scale price fixing in violation of Section 1 of the Sherman Act. The defendants allegedly hatched the scheme between 2008 and 2010 and canned it in July of 2015.

This past week, the FTC and DOJ issued an 11-page guidance document (the “Guidance”) aimed at protecting employees against anticompetitive conduct with respect to naked wage-fixing and agreements, in which companies agree on salary or other terms of compensation, and anti-poaching agreements, in which companies agree not to recruit each other’s employees. The Guidance for human resource (“HR”) professionals and hiring managers relates to both hiring and compensation decisions.

The Department of Justice has cleared Anheuser-Busch InBev’s (“AB InBev’s”) acquisition of SABMiller. Approval of the $107 billion deal came with substantial divestitures, including SABMiller’s U.S. business. That business, which includes the Miller Lite and Miller High Life products, will be sold to Molson Coors for $12 billion. As part of the approval, AB InBev is also prohibited from conducting incentive programs that would discourage independent distributors from selling competitors’ import or craft beers. According to the Department of Justice, this will preserve the ability of small brewers, such as craft brewers, to compete against AB InBev.

On August 8, 2016, the Federal Trade Commission sued 1-800 Contacts, alleging that it entered into anticompetitive bidding agreements with 14 of its rivals. According to the administrative complaint, these bidding agreements are an unfair method of competition because they unreasonably restrain competition for bidding on online search advertising auctions and restrict truthful, non-misleading ads. Previously, 1-800 Contacts alleged that its rivals had engaged in trademark infringement by purchasing advertising space from online search engines when consumers searched for “1-800 Contacts.” Most of 1-800 Contacts’ rivals agreed to settle or avoid lawsuits by entering into the allegedly anticompetitive bidding agreements, which prohibit parties from bidding on their rivals’ trademarked terms. Additionally, all but one of the contracts also require the use of “negative keywords,” which will prevent an advertiser’s name from appearing if a rival’s name is used as a search term.

As we previously reported, Judge Emmet Sullivan of the U.S. District Court of the District of Columbia had granted the FTC’s request for a preliminary injunction blocking the proposed Staples-Office Depot merger. Earlier this week, Judge Sullivan released a public version of the opinion supporting his decision.

On May 10, 2016, Judge Emmet Sullivan of the District Court of the District of Columbia held that the Federal Trade Commission had “met their burden” to show a reasonable probability that Staples’ acquisition of its rival, Office Depot, would likely cause competitive harm and that a preliminary injunction to halt the deal was in the public’s interest. Shortly after the court issued the preliminary injunction blocking the proposed merger, Staples announced that it was abandoning the transaction. 

The trend of consumer products brand acquisitions that we identified in Looking Ahead: Retail Antitrust Enforcement in 2016 continued this week with announcements of three separate acquisitions:

Campari to Acquire Maker of Grand Marnier

Gruppo Campari announced that it will acquire Societe des Produits Marnier Lapostolle S.A., the maker of Grand Marnier, for €684 million (approximately $761 million USD). The announced acquisition, if completed, would add Grand Marnier to Gruppo Campari’s spirits and beverages brand portfolio, which includes its eponymous aperitif and other brands, including Skyy vodka and Wild Turkey bourbon.

On February 29, 2016, News Corporation reached a $244 million settlement with a consumer product manufacturer class to end claims that it monopolized the market for third-party, in-store promotions by entering into long-term, exclusive contracts, and that it overcharged its advertisers by over $674 million in the last seven years. News Corp. acts as an intermediary between retailers and consumer product manufacturers by buying up advertising space on shelves and store floors and then reselling that space to consumer product manufacturers. Plaintiffs alleged that News Corp. used exclusive contracts to tie up nearly 90 percent of the in-store promotions market, and manufacturers, including Dial and Heinz, claimed News Corp. used that monopoly power to extract unfairly high prices.

As we previously reported in Looking Back: Retail Antitrust Enforcement in 2015, last year was a booming year for consumer products mergers (and the antitrust review of those mergers). With a robust market and incentives strongly in favor of further acquisitions, we expect the trend to continue in 2016.

2015 was a record year for mergers and acquisitions activity, with over $4.7 trillion in transactions announced. This record volume has kept U.S. antitrust authorities fully engaged.

Federal antitrust agencies reviewing more M&A transactions. Increased M&A activity in 2015 kept U.S. antitrust agencies busy. The number of transactions reported under the Hart-Scott-Rodino Act increased by 25 percent from FY2013 to FY2014, and the upward trend appeared to continue, although official statistics are not yet available.

The antitrust cops are on the beat. Implementing their “litigation readiness” focus, the U.S. antitrust agencies brought many merger challenges in 2015. Combined, the Department of Justice (“DOJ”) and Federal Trade Commission (“FTC”) sued to block over 25 mergers, including Staples/Office Depot, Sysco/US Foods, Electrolux/General Electric appliances business, Dollar Tree/Family Dollar and more.

M&A in 2015: Shattering prior records. With the economy in a modest recovery and with cheap financing readily available, M&A activity was at an all-time high in 2015. Surpassing the prior record of $4.3 trillion in deals in 2007, 2015 saw M&A activity of $4.7 trillion worth of transactions, of which approximately half involved U.S. companies. In fact, U.S. deals alone exceeded $2 trillion for the first time ever.

Late last year, as the holidays approached, the Federal Trade Commission issued enforcement guidance on “native advertising” — ads that purposely are formatted to appear as noncommercial and are integrated into surrounding editorial content. The agency’s guidance took two parts: an Enforcement Policy Statement on deceptively formatted ads, and a Guide for Business on native advertising. These long-awaited guidance documents follow on the FTC’s December 2013 “Blurred Lines” workshop on native advertising. Importantly, the FTC notes that its policy statement does not apply just to advertisers but also to other parties that help create the content: ad agencies, ad networks and potentially, publishers.

Over the last 18 months, patrons of the nation’s most popular outlet stores have hit well-known retailers, including Gap Outlet, Banana Republic Factory Store and Saks Off 5th, with a flood of class action lawsuits for false and misleading advertising. In early 2014, four members of Congress wrote to the Federal Trade Commission (“FTC”) asking the agency to begin an investigation into the sales practices at outlet stores.

As reported on the Privacy & Information Security Law blog, Hunton & Williams welcomes Phyllis H. Marcus as counsel to the firm’s privacy and competition teams. Phyllis joins the firm from the Federal Trade Commission, where she held a number of leadership positions, most recently as Chief of Staff of the Division of Advertising Practices. Phyllis led the FTC’s children’s online privacy program, including bringing a number of enforcement actions and overhauling the Children’s Online Privacy Protection Act (“COPPA”) Rule. She offers the privacy team a keen ...

Yesterday, the US Supreme Court in Kimble v. Marvel Enterprises, No. 13-720 (June 22, 2015), upheld the longstanding precedent provided by Brulotte v. Thys Co, 379 U.S. 29 (1964), which stated that “a patentee’s use of a royalty agreement that projects beyond the expiration date of the patent is unlawful per se.” Id. at 32. Justice Kagan, writing the opinion of the Court, stated that stare decisis requires the Court to adhere to the decision in Brulotte.

Read the full client alert.

On April 23, 2015, the Federal Trade Commission (FTC) announced that Nomi Technologies (Nomi) has agreed to settle charges stemming from allegations that the company misled consumers with respect to opting out of the company’s mobile-device tracking service at retail locations. The settlement marks the FTC’s first § 5 enforcement action against a retail tracking company.

On Friday, January 30, 2015, the U.S. Court of Appeals for the D.C. Circuit issued its opinion in POM Wonderful, LLC, et al. v. Federal Trade Commission, affirming the Federal Trade Commission's ruling in 2013 that a series of advertisements for POM’s pomegranate juice and supplements were deceptive and thus violated the FTC Act. However, the court provided some limited, yet important, relief to POM Wonderful and the other petitioners. The D.C. Circuit’s decision provides important guidance to companies advertising consumer products.

Read the full client alert.

The chairwoman of the Federal Trade Commission, Edith Ramirez, has announced that the FTC is significantly increasing scrutiny and enforcement of mainstream advertising by reputable companies. Chairwoman Ramirez recently said that the FTC is increasing enforcement against not only “outright fraud,” but also national advertising campaigns. The FTC’s recent approach of vigorous false advertising enforcement is intended to support the goal that, as the chairwoman stated, “advertising must be truthful and non-deceptive.”

The Eighth Circuit recently issued an opinion in the Interstate Bakeries Corporation bankruptcy case reversing its previous holding that a perpetual royalty-free trademark license constituted an executory contract that could be assumed or rejected in bankruptcy.  The Eighth Circuit, in a rehearing en banc on its earlier decision in Interstate III2, determined that the contract at issue should be considered part of an integrated agreement with another contemporaneously executed deal. When the Eighth Circuit expanded the parameters of the contract being considered, it ...

Most marketers and retailers know that the consumer protection laws require that their advertising claims be substantiated, truthful and not misleading. But the new year is a good time to take stock of advertising campaigns, practices and procedures to make sure they pass muster under the Federal Trade Commission’s (FTC’s) latest guidance. The FTC’s recent enforcement actions provide a starting point.