A Blue-Chip Antitrust Practice With A Strong Past Looks To A Stronger Future

Friday, December 1, 2006 - 01:00

Editor: Would each of you tell our readers something about your background?

Gifford: I have practiced antitrust law to one degree or another for about 30 years. I started my career at Donovan Leisure Newton & Irvine, where I worked on some of the most significant antitrust cases of that time, including the uranium cartel case and the Mobil-Marathon merger. In 1982 I went to the New York field office of the Antitrust Division of the U.S. Department of Justice. For five years I served as a trial lawyer handling both criminal and civil cases.

I came to Proskauer in 1987. Having decided that it was time to leave the Justice Department, I was looking for the "right firm." At the time, Proskauer was looking for experienced litigators, but not necessarily restricted to antitrust litigators. During the interview process I discovered that Proskauer would afford me the opportunity to handle the antitrust work in mergers and acquisitions in addition to all types of commercial litigation work. The firm's antitrust practice was expanding and, in fact, the growth of that practice has meant that most of my work here has been, and continues to be, in antitrust.

Rauchberg: I have spent my entire career at Proskauer. I joined the firm in 1967, right out of law school, after having participated in its summer program following my second year at law school. I was attracted by the high caliber of lawyer working at the firm, in addition to its commitment to general practice. Proskauer has always taken care to avoid pushing people into narrow specialties, and most of our lawyers practice across a wide area. Over the course of my career, as a consequence, I have handled all manner of antitrust cases, including trying civil antitrust cases, handling criminal antitrust investigations, and dealing with every aspect of major government investigations and litigations. In addition to antitrust, I have also worked as a general commercial litigator.

Editor: Would you give us an overview of the antitrust practice? Specifically, how has it evolved?

Rauchberg: The firm has always had a premier litigation practice. In the 1920s Joe Proskauer, one of the leading trial lawyers in the country, joined the firm and went on to preside over a preeminent litigation practice until his retirement in the late 1950s.

The antitrust practice at Proskauer began as part of the litigation practice. Lawyers known for their ability to handle complex litigation will attract antitrust cases as part of the mix. By the time I joined the firm, senior litigators such as George Gallantz, who represented the NBA, dealt with antitrust issues arising in the context of sports law, and Steve Kaye, for example, represented SCM in its well-known monopoly case against Xerox. At the same time, as the firm's corporate practice has grown, the involvement of the antitrust practice with the FTC and DOJ on various merger issues has increased very substantially.

Gifford: The development of the practice during the last 20 years has been significant. The depth of expertise present here has always been most impressive. I knew about the firm's antitrust and litigation strengths at the time of my arrival, of course, but the ability, the experience and the reach of the corporate department was unexpected. There is a wonderful diversity of clients in the corporate practice, many of them with antitrust issues. We have been able to expand the antitrust practice by exposing both our corporate and litigation colleagues to a full range of FTC and Department of Justice antitrust issues. Through our colleagues' collaboration with the antitrust group in educating our clients, we have identified and generated new work on transactions as well as ongoing counseling, which is a substantial part of my own practice. Some of that work then generates new antitrust litigation.

To the extent the practice is integrated with other groups, it resides across the entire firm and in every office. The number of antitrust practitioners here is about 35, and, in keeping with the firm's culture, most of them do at least some work in other areas. In one way or another I have worked with lawyers from every office - for example, we are handling a major private antitrust lawsuit, where we represent the plaintiff, as a collaboration of our New York, Washington and Boca Raton offices. The offices that handle antitrust matters on a regular basis are New York, Washington, Los Angeles and Paris.

As a consequence of this collaboration, we have been able to continue expanding the scope of the antitrust practice. Today it is as broad as that of any firm in the country. Litigation in private cases continues to grow, and we have also seen a steady stream of federal and state criminal investigations.

Editor: You mention the Paris office. Does the group get involved in EU competition law through that office?

Gifford: Yes, but the New York, Los Angeles, Boston and Washington offices also are involved in EU and other non-U.S. antitrust matters. We have a number of lawyers in the Paris office who have an extraordinary expertise in both EU and French national competition law. At the moment, our Paris colleagues are litigating in the French national court the first private damages case brought under the revised French competition law. Until recently in Europe, private plaintiffs were not able to bring their own antitrust actions; alleged violations of competition law were prosecuted by a governmental agency. The law has been changed, and the case that our Paris office is engaged in defending is a highly complex, multi-defendant bid-rigging claim.

Editor: Would you share with us some of the successes that the group has had in recent years?

Rauchberg: We recently won summary judgment dismissing an antitrust class action brought on behalf of direct and indirect purchasers of a pharmaceutical product against our client Biovail Corporation, a specialty pharmaceutical company utilizing advanced drug-delivery technologies. Biovail had been accused of anticompetitive conduct by the FTC in connection with one of its drugs, and the matter was eventually settled. Following the issuance of the FTC consent decree, as is typical, the class actions were brought. The dismissal was based upon the plaintiffs' inability to show antitrust injury. The case is an unusual example of a company obtaining summary judgment in a private class action after having entered into a consent decree with the government. We have also had recent successes in the form of favorable settlements.

Gifford: Some of those favorable settlements have come in very interesting, and complex, matters before the agencies. Most recently we concluded an extended investigation before the FTC on behalf of Andrx Corporation, an enterprise being acquired by Watson Pharmaceuticals, another prominent pharmaceutical company. That acquisition triggered a "second request" from the FTC. Our team, led by Rhett Krulla in Washington, who joined Proskauer last year after 32 years with the FTC, took a very active role and worked closely with Watson's counsel on the matter.

There are two notable aspects to the Andrx acquisition. First, the entire process was completed in a very short time. The transaction was cleared only about eight months after service of the second request, and considering the size of these companies and the number of their products, completing the response to the second request and resolving the concerns of the regulators in that time frame constituted something close to a record. Second, the deal was cleared by the FTC with a very small number of divestitures, which resulted in the acquisition closing with something close to its full economic and strategic value. This was a tremendous success.

We can't identify the client in some of our successes. In the last couple of months we successfully completed a fairly lengthy defense of one of our clients in criminal investigations by the Antitrust Division and a state attorney general's office. This involved an area of inquiry that was politically sensitive. The fact that the matters were concluded with the authorities deciding not to pursue the investigation was, accordingly, very satisfying.

Editor: I gather you work closely with the firm's sports law department on sports law issues.

Rauchberg: Many sports law issues turn out to be antitrust issues. We represent the NHL, NBA, Major League Soccer, Major League Baseball, and a variety of individual teams in various sports. By way of example, when the Chicago Bulls challenged the NBA's television rules as a violation of the antitrust laws, I tried the case with some of our sports law partners.

Editor: What are the significant issues that the antitrust group is seeing at the moment?

Gifford: Proskauer has had a leading healthcare practice for many years, and while we have handled many healthcare antitrust matters in the past, we see a potential for continuing growth in coming years in the healthcare area. Antitrust issues arise across the entire spectrum of healthcare, from pharmaceutical company acquisitions, mergers and joint ventures, hospital contracting practices, physician group contracting, hospital mergers and acquisitions - in both the for-profit and the non-profit sectors - technology licensing, joint ventures and M&A activity in markets such as medical devices and medical technology, and so on. This is a rapidly growing area worldwide.

Regulation and litigation in the pharmaceutical industry have been very active in recent years. Much of this revolves around patent dispute settlements between brand pharmaceutical companies and generic drug manufacturers. The FTC has investigated and brought actions in several cases alleging that settlements of patent disputes between brand and generic companies have resulted in agreements that unreasonably prevent entry by other generic companies. This is an active arena for us, and it appears that that state of affairs is going to continue. The FTC's case against Schering-Plough, which the FTC lost on appeal and which the Supreme Court refused to review, has left the agency with a great deal of uncertainty on how to handle these cases in the future. We are engaged in analyzing what the FTC is going to do next as it continues to scrutinize these agreements. I suspect that our antitrust lawyers will be very busy in this area going forward.

Editor: What about the future? Where would you like the group to be in, say, five years?

Rauchberg: As the reputation of our group increases, particularly in these challenging and complicated areas such as the healthcare arena to which Meg has referred, I am hopeful that we will be one of the names that automatically comes up when the services of leading antitrust practitioners are required.

Please email the interviewees at rrauchberg@proskauer.com or mgifford@proskauer.com with questions about this interview.