A federal appeals court in Washington today ruled against Trojan brand condom maker Church & Dwight Co. in a long-running subpoena enforcement dispute with federal trade regulators.
The Federal Trade Commission, investigating possible anti-competitive practices in the condom market, acquired hundreds of thousands of pages of documents from Church & Dwight Co. The company is the leading condom maker in the United States.
Lawyers for the Princeton, New Jersey-based company, which also makes Arm & Hammer brand products, including toothpaste, cat litter and baking soda, argued in the U.S. Court of Appeals for the D.C. Circuit that the FTC subpoena was too broad as it would require producing information about the sale of products other than condoms.
The appeals court today said “the district court did not err in finding that the information on products other than condoms was reasonably relevant to the commission’s investigation.” The trial court ruling is here.
DLA Piper antitrust partner Carl Hittinger in Philadelphia, who argued for Church & Dwight, was not immediately reached for comment this morning. The FTC's Mark Hegedus argued for the commission. He was not immediately reached for comment.
The commission in June 2009 began looking into whether Church & Dwight “has attempted to acquire, acquired, or maintained a monopoly in the distribution or sale of condoms in the United States.”
The FTC subpoena sought information about the sale and distribution of condoms in the U.S. and in Canada. The agency also issued a civil investigative demand, or CID, which asked for details about cost, price and production of condoms.
Church & Dwight turned over data to the FTC about condom sales with information about other products redacted from the documents, the appeals court said. The company unsuccessfully challenged the subpoena in a suit in U.S. District Court for the District of Columbia.
The D.C. Circuit panel said that because the FTC is investigating whether Church & Dwight conditioned discounts or rebates to retailers on the percentage of shelf space given to “Trojan brand condoms and other products,” information about other those other products is relevant.
“Under the commission’s interpretation, the information concerning products other than condoms is unquestionably relevant to its investigation, and the district court was correct to enforce the subpoena and the CID,” Ginsburg wrote in the appeals court decision.
Lawyers for Church & Dwight said that if the FTC wanted information about products other than condoms, the agency would have specifically asked for that data. Hittinger said in the D.C. Circuit that “there’s no connection in the record between condoms and bulk chemicals.”
Ginsburg said “there has to be some connection in the dealers—that is to say condoms and cat litter, right, might be carried by the same dealers.” The judge said “there’s no argument about that, supermarkets carry both.”
Hittinger said in response that the “telling fact” is that the FTC has had the documents in its possession for seven months and “if there’s any evidence of tying and bundling we should have seen that evidence.” He said it’s not enough for the FTC to show a connection between products simply because a supermarket sells more than one Church & Dwight item.
In court Hegedus said the FTC has the ability to issue additional subpoenas if the agency determines it needs to “dig deeper with respect to those non-condom products.”