The US Department of Justice has given its seal of approval to the proposed merger between Random House and Penguin.

“This positive first decision by one of the antitrust authorities is an important milestone on the path to uniting two of the world’s leading publishing companies into a truly global publishing group,” said Thomas Rabe, CEO of Bertelsmann AG (the German parent company of Random House). “It will enable investments worldwide in new digital publishing models, in new distribution paths, products, and services, and in the major growth markets.”

Bertelsmann and Penguin’s British parent company, Pearson PLC, announced their plans to merge last year. At the time, Rupert Murdoch’s News Corp was said to be eyeing Penguin for possible purchase in order to bolster their publishing arm (News Corp already owns HarperCollins).

The merger between Random House and Penguin will create the largest publishing house the world has ever known. The new company will be called ‘Penguin Random House,’ and Bertelsmann will control 53 percent of it, while Pearson will control the other 47 percent.

Estimates of Penguin Random House’s projected market share vary widely. When the merger was first announced, it was reported that the new company would control 30 percent of the trade-book market. Now, the media seem to suggest that the figure will be closer to 25 percent. However, if the market share is examined by genre, Penguin Random House’s clout might be much greater. For example, Dennis Johnson over at the independent publisher Melville House suggests that the new conglomerate might end up controlling 50 percent of the literary fiction market.

No doubt Pearson and Bertelsmann are hoping that, by tying the knot, they will be able to strengthen their hand when negotiating with digital companies like Amazon, Google, and Apple. Amazon alone controls a whopping 60 percent of the online book market thanks in large part to its now-ubiquitous Kindle family of e-readers.

Despite the Justice Department’s approval, the merger still faces potential obstacles in Europe. The European Commission still needs to evaluate the deal, and analysts note that it tends to evaluate culture-related mergers with particular care. When Universal Music Group purchased the recorded music division of EMI last year, European Union regulators forced Universal to sell off a large chunk of EMI’s assets, including most of the lucrative Parlophone label. Will Bertelsmann and Pearson be forced to make similar concessions?

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The Florida branches of the Council on American-Islamic Relations (CAIR) held a press conference on July 11 to condemn anti-terrorism training conducted and the anti-terrorism training manual, A Law Enforcement Guide to Understanding Islamist Terrorism, by Sam Khabora, as “factually erroneous and biased.”

The Tampa CAIR’s press conference – presented by Director Hassan Shibly- not only announced its rejection of Khabora’s statements and training but also stated that it has sent its concerns in a letter to the Florida Department of Law Enforcement (FDLE).

According to Shibly, trainings like Kharoba’s “makes our country less safe and less free.” Shibly went on to elaborate that the training makes us less free because it wastes police resources and time on training that is inaccurate, and that it makes Americans less free because it encourages the persecution of religion.

CAIR’s first concern was that Kharoba is not qualified to speak on the topic of Islam. Kharoba ‘s certifcation in the area of Islamic culture comes from an “Advanced Level General Certificate of Education in Arabic Culture” in the United Kingdom, which CAIR claims is the equivalent of an AP course in high school.

Additionally, CAIR pointed out at their press conference that much of the Islamic community in the United States is not of Arab descent. In fact, according to the US Department of State statistics in 2010 the majority of Arab Americans (two thirds) are Christian and the majority (up to one third) of Muslims in the United States are African-Americans.

Kharoba’s other claim to authority is that he lived in the Middle East for seventeen years. Shibly stated that letting Kharoba teach police based on this argument is like claiming that “any person who lives in America is qualified to talk about American history and Christianity in America.” In the letter to the FDLE, CAIR states, “Kharoba has neither the academic nor the operational background to qualify as a subject matter expert on either Islam or countering violent extremism.”

CAIR also cites other organizations, news agencies, and government officials who have rejected Kharoba’s training as biased and incorrect. The Washington Monthly March/April 2011 edition reported on Kharoba’s training in an article entitled “How We Train Our Cops to Fear Islam.”

The article clearly states several instances in which Kharoba makes sweeping generalizations about Islamic culture and Muslims including claiming that the Prophet Muhammad was a rapist, Islam is not a religion of peace, corner stores owned by Muslims are a way for Hezbollah to launder money, and wearing a headband is a sign of a martyr. According to the article Kharoba advocates for “legal harassment” in which police officers should identify Muslims in their neighborhoods and keep track of what activities they do and which properties they own.

In a similar article published in June of 2011 by the Broward Bulldog Kharoba’s teachings were “equate[d] to ethnic and religious profiling.” The article goes on to state that the US Department of Justice “have rejected such techniques as unconstitutional and discriminatory.”

According to CAIR, the Chairman and Ranking member of the US Senate Committee on Homeland Security and Governmental Affairs has sent a letter to Homeland Security Secretary Napolitano and Attorney General Eric Holder that first quotes Kharoba and states, “these comments [from Kharoba], of course, are neither factually accurate nor consistent with our nation’s fundamental values and are not made by adequately trained personnel. It appears, however, that some of these so-called experts have neither the academic nor operational background in the material about which they train.”

An FDLE Spokesperson, Gretl Plessinger stated that the FDLE has received the letter and is reviewing the claims. She could not comment, yet, on how the FDLE will address the concerns as the facts and information must be re-examined. She also stated that Sam Kharoba is not certified as a trainer by the FDLE. Instead, he has been hired by individual training centers that the FDLE has certified. According to Plessinger, Kharoba has been used in the past as a counter-terrorism instructor and that they have received positive feedback from those who have taken the course.

CAIR also claims that the responses to the training law enforcement has received from Kharoba is “troubling.” One response that CAIR points out in particular is that an officer stated, “going to make sure we have completed surveys of existing ME/Muslim population and have a clearer understanding of their properties.”

Also speaking at the press conference was Bishop of the Apostolic Church and President of the Florida Council of Churches Chuck Leigh. Bishop Leigh castigated the training as “spending money on bigotry” that Kharoba’s alleged misrepresentations of Islam “offends the very heart of Christianity.” The Bishop went on to state, “I think God is offended by it.”

CAIR is the largest Muslim civil rights organization in the United States. Chapters of the non-profit organization can be found across the United States and work with local communities on education and outreach. Hassan Shibly, the Director of the Tampa CAIR chapter, stated that CAIR emphasizes preventative education because their philosophy is ignorance breeds hate.

CAIR also represents Muslims across the United States in discrimination cases and fights laws that are viewed as discriminatory toward the Islamic community. Currently there are about 40,000 Muslims who fall within the area of the Tampa CAIR chapter, and there are forty open cases of discrimination.

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Two years after oil from a BP well began gushing into the Gulf of Mexico, the U.S. Department of Justice has filed criminal charges alleging that a former BP employee destroyed critical evidence in the early days of the unfolding disaster.

The charges are the first to be filed in what the Obama administration has called the worst environmental disaster in American history, and they are significant because they target an individual employee for his actions.

According to an affidavit and complaint filed Tuesday, April 24 in a Louisiana court, Kurt Mix, a former drilling and completions engineer, deleted email and text messages he had sent to senior BP managers estimating that the amount of oil spewing into the Gulf was many times greater than the amount stated publicly. Mix was specifically instructed by attorneys contracted by BP to retain his records before he deleted them, the affidavit states.

In a statement released to reporters, U.S. Attorney General Eric Holder indicated that more charges are likely, describing the indictment as “initial charges” in an ongoing investigation, and saying that the Department of Justice “will hold accountable those who violated the law.”

More than 200 million gallons of crude oil flowed into the Gulf of Mexico after a blowout caused the explosion of the Deepwater Horizon oil rig and the death of 11 workers on April 20, 2010. The spill continued, unabated, for nearly three months. Analysts have long expected criminal charges against BP or its employees.

A spokeswoman for the agency declined to say when more charges might be expected, or to explain why the case against Mix was the first to be made public.

Mix could not be reached for comment, and we were unable to leave him a message because his voicemail was full.

BP issued a statement saying that the company was cooperating with federal investigators and that “BP had clear policies requiring preservation of evidence in this case and has undertaken substantial and ongoing efforts to preserve evidence.”

According to an FBI affidavit submitted to the court along with the indictment, Mix, who worked for BP until January 2012, was directly involved in BP’s efforts to understand how much oil was flowing out of the broken Macondo well. On April 21, 2010, Mix estimated that between 68,000 and 138,000 barrels of oil were leaking each day — far more than the 5,000 barrels that were estimated publicly at the time.

On April 22, Mix received the first of six legal notices instructing him to retain his electronic records.

Yet, according to the affidavit, in early October, Mix allegedly deleted a string of more than 200 text messages on his iPhone that he had sent to a supervisor. The deleted texts, which the Department of Justice said were recovered forensically, included sensitive — and pessimistic — internal BP information sent while the company was attempting what it called a “Top Kill” effort to stop the gushing oil on May 26, 2010.

Mix wrote that the effort — which he was directly involved in — was unlikely to succeed. “Too much flowrate — over 15,000 and too large an orifice. Pumped over 12,800 bbl of mud today plus 5 separate bridging pills. Tired. Going home and getting ready for round three tomorrow.”

At the time, BP said publicly that the measure had a 70 percent chance of success.

Mix, 50, was arrested in Katy, Texas on April 24. If convicted, he faces a maximum penalty of 20 years in prison and a fine of up to $250,000 on each of the two counts he is charged with.

by Abrahm Lustgarten, ProPublica, April 24, 2012, 5:16 p.m.

Image Courtesy of   IBRRC

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The Federal Trade Commission issued a complaint to block Omnicare’s hostile acquisition of rival long-term care pharmacy provider PharMerica Corporation, alleging that the combination of the two largest U.S. long-term care pharmacies would harm competition and enable Omnicare to raise the price of drugs for Medicare Part D consumers and others.

In its complaint, the FTC charges that a deal combining Omnicare and PharMerica would significantly increase Omnicare’s already substantial bargaining leverage by dramatically increasing the number of skilled nursing facilities, known as SNFs, that receive long-term care pharmacy services from the company.  Due to its substantial market share, the FTC alleges that the combined firm likely would be a “must have” for Medicare Part D prescription drug plans, which are responsible for providing subsidized prescription drug benefit coverage for most SNF residents and other Medicare beneficiaries.

According to the Centers for Medicare & Medicaid Services (CMS) of the Department of Health and Human Services, the proposed acquisition “appears likely to result in higher reimbursement rates . . . and thereby to increase the cost to CMS (and therefore the U.S. government and U.S. taxpayers) as well as any individuals who pay out-of-pocket costs in connection with such services.”

“If Omnicare is allowed to purchase its biggest and only national competitor, it will diminish competition and raise health care costs – leaving taxpayers and patients to foot the bill,” said Richard Feinstein, Director of the FTC’s Bureau of Competition.  “The Bureau will continue to be vigilant in our efforts to prevent these sorts of anticompetitive deals.”

The FTC’s administrative complaint is part of the agency’s ongoing efforts to maintain competition in the U.S. health care sector, which benefits consumers by keeping prices low and quality and choice of products and services high.  This year, more than 1.6 million Part D Medicare beneficiaries are expected to require long-term care while living in an SNF, and about 1.1 billion prescriptions per year are processed under Part D on behalf of approximately 29 million beneficiaries.

Long-term Care Pharmacies.  Unlike traditional retail pharmacies, long-term care pharmacies do not provide medications directly to “walk-in” consumers from nearby homes.  Instead, long-term pharmacies work with SNFs and other institutional providers to arrange for the delivery and administration of prescription medications to the SNF’s residents.  Most SNF residents need help with the ordering, delivery, and administration of their drugs, and a majority of them get prescription drug coverage from a Part D prescription drug plan.

To protect this fragile population and ensure they receive the Part D benefits they are entitled to, CMS requires Part D plans to provide SNF residents with “convenient access” to a network of long-term care pharmacies, such as Omnicare and PharMerica.  This ensures that SNF residents can get their prescription drugs from a long-term care pharmacy that contracts with the residents’ chosen Part D health plan.  Health plans that cannot provide their beneficiaries with “convenient access” to long-term care pharmacies risk being barred from offering Medicare Part D health plans.

Omnicare, headquartered in Covington, Kentucky, owns and operates approximately 204 long-term care pharmacies in 44 states.  In 2010, Omnicare had revenues totaling about $6.1 billion.  PharMerica, headquartered in Louisville, Kentucky, owns and operates approximately 97 long-term pharmacies in 43 states.  In 2010, PharMerica had revenues of approximately $1.8 billion.

The FTC’s Complaint.  According to the FTC’s complaint, Omnicare’s proposed acquisition of PharMerica, the second-largest long-term care pharmacy in the United States, would be illegal and in violation of Section 5 of the FTC Act and Section 7 of the Clayton Act.  The acquisition would combine the largest and only two national long-term care pharmacies in the country.  The FTC alleges that the combined firm would serve approximately 57 percent of all licensed SNF beds in the United States.

Under the Merger Guidelines used by the FTC and Department of Justice, a transaction that leads to that much market concentration would be presumed illegal.  After the acquisition, the merged firm’s only competition for inclusion in Part D plans’ long-term care pharmacy networks would come from small, regional and local long-term care pharmacies, none of which currently operates in more than a few states.

The FTC charges that, even before the transaction, Omnicare has been able to use its size to exert bargaining leverage over Part D health plans, by threatening to terminate contracts if its terms are not met.  A firm that combines the largest and second-largest long-term care pharmacies in the country would have the unique ability to exert even greater bargaining power to raise the price of drugs to Part D health plans.

Due to its substantial market share, the combined firm likely would be a “must have” for Part D health plans, the FTC contends.  Losing contracts with a combined Omnicare/PharMerica would put the Part D health plans at serious risk of failing to meet CMS’s “convenient access” standard.  This increased risk would provide the combined firm with an anticompetitive advantage in negotiating prices it charges Part D health plans for long-term care pharmacy services.

The Commission vote to issue the administrative complaint against Omnicare was 3-1, with Commissioner J. Thomas Rosch voting no.  The case will be heard before an administrative law judge at the FTC in June 2012.

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