Legal Library: Cases and Proceedings

The FTC required Corning, Inc. to transfer assets and to supply some of its laboratory products to another company, under a settlement that resolves charges that Corning’s proposed acquisition of Becton, Dickinson and Company’s Discovery Labware Division would otherwise be anticompetitive. Under the FTC settlement, Corning will provide assets and assistance to enable life science company Sigma-Aldrich Co., LLC to manufacture Corning’s line of tissue culture treated (TCT) dishes, multi-well plates, and flasks in a manner substantially similar to Corning’s process. Until Sigma Aldrich develops its own manufacturing capabilities for these products, Corning will supply them to Sigma Aldrich to be marketed under Sigma Aldrich’s own brand, allowing Sigma Aldrich to immediately replace the competition lost as a result of Corning’s acquisition of Discovery Labware.

Renown Health agreed to settle charges that its acquisitions of two local cardiology groups reduced competition for the provision of adult cardiology services in the Reno area. Renown Health, based in Reno, Nevada, operates general acute care hospitals and commercial health plans serving the Reno area. Before the acquisitions, virtually all of the cardiologists in the Reno area were affiliated with two medical groups – Sierra Nevada Cardiology Associates and Reno Heart Physicians.To settle the charges, Renown Health will release its staff cardiologists from "non-compete" contract clauses, allowing up to 10 of them to join competing cardiology practices.

The FTC required drug supplier Novartis AG to give up its marketing rights to four topical skin care medications, under a settlement resolving charges that Novartis' acquisition of pharmaceutical firm Fougera Holdings, Inc. would harm competition in the market for these topical drugs. The settlement order requires Novartis to end a marketing agreement that allows it to sell three topically-applied generic drugs and return all rights to a fourth generic drug in development to its manufacturer, Tolmar, Inc. According to the FTC's complaint, Novartis' acquisition of Fougera would violate Section 5 of the FTC Act and Section 7 of the Clayton Act by reducing competition in the generic drug markets for three skin care drugs: 1) generic calcipotriene topical solution, 2) generic lidocaine-prilocaine cream, and 3) generic metronidazole topical gel. The complaint also alleges that the acquisition would eliminate potential competition in the market for the sale of diclofenac sodium gel.

The FTC required CoStar Group, the largest provider of commercial real estate information services in the United States, to sell LoopNet's ownership interest in Xceligent, under an order settling charges that CoStar's $860 million acquisition of LoopNet would be anticompetitive. The FTC's complaint alleges the proposed acquisition would reduce competition in the markets for real estate listings databases and information services. The modified final order resolving the charges preserves competition that otherwise would have been lost through the acquisition by requiring the combined firm to sell LoopNet's interest in Xceligent, a significant provider of U.S. commercial real estate information.

Koninklijke Ahold N.V., the parent company of Giant Food Stores, LLC, agreed to sell a supermarket outside of Philadelphia, Pennsylvania, to settle charges that its proposed acquisition of the Genuardi's supermarket chain from Safeway Inc. otherwise would be anticompetitive. The transaction, if completed, would eliminate competition between Giant and Genuardi's.  To preserve competition in the local grocery market, the consent order requires Ahold to sell a supermarket in Newtown, Pennsylvania to McCaffrey's supermarkets.

The FTC required Johnson & Johnson (J&J) to sell its system for surgically treating serious wrist fractures, resolving charges that J&J's proposed $21.3 billion acquisition of Synthes, Inc. would illegally reduce competition for these systems. J&J intends to sell its system, known as DVR, along with the rest of its product line for treating traumatic injuries, to Biomet, Inc. According to the FTC's complaint, J&J's proposed acquisition of Synthes would harm competition in the U.S. market for volar distal radius plating systems, internal devices that are surgically implanted on the underside of the wrist to achieve proper alignment of the radius bone following a fracture.

On 10/7/2011, the FTC required Teva Pharmaceutical Industries Ltd. to sell the rights and assets related to a generic cancer pain drug and a generic muscle relaxant, as a condition of its proposed $6.8 billion acquisition of rival drug firm Cephalon, Inc. In addition, the proposed settlement requires Teva to enter into a supply agreement that will allow a competing firm to sell a generic version of Cephalon’s wakefulness drug Provigil in 2012. On 7/3/2012, the FTC issued its final order. The final amended FTC order resolving the charges requires Teva to sell the rights and assets related to a generic cancer pain drug and a generic muscle relaxant to Par Pharmaceuticals, Inc. It also requires Teva to enter into a supply agreement that will allow Par to sell a generic version of Cephalon's wakefulness drug Provigil in 2012.

On 7/26/2011, the Commission required generic drug manufacturers Perrigo Company and Paddock Laboratories, Inc. to sell six generic drugs under a proposed settlement resolving charges that Perrigo’s proposed $540 million acquisition of Paddock would be anticompetitive. The proposed settlement also contains provisions to ensure future competition in the market for generic testosterone gel product. On 6/26/2012, the FTC issued a modified final order that required the companies to sell six generic drugs to Watson Pharmaceuticals, Inc.

The FTC required AmeriGas L.P. and Energy Transfer Partners L.P. (ETP), two of the nation's largest propane distributors, to amend AmeriGas's proposed acquisition of ETP's Heritage Propane business as part of a settlement with the FTC. The settlement resolves FTC charges that the deal, as originally proposed, would have reduced competition and raised prices in the market for propane exchange cylinders that consumers use to fuel barbeque grills and patio heaters. The FTC's settlement requires AmeriGas to exclude ETP's cylinder exchange business, Heritage Propane Express, from the sale.

The Commission required Cardinal Health, Inc. to reconstitute and sell nuclear pharmacies in Las Vegas, Nevada; Albuquerque, New Mexico, and El Paso, Texas under a settlement order resolving the agency’s charges that Cardinal’s purchase of nuclear pharmacies from Biotech reduced competition for low-energy radiopharmaceuticals in the three cities.

The FTC required specialty metals manufacturer Carpenter Technology Corporation to sell assets involved in producing two metal alloys used in the aerospace industry, under a settlement resolving charges that Carpenter's proposed $410 million acquisition of Latrobe Specialty Metals, Inc. would harm competition in the U.S. markets for these alloys.The FTC's complaint alleges that the deal – a merger to monopoly – likely would lead to higher prices for consumers of the two alloys.  The order requires Carpenter to divest assets necessary for manufacturing the two alloys – MP159 and Aerospace MP35N – to another metals manufacturer, Eramet S.A.

The Commission challenged Dow Chemical’s $18.8 billion proposed acquisition of Rohm & Haas Company as anticompetitive in the markets for various acrylics and other industrial chemicals used to make coated paper products, paints, and adhesives. According to the Commission’s complaint, the product markets in question include acrylic monomers, used in goods ranging from hygiene products to paints and industrial coatings, hollow sphere particles, used in paper products, and acrylic latex polymers, used in traffic paints. Given the high concentration in each of the product markets, the proposed acquisition would have represented a merger to monopoly. To remedy its anticompetitive concerns, the Commission required Dow to divest assets to Hager Pacific Acquisitions LLC.

The FTC reached a settlement with Healthcare Technology Holdings, Inc., the parent company of market research firm IMS Health Inc., according to which IMS has agreed to sell two product lines of rival SDI Health LLC, as a condition of allowing it to proceed with its acquisition of SDI. The proposed settlement order requires the sale of SDI's promotional audit and medical audit businesses to an FTC-approved buyer to resolve the agency's charges that IMS's acquisition of SDI, as originally proposed, is anticompetitive and likely would increase prices for market research products in the health care industry. On1/10/2012, the FTC approved a modified final order settling the charges.

The FTC filed separate complaints against the three largest U.S. suppliers of ductile iron pipe fittings, which are used in municipal water systems around the United States. The FTC charged that the three companies, McWane, Inc., Star Pipe Products, Ltd., and Sigma Corporation, illegally conspired to set and maintain prices for pipe fittings, and that McWane illegally maintained its monopoly power in the market for U.S.-made pipe fittings by implementing an exclusive dealing policy. Sigma settled the FTC's charges prior to litigation (final order dated Feb. 27, 2012); Star settled soon after (final order dated May 8, 2012).  The complaint against McWane was heard before an administrative law judge and later appealed to the Commission; see Docket No. 9351.

On 12/12/2011, the FTC approved orders requiring Valeant Pharmaceuticals International, Inc. to divest three drugs used to treat different skin ailments, as conditions of acquiring Ortho Dermatologics, Inc. from Johnson & Johnson, and Dermik Laboratories, Inc. from Sanofi. Under the settlements, Valeant will sell the manufacturing and marketing rights to drug products that treat acne and actinic keratosis, a pre-cancerous skin lesion, to Mylan Pharmaceuticals Inc. Valeant also will sell the marketing rights to a drug that treats fine line wrinkles to Spear Pharmaceuticals, Inc. Both settlements preserve competition and prevent higher prices that likely would have resulted from the acquisitions. (also see 1110216).

On 12/12/2011, the FTC approved orders requiring Valeant Pharmaceuticals International, Inc. to divest three drugs used to treat different skin ailments, as conditions of acquiring Ortho Dermatologics, Inc. from Johnson & Johnson, and Dermik Laboratories, Inc. from Sanofi. Under the settlements, Valeant will sell the manufacturing and marketing rights to drug products that treat acne and actinic keratosis, a pre-cancerous skin lesion, to Mylan Pharmaceuticals Inc. Valeant also will sell the marketing rights to a drug that treats fine line wrinkles to Spear Pharmaceuticals, Inc. Both settlements preserve competition and prevent higher prices that likely would have resulted from the acquisitions. (also see 1110215).

The Commission required laboratory testing companies Laboratory Corporation of America Holdings and Orchid Cellmark Inc. to divest a portion of Orchid's paternity testing business, to resolve the FTC complaint alleging that LabCorp's $85.4 million acquisition of Orchid would have an anticompetitive impact in the market for paternity testing services used by government agencies. Under the proposed settlement order, the portion of Orchid's U.S. paternity testing business that is focused on sales to government agencies, and related assets, will be sold to another testing company, DNA Diagnostics Center (DDC). On 2/1/2012, the FTC approved a final order.

The FTC required Universal Health Services, Inc., one of the nation’s largest hospital management companies, to sell 15 psychiatric facilities as a condition of its $3.1 billion acquisition of Psychiatric Solutions, Inc. As originally proposed the acquisition would have reduced competition in the provision of acute inpatient psychiatric services in three local markets: Delaware, Puerto Rico, and metropolitan Las Vegas, Nevada.

Pool Corporation, the largest distributor of swimming pool products in the United States, agreed to stop anticompetitive tactics that it allegedly used to keep out new competitors in local markets around the nation, as part of a settlement that resolves charges that the conduct maintained PoolCorp's monopoly over distribution of pool products. PoolCorp distributes products used in the construction, renovation, repair, service, and maintenance of residential and commercial swimming pools. The FTC charged that for the past eight years, PoolCorp, based in Covington, Louisiana, threatened not to sell the pool products of any manufacturer who sold products to a new distributor, effectively thwarting entry by new competitors by blocking them from buying pool products directly from manufacturers. The strategy significantly raised the costs incurred by its rivals, thereby lowering sales, increasing prices, and reducing the number of choices available to consumers, the agency alleged.

The Commission reached settlement agreement with Tops Markets LLC that protects consumers from the potential anticompetitive effects of Tops’ acquisition of the bankrupt Penn Traffic Company supermarket chain. To settle FTC charges that the acquisition was anticompetitive in several areas of New York and Pennsylvania, Tops agreed to sell seven Penn Traffic supermarkets to FTC-approved buyers in five grocery markets: Bath, Cortland, Ithaca, and Lockport, New York, as well as Sayre, Pennsylvania.