9710103
B238609

UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

In the Matter of

ROCHE HOLDING LTD, a corporation.

Docket No. C-3809

COMPLAINT

The Federal Trade Commission ("Commission"), having reason to believe that Respondent, Roche Holding Ltd ("Roche"), a corporation subject to the jurisdiction of the Commission, has agreed to acquire 100% of the voting stock of Corange Limited ("Corange"), a corporation subject to the jurisdiction of the Commission, in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45, and it appearing to the Commission that a proceeding in respect thereof would be in the public interest, hereby issues its Complaint, stating its charges as follows:

I. DEFINITIONS

  1. "Cardiac Thrombolytic Agents" means all thrombolytic agents used to dissolve blood clots.
  2. "DAT Reagents" means all diagnostic reagents used to test for any drug of abuse.

II. RESPONDENT

  1. Respondent Roche is a corporation organized, existing, and doing business under and by virtue of the laws of Switzerland, with its principal executive offices located at Grenzacherstrasse 124, Basel, Switzerland 4002.
  2. Respondent is engaged in, among other things, the research, development, manufacture and sale of Cardiac Thrombolytic Agents and DAT Reagents.
  3. Respondent is, and at all times relevant herein has been, engaged in commerce as "commerce" is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C. § 12, and is a corporation whose business is in or affects commerce as "commerce" is defined in Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 44.

III. THE ACQUIRED COMPANY

  1. Corange is a corporation organized, existing, and doing business under and by virtue of the laws of Bermuda, with its headquarters located at 22 Church Street, P.O. Box HM 2026, Hamilton, HM HX Bermuda.
  2. Corange is engaged in, among other things, the research, development, manufacture and sale of Cardiac Thrombolytic Agents and DAT Reagents.
  3. Corange is, and at all times relevant herein has been, engaged in commerce as "commerce" is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C. § 12, and is a corporation whose business is in or affects commerce as "commerce" is defined in Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 44.

IV. THE ACQUISITION

  1. On May 24, 1997, Roche entered into a Stock Purchase Agreement with Corange to acquire 100% of Corange's voting stock for approximately $11 billion ("Acquisition").

V. THE RELEVANT MARKETS

  1. For purposes of this Complaint, the relevant lines of commerce in which to analyze the effects of the Acquisition are:
    1. the research, development, manufacture and sale of Cardiac Thrombolytic Agents; and
    2. the research, development, manufacture and sale of DAT Reagents used in workplace testing.
  2. For purposes of this Complaint, the United States is the relevant geographic area in which to analyze the effects of the Acquisition in the relevant lines of commerce.

VI. STRUCTURE OF THE MARKETS

  1. The market for the research, development, manufacture and sale of Cardiac Thrombolytic Agents is highly concentrated as measured by the Herfindahl-Hirschman Index ("HHI"). The post merger HHI is 8,698 points, which is an increase of 3,220 points over the premerger HHI level. Roche and Corange are the two leading suppliers of Cardiac Thrombolytic Agents in the United States and produce the safest and most effective products on the market.
  2. Roche and Corange are actual competitors in the relevant market for the research, development, manufacture and sale of Cardiac Thrombolytic Agents in the United States.
  3. The market for the research, development, manufacture and sale of DAT Reagents used in workplace testing is highly concentrated as measured by the HHI. The post merger HHI is 4,878 points, which is an increase of 704 points over the premerger HHI level. Roche and Corange are two of only four suppliers of DAT Reagents used in workplace testing in the United States.
  4. Roche and Corange are actual competitors in the relevant market for the research, development, manufacture and sale of DAT Reagents used in workplace testing in the United States.

VII. BARRIERS TO ENTRY

  1. Entry into the market for the research, development, manufacture and sale of Cardiac Thrombolytic Agents is unlikely and would not occur in a timely manner to deter or counteract the adverse competitive effects described in Paragraph 18 because of, among other things, the time-consuming nature of research, development and U.S. Food and Drug Administration approval of these products.

  2. Entry into the market for the research, development, manufacture and sale of DAT Reagents used in workplace testing is unlikely and would not occur in a timely manner to deter or counteract the adverse competitive effects described in Paragraph 18 because of, among other things, the difficulty of developing a full panel of DAT Reagents, as well as gaining brand name recognition and customer acceptance.

VIII. EFFECTS OF THE ACQUISITION

  1. The effects of the Acquisition, if consummated, may be substantially to lessen competition and to tend to create a monopoly in the relevant markets in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the FTC Act, as amended, 15 U.S.C. § 45, in the following ways, among others:

(a) by eliminating actual, direct, and substantial competition between Roche and Corange in the markets for the research, development, manufacture and sale of Cardiac Thrombolytic Agents and DAT Reagents used in workplace testing;

(b) by increasing the likelihood that Roche will unilaterally exercise market power in the market for the research, development, manufacture and sale of Cardiac Thrombolytic Agents;

(c) by increasing the likelihood that consumers in the United States will be charged higher prices for Cardiac Thrombolytic Agents and DAT Reagents used in workplace testing;

(d) by reducing the likelihood of innovation in the market for the research, development, manufacture and sale of Cardiac Thrombolytic Agents; and

(e) by enhancing the likelihood of collusion or coordinated interaction between or among the firms in the market for the research, development, manufacture and sale of DAT Reagents used in workplace testing.

IX. VIOLATIONS CHARGED

  1. The Acquisition agreement described in Paragraph 9 constitutes a violation of Section 5 of the FTC Act, as amended, 15 U.S.C. § 45.
  1. The Acquisition described in Paragraph 9, if consummated, would constitute a violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the FTC Act, as amended, 15 U.S.C. § 45.

WHEREFORE, THE PREMISES CONSIDERED, the Federal Trade Commission on this twenty-second day of May 1998, issues its Complaint against said respondent.

By the Commission.
Donald S. Clark
Secretary
SEAL: