Announced Action for July 16, 2004

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Commission authorization of joint amicus brief filing: The Commission has authorized the filing of a joint amicus brief with the U.S. Department of Justice (DOJ) in Andrx Pharmaceuticals, Inc. v. Kroger Company, et al. (U.S. Court of Appeals for the Sixth Circuit). This case concerns a private antitrust matter involving an interim settlement of a pharmaceutical patent infringement case, in which the alleged infringer agreed not to market its product while the infringement litigation was pending. The Sixth Circuit held that this was a per se antitrust violation, arguably creating a conflict with a separate ruling by the Eleventh Circuit. Andrx subsequently filed a petition for certiorari, and the Supreme Court then invited the U.S. Solicitor General to submit a brief explaining the views of the United States.

In joining the Solicitor General in filing the brief, the FTC presented its investigation of the agreement in question, concluding that the petition for a writ of certiorari should be denied and that review by the court of the question presented may be premature at this time. The Commission vote authorizing the filing of the amicus brief, which can be found as a link to this press release on the FTC’s Web site, was 4-0-1, with Chairman Timothy J. Muris recused. (FTC File No. P859907; the staff contact is Melvin H. Orlans, Office of the General Counsel, 202-326-2475.)

Petition for approval of proposed divestiture: The Commission has received a petition for approval of proposed divestiture from American Air Liquide, Inc. (Air Liquide), related to the FTC’s recent decision and order regarding Air Liquide’s acquisition of Messer Griesheim GmbH. Paragraph II.A. of the decision and order requires Air Liquide to divest certain assets acquired from Messer Griesheim. Accordingly, through this petition, which can be found as a link to this press release on the FTC’s Web site, Air Liquide has requested approval to divest the “Atmospheric Gases Divestiture Assets and Businesses” as that term is defined in the order, to Matheson Tri-Gas, Inc., a wholly owned subsidiary of Nippon Sanso Corporation of Japan, or to one or more Matheson Tri-Gas subsidiary.

The Commission is accepting public comments on the proposed divestiture for 30 days, until August 16, 2004, after which it will it will decide whether to approve it. Comments can be sent to: FTC Office of the Secretary, 600 Pennsylvania Ave., N.W., Washington, DC 20580. (FTC File No. 041-0020; Docket No. C-4109; the staff contact is Joseph Eckhaus, Bureau of Competition, 202-326-2665; see related press release dated April 29, 2004.)

Submission of Commission comments: The Commission has submitted two comments to the Federal Energy Regulatory Commission (FERC). The first comment concerns revisions to the conditions under which FERC will permit electric utilities to sell wholesale power at market rather than regulated rates, and it addresses analytical methods for delineating markets and assessing market power in wholesale electricity markets (Docket No. RM04-7-000). The second comment concerns FERC’s policies governing electric utility procurement of wholesale electric supply from affiliated generators and through acquisition of affiliated, unregulated generation assets (Docket Nos. PL04-6-000 and PL04-9-000).

In its first comment, the Commission stated that “if market power exists in a market for wholesale electric power, economically practicable policies that lessen this market power by reducing a high level of generation concentration, expanding the geographic market, lowering entry barriers, or increasing the price elasticity of demand are likely to enhance consumer welfare.” The Commission then addressed how to accurately assess whether an electricity supplier has market power, and thus whether to allow that supplier to sell wholesale supply at market rates, rather than regulated rates. In its comment, the Commission recommended that FERC use the economic principles contained in the FTC/DOJ Horizontal Merger Guidelines to determine whether a supplier has market power in a particular product or geographic market. The Commission also addressed FERC’s four-pronged approach to determining whether a wholesale electricity supplier has market power, and it suggested updated thresholds or screens that should apply to each prong to ensure sound analysis.

In the second comment, the Commission addressed whether FERC should reevaluate its policies governing how electric utilities contract with affiliated generators or acquire previously spun-off generation assets in order to obtain electric supply. The comment explained that because utilities may have both incentives and the ability to exercise market power and harm consumers by discriminating in favor of their own affiliates and against independent suppliers, FERC may wish to reduce the potential for this harm by using independent third parties to evaluate utility procurement alternatives and by encouraging utilities to assess the market value of procurement alternatives. The comment described the potential harms from discrimination and cross-subsidization, and it identified approaches FERC may wish to use to detect and remedy such problems.

The Commission vote to approve both comments was 5-0. (FTC File Nos. V040021 and V040022; staff contact is Michael Wroblewski, 202-326-2155.)

Copies of the documents mentioned in this release are available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.

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