Inverness Medical Innovations Settles FTC Charges That it Stifled Future Competition in U.S. Market for Consumer Pregnancy Tests

Consent Order Restores Competition From New Products

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Inverness Medical Innovations, Inc., has agreed to settle Federal Trade Commission charges that it acted illegally to maintain its monopoly on consumer pregnancy tests in the United States when it acquired certain assets of a smaller competitor, ACON Laboratories, Inc., and interfered with that company’s efforts to develop and supply new consumer pregnancy tests that would compete with Inverness’ products.

The consent order announced today requires Inverness to sell the consumer pregnancy test assets related to water-soluble dye technology that it acquired from ACON and to remove barriers to ACON’s supply of digital consumer pregnancy tests to Inverness’ competitor. The order also limits Inverness’ ability to interfere with future development and supply of digital consumer pregnancy tests.

“Through its actions Inverness removed two important competitive threats to its leading market position in consumer pregnancy tests,” said David P. Wales, Acting Director of the FTC’s Bureau of Competition. “The Commission’s action today clears the way for more vigorous competition in the future that will benefit consumers through lower prices and more innovation.”

With approximately a 70 percent market share, Inverness is the market leader for U.S. consumer pregnancy tests. Inverness sells several-brand name pregnancy tests, including Clearblue, Accu-Clear, and FactPlus. In 2006, Inverness acquired assets from ACON, including a consumer pregnancy test that ACON was developing based on water-soluble dye technology, and assets related to a digital consumer pregnancy test joint venture that ACON had entered into with another company, Church & Dwight Co., Inc. By buying these assets, Inverness could restrict the development of emerging products that would compete with Inverness’ consumer pregnancy tests.

According to the Commission’s complaint, Inverness acquired these assets from ACON to maintain its monopoly in the pregnancy test market, and acted illegally to stifle future competition from ACON’s joint venture with Church & Dwight in violation of Section 5 of the FTC Act.

The complaint charges that Inverness weakened future competition in two main respects. First, it charges that Inverness limited potential competition from digital consumer pregnancy test products by, among other things, 1) imposing a covenant not to compete on ACON, limiting the scope and duration of its joint venture with Church & Dwight; 2) requiring ACON to provide Inverness with all profits from the joint venture; and 3) acquiring rights to certain intellectual property developed by ACON and Church & Dwight during their joint venture. The FTC contends that through these actions, Inverness interfered with ACON’s ability and incentive to develop and manufacture digital consumer pregnancy tests. The consent order prevents Inverness from interfering with ACON and Church & Dwight’s joint venture, and will enable ACON and Church & Dwight to remain competitive after the joint venture ends.

Second, the complaint charges that Inverness engaged in unfair competition to maintain its monopoly when it bought, but did not use, ACON’s water-soluble dye consumer pregnancy test assets. At the time, ACON was one of the only firms developing consumer pregnancy tests using water-soluble dye technology. According to the FTC, the 2006 acquisition of these assets solidified Inverness’ monopoly, and kept that technology from being developed into products that would compete with Inverness’ consumer pregnancy tests. The consent requires Inverness to divest to Aemoh Products, LLC, assets related to ACON’s water-soluble dye product, including its water-soluble dye technology. Under the terms of the order, Inverness also will be prohibited from making infringement claims against certain lateral flow products that use its water-soluble dye technology.

The Commission vote to accept the complaint and consent order and place copies on the public record was 3-0, with Commissioner Pamela Jones Harbour recused. The FTC will publish an announcement regarding the agreement in the Federal Register shortly. The complaint, consent order, and an analysis to aid public comment can be found now on the Commission’s Web site at http://www.ftc.gov/os/caselist/0610123/index.shtm.

The agreement will be subject to public comment for 30 days, beginning today and continuing through January 20, 2009, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, Room H-135, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC is requesting that any comment filed in paper form near the end of the public comment period be sent by courier or overnight
service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.

Copies of the documents related to this matter are available from the FTC's web site at http://www.ftc.gov and the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust@ftc.gov, or write to the Office of Policy and Coordination, Room 383, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

(FTC File No. 061-0123)
(Inverness.final.wpd)

Contact Information

MEDIA CONTACT:
Mitchell J. Katz,
Office of Public Affairs
202-326-2161
STAFF CONTACT:
Lore Unt,
Bureau of Competition
202-326-3019