FTC Order Preserves Competition Threatened by Agilent's Acquisition of Varian

Agilent Technologies, Inc. and Varian, Inc., two leading global suppliers of high-performance scientific measurement instruments, have agreed to sell three of their product lines in order to proceed with their merger, under a settlement with the Federal Trade Commission. The settlement resolves the competitive concerns created by the proposed merger and allows Agilent to proceed with its acquisition of Varian.

Under a July 2009 merger agreement, Agilent, headquartered in Santa Clara, California, proposes to acquire Varian, based in Palo Alto, California, in a deal valued at approximately $1.5 billion. According to the FTC’s complaint, Agilent’s acquisition of Varian would have violated U.S. antitrust laws by reducing competition for three types of scientific measurement instruments because the companies currently compete with one another in those markets.

To resolve these competitive concerns, the parties have agreed to an FTC order requiring them to sell assets related to the manufacture and sale of: 1) Micro Gas Chromatography (Micro GC) instruments; 2) Triple Quadrupole Gas Chromatography-Mass Spectrometry (3Q GC-MS) instruments; and 3) Inductively Coupled Plasma-Mass Spectrometry (ICP-MS) instruments.

Micro GCs are portable measurement devices used by customers in the oil and gas, mining, and waste industries to detect toxins in the air or in emissions 3Q GC-MSs are high-sensitivity measurement instruments that are used to identify and quantify trace amounts of substances in various samples, such as performance-enhancing drugs in blood and pesticides in food. ICP-MSs analyze inorganic materials, and are most often used to test water samples for the presence of toxic metals, such as arsenic, mercury, or lead.

The FTC contends that in each market, without the proposed divestitures, the acquisition would allow Agilent to raise prices, decrease innovation, or reduce customer service. According to the complaint, Agilent and Varian are the only two competitors producing Micro GCs, and the acquisition would leave Agilent with a monopoly in that market. Similarly, in the 3Q GC-MS and ICP-MS markets there are currently only four competing firms. Eliminating the competition between Agilent and Varian would leave Agilent with a post-merger market share of nearly 50 percent in each market.

To address the competitive concerns created by the proposed transaction, Agilent will divest its Micro CG instrument business to Inficon Group, a subsidiary of Inficon Holding AG, and Varian will divest its 3Q GC-MS and ICP-MS businesses to Bruker Corp. All three transactions will be completed within 10 days of the completion of the acquisition. The order also allows the FTC, if necessary, to appoint an interim monitor to oversee the sale of the assets and to ensure that the Commission is fully informed about the status of the divestitures. The FTC also may appoint a divestiture trustee in the event Agilent and Varian do not sell the Micro GC, 3Q GC-MS, and ICP-MS businesses within the time required.

International Cooperation. Australia’s Competition and Consumer Commission, the European Commission’s (EC) Competition Directorate, and Japan’s Fair Trade Commission also reviewed this merger. Throughout the investigation, FTC staff coordinated enforcement efforts with staff from these agencies. This cooperation was conducted under the auspices of the relevant bilateral cooperation agreements, the OECD Recommendation on cooperation among its members, and, in the case of the EC, the 2002 Best Practices on Cooperation in Merger Investigations.

The Commission vote approving the complaint, proposed settlement order, and monitor agreement was 5-0. The order will be subject to public comment for 30 days, until June 17, 2010, after which the Commission will decide whether to make it final. Comments should be sent to: FTC, Office of the Secretary, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. To submit a comment electronically, please click on: https://public.commentworks.com/ftc/agilent.

NOTE: The Commission issues a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of a complaint is not a finding or ruling that the respondent has violated the law. 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 $16,000.

Copies of the complaint, consent order, and an analysis to aid in public comment can be found on 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. 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.