For Your Information: May 20, 1997
The Federal Trade Commission today announced the following actions.
Commission action regarding applications for approval: Following a public comment period, the Commission has ruled on an application for approval of a transaction from the following entity:
- The FTC has approved the application of J.C. Penney Company, Inc., of Plano, Texas, and Thrift Drug, Inc., of Pittsburgh, Pennsylvania, to divest 130 Rite Aid stores located in North Carolina and Charleston, South Carolina, and 34 Thrift stores located in the Charlotte-Gastonia-Rock Hill and Raleigh-Durham-Chapel Hill areas of North and South Carolina, to New Kerr Drug, Inc., of 2522 S. TriCenter Boulevard in Durham, North Carolinia 27713. New Kerr is newly-formed and 49 percent owned by manage ment -- including Anthony Civello and Richard D. Johnson, among others who are former managers of Thrift Drug -- and 51 percent owned by Laurence F. Ross, an independent investor. Divestiture of these assets is required under a March 1996 consent order designed to prevent injury to competition as a result of Penney’s acquisitions of Eckerd Corporation and of 190 Rite Aid stores in these two states. (See Dec. 9, 1996 news release for more details regarding this case; Docket Nos. C-3721, C-3722; Commission vote on May 19 to approve the divestiture was 5-0.) Staff contact is Elizabeth Piotrowski, 202-326-2623.
Consent agreements given final approval: Following a public comment period on each, the Commission has made final the consent agreements with the following entities. The Commission action makes the consent orders binding on the respondents.
- The consent order with American Home Products Corporation (AHP), of Madison, New Jersey, settles charges that its acquisition of Solvay, S.A.’s animal health business would give AHP a dominant position in the market for canine lyme vaccines, canine corona virus vaccines, and feline leukemia vaccines, in violation of federal antitrust laws. Solvay is based in Brussels, Belgium. The order required AHP to divest Solvay’s U.S. and Canada rights to the three types of vaccines to the Schering-Plough Corporation (the divestiture has been completed); assist Schering-Plough in obtaining U.S. Department of Agriculture (USDA) certifications; and manufacture and supply the three vaccines to Schering-Plough for 24 to 36 months or until Schering-Plough obtains USDA approvals. The order also prohibits AHP from suing Schering-Plough for patent infringements relating to the vaccines. (See Feb. 25, 1997 news release for more details regarding this case; Docket No. C-3740; Commission vote on May 16 to issue the order as final was 5-0.) Staff contact is Casey Triggs, 202-326-2804.
- The consent order with General Mills, Inc., of Minneapolis, Minnesota, settles charges that its acquisition of Ralcorp Holdings, Inc.’s branded cold cereal business would boost General Mill’s share of the U.S. ready-to-eat cereals market to 31 percent and restrict the entry of new private label cereal products to compete with General Mills brands, resulting in higher prices for Chex brand cereals. Ralcorp is based in St. Louis, Missouri. In the deal, a new entity, New Ralcorp Holdings, Inc., will retain Ralcorp’s private label cold cereal business. The order requires General Mills to permit New Ralcorp to transfer to any successor party, without authorization or approval from General Mills, the right to manufacture and sell cereals identical to the Chex brand products. The order also bars General Mills from delaying production of the private label Chex rivals.
See Dec. 26, 1996 news release for more details regarding this case; Docket No. C-3742; Commission vote on May 16 to issue the order as final was 4-1, with Commissioner Roscoe B. Starek, III, dissenting.
Commissioner Mary L. Azcuenaga said in a concurring and dissenting statement that she opposed requiring elimination of the 18-month noncompete clause in the original agreement between General Mills and Ralcorp. She observed: "Although the complaint might be read as alleging that noncompete clauses are per se anticompetitive, that interpretation would be inconsistent with the Commission’s recent decision in another case [in the Ciba Geigy Limited matter, Docket No. C-3725] to issue an order that imposed an affirmative prohibition on competition for six years between the merged firm and the acquiring of certain assets to be divested under the order."
In his dissenting statement, Starek said he questions whether the evidence shows that the acquisition will allow General Mills unilaterally to raise prices for its branded cold cereals. He cited a recent court decision which found that consumers have many alternatives from which to choose when one cereal maker raises prices. Starek also said he finds it "completely unnecessary -- and [that it] in fact creates inefficiency -- to bar enforcement of the parties’ non-compete agreement." Such agreements can be pro- competitive "by allowing an acquiring entity a brief period to re-deploy the acquired assets in a manner that increases competition in the marketplace," he said.)
Staff contact is Phillip Broyles, 202-326-2805.
Copies of the documents referenced above are available from the FTC’s web site at http://www.ftc.gov and also from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
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