Tag: Merger

The FTC challenged Hexion LLC's proposed acquisition of Huntsman Corp., and settled its charges with a proposed consent order which requiredthe divestiture of Hexion's specialty epoxy business, and prevented the sharing of sensitive and non-public information which could lead to coordination of prices. Huntsman and Hexion are both producers of high-performance and specialty chemicals used in the aerospace and alternative energy industries. Subsequently, Hexion LLC and Huntsman Corporation petitioned the Commission to reopen and set aside two orders related to their proposed merger because they terminated their planned merger; the Commission granted, in part, the petition but left in place provisions of the order requiring Hexion for three years to seek the Commission’s approval prior to any acquisition of Huntsman, or any merger or other combination with Huntsman.

In September, 2008, the Commission challenged Reed Elsevier’s $4.1 billion proposed acquisition of ChoicePoint, which would have combined the two leading providers of electronic public record services provided to U.S. law enforcement customers. Public records services compile public and non-public records about individuals and businesses, including credit data, criminal, motor vehicle, property, and employment records, all used by law enforcement as an investigative tool in solving a wide variety of crimes. The transaction, as proposed, would have removed the intense rivalry that had lead to lower prices, product innovations, and improved services and support for law enforcement customers by eliminating the competition between Reed Elsevier’s LexisNexis product and ChoicePoint’s AutoTrackXP and CLEAR products. The Commission required divestiture of ChoicePoint’s product lines to Thomson Reuters Legal Inc. The Commission worked with the Attorneys General of eighteen states on this investigation.

The Commission challenged Lubrizol Corporation’s consummated 2007 acquisition of the oxidate assets of The Lockhart Company which had the effect of substantially lessening competition in the already highly concentrated U.S. market for chemical rust inhibitors. These inhibitors are commonly used to prevent rusting during the manufacture of metal products such as automobiles and other heavy equipment. According to the Commission’s complaint the acquisition removed Lubrizol’s last substantial competitor in the relevant market. In addition, the Commission challenged a non-compete agreement included in the terms of the acquisition which prevented Lockhart from competing in the relevant market for 5 years as anticompetitive because it restrained the ability of new firms to enter the market. The Commission issued a consent order remedying its anticompetitive concerns requiring the divestiture of the oxidate assets in question to Additives International and the elimination of the non-compete agreement.

Drug maker Bristol-Myers Squibb Company (BMS) agreed to pay $2.1 million – the largest fine allowed by law – for failing to inform the FTC of agreements reached with Apotex, Inc., regarding potential generic competition to its blockbuster drug Plavix. BMS’s conduct violated a 2003 FTC Order and the Medicare Modernization Act, which requires that certain drug company agreements be accurately reported to both the Commission and the U.S. Department of Justice. The complaint alleges that BMS failed to disclose that, as part of a patent settlement in which Apotex agreed not to launch its generic version of Plavix for several years, BMS also orally stated, among other things, that it would not compete with Apotex during the first 180 days after Apotex did market its new generic drug.

The Commission challenged Getinge AB’s proposed $865 million acquisition of rival Datascope Corporation as anticompetitive in the market for endoscopic vessel harvesting devices (EVHs). EVHs are used during coronary artery bypass graft surgery where a vein is removed from a patients leg or arm to replace a damaged or blocked coronary artery. According to the Commission’s complaint, the acquisition as proposed would give Getinge nearly a 90% market share and the ability to unilaterally increase prices while reducing the likelihood of innovation. The Commission issued a consent order requiring that Datascope divest its EVH assets to Sorin Group USA within 10 days of consummating the transaction.

In November 2008, the Commission issued an administrative complaint charging that the acquisition of CCC Information Services by Mitchell International, a transaction valued at $1.4 billion, would be anticompetitive in the market for “estimatics”, a database system used by auto insurers and repair shops to generate repair estimates for consumers. According to the complaint, the transaction would also harm competition in the market for total loss valuation (TLV) systems, used to inform consumers when their vehicle has been totaled. The transaction would create a new entity with well over half of the market share for these systems, allowing for unilateral price increases, and facilitating coordination among the remaining smaller competitors in the market. The Commission concurrently authorized staff to file a complaint in Federal District Court. On March 9, 2009, the US District Court for the District of Columbia ordered a preliminary injunction and temporary restraining order preventing the parties from consummating the transaction pending a full administrative trial on the merits. On March 13, 2009, since the respondents announced that they decided not to proceed with the proposed merger the Commssion dismissed the Administrative Complaint.

In November 2008, the Commission authorized staff to file a complaint in Federal District Court, charging that the acquisition of CCC Information Services by Mitchell International, a transaction valued at $1.4 billion, would be anticompetitive in the market for “estimatics”, a database system used by auto insurers and repair shops to generate repair estimates for consumers. According to the complaint, the transaction would also harm competition in the market for total loss valuation (TLV) systems, used to inform consumers when their vehicle has been totaled. The transaction would create a new entity with well over half of the market share for these systems, allowing for unilateral price increases, and facilitating coordination among the remaining smaller competitors in the market. The Commission concurrently issued an administrative complaint. On March 9, 2009, the US District Court for the District of Columbia ordered a preliminary injunction and temporary restraining order preventing the parties from consummating the transaction pending a full administrative trial on the merits. On March 13, 2009, since the respondents announced that they decided not to proceed with the proposed merger the Commssion dismissed the Administrative Complaint.

In December 2008, the Commission settled antitrust concerns raised by the proposed $8.9 billion acquisition of Barr Pharmaceuticals by Teva Pharmaceutical Industries. The proposed acquisition would have lessened competition in the markets for 17 commonly used generic medications including drugs used in the treatment of cancer, bacterial infections, diabetes, acid reflux, and depression as well as several varieties of oral contraceptives. According to the Commission’s complaint, the acquisition would have likely led to higher prices for consumers through the removal of one of only four competitors in each of these markets. The Commission’s consent agreement requires both Teva and Barr to sell assets in 29 U.S. markets to either Watson Pharmaceuticals or Qualitest Pharmaceuticals.

In late 2008, the Commission issued a consent order to restore competition in the market for oral long-acting opioids (LAOs). The FTC intervened in King Pharmaceutical’s proposed $1.6 billion acquisition of rival drug-maker Alpharma Inc. because the transaction would have joined the two leading producers of morphine sulfate oral LAO’s in the United States, a market which was already highly concentrated and which had annual sales of $4 billion in 2007. In order to maintain competition in the market, the Commission’s consent order requires King to divest its Kadian business to Actavis, a company which already manufactured the drug for King, and which could then produce a generic equivalent of the drug sooner than would have been permitted under King’s patent, which would not have expired until 2010.

The Commission issued an administrative complaint to challenge Oldcastle Architectural’s (a subsidiary of CRH) proposed $540 million acquisition of Pavestone Companies as anticompetitive in the US market for drycast concrete hardscape products sold to retailers such as The Home Depot, Lowe’s, and Wal-Mart Stores. According to the complaint, the acquisition would reduce competition by combining the only two companies capable of the national manufacture and sale of these heavy products, which include concrete pavers, segmented retaining wall blocks, and concrete patio products, due to the difficulty in distribution of such products, and the fact that both Oldcastle and Pavestone already possess large distribution networks. The acquisition as proposed would result in Oldcastle gaining a 90% market share for the manufacture and sale of these drycast products to home centers in the United States. The Commission also authorized staff to file a complaint in federal court seeking a temporary restraining order and preliminary injunction to prevent consummation of the proposed transaction, but the respondents decided not to proceed with the proposed merger and the Commssion dismissed the administrative complaint.

In order to restore competition in the U.S. market for consumer pregnancy tests, the Commission effectively reversed a consummated transaction in which Inverness Medical Innovations, a 70% market share holder, purchased the assets related to the development of a water-soluble dye based pregnancy test from ACON Laboratories in order to protect its monopoly power in the market. According to the Commission’s complaint, Inverness restrained competition in two ways. First, Inverness issued covenants not to compete to ACON, took profits from ACON’s joint venture with Church & Dwight, and purchased intellectual property rights which would restrict ACON from developing competing products. Second, Inverness limited product innovation by purchasing, but not using, the water-soluble dye test technology purchased from ACON, one of the only companies utilizing that technology. The Commission’s consent order ended any restrictions Inverness had over the joint venture between ACON and Church & Dwight, and required that Inverness divest its assets relating to the water-soluble dye technology, and its related pregnancy test product.

The Commission sought a federal court temporary restraining order and preliminary injunction, and issued an administrative complaint, against Whole Food Market, Inc.’s proposed acquisition of Wild Oats Markets, Inc. According to the complaint, the approximately $670 million deal raised competition problems in 21 local markets where Whole Foods and Wild Oats both operated stores and were each other’s closest competitors among premium national and organic supermarkets. The district court granted the TRO, but subsequently denied the preliminary injunction, concluding that the merger’s likely effect would not be substantially to reduce competition in violation of Section 7 of the Clayton Act. The Commission appealed the district court’s ruling on grounds that the lower court failed to apply the proper legal standard that governs preliminary injunction applications by the Commission in Section 7 cases. The appellate court remanded the case to the district court for further proceedings to determine if the proposed $670 million deal raised competition problems in numerous local markets where Whole Foods and Wild Oats both operated premium natural and organic supermarkets. In a settlement on March 6, 2009, Whole Foods agreed to sell the name brand of Wild Oats, along with 32 of the company’s stores.

There is a related administrative proceeding.

The Commission issued an administrative complaint to block CCS Corporation’s proposed $85 million acquisition of Newpark Environmental Services. According to the complaint, the proposed transaction was anticompetitive because it would consolidate two of the leading providers of waste disposal services for the offshore oil and natural gas exploration and production industry in the Gulf Coast Region, leading to higher prices and decreased service levels. In response to the complaint, CCS, a subsidiary of Red Sky, threatened to close down its operations in the Gulf Coast should the acquisition not receive the necessary regulatory approvals. The Commission filed for a preliminary injunction, and temporary restraining order in federal court. As a result, the parties abandoned the transaction, and the Commission dismissed its administrative complaint.

In an administrative complaint issued on October 25, 2001, the Commission challenged the February 2001 purchase of the Water Division and Engineered Construction Division of Pitt-Des Moines, Inc. alleging that the consummated merger significantly reduced competition in four separate markets involving the design and construction of various types of field-erected specialty industrial storage tanks in the United States. On June 27, 2003, an administrative law judge upheld the complaint and ordered the divestiture all of the assets acquired in the acquisition. In December 2004, the Commission approved an interim consent order prohibiting Chicago Bridge & Iron from altering the assets acquired from Pitt-Des Moines, Inc. except “in the ordinary course of business.” These assets included but were not limited to real property; personal property; equipment; inventories; and intellectual property. On January 7, 2005 the Commission upheld in part the ruling of an administrative law judge that Chicago Bridge & Iron’s acquisition of the Water Division and the Engineered Construction Division of Pitt-Des Moines, Inc. created a near-monopoly in four separate markets involving the design and construction of various types of field-erected specialty industrial storage tanks in the United States. In an effort to restore competition as it existed prior to the merger, the Commission ordered Chicago Bridge to reorganize the relevant product business into two separate, stand-alone, viable entities capable of competing in the markets described in the complaint and to divest one of those entities within six months. On January 25, 2008 the U.S. Court of Appeals for the Fifth Circuit upheld the Commission's order.  In November 2008, the Commission approved divestiture of the assets to Matrix Service Company.

In August 2006, the FTC approved a final consent order relating to the proposed $14.4 billion acquisition of the BOC Group by Linde requiring Linde to divest Air Separation Units (ASUs), bulk refined helium assets, and other assets in eight localities across the United States. The consent order aims to maintain competition in the markets for liquid oxygen, liquid helium, and bulk refined helium in several U.S. markets.