Legal Library: Cases and Proceedings

Pharmaceutical company Prestige Brands Holdings, Inc., the maker of Dramamine, agreed to divest assets and marketing rights for the over-the-counter motion sickness drug Bonine to settle FTC charges that Prestige’s proposed acquisition of Insight Pharmaceuticals Corporation would likely be anticompetitive. Prestige proposed to acquire Insight for $750 million. According to the FTC’s complaint, Prestige’s Dramamine, which is the best-selling branded product in the market for over-the-counter motion-sickness drugs, and Insight’s Bonine, are the only two branded products with significant sales. Absent a remedy, the acquisition would eliminate the close competition between Dramamine and Bonine, likely leading to higher prices for consumers.

The National Association of Teachers of Singing, Inc. (NATS) has agreed to eliminate provisions in its code of ethics that limit competition among its members. The FTC charged that NATS, which represents more than 7,300 vocal arts teachers in the United States, restrained competition in violation of the FTC Act through a code of ethics provision that prohibits members from soliciting students from other members. The order settling the FTC’s complaint against NATS requires that it stop restraining members from seeking teaching work, and stop telling its members that soliciting students is unethical. The order also requires NATS to obtain a certification from each of its chapters that the chapter is not restricting solicitation, advertising, or price-related competition by its members, and to sever its ties with any chapter that NATS learns is restraining solicitation, advertising, or price-related competition by its members. NATS also must implement an antitrust compliance program.

The National Association of Residential Property Managers, Inc. (NARPM) has agreed to eliminate provisions in its code of ethics that limit competition among its members. The FTC’s complaint against NARPM, which represent more than 4,000 real estate managers, brokers, and agents, alleges that NARPM and its members restrained competition in violation of the FTC Act through provisions in its code of ethics that restrict comparative advertising and solicitation of competitor’s clients. The proposed consent order settling the FTC’s charges requires NARPM to stop restraining its members from soliciting property management work, and from making statements that are not false or deceptive about a competitor’s products, services, or business or commercial practices. NARPM also must implement an antitrust compliance program.

Akorn, Inc. has agreed to sell its rights to develop, manufacture, and market the generic injectable tuberculosis drug, rifampin, in order to settle FTC charges that Akorn’s proposed acquisition of VersaPharm Inc. and its parent company, VPI Holdings Corp., would likely be anticompetitive. According to the FTC’s complaint, only VersaPharm and two other firms currently have FDA approval to sell generic injectable rifampin and there are no viable substitutes for rifampin as a course of treatment for tuberculosis. The FTC’s proposed settlement with Akorn requires the company to divest its Abbreviated New Drug Application for generic injectable rifampin – which is currently pending before the Food and Drug Administration – to Watson Laboratories, Inc.

Pharmaceutical companies Actavis plc and Forest Laboratories, Inc. agreed to sell or relinquish their rights to four generic pharmaceuticals that treat hypertension, angina, cirrhosis, and prevent seizures to settle FTC charges that Actavis’s acquisition of Forest likely would be anticompetitive. According to the FTC’s complaint, Actavis’s acquisition of Forest, as originally proposed, would violate federal antitrust laws by reducing competition in the markets for three current generic products. In addition, the FTC’s complaint also alleges that the proposed transaction would delay the introduction of another generic drug. Under the proposed FTC settlement order, the companies have agreed to relinquish their rights to market generic diltiazem hydrochloride (AB4) to Valeant Pharmaceuticals International, Inc.; sell generic ursodiol and generic lamotrigine ODT to Impax Laboratories, Inc.; and sell generic propranolol hydrochloride to Catalent Pharma Solutions, Inc. Under the terms of the proposed settlement, Actavis and Forest must ensure the viability, marketability, and competitiveness of the drugs that are
being divested until they are sold.

Hertz Global Holdings, Inc. agreed to sell its Advantage Rent A Car business, as well as the rights to operate 29 Dollar Thrifty on-airport locations around the country, to settle charges that Hertz’s $2.3 billion acquisition of Dollar Thrifty would have been harmed competition in 72 airport markets throughout the United States.

Two Internet resellers of UPC barcodes used by retailers for price scanning and inventory purposes, have settled charges that they violated the FTC Act by inviting competitors to join in a collusive scheme to raise the prices charged for barcodes sold online. In separate complaints, the FTC charged that InstantUPCCodes.com and its principal, Jacob J. Alifraghis, and 680 Digital, Inc., d/b/a Nationwide Barcode and its principal, Philip B. Peretz violated the FTC Act by inviting competitors to collude to raise prices for barcodes sold over the Internet. The Commission charges Instant and Nationwide with inviting an agreement to raise prices in violation of Section 5 of the FTC Act. The FTC has not alleged, however, that the invitations to collude resulted in an agreement on price or other terms of competition. The proposed orders setting the complaints against Instant and Nationwide and their respective principals are designed to remedy the anticompetitive conduct. Specifically, the proposed orders bar Instant and Nationwide from communicating with their competitors about barcode rates or prices; entering into, participating in, maintaining, organizing, implementing, enforcing, inviting, offering, or soliciting an agreement with any competitor to divide markets, allocate consumers, or fix prices; and urging any competitor to raise, fix, or maintain price or to limit or reduce the terms or levels of service they provide.

Fidelity National Financial, Inc. agreed to settle charges that its proposed $2.9 billion acquisition of Lender Processing Services, Inc. (LPS) would likely substantially lessen competition by combining the firms’ title plant assets in several local markets in Oregon. To preserve competition, the proposed settlement requires Fidelity to sell a copy of LPS’s title plants in six Oregon counties and an ownership interest equivalent to LPS’s share of a jointly owned title plant in the Portland, Oregon, metropolitan area.

The FTC alleged that starting in 2004 Marker Völkl and Tecnica agreed not to compete with each other to secure endorsements by professional skiers, in violation of Section 1 of the Sherman Act. Specifically, the FTC charges that Marker Völkl agreed not to solicit, recruit, or contact any skier who previously endorsed Tecnica skis, and Tecnica agreed to a similar arrangement with respect to Marker Völkl’s endorsers. In addition, the complaint states that in 2007, the companies expanded the scope of their non-compete agreement to cover all of their employees. The orders settling the FTC’s charges bar each firm from engaging in similar anticompetitive conduct in the future.

The FTC alleges that starting in 2004 Marker Völkl and Tecnica agreed not to compete with each other to secure endorsements by professional skiers, in violation of Section 1 of the Sherman Act. Specifically, the FTC charges that Marker Völkl agreed not to solicit, recruit, or contact any skier who previously endorsed Tecnica skis, and Tecnica agreed to a similar arrangement with respect to Marker Völkl’s endorsers. In addition, the complaint states that in 2007, the companies expanded the scope of their non-compete agreement to cover all of their employees. The proposed orders settling the FTC’s charges bar each firm from engaging in similar anticompetitive conduct in the future.