Legal Library: Cases and Proceedings

A final consent order settles allegations stemming from Medtronic's proposed acquisition of Physio-Control International Corporation's automatic external defibrillator business. According to the complaint, Medtronic, through its controlling interest in SurVivaLink Corporation, a direct competitor of Physio-Control, would control both companies as a result of the acquisition and thereby increase the likelihood of coordinated interaction which could result in increased prices and reduce innovation in the market. The consent order requires Medtronic to become a passive investor in SurVivaLink and reduce many of its present and future business contacts with the firm.

A consent order requires Albertson's to divest eight supermarkets in Montana and seven in Wyoming in order to settle FTC charges and maintain competitive grocery pricing in 11 communities following its acquisition of the Buttrey Food and Drug Store Company. Under the consent agreement, 13 of the supermarkets would be sold to Smith's Food and Drug Centers, Inc. and two supermarkets would be sold to Supervalu Holdings, Inc.

Federal-Mogul, one of the world's leading producers of thinwall bearings used in car, truck and heavy equipment engines, agreed to divest the thinwall bearings assets it acquired in its $2.4 billion takeover of T&N, plc. to settle FTC charges that the acquisition would likely substantially reduce competition in the worldwide market for thinwall bearings. According to the FTC, Federal-Mogul and T&N, headquartered in Manchester, England, have a combined market share in the United States of nearly 80 percent or more in each of the four markets identified in the complaint. The FTC consent order requiree Federal-Mogul to divest the thinwall bearings business of T&N, which includes the assets and plants that T&N uses to make thinwall bearings, as well as intellectual property that T&N uses to develop and design new bearings to meet the needs of engines that OEMs will develop in the future. To ensure that the divested thinwall bearings business would be in the same position that T&N had been in terms of research, the proposed order identifies individuals in T&N who worked on bearings research and development, and requires Federal-Mogul and T&N to assign those personnel to the businesses to be divested.

Final consent order settled allegations that the proposed consolidation of Commonwealth's title plant with First American Title Insurance Company, its only competitor in the Washington, DC area, would create a monopoly for title services in the Washington, DC market. The consent order requires Commonwealth, among other things, to reestablish its operations and to maintain them as viable businesses in competition with First American.

Exxon will divest its viscosity index improver business to Chevron Chemical Company LLC to settle allegations that its proposed joint venture with Royal Dutch Shell to develop, manufacture and sell their fuel and lubricants additives would reduce competition and lead to collusion among the remaining firms in the market.

Consent order settles charges that the acquisition of Petroleum Information Corporation could create a monopoly for production and well history data used by geologists and petroleum engineers to find additional oil and gas reserves. The settlement requires Dwight to license a complete set of well history to HPDI, an independent competitor, or another Commission-approved licensee.

An association of 25 automobile dealerships settled charges that they agreed to boycott Chrysler if the manufacturer continued to allocate vehicles based on total sales. Competing dealers marketed vehicles offering lower prices on the Internet and were taking substantial sales from other dealers in the Northwest. The consent order prohibits the dealers from threatening to enter into any boycott or refusal to deal with any automobile manufacturer or consumer.

Consent order prohibits the association from entering into agreements that restrict its members from posting or advertising room rates for lodgings in the South Lake Tahoe area of Northern California and Nevada.

Nortek, Inc., agreed to settle FTC charges that its $242.5 million acquisition of NuTone, its closest competitor in the hard-wired residential intercom business, would violate federal antitrust laws by creating a dominant firm that could drive up prices in the market.  Nortek, based in Providence, Rhode Island, controls 31 percent of the market for hard- wired residential intercoms, through its M & S subsidiary. NuTone is the leading seller of residential intercoms, with about 56 percent of the market. Together, the merged firm would control about 87 percent of U.S. hard-wired residential intercom sales.To settle the FTC charges, Nortek agreed to divest M & S, its wholly-owned subsidiary and the second-largest seller of hard-wired residential intercoms in the United States.

Sky Chefs modified its acquisition plans, excluding Ogden Corporation's in-flight catering operation at the McCarran International Airport in Las Vegas, Nevada from its purchase agreement, to settle Commission concerns that the consolidation of the two firms in Las Vegas would lead to higher prices for airline catering services. The consent order prohibits Sky Chefs from making certain acquisitions without Commission approval for 10 years.

Dentists in three communities in Puerto Rico settled charges that they refused to provide dental services under the government's managed care plan for the indigent unless they received certain prices. Under the terms of the consent order, the dentists are prohibited from jointly boycotting or refusing to deal with any third party payer to obtain higher reimbursement rates for dental services.

A group of physicians in the area of Lake Charles, Louisiana settled charges that they illegally conspired to fix the prices for professional services by engaging in joint price negotiations with third-party payers. The final consent order prohibits such practices but does allow the MDP to engage in legitimate joint conduct.

A final order prohibits five institutional pharmacies from engaging in any joint price negotiation or price agreements for the provision of prescription drugs in an attempt to maximize reimbursement rates with managed care organizations.

The FTC charged that Fastline Publications, Inc., a Kentucky publisher, and Mid-America Equipment Retailers Association, an Indiana trade association representing farm equipment dealers harmed competition when the publisher entered into agreements with the dealers to ban price advertising for new equipment in an attempt not to disclose those dealers who offered discounted prices.  According to the FTC, the agreements reduced competition among farm equipment dealers and deprived consumers of truthful and nondeceptive price information. The agreement to settle the charges prohibited Fastline and Mid-America from restricting the advertising of prices for farm equipment in the future.

The Commission withdrew a proposed consent agreement that settled allegations that PacifiCorp's proposed acquisition of The Energy Group PLC would lead to increases in wholesale and retail electricity prices in the United States. During the comment period PacificCorp withdrew its bid after the Texas Utilities Company announced a competing tender offer for The Energy Group.

Global Industrial Technologies, Inc. agreed to restructure its proposed acquisition of AP Green Industries, Inc. to resolve FTC allegations that the merger would likely substantially reduce competition by combining the two largest domestic producers of glass-furnace silica refractories in the United States. Under the terms of a settlement, Global divested AP Green’s silica refractories business to a Commission-approved buyer.

The consent order settled charges that Ethyl and The Associated Octel Company Ltd. entered into an agreement whereby Ethyl agreed to stop manufacturing lead antiknock compounds and, in return, Octel agreed to supply Ethyl with a limited volume of lead antiknock compounds. The complaint issued with the consent order charged that the agreement eliminated competition between the two firms. Under the terms of the consent order, Octel must modify the agreement with Ethyl to remove price and volume restrictions and both firms are prohibited from disclosing to one another the prices that they charge their customers.

Degussa agreed to restructure a proposed transaction to acquire only one hydrogen peroxide production plant from E. I. Dupont de Numbers & Co., to obtain prior Commission approval before acquiring certain other Dupont production plants and to notify the Commission of its attempts to acquire hydrogen peroxide facilities in specific areas. Originally, Degussa had planned to acquire all of Dupont's hydrogen peroxide facilities in North America.

The FTC charged that Stone Container Corporation, the world's leading manufacturer of linerboard, violated the antitrust laws by attempting to orchestrate an industry-wide price increase. According to the FTC, in both private conversations and public statements the executives of Stone Container signaled their intention to take mill downtime and reduce industry-wide inventories and their belief that doing so would build support for a price increase. According to the FTC complaint, the actions and statements constituted an invitation by Stone to its competitors to join a coordinated price increase. If accepted, the invitation would result in higher prices, reduced output and consumer injury, the complaint alleges.The FTC alleged that, following a failed attempt to increase the price it charged for linerboard in 1993, Stone Container temporarily shut down production at its own mills and bought up competitors' excess inventory as part of an intentional effort to build industry support for a price increase. The agreement to settle the FTC charges bars Stone Container from urging any competitor to raise or fix the price charged for linerboard.

LandAmerica agreed to divest title plants in 11 areas to settle antitrust allegations that its proposed acquisition of Commonwealth Land Title Insurance Company and Transnation Title Insurance Company, subsidiaries of Reliance Group Holdings, Inc. would reduce competition in title plant services --underwriting title insurance in the real estate industry. The consent order requires the divestiture of the title plants of Lawyers Title or those of Reliance Group to an acquirer approved by the Commission within six months.