Legal Library: Cases and Proceedings

Two of the world’s largest auto parts suppliers, ZF Friedrichshafen AG and TRW Automotive Holdings Corp., agreed to divest TRW's linkage and suspension business in North America and Europe, to settle FTC charges that their proposed $12.4 billion merger would likely harm competition in the North American market for heavy vehicle tie rods. Under the consent agreement, the combined company is required to divest TRW’s North American and European linkage and suspension business for heavy and light vehicles (which includes heavy vehicle tie rods). The business includes five manufacturing plants in Michigan, Canada, the Czech Republic, and Germany, and leased space in a research and development lab in Germany. At the divestiture buyer’s request, ZF must provide transition services for logistical and administrative support as well as transitional supply agreements for key manufacturing inputs needed to fulfill existing customer contracts.

Medical device company Zimmer Holdings, Inc. agreed to divest U.S. rights and assets related to unicondylar knee implants, total elbow implants, and bone cement in order to settle FTC charges that its proposed $13.35 billion acquisition of Biomet Inc. is anticompetitive. According to the complaint, Zimmer and Biomet are two of the only three substantial competitors in the U.S. markets for unicondylar knee implants and total elbow implants, and two of only four significant competitors in the U.S. market for bone cement. The order requires Zimmer to divest to Smith & Nephew the U.S. intellectual property, manufacturing technology, and existing inventory relating to its unicondylar knee implant, and to provide transitional services to help them establish manufacturing capabilities and secure necessary FDA approvals. The order also requires Biomet to divest to DJO the U.S. intellectual property, manufacturing technology, and existing inventory relating to its total elbow implant and bone cement products, and it facilitates DJO’s hiring of the Biomet sales representatives and other staff who work with these products.

The Commission challenged major consumer electronics manufacturers Panasonic Corporation's proposed $9 billion acquisition of Sanyo Electric Co., Ltd., requiring that Sanyo sell its portable nickel metal hydride (NiMH) battery business related assets, including a premier manufacturing plant in Japan. NiMH batteries power two-way radios, among other products, which are used by police and fire departments nationwide.

On February 19, 2015, the FTC filed an administrative complaint charging that the proposed merger of Sysco and US Foods would violate the antitrust laws by significantly reducing competition nationwide and in 32 local markets for broadline foodservice distribution services. The FTC alleged that if the merger goes forward as proposed, foodservice customers, including restaurants, hospitals, hotels, and schools, would likely face higher prices and lower levels of service than would be the case but for the merger. The FTC also authorized staff to seek in federal court a temporary restraining order and a preliminary injunction to prevent the parties from consummating the merger, and to maintain the status quo pending the administrative proceeding. The PI action was filed on February 20, 2015. According to the FTC complaint, a combined Sysco/US Foods would account for 75% of the national market for broadline distribution services. In addition, the parties would also hold high shares in a number of local markets. The Commission also charged that the proposed sale of 11 US Foods distribution centers to Performance Food Group would neither enable PFG to replace US Foods as a competitor nor counteract the significant competitive harm caused by the merger. The following state attorneys general have joined the FTC’s complaint for a preliminary injunction to be filed in federal district court: California, Illinois, Iowa, Maryland, Minnesota, Nebraska, Ohio, Virginia, Pennsylvania, Tennessee, and the District of Columbia. Following a June 23, 2015 ruling by the U.S. District Court for the District of Columbia granting the Federal Trade Commission request for a preliminary injunction, Sysco and US Foods abandoned their proposed merger, and the Commission dismissed its administrative complaint.

The FTC required Surgery Center Holdings, Inc., known as Surgery Partners, and Symbion Holdings Corporation, to divest Symbion’s ownership interest in an ambulatory surgery center in Orange City, Florida to Dr. Mark W. Hollmann, as part of a settlement resolving charges that Surgery Partners’ $792 million purchase of Symbion would be anticompetitive. Both companies operate a large number of ambulatory surgery centers located throughout the country that sell and provide outpatient surgical services to commercial health plans and commercially insured patients. The proposed merger would have combined the only two multi-specialty ambulatory surgical centers in the Orange City/Deltona area of Florida, and would have left commercial health plans and commercially insured patients there with only one meaningful alternative to Surgery Partners’ outpatient surgical services.