Legal Library: Cases and Proceedings

The FTC issued an administrative complaint against Reading Health System’s proposed acquisition of Surgical Institute of Reading L.P., alleging that the combination of the two health care providers would substantially reduce competition in the area surrounding Reading, Pennsylvania. The FTC also authorized staff, in conjunction with the Pennsylvania Attorney General, to seek a preliminary injunction in federal district court or other relief necessary to stop the deal pending a full administrative trial. After the parties abandoned the transaction, on 12/7/2012, the FTC formally dismissed the administrative complaint.

Renown Health agreed to settle charges that its acquisitions of two local cardiology groups reduced competition for the provision of adult cardiology services in the Reno area. Renown Health, based in Reno, Nevada, operates general acute care hospitals and commercial health plans serving the Reno area. Before the acquisitions, virtually all of the cardiologists in the Reno area were affiliated with two medical groups – Sierra Nevada Cardiology Associates and Reno Heart Physicians.To settle the charges, Renown Health will release its staff cardiologists from "non-compete" contract clauses, allowing up to 10 of them to join competing cardiology practices.

The FTC required drug supplier Novartis AG to give up its marketing rights to four topical skin care medications, under a settlement resolving charges that Novartis' acquisition of pharmaceutical firm Fougera Holdings, Inc. would harm competition in the market for these topical drugs. The settlement order requires Novartis to end a marketing agreement that allows it to sell three topically-applied generic drugs and return all rights to a fourth generic drug in development to its manufacturer, Tolmar, Inc. According to the FTC's complaint, Novartis' acquisition of Fougera would violate Section 5 of the FTC Act and Section 7 of the Clayton Act by reducing competition in the generic drug markets for three skin care drugs: 1) generic calcipotriene topical solution, 2) generic lidocaine-prilocaine cream, and 3) generic metronidazole topical gel. The complaint also alleges that the acquisition would eliminate potential competition in the market for the sale of diclofenac sodium gel.

Koninklijke Ahold N.V., the parent company of Giant Food Stores, LLC, agreed to sell a supermarket outside of Philadelphia, Pennsylvania, to settle charges that its proposed acquisition of the Genuardi's supermarket chain from Safeway Inc. otherwise would be anticompetitive. The transaction, if completed, would eliminate competition between Giant and Genuardi's.  To preserve competition in the local grocery market, the consent order requires Ahold to sell a supermarket in Newtown, Pennsylvania to McCaffrey's supermarkets.

The FTC required Johnson & Johnson (J&J) to sell its system for surgically treating serious wrist fractures, resolving charges that J&J's proposed $21.3 billion acquisition of Synthes, Inc. would illegally reduce competition for these systems. J&J intends to sell its system, known as DVR, along with the rest of its product line for treating traumatic injuries, to Biomet, Inc. According to the FTC's complaint, J&J's proposed acquisition of Synthes would harm competition in the U.S. market for volar distal radius plating systems, internal devices that are surgically implanted on the underside of the wrist to achieve proper alignment of the radius bone following a fracture.

The FTC filed an administrative complaint challenging OSF Healthcare System’s proposed acquisition of Rockford Health System, charging that the acquisition would substantially reduce competition among hospitals and primary care physicians in Rockford, Illinois, and significantly harm local businesses and patients. The FTC filed a separate complaint in federal district court seeking an order to halt the transaction temporarily to preserve competition for Rockford area residents pending the FTC’s administrative proceeding and any subsequent appeals. On 4/5/2012, the U.S. District Court ruled granting the FTC's request for a preliminary injunction. On 4/13/2012, the FTC dismissed the complaint in light of OSF Healthcare's decision to abandon the proposed transaction.

The FTC reached a settlement with Healthcare Technology Holdings, Inc., the parent company of market research firm IMS Health Inc., according to which IMS has agreed to sell two product lines of rival SDI Health LLC, as a condition of allowing it to proceed with its acquisition of SDI. The proposed settlement order requires the sale of SDI's promotional audit and medical audit businesses to an FTC-approved buyer to resolve the agency's charges that IMS's acquisition of SDI, as originally proposed, is anticompetitive and likely would increase prices for market research products in the health care industry. On1/10/2012, the FTC approved a modified final order settling the charges.

The FTC required Universal Health Services, Inc., one of the nation’s largest hospital management companies, to sell 15 psychiatric facilities as a condition of its $3.1 billion acquisition of Psychiatric Solutions, Inc. As originally proposed the acquisition would have reduced competition in the provision of acute inpatient psychiatric services in three local markets: Delaware, Puerto Rico, and metropolitan Las Vegas, Nevada.

The Commission reached settlement agreement with Tops Markets LLC that protects consumers from the potential anticompetitive effects of Tops’ acquisition of the bankrupt Penn Traffic Company supermarket chain. To settle FTC charges that the acquisition was anticompetitive in several areas of New York and Pennsylvania, Tops agreed to sell seven Penn Traffic supermarkets to FTC-approved buyers in five grocery markets: Bath, Cortland, Ithaca, and Lockport, New York, as well as Sayre, Pennsylvania.

The Commission required dialysis services company DaVita, Inc. to sell 29 outpatient dialysis clinics around the United States, under a settlement that resolves FTC charges that DaVita’s proposed $689 million acquisition of rival CDSI I Holding Company, Inc., also known as DSI, would be anticompetitive. The settlement preserves competition in 22 geographic markets where the FTC alleges that consumers would be harmed by DaVita’s acquisition of DSI. The settlement requires DaVita to sell the clinics to Dialysis Newco, Inc., a corporation formed by venture capital firms Frazier Healthcare and New Enterprise Associates.