Legal Library: Cases and Proceedings

The Commission authorized staff to seek a preliminary injunction to block the proposed acquisition of Claussen Pickle Company by Hicks, Muse, Tate & Furst Equity Fund V L.P., the owner of Vlasic Pickle Company on grounds that the transaction would combine the dominant firm in the market for refrigerated pickles (Claussen) with its most significant competitor in refrigerated pickles (Vlasic). Six days after the complaint was filed in federal district court, the parties abandoned the transaction.

A consent order permitted the $45 billion merger of Chevron and Texaco In., but required significant divestitures in the petroleum industry, including gasoline marketing assets, refining and bulk supply facilities, crude oil pipeline interests and terminaling facilities. Specifically, the Commission alleged that the proposed acquisition would likely substantially reduce competition in each of the following markets: 1) gasoline marketing in the western United States (in Arizona, Idaho, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming), the southern United States (in Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, Oklahoma, Tennessee, Texas, Virginia, and West Virginia), in Alaska and Hawaii, and smaller local areas; 2) the marketing of California Air Resources Board (CARB) gasoline in California; 3) the refining and bulk supply of CARB gasoline for sale in California; 4) the refining and bulk supply of gasoline and jet fuel in the Pacific Northwest (Washington and Oregon, west of the Cascade mountains; 5) the bulk supply of Phase II Reformulated Gasoline (RFG II) in metropolitan St. Louis, Missouri; 6) the terminaling of gasoline and other light petroleum products in Arizona (Phoenix and Tucson), California (San Diego and Ventura), Mississippi (Collins), and Texas (El Paso), and the Hawaiian islands of Hawaii, Kauai, Maui, and Oahu; 7) the pipeline transportation of crude oil from California's San Joaquin Valley; 8) the pipeline transportation of crude oil to shore from portions of the Eastern Gulf of Mexico; 9) the pipeline transportation of offshore natural gas to shore from locations in the Central Gulf of Mexico; 10) the fractionation of raw mix into natural gas liquids products at Mont Belvieu, Texas; and 11) the marketing and distribution of aviation fuel to customers in the western and southeastern United States.

The Commission charged Biovail Corporation with illegally acquiring an exclusive patent license for Tiazac, a pharmaceutical used to treat high blood pressure and chronic chest pain. The complaint further alleged that Biovail, in an effort to maintain its monopoly, wrongfully listed the acquired license in the U.S. Food and Drug Administration’s “Orange Book” for the purpose of blocking generic competition to its branded Tiazac. The consent order requires Biovail to divest part of its exclusive rights to DOV; prohibits the firm from taking any action that would trigger additional statutory stays on final FDA approval of a generic form of Tiazac; and also prohibits Biovail from wrongfully listing any patents in the Orange Book for a product for which the company already has an New Drug Application from the FDA.

The consent order permitted Valero to complete its $6 billion merger with Ultramar Diamond Shamrock Corporation, but required the divestiture of Ultramar's Golden Eagle Refinery, bulk gasoline contracts, and 70 Ultramar retail service stations in Northern California to a Commission-approved acquirer. According to the complaint, the merger as originally proposed, would have lessened competition in two refining markets in California resulting in consumers paying more than $150million annually if the price of CARB gasoline increased just one cent per gallon. CARB gasoline meets the specifications of the California Air Resources Board.

The consent order permits WA's acquisition of FAG Kugelfischer Georg Schufer AG but requires the divestiture of FAG'S cartridge ball screw support bearing business to Aktiebolaget SKF within 20 business days after the consummation of the INAJFAG transaction. According to the complaint issued with the consent order, the acquisition, as planned, would create a monopoly in the worldwide market for cartridge ball screw support bearings, a type of bearing used in the manufacture of machine tool equipment.

The Commission negotiated an agreement with The Hearst Corporation (Hearst) to settle a permanent injunction action filed by the FTC alleging that Hearst failed to provide documents required by premerger notification law and then consummated a merger that monopolized the integrated drug information database market. Under the terms of the order, Hearst divested the Medi-Span business to Lippincott Williams & Wilkins, Inc. , a subsidiary of Wolters Kluwer, n.v., disgorged $19 million in profits, and to complied with certain other obligations.

Hearst and its subsidiary paid a $4 million civil penalty to settle charges that they failed to include required documents in the notification and report form file in 1998 for the proposed acquisition of Medi-Span International, Inc. The complaint alleged that the omitted documents hindered the antitrust agencies in their review and analysis of the proposed acquisition. The complaint, stipulation and final judgment were filed in U.S. District Court for the District of Columbia by Commission attorneys acting as special attorneys to the United States Attorney General. During fiscal year 2001, the Commission filed a related complaint for a permanent injunction alleging that Hearst and First DataBank created a monopoly through the acquisition of Medi-Span, First DataBank's only other competitor selling software and data detailing information for pharmaceutical prices, descriptions, dosages, and interactions. The Final Order and Stipulation requiring divestiture and disgorgement of profits was entered December 18, 2001.

Siemens settled charges relating to its proposed $9 billion acquisition of Atecs Mannesmann AG, a subsidiary of Vodafone. The consent order requires, among other things, the divestiture of Vodafone's Mannesmann Dematic Postal Automation business to Northrop Grumman Corporation. Siemens and Vodafone, through its Dematic subsidiary, are the two leading suppliers of postal automation systems in the world.

A final order permitted the $4 billion merger of MCN, a natural gas utility servicing communities in Michigan, and DTE, a public utility engaged in the generation and sale of electricity in Detroit and southeastern Michigan. The consent order resolves Commission concerns that the merger would lessen competition in the local distribution of electricity and in the local distribution of natural gas in the city of Detroit and in the Michigan counties of Macomb, Monroe, Oakland, Washtenaw and Wayne. MCN is the parent of Michigan Consolidated Gas Company and DTE is the parent holding company of The Detroit Edison Company.

The consent order permits the merger of Philip Monis and Nabisco Holdings Corporation while settling charges that the merger of the two food companies would reduce competition in the already highly-concentrated food product markets. Under terms of the order, the parties are required to divest Nabisco's dry- mix gelatin, dry-mix pudding, no-bake dessert, and baking powder assets to The Jet Sea Company and Nabisco's intense mints assets to Hershey Foods Corporation.