Legal Library: Cases and Proceedings

The FTC charged that Solera's 2012 acquisition of Actual Systems likely would substantially lessen competition in the market for yard management systems, which was already highly concentrated.  To address the FTC's competitive concerns, Solera must sell assets related to Actual Systems' YMS to ASA Holdings.

The FTC charged that GE’s proposed acquisition of Avio would substantially lessen competition in the sale of engines for the A320neo aircraft, which would result in higher prices, reduced quality, and engine delivery delays for A320neo customers. GE -- through CFM International, its joint venture with France’s Snecma S.A. -- and Pratt & Whitney are the only two firms that manufacture engines for Airbus’s A320neo aircraft.  Avio designs a critical component -- the accessory gearbox or AGB -- for Pratt & Whitney’s PW1100G engine.  Pratt & Whitney has no viable alternatives to Avio for development of the AGB for the PW1100G engine.  According to the FTC, GE's acquisition of Avio would give GE the ability and incentive to disrupt the design and certification of Avio’s AGB for the PW1100G engine used on A320neo aircraft.  The FTC order remedies the acquisition’s likely anticompetitive effects by removing GE’s ability and incentive to disrupt Avio’s AGB work during the design, certification, and initial production ramp-up phase

On 4/20/2011, the FTC challenged Phoebe Putney Health System, Inc.’s (Phoebe’s) proposed acquisition of rival Palmyra Park Hospital, Inc. (Palmyra) from HCA, in Albany, Georgia. The FTC’s administrative complaint alleges that the deal will reduce competition significantly and allow the combined Phoebe/Palmyra to raise prices for general acute-care hospital services charged to commercial health plans, substantially harming patients and local employers and employees. The FTC also alleges that Phoebe has structured the deal in a way that uses the Hospital Authority of Albany-Dougherty County (the Authority) in an attempt to shield the anticompetitive acquisition from federal antitrust scrutiny under the “state action” doctrine. The FTC’s staff, together with the Attorney General of the State of Georgia, filed a separate complaint in federal district court in Albany, Georgia, seeking an order to halt any transaction involving Phoebe, the Authority, or Palmyra, under which Phoebe would acquire control of Palmyra’s operations, until the conclusion of the FTC’s administrative proceeding and any subsequent appeals. On 2/19/2013, the Supreme Court reversed the judgment of the Court of Appeals and remanded further proceedings.  On June 27, 2011, the district court denied the motion for a preliminary injunction on the grounds that the transaction was protected by the state action doctrine.  On December 14, the Eleventh Circuit affirmed.  In February 2013, the Supreme Court reversed, finding that the state of Georgia had not clearly articulated a policy that would permit the Hospital Authority to approve anticompetitive mergers.

On 3/14/2013, the Commission issued an order granting complaint counsels motion to lift the stay on administrative proceedings. On 4/9/2013, an amended complaint and renewed motions for a PI and TRO were filed in federal district court in Georgia, pending an 8/5/2013 administrative trial. On 5/15/2013, the U.S. District Court for the Middle District of Georgia granted the FTC’s motion for a temporary restraining order. On 6/25/2013, the Commission granted the motion to withdraw the matter from Part III, and accepted for public comment a proposed settlement of its charges. Due to the unique circumstances of the Certificate of Need (CON) laws in Georgia, the Commission originally believed it was unable to require that the hospitals become independent competitors. On 9/5/2014, based on public comments received, as well as other information, the Commission determined that Georgia’s CON laws may not preclude structural relief, and voted to withdraw its acceptance of the proposed consent agreement and return the matter to administrative litigation. On 3/31/15, the FTC entered into a settlement agreement requiring Phoebe Putney and the Hospital Authority must notify the FTC in advance of acquiring any part of a hospital or a controlling interest in other healthcare providers in the Albany, Georgia area for the next 10 years, and prohibiting them from objecting to regulatory applications made by potential new hospital providers in the same area for up to five years. The settlement is similar to the one proposed in 2013 and does not require structural relief.

On 9/25/2012, Biglari Holdings, Inc., a publicly traded holding company, agreed to pay $850,000 to resolve Federal Trade Commission allegations that it violated premerger reporting laws in connection with its 2011 acquisition of a stake in the restaurant operator Cracker Barrel Old Country Store, Inc. At the request of the FTC, the U.S. Department of Justice has filed a complaint for civil penalties, alleging that Biglari improperly failed to report the transaction to U.S. antitrust authorities by claiming the purchases were a “passive” investment when, in reality, Biglari intended to become actively involved in the management of Cracker Barrel. The complaint alleges that, at the time of its acquisitions, Biglari Holdings intended to actively participate in the management of Cracker Barrel, including seeking a seat on the company’s board of directors. As a result, Biglari Holdings was ineligible for the passive investor exemption and was required to submit an HSR notification before acquiring shares of Cracker Barrel in excess of $66 million.

The FTC required hospital management company Universal Health Services, Inc. to sell an acute inpatient psychiatric facility in the El Paso, Texas/Santa Teresa, New Mexico area to settle charges that UHS’s proposed acquisition of Ascend Health Corporation would be anticompetitive. As proposed, the deal allegedly would lead to a virtual monopoly in the provision of acute inpatient psychiatric services to commercially insured patients in the El Paso/Santa Teresa area.  The FTC's final order requires UHS to sell its Peak Behavioral Health Services facility within six months to an FTC-approved buyer. In addition, to ensure that the Peak assets are able to attract a buyer that can effectively compete with UHS after the sale, the proposed order allows the Commission to require a second UHS hospital, Mesilla Valley Hospital in Las Cruces, New Mexico, to be sold together with Peak if Peak alone is not divested to an approved buyer within six months.

The FTC accepted a consent order settling charges that Charlotte Pipe and Foundry Company’s 2010 purchase of Star Pipe Products, Inc.’s cast iron soil pipe (CISP) business was anticompetitive. To help restore competition in CISP markets in the United States, the order prohibits Charlotte Pipe from enforcing a confidentiality and non-compete agreement with Star Pipe, ensures that Charlotte Pipe will publicly disclose its prior acquisitions of other CISP importers, and requires Charlotte Pipe to notify the Commission before making future acquisitions in this industry. CISP products are important components of pipeline systems used to transport wastewater from buildings to municipal sewage systems, to vent plumbing systems, and to transport rainwater to storm drains.

The FTC required Western Digital Corporation to sell assets used to manufacture and sell desktop hard disk drives to Toshiba Corporation as part of a proposed settlement that resolves charges that Western Digital's proposed acquisition of rival Hitachi Global Storage Technologies Ltd. would likely have harmed competition in the market for desktop hard disk drives used in personal computers. The proposed FTC order settles charges that the deal as originally proposed would have left only two companies, Western Digital and Seagate Technology LLC, in control of the entire worldwide market for desktop hard disk drives.

Houghton International, Inc., the leading North American provider of hot rolling oil used to process aluminum, agreed to sell some of the assets it acquired in 2008 through its purchase of D.A. Stuart GmbH, a transaction that included multiple product markets. The FTC’s investigation found that Houghton’s acquisition of D.A. Stuart GmbH combined the two largest suppliers of aluminum hot rolling oil (AHRO) in North America, giving the combined firm control of almost 75 percent of the North American market. The FTC’s complaint alleges that, through its purchase of Stuart, Houghton could unilaterally raise AHRO prices to U.S. consumers. The complaint also alleges that the acquisition could decrease innovation for this vital input into aluminum manufacturing. Under the order settling the FTC’s charges, Houghton will sell Stuart’s AHRO business to Quaker Chemical Corporation.

The FTC approved an order settling charges that Robert Bosch GmbH’s acquisition of the SPX Service Solutions business of SPX Corporation would have given it a virtual monopoly in the market for air conditioning recycling, recovery, and recharge devices for vehicles. Under a settlement with the FTC, Bosch agreed to sell its automotive air conditioner repair equipment business, including RTI Technologies, Inc., to automotive equipment manufacturer, Mahle Clevite, Inc. Bosch also agreed to resolve allegations that, before its acquisition by Bosch, SPX harmed competition in the market for this equipment by reneging on a commitment to license key, standard-essential patents (SEPs) on fair, reasonable and non-discriminatory (FRAND) terms. The FTC alleged that SPX reneged on its obligation to license on FRAND terms by seeking injunctions against willing licensees of those patents. Bosch has agreed to abandon these claims for injunctive relief. 

Graco, Inc. settled FTC charges that it violated the antitrust laws by buying Gusmer Corp. (Gusmer) in 2005 and GlasCraft, Inc. (GCI) in 2008, its two closest competitors in the North American market for fast set equipment (FSE) used by contractors to apply polyurethane foams and polyurea coatings. The consent order settling the FTC’s charges is designed to restore competition to the FSE market that was lost as a result of Graco’s acquisitions. It incorporates a private litigation settlement between Graco and Polyurethane Machinery Corp. (Gama/PMC) that requires Graco to license certain technology to Gama/PMC. The consent order also contains provisions that provide Gama/PMC and other competitors easier access to distributors, so they can distribute competing FSE products effectively in the North American market.