Legal Library: Cases and Proceedings

The Federal Trade Commission, along with law enforcement officials and charity regulators from 70 offices in every state, the District of Columbia, American Samoa, Guam and Puerto Rico, announced more than 100 actions and a consumer education initiative in “Operation Donate with Honor,” a crackdown on fraudulent charities that con consumers by falsely promising their donations will help veterans and servicemembers.

Agilent Technologies, Inc. and Varian, Inc., two leading global suppliers of high-performance scientific measurement instruments, have agreed to sell three of their product lines in order to proceed with their proposed $1.5 billion merger. According to the FTC’s complaint, Agilent’s acquisition of Varian would have reduced competition for three types of scientific measurement instruments. To resolve these competitive concerns, the parties have agreed to sell assets related to the manufacture and sale of: 1) Micro Gas Chromatography (Micro GC) instruments; 2) Triple Quadrupole Gas Chromatography-Mass Spectrometry (3Q GC-MS) instruments; and 3) Inductively Coupled Plasma-Mass Spectrometry (ICP-MS) instruments.

The FTC filed a complaint in federal district court charging Shire ViroPharma Inc. with violating the antitrust laws by abusing government processes to delay generic competition to its branded prescription drug, Vancocin HCl Capsules. The complaint alleges that to maintain its monopoly, ViroPharma waged a campaign of serial, repetitive, and unsupported filings with the U.S. Food and Drug Administration and courts to delay the FDA’s approval of generic Vancocin Capsules, and exclude competition. According to the FTC, ViroPharma submitted 43 filings with the FDA and filed three lawsuits against the FDA between 2006 and 2012. According to the FTC, ViroPharma knew that it was the FDA’s practice to refrain from approving any generic applications until it resolved any pending relevant citizen petition filings. Viropharma intended for its serial filings to delay the approval of generics, and thus competition and lower prices. The FTC seeks a court order permanently prohibiting ViroPharma from submitting repetitive and baseless filings with the FDA and the courts, and from similar and related conduct as well as any other necessary equitable relief, including restitution and disgorgement.

The FTC required global healthcare company Grifols S.A. to divest blood plasma collection centers in three U.S. cities, among other conditions, as part of a settlement resolving charges that Grifols’ acquisition of Florida-based Biotest US Corporation is anticompetitive and violates federal antitrust law. The complaint alleges that, as proposed, the acquisition would harm competition in the markets for collection of human blood plasma in Lincoln, Nebraska, Augusta, Georgia, and Youngstown, Ohio. Grifols and Biotest US are the only companies that operate plasma collection centers in these cities, and, without a remedy, the merger would result in a merger-to-monopoly in these cities. Under the terms of the proposed settlement, Grifols will divest its plasma collection centers in these three cities to KedPlasma, which is a subsidiary of Kedrion Biopharma Inc., a leading manufacturer of protein products and the fifth-largest producer of plasma proteins worldwide. 

The complaint also alleges that, absent a remedy, the acquisition would harm the U.S. market for hepatitis B immune globulin, or HBIG, a plasma-derived injectable medicine that provides hepatitis B antibodies for preventing hepatitis B infections. When Grifols announced the proposed acquisition in December 2017, Biotest US owned 41 percent of ADMA Biologics, Inc., which has the largest share in the U.S. market for HBIG and competes with Grifols and one other supplier.  Biotest US has recently transferred its ownership share in ADMA to The Biotest Divestiture Trust, the parent company of Biotest US. Because Grifols is only seeking to acquire Biotest US and not its parent, Grifols will not acquire any ownership interest in ADMA under the proposed acquisition. Under the proposed consent agreement, Grifols is prohibited, without prior notification, from acquiring any ownership interest in ADMA or obtaining any rights to nominate or obtain representation on the ADMA Board of Directors.

The FTC issued an administrative complaint charging that Wilhelmsen Maritime Services’ proposed $400 million acquisition of Drew Marine Group would violate the antitrust laws by significantly reducing competition in an important market for marine water treatment chemicals and services used by global fleets. Marine water treatment chemicals and services are used by tankers, container ships, bulk carriers, cruise ships, and military support vessels to maintain critical on-board equipment. The FTC alleges that if consummated, the merger would result in a company controlling at least 60 percent of the global marine water treatment chemical and service market, leaving only inferior alternatives for global fleets. 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.

In June 2018, the operators of a Los Angeles-based student loan debt relief scam agreed to settle Federal Trade Commission charges that they falsely claimed to be affiliated with the Department of Education, charged consumers illegal upfront fees, and collected monthly fees they claimed would be credited toward consumers’ student loans. In February 2021, the FTC sent refunds totaling to people who lost money as a result of the scam.

Red Ventures and Bankrate agreed to divest Bankrate’s Caring.com business unit to settle FTC charges that their $1.4 billion merger would likely harm competition in the market for third-party paid referral service for senior living facilities. According to a complaint filed by the FTC, Red Ventures and Bankrate supply proprietary internet content and customer leads for a variety of industries. Caring.com is a wholly-owned subsidiary of Bankrate, while two of Red Ventures’ largest shareholders jointly own A Place for Mom.com, the largest provider of such services. According to FTC’s complaint, Caring.com and A Place for Mom.com are each other’s closest competitors, competing for national and local business. The complaint alleges that the two Red Venture shareholders have the collective ability to significantly influence management of Red Venture and Caring.com. Thus, if consummated, the transaction may increase the chance for Red Ventures to unilaterally exercise market power and the potential for coordinated interaction between Caring.com and A Place for Mom. Under the terms of the proposed settlement, the parties will divest Caring.com no later than six months after the acquisition and provide transition services to an FTC-approved buyer.

Tthe FTC required Fresenius Medical Care AG & Co. KGaA to sell 60 outpatient dialysis clinics in 43 local markets under a proposed settlement resolving charges that its acquisition of rival dialysis provider Liberty Dialysis Holdings, Inc. would harm competition in numerous local markets for outpatient dialysis services around the country. According to the FTC, Fresenius's acquisition of Liberty would eliminate head-to-head competition between the firms in the 43 markets at issue, leading to higher prices and reduced quality for dialysis consumers.

The FTC challenged ProMedica Health System, Inc.’s consummated acquisition of rival St. Luke’s Hospital in Lucas County, Ohio. The FTC’s administrative complaint alleged that the deal will reduce competition and allow ProMedica to raise prices for general acute-care and inpatient obstetrical services. The FTC staff also filed a separate complaint in federal district court seeking an order requiring ProMedica to preserve St. Luke’s as a separate, independent competitor during the FTC’s administrative proceeding. The action in federal district court was brought jointly with the Attorney General of the State of Ohio. The PI hearing was held on February 10 and 11, 2011. The District Court granted the FTC's request for a preliminary injunction. With an Initial Decision issued on 1/05/2012, the Chief Administrative Law Judge D. Michael Chappell ruled that ProMedica Health System, Inc.'s consummated acquisition of rival St. Luke's Hospital harmed competition in violation of U.S. antitrust law and would allow ProMedica to raise the prices of general acute care inpatient hospital services in Lucas County, Ohio (the Toledo area). Judge Chappell ordered ProMedica to divest St. Luke's Hospital to an FTC-approved buyer within 180 days after the order becomes final. On 3/28/2012, The FTC issued its Opinion and Final Order in a 4-0 decision, ordering ProMedica to divest St. Luke's Hospital to an FTC-approved buyer within six months after the Commission order becomes final. ProMedica appealed to the Sixth Circuit, which upheld the Commission's order.

The FTC required Grifols, S.A., a manufacturer of plasma-derived drugs, to make significant divestitures as part of a settlement allowing Grifols to acquire a leading plasma-derived drug manufacturer, Talecris Biotherapeutics Holdings Corp. It resolves FTC charges that Grifols’ proposed acquisition of Talecris would be anticompetitive and would violate federal antitrust laws. As part of the settlement, Grifols will sell the Talecris fractionation facility in Melville, New York, and Grifols’ plasma collection centers in Mobile, Alabama, and Winston-Salem, North Carolina, to Kedrion S.p.A. Kedrion is a manufacturer of plasma-derived products in Europe and other markets, and will be a new entrant in the U.S. plasma-derived products industry. Grifols also will manufacture three plasma-derived products for Kedrion for several years under a manufacturing agreement. The FTC approved a final order on July 22, 2011.

Baxter International Inc. and Claris Lifesciences Limited have agreed to divest two types of pharmaceutical products to settle charges that Baxter’s proposed $625 million acquisition of Claris’ injectable drugs business would (1) reduce current competition in the United States for the antifungal agent fluconazole in saline intravenous bags, which is used to treat fungal and yeast infections, and (2)reduce future competition in the U.S. market for intravenous milrinone, which dilates the blood vessels, lowers blood pressure and allows blood to flow more easily through the cardiovascular system. Under the FTC order, the parties will divest all of Claris’s rights to fluconazole in saline intravenous bags and milrinone in dextrose intravenous bags to New Jersey-based pharmaceutical company Renaissance Lakewood LLC. The order requires Baxter to supply Renaissance with fluconazole in saline intravenous bags and milrinone in dextrose intravenous bags for up to five years while transferring the manufacturing technology to Renaissance or its contract manufacturing designee. Baxter is also required to assist Renaissance in establishing its manufacturing capabilities and securing the necessary FDA approvals.

Broadcom Limited has agreed to establish a firewall to remedy the FTC’s concerns that its proposed $5.9 billion acquisition of Brocade Communications Systems, Inc. is anticompetitive. These concerns arise because of Broadcom’s current access to the confidential business information of Brocade’s major competitor, Cisco Systems, Inc., that could be used to restrain competition or slow innovation in the worldwide market for fibre channel switches.Fibre channel switches are part of storage area networks that transfer data between servers and storage arrays in data centers. Because fibre channel switches can quickly and securely transfer large amounts of data, they are often used for mission-critical applications. According to the complaint, San Jose, California-based Broadcom makes the fibre channel application specific integrated circuits, or ASICs, that are custom-tailored to carry out the functions of each switch. Brocade and Cisco are the only two competitors in the worldwide market for fibre channel switches, and Broadcom supplies both companies with ASICs to make fibre channel switches. The complaint alleges that Broadcom’s acquisition of Brocade could harm worldwide competition in the fibre channel switch market because as Cisco’s supplier, Broadcom has extensive access to Cisco’s competitively sensitive confidential information.  The FTC order prevents Brocade from using Cisco’s competitively sensitive confidential information for any purpose other than the design, manufacturing and sale of fibre channel ASICs for Cisco. It requires Broadcom’s business group responsible for developing, producing, selling and marketing fibre channel ASICs for Cisco to have separate facilities and a separate information technology system with security protocols that allow access only to authorized individuals, and provides for other information firewall protections. To assure compliance, the Commission will appoint a monitor for five years, and the Commission may extend the appointment for up to an additional five years.

Alimentation Couche-Tard Inc. agreed to divest up to 71 retail fuel stations with convenience stores to Empire Petroleum Partners in order to settle charges that ACT’s proposed $4.4 billion acquisition of competitor CST Brands, Inc. would violate federal antitrust law. The divestiture order requires ACT to divest 70 CST fuel stations to Empire, and to give Empire the option of acquiring an additional location owned by ACT. The fuel stations to be divested are in Arizona, Colorado, Florida, Georgia, Louisiana, New Mexico, Ohio, and Texas. According to the complaint, the geographic markets for the retail sale of gasoline and diesel are localized, generally ranging from a few blocks to a few miles. The complaint alleges that without a remedy the merger would significantly increase market concentration for the retail sales of gasoline or diesel in each of the 71 local markets, resulting in a monopoly in ten markets and reducing the number of competitors in the rest to two or three.