Legal Library: Cases and Proceedings

A final consent order settles allegations stemming from Medtronic's proposed acquisition of Physio-Control International Corporation's automatic external defibrillator business. According to the complaint, Medtronic, through its controlling interest in SurVivaLink Corporation, a direct competitor of Physio-Control, would control both companies as a result of the acquisition and thereby increase the likelihood of coordinated interaction which could result in increased prices and reduce innovation in the market. The consent order requires Medtronic to become a passive investor in SurVivaLink and reduce many of its present and future business contacts with the firm.

A consent order requires Albertson's to divest eight supermarkets in Montana and seven in Wyoming in order to settle FTC charges and maintain competitive grocery pricing in 11 communities following its acquisition of the Buttrey Food and Drug Store Company. Under the consent agreement, 13 of the supermarkets would be sold to Smith's Food and Drug Centers, Inc. and two supermarkets would be sold to Supervalu Holdings, Inc.

Federal-Mogul, one of the world's leading producers of thinwall bearings used in car, truck and heavy equipment engines, agreed to divest the thinwall bearings assets it acquired in its $2.4 billion takeover of T&N, plc. to settle FTC charges that the acquisition would likely substantially reduce competition in the worldwide market for thinwall bearings. According to the FTC, Federal-Mogul and T&N, headquartered in Manchester, England, have a combined market share in the United States of nearly 80 percent or more in each of the four markets identified in the complaint. The FTC consent order requiree Federal-Mogul to divest the thinwall bearings business of T&N, which includes the assets and plants that T&N uses to make thinwall bearings, as well as intellectual property that T&N uses to develop and design new bearings to meet the needs of engines that OEMs will develop in the future. To ensure that the divested thinwall bearings business would be in the same position that T&N had been in terms of research, the proposed order identifies individuals in T&N who worked on bearings research and development, and requires Federal-Mogul and T&N to assign those personnel to the businesses to be divested.

Exxon will divest its viscosity index improver business to Chevron Chemical Company LLC to settle allegations that its proposed joint venture with Royal Dutch Shell to develop, manufacture and sell their fuel and lubricants additives would reduce competition and lead to collusion among the remaining firms in the market.

Consent order settles charges that the acquisition of Petroleum Information Corporation could create a monopoly for production and well history data used by geologists and petroleum engineers to find additional oil and gas reserves. The settlement requires Dwight to license a complete set of well history to HPDI, an independent competitor, or another Commission-approved licensee.

Sky Chefs modified its acquisition plans, excluding Ogden Corporation's in-flight catering operation at the McCarran International Airport in Las Vegas, Nevada from its purchase agreement, to settle Commission concerns that the consolidation of the two firms in Las Vegas would lead to higher prices for airline catering services. The consent order prohibits Sky Chefs from making certain acquisitions without Commission approval for 10 years.

Columbia MCA paid a $2.5 million civil penalty to settle charges that it failed to divest the Davis Hospital and Medical Center in Layton, Utah, the Pioneer Valley Hospital in West Valley City, Utah and the South Seminole Hospital in Florida as required by a 1995 consent order. The complaint and settlement were filed in the U.S. District Court for the District of Columbia.

The Commission authorized staff to file separate motions in federal district court to block the mergers of the nation's four largest drug wholesalers into two wholesale distributors of pharmaceutical products. The Commission charged that Cardinal 's proposed acquisition of Bergen Brunswig Corporation and McKesson Corporation's proposed acquisition of AmeriSource Health Corp. would substantially reduce competition in the market for prescription drug wholesaling and lead to higher prices and a reduction in services to the companies' customers --hospitals, nursing homes and drugstores --and eventually to consumers. Two separate motions for preliminary injunctions were filed in the U.S. District Court for the District of Columbia March 6, 1998. On July 31, 1998, the District Court granted the Commission's motions enjoining both proposed mergers. The parties abandoned their respective merger plans soon after the decision.