Legal Library: Cases and Proceedings

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.

The Sherwin-Williams Company agreed to settle charges that its proposed $11.3 billion acquisition of Valspar Corporation is likely anticompetitive by selling Valspar’s North America Industrial Wood Coatings Business to Axalta Coating Systems Ltd. The transaction would combine Sherwin-Williams and Valspar, two of the top three industrial wood coatings manufacturers. According to the complaint, the acquisition as originally proposed likely would reduce competition in the North American market for industrial wood coatings used to make furniture, kitchen cabinets, and building products. Under the terms of the consent agreement, Sherwin-Williams will divest to Axalta two Valspar industrial wood coatings plants, one in High Point, North Carolina, and the other in Cornwall, Ontario. Axalta will also receive the research and development facilities, warehouses and testing facilities of Valspar’s Industrial Wood Coatings Business, as well as customer contracts, intellectual property, inventory, accounts receivable, government licenses and permits, and business records.

The FTC authorized legal action to block the merger of the two largest daily fantasy sports sites, DraftKings and FanDuel, alleging that the combined firm would control more than 90 percent of the U.S. market for paid daily fantasy sports contests. The FTC, jointly with the Offices of the Attorneys General in the State of California and the District of Columbia, filed a complaint in federal district court seeking a preliminary injunction to stop the deal and to maintain the status quo pending an administrative trial. The Commission also issued an administrative complaint alleging that the proposed merger violates Section 7 of the Clayton Act and Section 5 of the FTC Act by creating a single provider with by far the largest share of the market for paid daily fantasy sports contests in the United States.

On July 13, 2017, the parties abandoned the transaction, and the Commission dismissed the administrative complaint.

Mallinckrodt ARD Inc., formerly known as Questcor Pharmaceuticals, Inc., and its parent company, Mallinckrodt plc, agreed to pay $100 million to settle charges that they violated the antitrust laws when Questcor acquired the rights to a drug that threatened its monopoly in the U.S. market for adrenocorticotropic hormone (ACTH) drugs. Acthar is a specialty drug used as a treatment for infantile spasms, a rare seizure disorder afflicting infants, as well a drug of last resort used to treat other serious medical conditions. The complaint alleges that, while benefitting from an existing monopoly over the only U.S. ACTH drug, Acthar, Questcor illegally acquired the U.S. rights to develop a competing drug, Synacthen Depot. The acquisition stifled competition by preventing any other company from using the Synacthen assets to develop a synthetic ACTH drug, preserving Questcor’s monopoly and allowing it to maintain extremely high prices for Acthar. In addition to the $100 million monetary payment, the proposed stipulated court order, which must be approved by the federal court, requires that Questcor grant a license to develop Synacthen Depot to treat infantile spasms and nephrotic syndrome to a licensee approved by the Commission.

Holcim Ltd. and Lafarge S.A. agreed to divest plants, terminals, and a quarry to settle FTC charges that their proposed $25 billion merger creating the world’s largest cement manufacturer would likely harm competition in the United States. According to a complaint filed by the FTC, the merger of Holcim, a Swiss company, and Paris-based Lafarge, would have harmed competition in 12 regional markets for portland cement, an essential ingredient in making concrete, and in two additional regional markets for slag cement, a specialty cement used for making more durable concrete structures. Because cement products are heavy and relatively cheap, transportation costs limit their markets to local or regional areas. The FTC staff cooperated closely with the Canadian Competition Bureau (“CCB”) throughout this investigation.

Emerson Electric Co. agreed to sell the switchbox business of Pentair plc to Stamford, Conn.-based Crane Co. in order to settle charges that Emerson’s proposed $3.15 billion acquisition of Pentair would violate federal antitrust law. Emerson and Pentair are manufacturers of industrial valves and control products, including switchboxes, which are widely used in the oil and gas, chemical, petrochemical, power, and other industries. Switchboxes perform a critical safety function, so brand reputation and product reliability are very important to customers. Emerson’s TopWorx and Pentair’s Westlock switchboxes are the most widely-used brands nationwide and, for many customers, the only acceptable brands of switchboxes. Under the FTC order, Emerson must divest Westlock Controls Corporation, the Pentair subsidiary that designs, manufactures, and sells switchboxes, to Crane Co. The order requires Emerson to provide Crane all of Westlock’s production facilities, intellectual property, confidential business information, and the opportunity to hire Westlock employees.

China National Chemical Corporation (ChemChina) and Swiss global agricultural company Syngenta AG agreed to divest three types of pesticides to settle FTC charges that their proposed merger would harm competition in the U.S. markets for three pesticides: (1) the herbicide paraquat, which is used to clear fields prior to the growing season; (2) the insecticide abamectin, which protects primarily citrus and tree nut crops by killing mites, psyllid, and leafminers; and (3) the fungicide chlorothalonil, which is used mainly to protect peanuts and potatoes. According to the complaint, Syngenta owns the branded version of each of the three products at issue, giving it significant market shares in the United States. ChemChina subsidiary ADAMA focuses on generic pesticides and is either the first- or second-largest generic supplier in the United States for each of these products. The complaint alleges that without the proposed divestiture, the merger would eliminate the direct competition that exists today between ChemChina generics subsidiary ADAMA and Syngenta’s branded products, increasing the likelihood that U.S. customers buying paraquat, abamectin, and chlorothalonil would be forced to pay higher prices or accept reduced service for these products. The Commission's order requires ChemChina to sell all rights and assets of ADAMA’s U.S. paraquat, abamectin and chlorothalonil crop protection businesses to California-based agrochemical company AMVAC.

The American Guild of Organists agreed to eliminate rules that restrict its members from competing for opportunities to perform to settle charges that the guild’s rules restrained competition and harmed consumers in violation of the FTC Act. The guild represents approximately 15,000 member organists and choral directors in 300 chapters in the US and abroad. Under the guild’s code of ethics, if a consumer wished to have someone other than an “incumbent musician” play at a venue for a wedding, funeral or other service, the consumer was required to pay both the incumbent and the consumer’s chosen musician. The code of ethics stated that “members are advised to protect themselves as incumbents” through contracts that secure fees even if they don’t perform. The guild also developed and publicized compensation schedules and formulas, and instructed its chapters and members to develop and use regionally applicable versions to determine charges for their services. The Commission's consent order requires the American Guild of Organists to stop restraining its members from soliciting work as musicians, and to stop issuing compensation schedules, guidance, or model contract provisions for members to use to determine their compensation. The guild must implement an antitrust compliance program, and is required under the order to stop recognizing chapters that fail to certify their compliance with the order’s provisions.