Legal Library: Cases and Proceedings

Eli Lilly and Company agreed to divest its Sentinel product line of medications for treating heartworm disease in dogs in order to settle FTC charges that its proposed $5.4 billion acquisition of Novartis Animal Health would likely be anticompetitive. Under the settlement, Eli Lilly will divest its Sentinel product line and associated assets to the French pharmaceutical company, Virbac S.A. The FTC’s complaint challenging the transaction alleges that the proposed acquisition would be anticompetitive and lead to higher prices. According to the complaint, Eli Lilly’s Trifexis and Novartis Animal Health’s Sentinel products are particularly close substitutes because they are the only two products that are given orally once a month, contain the same active ingredient, and also treat fleas and other internal parasites in dogs.

An association representing skating teachers agreed to eliminate provisions in its bylaws that the FTC alleged limit competition among the association’s members. In its complaint, the FTC charged that the Professional Skaters Association, through its code of ethics, broadly bans members from soliciting other members’ students, and thereby deprives consumers of the benefits of competition among the 6,400 ice skating teachers and coaches who are members. According to the complaint, the PSA instructed its members that this code provision prohibited coaches from many types of direct and indirect communications with skaters and parents, and actively enforced the ban through a variety of penalties, including suspension, even over the objections of skating students and their parents who wanted to switch coaches. The consent order settling the FTC’s charges requires the Professional Skaters Association to stop restraining its members from soliciting work and competing on the basis of price. It also requires the group to change its code of ethics, publicize its settlement with the FTC, and implement an antitrust compliance program.

The Commission challenged Schering-Plough’s proposed $41.4 billion acquisition of Merck & Co., and required divestitures to preserve competition in markets for human and animal pharmaceuticals. The proposed consent order requires that Merck sell its interest in Merial Limited, an animal health joint venture with Sanofi-Aventis S.A., and that Schering-Plough sell its assets related to significant drugs for nausea and vomiting in humans.

The FTC issued an administrative complaint against Ferrellgas Partners, L.P and Ferrellgas, L.P. (doing business as Blue Rhino) and UGI Corporation and AmeriGas Partners, L.P. (doing business as AmeriGas Cylinder Exchange), alleging that they illegally agreed on reducing the amount of propane in their tanks sold to a key customer. The complaint alleges that, together, Blue Rhino and AmeriGas controlled approximately 80 percent of the market for wholesale propane exchange tanks in the United States. In 2008, Blue Rhino and AmeriGas each decided to implement a price increase by reducing the amount of propane in their exchange tanks from 17 pounds to 15 pounds, without a corresponding reduction in the wholesale price. On 10/31/14, AmeriGas and Blue Rhino agreed to settle FTC charges of restraining competition. Faced with resistance from Walmart, the two companies colluded by secretly agreeing to coordinate their negotiations with Walmart in order to push it to accept the reduction. The consent agreements prohibit the companies from soliciting, offering, participating in, or entering or attempting to enter into any type of agreement with any competitor in the propane exchange business to raise, fix, maintain, or stabilize the prices or price levels of propane exchange tanks through any means – including modifying the fill level contained in propane tanks or coordinating communications to customers. The companies also are prohibited from sharing sensitive non-public business information with competitors except in narrowly defined circumstances.