Legal Library: Cases and Proceedings

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 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.

American Air Liquide Holdings, Inc. and Airgas, Inc., agreed to divest certain production and distribution assets to settle charges that their proposed $13.4 billion merger likely would have harmed competition and led to higher prices in several U.S. and regional markets. The companies will sell assets used to produce and supply seven types of industrial gas: bulk oxygen, bulk nitrogen, bulk argon, bulk nitrous oxide, bulk liquid carbon dioxide, dry ice, and packaged welding gases sold in retail stores. These gases are used in a number of industries, including oil and gas, steelmaking, health care, and food manufacturing, according to the complaint. Under the proposed settlement order, Air Liquide will sell these assets to a Commission-approved buyer within four months after it acquires Airgas. The proposed consent agreement includes an asset maintenance order to ensure that Air Liquide and Airgas continue to act independently and maintain the relevant assets until they are divested.

Teva Pharmaceutical Industries Ltd. agreed to sell the rights and assets related to 79 pharmaceutical products to settle FTC charges that its proposed $40.5 billion acquisition of Allergan plc’s generic pharmaceutical business would be anticompetitive. The remedy requires Teva to divest the drug portfolio to eleven firms, and will preserve competition in U.S. pharmaceutical markets where Teva and Allergan compete now or would likely have competed in the future if not for the merger. The divested products include anesthetics, antibiotics, weight loss drugs, oral contraceptives, and treatments for a wide variety of diseases and conditions, including ADHD, allergies, arthritis, cancers, diabetes, high blood pressure, high cholesterol, mental illnesses, opioid dependence, pain, Parkinson’s disease, and respiratory, skin and sleep disorders. The acquirers of the divested products are Mayne Pharma Group Ltd., Impax Laboratories, Inc., Dr. Reddy’s Laboratories Ltd., Sagent Pharmaceuticals, Inc., Cipla Limited, Zydus Worldwide DMCC, Mikah Pharma LLC, Perrigo Pharma International D.A.C., Aurobindo Pharma USA, Inc., Prasco LLC and 3M Company.  In addition to the product divestitures, to address the anticompetitive effects likely to arise in markets for 15 pharmaceutical products where Teva supplies active pharmaceutical ingredients to current or future Allergan competitors, the FTC order additionally requires Teva to offer these existing API customers the option of entering into long-term API supply contracts.

Mylan Inc. agreed to divest the rights and assets related to two generic pharmaceutical products in order to settle FTC charges that its proposed $7.2 billion acquisition of Swedish drug maker Meda would be anticompetitive. The FTC order preserves competition in the markets for 250 mg generic carisoprodol tablets, which treat muscle spasms and stiffness, and for 400 mg and 600 mg generic felbamate tablets, which treat refractory epilepsy. Under the proposed order, the U.S.-based generic pharmaceutical company Alvogen Pharma US, Inc. will acquire all of Mylan’s rights and assets related to 400 mg and 600 mg felbamate tablets. The proposed order also requires Mylan to provide transitional services and take all actions that are necessary for Alvogen to obtain FDA approval to manufacture and market 400 mg and 600 mg generic felbamate tablets. According to the FTC’s complaint, Meda and one other company currently market 250 mg generic carisoprodol tablets, and Mylan, which owns the U.S. marketing rights to a recently approved carisoprodol product, is the next likely entrant. Without a remedy, the acquisition would eliminate Mylan’s entry as a third independent competitor, delaying beneficial competition and future price decreases. Under the proposed order, Mylan must relinquish its U.S. marketing rights for the drug. With the settlement, Indicus Pharma LLC, which owns the product, manufactures it, and markets it internationally, will compete independently in the U.S. market.

The FTC filed an administrative complaint charging that the proposed $982 million merger of Canadian chemical suppliers Superior Plus Corp. and Canexus Corp. would violate the antitrust laws by significantly reducing competition in the North American market for sodium chlorate – a commodity chemical used to bleach wood pulp that is then processed into paper, tissue, diaper liners, and other products. Superior and Canexus are two of the three major producers of sodium chlorate in North America. If the merger takes place, the new company and rival AkzoNobel will control approximately 80 percent of the total sodium chlorate production capacity in North America.  By combining more than half of all North American sodium chlorate production capacity in the merged Superior and Canexus, the acquisition is likely to lead to anticompetitive reductions in output and higher prices, the complaint alleges. Additionally, by removing Canexus as an independent sodium chlorate producer, with its large scale and low-costs, the acquisition will also increase the likelihood of coordination in an already vulnerable market, according to the complaint.  The FTC also authorized staff to seek a temporary restraining order and a preliminary injunction in federal court to prevent the parties from consummating the merger and to maintain the status quo pending the administrative proceeding. The FTC and the Canadian Competition Bureau collaborated in this investigation.  On June 30, the parties abandoned their plans.