Legal Library: Cases and Proceedings

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.

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.

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.

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.

Investment trust Caledonia Investments plc agreed to pay $480,000 in civil penalties to resolve charges that it violated federal premerger reporting laws by failing to report its purchase in 2014 of voting shares in the helicopter services company Bristow Group, Inc. According to the complaint, in June 2008, Caledonia first acquired voting shares in Bristow and reported its purchase to U.S. antitrust authorities, as required under the Hart-Scott-Rodino Act. Subsequently, Caledonia made additional purchases that were exempt from reporting under HSR rules. During that same timeframe, however, two Caledonia employees were designated to serve on Bristow’s board. Bristow awards restricted-stock voting securities to its board members, and by agreement, it set aside the securities for the two Caledonia board members for purchase by Caledonia. In February 2014, these voting shares vested, and Caledonia acquired them, according to the complaint. The Commission charged that Caledonia was required under the HSR Act to report this purchase but failed to do so. The HSR Act allows a company that has reported an initial purchase of voting shares to purchase additional voting shares from the same issuer – as long as those purchases do not cause the company’s total holdings to cross a higher reporting threshold over a five-year period following the initial purchase. The complaint charges that Caledonia’s 2014 purchase of voting shares in Bristow fell outside the five-year period following its initial purchase.

Fortiline, LLC, a company that distributes ductile iron pipe, fittings and accessories throughout much of the United States, agreed to  settle charges that it violated federal antitrust law by inviting a competitor to raise and fix prices. This is the first case where the FTC has challenged an invitation to collude by a firm that is both a direct competitor with, and a distributor for, the invitee. According to an administrative complaint filed by the FTC, on two occasions in 2010, Fortiline invited a competing firm, which mainly manufactures ductile iron pipe but also engaged in direct sales to contractors, to collude on pricing in North Carolina and most of Virginia. In some areas, Fortiline competes with this firm – identified in the complaint as “Manufacturer A” – by distributing ductile iron pipe (“DIP”) products made by another DIP manufacturer, identified as “Manufacturer B.” In other areas, Fortiline distributes the product of Manufacturer A. The FTC’s complaint alleges that on two occasions when Fortiline was competing with Manufacturer A, Fortiline communicated an invitation to collude on DIP pricing.The proposed consent order prohibits Fortiline from entering into, attempting to enter into, or inviting any agreement with any competitor to raise or fix prices, divide markets, or allocate customers.

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.

The FTC filed a complaint in federal district court alleging that Endo Pharmaceuticals Inc. and several other drug companies violated antitrust laws by using pay-for-delay settlements to block consumers’ access to lower-cost generic versions of Opana ER and Lidoderm with an agreement not to market an authorized generic – often called a “no-AG commitment” – as a form of reverse payment. The complaint, filed in the Eastern District of Pennsylvania, alleges that Endo paid the first generic companies that filed for FDA approval – Impax Laboratories, Inc. and Watson Laboratories, Inc. – to eliminate the risk of competition for Opana ER and Lidoderm, in violation of the Federal Trade Commission Act. Opana ER is an extendedrelease opioid used to relieve moderate to severe pain. Lidoderm is a topical patch used to relieve pain associated with post-herpetic neuralgia, a complication of shingles. The FTC is seeking a court judgment declaring that the defendants’ conduct violates the antitrust laws, ordering the companies to disgorge their ill-gotten gains, and permanently barring them from engaging in similar anticompetitive behavior in the future.  Teikoko Pharma USA and Teikoku Seiyaku Co., Ltd. agreed to a stipulated order resolving FTC charges.

In November 2016, the FTC voluntarily dismissed the complaint in this action.  On January 23, 2017, the FTC refiled charges related to the Lidoderm agreements in federal court in California (Federal Trade Commission vs. Allergan plc; Watson Laboratories, Inc., et al) and refiled charges related to the Opana ER agreement in a Part 3 administrative proceeding.  (In re Impax Laboratories, Inc.)

The National Association of Animal Breeders (NAAB) agreed to remove provisions in its Code of Ethics that the FTC charged limit competition among its members. The consent order settling the FTC’s allegations requires NAAB to end certain advertising restrictions, remove references to the restrictions from its website and official documents, publish and distribute an announcement regarding the consent agreement and the resulting changes to the Code of Ethics, and implement an antitrust compliance program.

The FTC issued an administrative complaint charging that Steris Corporation’s proposed $1.9 billion acquisition of Synergy Health plc would violate the antitrust laws by significantly reducing future competition in regional markets for sterilization of products using radiation, particularly gamma or x-ray radiation. The Commission also authorized agency staff to seek a temporary restraining order and preliminary injunction in federal court to maintain the status quo pending an administrative trial on the merits. According to the FTC, it is unlikely that new competitors in the market for contract radiation sterilization services would replicate the competition that would be eliminated by the merger. The Commission alleged that the challenged acquisition would eliminate likely future competition between Steris’s gamma sterilization facilities and Synergy’s planned x-ray sterilization facilities in the United States, thus depriving customers of an alternative sterilization service and additional competition. On September 25, 2015 the district court denied the FTC motion for a PI. On October 30, the Commission dismissed the administrative complaint.

On 2/19/15, the FTC filed an administrative complaint charging that the proposed merger of Sysco and US Foods would violate the antitrust laws by significantly reducing competition nationwide and in 32 local markets for broadline foodservice distribution services. The FTC alleged that if the merger goes forward as proposed, foodservice customers, including restaurants, hospitals, hotels, and schools, would likely face higher prices and lower levels of service than would be the case but for the merger. 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. The PI action was filed on 2/20/15. According to the FTC complaint, a combined Sysco/US Foods would account for 75% of the national market for broadline distribution services. In addition, the parties would also hold high shares in a number of local markets. The Commission also charged that the proposed sale of 11 US Foods distribution centers to Performance Food Group would neither enable PFG to replace US Foods as a competitor nor counteract the significant competitive harm caused by the merger. The following state attorneys general have joined the FTC’s complaint for a preliminary injunction to be filed in federal district court: California, Illinois, Iowa, Maryland, Minnesota, Nebraska, Ohio, Virginia, Pennsylvania, Tennessee, and the District of Columbia. Following a June 23, 2015 ruling by the U.S. District Court for the District of Columbia granting the Federal Trade Commission request for a preliminary injunction, Sysco and US Foods abandoned their proposed merger, and the Commission dismissed its administrative complaint.

On February 19, 2015, the FTC filed an administrative complaint charging that the proposed merger of Sysco and US Foods would violate the antitrust laws by significantly reducing competition nationwide and in 32 local markets for broadline foodservice distribution services. The FTC alleged that if the merger goes forward as proposed, foodservice customers, including restaurants, hospitals, hotels, and schools, would likely face higher prices and lower levels of service than would be the case but for the merger. 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. The PI action was filed on February 20, 2015. According to the FTC complaint, a combined Sysco/US Foods would account for 75% of the national market for broadline distribution services. In addition, the parties would also hold high shares in a number of local markets. The Commission also charged that the proposed sale of 11 US Foods distribution centers to Performance Food Group would neither enable PFG to replace US Foods as a competitor nor counteract the significant competitive harm caused by the merger. The following state attorneys general have joined the FTC’s complaint for a preliminary injunction to be filed in federal district court: California, Illinois, Iowa, Maryland, Minnesota, Nebraska, Ohio, Virginia, Pennsylvania, Tennessee, and the District of Columbia. Following a June 23, 2015 ruling by the U.S. District Court for the District of Columbia granting the Federal Trade Commission request for a preliminary injunction, Sysco and US Foods abandoned their proposed merger, and the Commission dismissed its administrative complaint.

An association representing electricians agreed to eliminate provisions in its bylaws that the FTC charged limit competition among each association’s members. The FTC alleged that the purpose and effect of the association's bylaws has been to restrain competition by discouraging and restricting competition among PLASMA members. The consent order settling the FTC’s charges requires PLASMA to revise its bylaws, publicize its settlement with the FTC, and implement an antitrust compliance program.