Legal Library: Cases and Proceedings

ON Semiconductor Corporation agreed to sell its Ignition IGBT business in order to settle charges that its proposed $2.4 billion acquisition of Fairchild Semiconductor International, Inc. would likely substantially lessen competition in the worldwide market for Ignition IGBTs, resulting in higher prices and reduced innovation. Ignition IGBTs are semiconductors that function as solid-state electronic switches in the ignition systems of automotive internal combustion engines.  The order preserves competition by requiring ON to divest its Ignition IGBT business to Chicago-based manufacturer Littelfuse, Inc. The divestiture includes design files and intellectual property that Littelfuse needs to manufacture ON’s Ignition IGBTs. ON must also facilitate the transfer of its customer relationships to Littelfuse, and supply Ignition IGBTs for Littlefuse to sell to customers while Littelfuse sets up its manufacturing operations.

The Federal Trade Commission filed a complaint against medical testing laboratory LabMD, Inc. alleging that the company failed to reasonably protect the security of consumers’ personal data, including medical information. The complaint alleges that in two separate incidents, LabMD collectively exposed the personal information of approximately 10,000 consumers. The complaint alleges that LabMD billing information for over 9,000 consumers was found on a peer-to-peer (P2P) file-sharing network and then, in 2012, LabMD documents containing sensitive personal information of at least 500 consumers were found in the hands of identity thieves. The case is part of an ongoing effort by the Commission to ensure that companies take reasonable and appropriate measures to protect consumers’ personal data.

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.

Energy companies Energy Transfer Equity, L.P. (“ETE”), and The Williams Companies, Inc., agreed to divest Williams’ interest in an interstate natural gas pipeline to proceed with ETE’s proposed acquisition of Williams. According to the complaint, the proposed merger, if consummated, would have reduced competition in the market for “firm” – i.e., guaranteed – pipeline capacity to deliver natural gas to points within the Florida peninsula. In Florida, natural gas is extensively used for electric power generation, making competitive access to constant and reliable sources of supply critical. The complaint alleges that absent a remedy, the acquisition would eliminate the competition between FGT and Gulfstream, which historically has enabled Florida customers to obtain lower transportation rates and better terms of service. It also would have resulted in a pipeline monopoly at many natural gas delivery points within the peninsula.  The complaint also alleges that the proposed merger likely would harm future competition from a new interstate pipeline, Sabal Trail Transmission LLC, which is scheduled to start transporting natural gas to parts of the Florida peninsula in May 2017. According to the complaint, Sabal Trail and its future customers will rely on leased access to a segment of the Transco Pipeline, a Williams-owned, large interstate pipeline, for natural gas supply. The complaint alleges that the newly merged company would have an incentive to deny Sabal Trail additional capacity expansions on Transco because ETE’s FGT pipeline is a closer competitor to Sabal Trail than was Williams’ Gulfstream pipeline.

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.