Legal Library: Cases and Proceedings

The Commission charged that the acquisition of K2, Inc, a sporting goods manufacturer, by Jarden Corporation would likely harm competition. The proposed $1.2 billion transaction would have joined two of the nation’s leading producers of monofilament fishing line, the most common type of line used in the United States. The consent order settling the charges requires Jarden to sell all assets related to the manufacture and sale of four varieties of monofilament fishing line to sporting goods company W.C. Bradley/Zebco.

The Commission charged a group of optometrists in Puerto Rico with violating the FTC Act by orchestrating agreements among members of the Colegio de Optometras to refuse, or threaten to refuse, to accept vision and health care contracts except on collectively agreed-upon terms. Two leaders of the group were also charged with facilitating the agreement by urging members not to participate in the vision network. The Commission’s consent order settling these charges bars the group and the two leaders from engaging in such conduct, while allowing them to undertake certain kinds of joint contracting arrangements by which physician participants control costs and improve quality by managing the provision of services. FTC staff worked with the Office of Monopolistic Affairs of Puerto Rico’s Department of Justice on this case.

The Commission settled a September 15 2003 administrative complaint charging the South Carolina State Board of Dentistry with unlawfully restraining competition by enacting a rule that required a dentist to examine every child before a dental hygienist could provide preventive dental care – such as cleanings – in schools. The Board, which is a state regulatory agency composed primarily of practicing dentists, claimed that its actions were immune from antitrust challenge under the state action doctrine, but that argument was rejected in a 2004 Commission opinion holding that the Board’s conduct was directly contrary to state law. In 2006, the court of appeals dismissed the Board’s interlocutory petition for review for lack of jurisdiction, and the Supreme Court denied certiorari in January 2007. The FTC’s 2007 consent requires the Board to publicly support the current state public health program that allows hygienists to provide preventive dental care to schoolchildren, especially those from low-income families.

The Commission charged that a motor oil lubricant importer illegally conspired with its competitors to restrict the importation and sale of these products in Puerto Rico, which resulted in higher prices paid by consumers. According to the FTC’s complaint, during 2005 and 2006, American Petroleum joined with numerous others in the Puerto Rico lubricants industry to lobby for the delay, modification, or repeal of Puerto Rico Law 278, which imposes an environmental recovery fee of 50 cents per quart. With the effective date of the law approaching, the importers adopted a strategy of refusing to import lubricants as a means of forcing a change. The consent order settling the charges bars American Petroleum from conspiring with its competitors to restrict output, refuse to deal, or boycott any lubricant buyer or potential buyer.

Ahold would be permitted to acquire Bruno's Supermarkets, Inc. under terms of a consent order, but would be required to divest two BI-LO supermarkets in Georgia -one Milledgeville, and one in Sandersville. The Commission's complaint charged that the acquisition as originally proposed would reduce competition in the retail sale of food and grocery items in supermarkets in the area and would eliminate direct competition between supermarkets owned and controlled by Ahold and those owned or controlled by Bruno's.

In 2007, the Commission requested that the Department of Justice file a complaint seeking civil penalties against James D. Dondero for violating the filing requirements of the Hart-Scott-Rodino Pre-Merger Notification Act. A stipulation and proposed final judgment was also filed requiring Dondero, parent of Highland Capital Management, L.P., a hedge fund, to pay $250,000 to settle the charges. According to the Commission, Highland failed to file the appropriate premerger documents in 2003 when it acquired shares of Neighborcare, Inc, then known as Genesis Health Ventures, bringing its holdings above the $50 million filing threshold. Upon realizing the error, a corrective filing was made, and Highland outlined steps to avoid future violations. However, in 2005, Highland reported another such violation involving shares of Motient Corporation.

The Commission intervened in the formation of United Launch Alliance (ULA), a proposed joint venture between the Boeing Corp. and Lockheed Martin Corp. The FTC’s complaint alleged that the formation of ULA as originally structured would have reduced competition in the markets for U.S. government medium to heavy launch services and space vehicles. In settling the Commissions’ charges, the parties agreed to take certain actions (such as nondiscrimination requirements and firewalls) to address ancillary competitive harms not inextricably tied to the national security benefits of ULA.

The consent order settled charges that Thermo Electron Corporation’s proposed $12.8 billion acquisition of Fisher Scientific International, Inc. would harm competition in the U.S. market for high-performance centrifugal vacuum evaporators (CVEs). Thermo and Fisher are the only two significant suppliers of high-performance CVEs in the United States and the proposed transaction would eliminate the direct price, service, and innovation competition that exists between them. To settle the Commission’s charges, Thermo is required to divest Fisher’s Genevac division, which includes Fisher’s entire CVE business, within five months of the date the consent agreement was signed.

The Commission filed an administrative complaint challenging a set of rules adopted by MiRealSource, Inc. to keep Exclusive Agency Listings from being listed on its MLS, as well as other rules that restricted competition in real estate brokerage services. The complaint alleges that the conduct was collusive and exclusionary, because in agreeing to keep non-traditional listings off the MLS or from public Web sites, the brokers enacting the rules were, in effect, agreeing among themselves to limit the manner in which they compete with one another, and withholding valuable benefits of the MLS from real estate brokers who did not go along. On February 5, 2007 the Commission approved a consent order in which MiRealSource agreed to abandon such collusive conduct and provide its services to all member brokers representing potential home sellers, regardless of the type of listing contract that they choose.

The consent order settles charges that Hospira Inc.’s proposed $2 billion acquisition of rival drug manufacturer Mayne Pharma Ltd. would likely reduce competition in the following products: hydromorphone hydrochloride (hydromorphone), nalbuphine hydrochloride (nalbuphine), morphine sulfate (morphine), preservative-free morphine, and deferoxamine mesylate (deferoxamine).  In settling the Commission’s charges, the companies agreed to divest to Barr Pharmaceuticals, Inc. (Barr), within 10 days of the acquisition, Mayne’s rights and assets related to the relevant products.