Legal Library: Cases and Proceedings

Global medical technology company Medtronic, Inc. agreed to divest the drug-coated balloon catheter business of Ireland-based medical products company Covidien plc, in order to settle FTC charges that its $42.9 billion acquisition of Covidien would likely be anticompetitive. Under the FTC’s proposed settlement, Medtronic will sell the drug-coated balloon catheter business to a Colorado-based medical device company, The Spectranetics Corporation. According to the FTC’s complaint, both Medtronic and Covidien are developing drug-coated balloon catheters to compete with C.R. Bard, Inc., which currently is the only company that supplies these products, used to treat peripheral artery disease, in the U.S. market. Medtronic and Covidien are the only companies with products in clinical trials in the Food and Drug Administration’s approval process, which makes it unlikely that other competitors could enter the market in time to counteract the effects of the merger.

According to the FTC's complaint, Bi-Lo’s proposed $265 million acquisition of the Delhaize supermarkets would likely harm consumers through higher grocery prices, diminished quality and reduced service levels in 11 local markets in three states. The consent order requires the merged Bi-Lo/Delhaize to sell 12 stores to Rowes IGA Supermarkets, HAC, Inc., W. Lee Flowers & Co., Inc. and Food Giant. Under the terms of the purchase agreement, Bi-Lo will acquire the Delhaize stores on a rolling basis, through eight separate deal closings over a 10-week period. Each supermarket divestiture must be completed within 10 days of the respective Bi-Lo/Delhaize closing date. The FTC settlement preserves supermarket competition in 11 local markets in three states.

Service Corporation International (SCI), the nation’s largest provider of funeral and cemetery services,agreed to sell 53 funeral homes and 38 cemeteries to resolve FTC charges that its proposed $1.4 billion acquisition of Stewart Enterprises, Inc. (Stewart) is likely to substantially lessen competition in 59 communities throughout the United States. The FTC complaint alleges the deal as proposed would eliminate direct competition between the two firms. The FTC charges that the proposed deal would enable the merged firm unilaterally to raise prices charged to consumers in these local markets and would substantially increase the risk of collusion between SCI and the few remaining competitors in the affected local areas. The proposed order settling the FTC’s charges requires SCI and Stewart to sell the 53 funeral homes and 38 cemeteries to Commission-approved buyers within 180 days, and also requires SCI and Stewart to sell certain related assets and property needed to ensure that the buyers will be able to fully replicate the competition that would have been lost if the transaction were completed as proposed.

The FTC challenged Verisk Analytics, Inc.’s proposed $650 million acquisition of EagleView Technology Corporation, alleging that it would likely reduce competition and result in a virtual monopoly in the U.S. market for rooftop aerial measurement products used by the insurance industry to assess property claims. The FTC issued an administrative complaint and authorized staff to seek a temporary restraining order and preliminary injunction in federal court.  On 12/16/14, Verisk Analytics, Inc. announced that it would abandon its plans to acquire EagleView, and the Commission dismissed the administrative complaint.

Pharmaceutical company Prestige Brands Holdings, Inc., the maker of Dramamine, agreed to divest assets and marketing rights for the over-the-counter motion sickness drug Bonine to settle FTC charges that Prestige’s proposed acquisition of Insight Pharmaceuticals Corporation would likely be anticompetitive. Prestige proposed to acquire Insight for $750 million. According to the FTC’s complaint, Prestige’s Dramamine, which is the best-selling branded product in the market for over-the-counter motion-sickness drugs, and Insight’s Bonine, are the only two branded products with significant sales. Absent a remedy, the acquisition would eliminate the close competition between Dramamine and Bonine, likely leading to higher prices for consumers.

The National Association of Teachers of Singing, Inc. (NATS) has agreed to eliminate provisions in its code of ethics that limit competition among its members. The FTC charged that NATS, which represents more than 7,300 vocal arts teachers in the United States, restrained competition in violation of the FTC Act through a code of ethics provision that prohibits members from soliciting students from other members. The order settling the FTC’s complaint against NATS requires that it stop restraining members from seeking teaching work, and stop telling its members that soliciting students is unethical. The order also requires NATS to obtain a certification from each of its chapters that the chapter is not restricting solicitation, advertising, or price-related competition by its members, and to sever its ties with any chapter that NATS learns is restraining solicitation, advertising, or price-related competition by its members. NATS also must implement an antitrust compliance program.