Legal Library: Cases and Proceedings

The Commission approved an administrative complaint, alleging that a combined Jostens/American Achievement Corp. ("AAC") would control an unduly high percentage of the high school and college rings markets, making it a dominant firm with only one smaller meaningful competitor in both markets.  The Commission charged that the proposed combination of Jostens and AAC would likely have been anticompetitive and led to higher prices and reduced service for both high school and college students who buy class rings.  The FTC also voted to seek a preliminary injunction in federal court to stop Jostens from proceeding with the proposed acquisition of its close rival, AAC.  On April 17, 2014, the parties abandoned their plans to merge.

The FTC’s complaint against the Music Teachers National Association, Inc. (MTNA), which represents over 20,000 music teachers nationwide, alleges that the association and its members restrained competition in violation of the FTC Act through a code of ethics provision that restricted members from soliciting clients from rival music teachers.  The proposed order requires MTNA to stop restricting or declaring it unethical for its members to solicit teaching work from other music teachers.  The order also requires MTNA to maintain an antitrust compliance program. In addition, MTNA is an umbrella organization for more than 500 state and local music teaching association affiliates throughout the country. Some of these affiliates have codes of ethics that restrain their members from charging fees that are lower than the average in the community, offering free lessons or scholarships, or advertising free scholarships or tuition. The proposed settlement requires MTNA to, among other things, stop affiliating with any association that MTNA knows is restricting solicitation, advertising, or price-related competition by its members.

According to the complaint, the proposed merger of Albertson’s and United is likely to reduce competition in local grocery markets within Amarillo and Wichita Falls, which would harm consumers through higher prices, lower quality and reduced service levels. To preserve competition in these markets, Albertson’s will sell its lone stores in Amarillo and Wichita Falls, Texas, to MAL Enterprises, Inc., which operates under the Lawrence Brothers IGA, Cash Saver and Save-A-Lot supermarket banners.

Under a settlement, the FTC required Watson Pharmaceuticals, Inc. and Actavis Inc. to sell the rights and assets to 18 drugs to Sandoz International GmbH and Par Pharmaceuticals, Inc, and relinquish the manufacturing and marketing rights to three others, to settle charges that Watson’s proposed $5.9 billion acquisition of Actavis would otherwise be anticompetitive.The settlement protects competition in the markets for 21 current and future generic drugs, used to treat a wide range of conditions ranging from hypertension and diabetes to anxiety and attention deficit hyperactivity disorder (ADHD).

The FTC required hospital management company Universal Health Services, Inc. to sell an acute inpatient psychiatric facility in the El Paso, Texas/Santa Teresa, New Mexico area to settle charges that UHS’s proposed acquisition of Ascend Health Corporation would be anticompetitive. As proposed, the deal allegedly would lead to a virtual monopoly in the provision of acute inpatient psychiatric services to commercially insured patients in the El Paso/Santa Teresa area.  The FTC's final order requires UHS to sell its Peak Behavioral Health Services facility within six months to an FTC-approved buyer. In addition, to ensure that the Peak assets are able to attract a buyer that can effectively compete with UHS after the sale, the proposed order allows the Commission to require a second UHS hospital, Mesilla Valley Hospital in Las Cruces, New Mexico, to be sold together with Peak if Peak alone is not divested to an approved buyer within six months.

The FTC required Western Digital Corporation to sell assets used to manufacture and sell desktop hard disk drives to Toshiba Corporation as part of a proposed settlement that resolves charges that Western Digital's proposed acquisition of rival Hitachi Global Storage Technologies Ltd. would likely have harmed competition in the market for desktop hard disk drives used in personal computers. The proposed FTC order settles charges that the deal as originally proposed would have left only two companies, Western Digital and Seagate Technology LLC, in control of the entire worldwide market for desktop hard disk drives.

Graco, Inc. settled FTC charges that it violated the antitrust laws by buying Gusmer Corp. (Gusmer) in 2005 and GlasCraft, Inc. (GCI) in 2008, its two closest competitors in the North American market for fast set equipment (FSE) used by contractors to apply polyurethane foams and polyurea coatings. The consent order settling the FTC’s charges is designed to restore competition to the FSE market that was lost as a result of Graco’s acquisitions. It incorporates a private litigation settlement between Graco and Polyurethane Machinery Corp. (Gama/PMC) that requires Graco to license certain technology to Gama/PMC. The consent order also contains provisions that provide Gama/PMC and other competitors easier access to distributors, so they can distribute competing FSE products effectively in the North American market.