Legal Library: Cases and Proceedings

The Commission challenged major consumer electronics manufacturers Panasonic Corporation's proposed $9 billion acquisition of Sanyo Electric Co., Ltd., requiring that Sanyo sell its portable nickel metal hydride (NiMH) battery business related assets, including a premier manufacturing plant in Japan. NiMH batteries power two-way radios, among other products, which are used by police and fire departments nationwide.

On 4/20/2011, the FTC challenged Phoebe Putney Health System, Inc.’s (Phoebe’s) proposed acquisition of rival Palmyra Park Hospital, Inc. (Palmyra) from HCA, in Albany, Georgia. The FTC’s administrative complaint alleges that the deal will reduce competition significantly and allow the combined Phoebe/Palmyra to raise prices for general acute-care hospital services charged to commercial health plans, substantially harming patients and local employers and employees. The FTC also alleges that Phoebe has structured the deal in a way that uses the Hospital Authority of Albany-Dougherty County (the Authority) in an attempt to shield the anticompetitive acquisition from federal antitrust scrutiny under the “state action” doctrine. The FTC’s staff, together with the Attorney General of the State of Georgia, filed a separate complaint in federal district court in Albany, Georgia, seeking an order to halt any transaction involving Phoebe, the Authority, or Palmyra, under which Phoebe would acquire control of Palmyra’s operations, until the conclusion of the FTC’s administrative proceeding and any subsequent appeals. On 2/19/2013, the Supreme Court reversed the judgment of the Court of Appeals and remanded further proceedings.  On June 27, 2011, the district court denied the motion for a preliminary injunction on the grounds that the transaction was protected by the state action doctrine.  On December 14, the Eleventh Circuit affirmed.  In February 2013, the Supreme Court reversed, finding that the state of Georgia had not clearly articulated a policy that would permit the Hospital Authority to approve anticompetitive mergers.

On 3/14/2013, the Commission issued an order granting complaint counsels motion to lift the stay on administrative proceedings. On 4/9/2013, an amended complaint and renewed motions for a PI and TRO were filed in federal district court in Georgia, pending an 8/5/2013 administrative trial. On 5/15/2013, the U.S. District Court for the Middle District of Georgia granted the FTC’s motion for a temporary restraining order. On 6/25/2013, the Commission granted the motion to withdraw the matter from Part III, and accepted for public comment a proposed settlement of its charges. Due to the unique circumstances of the Certificate of Need (CON) laws in Georgia, the Commission originally believed it was unable to require that the hospitals become independent competitors. On 9/5/2014, based on public comments received, as well as other information, the Commission determined that Georgia’s CON laws may not preclude structural relief, and voted to withdraw its acceptance of the proposed consent agreement and return the matter to administrative litigation. On 3/31/15, the FTC entered into a settlement agreement requiring Phoebe Putney and the Hospital Authority must notify the FTC in advance of acquiring any part of a hospital or a controlling interest in other healthcare providers in the Albany, Georgia area for the next 10 years, and prohibiting them from objecting to regulatory applications made by potential new hospital providers in the same area for up to five years. The settlement is similar to the one proposed in 2013 and does not require structural relief.

The FTC challenged Graco Inc.'s proposed $650 million acquisition of ITW Finishing LLC from Illinois Tool Works Inc., alleging that it would harm competition in the market for equipment used to apply paints and other liquid finishes to a variety of manufactured goods, such as cars, wood cabinets, and major appliances. In March 2012, the FTC issued an order requiring Graco Inc. to hold separate the worldwide liquid finishing equipment businesses of Illinois Tool Works Inc. and ITW Finishing LLC, while allowing Graco to complete its proposed $650 million acquisition of all of ITW's finishing equipment businesses. The Commission also withdrew its court challenge to the deal. On 5/31/2012, the FTC required Graco Inc., a leader in the worldwide market for key industrial finishing equipment, to sell the worldwide liquid finishing business of Illinois Tool Works Inc. and ITW Finishing LLC under a proposed order, as part of a settlement resolving charges that its $650 million acquisition of several ITW businesses would have been anticompetitive and led to higher prices and reduced innovation for the North American manufacturers who rely on this equipment.

Eli Lilly and Company agreed to divest its Sentinel product line of medications for treating heartworm disease in dogs in order to settle FTC charges that its proposed $5.4 billion acquisition of Novartis Animal Health would likely be anticompetitive. Under the settlement, Eli Lilly will divest its Sentinel product line and associated assets to the French pharmaceutical company, Virbac S.A. The FTC’s complaint challenging the transaction alleges that the proposed acquisition would be anticompetitive and lead to higher prices. According to the complaint, Eli Lilly’s Trifexis and Novartis Animal Health’s Sentinel products are particularly close substitutes because they are the only two products that are given orally once a month, contain the same active ingredient, and also treat fleas and other internal parasites in dogs.

The Commission challenged Schering-Plough’s proposed $41.4 billion acquisition of Merck & Co., and required divestitures to preserve competition in markets for human and animal pharmaceuticals. The proposed consent order requires that Merck sell its interest in Merial Limited, an animal health joint venture with Sanofi-Aventis S.A., and that Schering-Plough sell its assets related to significant drugs for nausea and vomiting in humans.

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.

The FTC challenged Ardagh Group, S.A.’s proposed $1.7 billion acquisition of Saint-Gobain Containers, Inc., alleging that it will reduce competition and result in the two firms – the merged firm and its only remaining significant competitor, Owens-Illinois – controlling in excess of 75 percent of the U.S. markets for glass containers for beer and spirits customers, resulting in higher prices for those customers. The FTC issued an administrative complaint against the two companies, alleging that the acquisition would violate U.S. antitrust law. The proposed acquisition would combine the second-largest manufacturer of glass containers (Saint-Gobain) and the third-largest (Ardagh).The complaint alleges that glass container competitors possess a wealth of information about each other and the glass container industry, and that reducing the number of major competitors from three to two will make it substantially easier for the remaining two competitors to coordinate with one another to achieve supracompetitive prices or other anticompetitive outcomes. The Commission also filed a motion for a preliminary injunction in federal court to preserve the status quo pending the outcome of the administrative trial on the merits.  On 11/3/13, the parties stipulated to a hold separate order in the federal court proceeding.   On 11/8/13 the Commission stayed the part 3 litigation pending settlement discussions. On 4/10/14, Ardagh Group SA agreed to sell six of its nine glass container manufacturing plants in the United States to settle the FTC's charges. The FTC’s settlement order requires Ardagh to sell six of the manufacturing plants and related assets it acquired through its 2012 acquisition of Anchor Glass Container Corporation, along with Anchor’s former corporate headquarters in Tampa, Fla.

On 4/20/2011, the FTC challenged Phoebe Putney Health System, Inc.’s (Phoebe’s) proposed acquisition of rival Palmyra Park Hospital, Inc. (Palmyra) from HCA, in Albany, Georgia. The FTC’s administrative complaint alleges that the deal will reduce competition significantly and allow the combined Phoebe/Palmyra to raise prices for general acute-care hospital services charged to commercial health plans, substantially harming patients and local employers and employees. The FTC also alleges that Phoebe has structured the deal in a way that uses the Hospital Authority of Albany-Dougherty County (the Authority) in an attempt to shield the anticompetitive acquisition from federal antitrust scrutiny under the “state action” doctrine. The FTC’s staff, together with the Attorney General of the State of Georgia, filed a separate complaint in federal district court in Albany, Georgia, seeking an order to halt any transaction involving Phoebe, the Authority, or Palmyra, under which Phoebe would acquire control of Palmyra’s operations, until the conclusion of the FTC’s administrative proceeding and any subsequent appeals. On 2/19/2013, the Supreme Court reversed the judgment of the Court of Appeals and remanded further proceedings.  On June 27, 2011, the district court denied the motion for a preliminary injunction on the grounds that the transaction was protected by the state action doctrine.  On December 14, the Eleventh Circuit affirmed.  In February 2013, the Supreme Court reversed, finding that the state of Georgia had not clearly articulated a policy that would permit the Hospital Authority to approve anticompetitive mergers.

On 3/14/2013, the Commission issued an order granting complaint counsels motion to lift the stay on administrative proceedings. On 4/9/2013, an amended complaint and renewed motions for a PI and TRO were filed in federal district court in Georgia, pending an 8/5/2013 administrative trial. On 5/15/2013, the U.S. District Court for the Middle District of Georgia granted the FTC’s motion for a temporary restraining order. On 6/25/2013, the Commission granted the motion to withdraw the matter from Part III, and accepted for public comment a proposed settlement of its charges. Due to the unique circumstances of the Certificate of Need (CON) laws in Georgia, the Commission originally believed it was unable to require that the hospitals become independent competitors. On 9/5/2014, based on public comments received, as well as other information, the Commission determined that Georgia’s CON laws may not preclude structural relief, and voted to withdraw its acceptance of the proposed consent agreement and return the matter to administrative litigation. On 3/31/15, the FTC entered into a settlement agreement requiring Phoebe Putney and the Hospital Authority must notify the FTC in advance of acquiring any part of a hospital or a controlling interest in other healthcare providers in the Albany, Georgia area for the next 10 years, and prohibiting them from objecting to regulatory applications made by potential new hospital providers in the same area for up to five years. The settlement is similar to the one proposed in 2013 and does not require structural relief.