Legal Library: Cases and Proceedings

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.

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.

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 4/8/2013, Bosley, Inc., the nation’s largest manager of medical/surgical hair restoration procedures, settled Federal Trade Commission charges that it illegally exchanged competitively sensitive, nonpublic information about its business practices with one of its competitors, HC (USA), Inc., commonly known as Hair Club, in violation of Section 5 of the FTC Act. In settling the FTC’s charges, Bosley has agreed not to communicate such information in the future, and will institute an antitrust compliance program. The FTC alleged that for at least the past four years, Bosley exchanged competitively sensitive, nonpublic information about its business operations with Hair Club. The information exchanged by the companies’ CEOs included details about future product offerings, surgical hair transplantation price floors and discounts, plans for business expansion and contraction, and current business operations and performance.

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.

The FTC required bleach producer and seller Oltrin Solutions, LLC to release its competitor, JCI Jones Chemicals, Inc. from an agreement not to sell bleach in North Carolina and South Carolina. This non-compete agreement was part of a 2010 transaction between the two firms that the FTC alleges violated antitrust laws. The FTC’s settlement with Oltrin and JCI will restore competition between these two producers and sellers of bulk bleach, which is primarily used to disinfect water.  The FTC contends that the deal between the two firms eliminated substantial competition between Oltrin and JCI in the relevant geographic market; substantially increased the market concentration for bulk bleach sales in the relevant geographic market; and increased Oltrin’s ability to raise bulk bleach prices. The FTC order requires Oltrin to release JCI from the non-compete agreement, transfer a minimum volume of its bulk bleach contracts back to JCI, and provide a short-term backup supply agreement that will facilitate JCI’s re-entry into the bulk bleach market in North Carolina and South Carolina.

Magnesium Elektron, a leader in the production of magnesium plates used for photoengraving, settled FTC charges that its acquisition of rival plate manufacturer Revere Graphics Worldwide, Inc. was anticompetitive and a violation of the antitrust laws. The FTC's order restores the competition eliminated by the merger by requiring Magnesium Elektron to sell necessary intellectual property and technical know-how used to manufacture magnesium plates for photoengraving applications to Kansas-based Universal Engraving.  While Universal Engraving does not currently manufacture or sell magnesium plates, it is uniquely positioned to become an effective competitor in this market because it already sells other metals used in the photoengraving process to customers affected by the merger.

On 12/16/2011, Brian L. Roberts, the Chief Executive Officer of Comcast Corporation, agreed to pay a $500,000 penalty to settle Federal Trade Commission charges that he violated the Hart-Scott-Rodino Antitrust Improvement Act (HSR Act) in connection with his acquisitions of Comcast stock between 2007 and 2009. The FTC alleged that Roberts failed to file required notices before acquiring Comcast shares. The amount of the fine was limited by a number of factors, including that the violation was inadvertent and technical; that it was apparently due to faulty advice from outside counsel; that Roberts did not gain financially from the violation; and that he reported the violation promptly once it was discovered.

BASF has settled Commission charges that its proposed $5.1 billion acquisition of rival chemical manufacturer Ciba Holding Inc. would be anticompetitive and violate federal law by reducing competition in the worldwide markets for two high performance pigments. Under the terms of a consent order allowing the transaction to proceed, the FTC requires BASF to sell all assets, including the intellectual property related to the two pigments, bismuth vanadate and indanthrone blue, to a Commission-approved buyer within six months.

Under the terms of the settlement, Simon Property Group, Inc. is required to divest property and modify tenant leases to preserve outlet center competition in parts of southwest Ohio, Chicago, Illinois, and Orlando, Florida, in the wake of Simon’s purchase of Prime Outlets Acquisition Company, LLC. In addition, Simon has agreed to remove radius restrictions for tenants with stores in its outlet malls serving the Chicago and Orlando markets.

Dow settled antitrust concerns relating to its proposed merger with Union Carbide Corporation. Dow agreed to divest and license intellectual property necessary to the production of linear low-density polyethylene -an ingredient used in premium plastic products such as trash bags and sealable food pouches -to BP Amoco plc.

In May 1996, the Commission filed an administrative complaint charging Toys "R" Us with using its dominant position as a toy distributor to obtain agreements from toy manufacturers to stop selling to warehouse clubs the same toys that they sold to Toys "R" Us.  After an administrative trial, the ALJ issued an initial decision finding that Toys "R' Us' policy to stop carrying toys made by a manufacturer that sold the same toys to discount club stores had induced manufacturers to agree to stop supplying some toys to club stores in violation of the antitrust laws.  In October 1998, the Commission issued its decision that Toys "R Us had orchestrated horizontal and vertical agreements with and among toy manufacturers to restrict the availability of popular toys to warehouse clubs, and ordered the company to stop pressuring manufacturers to limit supply or otherwise refuse to sell to discount club stores. Toys "R" Us appealed to the Seventh Circuit, and in August 2000, the appellate court upheld the Commission's order.

In April 2014, on a petition from Toys "R" Us, the Commission modified its order to set aside certain provisions that restricted the company's ability to enter into certain conditional supply relationships, finding that Toys "R" Us is no longer the largest toy retailer.

The FTC preserved competition in the North American market for alumina wear tile by imposing conditions on Keystone Holdings, LLC and Compagnie de Saint-Gobain in a settlement involving Keystone’s planned acquisition of Saint-Gobain’s Advanced Ceramics Business. According to the FTC’s complaint, the deal as originally structured would have reduced competition in the relevant markets by eliminating direct competition between CoorsTek – the Keystone subsidiary that manufactures its tiles – and Saint-Gobain. In addition, the deal would increase CoorsTek’s market share substantially, eliminate CoorsTek’s most significant alumina wear tile competitor in North America, allow the combined company to raise prices for alumina wear tile, and increase the likelihood that the remaining firms could act together to raise prices for alumina wear tile.

Solvay settled antitrust concerns stemming from its proposed acquisition of Ausimont S.p.A. from Italenergia S.p.A., and agreed to divest its U.S. polyvinylidene fluoride (PVDF) operations and its interest in Alventia LLC, a joint venture which manufactures the main raw material for PVDF. According to the complaint, the proposed acquisition would lessen competition in two markets: the production and sale of all grades of PVDF; and the production and sale of melt-processible grades of PVDF.

Service Corporation International (SCI), the nation’s largest provider of funeral and cemetery services, settled Commission charges that its proposed acquisition of Keystone North America Inc., the fifth-largest funeral and cemetery services provider in North America, raises antitrust concerns in several local markets for funeral services and cemetery services. The order requires SCI to sell 22 funeral homes and four cemeteries in 19 local markets to ensure competition is preserved following its acquisition of Keystone.