Legal Library: Cases and Proceedings

The Commission charged that Sun Pharmaceutical Industries Ltd’s proposed acquisition of Taro Pharmaceuticals Industries, Ltd would substantially reduce competition, likely resulting in higher prices for three distinct generic formulations of the anticonvulsant drug carbamazepine, used widely as an antiepileptic and to prevent and control seizures. The proposed deal would have reduced the number of drug suppliers to a level where the number of competitors has a direct and substantial impact on prices. In order to remedy these concerns, Sun agreed to divest all of its rights and assets needed to develop three generic forms of carbamazepine: 1) immediate-release tablets; 2) chewable tablets; and 3) extended-release tablets.

The Commission challenged McCormick & Company’s $605 million acquisition of Lawry’s and Adolph’s brands of seasoned salt products from Unilever N.V., alleging that the transaction would be detrimental to competition in the highly concentrated U.S. market for seasoned salts. According to the Commission’s complaint, the proposed deal would combine the two companies that comprise almost the entire $100 million market for seasoned salt, increasing the likelihood that McCormick would be able unilaterally to increase prices. McCormick agreed to divest its Season-All business to Morton, an FTC approved buyer, within 10 days of completing the acquisition.

The Commission challenged Flow International Corporation’s proposed $109 million acquisition of rival waterjet manufacturer OMAX Corporation. Both corporations develop, manufacture, and sell computerized waterjet cutting systems which use pressurized water mixed with abrasive garnet particles to cut various materials, including steel and stone. The proposed acquisition would have united the two largest competitors in the market for the manufacture and sale of computerized waterjet cutting systems and allowed Flow to exercise market power and increase prices. Furthermore, the Commission charged that entry would be very unlikely because OMAX received two broad patents relating to the control systems for waterjet cutting systems. The Commission approved a consent agreement requiring OMAX to grant any request for a royalty-free license for its controller patents.

The Commission challenged a series of acquisitions by TALX Corporation, a fully owned subsidiary of Equifax, Inc., that lessened competition in the markets for outsourced unemployment compensation management (UCM) and verification of income and employment (VOIE) services. Unemployment compensation management services consist of the administration of unemployment compensation claims filed with a state or territory. Verification of income and employment services consists of providing income and employment information on behalf of employers to third parties, such as lenders or other creditors. According to the Commission’s complaint, TALX’s series of acquisitions from 2002 to 2005 substantially reduced competition in the nationwide provision of VOIE services and in the provision of outsourced UCM services, and enhanced TALX’s ability to unilaterally increase prices and decrease the quality of its services. Under the Commission consent order designed to restore competition, TALX agreed to allow certain customers terminate their agreements and give notice to the FTC before acquiring, or entering a management contract with, a UCM or VOIE service provider.

Under the terms of the proposed consent order, the Missouri Board of Embalmers and Funeral Directors agreed to settle charges that it deterred competitive entry in the retail sale of caskets by adopting a rule that only licensed funeral directors could sell caskets to consumers on an at-need basis. Under the proposed settlement, the Board is required to communicate to the public that it is not necessary to obtain a license from the Board to offer for retail sale caskets and other funeral merchandise to customers in Missouri.