Legal Library: Cases and Proceedings

In November 2008, the Commission issued an administrative complaint charging that the acquisition of CCC Information Services by Mitchell International, a transaction valued at $1.4 billion, would be anticompetitive in the market for “estimatics”, a database system used by auto insurers and repair shops to generate repair estimates for consumers. According to the complaint, the transaction would also harm competition in the market for total loss valuation (TLV) systems, used to inform consumers when their vehicle has been totaled. The transaction would create a new entity with well over half of the market share for these systems, allowing for unilateral price increases, and facilitating coordination among the remaining smaller competitors in the market. The Commission concurrently authorized staff to file a complaint in Federal District Court. On March 9, 2009, the US District Court for the District of Columbia ordered a preliminary injunction and temporary restraining order preventing the parties from consummating the transaction pending a full administrative trial on the merits. On March 13, 2009, since the respondents announced that they decided not to proceed with the proposed merger the Commission dismissed the Administrative Complaint.

In late 2008, the Commission issued a consent order to restore competition in the market for oral long-acting opioids (LAOs). The FTC intervened in King Pharmaceutical’s proposed $1.6 billion acquisition of rival drug-maker Alpharma Inc. because the transaction would have joined the two leading producers of morphine sulfate oral LAO’s in the United States, a market which was already highly concentrated and which had annual sales of $4 billion in 2007. In order to maintain competition in the market, the Commission’s consent order requires King to divest its Kadian business to Actavis, a company which already manufactured the drug for King, and which could then produce a generic equivalent of the drug sooner than would have been permitted under King’s patent, which would not have expired until 2010.

The Commission issued an administrative complaint to challenge Oldcastle Architectural’s (a subsidiary of CRH) proposed $540 million acquisition of Pavestone Companies as anticompetitive in the US market for drycast concrete hardscape products sold to retailers such as The Home Depot, Lowe’s, and Wal-Mart Stores. According to the complaint, the acquisition would reduce competition by combining the only two companies capable of the national manufacture and sale of these heavy products, which include concrete pavers, segmented retaining wall blocks, and concrete patio products, due to the difficulty in distribution of such products, and the fact that both Oldcastle and Pavestone already possess large distribution networks. The acquisition as proposed would result in Oldcastle gaining a 90% market share for the manufacture and sale of these drycast products to home centers in the United States. The Commission also authorized staff to file a complaint in federal court seeking a temporary restraining order and preliminary injunction to prevent consummation of the proposed transaction, but the respondents decided not to proceed with the proposed merger and the Commission dismissed the administrative complaint.

Enforcing the mandatory premerger notification filing provisions under the Hart-Scott-Rodino Antitrust Improvements Act, the Commission filed a complaint in Federal District Court charging ESL Partners and ZAM Holdings, two investment funds, with failing to make timely filings prior to making two acquisitions. The acquisitions in question were the purchase of blocks of AutoZone, Inc.’s shares in September and October of 2004. According to the Commission’s complaint, the acquisition met the filing threshold established in the HSR act, and thus was required to file. ESL and ZAM agreed to pay civil penalties of $525,000 and $275,000 respectively to settle the Commission’s charges.

The Commission issued an administrative complaint to block CCS Corporation’s proposed $85 million acquisition of Newpark Environmental Services. According to the complaint, the proposed transaction was anticompetitive because it would consolidate two of the leading providers of waste disposal services for the offshore oil and natural gas exploration and production industry in the Gulf Coast Region, leading to higher prices and decreased service levels. In response to the complaint, CCS, a subsidiary of Red Sky, threatened to close down its operations in the Gulf Coast should the acquisition not receive the necessary regulatory approvals. The Commission filed for a preliminary injunction, and temporary restraining order in federal court. As a result, the parties abandoned the transaction, and the Commission dismissed its administrative complaint.

The Commission challenged the proposed acquisition by Carlyle Partners IV, L.P. of INEOS Group Ltd., alleging that the deal would be anticompetitive in the highly concentrated Midwestern market for sodium silicate. Sodium silicates are used in detergents and other products, and are important chemicals used by the pulp and paper industry. The acquisition would have joined market leader PQ Corporation, which is owned by Carlyle, with INEOS, the third-largest sodium silicate provider. Under the Commission’s order, Carlyle must divest PQ’s sodium silicate plant in Utica, Illinois, and all associated intellectual property required to operate the plant to Oak Hill Company within five days of consummating the transaction.

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.