Legal Library: Cases and Proceedings

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.

The Commission charged that Transitions Optical, Inc., the nation’s leading manufacturer of photochromic treatments that darken corrective lenses used in eyeglasses, used anticompetitive practices to maintain its monopoly and increase prices. Photochromic treatments are applied to eyeglass lenses and treated lenses darken when exposed to UV light. The FTC charges that the company illegally maintained its monopoly by engaging in exclusive dealing at nearly every level of the photochromic lens distribution chain.  The FTC alleged that Transitions’ exclusionary tactics locked out rivals from approximately 85 percent of the lens caster market, and partially or completely locked out rivals from up to 40 percent or more of the retailer and wholesale lab market.  Under FTC consent order, Transitions agreed to stop all exclusive dealing practices that pose a threat to competition, making it easier for competitors to enter.

Following an appeal by RealComp, the United States Court of Appeals for the Sixth Circuit upheld the FTC order. On August 15, 2011 Realcomp appealed to the Supreme Court. On October 11, 2011 the Supreme Court denied Realcomp's petition for a writ of certiorari.

Alta Bates Medical Group, Inc., a 600-physician independent practice association serving the Berkeley and Oakland, California, area, settleed Commission charges that it violated federal antitrust law by fixing prices charged to health care insurers. The consent order prohibits Alta Bates from collectively negotiating fee-for-service reimbursements and engaging in related anticompetitive conduct. In addition to price-fixing of fee-for-service reimbursements, the FTC’s complaint alleges an unlawful concerted refusal to deal.

John C. Malone, CEO and Chairman of Discovery Holding Company, agreed to pay a $1.4 million civil penalty to settle Federal Trade Commission charges that he violated the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act) in connection with acquisitions of Discovery shares in 2005 and 2008. The FTC alleged that Malone failed to file the required notice in 2005 after buying Discovery shares, and then in 2008 purchased additional Discovery shares before the expiration of a waiting period required by the HSR Act.

The Commission challenged Lubrizol Corporation’s consummated 2007 acquisition of the oxidate assets of The Lockhart Company which had the effect of substantially lessening competition in the already highly concentrated U.S. market for chemical rust inhibitors. These inhibitors are commonly used to prevent rusting during the manufacture of metal products such as automobiles and other heavy equipment. According to the Commission’s complaint the acquisition removed Lubrizol’s last substantial competitor in the relevant market. In addition, the Commission challenged a non-compete agreement included in the terms of the acquisition which prevented Lockhart from competing in the relevant market for 5 years as anticompetitive because it restrained the ability of new firms to enter the market. The Commission issued a consent order remedying its anticompetitive concerns requiring the divestiture of the oxidate assets in question to Additives International and the elimination of the non-compete agreement.

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 November 2008, the Commission authorized staff to file a complaint in Federal District Court, 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 issued an administrative complaint. 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 order to restore competition in the U.S. market for consumer pregnancy tests, the Commission effectively reversed a consummated transaction in which Inverness Medical Innovations, a 70% market share holder, purchased the assets related to the development of a water-soluble dye based pregnancy test from ACON Laboratories in order to protect its monopoly power in the market. According to the Commission’s complaint, Inverness restrained competition in two ways. First, Inverness issued covenants not to compete to ACON, took profits from ACON’s joint venture with Church & Dwight, and purchased intellectual property rights which would restrict ACON from developing competing products. Second, Inverness limited product innovation by purchasing, but not using, the water-soluble dye test technology purchased from ACON, one of the only companies utilizing that technology. The Commission’s consent order ended any restrictions Inverness had over the joint venture between ACON and Church & Dwight, and required that Inverness divest its assets relating to the water-soluble dye technology, and its related pregnancy test product.