Legal Library: Cases and Proceedings

Pharmaceutical companies Endo Health Sciences Inc. (Endo) and Boca Life Science Holdings, LLC and Boca Pharmacal, LLC (Boca) agreed to a settlement resolving FTC charges that Endo’s acquisition of Boca would be anticompetitive. Under the settlement, the companies will relinquish their rights to market and distribute four generic multivitamin fluoride drops for children, and will sell three other generic drugs in development.The proposed settlement preserves competition in the pharmaceutical markets for four prescription generic multivitamin drop products given to children in the United States who do not have access to fluoridated water.  In addition, the FTC’s settlement preserves future competition for three generic drugs where the proposed acquisition would eliminate one likely future entrant from a very limited pool of future entrants.

According to the complaint, the proposed merger of Albertson’s and United is likely to reduce competition in local grocery markets within Amarillo and Wichita Falls, which would harm consumers through higher prices, lower quality and reduced service levels. To preserve competition in these markets, Albertson’s will sell its lone stores in Amarillo and Wichita Falls, Texas, to MAL Enterprises, Inc., which operates under the Lawrence Brothers IGA, Cash Saver and Save-A-Lot supermarket banners.

Oil refiner Tesoro Corporation and one of its subsidiaries agreed to sell their light petroleum products terminal in Boise, Idaho to settle charges that their $335 million acquisition of pipeline and terminal assets from Chevron Corporation would be anticompetitive. Without the divestitures required by the FTC, the deal would have given Tesoro ownership of two of the three full service light petroleum terminals in Boise, significantly reducing competition for local terminal services. The proposed order requires Tesoro to sell the terminal it currently owns in Boise to an FTC-approved buyer within six months of when the order becomes final.

Under a settlement with th FTC, Mylan, Inc., and Agila Specialties Global Pte. Ltd and Agila Specialties Pvt. Ltd. (collectively, Agila)  divested 11 generic injectable drugs as a condition of allowing Mylan’s proposed acquisition of Agila from Strides Arcolab Ltd. (Strides). According to the complaint, in each of these 11 markets, Mylan and Agila are two of only a limited number of current or likely future competitors. The number of suppliers in generic pharmaceutical markets matters because prices generally decrease as the number of competing generic suppliers increases. In addition, the injectable generic products of concern are highly susceptible to supply disruptions caused by the inherent difficulties of producing sterile liquid drugs.

Under a settlement, the FTC required Watson Pharmaceuticals, Inc. and Actavis Inc. to sell the rights and assets to 18 drugs to Sandoz International GmbH and Par Pharmaceuticals, Inc, and relinquish the manufacturing and marketing rights to three others, to settle charges that Watson’s proposed $5.9 billion acquisition of Actavis would otherwise be anticompetitive.The settlement protects competition in the markets for 21 current and future generic drugs, used to treat a wide range of conditions ranging from hypertension and diabetes to anxiety and attention deficit hyperactivity disorder (ADHD).

Honeywell International Inc agreed to license patents critical to the manufacture of two-dimensional (2D) bar code scanners to settle FTC charges that it's acquisition of rival Intermed Inc would be anticompetitive.  Honeywell will license its and Intermec's patents for 2D scan engines to Datalogic IPTECH s.r.l for the next 12 years.

The FTC required Kinder Morgan, Inc., one of the largest U.S. transporters of natural gas and other energy products, to sell three natural gas pipelines and other related assets in the Rocky Mountain region as part of a settlement resolving charges that Kinder Morgan's $38 billion acquisition of El Paso Corporation would be anticompetitive. According to the FTC's complaint, Kinder Morgan's proposed acquisition of El Paso would harm competition in the markets for pipeline transportation and processing of natural gas in the Rocky Mountain gas production areas in and around Wyoming, Colorado, Nebraska, and Utah.

The FTC charged that Solera's 2012 acquisition of Actual Systems likely would substantially lessen competition in the market for yard management systems, which was already highly concentrated.  To address the FTC's competitive concerns, Solera must sell assets related to Actual Systems' YMS to ASA Holdings.

The FTC charged that GE’s proposed acquisition of Avio would substantially lessen competition in the sale of engines for the A320neo aircraft, which would result in higher prices, reduced quality, and engine delivery delays for A320neo customers. GE -- through CFM International, its joint venture with France’s Snecma S.A. -- and Pratt & Whitney are the only two firms that manufacture engines for Airbus’s A320neo aircraft.  Avio designs a critical component -- the accessory gearbox or AGB -- for Pratt & Whitney’s PW1100G engine.  Pratt & Whitney has no viable alternatives to Avio for development of the AGB for the PW1100G engine.  According to the FTC, GE's acquisition of Avio would give GE the ability and incentive to disrupt the design and certification of Avio’s AGB for the PW1100G engine used on A320neo aircraft.  The FTC order remedies the acquisition’s likely anticompetitive effects by removing GE’s ability and incentive to disrupt Avio’s AGB work during the design, certification, and initial production ramp-up phase

To settle charges that it violated Section 5 of the FTC Act by engaging in unfair methods of competition and unfair acts or practices related to the licensing of standard essential patents (SEPs) for cellular, video codec, and wireless LAN stanards, Google Inc. agreed to change some of its business practices. Under a settlement reached with the FTC, Google agreed to meet its prior commitments to allow competitors access – on fair, reasonable, and non-discriminatory terms – to patents on critical standardized technologies needed to make popular devices such as smart phones, laptop and tablet computers, and gaming consoles.

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.

The FTC required hospital management company Universal Health Services, Inc. to sell an acute inpatient psychiatric facility in the El Paso, Texas/Santa Teresa, New Mexico area to settle charges that UHS’s proposed acquisition of Ascend Health Corporation would be anticompetitive. As proposed, the deal allegedly would lead to a virtual monopoly in the provision of acute inpatient psychiatric services to commercially insured patients in the El Paso/Santa Teresa area.  The FTC's final order requires UHS to sell its Peak Behavioral Health Services facility within six months to an FTC-approved buyer. In addition, to ensure that the Peak assets are able to attract a buyer that can effectively compete with UHS after the sale, the proposed order allows the Commission to require a second UHS hospital, Mesilla Valley Hospital in Las Cruces, New Mexico, to be sold together with Peak if Peak alone is not divested to an approved buyer within six months.

The FTC accepted a consent order settling charges that Charlotte Pipe and Foundry Company’s 2010 purchase of Star Pipe Products, Inc.’s cast iron soil pipe (CISP) business was anticompetitive. To help restore competition in CISP markets in the United States, the order prohibits Charlotte Pipe from enforcing a confidentiality and non-compete agreement with Star Pipe, ensures that Charlotte Pipe will publicly disclose its prior acquisitions of other CISP importers, and requires Charlotte Pipe to notify the Commission before making future acquisitions in this industry. CISP products are important components of pipeline systems used to transport wastewater from buildings to municipal sewage systems, to vent plumbing systems, and to transport rainwater to storm drains.

The FTC required Western Digital Corporation to sell assets used to manufacture and sell desktop hard disk drives to Toshiba Corporation as part of a proposed settlement that resolves charges that Western Digital's proposed acquisition of rival Hitachi Global Storage Technologies Ltd. would likely have harmed competition in the market for desktop hard disk drives used in personal computers. The proposed FTC order settles charges that the deal as originally proposed would have left only two companies, Western Digital and Seagate Technology LLC, in control of the entire worldwide market for desktop hard disk drives.

Eight independent nephrologists in Puerto Rico settled Federal Trade Commission charges that they illegally collectively bargained with insurers and refused to treat health plan patients when their price demands were rebuffed. Under a proposed order settling the FTC’s charges, the doctors are barred from jointly negotiating prices, jointly refusing to deal with any insurer, and jointly refusing to treat patients. According to the FTC’s complaint, the eight doctors have violated federal antitrust laws since late 2011 by 1) collectively negotiating and fixing the prices upon which they would contract with Humana to extract higher reimbursement rates, and 2) collectively terminating their contracts with Humana and refusing to treat Humana patients enrolled in the Mi Salud program when Humana would not meet their price demands.

Houghton International, Inc., the leading North American provider of hot rolling oil used to process aluminum, agreed to sell some of the assets it acquired in 2008 through its purchase of D.A. Stuart GmbH, a transaction that included multiple product markets. The FTC’s investigation found that Houghton’s acquisition of D.A. Stuart GmbH combined the two largest suppliers of aluminum hot rolling oil (AHRO) in North America, giving the combined firm control of almost 75 percent of the North American market. The FTC’s complaint alleges that, through its purchase of Stuart, Houghton could unilaterally raise AHRO prices to U.S. consumers. The complaint also alleges that the acquisition could decrease innovation for this vital input into aluminum manufacturing. Under the order settling the FTC’s charges, Houghton will sell Stuart’s AHRO business to Quaker Chemical Corporation.

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 approved an order settling charges that Robert Bosch GmbH’s acquisition of the SPX Service Solutions business of SPX Corporation would have given it a virtual monopoly in the market for air conditioning recycling, recovery, and recharge devices for vehicles. Under a settlement with the FTC, Bosch agreed to sell its automotive air conditioner repair equipment business, including RTI Technologies, Inc., to automotive equipment manufacturer, Mahle Clevite, Inc. Bosch also agreed to resolve allegations that, before its acquisition by Bosch, SPX harmed competition in the market for this equipment by reneging on a commitment to license key, standard-essential patents (SEPs) on fair, reasonable and non-discriminatory (FRAND) terms. The FTC alleged that SPX reneged on its obligation to license on FRAND terms by seeking injunctions against willing licensees of those patents. Bosch has agreed to abandon these claims for injunctive relief. 

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.