Legal Library: Cases and Proceedings

The FTC charged that five distributors of recorded music illegally required retailers to advertise compact discs at or above the minimum advertised price (MAP) set by the distribution company in exchange for substantial advertising payments for various types of media including television, radio, newspaper and signs and banners within the retailers own stores. Time-Warner Inc., Bertlesmann, Universal Music and Video Distribution Corporation and UMG Recordings, Inc., EMI Music Distribution, and Sony Music Entertainment represent approximately 85 percent of all CD’s purchased in the United States. According to the complaint, the MAP policies violated the antitrust laws in two respects. First, when considered together, the arrangements constitute practices that facilitate horizontal collusion among the distributors, and, when viewed individually, each distributor's arrangement constitutes an unreasonable vertical restraint of trade under the rule of reason.  In separate settlements, each distributor agreed to stop linking promotional funds to the advertised prices of their retailer customers for the next seven years. For the next 13 years after that, each company was prohibited from conditioning promotional money on the prices contained in advertisements they do not pay for, or terminating relationships with any retailer based on that retailer's prices.

Final consent order permits Pfizer’s merger with Warner-Lambert Company and requires divestitures in several pharmaceutical markets including: Pfizer’s RID brand of head lice treatment; Pfizer’s antidepressant drug, Celexa; Warner’s Cognex, a drug used in the treatment of Alzheimer’s disease; and assets relating to the Epidermal Growth Factor receptor tryosine kinase inhibitor - drugs under development to treat solid cancerous tumors such as head and neck, non-small cell lung, breast, ovarian, pancreas and colorectal cancers.

Service Corporation International divested the LaGrone Funeral Home, acquired in 1994, to settle charges that the acquisition gave Service Corporation a monopoly in the provision of funeral services in Roswell, New Mexico. The order also requires Service Corporation, for ten years, to obtain prior Commission approval before acquiring any funeral home serving Chaves County, New Mexico.

A consent order requires Ceridian to grant licenses to new and existing firms that provide commercial credit cards (known as "trucking fleet-cards") used by over-the-road trucking companies to make purchases at retail locations. The order settles charges that Ceridian's consummated acquisitions of NTS Corporation and Trendar Corporation gave Ceridian the power to control the markets for the provision of trucking fleet cards and the systems used to read them at truck stops throughout the country.

The dental association with a membership of more than 1800 dentists practicing in Puerto Rico agreed not to encourage its members to enter into agreements that set or fixed the fees charged or terms and conditions under which dentists would deal with health insurance plans or other payers in an attempt to obtain higher reimbursement rates for dental services.

A consent order settled charges that Fidelity’s acquisition of Chicago Title Corporation would reduce competition for title information services in San Luis Obispo, Tehama, Napa, Merced, Yolo, and San Benito, California. The order requires the divestiture of title plants in each of the six areas.

VNU N.V. settled antitrust concerns that its proposed acquisition of Nielsen Media Research, Inc. would restrict competition in the market for advertising expenditure measurement services in the United States. The order requires VNU to divest its Competitive Media Reporting division, the nation's largest supplier in the specialized market.

Abbott and Geneva Pharmaceuticals settled charges that the two firms entered into an illegal agreement to stop the marketing and development of a competing generic drug. According to the complaint, Abbott, manufacturer of Hytrin – the brand name for terazosin HCL, a prescription drug used to treat hypertension and benign prostatic hyperplasia, entered into an agreement with Geneva Pharmaceuticals whereby Abbott would pay Geneva millions of dollars not to market a generic version of Hytrin. The orders bars Abbott and Geneva, among other things, from entering into agreements in which a generic company agrees with a manufacturer of a branded drug to delay or stop the production of a competing drug.

The Wisconsin Chiropractic Association and its executive director, Russell A. Leonard, settled charges that they conspired to fix the prices for chiropractic goods and services and to boycott third party payers in an attempt to obtain higher reimbursement rates for services and contracts in the La Crosse, Wisconsin area.

General surgeons and six competing general surgery practice groups in the Austin, Texas area settled charges that they collectively refused to deal with two health plans, forcing the plans to accept the surgeons’ demands to raise surgical rates.

McCormick & Company agreed to settle charges that it violated the Robinson-Patman Act when the firm charged some retailers higher net prices for its spice and seasoning products than it charged other retailers. According to the complaint, McCormick, the world’s largest spice company, offered its products to some retailers at substantial discounts using a variety of different discounting schemes, such as slotting allowances, free goods, off-invoice discounts and cash rebates. The order prohibits McCormick from engaging in price discrimination and from selling its products to any purchaser at a net price higher than McCormick charged the purchaser’s competitor.

A final order ensures competition in the markets for natural gas transportation out of the Gulf of Mexico and into the southeastern United States. The consent order permitted El Paso's $6 billion merger with Sonar Inc. and requires the divestiture of Sea Robin Pipeline Company; Sonat's one-third ownership interest in Destin Pipeline Company, L.L.C.; and the East Tennessee Natural Gas Company.

Rhodia divested certain assets to resolve antitrust concerns stemming from its acquisition of Allbright & Wilson PLC. The consent order permits the acquisition but requires the divestiture of Albright’s interest in its United States phosphoric acid joint venture to its joint venture partner, Potash Corporation of Saskatchewan.

A consent order settled charges that Shaw's proposed acquisition of Star Markers, Inc. could eliminate supermarket competition and increase prices in the greater Boston metropolitan area. The consent order permits the acquisition and requires the divestiture of three Shaw supermarkets and seven Star markets in eight communities.

Final order settles allegations that Intel's acquisition of Digital Equipment Corporation's assets could endanger the continuing and future development of the Alpha microprocessor, a direct competitor of Intel's Pentium line of computer system components. The order requires Digital to license the Alpha technology to Advanced Micro Devices and to Samsung Electronics Co., Ltd. or to other Commission-approved companies to manufacture Digital's microprocessor devices.

A consent order permits MacDermid’s acquisition of Polyfibron Technologies, Inc. and requires the divestiture, among other things, of Polyfibron’s liquid photopolymer business to Chemence Inc. According to the complaint, the acquisition would result in a monopoly in the production, distribution and sale of liquid and solid photopolymer in North America. Photopolymers are used to make flexographic printing plates.

The FTC accepted a consent agreement that allowed Reckitt & Colman plc to acquire all of the voting securities of Benckiser N.V. from NRV Vermogenswerwaltung GmbH, while ensuring that competition in two highly concentrated household cleaning product markets is maintained. According to the complaint, the markets for hard surface bathroom cleaners and fine fabric wash products are highly concentrated, and the proposed acquisition was likely to substantially increase the concentration in each market. Under the agreement, Benckiser's Scrub Free® and Delicare® businesses would be divested to Church & Dwight, Inc., which also produces household cleaning products, selling items under the Arm & Hammer® brand name.

Final order requires Kroger and Fred Meyer Stores, Inc. to divest eight supermarkets to settle charges that the acquisition of Fred Meyer would increase concentration and decrease competition in seven cities in Arizona, Wyoming, and Utah. Under terms of the order, two Smith's Food & Drug Centers will be sold to Nash-Finch Company; one "City Market" will be sold to Albertson's Inc.; and five supermarkets (two "City Markets"; two Fry's, and one Smith's) will be sold to Fleming Companies, Inc.

A final order requires the divestiture of large titanium stainless steel and large nickel-based superalloy production assets (structural cast metals used in the manufacture of aerospace components) to settle antitrust concerns stemming from its acquisition of Wyrnan-Gordon Company. The order requires Precision Castparts to divest Wyman-Gordon's titanium foundry in Albany, Oregon and Wyman- Gordon's Large Cast Parts foundry in Groton, Connecticut.

A final order settled charges stemming from Kroger Company's acquisition of The John C. Groub Company. The order requires the divestiture of three supermarkets in Columbus and Madison, Indiana to Roundy's, Inc., one of the largest food wholesalers in the United States.