Legal Library: Cases and Proceedings

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.

The FTC challenged Pinnacle Entertainment, Inc.’s proposed $2.8 billion acquisition of rival casino operator Ameristar Casinos, Inc., alleging that the proposed deal would reduce competition and lead to higher prices and lower quality for casino customers in the St. Louis, Missouri and Lake Charles, Louisiana areas. In St. Louis, the two companies operated competing casinos, and in the Lake Charles area, Pinnacle operates one casino, and Ameristar is constructing a new casio to open next year. The FTC issued an administrative complaint against the two companies alleging that the deal would substantially lessen competition for casino services in the St. Louis and Lake Charles areas. The FTC also authorized staff to seek a temporary restraining order and preliminary injunction, but parties agreed to divest two casinos, one in St. Louis and another in Lake Charles, to settle the administrative charges.

In the matter of Polypore International/Daramic LLC, the Commission issued an administrative complaint challenging Polypore’s consummated acquisition of Microporous Products in the global market for battery separators, a key component in flooded lead-acid batteries. According to the Commission’s complaint, the acquisition, which occurred in February 2008, substantially lessened competition and led to higher prices in several North American product markets including 1) deep-cycle separators used in golf carts, 2) motive separators for batteries used primarily in forklifts, 3) automotive separators used in car batteries, and 4) uninterruptible power supply (UPS) separators used in batteries that provide backup power during power outages. Additionally, the complaint alleged that Polypore engaged in anticompetitive conduct by entering into a joint marketing agreement with a competitor, restricting the competitor’s entry into the polyethylene battery separator markets. The complaint also charged that Polypore sought to maintain monopoly power through anticompetitive means in several battery separator markets. On 3/8/2010, the ALJ announced an Initial Decision finding that Polypore International Inc.’s consummated acquisition – through its Daramic Acquisition Corporation subsidiary – of rival battery separator manufacturer Microporous L.P. was anticompetitive and violated federal law in four battery separator markets in North America. In an Order filed with the Initial Decision on 2/22/2010, Judge Chappell ordered Polypore to divest Microporous to an FTC-approved buyer within six months after the divestiture provisions of the Order become final. Judge Chappell also ruled that a 2001 joint marketing agreement between Polypore and a rival battery separator manufacturer illegally divided up the markets for particular types of battery separators in North America, and ordered Polypore to amend the agreement to terminate and declare null and void the covenant not to compete. Finally, the Judge dismissed a separate allegation that Polypore engaged in exclusionary conduct in specific battery separator markets. In December of 2010, the Commission voted to uphold in large part the March 2010 Initial Decision, finding that the acquisition reduced competition in three of the four relevant markets, and ordering divestiture. Polypore subsequently filed a petition for review of the Commission's Decision and Order in the US court of Appeals for the Eleventh Circuit. On 07/12/2012, the U.S. Court of Appeals upheld the FTC's Opinion and Order, and on 06/24/2013, the Supreme Court denied Polypore's petition for certioari. In December 2013, the FTC approved the sale of all stock and assets related to Microporous to Seven Mile Capital Partners.

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.