Announced Actions for June 14, 1996

The Federal Trade Commission today announced the following actions. Unless otherwise noted, the FTC staff contact is Dan Ducore, 202-326-2526.

Applications for prior approval of transactions: The FTC has received applications for prior approval of divestitures from the following. The applications will be subject to public comment for 30 days, until July 15.

• Schwegmann Giant Super Markets, Inc., of New Orleans, Louisiana, has applied for FTC approval to divest two Canal Villere supermarkets in New Orleans: the store at 4726 Paris Avenue to New Orleans resident Dai Nguyen, who is an owner and manager in the grocery business; and the store at 2125 Caton Street to William C. Smith, a resident of Slidell, who has been a manager in the supermarket business. The divestitures are among seven required under a 1995 consent order designed to restore supermarket competition allegedly injured when Schwegmann acquired the New Orleans supermarkets formerly owned by National Holdings, Inc., From Schnuck Markets, Inc. Applications for three other of the seven divestitures already are pending at the FTC. (See March 8, 1995 news release for more details regarding the consent order; Docket No. C-3584.)

Commission action regarding applications for prior approval: Following a public comment period, the FTC has ruled on applications from the following:

• The FTC has approved the application of HEALTHSOUTH Corporation, of Birmingham, Alabama, to divest the firm’s interests in Nashville Rehabilitation Hospital in Nashville, Tennessee, to Edgefield Rehabilitation L.L.C., which was formed for the purpose of the acquisition. The divestiture was required under a 1995 consent order designed to restore competition for rehabilitation hospital facilities in three areas, including Nashville, that allegedly was lost when HEALTHSOUTH merged with ReLife of Tennessee, Inc. (See April 17, 1995 news release for more details regarding the consent order; Docket No. C-3570; Commission vote to approve the divestiture was 5-0.)

• The FTC has approved two applications for divestiture from The Stop & Shop Companies, Inc., of Quincy, Massachusetts: a Purity Supreme supermarket in Kingston will be divested to Victory Distributors, Inc., of Leominster, Massachusetts, and a Purity store in South Weymouth will be sold to Foodmaster Supermarkets, Inc., of Sommerville, Massachusetts. The Foodmaster application also sought approval for divestiture of a store in Whitman, but that store was not required to be divested by the FTC, so the Commission said it reviewed the transaction only as it related to the South Weymouth divestiture. The divestitures were required by a 1995 consent order designed to restore supermarket competition in five areas of Massachusetts that allegedly was lost when Stop & Shop merged with Purity Supreme, Inc. (See Nov. 1, 1995 news release for more details regarding the consent order; Docket No. C-3649; Commission votes to approve the divestitures were 5-0.)

• The FTC has approved the application of TCH Corporation, of Los Angeles, California, to divest the pharmacy assets in the Thrifty drug store in Florence, Oregon, to Tiffany-Davis Drug Co., of Eugene, Oregon. The divestiture was required under a 1994 consent order intended to restore pharmacy competition in retail drug stores in six areas, including Florence, that allegedly was lost in TCH’s acquisition of the PayLess drug store chain. (See Aug. 19, 1994 news release regarding the consent order; Docket No. C-3519; Commission vote to approve the divestiture was 5-0.)

Consent agreements given final approval: Following a public comment period, the Commission has made final consent agreements with the following entities. The Commission action makes the orders binding on the respondents.

• RxCare of Tennessee, Inc., and the Tennessee Pharmacists Association, of Nashville, settling charges that the “most favored nation” clause in RxCare’s contracts with pharmacies to fill insured patients’ prescriptions discouraged the pharmacies from discounting and thereby limited price competition among the pharmacies in their dealings with pharmacy benefits managers and third-party payers. RxCare provides pharmacy network services and includes in its network more than 95 percent of all chain and independent pharmacies in Tennessee. A pharmacy network is a group of pharmacies that fill prescriptions for patients covered by a third-party health benefit plan. The clause at issue requires that, if an RxCare network pharmacy accepts a prescription reimburse ment rate from any other third-party payer that is lower than the RxCare rate, the pharmacy must accept the lower rate for all RxCare business in which it participates. The FTC challenged the clause stating that, because RxCare represents such a large portion of its network members’ business, those members would incur an unacceptable revenue loss if they were forced to accept rates below the RxCare rate on all their RxCare business. The consent order prohibits RxCare and the Association from maintaining or enforcing a most favored nation clause, and requires RxCare to remove the clause from existing contracts. (See Jan. 19, 1996 news release for more details about the consent agreement; Docket No. C-3664; Commission vote on June 10 to issue the order as final was 5-0, with Commissioners Mary L. Azcuenaga and Christine A. Varney issuing concurring state ments. Azcuenaga said she wrote separately “to emphasize that this order does not call into question the general lawfulness of most favored nation clauses. Although most favored nation clauses usually raise no competitive concerns, in this case, the clause was used in furtherance of a horizontal agreement to stabilize the reimbursement rates for retail pharmacy services . . ..” Varney said she voted yes because the clause “in this case, may have lessened competition.” She emphasized, however, that “joint ventures by retail pharmacists can be procompetitive by injecting new competition into the market for pharmacy benefit management services.”) Staff contact is Michael D. McNeely, 202-326- 2904.

• Saint-Gobain/Norton Industrial Ceramics Corporation, of Worcester, Massachusetts, settling charges that the firm’s acquisition of The Carborundum Company likely would lead to monopolies or near-monopolies, in violation of antitrust laws, in the markets for three products used in industrial furnaces and home appliances. The consent order is designed to restore competition by requiring Saint-Gobain to divest businesses and associated assets in each of the markets. Specifically, the order requires divestiture of the New York-based Monofrax fused cast refractories business, the Puerto Rico-based hot surface igniter business, and the New Jersey-based silicon carbide refractories business. In addition, the assets to be divested must be held separate pending divestiture. (See Feb. 26, 1996 news release for more details regarding the consent agreement; Docket No. C-3673; Commission vote on June 12 to issue the order as final was 5-0.) Staff contact is Howard Morse, 202-326-2949.

Comments on the Schwegmann applications should be addressed to the FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580. Copies of the documents referenced above are available from the FTC’s Public Reference Branch, Room 130, at the same address; 202-326-2222; TTY for the hearing impaired 202- 326-2502. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC’s World Wide Web site at: http://www.ftc.gov