FTC Negotiates Fix for Opaque Contact Lens Merger

Wesley-Jessen Corporation, the leading maker of opaque contact lenses -- corrective or solely-cosmetic lenses that change the apparent eye color of the wearer -- has agreed to divest the opaque lens business of its main rival, Pilkington Barnes Hind International, Inc., under an agreement it has signed with the Federal Trade Commission to settle charges that the merger of the two competitors would violate federal antitrust laws. The FTC said the settlement will help protect all contact lens wearers, because it undoes the part of the deal that would result in a near monopoly, while allowing the part that could result in a stronger firm to compete with the three main firms in the clear contact lens market.

In the deal at issue, Wesley-Jessen, based in Des Plaines, Illinois, plans to acquire Pilkington Barnes Hind International, Inc., a subsidiary of Pilkington plc that is based in Sunnyvale, California, for $80 million. Wesley-Jessen manufactures the Durasoft line of opaque lenses, while Pilkington Barnes Hind makes the Natural Touch line.

The FTC alleged the acquisition would give the merged firm more than 90 percent of the $46 million opaque contact lens market, adding that it is unlikely the merged firm would face new competition given the broad patents governing the design and manufacture of opaque lenses that Wesley-Jessen and Pilkington Barnes Hind now hold. Absent FTC action, the merger would eliminate direct competition between the two firms in the opaque lens market, create a dominant firm, increase the likelihood that Wesley-Jessen will unilaterally exercise market power, and enhance the chance of collusion or coordinated interaction between the merged firm and others in the market. The result could be higher consumer prices and reduced innovation or quality for opaque contact lenses, the FTC said.

"Prices for Durasoft opaque lenses dropped substantially when the Natural Touch line was introduced in 1992, and the FTC is acting today to preserve this competition," said William J. Baer, Director of the FTC’s Bureau of Competition.

Under the proposed consent agreement, which the Commission announced today for public comment before it determines whether to make it final, Wesley-Jessen would be required to divest the opaque contact lens business of Pilkington Barnes Hind to a Commission-approved buyer within four months from the date it signed the agreement. In addition, Wesley-Jessen has agreed to supply the acquirer with Pilkington Barnes Hind lenses while the acquirer obtains Food and Drug Administration approval to market its own lenses. The Commission said the intent of the settlement is to put the acquirer in the same competitive position as Pilkington Barnes Hind is today, and would require the acquirer to obtain the necessary FDA approvals and begin producing its own opaque lenses within 18 months of Commission approval of the settlement.

The proposed consent agreement also would prohibit Wesley-Jessen, for 10 years, from acquiring any opaque contact lens maker in the United States without notifying the Commission in advance. In addition, it contains various record keeping and reporting requirements designed to assist the FTC in monitoring the firm’s compliance.

The Commission vote to accept the proposed consent agreement for public comment was 5-0. An announcement regarding the proposed consent agreement will be published in the Federal Register shortly. The agreement will be subject to public comment for 60 days, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $10,000.

Copies of the complaint, proposed consent agreement, and an analysis of the agreement to assist the public in commenting are available from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases, related documents and other materials also are available on the Internet at the FTC’s World Wide Web site at: http://www.ftc.gov

(FTC File No. 961 0060)