FTC Approves Corning’s Acquisition of Beckton Dickinson’s Discover Labware Division
On October 31, 2012, the FTC issued a press release announcing its consent agreement that allowed Corning to acquire Beckton Dickinson’s Discover Labware Division in what the FTC alleges is a highly concentrated market.
From the FTC’s allegations and description of the relevant market, it appears to be an acquisition that reduces competition from four major competitors to only three significant competitors. The FTC alleges that Corning and Discovery Labware are the two leading supplier of tissue culture treated (“TCT) cell culture products and claims that the transaction, as proposed, would have eliminated Corning’s most significant competitor and that the combined firm would unilaterally have the ability to increase price.
Corning and Discovery Labware both make plastic lab ware, including TCT cell culture multi-well plates, dishes, and flasks. TCT cell culture plates are plastic containers that essentially are surfaces on which researchers grow cells. They are used primarily by researchers at drug companies, bio-tech firms, and universities in their cell culture work.
The FTC alleges that there are only two other significant competitors in the production and sale of TCT culture products: Thermo Fisher and Greiner bio One. The FTC explicitly states that no other suppliers have the size of the two merging parties and that the merger would eliminate Corning’s most significant competitor, allowing it to raise prices for lab ware products.
To resolve the competition concerns, the Consent Agreement requires Corning to supply Sigma Aldrich, the new entrant, on an interim basis, with Corning-manufactured TCT cell culture products until Sigma Aldrich has developed independent manufacturing capabilities. This supply agreement will enable Sigma Aldrich to immediately sell TCT cell culture products under its own brand name. The Consent Agreement also requires that Corning provide in the future, at Sigma Aldrich’s request, technical assistance necessary to begin manufacturing TCT cell culture multiwell plates, flasks, and dishes in a manner substantially similar to the manner in which Corning manufactures these products today. The Commission voted 5-0 to accept the condsent order.
This enforcement action is noteworthy for several reasons. The Consent Agreement provides for behavioral remedies instead of a simple structural remedy to resolve a horizontal competition concern. Rather than requiring Corning to divest a competing manufacturing plant or a business, the FTC’s Consent Agreement is designed to remedy the anticompetitive effects of the acquisition by requiring Corning to supply Sigma Aldrich with the products so that it can immediately begin selling TCT cell culture products in competition with Corning. At the same time, Corning is required to provide Sigma Aldrich with certain manufacturing assets and the necessary technical assistance to begin manufacturing TCT cell culture multi-well plates, flasks, and dishes in a manner similar to how Corning currently makes them. This Consent Agreement continues a trend by the antitrust agencies to become more flexible in resolving horizontal competition problems in the merger context by coming up with a remedy that works instead of simply requiring a structural remedy.