Antitrust Lawyer Blog Commentary on Current Developments

FTC ENTERS INTO A SETTLEMENT REGARDING SCHERING-PLOUGH’S ACQUISITION OF ORGANON BIOSCIENCES N.V.

On November 16, 2007, the Federal Trade Commission entered into a settlement regarding Schering-Plough Corporation’s proposed $14.4 billion acquisition of Organon BioSciences N.V. from Akzo-Nobel N.V.

The FTC alleges that the deal harms competition in the U.S. markets for the manufacture and development of three poultry vaccines. In settling the charges, the companies entered into a consent order with the Commission that required the merging parties to divest the rights and assets needed to develop each vaccine to Wyeth within 10 days of the acquisition and to provide supply and transitional support services to Wyeth’s Fort Dodge division for two years.
On March 12, 2007, Schering-Plough proposed to acquire all outstanding shares of Organon BioSciences from Akzo Nobel. According to the Commission’s complaint, the proposed acquisition lessened competition in the U.S. markets for the manufacture and sale of the following poultry vaccines: 1) live vaccines for the prevention and treatment of the Georgia 98 strain of infectious bronchitis virus in poultry; 2) live vaccines for the prevention and treatment of fowl cholera due to Pasteurella multocida in poultry; and 3) live vaccines for the prevention and treatment of Mycoplasma gallisepticum) in poultry.

The consent order approved by the Commission is designed to cure the alleged anticompetitive effects of Schering-Plough’s acquisition of Organon BioSciences by replacing the competition that would have been lost in each relevant product market. Under its terms, within 10 days after the acquisition, Schering-Plough is required to divest the rights and assets necessary to develop, manufacture, and market live vaccines for the prevention and treatment in poultry of the above-mentioned diseases.

Finally, the order contains several provisions to ensure that the divestitures are successful, including the requirement that Schering-Plough provide the transitional services necessary to enable the FTC-approved buyer to obtain all necessary U.S. Department of Agriculture approvals.

Robert Doyle
(202) 589-1834
rdoyle@dbmlawgroup.com