Articles Posted in FTC Consumer Protection Highlights

On September 9, 2010, The FTC entered into a settlement agreement with Air Products and Chemicals, Inc. regarding its proposed takeover of Airgas, Inc. The settlement will require the company to sell certain liquid gas assets if it proceeds with its proposed hostile takeover of Airgas.

The proposed settlement agreement resolves FTC charges that Air Products' proposed acquisition of Airgas would harm competition in five regional markets for bulk liquid oxygen and bulk liquid nitrogen, which are used in a range of applications from hospital patient care to the manufacture of frozen foods. According to the FTC's complaint, Air Products' acquisition of Airgas, as originally proposed, would eliminate direct competition between the two companies in five U.S. regions and likely would allow the combined firm to exercise its market power to set prices for bulk liquid oxygen and bulk liquid nitrogen.

The settlement agreement is designed to remedy this competitive harm by requiring that, if Air Products succeeds in its hostile takeover, Air Products sell 15 air separation units (“ASU”s) and related assets that are currently owned and operated by Airgas. The ASUs are used to separate atmospheric air into nitrogen, oxygen, and its other primary components. The units to be sold are in Bozrah, Connecticut; Carrollton, Kentucky; Canton, Ohio; Dayton, Ohio; New Carlisle, Indiana; Madison, Wisconsin; Waukesha, Wisconsin; Carrollton, Georgia; Jefferson, Georgia; Gaston, South Carolina (two ASUs); Rock Hill, South Carolina; Chester, Virginia; Mulberry, Arkansas; and Lawton, Oklahoma. As a result of this agreement, Air Products would face the same competition in those areas as it does now.

On December 23, 2009, Agrium Inc. agreed to sell a range of assets as part of an agreement with the FTC that will allow Agrium to move forward with its acquisition of competitor CF Industries Holdings, Inc. The proposed consent order settles allegations that the acquisition would have eliminated competition in the market for anhydrous ammonia fertilizer, a product that farmers rely on to grow their crops.

According to the FTC’s complaint, Agrium’s acquisition of CF would have eliminated competition between the two companies in the distribution and sale of anhydrous ammonia in three markets: the Pacific Northwest; East Dubuque, Illinois; and Marseilles, Illinois.

The FTC’s complaint alleges that each of these markets is highly concentrated and the proposed transaction would further increase concentration levels by reducing the number of significant competitors in the Pacific Northwest from two to one, and in the two areas in Illinois from three to two. The complaint further alleges that the proposed transaction likely would increase the prices for anhydrous ammonium fertilizer.

On November 25, 2009, the FTC announced that it approved SCI’s acquisition of Palm Mortuary, Inc. (“Palm”) as long as it sold a cemetery and funeral home in Las Vegas.

The FTC alleged that Las Vegas has a highly concentrated market for cemetery services, which includes burial plots, opening and closing of graves, memorials, burial vaults, mausoleum spaces, and cemetery maintenance. According to the FTC’s complaint, SCI’s proposed acquisition of Palm would have reduced the number of significant competitors from three to two, and SCI would have controlled 76 percent of the market for funeral services.

The complaint alleges that the transaction would have increased the likelihood that the combined firm could raise prices either unilaterally or through coordinated interaction with its only remaining competitor. Entry of a new competitor in the area is not likely to counteract the alleged anticompetitive effects of the acquisition, due in part to the limited amount of land in Las Vegas that is suitable for cemeteries.

On October 7, 2009, the Federal Trade Commission (“FTC”) settled its litigation regarding Carilion Clinic’s (“Carilion”) acquisition of two outpatient clinics.

On July 24, 2009, the FTC issued an administrative complaint challenging Carilion’s August 2008 acquisition of two outpatient clinics in the Roanoke, Virginia area. Prior to the acquisition, the Center for Advanced Imaging (“CAI”) and the Center for Surgical Excellence (“CSE”) had strong reputations for offering high-quality care and convenient services at prices much lower than Carilion’s.

According to the complaint, Carilion’s $20 million acquisition of CAI and CSE reduced the number of outpatient imaging and surgical services providers in the Roanoke area from three to two. Carilion now faces competition for outpatient imaging and surgical services from only one other provider, HCA, the other major hospital system in the Roanoke area.