On May 27, the Federal Trade Commission filed an administrative complaint o block CSL Limited’s proposed $3.1 billion acquisition of Talecris Biotherapeutics Holdings Corporation. The administrative complaint alleges that the deal would be illegal and would substantially reduce competition in the U.S. markets for four plasma-derivative protein therapies – Immune globulin (Ig), Albumin, Rho-D, and Alpha-1. These therapies are used to treat patients suffering from illnesses such as primary immunodeficiency diseases, chronic inflammatory demyelinating polyneuropathy, alpha-1 antitrypsin disease, and hemolytic disease of the newborn.
In addition to the administrative complaint, the Commission authorized the staff to seek a preliminary injunction in federal district court in Washington, D.C. to stop the transaction pending completion of the adminstrative trial.
According to the Commission’s administrative complaint, the plasma protein markets are highly concentrated markets which are already exhibiting signs of coordinated behavior. The proposed acquisition would further consolidate the industry and increase the likelihood of collusion. CSL’s proposed acquisition of Talecris would be anticompetitive. The proposed acquisition would reduce the number of competitors in the U.S. markets for Ig and Albumin from five to four, leaving the top two remaining competitors – CSL and Baxter – accounting for more than 80 percent of each market. In addition, in the U.S. markets for Rho-D and Alpha-1, the proposed transaction would reduce the number of competitors from three to two.
This consolidation would continue the reduction in competition that has occurred over the past 19 years. In 1990, there were 13 plasma-derivative protein product competitors. This number was reduced to nine in 2003, and only five competitors remain today – CSL, Talecris, Baxter, Grifols, and Octapharma. The Commission’s administrative complaint alleges that firms in the plasma industry have used this consolidation as a tool to limit supply and drive higher prices, rather than to provide benefits for consumers. The proposed acquisition of Talecris is particularly concerning because Talecris was undergoing substantial expansion that – absent the acquisition – would have increased availability and lowered prices of these life saving drugs. The complaint also charges that by reducing the number of competitors, and eliminating this ongoing expansion, the acquisition will make anticompetitive harm through coordinated interaction even more likely and more successful.
Finally, the complaint states that there are significant barriers to entry and expansion in these markets, including regulatory, intellectual property, and capital requirements, that make entry or expansion unlikely to occur to a degree that is sufficient to offset the alleged anticompetitive effects of the proposed transaction.
The Commission vote approving the filing of the administrative and federal district court complaints was 2-0, with Commissioners Pamela Jones Harbour and William E. Kovacic recused.