FTC Tag Archives — Page 3 of 6 — Antitrust Lawyer Blog

March 2, 2018

Close Coordination Between FTC and EC on Essilor and Luxottica Antitrust Reviews

On March 1, 2018, Essilor International S.A. (“Essilor”) and Luxottica Group S.p.A. (“Luxottica”) announced that the proposed combination between the two companies has been cleared by both the FTC and the EC without conditions.

Critics raised concerns about the merged company’s shutting out competitors, which would leave consumers with fewer options and less freedom of choice. For example, if the merged firm bundles together frames and lenses for sale in its Lenscrafters stores, other lens manufacturers will lose sales. Independent stores might also be left out or excluded from the markets. The concern was not just in these critics’ imagination as Luxottica has a history of shutting out its rivals. Year ago, Luxottica and Oakley had a disagreement about pricing, and Luxottica stopped Oakley’s products in their stores. Oakley’s stock price collapsed, and it was later bought by Luxottica. Critics also claimed the merger eliminated competition between the two companies and ends the possibility of future competition. Essilor had started promoting its own sunglasses and online sales, and Luxottica was beginning its own lens manufacturing. The two firms were expanding into each other’s markets and competing against each others, which would have driven down prices, improved quality, and helped consumers. Given the decisions by the FTC and EC, that competition will never occur.

According to the FTC in its statement to close its investigation of the merger, the evidence did not support a conclusion that Essilor’s proposed acquisition of Luxottica violates federal antitrust laws: “FTC staff extensively investigated every plausible theory and used aggressive assumptions to assess the likelihood of competitive harm. The investigation exhaustively examined information provided by a wide and deep swath of market participants, as well as the parties’ own documents and data. Assessing the likely competitive effects of a proposed transaction is a fact-specific exercise that takes into account the current market dynamics, which may be different in the future. Here, however, the evidence did not support a conclusion that Essilor’s proposed acquisition of Luxottica may be substantially to lessen competition in violation of Section 7 of the Clayton Act.” The FTC vote to close the investigation and issue the closing statement was 2-0.

February 10, 2018

FTC Says No More Divestitures of Complex Pipeline Products to Resolve Future Competition Concerns in Pharmaceutical Mergers

by Doyle, Barlow & Mazard PLLC

On February 2, 2018, Bruce Hoffman, the Federal Trade Commission’s (“FTC”) acting Director of the Bureau of Competition, announced at the Global Competition Review Seventh Annual Antitrust Law Leaders Forum that the FTC will no longer accept divestitures of inhalant and injectable pipeline drugs in pharmaceutical mergers. Historically, the FTC had accepted divestiture of pipeline asset to remedy potential competition concerns. Hoffman said that the FTC is making changes to how it resolves anticompetitive pharmaceutical mergers because past divestitures of assets in the research and development pipeline had a high failure rate for inhalants and injectables, which are known to be difficult and complex to manufacture.

The past history of problems with divestitures in this area indicated to the FTC that divesting ongoing manufacturing assets rather than pipeline assets that have not come to market places greater risk of failure on the merging firms rather than consumers. Accordingly, in situations in which the parties to the transaction own both an established inhalant or injectable that is currently being manufactured and an overlapping pipeline inhalant or injectable, the FTC will seek a divestiture of the manufactured product that is already on the market. The FTC, for example, may require the divestiture of contract manufacturing capabilities rather than other assets, such as research and development assets.

The FTC is taking the stance because of an internal study that revealed that the rate of failure for divestitures of complex pipeline products was “startlingly high”. Apparently, divestiture buyers have had difficulty in actually getting the complex pipeline assets to market. Not surprisingly, a divestiture buyer could struggle to reliably manufacture a complex pharmaceutical product, which harms its ability to ultimately bring the product to market. Indeed, all kinds of things can go wrong when trying to launch a complex pharmaceutical product. For instance, the divestiture buyer of pipeline assets could have difficulty obtaining final FDA approvals including the OK to actually manufacture the product.

January 10, 2018

Business as Usual: Trump Administration Targets Consummated Mergers

by Doyle, Barlow & Mazard PLLC

Historically, the FTC and DOJ have sought to unwind consummated mergers that are deemed to be anticompetitive. During Trump’s first year in office, the FTC and DOJ have demonstrated their willingness to unwind anticompetitive mergers that somehow sneaked by the regulators.

FTC Seeks to Unwind Merger of Prosthetic Knee Manufacturers

On December 20, 2017, the FTC filed an administrative complaint to unwind the merger of Otto Bock HealthCare North America, Inc., (“Otto Bock”) and FIH Group Holdings, LLC (“Freedom”), two manufacturers of prosthetic knees equipped with microprocessors that adapt the joint to surface conditions and walking rhythm. In September 2017, the parties simultaneously signed a merger agreement and consummated the merger without the FTC having an opportunity to review the deal. Apparently, the merger was not HSR reportable. According to the FTC, the merger eliminated direct and substantial competition between head to head competitors that engaged in intense price and innovation competition. While the litigation is ongoing, the parties agreed to a Hold Separate and Asset Maintenance Agreement, which prevents them from continuing the integration of the two businesses. The FTC did not allege any violation of the HSR ACT.

December 20, 2017

Power Buyer Defense Not Enough: FTC Wins PI Hearing Against Sanford Health

by Doyle, Barlow & Mazard PLLC

On December 15, 2017, a federal district court granted the Federal Trade Commission’s (“FTC”) and North Dakota Attorney General’s request for a preliminary injunction against Sanford Health’s proposed acquisition of Mid Dakota Clinic, a large multispecialty group, pending the FTC’s administrative trial on the merits scheduled for January of 2018. FTC v. Sanford Health, et al., Case. No. 1:17-cv-00133 (D. N.D. Dec. 15, 2017).

Background

In June of 2017, the FTC and the North Dakota Attorney General sued to block the merger of the two largest physician groups in Bismarck and Mandan, North Dakota. The FTC alleged that the two groups had based on physician headcount at 75 percent of the physicians for adult primary care physician services, pediatric services, and obstetrics and gynecology services, and 100 percent of the general surgery physician services in the Bismarck-Mandan area. The merger would eliminate competition between them and substantially lessen competition in the four markets.

December 14, 2017

FTC is the New Cop on the Broadband Beat

by Doyle, Barlow & Mazard PLLC

On December 14, 2017, the Federal Communications Commission (FCC) voted 3-2 to adopt the Restoring Internet Freedom Order and in doing so, scrapped its net neutrality rules that were put in place in 2015.

Net Neutrality is a principle that allows for an open and free internet. The Internet Service Providers (ISPs”) are the gatekeepers to all content on the internet. Net Neutrality rules prohibited ISPs from unfairly discriminating against others by speeding up, slowing down, throttling, or blocking the delivery of internet traffic. Net Neutrality is what gives users the freedom as they browse through web pages, apps or any other content available on the internet.

By scrapping the FCC’s Net Neutrality rules, ISPs will be free to act without burdensome regulations, which imposed substantial costs, chilled investment, and lessened innovation. ISPs, however, will be required to disclose information about their practice to consumers, entreprenuers, and the Commission, including any blocking, throttling, paid prioritization, or affiliated prioritization. While the FCC is returning to a light touch approach, its action restores the FTC’s jurisdiction to act when ISPs or broadband providers get out of line through unfair, deceptive, or anticompetitive acts.

December 8, 2017

Senator Warren Criticizes Current State of Antitrust Enforcement

by Doyle, Barlow & Mazard PLLC

On December 6, 2017, Senator Elizabeth Warren sharply criticized the state of antitrust enforcement in a speech at the Open Markets Institute.

She said that antitrust enforcers adopted the Chicago School principles, which narrowed the scope of the antitrust laws and allowed mega-mergers to proceed resulting in many concentrated industries. She believes that antitrust enforcers already have the tools to reduce concentrated markets and that they simply must start enforcing the law again.

Senator Warren’s recommendations included stronger merger enforcement, cracking down on anticompetitive conduct and increasing agency involvement in defending competition.

December 7, 2017

Trump’s FTC Challenges Tronox’s Acquisition of Cristal

by Doyle, Barlow & Mazard PLLC

On December 5, 2017, the Federal Trade Commission (“FTC”) issued an administrative complaint challenging Tronox Limited’s proposed acquisition of Cristal, a merger of two of the top three suppliers of chloride process titanium dioxide (“TiO2”) in the North American market.

Background

On February 21, 2017, Tronox inked a deal to buy Cristal for $1.67 billion and a 24% stake in the new entity. The transaction would have created the largest TiO2 company in the world, based on titanium chemical sales and nameplate capacity.

November 23, 2017

FTC Clears ACT’s Acquisition of Jet-Pep

by Doyle, Barlow & Mazard PLLC

On November 22, 2017, the FTC announced that retail fuel station and convenience store operator Alimentation Couche-Tard Inc. (“ACT”) agreed to divest three fuel stations in Alabama to settle FTC charges that ACT’s proposed acquisition of Jet-Pep, Inc. (“Jet-Pep”) would violate federal antitrust law.

Under the terms of the deal, ACT will acquire ownership or operation of 120 Jet-Pep fuel outlets with convenience stores – 18 via Circle K, a wholly-owned subsidiary of ACT, and 102 via CrossAmerica Partners LP, over which Circle K has operational control and management.

According to the complaint, the acquisition would increase both the likelihood of successful coordination among the remaining firms and the likelihood that ACT will unilaterally exercise market power in three local retail fuel markets. The complaint alleges that without a remedy, the acquisition of Jet-Pep by ACT would reduce the number of independent market participants from three or fewer in Brewton, Monroeville, and Valley, Alabama.

November 4, 2017

FTC Remains Mindful of Minority Interests in Merger Review

by Doyle, Barlow & Mazard PLLC

On November 3, 2017, the FTC announced that Red Ventures and Bankrate agreed to a divestiture of Bankrate’s Caring.com business unit to settle FTC charges that their $1.4 billion merger would likely harm competition in the market for third-party paid referral service for senior living facilities.

According to the FTC’s complaint, Red Ventures was not itself present in that market. Nevertheless, the FTC was concerned that two of Red Ventures’ largest private equity shareholders: Silverlake Partners and General Atlantic jointly own A Place for Mom.com, which allegedly competes with Bankrate’s Caring.com, which competes in the market for third-party paid senior living facilities referral services. A Place for Mom.com, the largest provider of such services, and Caring.com is the second largest provider. In addition to their 34% equity interest in Red Ventures, General Atlantic and Silver Lake Partners have two of the seven seats on Red Ventures’ board, approval rights over two other seats and approval rights over significant capital expenditures.

According to the complaint, a Place for Mom.com and Caring.com are each other’s closest competitors, competing for national and local business. Other competitors in the U.S. market for third-party paid referral services for senior living facilities comprise a much smaller fringe. The complaint alleges that the two Red Venture shareholders have the collective ability to significantly influence management of Red Venture and Caring.com. Thus, if consummated, the transaction may increase the chance for Red Ventures to unilaterally exercise market power and the potential for coordinated interaction between Caring.com and A Place for Mom.

October 1, 2017

FTC Settles With Integra on its Acquisition of J&J’s Codman Neuro Division

by Doyle, Barlow & Mazard PLLC

On September 27, 2017, the FTC announced that Integra LifeSciences Holdings Corp. (“Integra”) and Johnson & Johnson (“J&J”) agreed to a divestiture of five neurosurgical medical device product lines to settle FTC allegations that Integra’s proposed $1 billion acquisition of J&J’s Codman Neuro division (“Codman”) would negatively impact competition in those markets.

Competitive Issue

Both companies supply a range of devices used in operative neurosurgery, hydrocephalus management and neuro-critical care. According to the FTC’s complaint, the acquisition as it was proposed would likely harm competition in the U.S. markets for (1) intracranial pressure monitoring systems, where Integra and Codman are the only significant suppliers of these systems, together accounting for 94% of the U.S. market; (2) cerebrospinal fluid collection systems, where Integra and Codman are two of the only three competitively significant suppliers of these collection systems in the United States, together accounting for 71% of the market; (3) non-antimicrobial external ventricular drainage catheters, where Integra and Codman are two of the only three competitively significant suppliers of these catheters in the United States, together accounting for 46% of the market; (4) fixed pressure valve shunt systems, where Integra and Codman are two of the only three competitively significant suppliers of these catheters, accounting for a combined 38% of the U.S. market; and (5) dural grafts, where Integra and Codman together control 75% of the U.S. market.