FTC Antitrust Highlights
- On January 31, the Commission's Bureau of Competition announced the closing of its investigation into the acquisition by Comcast Corporation ("Comcast") and Time Warner Cable Inc. ("TWC") of the cable assets of Adelphia Communications Corporation ("Adelphia"), and into related transactions in which Comcast and TWC will swap various cable systems of Adelphia. The Bureau has sent closing letters to the parties. The FTC's Commissioners also have issued statements on the closing of the investigations, the first by Chairman Deborah Platt Majoras and Commissioners William E. Kovacic and J. Thomas Rosch, and the second by Commissioners Pamela Jones Harbour and Jon Leibowitz. Although Commissioners Harbour and Leibowitz agreed generally with the closing of the investigation, both would have sought and obtained additional behavioral relief in Chicago and Sacramento to insure sports programming was provided to regional sports networks and non-discriminatory terms and conditions.
- On January 24, the Commission approved a comment to the Federal Energy Regulatory Commission ("FERC") about economically sound ways to assess generation of market power in wholesale electricity markets. The comment responds to a proposed new methodology by the Edison Electric Institute ("EEI") - the trade association for electric utilities - called the "historical contestable load" analysis to analyze market power. The FTC's comment, identifies five significant problems with the EEI's proposal, based on the analysis of market power in the joint FTC/U.S. Department of Justice Horizontal Merger Guidelines. Specifically, the comment states that in each of the five areas, the proposal does not represent an analytical advance over FERC's existing techniques to assess horizontal market power and falls far short of the economically sound framework for market power analysis presented in the Guidelines. The comment concludes by stating that "[t]he historical contestable load proposal suffers from a number of substantial defects . . . Accordingly, the FTC recommends that FERC reject use of a contestable load in assessing generation of market power." The Commission vote approving the comment and authorizing its transmission to FERC was 5-0.
- Under a consent agreement announced on January 23, the Federal Trade Commission will allow Teva Pharmaceutical Industries Ltd.'s ("Teva") proposed acquisition of IVAX Corporation ("IVAX"), provided the companies sell the rights and assets needed to manufacture and/or market 15 generic pharmaceutical products. The divestiture of these products will ensure the replacement of the competition that would be lost in these markets after the transaction is completed, with two firms, Par Pharmaceutical Companies, Inc. ("Par") and Barr Pharmaceuticals, Inc. ("Barr"), set to acquire the divested generic drugs and market them in the future. Among the drugs to be sold are several forms of generic amoxicillin and amoxicillin clavulanate potassium that are widely used in the United States.
On July 25, 2005, Teva proposed buying all of the issued and outstanding shares of IVAX for approximately $7.4 billion. IVAX, the fifth-largest supplier of generic drugs in the United States and the eleventh-largest drug company based on prescriptions filled, is based in Miami, Florida. The proposed acquisition of IVAX would make Teva, which is based in Israel, the world's largest generic pharmaceutical supplier.The consent order remedies the allegedly anticompetitive impacts of Teva's proposed acquisition of IVAX by requiring the divestiture or assignment of the rights and assets needed to develop and market the following generic drugs: 1) amoxicillin clavulanate potassium from IVAX, to be divested to Par; 2) long-acting cefaclor (cefaclor LA) tablets from IVAX, to be divested to Par; 3) pergolide mesylate tablets from Teva, to be divested to Par; 4) estazolam tablets from IVAX, to be divested to Par; 5) leuprolide acetate injection kits from IVAX, to be divested to Par; 6) nabumetone tablets from IVAX, to be divested to Par; 7) amoxicillin from IVAX, to be divested to Par; 8) propoxyphene hydrochloride capsules from IVAX, to be divested to Par; 9) nicardipine hydrochloride capsules from IVAX, to be divested to Barr; 10) flutamide capsules from Teva, to be divested to Par; 11) clozapine tablets from Teva, to be divested to Par; 12) tramadol/acetaminophen tablets from Teva, to be divested to Barr; 13) glipizide and metformin hydrochloride tablets from IVAX, to be divested to Barr; 14) calcitriol injectables from IVAX, to be divested to Par; and 15) cabergoline tablets from Teva, to be divested to Barr. In addition, the consent order contains other provisions to ensure the divestitures are successful. First, it requires Teva and IVAX to provide transitional services to ensure the acquiring companies can get FDA approval to manufacture the divested drugs independently. Next, Teva and IVAX must supply the acquiring companies with the relevant drugs until the acquiring companies gain approval to manufacture them on their own. Finally, the FTC has appointed R. Owen Richards of Quantic Regulatory Services, LLC to oversee the asset transfers and to ensure Teva and IVAX's compliance with the terms of the consent order. The order also contains routine reporting requirements. The Commission vote to approve the consent order and place a copy on the public record was 5-0.
- On January 13, the Commission, by a vote of 5-0, authorized publication of a Federal Register notice announcing the revised thresholds for the Hart-Scott-Rodino Antitrust Improvements Act of 1976 required by the 2000 amendments to Section 7A of the Clayton Act. Section 7A(a)(2) requires the Federal Trade Commission to revise the jurisdictional thresholds annually, based on the change in gross national product, in accordance with Section 8(a)(5). The revised thresholds will apply to all transactions that will close on or after the effective date of this notice.
SUBSECTION OF 7A ORIGINAL THRESHOLD ADJUSTED THRESHOLD 7A(a)(2)(A) $200 million $226.8 million 7A(a)(2)(B)(i) $50 million $56.7 million 7A(a)(2)(B)(i) $200 million $226.8 million 7A(a)(2)(B)(ii)(i) $10 million $11.3 million 7A(a)(2)(B)(ii)(i) $100 million $113.4 million 7A(a)(2)(B)(ii)(II) $10 million $11.3 million 7A(a)(2)(B)(ii)(II) $100 million $113.4 million 7A(a)(2)(B)(ii)(III) $100 million $113.4 million 7A(a)(2)(B)(ii)(III) $10 million $11.3 million Section 7A note: Assessment and Collection of Filing Fees (3)(b)(1) $100 million $113.4 million Section 7A note: Assessment and Collection of Filing Fees (3)(b)(2) $100 million $113.4 million Section 7A note: Assessment and Collection of Filing Fees (3)(b)(2) $500 million $567.0 million Section 7A note: Assessment and Collection of Filing Fees (3)(b)(3) $500 million $567.0 million
Any reference to these thresholds and related thresholds and limitation values in the HSR rules (16 C.F.R. Parts 801-803) and the Antitrust Improvements Act Notification and Report Form and its Instructions will also be adjusted, where indicated by the term "(as adjusted)", as follows:ORIGINAL THRESHOLD ADJUSTED THRESHOLD $10 million $11.3 million $50 million $56.7 million $100 million $113.4 million $110 million $124.7 million $200 million $226.8 million $500 million $567.0 million $1 billion $1,134.0 million
- On January 13, the Commission, by a vote of 5-0, authorized publication of a Federal Register notice announcing the revised thresholds for Section 8 interlocking directorates. Section 8 of the Clayton Act was amended on November 16, 1990. The amendment establishes jurisdictional thresholds that trigger the Act's prohibition on interlocking directorates. The Act also requires that the Commission revise those thresholds annually based on the change in the level of gross national product. The notice will be published in the Federal Register and will be effective upon publication.
Section 8 of the Clayton Act prohibits, with certain exceptions, one person from serving as a director or officer of two competing corporations if two thresholds are met. Competitor corporations are covered by Section 8 if each one has capital, surplus, and undivided profits aggregating more than $10,000,000, with the exception that no corporation is covered if the competitive sales of either corporation are less than $1,000,000. Section 8(a)(5) requires the Federal Trade Commission to revise those thresholds annually, based on the change in gross national product. The new thresholds, which take effect immediately, are $22,761,000 for Section 8(a)(1), and $2,276,100 for Section 8(a)(2)(A).
- On January 5, Federal Trade Commission Chairman Deborah Platt Majoras swore in J. Thomas Rosch as an FTC Commissioner. Rosch, whose term runs through September 25, 2012, was nominated by President George W. Bush on September 29, 2005, and confirmed by the U.S. Senate on December 17, 2005.
- On January 4, 2006, Federal Trade Commission Chairman Deborah Platt Majoras swore in William E. Kovacic as the FTC's newest commissioner. Kovacic, whose term runs through September 25, 2011, was nominated by President George W. Bush on July 28, 2005, and confirmed by the U.S. Senate on December 17, 2005.
Authored by:
Robert W. Doyle, Jr.
202-218-0030
rdoyle@sheppardmullin.com
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