FTC Antitrust Highlights

By Sheppard Mullin on February 7, 2005

On January 25th, the Commission, by a vote of 5-0, authorized publication of a Federal Register notice announcing the revised thresholds for the Hart-Scott-Rodino (“HSR”) Antitrust Improvements Act of 1976 required by the 2000 amendments to Section 7A of the Clayton Act. Section 7A(a)(2) requires the FTC to revise the jurisdictional thresholds annually, based on the change in gross national product, in accordance with Section 8(a)(5). Certain related thresholds and limitations in the HSR rules also were adjusted by the notice. The notice will be published in the Federal Register shortly and become effective 30 days after publication. The revised thresholds will apply to all transactions that close on or after the effective date of this notice. The new “size of transaction” and “size of person” thresholds are as follows:

Size of Transaction

Size of Person

On January 21, the Commission approved the publication of a Federal Register notice announcing changes in the two threshold figures that define when it is unlawful for an individual to serve as an officer or director of two or more competing corporations. Under the new interlocking directorate thresholds, effective immediately, Section 8 of the Clayton Act is applicable to such arrangements (with certain exceptions) if each of two companies has capital, surplus, and undivided profits in excess of $21,327,000, and the competitive sales of each corporation exceed $2,132,700. Section 8 of the Clayton Act charges the FTC with preventing and eliminating unlawful interlocking directorates. A 1990 amendment to Section 8 requires the FTC to adjust the thresholds that trigger the prohibition – originally set at $10 million and $1 million, respectively – each year, based on the change in the Gross National Product. The Commission vote to adjust the threshold levels was 5-0.

On January 21, Magellan Midstream Partners, L.P. (“Magellan”) filed a petition requesting the Commission’s approval of the proposed divestiture of certain assets recently acquired from Shell Oil Company (“Shell”). Under the terms of the FTC’s consent order concerning Magellan’s acquisition of certain pipeline and terminal assets from Shell, Magellan is required to divest a gasoline terminal located in Oklahoma City, Oklahoma. Through this application, Magellan is requesting Commission approval to divest the former Shell Oklahoma City Terminal, as that asset is defined in the order, to SemFuel, L.P. The FTC will accept public comments on the proposed divestiture for 30 days, until February 19, 2005, and thereafter will decide whether to approve it.

On January 14, the Commission approved a petition for proposed divestiture received from General Electric Company (“GE”) and related to the FTC decision and order regarding GE’s acquisition of InVision Technologies (“InVision”). Under the terms of the order, GE must divest its “X-Ray Nondestructive Technology (“NDT”) Business,” as that term is defined in the order, to a Commission-approved buyer. In its petition, GE requested approval to divest the X-ray NDT Business to Andlinger & Company, Inc. (“Andlinger”). By a vote of 3-0-2, with Commissioner Pamela Jones Harbour recused and Commissioner Jon Leibowitz not participating, the Commission approved the proposed divestiture to Andlinger.

On January 11, the Commission approved the appointment of Quantic Regulatory Services, LLC (“Quantic”) as interim monitor in the matter concerning Cephalon, Inc.’s (“Cephalon”) acquisition of Cima Labs, Inc., and has approved an interim monitor agreement between Cephalon and Quantic. Under the consent order allowing this transaction, the companies are required to license and deliver to Barr Laboratories, Inc. (“Barr”) certain intellectual property and business information and know-how related to the drug Actiq (oral optoid fentanyl). Due to the complexity of successfully transferring these assets to Barr and the need to ensure this transfer is completed in a timely manner, Cephalon has agreed to the appointment of the interim monitor and the monitor agreement. The Commission vote appointing the interim monitor and approving the interim monitor agreement was 4-0-1, with Commissioner Pamela Jones Harbour recused.

On January 4, the FTC granted approval for Enterprise Products Partners L.P. (“Enterprise”) and Dan L. Duncan to divest the Enterprise Propane Storage Interest in Hattiesburg, Mississippi, to Enbridge Midcoast Energy, L.P., a wholly owned subsidiary of Enbridge Energy Partners, L.P. (“Enbridge”). Pursuant to a September 2004 Commission consent order with Enterprise and Dan L. Duncan, arising out of Enterprise’s $13 billion merger with GulfTerra Energy Partners (“GulfTerra”), Enterprise and Duncan are required to divest these assets, subject to the FTC’s approval, by December 31, 2004. The order also requires Enterprise and Duncan to divest either Enterprise’s 51 percent interest in the Starfish Pipeline Company, LLC, or its 100 percent-owned natural gas pipeline in the Gulf of Mexico by March 31, 2005. The Commission vote approving the divestiture of the Enterprise Propane Storage Interest to Enbridge was 5-0.

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