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Documents Flashcards Grammar checker. Goal of Antitrust Remedies advertisement. Of course, an casrlist is the most powerful weapon in the agency arsenal to prevent an anticompetitive merger from being consummated.

Most mergers believed by the agencies to result in anticompetitive harm are not litigated, but rather are resolved by remedies included in a consent decree negotiated with the parties.

As will be seen, while the approaches of the two agencies are generally similar, there are important differences on a number of key issues that can be and not infrequently determine how quickly the merging parties can complete their transactions and the degree of difficulty they will face in effecting the agreed remedy. Goal of Antitrust Remedies The principal law under which the U. Procedural History While both the Antitrust Division and the FTC are authorized to settle merger challenges without having to litigate, the authority on which each agency can do so differs.

We note that Section 7 may also be enforced by private parties and State attorneys general pursuant 0510214comllaint Sections 4 and 16 of the Clayton Act. This sentiment is echoed by the courts as well. According to the U.

II. Goal of Antitrust Remedies

The judicial guidance as 0510214ccomplaint remedies comes from litigated cases in the pre-Hart-Scott-Rodino Act era when the government generally learned about anti-competitive mergers only after they were consummated. If a merger has been consummated, the goal would be to restore competition to the level where it was prior to the anticompetitive merger. With the passage of the Hart-Scott-Rodino Antitrust Improvements Act inthe agencies less often face the circumstances where a transaction has to be unwound.

Following public allegations regarding improper conduct with regard to DOJ settlements as casleist of the Watergate scandal, in 05100214, Congress enacted the Tunney Act, formally known as the Antitrust Procedures and Penalties Act. Under the Tunney Act, the DOJ is required to 0510214compalint a competitive impact 051214complaint, describing, among 05110214 things, the case and the relief sought in the consent decree, evaluating alternative remedies actually considered, and discussing remedies available to private injured parties and procedures available for modifying the proposal.

The DOJ statement must be filed along with the proposed consent decree and must be published in the Federal Register at least sixty days before the decree becomes final. Finally, the court considering the consent decree must determine whether the consent decree is in the public interest.

When the Commission votes to commence a proceeding, it commences an administrative proceeding governed by the provisions of the FTC Act.

At the same time, the FTC will publish an analysis of the proposed consent order to aid the public. Following the initial comment period, the FTC may either withdraw its acceptance of the agreement, modify the proposed consent order, or issue a final decision and order.

Since the FTC and DOJ purport to apply the same substantive standards and they have common stated goals in seeking remedies, it is not surprising that there are many similarities in the merger remedy positions of the caaselist agencies. Both Agencies Prefer Structural Remedies In horizontal merger cases, both the DOJ and czselist FTC have strong preferences for structural remedies such as the divestiture of one of the two overlapping businesses.

Divestitures 05110214 Include All Necessary Assets Both agencies take pains to assure that a divestiture intended to remediate the anticompetitive 0510214complain of a merger is sufficient to preserve a viable competitor post-divestiture. This arises, for example, when the relevant products are marketed and distributed along with other products. For example, in the merger of Nestle Holding, Inc.

In re Nestle Holding, Inc. For example, the agencies are generally dubious when research and development assets are excluded from the divestiture, although this may be deemed acceptable where the buyer has its own research and development capability concerning the relevant products or such services are readily available from a third party. The Divestiture of An Existing Business Is Preferred Both the DOJ and the FTC have expressed preference for the divestiture of an ongoing or existing business over a collection of assets that have been cobbled together to meet a competitive concern.

The Staff studied 35 consent orders that involved 50 divestitures in the aggregate.

However, the Staff only examined 37 of the 50 divestitures embodied in those 35 consent decrees. For instance, the FTC Divestiture Study noted that there may be instances where the divestiture of an on-going business is undesirable because it will destroy efficiencies of a merger.

Partial divestitures may also be acceptable where certain of the assets deemed necessary to operate 0510214cmoplaint are already in the possession of the divestiture buyer or 0510214cokplaint readily obtainable from non-parties.


For example, in the petroleum industry, the FTC has permitted the divestiture of discrete assets or groups of assets that previously had not operated as autonomous businesses after an investigation led the 22 FTC Divestiture Study, at In such cases, the Divestiture Study suggested that the FTC should include provisions in consent decrees to attempt to reduce the risks that a buyer of a partial business will not be viable following the divestiture.

These provisions such as interim monitors and 010214 jewel provisions are discussed at pages 18 – 30, supra. Examples include the divestiture of stand alone assets such as a single refinery or a geographically connected set of assets such as a group of caseliat and a related pipeline.

Both agencies have a preference for clean-sweep divestitures over mix-and-match asset packages, although the FTC preference appears to be more pointed. C June 15,available at http: How Can We Remedy It?

Section, Houston, Texas, April 17, caselisf, available at http: Both agencies will generally allow the parties the opportunity independently to market the assets to be divested. Once a proposed buyer is 0510214complainy, each agency will conduct an independent investigation to evaluate the proposed buyer, which often includes interviewing the proposed buyer as well as customers, suppliers and, on occasion, competitors.

The agencies 32 Id. Agency 051024 will require the buyer to produce financial and strategic business information as part of this review. The two agencies apply similar tests assessing whether to approve a proposed buyer. DOJ approval requires satisfying three fundamental tests. First, a buyer that already has a significant presence in the relevant market often will not be deemed appropriate.

Second, the DOJ must be satisfied that the purchaser has the incentive to use the divestiture assets to compete in the relevant market rather than for some other purpose such as use in a different relevant market.

Buyers who have not operated in the industry are at a severe disadvantage in defining what assets they need and determining whether they are receiving all the assistance to which they are entitled. Especially in orders that require the divestiture of less than an entire business, the buyers lack important information about the business that is being divested.

This lack, this industry ignorance, is not the result of carelessness, of a failure to perform due diligence, or of poor judgment; it is an inherent characteristic of entering a new business. The Divestiture Study notes that proposed buyers must be given adequate time and an opportunity to conduct full due diligence.

In addition, the Study suggests: Timing of the Divestiture For many years, the agencies allowed merging parties to consummate their transaction without first identifying a buyer, providing a specified period, usually of one or two years, in which the parties were required to identify a proposed buyer and obtain agency approval. Today, both agencies have a stated policy that the divestiture must be accomplished quickly, so that when divestitures are allowed to be undertaken after consummation of the merger,39 the specified period normally ranges from three to six months although there have been instances where a shorter period is imposed,40 and there are still cselist where 12 months is deemed acceptable.

So-called upfront buyer provisions are one of the areas of divergence in FTC and DOJ practice discussed in the next section of this paper. For instance, the DOJ may require a rapid divestiture when it believes critical assets may deteriorate quickly or there will be significant competitive harm before the assets are transferred to the purchaser.

Requiring merging parties to promise not to engage in certain conduct can be contrary to the economic incentives of the parties and can 0510214cmoplaint in market inefficiencies. Both agencies include provisions in consent orders requiring the trustee to use its best efforts to sell the assets at the most 0510214compaint price, but 0510214complaitn divestiture trustees are obligated to sell the assets at any price.

These exceptions include where the restriction serves as an adjunct to structural relief, as a stand-alone remedy in regulated industries, and in remedying concerns regarding vertical mergers.

Conduct relief is often used by both agencies to enhance the effectiveness of structural relief. In such cases, a consent decree may require the seller to enter into a short-term supply agreement with the buyer, which can help prevent the loss or weakening of the divested assets during the transitional period.

C May 30, Final Decision and Order Caselidt and Pharmacia were prohibited from soliciting employees who had responsibilities relating to the femhrt assets hormone replacement therapy from the divestiture buyer Galen Holdings for one year following the divestitureavailable at http: Consequently, conduct relief has been permitted in mergers involving firms in the telecommunications and defense industries in view of significant regulatory oversight by the Federal Communications Commission and the Department of Defense, respectively.

In addition to requiring the merging parties to divest small container commercial waste hauling assets, the proposed consent decree also requires Waste Industries to shorten its existing and future contracts for small container commercial waste-hauling services.


Finally, conduct relief has been used in addressing the competitive issues raised by vertical mergers. There are several reasons why it is more common to find conduct relief in vertical mergers than in horizontal transactions. Vertical mergers often involve a scenario where a formerly independent buyer of a critical input acquires the producer of the input, vertically integrating into one firm a customer and a supplier.

On the other hand, the merger can result in significant cost savings that would benefit consumers in the form of price decreases or quality improvements, and the prospects of obtaining an injunction blocking the entire deal may be low.

Firewalls and 0510214compoaint dealing provisions are frequently That is casrlist to say that there have not been successful attempts to block vertical mergers outright. Digene was the only company in the U. By acquiring Digene, Cytyc would have been in a position to foreclose its only existing competitor by limiting access to Digene’s HPV test.

After the FTC commenced a preliminary injunction proceeding, the parties abandoned the deal. Senate, July 24, Differences Between the DOJ and the FTC While there are many similarities in merger remedies policy and practice, there are significant differences between the DOJ and FTC that can and not infrequently do have a real world impact on how quickly merging parties can complete their transaction and achieve the procompetitive efficiencies of their transactions.

C September 29, consent caseljst contained firewall and fair dealing provisionsavailable at http: Northrop Grumman Corp, Civil No: In re Allergan, File No.

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Agency insistence on an up-front buyer provision often causes delay of several months in completing the merger depending upon how long it takes to find a buyer and negotiate a contract of sale acceptable to the reviewing agency. The agencies differ in their policies on upfront buyers. The FTC uses upfront buyer provisions frequently. The DOJ tends not to employ such provisions.

II. Goal of Antitrust Remedies

In public statements, the FTC has articulated a preference for an upfront buyer when the parties are divesting a package of assets that has not caseliet operated as an autonomous business. A review of consent orders confirms that the FTC has frequently used upfront 05102144complaint provisions in cases involving divestitures of assets that had not previously operated as a separate business.

C March 13, Decision and Order perylene assets to be divested to Ciba Specialty Chemicalsavailable at http: C April 3, Decision and Order requiring divestiture of laboratory services assets to LabCorpavailable at http: In fact, invirtually all FTC consent orders required upfront buyers. C August 30, Decision and orderavailable at http: Fix it First Remedies For strategic or other business reasons, merger parties may wish to restructure their transaction to eliminate antitrust issues at the outset or, if during the course of agency review, prior to the filing of an agency complaint in a judicial or administrative forum.

Such voluntary restructuring of a merger may involve the sale of a subsidiary, business unit, division or some other package of assets to a third-party that 051014complaint merger parties believe should eliminate any potential competitive problems resulting from the proposed merger. In contrast, the FTC generally disfavors a fix-it-first approach, and often insists on the execution of a consent decree because 0510214coomplaint gives the FTC a greater say in the selection of the divestiture assets and buyer and the implementation of the divestiture.

One example where the FTC required the parties to enter into a consent order even after they had restructured their transaction is the 0510214complainy between Buckeye Partners and Shell Oil Company. Buckeye was acquiring from Shell a package of refined petroleum pipeline and terminal assets.

The consent order required Buckeye to notify the FTC 0510214compllaint any intention to acquire an interest in the Niles terminal and required Shell caselish notify the FTC of any ccaselist to sell any interest in that terminal, both for a period of ten years.

The FTC required a consent order to memorialize the retention of these plants by Goodman and to address any potential future sales of these plants by Goodman to other parties. The FTC filed a complaint on July 27, caseljst, in federal district court in Hawaii, seeking to enjoin that acquisition on two counts: Following several weeks of litigation, on September 6,the FTC announced that it had withdrawn its complaint after Aloha entered into a year throughput agreement with an independent gasoline jobber.

The DOJ prevailed 0512014complaint the existence of a fix-it-first remedy. After the FTC authorized its staff to seek a preliminary injunction blocking the deal on the ground that the acquisition would enable Libbey to exercise market power in the food service glassware market, the parties amended their merger agreement to exclude most but not all of the Anchor Hocking food service business.