[Federal Register: March 5, 1997 (Volume 62, Number 43)]
[Notices]
[Page 10058-10059]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05mr97-85]
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FEDERAL TRADE COMMISSION
[File No. 971-0009]
American Home Products Corporation; Analysis To Aid Public
Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
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SUMMARY: In settlement of alleged violations of federal law prohibiting
unfair or deceptive acts or practices and unfair methods of
competition, this consent agreement, accepted subject to final
Commission approval, will settle antitrust concerns stemming from the
Madison, New Jersey-based company's proposed acquisition of Solvay,
S.A.'s animal health business. The complaint accompanying the consent
agreement alleges that the proposed $463 million acquisition would give
American Home Products a dominant position in the market for canine
lyme vaccines, canine corona virus vaccines, and feline leukemia
vaccines. The agreement would require, among other things, that
American Home Products divest Solvay's U.S. and Canadian rights to the
three types of vaccines to the Schering-Plough Corporation or another
Commission-approved buyer.
DATES: Comments must be received on or before May 5, 1997.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th St. and Pa. Ave., N.W., Washington, D.C. 20580.
FOR FURTHER INFORMATION CONTACT: William J. Baer, Federal Trade
Commission, H-374, 6th St. and Pa. Ave., N.W., Washington, D.C. 20580.
(202) 326-2932; George S. Cary, Federal Trade Commission, H-374, 6th
St. and Pa. Ave., N.W., Washington, D.C. 20580. (202) 326-3741; Casey
R. Triggs, Federal Trade Commission, S-2308, 6th St. and Pa. Ave.,
N.W., Washington, D.C. 20580. (202) 326-2804.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46, and Section 2.34 of
the Commission's Rules of Practice (16 CFR 2.34), notice is hereby
given that the above-captioned consent agreement containing a consent
order to cease and desist, having been filed with and accepted, subject
to final approval, by the Commission, has been placed on the public
record for a period of sixty (60) days. The following Analysis to Aid
Public Comment describes the terms of the consent agreement, and the
allegations in the accompanying complaint. An electronic copy of the
full text of the consent agreement package can be obtained from the
Commission Actions section of the FTC Home Page (for February 25,
1997), on the World Wide Web, at ``http://www.ftc.gov/os/actions/htm.''
A paper copy can be obtained from the FTC Public Reference Room, Room
H-130, Sixth Street and Pennsylvania Avenue, N.W., Washington, D.C.
20580, either in person or by calling (202) 326-3627. Public comment is
invited. Such comments or views will be considered by the Commission
and will be available for inspection and copying at its principal
office in accordance with Section 4.9(b)(6)(ii) of the Commission's
Rules of Practice (16 CFR 4.9(b)(6)(ii)).
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission (``Commission'') has accepted, subject
to final approval, an agreement containing a proposed Consent Order
from American Home Products Corporation (``AHP'') under which AHP would
divest Solvay S.A.'s (``Solvay''), canine lyme vaccine, canine corona
virus combination vaccines and feline leukemia combination vaccines.
The agreement is designed to remedy the anticompetitive effects
resulting from AHP's acquisition of Solvay's animal health business.
The proposed Consent Order has been placed on the public record for
sixty (60) days for reception of comments by interested persons.
Comments received during this period will become part of the public
record. After sixty (60) days, the Commission will again review the
agreement and the comments received and will decide whether it should
withdraw from the agreement or make final the agreement's proposed
Order.
The proposed complaint alleges that the proposed acquisition, if
consummated, would constitute a violation of Section 7 of the Clayton
Act, as amended, 15 U.S.C. Sec. 18, and Section 5 of the FTC Act, as
amended, 15 U.S.C. Sec. 45, in the markets for canine lyme vaccine,
canine corona virus combination vaccines and feline leukemia
combination vaccines.
The canine lyme, canine corona virus combination and feline
leukemia combination vaccines are the only effective method to prevent
certain companion animal diseases. These vaccines work by exposing the
host animal's own immune system to specific antigens for the disease.
These antigens in turn stimulate the immune system's production of
antibodies, which protect the host animal against future exposure to
the disease.
Companion animal vaccine manufacturers sell vaccines such as canine
lyme, canine corona virus combination and feline leukemia combination
to veterinarians, who then charge consumers when they bring their
companion animals in for treatment. Veterinarians rely on competition
among the vaccine manufacturers to drive down the cost of services they
provide. Where a single vaccine manufacturer controls a large share of
a vaccine market, that manufacturer is able to extract higher prices as
a result.
AHP's proposed acquisition of Solvay's animal health business would
give the combined entity a dominant position in the canine lyme, canine
corona virus combination and feline leukemia combination vaccine
markets. As a result, the combined entity would have the ability to
raise prices in each of these markets. Furthermore, entry into these
markets is difficult and time consuming because of lengthy development
periods and the need for approvals by the United States Department of
Agriculture (``USDA'') and is unlikely to offset the competitive harm
that would result from the combination of AHP and Solvay's animal
health business.
The proposed consent order requires AHP to divest certain assets to
Schering-Plough, Ltd. (``Schering-Plough'') relating to Solvay's canine
lyme, canine corona virus combination and feline leukemia combination
vaccines including, but not limited to, master seeds and cell stock,
know-how, intellectual property and research and development. In
addition, AHP is required to assist Schering-Plough in obtaining USDA
certification. These
[[Page 10059]]
assets in the hands of Schering-Plough are sufficient to replace the
lost competition that would result from the acquisition.
Public comments regarding all aspects of the proposed divestiture
to Schering-Plough will be considered with other comments on the
proposed Order.
Under the proposed Order, if Schering-Plough ceases to sell
contract manufactured canine lyme, canine corona virus combination and
feline leukemia combination vaccines prior to obtaining USDA
certification, abandons its efforts to obtain USDA approval, or fails
to obtain timely USDA approval, or in the event AHP fails to divest the
assets absolutely and in good faith, the Commission may terminate the
divestiture agreement and appoint a trustee to divest Solvay's canine
lyme vaccine, canine corona virus combination vaccines, and feline
leukemia combination vaccines, as well as Solvay's Charles City
Facility and equine vaccines. The crown jewel provision also includes,
at AHP's discretion, a supply contract for a term not to exceed (3)
three years from the date of the divestiture, which requires the new
acquirer to supply AHP (i) any swine or poultry vaccines for sale
worldwide, (ii) any canine lyme vaccine, canine corona virus
combination vaccines and feline leukemia combination vaccines for sale
by AHP outside the United States and Canada and (iii) single antigen
rabies vaccine and feline leukemia combination vaccine with rabies for
sale worldwide being produced at the Charles City Facility at the time
of divestiture, priced at each vaccine's average total cost. This crown
jewel provision will ensure that a trustee can divest a package of
assets that is sufficiently attractive to potential buyers.
Under the provisions of the proposed Order, AHP is also required to
provide the Commission with a report of compliance with the divestiture
provisions of the Order within sixty (60) days following the date this
Order becomes final, and every ninety (90) days thereafter until AHP
has fully complied with the divestiture provisions of the proposed
Order.
The purpose of this analysis is to facilitate public comment on the
proposed Order, and it is not intended to constitute an official
interpretation of the agreement and proposed Order or to modify in any
way their terms.
Donald S. Clark,
Secretary.
Concurring Statement of Commissioner Mary L. Azcuenaga in American Home
Products Corp., File No. 971-0009
I concur in the decision to accept the consent agreement for public
comment and write separately to invite comment on whether and when the
Commission should require the firm divesting assets to give up patent
rights beyond those acquired in the transaction at issue. Paragraph IID
of the proposed order requires American Home Products (AHP) not only to
license the intellectual property that is acquired from Solvay S.A.,
but also to agree not to sue the acquiring firm for infringement of
vaccine patents that AHP owned before the acquisition. The firm
purchasing the divested assets will obtain Solvay's intellectual
property free and clear of any claim that the Solvay vaccines infringe
AHP's patents. Should the Commission resolve the patent dispute
regarding whether Solvay's vaccines infringed AHP's patents, and if so,
how should such a dispute be resolved?
[FR Doc. 97-5343 Filed 3-4-97; 8:45 am]
BILLING CODE 6750-01-M