WHAT HAPPENED:

  • Senator Elizabeth Warren (D-MA) gave a speech at the Open Markets Institute on December 6 entitled “Three Ways to Remake the American Economy for All”, in which she repeatedly positioned antitrust policy as a tool to rebalance competition between “big, powerful corporations” and “just about everyone else.”
  • Senator Warren spoke critically about recent antitrust enforcement and advocated three steps for improving antitrust enforcement: (1) block mergers that choke-off competition; (2) crack down on anticompetitive conduct; and (3) get all government agencies to defend competition.
  • On mergers, Senator Warren asserted that “settlement agreements that allowed bad mergers if the companies promised to take actions” have not worked out because “those expertly crafted provisions have been epic failures” and that “[s]tudies show that those settlement conditions often fail to bring about the cost savings and other benefits giant corporations promised.”
  • She advocated that to improve antitrust enforcement “we need to demand a new breed of antitrust enforcers … Enforcers who will turn down papier-mache settlement agreements and actually take cases to court.”
  • Senator Warren stated that increased enforcement is needed not just for horizontal mergers between direct competitors, but also for vertical mergers (e.g., between customers/suppliers). In her view, the “Chicago School party line” that vertical mergers do not harm competition may be accepted theory, but is “not often the reality” when large companies are involved.
  • On anticompetitive conduct, Senator Warren singled out no-poach agreements as an area for increased enforcement—specifically franchises that do not allow an employee of one franchisee to be hired by another franchisee.
  • On getting other agencies to defend competition, Senator Warren noted that while not enforcers like DOJ, other government agencies like the Defense Department, the Food and Drug Administration, the Federal Deposit Insurance Corporation and the Federal Communications Commission, can significantly impact competition through regulation and purchasing.
  • Finally, Senator Warren highlighted several consolidated industries that she views as significantly concentrated for which she would like to see increased antitrust focus including: airlines, banking, healthcare, pharma, agriculture, telecom and tech.

WHAT THIS MEANS:

  • Senator Warren’s theme that antitrust can be used to protect small businesses, entrepreneurs, innovators, workers and just about everyone else from the “rich and powerful” shows that increasing antitrust enforcement has become a key party line for the upcoming midterm elections.
  • Additionally, Senator Warren stated that “[t]he individuals who lead the [FTC and DOJ] determine the federal government’s competition priorities,” and have a significant impact on antitrust enforcement by deciding which cases to open or take to court. Given these statements and that several high-profile mergers will be decided before the midterms, we expect that Senator Warren will continue to highlight the potential impact of high-profile mergers on small business and individuals.
  1. Jurisdictional thresholds

French merger control applies if the turnovers of the parties to a transaction (usually the acquirer(s) including its (their) group(s) of companies, and the target) exceeded, in the last financial year, certain (cumulative) thresholds provided in Article L. 430-2, I of the French Commercial Code (the “Code”):

  • Combined worldwide pre-tax turnover of all concerned parties > €150 million; and
  • French turnover achieved by at least two parties individually > €50 million euros; and
  • The transaction is not caught by the EU Merger Regulation.

Specific (and lower) thresholds exist for mergers in the retail sector or in French overseas departments or communities[1].

In the situation of an acquisition of joint control, a transaction can be notifiable where each of the acquirers meets the thresholds even if the target has no presence or turnover in France.

There is no exception applicable to foreign-to-foreign transactions.

Acquisitions of ‘non-controlling’ minority shareholdings are not notifiable.

  1. Filing is mandatory and failure to file or early implementation can be sanctioned

Under Article L. 430-3 of the Code, a notifiable merger cannot be finalized before its clearance by the French Competition Authority (the “FCA”) but the Code does not provide any specific deadline for the notification. There is no filing fee.

Failure to notify a reportable transaction can be sanctioned by the FCA as follows:

  • A daily penalty can be imposed on the notifying party(ies) until they notify the operation or demerge, as the case may be; and
  • A fine can be imposed on the notifying party(ies) up to:
    • For corporate entities: 5% of their pre-tax turnover in France during the last financial year;
    • For individuals: €1.5 million.

Due to the suspensive effect of the filing, these sanctions also apply when the parties start to implement a notified transaction before receiving clearance (so-called ‘gun jumping’) from the FCA.

Nevertheless, individual exemptions may be granted by the FCA to allow undertakings to close before receiving clearance; in practical terms, exemptions are exceptional and limited to circumstances where insolvency proceedings have been opened, or are about to be opened, in relation to the target.

  1. Timeline of merger control procedure

The majority of notified transactions are cleared in Phase I, which lasts 25 business days as from the receipt by the FCA of a complete notification.

A simplified procedure, which lasts for about 15 business days, is available for non-problematic acquisitions, which is often the case for transactions involving private equity funds. Simplified procedures accounted for about 50% of the notified transactions between May 2016 and May 2017.

Phase II is reserved for problematic acquisitions requiring a deeper examination and takes at least an additional 65 business days.

In addition, parties can pre-notify a transaction with the FCA. The pre-notification procedure can prove to be very useful in order to confirm the notifiability of a transaction, the nature and amount of information that will be required by the FCA in the actual filing, and/or obtain a first impression of the FCA’s preliminary analysis of potential competition issues that may be raised by a transaction.

[1]     Thresholds applying to mergers including at least two parties operating one or several shops of retail business (“magasin de commerce de détail”) or one party having its activity, at least in part, in a French overseas department or community are the following:

  • Combined worldwide pre-tax turnover of all concerned parties > €75 million; and
  • French turnover achieved by at least two parties in the retail business sector > €15 million OR turnover achieved by at least two parties in at least one overseas department/community > €15 million (or if active in the retail business sector > €5 million); and
  • The transaction is not caught by the EU Merger Regulation.

On November 29, 2017, a Japanese auto parts manufacturer and its US subsidiary defeated the US Department of Justice’s claims that the companies conspired with others to fix prices and rig bids for automotive body sealing products. The case involved a rare trial involving criminal antitrust charges. After 13 days of trial, a jury returned a not-guilty verdict for Tokai Kogyo Co. Ltd. and its subsidiary, Green Tokai Co. Ltd. Continue Reading.

WHAT HAPPENED:

  • Alimentation Couche-Tard Inc. (ACT) is a Canadian corporation and is engaged in the retail sale of gasoline and diesel fuel in the United States. Circle K Stores, Inc. (Circle K) is a wholly owned subsidiary of ACT. Circle K indirectly owns all of the membership interests in CrossAmerica GP LLC, CrossAmerica Partners LP’s (CAPL) general partner.
  • Pursuant to three separate Asset Purchase Agreements, dated August 4, 2017, ACT would acquire ownership or operation of all Jet-Pep, Inc. retail fuel outlets. Specifically, Circle K would acquire 18 retail fuel outlets, a fuel terminal and related trucking assets and CAPL would acquire 102 Jet-Pep retail fuel outlets.
  • While the purchases did not require an HSR filing, the FTC learned of the transaction, investigated and required remedies before allowing the transaction to proceed.
  • The FTC defined the relevant product markets as the retail sale of gasoline and the retail sale of diesel.
  • The FTC defined the geographic markets as local markets and identified the three separate geographic markets in Alabama including Brewton, Monroeville and Valley.
  • In its complaint, the FTC alleged that post-merger the “number of competitively constraining independent market participants” would be reduced “to no more than three in each local market.”
  • The FTC alleged that the proposed acquisition would result in (1) an increased likelihood that ACT would unilaterally exercise market power in the relevant markets; and (2) an increased likelihood of collusive or coordinated interaction between the remaining competitors in the relevant markets.
  • The FTC accepted a consent order in which ACT agreed to divest certain Jet-Pep retail fuel outlets and related assets to remedy concern in three local geographic markets in Alabama. ACT must complete the divestiture to a Commission-approved buyer within 120 days after the acquisition closes.

WHAT THIS MEANS:

  • This consent decree is a reminder that even when a transaction is not HSR reportable, the transaction may still be reviewed and challenged by the FTC and DOJ.
  • Local geographic markets are highly fact specific. Factors used to determine local geographic markets for retail gasoline and retail diesel include: commuting patterns, traffic flows and outlet characteristics unique to each market.
  • If the proposed divestiture package is something less than a complete, autonomous and operable business unit, the parties must show that their proposed package will enable the buyer to maintain or restore competition in the market.
  • FTC and DOJ may not require a buyer-up-front where they have significant experience in the industries at issue, and where the ownership interest is a high-value, low-risk asset (e.g., retail fuel business) that is likely to generate substantial interest from more than one potentially acceptable buyer.

WHAT HAPPENED:

  • On Thursday, November 16, 2017, newly confirmed Assistant Attorney General for Antitrust Makan Delrahim, speaking at the American Bar Association Section of Antitrust Law’s Fall Forum, explained where antitrust enforcement fits in the broader Trump administration effort to reduce federal regulations.
  • Delrahim remarked that “antitrust is law enforcement, it’s not regulation.” Antitrust enforcement “supports reducing regulation, by encouraging competitive markets that, as a result, require less government intervention.” Delrahim explained that “[v]igorous antitrust enforcement plays an important role in building a less regulated economy in which innovation and business can thrive, and ultimately the American consumer can benefit.” As a result, the government can minimize regulation related to price, quality, and investment.
  • Delrahim announced that the Antitrust Division of the US Department of Justice (DOJ) would seek to reduce the number of long-term consent decrees and “return to the preferred focus on structural relief to remedy mergers that violate the law,” thereby limiting the use of behavioral remedies in consent decrees particularly in vertical transactions, where such remedies have historically been common. According to Delrahim, “a behavioral remedy supplants competition with regulation; it replaces disaggregated decision making with central planning.” Delrahim also expressed concern that behavioral remedies simply delay the exercise of otherwise anticompetitive market power.
  • Mentioning by name several consent decrees in vertical transactions containing behavioral provisions in merger cases brought by the Obama administration, Delrahim expressed concern that these remedies “entangle the [Antitrust] Division and the courts in the operation of a market on an on-going basis.” Delrahim cautioned that the lack of enforceability and reliability of behavioral remedies diminish the effectiveness of antitrust enforcement, a risk that consumers should not have to bear.

WHAT THIS MEANS:

  • Delrahim’s stance on behavioral remedies starkly contrasts with previous DOJ policies, followed under both Democratic and Republican administrations. Prior administrations strongly preferred structural remedies, but recognized that behavioral remedies could be appropriate particularly for vertical transactions that presented pro-competitive benefits. The DOJ’s most recent policy paper on remedies (issued by the Obama administration) exemplifies this view, stating: “conduct remedies often can effectively address anticompetitive issues raised by vertical mergers.”
  • Despite the new administration’s disfavored view of behavioral remedies for a vertical merger, such remedies are not off the table. To secure a DOJ consent decree with behavioral remedies for a vertical merger, parties will likely have to show that the transaction “generates significant efficiencies that cannot be achieved without the merger or through a structural remedy.” Delrahim unambiguously stated that this is “a high standard to meet.”
  • Delrahim’s speech appeared aimed at several high profile vertical transactions that are currently under review by the DOJ, likely seeking to explain why the DOJ will insist on structural remedies in transactions where most outside observers thought a behavioral remedy may suffice.
  • It is possible that Joe Simons, President Trump’s unconfirmed appointee for Chairman of the Federal Trade Commission, may take a differing stance on behavioral remedies, following prior policy statements. This could result in a slight difference in policies between the Federal Trade Commission and the DOJ in merger enforcement.

Between 2012 and 2013, Marine Harvest ASA (“Marine Harvest”), a Norwegian seafood company, acquired Morpol ASA (“Morpol”), a Norwegian producer and processor of salmon. Marine Harvest notified the transaction to the European Commission under the European Union’s Merger Regulation (“EUMR”), but implemented it prior to the European Commission having granted clearance. In 2014, the European Commission imposed a EUR 20 million fine on Marine Harvest for “jumping the gun”. On 26 October 2017, the General Court of the European Union (“General Court”) confirmed the European Commission’s decision (“Decision”).

WHAT HAPPENED:

On 14 December 2012, Marine Harvest entered into a share and purchase agreement (“SPA”) with companies owned by Jerzy Malek, the founder and former CEO of Morpol. Under the SPA, Marine Harvest acquired 48.5% of the shares in Morpol (“Initial Transaction”). The Initial Transaction was closed on 18 December 2012. On 15 January 2013, Marine Harvest submitted a mandatory public offer for the remaining 51.5% of the shares in Morpol (“Public Offer”). Following settlement and completion of the Public Offer in March 2013, Marine Harvest owned a total of 87.1% of the shares in Morpol (together, the “Transaction”).

Marine Harvest established first contact with the European Commission on 21 December 2012 by submitting a “Case Team Allocation Request”, which initiates the pre-notification process under the EUMR. After submitting various drafts and answers to requests for information, Marine Harvest formally notified the Transaction on 9 August 2013. On 30 September 2013, the European Commission cleared the Transaction subject to some conditions.

On 31 March 2014, the European Commission formally launched a separate investigation into alleged “gun jumping” by Marine Harvest, and in the decision of 23 July 2014, the European Commission imposed a fine of EUR 20 million on Marine Harvest (“Fining Decision”). The European Commission held that Marine Harvest, by implementing the Initial Transaction, had acquired de facto control over Morpol. By acquiring de facto control, Marine Harvest had infringed Art. 7(1) EUMR (“Standstill Obligation”). Under the Standstill Obligation, transactions requiring notification to, and clearance by, the European Commission may not be implemented prior to clearance.

The European Commission rejected Marine Harvest’s argument that the implementation of the Initial Transaction was covered by an exemption provided for in Art. 7(2) EUMR (“Public Bid Exemption”). Under the Public Bid Exemption, the acquisition of control from various sellers through a public bid, or a series of transactions in securities, can be implemented prior to clearance. However, this applies only if the transaction is notified without delay to the European Commission, and if the acquirer does not exercise the respective voting rights. According to the European Commission, the Public Bid Exemption is not intended to cover situations involving the acquisition, from a single seller, of a “significant block of shares” which in itself confers de facto control.

Marine Harvest appealed against the Fining Decision to the General Court. However, with the Decision, the General Court confirmed the European Commission findings, both on substance on with respect to the level of the fine.

WHAT THIS MEANS:

The Decision is an impressive reminder that gun jumping, i.e. the implementation of transactions prior to clearance by the relevant antitrust authorities, can entail severe consequences. Under European merger control law, the European Commission can impose fines of up to 10% of the group’s total turnover on companies infringing the Standstill Obligation. Antitrust authorities in most other major antitrust jurisdictions have comparable sanctioning tools.

The Decision also confirms that the acquisition of a minority stake may well be considered as conferring de facto control. This applies in particular to situations where the minority shareholder is highly likely to achieve a majority at the shareholders’ meetings, taking account of the size of its shareholding and the level of attendance of other shareholders at shareholders’ meetings in preceding years. The General Court furthermore emphasises that the mere possibility to exercise control is sufficient for a breach of the Standstill Obligation. Whether the acquirer actually makes use of that possibility (Marine Harvest argued it did not) is of no relevance.

Finally, the Decision clarifies that the European Commission is entitled to apply a narrow interpretation of the Public Bid Exemption. Parties who intend to rely on the Public Bid Exemption for (partly) implementing transactions prior to clearance should do so, if possible, only after consulting with the European Commission. Indeed, the European Commission, confirmed by the General Court, held that Marine Harvest acted negligently in not having consulted with the European Commission. Marine Harvest’s negligence was a main factor for the European Commission to conclude that a significant fine should be imposed – even though, as Marine Harvest argued throughout the proceedings, the European Commission did not impose a fine in a very similar, previous merger case.

On October 19, 2017, the French Competition Authority (the “FCA”) imposed a EUR 302 million fine on the three leading companies in the PVC and linoleum floor coverings sector; Forbo, Gerflor and Tarkett, as well as the industry’s trade association, SFEC (Syndicat Français des Enducteurs Calandreurs et Fabricants de Revêtements de Sols et Murs), for price-fixing, sharing commercially sensitive information, and signing a non-compete agreement relating to environmental performance advertising.

The FCA said the significant fine reflected the gravity of the offence and the long duration of the anticompetitive behavior, which for one company lasted 23 years.

WHAT HAPPENED

The proceedings were originally initiated by unannounced inspections carried out in the floor coverings industry in 2013 by the FCA, acting on information submitted by the DGCCRF (Directorate General for Competition Policy, Consumer Affairs and Fraud Control), which resulted in the discovery of three distinct anticompetitive practices.

Price-fixing

The FCA found that the three main manufacturers of floor coverings in France met secretly at so-called “1, 2, 3” meetings, from October 2001 to September 2011, at hotels, on the margins of official meetings of the SFEC or through dedicated telephone lines, in order to discuss minimum prices and price increases for their products. The manufacturers also entered into agreements covering a great deal of other sensitive information, such as the strategies to adopt with regard to specific customers or competitors, organization of sales activities and sampling of new products.

Confidential information exchange via the trade association

The FCA found that from 1990 until the start of the FCA’s investigations in 2013, Forbo, Gerflor and Tarkett also exchanged, in the context of official meetings of the SFEC, very precise information relating to their trading volumes, revenues per product category and business forecasts. In its decision, the FCA also raised the active role played by the SFEC, supporting companies in their conduct.

Non-compete agreement relating to environmental performance advertising

The three main manufacturers of floor coverings in France, together with the trade association, also signed a ‘non-compete’ agreement which prevented each company from advertising the individual environmental performance of its products. The FCA considered that this agreement may have acted as a disincentive for manufacturers to innovate and offer new products, earmarked by better environmental performance, compared to the products offered by their competitors.

Neither the manufacturers nor the trade association disputed the facts and all of them sought a settlement procedure. In addition, Forbo and Tarkett, leniency applicants, benefited from fine reductions corresponding to the respective dates they approached the FCA (the sooner, the higher the fine reduction), the quality of the evidence they provided and their cooperation during the investigation.

WHAT THIS MEANS

The FCA’s decision in the floor coverings cartel case has significant impact due to the total amount of the fines imposed which is (i) higher than the aggregate amount of sanctions imposed by the FCA in 2016 (i.e., EUR 202,873,000), and (ii) until now the highest fine imposed by the FCA in 2017, the FCA having imposed a EUR 100 million fine on Engie for abusing its dominant position in the gas market (Decision No. 17-D-06 of 21 March 2017) and a EUR 40 million fine on Altice and SFR for non-compliance with an agreement made during the acquisition of SFR by the Altice group (Decision No. 17-D-04 of 8 March 2017).

This decision is the first application of the new settlement procedure introduced by the Macron Law of 6 August 2015. This new procedure replaced the previous “no challenge” procedure (“non-contestation des griefs”) pursuant to which companies could only negotiate a percentage reduction without knowing the original amount of the fine. Under the new procedure, the companies’ discussion with the FCA will focus directly on the minimum and maximum amount of the fine and will no longer be limited to a reduction rate applicable to a hypothetical amount of the fine.

This is also the first decision in France where the new settlement procedure and the leniency procedure have been cumulated.

Finally, the FCA raised the very serious nature of the infringement, which lasted for a long time and involved the majority of the market players (between 65% and 85% of the market from 2001 until 2012). This decision sends once again a clear message to companies that cartels and exchanges of competitively sensitive information remain one of FCA’s main priorities. Therefore, discussions in the context of trade association meetings should be approached carefully and in accordance with prior legal advice.

WHAT HAPPENED

  • On Friday, October 13, acting FTC chairman Maureen Ohlhausen delivered a speech at the Hillsdale College Free Market Forum titled, “Markets, Government, and the Common Good,” highlighting her view on the intersection between IP and antitrust domestically and abroad.
  • Chairman Ohlhausen’s position, that IP rights must be vigorously protected, is in line with her long-held belief that some enforcement of antitrust laws, especially abroad, has been overzealous when it comes to intellectual property.
  • In 2012, Ohlhausen objected to the FTC’s decision to require Robert Bosch GmbH to refrain from pursuing injunctions on certain SEPs (standard essential patents), and she wrote a dissenting opinion on the commission’s consent agreement with Google Inc. and Motorola Mobility Inc. requiring Google to withdraw claims for injunctive relief on SEPs.
  • In Friday’s speech, she argued that though “foreign [governments] take or allow the taking of American proprietary technologies without due payment,” the US should continue to protect patent rights and avoid punishing a company for “a unilateral refusal to assist its competitors.”
  • Ohlhausen also addressed what she termed the current “age of IP skepticism” as it relates to patent-assertion entities (PAEs).
  • She concluded that while some minor changes may be appropriate to promote innovation in the face of “Litigation PAEs” employing nuisance litigation techniques, these changes should be “narrowly tailored to address observed behavior.”
  • She voiced support for case management practices that could mitigate litigation cost asymmetries between PAE plaintiffs and defendants, increased transparency, and rules encouraging courts to stay litigation by PAEs when parallel proceedings are already underway, but eschewed more drastic measures such as the creation of “new, specialized guidelines to address particular types of IP disputes,” which, she argued, are unsupported by the available evidence.
  • In her view, “the key to addressing the US patent system lies in incremental adjustment where necessary based on a firm empirical foundation.”

WHAT THIS MEANS

  • Ohlhausen’s concern that certain antitrust enforcement “inappropriately morphs antitrust law into a tool for price regulation” is a notable policy direction that could make the FTC less inclined to pursue cases involving alleged violations of SEPs.
  • Under her direction, any changes forthcoming at the FTC are likely to be minor adjustments reflecting the belief that protecting patent rights is “fundamental to advanc[ing] innovation.”

WHAT HAPPENED:

  • On October 2, 2017, the US Court of Appeals for the Third Circuit unsealed its opinion in Valspar Corp. v. E.I. Du Pont De Nemours & Co., No. 16-1345 2017 WL 4364317 (3d Cir. Sept. 14, 2017) in which the court affirmed the district court’s grant of summary judgment for defendant on the grounds that plaintiff lacked sufficient evidence to allege a conspiracy to fix prices.
  • Valspar alleged that titanium dioxide suppliers engaged in price-fixing, citing evidence that the manufacturers announced 31 price increases in a twelve year period and other circumstantial evidence. at *5. The parties agreed that the titanium dioxide market is oligopolistic, with a handful of firms, substantial barriers to entry, and no substitute products. Id. at *1.
  • After Valspar settled with all defendants but DuPont, the latter moved for summary judgment. The district court found that Valspar lacked evidence of an actual agreement among defendant suppliers to fix prices. at *1.
  • The Third Circuit agreed with the district court and found that Valspar’s argument failed on two grounds. First, the court explained that Valspar neglected to consider conscious parallelism when it claimed that it was “inconceivable” that defendants executed identical price increases on 31 occasions without a conspiracy. at *5. Price movement in an oligopoly is expected to be interdependent, as rational decision makers anticipate the movements of other firms. Second, Valspar was required to show that defendants’ parallel pricing “went beyond mere interdependence and was so unusual that in the absence of advance agreement, no reasonable firm would have engaged in it.” Id. at *6 (quoting In re Baby Food Antitrust Litig., 166 F.3d 112, 135 (3d Cir. 1999)).

WHAT THIS MEANS:

  • The Valspar case is interesting in that it is an opt-out case from the In re Titanium Dioxide class action litigation, in which the United States District Court for the District of Maryland denied defendants’ motion for summary judgment based on the same evidence that here allowed the District of Delaware, as affirmed by the Third Circuit, to grant it. The Third Circuit attributed the different outcomes in the class and opt-out cases to the fact that the District of Maryland—which sits in the US Court of Appeals for the Fourth Circuit—is not bound by Third Circuit precedent while the District of Delaware is so bound. at *11 (“This resulted in the Maryland court applying a standard quite different from the one we have developed and that the [Delaware court] applied.”).
  • The opinion clarifies the evidence required under Third Circuit precedent to prove a conspiracy in an oligopolistic industry. The court explained that in oligopoly cases, evidence that price increases are not correlated to supply or demand is “largely irrelevant.” at *7. Awareness among defendants of the conscious parallelism is similarly not enough. Id. at *4 n.3. Plaintiffs must show proof of an explicit, manifest agreement. Id. A plaintiff alleging a conspiracy among defendants may not rely on “ambiguous evidence alone” to survive summary judgment. Id. at *5 (quoting In re Chocolate Confectionary Antitrust Litig., 801 F.3d 383, 396 (3d Cir. 2015)).

WHAT HAPPENED

  • On February 14, 2017, Integra agreed to purchase Johnson & Johnson’s Codman neurosurgery business (excluding Codman’s neurovascular and drug deliver businesses) for $1.045 billion.
  • Seven months later, on September 25, 2017, the Federal Trade Commission (FTC) agreed to clear the transaction subject to the parties divesting five neurosurgical tools and associated assets including the relevant intellectual property (IP), manufacturing technology and know-how, and research & development (R&D) information related to the five tools. Additionally the buyer of the divested assets can freely negotiate to hire any employees that worked on sales, marketing, manufacturing, or R&D for the divestiture products. The parties must also supply Natus Medical Incorporated (Natus) with cranial access kits often sold with the divestiture assets until Natus can start sourcing them independently.
  • The FTC required that the parties divest the following medical devices:
    • Intracranial pressure monitoring systems, which measure pressure inside the skull. The FTC determined that Integra (68 percent) and Codman (26 percent) combined market share in the United States would be 94 percent and that only fringe competitors with limited presence would have remained.
    • Cerebrospinal fluid collections systems, which drain excess cerebrospinal fluid and monitor pressures within the fluid. The FTC found that Integra (57 percent) and Codman (14 percent) would combine for 71 percent market share in the United States and would have reduced the number of significant competitors from three to two.
    • Non-antimicrobial external ventricular drainage catheters, which funnel excess cerebrospinal fluid form the brain to cerebrospinal fluid collection systems to relieve intracranial pressure. Here, the FTC said Integra (29 percent) and Codman (17 percent) are the number two and three competitors accounting for 46 percent of the market in the United States and would have reduced the number of significant competitors from three to two.
    • Fixed pressure valve shunts, which are used to treat excessive accumulation of cerebrospinal fluid. The FTC found that Integra (23 percent) and Codman (15 percent) were the number two and three competitors would control 38 percent of the US market and, again, that the number of competitors would have been reduced from three to two.
    • Dural grafts, which are used to repair or replace the membrane that surrounds the brain and spinal cord and keep cerebrospinal fluid in place. The FTC determined that the merger would have reduced the number of significant competitors from four to three with Integra (66 percent) and Codman (nine percent) combining for 75 percent market share.
  • Under the terms of the settlement, the parties must divest within 10 days of closing to Natus, which is a global health care company with an existing neurology business including systems that are complementary to the divestiture assets.

Continue Reading THE LATEST: Integra Forced to Divest Neurosurgical Tools to Gain FTC Clearance