[Federal Register Volume 59, Number 175 (Monday, September 12, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-22434]


[[Page Unknown]]

[Federal Register: September 12, 1994]


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FEDERAL TRADE COMMISSION
[File No. 941 0085]

 

Roche Holding Ltd., et al.; Proposed Consent Agreement With 
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 acts and practices and unfair methods of competition, this 
consent agreement, accepted subject to final Commission approval, would 
permit, among other things, Roche Holding Ltd. to acquire Syntex 
Corporation and its subsidiary, Syva, and would require Roche to divest 
Syva's drugs of abuse testing (DAT) business within 12 months to a 
Commission-approved buyer, to operate the Syva assets separately from 
its own DAT business pending the divestiture, and to obtain, for ten 
years, prior Commission approval before acquiring assets or interests 
of any entity involved in the market for drugs of abuse reagent 
products.

DATES: Comments must be received on or before November 14, 1994.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
Room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:
Claudia Higgins or Ann Malester, FTC/S-2224, Washington, DC 20580. 
(202) 326-2682.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 2.34 of the 
Commission's Rules of Practice (16 CFR 2.34), notice is hereby given 
that the following 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. 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 
Sec. 4.9(b)(6)(ii) of the Commission's Rules of Practice (16 CFR 
4.9(b)(6)(ii)).

    In the Matter of: Roche Holding Ltd, a corporation, and Syntex 
Corporation, a corporation; Agreement Containing Consent Order.

    The Federal Trade Commission (``Commission''), having initiated an 
investigation of the proposed acquisition by Roche Capital Corporation, 
a Panamanian corporation and an indirect wholly-owned subsidiary of 
Roche Holding Ltd, a Swiss corporation (collectively referred to as 
``Roche''), of Syntex Corporation (``Syntex''), and it now appearing 
that Roche and Syntex, hereinafter sometimes referred to as ``Proposed 
Respondents,'' are willing to enter into an agreement containing an 
order to divest certain assets and cease and desist from making certain 
acquisitions, and providing for certain other relief:
    It is hereby agreed by and between Proposed Respondents, by their 
duly authorized officers and attorneys, and counsel for the Commission 
that:
    1. Proposed Respondent Roche Holding Ltd is a corporation 
organized, existing, and doing business under and by virtue of the laws 
of Switzerland with its principal executive offices located at 
Grenzacherstrasse 124, Basel, Switzerland 4002. Hoffmann-La Roche Inc., 
an indirect wholly-owned subsidiary of Roche Holding Ltd, is located at 
340 Kingsland Street, Nutley, New Jersey 07110.
    2. Proposed Respondent Syntex is a corporation, organized, 
existing, and doing business under and by virtue of the laws of Panama 
with its principal executive offices located at 3401 Hillview Avenue, 
Palo Alto, California 94304. Syva Company, an indirect wholly-owned 
subsidiary of Syntex, is headquartered at 3403 Yerba Buena Road, San 
Jose, California 95161-9013.
    3. Proposed Respondents admit all the jurisdictional facts set 
forth in the draft of complaint here attached.
    4. Proposed Respondents waive:
    (a) any further procedural steps;
    (b) the requirement that the Commission's decision contain a 
statement of findings of fact and conclusions of law;
    (c) all rights to seek judicial review or otherwise to challenge or 
contest the validity of the order entered pursuant to this agreement; 
and
    (d) any claims under the Equal Access to Justice Act.
    5. This agreement shall not become part of the public record of the 
proceeding unless and until it is accepted by the Commission. If this 
agreement is accepted by the Commission, it together with the draft of 
complaint contemplated thereby, will be placed on the public record for 
a period of sixty (60) days and information in respect thereto publicly 
released. The Commission thereafter may either withdraw its acceptance 
of this agreement and so notify the Proposed Respondents, in which 
event it will take such action as it may consider appropriate, or issue 
and serve its complaint (in such form as the circumstances may require) 
and decision, in disposition of the proceeding.
    6. This agreement is for settlement purposes only and does not 
constitute an admission by Proposed Respondents that the law has been 
violated as alleged in the draft of complaint here attached, or that 
the facts as alleged in the draft complaint, other than jurisdictional 
facts, are true.
    7. This agreement contemplates that, if it is accepted by the 
Commission, and if such acceptance is not subsequently withdrawn by the 
Commission pursuant to the provisions of Section 2.34 of the 
Commission's Rules, the Commission may, without further notice to 
Proposed Respondents, (1) issue its complaint corresponding in form and 
substance with the draft of complaint here attached and its decision 
containing the following order to divest and to cease and desist, in 
disposition of the proceeding, and (2) make information public with 
respect thereto. When so entered, the order shall have the same force 
and effect and may be altered, modified, or set aside in the same 
manner and within the same time provided by statute for other orders. 
The order shall become final upon service. Delivery by the U.S. Postal 
Service of the complaint and decision containing the agreed-to order to 
Proposed Respondents' addresses as stated in this agreement shall 
constitute service. Proposed Respondents waive any right they may have 
to any other manner of service. The complaint may be used in construing 
the terms of the order, and no agreement, understanding, 
representation, or interpretation not contained in the order or the 
agreement may be used to vary or contradict the terms of the order.
    8. Proposed Respondents have read the proposed complaint and order 
contemplated hereby. Proposed Respondents understand that once the 
order has been issued, they will be required to file one or more 
compliance reports showing that they have fully complied with the 
order. Proposed Respondents further understand that they may be liable 
for civil penalties in the amount provided by law for each violation of 
the order after it becomes final.

Order

I

    It is ordered that, as used in this order, the following 
definitions shall apply:
    A. ``Roche'' means Roche Holding Ltd, its predecessors, 
subsidiaries, including without limitation Roche Capital Corporation, 
divisions, and groups and affiliates controlled by Roche, their 
directors, officers, employees, agents, and representatives, and their 
successors and assigns.
    B. ``Syntex'' means Syntex Corporation, its predecessors, 
subsidiaries, divisions, and groups and affiliates controlled by 
Syntex, their directors, officers, employees, agents, and 
representatives, and their successors and assigns.
    C. ``Syva'' or ``Syva Company'' means Syva Company, a Delaware 
corporation and an indirect wholly-owned subsidiary of Syntex 
Corporation, its predecessors, subsidiaries, divisions, and groups and 
affiliates controlled by Syva, their directors, officers, employees, 
agents, and representatives, and their successors and assigns.
    D. ``Respondents'' means Roche and Syntex.
    E. ``Commission'' means the Federal Trade Commission.
    F. ``Acquisition'' means Roche's proposed acquisition of voting 
securities of Syntex pursuant to the Acquisition Agreement and Plan of 
Merger dated May 1, 1994.
    G. ``Patents'' means some, all or any part of all U.S. or foreign 
unexpired patents and patents issued in the future based upon patent 
applications filed in any country as of August 1, 1994, and all 
substitutions, continuations, continuations-in-part, divisions, 
renewals, reissues and extensions based on said patents, the 
applications therefor, or said patent applications.
    H. ``Drugs of abuse reagent products'' means diagnostic reagent 
products used for drugs of abuse testing, including without limitation, 
reagent, control and calibrator products used to test for cannabinoids 
or marijuana, cocaine and cocaine metabolites, opiates, amphetamines 
and methamphetamines, phencyclidine, methadone, methaqualone, 
propoxyphene, barbiturates, benzodiazepine, lysergic acid diethylamide, 
ethyl alcohol, or other controlled substances for which drugs of abuse 
testing is conducted.
    I. ``Syva Business'' means all of Syntex's United States rights, 
title and interest in and to:
    (1) drugs of abuse reagent products, including but not limited to, 
EMIT, EMIT II, and all patents, production 
technology and know-how related to the manufacture and sale of drugs of 
abuse reagent products in the United States; and
    (2) all of the Syva Company's assets and businesses as further 
delineated in Schedule A, attached hereto and made a part hereof.

II

    It is further ordered that:
    A. Roche shall divest, absolutely and in good faith, within twelve 
(12) months of the date this order becomes final, the Syva Business, 
and shall also divest such additional ancillary assets and businesses 
and effect such arrangements as are necessary to assure the 
marketability, viability, and competitiveness of the Syva Business; 
provided that Roche is not required to divest any of the Syva assets 
and businesses identified in Part 2 of Schedule A, if such assets and 
businesses are not requested by the acquirer.
    B. Roche shall divest the Syva Business only to an acquirer that 
receives the prior approval of the Commission and that has made any 
necessary notice to or obtained any necessary approval from the FDA to 
manufacture and sell all of the Syva drugs of abuse reagent products, 
and only in a manner that has received the prior approval of the 
Commission. The purpose of the divestiture of the Syva Business is to 
ensure the continuation of the Syva Business as an ongoing, viable 
operation, engaged in the same business in which the Syva Business is 
engaged at the time of the proposed divestitute, and to remedy the 
lessening of competition resulting from the Acquisition as alleged in 
the Commission's complaint.
    C. Upon reasonable notice from the acquirer to Respondents, 
Respondents shall provide such personnel, information, technical 
assistance, advice and training to the acquirer as is necessary to 
transfer technology and know-how to assist the acquirer in obtaining 
any necessary FDA approval for the manufacture and sale of the Syva 
drugs of abuse reagent products and any other products identified in 
Schedule A that are acquired pursuant to this order. Such assistance 
shall include reasonable consultation with knowledgeable employees of 
Respondents and training at the acquirer's facility for a period of 
time sufficient to satisfy the acquirer's management that its personnel 
are appropriately trained in the manufacture of the Syva drugs of abuse 
reagent products and any other products identified in Schedule A that 
are acquired pursuant to this order. Respondents shall not charge the 
acquirer a rate more than their own direct costs for providing such 
technical assistance.
    D. Pending divestiture of the Syva Business, Respondents shall take 
such actions as are necessary to maintain the viability and 
marketability of the Syva Business and to prevent the destruction, 
removal, wasting, deterioration or impairment of any of the Syva 
Business except for ordinary wear and tear.

III

    It is further ordered that:
    A. If Roche has not divested, absolutely and in good faith, and 
with the prior approval of the Commission, the Syva Business within 
twelve (12) months of the date this order becomes final, to an acquirer 
that has made any necessary notice to or obtained any necessary 
approval from the FDA to manufacture and sell Syva drugs of abuse 
reagent products, the Commission may appoint a trustee to divest the 
Syva Business.
    B. In the event that the Commission or the Attorney General brings 
an action pursuant to section 5(l) of the Federal Trade Commission Act, 
15 U.S.C. section 45(l), or any other statute enforced by the 
Commission, Roche shall consent to the appointment of a trustee in such 
action. Neither the appointment of a trustee nor a decision not to 
appoint a trustee under this Paragraph shall preclude the Commission or 
the Attorney General from seeking civil penalties or any other relief 
available to it, including a court-appointed trustee, pursuant to 
section 5(l) of the Federal Trade Commission Act, or any other statute 
enforced by the Commission, for any failure by Roche to comply with 
this order.
    C. If a trustee is appointed by the Commission or a court pursuant 
to Paragraph III.A. or B. this order, Roche shall consent to the 
following terms and conditions regarding the trustee's powers, duties, 
authority, and responsibilities:
    1. The Commission shall select the trustee, subject to the consent 
of Roche, which consent shall not be unreasonably withheld. The trustee 
shall be a person with experience and expertise in acquisitions and 
divestitures. If Roche has not opposed, in writing, including the 
reasons for opposing, the selection of any proposed trustee within ten 
(10) days after notice by the staff of the Commission to Roche of the 
identity of any proposed trustee, Roche shall be deemed to have 
consented to the selection of the proposed trustee.
    2. Subject to the prior approval of the Commission, the trustee 
shall have the exclusive power and authority to divest the Syva 
Business.
    3. Within ten (10) days after appointment of the trustee, Roche 
shall execute a trust agreement that, subject to the prior approval of 
the Commission and, in the case of a court-appointed trustee, of the 
court, transfers to the trustee all rights and powers necessary to 
permit the trustee to effect the divestiture required by this order.
    4. The trustee shall have twelve (12) months from the date the 
Commission approves the trust agreement described in Paragraph III.C.3. 
to accomplish the divestiture, which shall be subject to the prior 
approval of the Commission. If, however, at the end of the twelve month 
period, the trustee has submitted a plan of divestiture or believes 
that divestiture can be achieved within a reasonable time, the 
divestiture period may be extended by the Commission, or, in the case 
of a court-appointed trustee, by the court; provided, however, the 
Commission may extend this period only two (2) times.
    5. The trustee shall have full and complete access to the 
personnel, books, records and facilities related to Syva, or to any 
other relevant information, as the trustee may request. Roche shall 
develop such financial or other information as such trustee may request 
and shall cooperate with the trustee. Roche shall take no action to 
interfere with or impede the trustee's accomplishment of the 
divestiture. Any delays in divestiture caused by Roche shall extend the 
time for divestiture under this Paragraph in an amount equal to the 
delay, as determined by the Commission or, for a court-appointed 
trustee, by the court.
    6. The trustee shall use his or her best efforts to negotiate the 
most favorable price and terms available in each contract that is 
submitted to the Commission, subject to Roche's absolute and 
unconditional obligation to divest at no minimum price. The divestiture 
shall be made in the manner and to the acquirer as set out in Paragraph 
II of this order, as appropriate; provided, however, if the trustee 
receives bona fide offers from more than one acquiring entity, and if 
the Commission determines to approve more than one such acquiring 
entity, the trustee shall divest to the acquiring entity or entities 
selected by Roche from among those approved by the Commission. If 
requested by the trustee or acquirer, Roche shall provide the 
acquirer(s) with the assistance required by Paragraph II.C. of this 
order.
    7. The trustee shall serve, without bond or other security, at the 
cost and expense of Roche, on such reasonable and customary terms and 
conditions as the Commission or a court may set. The trustee shall have 
the authority to employ, at the cost and expense of Roche, such 
consultants, accountants, attorneys, investment bankers, business 
brokers, appraisers, and other representatives and assistants as are 
necessary to carry out the trustee's duties and responsibilities. The 
trustee shall account for all monies derived from the divestiture and 
all expenses incurred. After approval by the Commission and, in the 
case of a court-appointed trustee, by the court, of the account of the 
trustee, including fees for his or her services, all remaining monies 
shall be paid at the direction of Roche, and the trustee's power shall 
be terminated. The trustee's compensation shall be based at least in 
significant part on a commission arrangement contingent on the 
trustee's divesting the Syva Business.
    8. Roche shall indemnify the trustee and hold the trustee harmless 
against any losses, claims, damages, liabilities, or expenses arising 
out of, or in connection with, the performance of the trustee's duties, 
including all reasonable fees of counsel and other expenses incurred in 
connection with the preparation for, or defense of any claim, whether 
or not resulting in any liability, except to the extent that such 
liabilities, losses, damages, claims, or expenses result from 
misfeasance, gross negligence, willful or wanton acts, or bad faith by 
the trustee.
    9. If the trustee ceases to act or fails to act diligently, a 
substitute trustee shall be appointed in the same manner as provided in 
Paragraph III of this order.
    10. The Commission or, in the case of a court-appointed trustee, 
the court, may on its own initiative or at the request of the trustee 
issue such additional orders or directions as may be necessary or 
appropriate to accomplish the divestiture required by this order.
    11. The trustee shall have no obligation or authority to operate or 
maintain the Syva Business.
    12. The trustee shall report in writing to Roche and the Commission 
every sixty (60) days concerning the trustee's efforts to accomplish 
divestiture.

IV

    It is further ordered that Respondents shall comply with all terms 
of the Agreement to Hold Separate, attached to this order and made a 
part hereof as Appendix I. The Agreement to Hold Separate shall 
continue in effect until Roche has divested all of the Syva Business as 
required by this order.

V

    It is further ordered that, for a period of ten (10) years form the 
date this order becomes final, Roche shall not, without the prior 
approval of the Commission, directly or indirectly, through 
subsidiaries, partnerships, or otherwise:
    (a) acquire more than 1% of the stock, share capital, equity or 
other interest in any concern, corporate or non-corporate, engaged in 
at the time of such acquisition, or within the two years preceding such 
acquisition engaged in, the manufacture or production of drugs of abuse 
reagent products in the United States; or
    (b) acquire any assets used or previously used (and still suitable 
for use) in the manufacture and production of drugs of abuse reagent 
products in the United States to which sales of $3 million or more of 
drugs of abuse reagent products were attributable in the year preceding 
such acquisition.

Provided, however, that this Paragraph V shall not apply to the 
acquisition of products or services acquired in the ordinary course of 
business or to any acquisition of a non-exclusive license to any United 
States patents or other form of intellectual property (excluding assets 
of the Syva Business).

VI

    It is further ordered that:
    A. Within sixty (60) days after the date this order becomes final 
and every sixty (60) days thereafter until the Respondents have fully 
complied with Paragraphs II and III of this order, Roche shall submit 
to the Commission a verified written report setting forth in detail the 
manner and form in which it intends to comply, is complying, and has 
complied with Paragraphs II, III, and IV of this order. Roche shall 
include in its compliance reports, among other things that are required 
from time to time, a full description of the efforts being made to 
comply with Paragraphs II, III, and IV of this order, including a 
description of all substantive contacts or negotiations for the 
divestiture required by this order, including the identity of all 
parties contacted. Roche shall include in its compliance reports copies 
of all written communications to and from such parties, all internal 
memoranda, and all reports and recommendations concerning the 
divestiture.
    B. One (1) year from the date this order becomes final, annually 
for the next nine (9) years on the anniversary of the date this order 
becomes final, and at such other times as the Commission may require, 
Roche shall file a verified written report with the Commission setting 
forth in detail the manner and form in which it has complied and is 
complying with Paragraph V of this order.

VII

    It is further ordered that, for the purpose of determining or 
securing compliance with this order, Respondents shall permit any duly 
authorized representatives of the Commission:
    A. Access, during office hours and in the presence of counsel, to 
inspect and copy all books, ledgers, accounts, correspondence, 
memoranda and other records and documents in the possession or under 
the control of Respondents, relating to any matters contained in this 
order; and
    B. Upon five (5) days' notice to Respondents, and without restraint 
or interference from Respondents, to interview officers, directors, or 
employees of Respondents. Officers and employees of Respondents whose 
place of employment is outside the United States shall be made 
available on reasonable notice.

VIII

    It is further ordered that Roche shall notify the Commission at 
least thirty (30) days prior to any proposed change in the corporate 
Respondent such as dissolution, assignment, sale resulting in the 
emergence of a successor corporation, or the creation or dissolution of 
subsidiaries or any other change in the corporation that may affect 
compliance obligations arising out of the order.

Schedule A

    Roche shall divest all of the assets and businesses of the Syva 
Business pursuant to the terms of this order. The associated assets 
identified in Paragraph I.I. (2) of this order shall include all 
assets, properties, business and goodwill, tangible and intangible, of 
the Syva Company in and relating to the development, manufacture, sale, 
distribution and marketing of drugs of abuse reagent products in the 
United States, including without limitation, the following:

Part 1

    1. All rare reagent inventory (including antibody reagent pools, 
hapten conjugates, and detection labels), all inventory (finished and 
work in process), all sources of the antibodies (whether animals or 
cell lines), immunogens, commodities, cross-reactants, machinery, 
fixtures, equipment, vehicles, transportation facilities, furniture, 
tools, and other tangible personal property;
    2. all customer lists, vendor lists, catalogs, sales promotion 
literature, advertising materials, technical information, management 
information systems, software, inventions, copyrights, trademarks, 
trade names, trade secrets, intellectual property, formulations, 
patents, technology know-how, specifications, designs, drawings, 
processes, quality assurance and control data, research materials, and 
information, relating to the manufacture and sale of the drugs of abuse 
reagent products, including without limitation information relating to 
FDA approvals and applications for FDA approvals, research and 
development data, data required under the Good Manufacturing Practices 
Guidelines, regulatory data packages, process validation, and 
documentation relating to Drug Enforcement Agency (``DEA'') approvals;
    3. all rights, title and interest in and results of all research 
and development efforts of Syntex relating to improvements, 
developments, and variants of the Syva EMIT, EMIT II, and other drugs 
of abuse reagent product lines;
    4. all rights, title and interest in and to the contracts entered 
into in the ordinary course of business with customers (together with 
associated bid and performance bonds), suppliers, sales 
representatives, distributors, agents, personal property lessors, 
personal property lessees, licensors, licensees, consignors, and 
consignees;
    5. all rights under warranties and guarantees, express of implied;
    6. all books, records and files; and
    7. all items of prepaid expense.

Part 2

    1. All assets, properties, business and goodwill, tangible and 
intangible, of the Syva Company in and relating primarily to the 
development, manufacture, sale, distribution and marketing of any in 
vitro diagnostic products other than drugs of abuse reagent products, 
including therapeutic drug monitoring reagent products, infectious 
disease reagent products, endocrine (thyroid) testing reagent products, 
and reagents used on the VISTA system (e.g., hormone, cancer, anemia, 
protein, and hepatitis/HIV testing);
    2. inventory and storage capacity; and
    3. all rigths, title and interest in and to owned or leased real 
property, together with appurtenances, licenses and permits.

Appendix I

    In the Matter of: Roche Holding Ltd, a corporation, and Syntex 
Corporation, a corporation; agreement to hold separate.

    This Agreement to Hold Separate (``Hold Separate'') is by and 
between Roche Holding Ltd (``Roche''), a corporation organized, 
existing, and doing business under and by virtue of the laws of 
Switzerland, with its office and principal place of business at 
Grenzacherstrasse 124, Basel, Switzerland 4002; Syntex Corporation 
(``Syntex''), a corporation, organized, existing, and doing business 
under and by virtue of the laws of Panama with its principal place of 
business located at 3401 Hillview Avenue, Palo Alto, California 94304; 
and the Federal Trade Commission (``the Commission''), an independent 
agency of the United States Government, established under the Federal 
Trade Commission Act of 1914, 15 U.S.C. section 41, et seq. 
(collectively, the ``Parties'').

Premises

    Whereas, on May 1, 1994, Roche entered into an Acquisition 
Agreement and Plan of Merger with Syntex Corporation (``Syntex'') to 
acquire all the voting stock of Syntex (hereinafter ``Acquisition''); 
and
    Whereas, Syntex with its principal office and place of business 
located at 3401 Hillview Avenue, Palo Alto, California 94304, 
manufacturers and markets through its indirect wholly-owned subsidiary, 
the Syva Company, among other things, drugs of abuse reagent products; 
and
    Whereas, Hoffmann-La Roche Inc., an indirect wholly-owned 
subsidiary of Roche, with its principal office and place of business 
located at 340 Kingsland Street, Nutley, New Jersey 07110, through its 
subsidiary Roche Diagnostic Systems, Inc., manufacturers and markets, 
among other things, drugs of abuse reagent products; and
    Whereas, the Commission is now investigating the Acquisition to 
determine whether it would violate any of the statutes enforced by the 
Commission; and
    Whereas, if the Commission accepts the Agreement Containing Consent 
Order (``Consent Order''), the Commission must place it on the public 
record for a period of at least sixty (60) days and may subsequently 
withdraw such acceptance pursuant to the provisions of Sec. 2.34 of the 
Commission's Rules; and
    Whereas, the Commission is concerned that if an understanding is 
not reached, preserving the status quo ante of the Syva Business as 
defined in paragraph I. of the Consent Order during the period prior to 
the final acceptance of the Consent Order by the Commission (after the 
60-day public comment period), divestiture resulting from any 
proceeding challenging the legality of the Acquisition might not be 
possible, or might be less than an effective remedy; and
    Whereas, the Commission is concerned that if the Acquisition is 
consummated, it will be necessary to preserve the Commission's ability 
to require the divestiture of the Syva Business and the Commission's 
right to have the Syva Business continue as a viable competitor; and
    Whereas, the purpose of the Hold Separate and the Consent Order is:
    1. to preserve the Syva Business as a viable, independent business 
pending its divestiture as a viable and ongoing enterprise,
    2. to remedy any anticompetitive effects of the Acquisition, and
    3. to preserve the Syva Business as an ongoing and competitive 
entity engaged in the same business in which it is presently employed 
until divestiture is achieved; and
    Whereas, Roche and Syntex's entering into this Hold Separate shall 
in no way be construed as an admission by Roche and Syntex that the 
Acquisition is illegal; and
    Whereas, Roche and Syntex understand that no act or transaction 
contemplated by this Hold Separate shall be deemed immune or exempt 
from the provisions of the antitrust laws or the Federal Trade 
Commission Act by reason of anything contained in this Hold Separate.
    Now, therefore, the parties agree, upon the understanding that the 
Commission has not yet determined whether the acquisition will be 
challenged, and in consideration of the Commission's agreement that, at 
the time it accepts the Consent Order for public comment it will grant 
early termination of the Hart-Scott-Rodino waiting period, and unless 
the Commission determines to reject the Consent Order, it will not seek 
further relief from Roche with respect to the Acquisition, except that 
the Commission may exercise any and all rights to enforce this Hold 
Separate, the Agreement Containing Consent Order to which it is annexed 
and made a part thereof and the Order, once it becomes final, and in 
the event that the required divestiture is not accomplished, to appoint 
a trustee to seek divestiture of the Syva Business pursuant to the 
Consent Order, as follows:
    1. Roche and Syntex agree to execute and be bound by the Consent 
Order.
    2. Roche and Syntex agree that from the date this Hold Separate is 
accepted until the earliest of the time listed in subparagraphs 2.a.-
2.b., they will comply with the provisions of Paragraph 3. of this Hold 
Separate:
    a. three business days after the Commission withdraws its 
acceptance of the Consent Order pursuant to the provisions of Sec. 2.34 
of the Commission's rules;
    b. the time that the divestiture obligations required by the 
Consent Order are completed.
    3. To ensure the complete independence and viability of the Syva 
Business and to assure that no competitive information is exchanged 
between the Syva Business and Roche, Roche shall hold the Syva Business 
as it is presently constituted separate and apart on the following 
terms and conditions:
    a. the Syva Business shall be held separate and apart and shall be 
operated independently of Syntex (meaning here and hereinafter, Syntex 
excluding the Syva Business and excluding all personnel connected with 
the Syva Business as of the date this Agreement was signed) and Roche 
(meaning here and hereinafter, Roche excluding Syntex and excluding all 
personnel connected with Syntex as of the date this Agreement was 
signed) except to the extent that Syntex or Roche must exercise 
direction and control over the Syva Business to assure compliance with 
this Agreement or the Consent Order.
    b. Syntex personnel connected with Syva or providing support 
services to Syva as of the date of this Agreement was signed may 
continue, as employees of Syntex, to provide such services as they are 
currently providing to Syva. Such Syntex personnel must retain and 
maintain all material confidential information relating to the Syva 
Business on a confidential basis and, except as is permitted by this 
Hold Separate, such persons shall be prohibited from providing, 
discussing, exchanging, circulating, or otherwise furnishing any such 
information to or with any other person whose employment involves any 
other Roche business, including the drugs of abuse reagent products 
business, therapeutic drug monitoring business and the Roche clinical 
laboratories business.
    c. Roche and Syntex shall elect a five-person board of directors 
for the Syva Company (``New Board''). The New Board shall consist of 
the Syva Company President and General Manager, Richard Bastiani, the 
Syva Company Senior Vice-President of Marketing and Sales, David 
Oxlade, and the Syva Company Vice-President of Finance, Wilbert Lee, as 
of the date of this Hold Separate (provided they agree, or comparable, 
knowledgeable persons among the managers of Syva Company independent of 
Roche); the Chief Financial Officer of Roche whose responsibilities 
with Roche do not involve direct management of Roche's drugs of abuse, 
therapeutic drug monitoring or clinical laboratories businesses, Henri 
B. Meier (provided he agrees, or a comparable, knowledgeable person 
among the financial managers of Roche); and the Chairman of Syntex, 
Paul Freiman (provided he agrees, or a comparable, knowledgeable person 
among the managers of Syntex). The Chairman of the New Board shall be 
Richard Bastiani (provided he agrees, or a comparable, knowledgeable 
person among the managers of Syva), who shall remain independent of 
Roche and competent to assure the continued viability and 
competitiveness of the Syva Company. Except for the Roche employee 
serving on the New Board, Roche shall not permit any director, officer, 
employee, or agent of Roche also to be a director, officer, employee of 
the Syva Company. Each New Board member shall enter into a 
confidentiality agreement agreeing to be bound by the terms and 
conditions set forth in Attachment A, appended to this Hold Separate.
    d. Roche shall not exercise direction or control over, or influence 
directly or indirectly, the Syva Business, the New Board, or any of its 
operations or businesses; provided, however, that Roche may exercise 
only such direction and control over the Syva Business as is necessary 
to assure compliance with this Hold Separate, the order and with all 
applicable laws.
    e. Roche and Syntex shall maintain the marketability, viability, 
and competitiveness of the Syva Business, and shall not cause or permit 
the destruction, removal, wasting, deterioration, or impairment of any 
assets or business they may have to divest except in the ordinary 
course of business and except for ordinary wear and tear, and they 
shall not sell, transfer, encumber (other than in the normal course of 
business), or otherwise impair the marketability, viability or 
competitiveness of the Syva Business.
    f. Except as required by law, and except to the extent that 
necessary information is exchanged in the course of evaluating and 
consummating the Acquisition, defending investigations or litigation, 
obtaining legal advice, complying with this Hold Separate or the 
Consent Order or negotiating agreements to divest assets, Roche and 
Syntex shall not receive or have access to, or the use of, any material 
confidential information of the Syva Business or the activities of the 
New Board not in the public domain, nor shall the Syva Company, or the 
New Board, receive or have access to, or the use of, any material 
confidential information about the Roche drugs of abuse reagent 
business or the activities of Roche in managing the drugs of abuse 
reagent business not in the public domain. Roche and Syntex may receive 
on a regular basis from the Syva Company aggregate financial 
information necessary and essential to allow Roche and Syntex to file 
financial reports, tax returns, and personnel reports. Any such 
information that is obtained pursuant to this subparagraph shall be 
used only for the purpose set forth in this subparagraph. (``Material 
confidential information,'' as used herein, means competitively 
sensitive or proprietary information not independently known to Roche 
from sources other than the Syva Company or the New Board and includes 
but is not limited to customer lists, price lists, marketing methods, 
patents, technologies, processes, or other trade secrets.)
    g. Except as is permitted by this Hold Separate, the director of 
the Syva Company appointed by Roche who is also a director, officer, 
agent, or employee of Roche (``Roche New Board member''), shall not 
receive any Syva Business material confidential information and shall 
not disclose any such information obtained through his or her 
involvement with the Syva Business to Roche or use it to obtain any 
advantage for Roche. The Roche New Board member shall participate in 
matters that come before the New Board only for the limited purposes of 
considering any capital investment of over $150,000, approving any 
proposed budget and operating plans, authorizing dividends and 
repayment of loans consistent with the provisions hereof, reviewing 
material transactions described in subparagraph 3.i, and carrying out 
Roche's responsibilities under the Hold Separate and the Order. Except 
as permitted by the Hold Separate, the Roche New Board member shall not 
participate in any matter, or attempt to influence the votes of other 
directors on the New Board with respect to matters that would involve a 
conflict of interest between Roche and the Syva Business. Meetings of 
the New Board during the term of the Hold Separate shall be audio 
recorded and the recording retained for two (2) years after the 
termination of the Hold Separate.
    h. The Syva Company shall be staffed with sufficient employees to 
maintain the viability and competitiveness of the Syva Business, which 
employees shall be the Syva Company employees and may also be hired 
from sources other than the Syva Company. Each director, officer, and 
management employee of the Syva Company shall execute a confidentiality 
agreement prohibiting the disclosure of any Syva Business confidential 
information.
    i. All material transactions, out of the ordinary course of 
business and not precluded by Paragraph 3 hereof, shall be subject to a 
majority vote of the New Board.
    j. Roche shall not change the composition of the New Board unless 
the Chairman of the New Board consents. The Chairman of the New Board 
shall have the power to remove members of the New Board for cause and 
to require Roche to appoint replacement members to the New Board in the 
same manner as provided in Paragraph 3.c. of this Hold Separate. Roche 
shall not change the composition of the management of the Syva Company 
except that the New Board shall have the power to remove management 
employees for cause.
    k. If the Chairman ceases to act or fails to act diligently, a 
substitute chairman shall be appointed in the same manner as provided 
in Paragraph 3.c.
    l. Roche shall circulate to its management employees of Roche drugs 
of abuse, therapeutic drug monitoring and Roche clinical laboratories 
businesses and appropriately display a notice of this Hold Separate and 
Consent Order in the form attached hereto as Attachment A.
    m. Roche and Syntex shall cause the Syva Business to continue to 
expend funds for the advertising and trade promotion of the Syva 
Business at levels not lower than those budgeted for 1994 and 1995, and 
shall increase such spending as deemed reasonably necessary by the New 
Board in light of competitive conditions. If necessary, Roche and 
Syntex shall provide the Syva Business with any funds to accomplish the 
foregoing. Syntex shall continue to provide to the Syva Business such 
support services as it provided prior to the Acquisition to the Syva 
Company.
    n. All earnings and profits of the Syva Business shall be retained 
separately by the Syva Business. If necessary, Roche shall provide the 
Syva Business with sufficient working capital to operate at the rate of 
operation in effect during the twelve (12) months preceding the date of 
the Hold Separate.
    o. The New Board shall serve at the cost and expense of Roche. 
Roche shall indemnify the New Board against any losses or claims of any 
kind that might arise out of its involvement under this Hold Separate, 
except to the extent that such losses or claims result from 
misfeasance, gross negligence, willful or wanton acts, or bad faith by 
the New Board directors.
    p. The New Board shall have access to and be informed about all 
companies who inquire about, seek or propose to buy the Syva Business.
    q. The New Board shall report in writing to the Commission every 
thirty (30) days concerning the New Board's efforts to accomplish the 
purposes of this Hold Separate.
    4. Should the Federal Trade Commission seek in any proceeding to 
compel Roche to divest itself of the Syva Business or any additional 
assets, as provided in the proposed order, or to seek any other 
equitable relief, Roche shall not raise any objection based on the 
expiration of the applicable Hart-Scott-Rodino Antitrust Improvements 
Act waiting period or the fact that the Commission has permitted the 
Acquisition. Roche shall also waive all rights to contest the validity 
of this Hold Separate.
    5. For the purpose of determining or securing compliance with this 
Hold Separate, subject to any legally recognized privilege, and upon 
written request with reasonable notice to Roche made to its General 
Counsel, Roche and Syntex shall permit any duly authorized 
representative or representatives of the Commission:
    a. Access during the office hours of Roche or Syntex and in the 
presence of counsel to inspect and copy all books, ledgers, accounts, 
correspondence, memoranda, and other records and documents in the 
possession or under the control of Roche or Syntex relating to 
compliance with this Hold Separate;
    b. Upon five (5) days notice to Roche or Syntex, and without 
restraint or interference from it, to interview officers or employees 
of Roche or Syntex, who may have counsel present, regarding any such 
matters.
    6. [Deleted].
    7. This Hold Separate shall not be binding until approved by the 
Commission.

Attachment A--Notice of Divestiture and Requirement for Confidentiality

    Roche Holding Ltd (``Roche'') and Syntex Corporation (``Syntex'') 
have entered into a Consent Agreement and Agreement to Hold Separate 
with the Federal Trade Commission (``Commission'') relating to the 
divestiture of the Syva Business. Until after the Commission's Order 
becomes final and the Syva Business is divested, the Syva Business must 
be managed and maintained as a separate, ongoing business, independent 
of all other Roche businesses and independent of the Roche drugs of 
abuse business. All competitive information relating to the Syva 
Business, including without limitation the drugs of abuse business, 
must be retained and maintained by the persons involved in the Syva 
Business on a confidential basis and such persons shall be prohibited 
from providing, discussing, exchanging, circulating, or otherwise 
furnishing any such information to or with any other person whose 
employment involves any other Roche business, including the drugs of 
abuse business, therapeutic drug monitoring business and the Roche 
Biomedical Laboratories business. Similarly, all such persons involve 
in the Roche therapeutic drug monitoring business, drugs of abuse 
business and the Roche Biomedical Laboratories shall be prohibited from 
providing, discussing, exchanging, circulating or otherwise furnishing 
competitive information about such business to or with any person whose 
employment involves the Syva Business.
    Any violation of the Consent Agreement or the Agreement to Hold 
Separate, incorporated by reference as part of the Consent Order, may 
subject Roche and Syntex to civil penalties and other relief as 
provided by law.

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission (``Commission'') has accepted 
provisionally an agreement containing a proposed consent order from 
Roche Holding Ltd (``Roche''), under which Roche would be required to 
divest the assets relating to Syntex Corporation's drugs of abuse 
reagent business (``Syva 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.
    In a proposed tender offer, Roche plans to acquire 100% of the 
voting securities of Syntex Corporation and merge Syntex into Roche.
    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. section 18, and Section 5 of the FTC Act, as 
amended, 15 U.S.C. section 45, in the market for drugs of abuse reagent 
products. The proposed Consent Order would remedy the alleged violation 
by replacing the lost competition that would result from the 
acquisition.
    The proposed Consent Order provides that Roche shall divest the 
Syva Business within twelve (12) months from when the Order becomes 
final. If Roche is unable to divest the Syva Business during the 
allotted time period, then a trustee may be appointed to divest the 
Syva Business within a twelve (12) month period. If, at the end of the 
twelve month period, the trustee has submitted a plan of divestiture or 
believes that divestiture can be achieved within a reasonable time, the 
time period for divestiture can be extended by the Commission, or, in 
the case of a court-appointed trustee, by the court. The Commission, 
however, may extend this period only two (2) times.
    A Hold Separate Agreement signed by Roche provides that during any 
period in which Roche possesses an ownership interest in the Syva 
Business, these assets will be operated independently of Roche. Under 
the provisions of the Order, Roche is also required to provide to the 
Commission a report of compliance with the divestiture provisions of 
the Order within sixty (60) days following the date this Order becomes 
final, and every sixty (60) days thereafter until Roche has completely 
divested its interest in the Syva Business.
    The Order also prohibits Roche from acquiring any interest in any 
other company that sells drugs of abuse reagent products without prior 
approval from the Commission for a ten-year period.
    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.
[FR Doc. 94-22434 Filed 9-9-94; 8:45 am]
BILLING CODE 6750-01-M