[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