[Federal Register Volume 60, Number 186 (Tuesday, September 26, 1995)]
[Notices]
[Pages 49609-49616]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-23797]



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FEDERAL TRADE COMMISSION
[File No. 951 0090]


Hoechst AG; Proposed Consent Agreement With Analysis To Aid 
Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: This consent agreement, accepted subject to final Commission 
approval, settles alleged violations of federal law prohibiting unfair 
or deceptive acts and practices and unfair methods of competition 
arising from the $7.1 billion merger of Hoechst AG and Marion Merrell 
Dow, Inc. The consent agreement, among other things, would require 
Hoechst--a pharmaceutical firm--to provide Biovail Corporation 
International with a letter of access to the toxicology data necessary 
to secure additional FDA approvals for a hypertension and cardiac drug 
called Tiazac (diltiazem). It would also require Hoechst to return any 
confidential information obtained from Biovail; to refrain from using 
the information; to dismiss a patent infringement lawsuit filed by 
Marion Merrell Dow regarding Tiazac; to withdraw a citizen petition 
Marion Merrell Dow filed with the Food and Drug Administration relating 
to Tiazac; and to agree not to file any subsequent litigation against 
Biovail regarding diltiazem. In addition, the consent agreement would 
require Hoechst to divest the rights to either Trental or Beraprost 
(two drugs intended to treat intermittent claudication, a painful leg 
cramping condition); to divest the rights to Pentasa (or the generic 
formulation), which is one of two oral forms of mesalamine used to 
treat ulcerative colitis and Crohn's Disease; and to divest the rights 
to Rifadin (or the generic formulation), which is used to treat 
tuberculosis. The required divestitures would have to be made to 
Commission approved entities. If they are not completed within nine 
months of the date on which the Commission accords final approval to 
the consent agreement, the consent agreement would permit the 
Commission to appoint a trustee to complete them.

DATES: Comments must be received on or before November 27, 1995.

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: William Baer, FTC/H-374, Washington, 
DC 20580 (202) 326-2932; or Ann Malester, FTC/S-2308, 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 Hoechst AG, a corporation.

Agreement Containing Consent Order

    The Federal Trade Commission (``Commission''), having initiated an 
investigation of the merger of Hoechst AG (``Hoechst''), through its 
United States subsidiary, Hoechst Corporation, and Marion Merrell Dow 
Inc. (``MMD''), and it now appearing that Hoechst, hereinafter 
sometimes referred to as ``Proposed Respondent,'' is willing to enter 
into an Agreement Containing Consent Order to (i) divest certain 
assets, (ii) cease and desist from certain acts, and (iii) provide for 
certain other relief:
    It is hereby agreed by and between Proposed Respondent, by its duly 
authorized officers and its attorneys, and counsel for the Commission 
that:
    1. Proposed Respondent Hoechst is a corporation organized, 
existing, and doing business under and by virtue of the laws of 
Germany, with its principal place of business located at 65926 
Frankfurt am Main, Germany.
    2. Proposed Respondent admits all the jurisdictional facts set 
forth in the draft of complaint.
    3. Proposed Respondent waives:
    (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 claim under the Equal Access to Justice Act. 

[[Page 49610]]

    4. 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 Proposed Respondent, 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.
    5. This Agreement is for settlement purposes only and does not 
constitute an admission by Proposed Respondent that the law has been 
violated as alleged in the draft of complaint, or that the facts as 
alleged in the draft complaint, other than jurisdictional facts, are 
true.
    6. 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 Sec. 2.34 of the Commission's 
rules, the Commission may, without further notice to Proposed 
Respondent, (1) issue its complaint corresponding in form and substance 
with the draft of complaint 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 United States Postal Service of the 
complaint and decision containing the agreed-to Order to Proposed 
Respondent's counsel, William C. Pelster, of Skadden, Arps, Slate, 
Meagher & Flom, 919 Third Avenue, New York, New York 10022-3897, shall 
constitute service. Proposed Respondent waives any right it 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.
    7. Proposed Respondent has read the proposed Complaint and Order 
contemplated hereby. Proposed Respondent understands that once the 
Order has been issued, it will be required to file one or more 
compliance reports showing it has fully complied with the Order. 
Proposed Respondent further understands that it may be liable for civil 
penalties in the amount provided by law for each violation of the Order 
after it becomes final. By signing this Agreement, Proposed Respondent 
represents that the relief contemplated by this Agreement can be 
accomplished.

Order

I

    It is ordered That, as used in this Order, the following 
definitions shall apply:
    A. ``Respondent'' or ``Hoechst'' means Hoechst AG, its directors, 
officers, employees, agents and representatives, successors and 
assigns; its subsidiaries, divisions, groups and affiliates controlled 
by Hoechst AG; subsidiaries, divisions, groups and affiliates in which 
Hoechst AG owns more than 25 percent of the voting securities; and the 
respective directors, officers, employees, agents and representatives, 
and the respective successors and assigns of each.
    B. ``MMD'' means Marion Merrell Dow Inc., its directors, officers, 
employees, agents and representatives, successors and assigns; its 
subsidiaries, divisions, groups and affiliates controlled by Marion 
Merrell Dow Inc.; and the respective directors, officers, employees, 
agents and representatives, and the respective successors and assigns 
of each.
    C. ``Merger'' means the merger of Hoechst and MMD through the 
acquisition by Hoechst of the voting securities of MMD pursuant to a 
Stock Purchase Agreement and an Agreement and Plan of Merger both dated 
as of May 3, 1995.
    D. ``Commission'' means the United States Federal Trade Commission.
    E. ``FDA'' means the United States Food and Drug Administration.
    F. ``NDA'' means new drug application.
    G. ``ANDA'' means abbreviated new drug application.
    H. ``Diltiazem'' means any formulation of the compound diltiazem 
hydrochloride used in the treatment of hypertension or angina.
    I. ``Biovail'' means Biovail Corporation International, organized 
and existing under the laws of Canada and with its offices and 
principal place of business at 460 Comstock Road, Scarborough, Ontario, 
Canada, including its successors, licensees and assigns.
    J. ``Biovail Diltiazem Products'' means the sustained release and/
or extended release diltiazem products that Hoechst was developing with 
Biovail pursuant to the Rights Agreement that Hoechst and Biovail 
entered into on June 30, 1993.
    K. ``Documents'' means all computer files and written, recorded, 
and graphic materials of every kind. The term ``documents'' includes 
electronic correspondence and drafts of documents, originals and all 
copies of documents, and copies of documents the originals of which are 
not in the possession, custody or control of the company.
    L. ``Non-Public Information'' means any information or documents 
not in the public domain furnished by Biovail to Hoechst in connection 
with the Biovail Diltiazem Products. Non-Public Information shall not 
include information that subsequently becomes public or falls within 
the public domain through no violation of this Order by Respondent or 
nor shall it include information that subsequently becomes known to 
Respondent from a third-party not in breach of a confidential 
disclosure agreement.
    M. ``Beraprost'' means the prostaglandin analog(s) licensed by 
Toray Industries, Inc. to MMD used for the treatment of peripheral 
arterial disease, including, but not limited to, intermittent 
claudication.
    N. ``Beraprost Assets'' means all of MMD's U.S. assets and rights 
relating to the research and development, manufacture and sale of 
Beraprost, that are not part of MMD's physical facilities. ``Beraprost 
Assets'' include, but are not limited to, all rights to brand or trade 
name, formulations, patents, trade secrets, technology, know-how, 
specifications, designs, drawings, processes, production information, 
manufacturing information, testing and quality control data, research 
materials, technical information, distribution information, customer 
lists, information stored on management information systems (and 
specifications sufficient for the Acquirer to use such information), 
software specific to MMD's Beraprost, inventory sufficient for the 
Acquirer to complete all safety and efficacy studies, clinical trials 
or bioequivalency studies necessary to obtain FDA approvals, and all 
data, contractual rights, materials and information relating to 
obtaining FDA approvals and other government or regulatory approvals 
for the United States.
    O. ``Trental'' means the compound pentoxifylline marketed 
by Hoechst for use in the treatment of vascular disease, including, but 
not limited to, intermittent claudication. 

[[Page 49611]]

    P ``Trental Assets'' means all of Hoechst's U.S. assets 
and rights relating to the research and development, manufacture and 
sale of Trental, including the unique physical assets used by 
Hoechst to manufacture Trental and all of its brand names and 
trade names. ``Trental Assets'' include, but are not limited 
to, all rights to brand or trade name, formulations, patents, trade 
secrets, technology, know-how, specifications, designs, drawings, 
processes, production information, manufacturing information, testing 
and quality control data, research materials, technical information, 
distribution information, customer lists, information stored on 
management information systems (and specifications sufficient for the 
Acquirer to use such information), software specific to Hoechst's 
Trental, and all data, contractual rights, materials and 
information relating to obtaining FDA approvals and other government or 
regulatory approvals for the United States.
    Q. ``Mesalamine'' means the compound mesalamine used for the 
treatment of ulcerative colitis and Crohn's disease.
    R. ``Mesalamine Assets'' means either (1) all of Hoechst's U.S. 
assets and rights relating to the research and development, manufacture 
and sale of mesalamine by Hoechst that are not part of Hoechst's 
physical facilities and that were not acquired through the Merger; or 
(2) all of MMD's U.S. assets and rights relating to the research and 
development, manufacture and sale of mesalamine by MMD, including the 
unique physical assets used by MMD to manufacture mesalamine and all of 
its brand names and trade names. ``Mesalamine Assets'' include, but are 
not limited to, all rights to brand or trade names, all formulations, 
patents, trade secrets, technology, know-how, specifications, designs, 
drawings, processes, production information, manufacturing information, 
testing and quality control data, research materials, technical 
information, distribution information, information stored on management 
information systems (and specifications sufficient for the Acquirer to 
use such information), inventory sufficient for the Acquirer to 
complete all ongoing safety and efficacy studies, clinical trials or 
bioequivalency studies necessary to obtain FDA approvals and all data, 
contractual rights, materials and information relating to obtaining FDA 
approvals and other government or regulatory approvals for the United 
States.
    S. ``Rifampin'' means the compound rifampin used for the treatment 
of tuberculosis.
    T. ``Rifampin Assets'' means either (1) all of Hoechst's U.S. 
assets and rights relating to the research and development, manufacture 
and sale of rifampin by Hoechst that are not part of Hoechst's physical 
facilities and that were not acquired through the Merger; or (2) MMD's 
U.S. assets and rights relating to the research and development, 
manufacture and sale of rifampin by MMD, including the unique physical 
assets used by MMD to manufacture rifampin and all of its brand names 
and trade names. ``Rifampin Assets'' include, but are not limited to, 
all rights to brand or trade names, all formulations, patents, trade 
secrets, technology, know-how, specifications, designs, drawings, 
processes, production information, manufacturing information, testing 
and quality control data, research materials, technical information, 
distribution information, information stored on management information 
systems (and specifications sufficient for the Acquirer to use such 
information), inventory sufficient for the Acquirer to complete all 
ongoing safety and efficacy studies, clinical trials or bioequivalency 
studies necessary to obtain FDA approvals and all data, contractual 
rights, materials and information relating to obtaining FDA approvals 
and other government or regulatory approvals for the United States.
    U. ``Acquirer'' means the entity or entities to whom Hoechst shall 
divest the assets required to be divested pursuant to this Order.
    V. ``Contract Manufacture'' means the manufacture of 
Trental, mesalamine or rifampin, as applicable, by Hoechst 
for sale to an Acquirer in a form acceptable for commercial sale in the 
United States, in each form of packaging used by Respondent or MMD in 
the distribution and sale of such product, with information including, 
but not limited to, the name and identification codes of the Acquirer 
inscribed on the packaging, and packaged in units specified by the 
Acquirer, as permitted by the FDA.
    W. ``Cost'' means Respondent's or MMD's actual per unit cost of 
manufacturing the assets to be divested pursuant to this Order.
    X. ``Formulation'' means any and all information, including patent, 
trade secret information, technical assistance and advice, relating to 
the manufacture of the assets to be divested pursuant to this Order 
that meet FDA approved specifications therefor.

II

    It is further ordered That:
    A. Within seven (7) days of the date this Order becomes final:
    1. Respondent shall grant to Biovail the right of reference to the 
pharmacology, toxicology and animal reproductive toxicology data 
contained in MMD's NDA No. 18-602 for Diltiazem on file with the FDA. 
Respondent shall make the necessary filings with the FDA authorizing 
the FDA to refer to the appropriate section(s) of MMD's NDA No. 18-602 
for such data (including, but not limited to, pharmacology and 
toxicology data) in support of Biovail's NDA No. 20-401 for the Biovail 
Diltiazem Products, including any supplemental NDAs or related NDAs. 
Provided however, the right of reference granted to Biovail pursuant to 
this Paragraph does not constitute a general release of the data 
contained in MMD's NDA No. 18-602, except as it might appear in 
labelling.
    2. Respondent shall withdraw the Citizen Petition(s) that MMD filed 
with the FDA relating to NDAs under section 505(b)(2) of the Food, Drug 
and Cosmetics Act, 21 U.S.C. 355(b)(2), including the NDA for the 
Biovail Diltiazem Products. Respondent shall not file any further 
Citizen Petition with the FDA relating to the NDA under section 
505(b)(2) of the Food, Drug and Cosmetics Act, 21 U.S.C. 355(b)(2), 
that could have the effect of delaying the approval of the NDA for the 
Biovail Diltiazem Products.
    3. Respondent shall file a stipulation of dismissal with prejudice 
to MMD of all litigation currently pending in the United States between 
or among MMD, Hoechst, and Biovail, including, but not limited to, 
Marion Merrell Dow Inc., Carderm Capital L.P. and Elan plc v. Hoechst-
Roussel Pharmaceuticals, Inc., No. 93-5074 (D.N.J), and shall not 
institute or cause any other person to institute any patent 
infringement action against Biovail relating to the Biovail Diltiazem 
Products.
    4. Respondent shall return to Biovail all documents relating to the 
research, development, FDA approval, patenting, manufacture, marketing, 
or sale of the Biovail Diltiazem Products.
    B. Respondent shall not use any Non-Public Information relating to 
the Biovail Diltiazem Products and shall not provide, disclose or 
otherwise make available to MMD any Non-Public Information relating to 
the Biovail Diltiazem Products.
    C. The purpose of this Paragraph II is to remedy the lessening of 
competition resulting from the Merger as alleged in the Commission's 
Complaint. 

[[Page 49612]]


III

    It is further ordered That:
    A. Respondent shall divest, absolutely and in good faith, within 
nine (9) months of the date this Order becomes final, either the 
Beraprost Assets or Trental Assets.
    B. Respondent shall divest the Beraprost Assets or 
Trental Assets only to an Acquirer that receives the prior 
approval of the Commission and only in a manner that receives the prior 
approval of the Commission. The purpose of the divestiture of the 
Beraprost Assets or Trental Assets is to ensure continued 
competition between Trental and Beraprost, in the same manner 
in which Trental and Beraprost would compete absent the 
Merger, and to remedy the lessening of competition resulting from the 
Merger as alleged in the Commission's Complaint.
    C. The time period for divestiture pursuant to this Paragraph III 
of this Order shall be tolled if and when Respondent:
    1. Provides to the Commission objective evidence, including, but 
not limited to, results of clinical trials, indicating that, based on a 
compound's medical profile, and through no fault of Respondent, the 
Beraprost Assets are not viable or marketable; and
    2. Petitions the Commission to modify this Order, pursuant to 
section 5(b) of the FTC Act and Sec. 2.51 of the Commission's rules of 
practice, based on the circumstances described in Paragraph III.C.1 of 
this Order.
    This tolling of the time period for divestiture shall end when the 
Commission rules on Respondent's petition to modify this Order.

IV

    It is further ordered That:
    A. Respondent shall divest, absolutely and in good faith, within 
nine (9) months of the date this Order becomes final, the Mesalamine 
Assets.
    B. Respondent shall divest the Mesalamine Assets only to an 
Acquirer that receives the prior approval of the Commission and only in 
a manner that receives the prior approval of the Commission. The 
purpose of the divestiture of the Mesalamine Assets is to ensure 
continued competition between Hoechst's mesalamine and MMD's 
mesalamine, in the same manner in which these compounds would compete 
absent the Merger, and to remedy the lessening of competition resulting 
from the Merger as alleged in the Commission's Complaint.

V

    It is further ordered That:
    A. Respondent shall divest, absolutely and in good faith, within 
nine (9) months of the date this Order becomes final, the Rifampin 
Assets.
    B. Respondent shall divest the Rifampin Assets only to an Acquirer 
that receives the prior approval of the Commission and only in a manner 
that receives the prior approval of the Commission. The purpose of the 
divestiture of the Rifampin Assets is to ensure continued competition 
between Hoechst's rifampin and MMD's rifampin, in the same manner in 
which these compounds would compete absent the Merger, and to remedy 
the lessening of competition resulting from the Merger as alleged in 
the Commission's Complaint.

VI

    It is further ordered That:
    A. Upon reasonable notice and request from the Acquirer(s) to 
Hoechst, Hoechst shall provide information, technical assistance and 
advice to the Acquirer(s) with respect to any assets divested pursuant 
to this Order such that the Acquirer(s) will be capable of continuing 
all applicable research, development and manufacturing. Such assistance 
shall include reasonable consultation with knowledgeable employees of 
Hoechst and training at the Acquirer's facility for a period of time 
sufficient to satisfy the Acquirer's management that its personnel are 
adequately knowledgeable about the assets divested pursuant to this 
Order. However, Respondent shall not be required to continue providing 
such assistance for more than twelve (12) months after divestiture of 
such assets. Respondent may require reimbursement from the Acquirer(s) 
for all of its own direct costs incurred in providing the services 
required by this Subparagraph. Direct costs, as used in this 
Subparagraph, means all actual costs incurred exclusive of overhead 
costs. If an Acquirer hires any of Respondent's officers, directors, 
agents, or employees whose work relates to a divested asset being 
acquired by the Acquirer, Respondent shall waive any confidentiality or 
non-competition employment rights relating to assets divested pursuant 
to this Order that Respondent has against such employee.
    B. Pending divestiture of the assets to be divested pursuant to 
this Order, Respondent shall:
    1. Take such actions as are necessary to prevent the destruction, 
removal, wasting, deterioration or impairment of the assets to be 
divested pursuant to this Order, except for ordinary wear and tear; and
    2. Maintain research and development of the assets required to be 
divested by this Order, at the levels planned by either Hoechst or MMD 
for such assets as of June 1, 1995.
    C. Hoechst shall maintain the physical assets, if any exist, 
necessary to manufacture Trental, Beraprost, mesalamine and 
rifampin, until Respondent's obligations pursuant to Paragraphs III, 
IV, V, VI and VII of this Order have been fulfilled. The maintenance of 
physical assets described in this subparagraph shall not exceed two (2) 
years following divestitures pursuant to Paragraphs III, IV and V of 
this Order.
    D. Respondent shall obtain from each Acquirer a certification of 
the Acquirer's good faith intention to obtain in an expeditious manner 
all necessary FDA approvals to manufacture and sell in the United 
States the assets to be divested pursuant to this Order and a 
commitment by the Acquirer to use reasonable diligence to continue to 
research and develop the assets to be divested pursuant to this Order 
for sale in the United States.

VII

    It is further ordered That:
    A. If Respondent fulfills its obligations pursuant to this Order by 
divesting assets relating to a product for which the FDA has issued 
either approval of a NDA or an ANDA (hereinafter Divested Product), 
Respondent shall execute an Agreement (hereinafter Divestiture 
Agreement) with the Acquirer of such Divested Product.
    B. Each Divestiture Agreement shall include the following and 
Respondent shall commit to satisfy the following:
    1. Respondent shall Contract Manufacture and deliver to the 
Acquirer in a timely manner the requirements of the Acquirer for the 
Divested Product at Respondent's or MMD's Cost for a period not to 
exceed five (5) years from the date the Divestiture Agreement is 
approved, or six (6) months after the date the Acquirer obtains all 
necessary FDA approvals to manufacture the Divested Product for sale in 
the United States, whichever is earlier.
    2. Respondent shall commence delivery of the Divested Product to 
the Acquirer within two (2) months from the date the Commission 
approves the Acquirer and the Divestiture Agreement.
    3. After Respondent commences delivery of the Divested Product to 
the Acquirer pursuant to Paragraph VII.B.2 of this Order, all inventory 
of the Divested Product produced by Respondent for the U.S. market at 
the facility that produced such Divested Product, regardless of the 
date of its 

[[Page 49613]]
production, may be sold by Respondent only to the Acquirer.
    4. Respondent shall make representations and warranties to the 
Acquirer that the Divested Product Contract Manufactured by Respondent 
for the Acquirer meets the FDA approved specifications therefor and is 
not adulterated or misbranded within the meaning of the Food, Drug and 
Cosmetic Act, 21 U.S.C. 321, et seq. Respondent shall agree to 
indemnify, defend and hold the Acquirer harmless from any and all 
suits, claims, actions, demands, liabilities, expenses or losses 
alleged to result from the failure of the Divested Product Contract 
Manufactured by Respondent to meet FDA specifications. This obligation 
shall be contingent upon the Acquirer giving Respondent prompt, 
adequate notice of such claim, cooperating fully in the defense of such 
claim, and permitting Respondent to assume the sole control of all 
phases of the defense and/or settlement of such claim, including the 
selection of counsel. This obligation shall not require Respondent to 
be liable for any negligent act or omission of the Acquirer or for any 
representations and warranties, express or implied, made by the 
Acquirer that exceed the representations and warranties made by 
Respondent to the Acquirer.
    5. During the term of Contract Manufacturing, upon reasonable 
request by the Acquirer, Respondent shall make available to the trustee 
appointed pursuant to Paragraph VIII.A. of this Order all records kept 
in the normal course of business that relate to the cost of 
manufacturing the Divested Product.

VIII

    It is further ordered That:
    A. Within forty-five (45) days of the date this Order becomes 
final, the Commission shall appoint a trustee to ensure that Respondent 
expeditiously performs its responsibilities required by this Order. 
Respondent shall consent to the following terms and conditions 
regarding the trustee's powers, duties, authorities, and 
responsibilities under this Paragraph:
    1. The Commission shall select the trustee, subject to the consent 
of Respondent, which consent shall not be unreasonably withheld. If 
Respondent 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 Respondent of the 
identity of any proposed trustee, Respondent shall be deemed to have 
consented to the selection of the proposed trustee.
    2. Within ten (10) days after the appointment of the trustee, 
Respondent shall execute a trust agreement that, subject to the prior 
approval of the Commission, confers on the trustee all the rights and 
powers necessary to permit the trustee to assure Respondent's 
compliance with the terms of this Order, including the rights and 
powers necessary to divest assets, if the trustee is so directed by the 
Commission. As part of the trustee agreement, the trustee shall execute 
confidentiality agreement(s) with Respondent.
    3. The trustee shall serve until either (a) the Acquirer(s) has 
filed a complete application with the FDA for approval to manufacture 
and sell a product(s) based on the Trental Assets or the 
Beraprost Assets, the Rifampin Assets and the Mesalamine Assets, as 
applicable; (b) the trustee determines that the Acquirer(s) has 
abandoned its efforts to obtain FDA approval to manufacture and sell a 
product(s) based upon the Trental Assets or the Beraprost 
Assets, the Rifampin Assets and the Mesalamine Assets, as applicable; 
or (c) the trustee determines that the Acquirer(s) has failed to 
exercise reasonable diligence in research and development toward 
obtaining FDA approval to manufacture and sell a product(s) based upon 
the Trental Assets or the Beraprost Assets, the Rifampin 
Assets and the Mesalamine Assets, as applicable, which lack of 
diligence will have been certified to and accepted by the Commission, 
whichever comes first. The trustee's service shall continue for no more 
than two (2) years following divestiture of the Trental 
Assets or the Beraprost Assets, the Rifampin Assets and the Mesalamine 
Assets, as applicable.
    4. The trustee shall have full and complete access to the 
personnel, books, records, facilities and technical information related 
to the Trental Assets or the Beraprost Assets, the Rifampin 
Assets and the Mesalamine Assets, or to any other relevant information, 
as the trustee may reasonably request, including, but not limited to, 
all records kept in the normal course of business that relate to the 
research and development of and the cost of manufacturing 
Trental or Beraprost, mesalamine and rifampin. Respondent 
shall develop such financial or other information as the trustee may 
request and shall cooperate with the trustee. Respondent shall take no 
action to interfere with or impede the trustee's accomplishment of his 
or her responsibilities pursuant to this Order.
    5. The trustee shall serve, without bond or other security, at the 
cost and expense of Respondent, on such reasonable and customary terms 
and conditions as the Commission may set. The trustee shall have 
authority to employ, at the cost and expense of Respondent, such 
consultants, accountants, attorneys and other representatives and 
assistants as are reasonably necessary to carry out the trustee's 
duties and responsibilities. The trustee shall account for all expenses 
incurred. The Commission shall approve the account of the trustee, 
including fees for his or her services.
    6. Respondent 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 preparations 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.
    7. 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 VIII.A. of this Order.
    8. The Commission 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 requirements of this Order.
    9. The trustee shall report in writing to Respondent and the 
Commission every one hundred and eighty (180) days concerning the 
trustee's obligations pursuant to this Paragraph VIII.
    B. Respondent shall comply with all reasonable directives of the 
trustee regarding Respondent's obligations to comply with this Order.
    C. The trustee may require Respondent to manufacture Beraprost for 
use by the Acquirer in conducting clinical trials or other actions as 
required by the FDA if:
    1. the Acquirer has depleted its inventory of Beraprost acquired 
pursuant to the divestiture;
    2. the Acquirer has a need to conduct further trials or studies 
prior to submission of an application to the FDA to manufacture and 
sell a product based on the Beraprost Assets; and
    3. despite good faith efforts to establish its own manufacturing 
capability for Beraprost, the Acquirer has not succeeded in doing so as 
of the time Beraprost is needed for such 

[[Page 49614]]
clinical trials or other actions as required by the FDA.
    The trustee shall determine reasonable compensation for Respondent, 
based upon the costs of manufacture for such production.

IX

    It is further ordered That:
    A. If Respondent has not divested, absolutely and in good faith and 
with the Commission's prior approval, (1) either the Trental 
Assets or the Beraprost Assets; (2) the Mesalamine Assets; and (3) the 
Rifampin Assets, within the time required by Paragraphs III.A., IV.A., 
and V.A. of this Order, the Commission may direct the trustee appointed 
pursuant to Paragraph VIII of this Order to accomplish any divestiture 
required pursuant to this Order. Neither the decision of the Commission 
to direct the trustee nor the decision of the Commission not to direct 
the trustee to divest the assets required to be divested 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 the 
Respondent to comply with this Order. Respondent shall consent to the 
following terms and conditions regarding the trustee's powers, duties, 
authorities, and responsibilities under this Paragraph:
    B. If the trustee is directed under Subparagraph A. of this 
Paragraph to divest any assets, Respondent shall consent to the 
following terms and conditions regarding the trustee's powers, duties, 
authority, and responsibilities:
    1. The Commission shall extend the authority and responsibilities 
of the trustee appointed under Paragraph VIII of this Order to include 
divesting any assets required to be divested by this Order that have 
not been divested.
    2. Subject to the prior approval of the Commission, the trustee 
shall have the exclusive power and authority to divest any assets 
required to be divested pursuant to this Order that have not been 
divested.
    3. Within ten (10) days after the extension of the trustee's 
authority and responsibilities, Respondent shall amend the existing 
trust agreement in a manner 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 divestitures required by this Order.
    4. The trustee shall have twelve (12) months from the date the 
Commission approves the extension of the trustee's authorities and 
responsibilities as described in Paragraph IX.B.3 to accomplish the 
divestiture(s), 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(s) or believes that 
divestiture(s) 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, facilities and technical information related 
to the assets to be divested by the trustee, or to any other relevant 
information, as the trustee may reasonably request, including, but not 
limited to, all records kept in the normal course of business that 
relate to the research and development of, and the cost of 
manufacturing, Trental, Beraprost, mesalamine and rifampin. 
Respondent shall develop such financial or other information as the 
trustee may request and shall cooperate with the trustee. Respondent 
shall take no action to interfere with or impede the trustee's 
accomplishment of the divestiture. Any delays in divestiture caused by 
Respondent 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 Respondent's absolute and 
unconditional obligation to divest at no minimum price; to assure that 
Respondent enters into Divestiture Agreement(s) that comply with the 
provisions of Paragraph VII; to assure that Respondent and the 
Acquirer(s) comply with the remaining provisions of this Order. The 
divestitures and the Divestiture Agreement(s) shall be made in the 
manner set forth in Paragraphs III, IV, V, VI and VII of this Order; 
provided, however, that if the trustee receives bona fide offers from 
more than one acquiring entity for any of the assets to be divested 
pursuant to this Order, and if the Commission determines to approve 
more than one such acquiring entity for any of the assets to be 
divested pursuant to this Order, the trustee shall divest to the 
acquiring entity selected by Respondent from among those approved by 
the Commission.
    7. The trustee shall serve, without bond or other security, at the 
cost and expense of Respondent, on such reasonable and customary terms 
and conditions as the Commission may set. The trustee shall have 
authority to employ, at the cost and expense of Respondent, such 
consultants, accountants, attorneys and other representatives and 
assistants as are reasonably necessary to carry out the trustee's 
duties and responsibilities. The trustee shall account for all monies 
derived from the sale 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 the Respondent. 
The trustee's compensation shall be based at least in significant part 
on a commission arrangement contingent on the trustee's divesting the 
assets to be divested.
    8. Respondent 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 preparations 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 VIII.A. 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 divestitures required by this Order.
    11. The trustee shall report in writing to Respondent and the 
Commission every sixty (60) days concerning the trustee's efforts to 
accomplish the divestiture(s) required by this Order.
    12. If a divestiture application filed pursuant to Paragraph III.A. 
is pending before the Commission, and Respondent petitions the 
Commission to modify this Order based on the conditions in Paragraph 
III.C., then the Commission shall not approve the divestiture 
application until it rules on the petition to modify. 

[[Page 49615]]


X

    It is further ordered That, for the purpose of determining or 
securing compliance with this Order, Respondent 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 Respondent, relating to any matters contained in this 
Order; and
    B. Upon five (5) days' notice to Respondent, and without restraint 
or interference from Respondent, to interview officers, directors, or 
employees of Respondent, who may have counsel present regarding such 
matters.

XI

    It is further ordered That, within sixty (60) days after the date 
this Order becomes final and every sixty days (60) days thereafter 
until Respondent has fully complied with the provisions of Paragraphs 
II, III, IV, V, VI and VII of this Order, Respondent 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 this Order. Respondent 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, IV, V, VI and VII of this Order, including a description of all 
substantive contacts or negotiations for accomplishing the divestiture 
and the identity of all parties contacted. Respondent 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 divestiture.

XII

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

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an agreement containing a proposed Consent Order 
(``Order'') from Hoechst AG (``Hoechst''), which remedies the 
anticompetitive effects of Hoechst's merger with Marion Merrell Dow 
Inc. (``MMD''). The proposed order requires Hoechst to divest assets 
and undertake certain actions to restore competition in four separate 
markets: (1) Once-a-day diltiazem, (2) drugs for the treatment of 
intermittent claudication, (3) oral dosage forms of mesalamine, and $4) 
rifampin.
    The proposed 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 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.
    On June 28, 1995, Hoechst merged with Marion Merrell Dow, which was 
formerly 71% owned by The Dow Chemical Company. Hoechst was permitted 
to complete the merger prior to the conclusion of the Commission's 
investigation under the terms of a Hold Separate Agreement, which 
provided that Marion Merrell Dow would be operated separately from 
Hoechst until the conclusion of the investigation. As a further 
condition to the Commission allowing Hoechst to consummate the merger, 
Hoechst agreed to accept the terms of the proposed Order if after the 
conclusion of its investigation, the Commission determined that the 
proposed Order was necessary.
    The proposed complaint alleges that the merger violates section 7 
of the Clayton Act, as amended, 15 U.S.C. 18, and section 5 of the FTC 
Act, as amended, 15 U.S.C. 45, in four markets in the United States: 
(1) The research, development, manufacture and sale of once-a-day 
diltiazem; (2) the research, development, manufacture and sale of drugs 
for the treatment of intermittent claudication; (3) the research, 
development, manufacture and sale of oral dosage forms of mesalamine; 
and (4) the research, development, manufacture and sale of rifampin.
    The proposed Order would remedy the alleged violations. First, in 
the market for once-a-day diltiazem the proposed Order facilitates 
effective competition in the once-a-day diltiazem market. MMD markets 
the leading once-a-day diltiazem product, Cardizem CD, which 
is used to treat hypertension and angina. In 1993, Hoechst and MMD 
began the negotiations that culminated in the merger of the two 
companies. At the same time, Hoechst and Biovail Corporation 
International (``Biovail'') were developing, Tiazac, a once-
a-day diltiazem product intended to compete directly with MMD's 
Cardizem CD. The Hoechst-MMD merger negotiations affected 
Hoechst's incentives to develop Tiazac as an independent 
competitor to Cardizem CD, delaying and impeding entry of 
Tiazac into the market. Just before the merger was announced, 
Hoechst returned its rights to Tiazac. However, this 
purported ``fix-it-first'' failed to remedy the anticompetitive effects 
resulting from the merger.
    Under the proposed Order, Hoechst is required, within seven days of 
the date the Order becomes final, to provide Biovail with a letter of 
access to the toxicology data necessary to secure additional Food and 
Drug Administration (``FDA'') approvals for Tiazac. In 
addition, the proposed Order requires Hoechst to return any 
confidential information obtained from Biovail in the course of their 
relationship, to refrain from using this information, to dismiss a 
patent infringement lawsuit filed by MMD relating to Tiazac, 
and to withdraw a Citizen Petition filed with the FDA by MMD relating 
to Tiazac. These provisions will remedy the loss of 
competition that resulted from the merger.
    Second, in the market for drugs for the treatment of intermittent 
claudication, Hoechst markets Trental, the only drug 
currently approved by the FDA for the treatment of this disease, which 
is painful leg cramping as a result of arteriosclerosis. MMD was 
developing Beraprost, one of only a few drugs in development for the 
treatment of intermittent claudication. Thus, the merger eliminates 
significant potential competition between Trental and 
Beraprost. The proposed Order would remedy the alleged violation by 
requiring Hoechst to divest either Trental or Beraprost. 
Hoechst must accomplish the divestiture to a Commission-approved 
acquirer within nine months.
    Third, in the market for oral dosage forms of mesalamine, MMD 
markets Pentasa, one of two oral forms of mesalamine 
available for the treatment of the gastrointestinal diseases of 
ulcerative colitis and Crohn's Disease. Hoechst was one of only a few 
firms developing a generic formulation of mesalamine. Therefore, the 
merger eliminates significant potential competition between these two 
products. The proposed Order requires Hoechst, within nine months, to 
divest either Pentasa or the generic formulation in 
development to a Commission-approved acquirer. 

[[Page 49616]]

    Fourth, in the market for rifampin, which is used to treat 
tuberculosis, MMD markets Rifadin. Hoechst was one of only a 
few firms developing a generic formulation of rifampin. Thus, the 
merger eliminates significant potential competition between these two 
products. The proposed Order requires Hoechst, within nine months, to 
divest either Rifadin or the generic formulation of rifampin 
in development, to a Commission-approved acquirer.
    The proposed Order also provides for the appointment of a trustee 
to assure that Hoechst appropriately completes the required 
divestitures. If Hoechst fails to divest any of the products within 
nine months, then the trustee's authority may be extended to include 
responsibility for accomplishing the required divestitures. The Order 
also requires Hoechst to provide technical assistance and advice to 
assist the purchaser(s) in obtaining FDA approval to manufacture and 
sell the divested products.
    Under the provisions of the Order, Hoechst 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 the 
Order becomes final, and every sixty (60) days thereafter until Hoechst 
has completed the required divestitures. The Order also requires 
Hoechst to notify the Commission at least thirty (30) days prior to any 
change in the structure of Hoechst resulting in the emergence of a 
successor.
    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. 95-23797 Filed 9-25-95; 8:45 am]
BILLING CODE 6750-01-P