[Federal Register Volume 63, Number 42 (Wednesday, March 4, 1998)]
[Notices]
[Pages 10626-10628]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-5534]
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FEDERAL TRADE COMMISSION
[File No. 971-0103]
Roche Holding Ltd.; Analysis to Aid Public Comment
AGENCY: Federal Trade Commission.
[[Page 10627]]
ACTION: Proposed consent agreement.
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SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair or deceptive acts or
practices or unfair methods of competition. The attached Analysis to
Aid Public Comment describes both the allegations in the draft
complaint that accompanies the consent agreement and the terms of the
consent order--embodied in the consent agreement--that would settle
these allegations.
DATES: Comments must be received on or before May 4, 1998.
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 or Christina Perez, FTC/
H-374, Washington, DC 20580. (202) 326-2932 or 326-2048.
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 above-captioned consent agreement containing a consent order
to cease and desist, having been filed with and accepted, subject to
final approval, by the Commission, has been placed on the public record
for a period of sixty (60) days. The following Analysis to Aid Public
Comment describes the terms of the consent agreement, and the
allegations in the complaint. An electronic copy of the full text of
the consent agreement package can be obtained from the FTC Home Page
(for February 25, 1998), on the World Wide Web, at ``http://
www.ftc.gov/os/actions/htm.'' A paper copy can be obtained from the FTC
Public Reference Room, Room H-130, Sixth Street and Pennsylvania
Avenue, NW., Washington, D.C. 20580, either in person or by calling
(202) 326-3627. Public comment is invited. Such comments or views will
be considered by the Commission and will be available for inspection
and copying at its principal office in accordance with
Sec. 4.9(b)(6)(ii) of the Commission's rules of practice (16 CFR
4.9(b)(6)(ii)).
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission (``Commission'') has accepted, subject
to final approval, an Agreement Containing a Proposed Consent Order
(``Order'') from Roche Holding Ltd (``Roche''), which remedies the
anticompetitive effects of Roche's acquisition of Corange Limited.
Corange is the parent company of Boehringer Mannheim (``BM''). Both
Roche and BM manufacture a wide array of pharmaceutical and diagnostic
instruments and reagents. The proposed Order remedies the acquisition's
anticompetitive effects by requiring Roche to divest BM's cardiac
thrombolytic agent and drugs of abuse testing (``DAT'') reagent assets
as viable, on-going product lines. Roche has entered into an agreement
to divest to Centocor, Inc. (``Centocor'') BM's cardiac thrombolytic
agent assets.
The proposed Order has been placed on the public record for sixty
(60) days for reception of comments by interested persons. Public
comments regarding the proposed divestiture of the United States and
Canadian Retavase businesses to Centocor, Inc. will be considered with
other comments on the proposed Order. 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.
Pursuant to a Stock Purchase Agreement signed May 24, 1997, Roche
agreed to purchase 100% of the outstanding voting stock of Corange for
approximately $11 billion. The proposed Complaint alleges that the
acquisition 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
the markets for the research, development, manufacture and sale of
cardiac thrombolytic agents and workplace DAT reagents.
Cardiac thrombolytic agents are pharmaceuticals used to treat heart
attacks by dissolving blood clots in the blood vessels of the heart.
Angioplasty, the only other method of treating heart attacks, is a very
expensive surgical procedure that is not available at many hospitals in
the United States. As a result, there are no competitive substitutes
for cardiac thrombolytic agents.
The U.S. cardiac thrombolytic agents market is highly concentrated.
According to studies published in the New England Journal of Medicine,
the safest and most effective cardiac thrombolytic agents are BM's
Retavase and Genetech's Activase. Roche owns 68% of Genetech's stock.
As a result of these studies, it appears that the only other cardiac
thrombolytic agent approved for use in the United States,
Streptokinase, is not an acceptable substitute for most U.S.
physicians. Also, because of the lengthy development time involved in
entering the cardiac thrombolytic agent market, no other company is
expected to enter the United States market for at least two years. For
these reasons, the acquisition, if consummated, would lead to the
elimination of the only head-to-head competition of safe and effective
cardiac thrombolytic agents, and therefore, is likely to lead to higher
prices.
DAT reagents are chemical antibodies that are combined with a urine
specimen to detect the presence of an illegal drug. Workplace DAT is
pre-employment, random, post-accident and reasonable cause testing of
employees in law enforcement, federal government and private industry
for safety and security reasons. It is conducted at commercial
laboratories with high-volume dedicated instruments that can only use
workplace DAT reagents. DAT conducted in hospitals is very different
from workplace DAT. Hospitals use medium- to low-volume instruments
that can conduct a wide-variety of tests and use a wide variety of
reagents that cannot be used economically for workplace DAT.
The workplace market of DAT reagents is highly concentrated and new
entry would be neither timely nor sufficient. A new producer of
workplace DAT reagents would find it very difficult to develop a full
line of workplace DAT reagents, as well as gain customer acceptance
within two years. Roche and BM are two of only four suppliers of
workplace DAT reagents in the United States. By eliminating the
competition between two of the top three competitors in this highly
concentrated market, the proposed acquisition would enhance the
likelihood of coordinated interaction between or among the remaining
firms in the market, increasing the likelihood that consumers in the
United States would be forced to pay higher prices for workplace DAT
reagents.
The proposed Order remedies the anticompetitive effects in the
cardiac thrombolytic agent market by requiring Roche to divest all of
the assets relating to BM's United States and Canadian Retavase
businesses to Centocor, Inc. or another Commission-approved buyer.
Centocor is an established biotechnology company that currently sells
ReoPro. ReoPro is a drug that is given to a patient after a heart
attack to prevent new blood clots from forming. Because this is a
complementary product to Retavase, it is anticipated that Centocor will
achieve significant marketing synergies if it is allowed to purchase
the Retavase businesses. Although Centocor is not one of the large,
well-known pharmaceutical
[[Page 10628]]
companies, it is well-respected by the medical community and has a
significant capital base to support its proposed acquisition of the
Retavase assets. In the event that Roche does not sell these assets to
Centocor or another Commission-approved purchaser within ninety days of
the Order's becoming final, a ``crown jewel'' provision in the Order
permits a Commission-appointed trustee to divest the world-wide rights
to Retavase.
The proposed Order also effectively remedies the proposed
transaction's anticompetitive effects in the workplace DAT reagent
market by requiring Roche to divest BM's DAT reagents and grant a non-
exclusive license to all other Cloned Enzyme Donor Immuno-Assay
(``CEDIA'') reagents in the United States, including, but not limited
to, reagents used for therapeutic drug monitoring, thyroid analysis,
testing for anemia, and hormone testing. In the event Roche fails to
divest and license these assets within two months of the Order's
becoming final, the proposed Order contains a ``crown jewel'' provision
that allows a Commission-appointed trustee to divest all of BM's CEDIA
reagents.
The proposed Order also requires Roche to provide substantial
assistance to each of the acquirers so that they can each compete
effectively in the relevant markets. First, Roche must contract
manufacture a supply of the divested products for the time period it
takes for each acquirer to establish its own manufacturing processes
and obtain its own FDA approvals to manufacture and sell Retavase and
DAT reagents in the United States. Second, Roche must provide technical
assistance and advice to assist both acquirers in their efforts to
begin manufacturing the divested products. Finally, the Order provides
the Retavase acquirer and the reagent acquirer the ability to hire
former BM employees associated with the marketing or sales of Retavase
or CEDIA reagents, respectively.
In order to facilitate the smooth transfer of assets and ensure
that the acquirers will get the assistance necessary to independently
manufacture the products, the proposed Order also provides for the
appointment of an interim trustee. The interm trustee will serve until
the acquirers have received all necessary FDA approvals to manufacture
and sell the divested products.
Because it is becoming essential for a DAT reagents supplier to
also provide its customers with DAT analyzers, the proposed Order
requires Roche to terminate BM's exclusive distribution arrangement
with Hitachi Ltd., and to inform Hitachi, within ten days of divesting
the DAT reagents, that, as to the reagent acquirer, it waives all
exclusivity provisions of BM's agreement with Hitachi.
In addition, because of pending litigation between Genentech and
BM, the proposed Order requires Roche to provide: (1) Full access to,
and cooperation from, former BM employees and agents who have knowledge
about the disputed patents; (2) access to any documents that may be
relevant to the dispute; and (3) reimbursement for half of all the
legal expenses relating to the dispute. In addition, Roche is
prohibited from disclosing or otherwise making available to Genentech
any information relating to the patent dispute without the prior
written consent of the Retavase acquirer.
The Order also requires Roche to provide to the Commission a report
of compliance with the divestiture and licensing provisions of the
Order within sixty (60) days following the date the Order becomes
final, and every ninety (90) days thereafter until Roche has completed
the divestitures and licensing. The Order also requires Roche to notify
the Commission at least thirty (30) days prior to any change in the
structure of Roche that may affect compliance with the Order.
The purpose of this analysis is to facilitate public comment on the
proposed Order, and it is not intended to constitute an official
interpretation of the agreement and proposed Order or to modify in any
way their terms.
Donald S. Clark,
Secretary.
[FR Doc. 98-5534 Filed 3-3-98; 8:45 am]
BILLING CODE 6750-01-M