[Federal Register Volume 64, Number 60 (Tuesday, March 30, 1999)]
[Notices]
[Pages 15166-15167]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-7752]


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FEDERAL TRADE COMMISSION

[File No. 9910089]


Zeneca Group PLC.; Analysis to Aid Public Comment

AGENCY: Federal Trade Commission.

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 June 1, 1999.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
Room 159, 600 Pennsylvania Avenue, NW, Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Steven Berstein or David Inglefield, 
FTC/S-2308, 601 Pennsylvania Avenue, NW, Washington, DC 20580, (202) 
326-2423 or (202) 326-2637.

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 March 25, 1999), on the World Wide Web, at ``http://www.ftc.gov/
os/actions97.htm.'' A paper copy can be obtained from the FTC Public 
Reference Room, Room H-130, 600 Pennsylvania Avenue, NW, Washington, DC 
20580, either in person or by calling (202) 326-3627.
    Public comment is invited. Comments should be directed to: FTC/
Office of the Secretary, Room 159, 600 Pennsylvania Avenue, NW, 
Washington, DC 20580 Two paper copies of each comment should be filed, 
and should be accompanied, if possible, by a 3\1/2\ inch diskette 
containing an electronic copy of the comment. 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 
from Respondent Zeneca Group PLC (``Zeneca''), which is designed to 
remedy the anticompetitive effects resulting from the merger of Zeneca 
and Astra AB (``Astra''). Under the terms of the agreement, Respondent 
will be required, among other things, to transfer and surrender all of 
Zeneca's rights and assets relating to levobupivacaine, a long-acting 
local anesthetic, to Chiroscience Group plc (``Chiroscience''), the 
developer of levobupivacaine.
    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 
proposed Consent Order and the comments received, and will decide 
whether it should withdraw from the proposed Consent Order or make 
final the proposed Order.
    Pursuant to a December 9, 1998, Merger Agreement and Plan of 
Merger, Zeneca agreed to acquire 100 percent of all issued shares of 
Astra stock for approximately $30.5 billion. Upon completion of the 
merger, Zeneca will be renamed AstraZeneca. The proposed Complaint 
alleges that the merger, if consummated, would violate section 7 of the 
Clayton Act, as amended, 15 U.S.C. 18, and section 5 of the Federal 
Trade Commission Act, as amended, 15 U.S.C. 45, in the U.S. market for 
long-acting local anesthetics.
    Long-acting local anesthetics are pharmaceutical products used to 
relieve pain during the course of surgical or other medical procedures 
by blocking pain impulses from reaching the central nervous system. 
Long-acting local anesthetics have an effective duration of up to six 
to seven hours, and allow patients to remain awake and conscious 
throughout the medical procedure.

[[Page 15167]]

    The U.S. market for long-acting local anesthetics is highly 
concentrated, with a pre-acquisition HHI of 6,682. Astra is the leading 
supplier of long-acting local anesthetics in the United States and 
worldwide, and is one of only two companies (along with Abbott 
Laboratories) with Food and Drug Administration (''FDA'') approval for 
the manufacture and sale of long-acting local anesthetics in the United 
States. While Zeneca does not currently sell long-acting local 
anesthetics, it had entered into an agreement with Chiroscience to 
market and assist in the development of levobupivacaine (known 
commercially as Chirocaine), a new long-acting local anesthetic being 
developed by Chiroscience. Thus, through this agreement with 
Chiroscience, Zeneca is an actual potential competitor in the U.S. 
market for long-acting local anesthetics.
    The impending introduction of levobupivacaine in 1999 was expected 
to result in increased competition in the U.S. market for long-acting 
local anesthetics, leading to lower prices and potential improvements 
in product safety. The proposed merger of Zeneca and Astra would 
eliminate this significant source of new competition and leave the 
long-acting local anesthetic market highly concentrated for the 
foreseeable future.
    It is unlikely that this lost competition would have been replaced 
by new competitors due to the substantial barriers to entry that exist 
in the U.S. market for long-acting local anesthetics. A new entrant 
into this market would need to undertake the difficult, expensive and 
time-consuming process of researching and developing a new product, 
obtaining FDA approval and gaining customer acceptance. Because of the 
difficulty of accomplishing these tasks, new entry into this market, 
other than Zeneca's and Chiroscience's imminent introduction of 
levobupivacaine, would not be timely, likely or sufficient to deter or 
counteract the anticompetitive effects resulting from the merger.
    The proposed Consent Order effectively remedies the merger's 
anticompetitive effects in the U.S. market for long-acting local 
anesthetics by requiring Zeneca to transfer and surrender all of its 
rights and assets relating to levobupivacaine to Chiroscience, the 
developer of levobupivacaine, no later than ten (10) business days 
after the date the Commission accepts the Consent Agreement for public 
comment. Under the terms of the Consent Order, Zeneca is required to 
transfer and surrender these assets pursuant to an agreement entered 
into between Chiroscience and Zeneca that is defined in the Agreement 
Containing Consent Order as the ``Chiroscience/Zeneca Agreement.'' The 
assets to be transferred to Chiroscience consist principally of 
intellectual property and know-how and include, among other things, all 
of the applicable patents, trademarks, copyrights, technical 
information and market research relating to lovobupivacaine. In 
addition, the Consent Order requires Zeneca to comply with the other 
provisions of the Chiroscience/Zeneca Agreement. That agreement 
establishes, among other things, a trasitional period during which 
Zeneca is required to continue carrying our certain ongoing activities 
relating to the commercialization of levobupivacaine, including 
manufacturing, regulatory, clinical, development and marketing 
activities. The Chiroscience/Zeneca Agreement also contains provisions 
that will protect the confidentiality of any informaiton provided by 
Chiroscience to Zeneca in the past, or during the transitional period.
    In addition, the Consent Order requires Zeneca to divest its 
approximately 3% investment interest in Chiroscience within four (4) 
months of the expiration of the Agreement Amending Share Subscription 
Agreement, as defined in the proposed Consent Order. Pending 
divestiture of this investment interest, the Order prohibits Zeneca 
from, directly or indirectly: (i) Exercising dominion or control over, 
or otherwise seeking to influence, the management, direction or 
supervision of the business of Chiroscience; (ii) seeking or obtaining 
representation on the Board of Directors of Chiroscience; (iii) 
exercising any voting rights attached to the investment interest; (iv) 
seeking or obtaining access to any confidential or proprietary 
informaiton of Chiroscience; or (v) taking any action or failing to 
take any action in a manner that would be incompatible with the status 
of Zeneca as a passive investor in Chiroscience.
    The proposed Consent Order also requires Zeneca to provide the 
Commission a report of compliance with the Order within thirty (30) 
days following the date the Order becomes final and every ninety (90) 
days thereafter until its has complied with the terms of the Order. 
Finally, the Order allows the Commission to appoint an Interim Trustee 
to facilitate an orderly transfer of the levobupivacaine assets and to 
ensure that Zeneca carries out its obligations under the Consent 
Agreement and the Chiroscience/Zeneca Agreement.
    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.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 99-7752 Filed 3-29-99; 8:45 am]
BILLING CODE 6750-01-M