[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