[Federal Register Volume 71, Number 135 (Friday, July 14, 2006)]
[Notices]
[Pages 40122-40125]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-11070]


=======================================================================
-----------------------------------------------------------------------

FEDERAL TRADE COMMISSION

[File No. 051 0263]


Hologic, Inc.; Analysis of Agreement Containing Consent Order To 
Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

-----------------------------------------------------------------------

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 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 August 5, 2006.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``Hologic, Inc., File No. 051 0263,'' to 
facilitate the organization of comments. A comment filed in paper form 
should include this reference both in the text and on the envelope, and 
should be mailed or delivered to the following address: Federal Trade 
Commission/Office of the Secretary, Room 135-H, 600 Pennsylvania 
Avenue, NW., Washington, DC 20580. Comments containing confidential 
material must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with Commission Rule 4.9(c). 16 CFR 
4.9(c) (2005).\1\ The FTC is

[[Page 40123]]

requesting that any comment filed in paper form be sent by courier or 
overnight service, if possible, because U.S. postal mail in the 
Washington area and at the Commission is subject to delay due to 
heightened security precautions. Comments that do not contain any 
nonpublic information may instead be filed in electronic form as part 
of or as an attachment to email messages directed to the following e-
mail box: [email protected].
---------------------------------------------------------------------------

    \1\ The comment must be accompanied by an explicit request for 
confidential treatment, including the factual and legal basis for 
the request, and must identify the specific portions of the comment 
to be withheld from the public record. The request will be granted 
or denied by the Commission's General Counsel, consistent with 
applicable law and the public interest. See Commission Rule 4.9(c), 
16 CFR 4.9(c).
---------------------------------------------------------------------------

    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. All timely and responsive public comments, whether filed 
in paper or electronic form, will be considered by the Commission, and 
will be available to the public on the FTC Web site, to the extent 
practicable, at http://www.ftc.gov. As a matter of discretion, the FTC 
makes every effort to remove home contact information for individuals 
from the public comments it receives before placing those comments on 
the FTC Web site. More information, including routine uses permitted by 
the Privacy Act, may be found in the FTC's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

FOR FURTHER INFORMATION CONTACT: Jeffrey H. Perry, Bureau of 
Competition, 600 Pennsylvania Avenue, NW., Washington, DC 20580, (202) 
326-2331.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec.  2.34 of 
the Commission 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 thirty (30) 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 July 7, 2006), on the World Wide Web, at http://www.ftc.gov/os/2006/07/index.htm. A paper copy can be obtained from the FTC Public 
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW., Washington, 
DC 20580, either in person or by calling (202) 326-2222.
    Public comments are invited, and may be filed with the Commission 
in either paper or electronic form. All comments should be filed as 
prescribed in the ADDRESSES section above, and must be received on or 
before the date specified in the DATES section.

Analysis of Agreement Containing Consent Order To Aid Public Comment

I. Introduction

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an Agreement Containing Consent Order (``Consent 
Agreement'') from Hologic, Inc. (``Hologic''). The purpose of the 
proposed Consent Agreement is to remedy the competitive harm resulting 
from Hologic's consummated acquisition of certain assets of Fischer 
Imaging Corporation (``Fischer''). Under the terms of the proposed 
Consent Agreement, Hologic is required to divest to Siemens AG 
(``Siemens'') all assets it acquired from Fischer relating to Fischer's 
prone stereotactic breast biopsy system (``prone SBBS'') business.
    The proposed Consent Agreement has been placed on the public record 
for thirty days to solicit comments from interested persons. Comments 
received during this period will become part of the public record. 
After thirty days, the Commission will again review the proposed 
Consent Agreement and the comments received, and will decide whether it 
should withdraw the proposed Consent Agreement or make it final.
    On September 29, 2005, Hologic paid $32 million to acquire 
substantially all of Fischer's intellectual property and certain other 
assets relating to its mammography and breast biopsy businesses, 
including the patents, trademarks, customer lists, and vendor lists 
relating to Fischer's prone SBBS product, MammoTest (``Acquisition''). 
As a result of the Acquisition, Fischer--the only significant 
competitor to Hologic in the U.S. market for prone SBBSs--relinquished 
all rights to develop, manufacture, market, and sell prone SBBSs in the 
United States. The Commission's complaint alleges that the Acquisition 
violated 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, by eliminating Hologic's only significant competitor in the U.S. 
market for prone SBBSs. The proposed Consent Agreement would restore 
the competition eliminated by the Acquisition by ensuring the prompt 
competitive viability of Siemens as an additional supplier of prone 
SBBSs in the United States.

II. The Parties

    Hologic is a developer, manufacturer, and marketer of diagnostic 
and imaging medical devices. Its chief product areas are mammography 
equipment, breast biopsy systems (including the MultiCare Platinum 
prone SBBS), and bone densitometry equipment. In 2005, Hologic reported 
worldwide revenues of approximately $288 million.
    Prior to the Acquisition, Fischer was actively involved in 
developing, manufacturing, and marketing equipment used in the 
screening and diagnosis of breast cancer. The company's chief products 
were its SenoScan digital mammography system and its MammoTest prone 
SBBS. In 2004, Fischer reported revenues of approximately $64 million. 
For the first nine months of 2005, prior to the Acquisition, Fischer 
reported revenues of $39 million.

III. Prone SBBSs

    A prone SBBS is an integrated system that allows a physician to 
conduct a highly precise, minimally-invasive breast biopsy using x-ray 
guidance. During the procedure, the patient lies prone on a table with 
her breast suspended through an aperture in the table. With the 
patient's breast compressed, the physician utilizes the system's x-ray 
imaging to guide a needle to the precise location of the suspected 
lesion and extracts small tissue samples for diagnosis. The entire 
procedure is conducted beneath the table and is obscured from the 
patient's view.
    There are several other methods of performing breast biopsies, 
including open surgical biopsies and other types of minimally-invasive 
systems. None of these other methods, however, are viable economic 
substitutes for prone SBBSs. Indeed, most hospitals have the capability 
to perform breast biopsies using multiple methods to ensure that the 
most appropriate system is used for each procedure.
    Surgical biopsies were once the only method of biopsying breast 
tissue, but these procedures have declined significantly in popularity 
in response to the availability of newer, minimally-invasive, biopsy 
systems. Minimally-invasive biopsies provide accurate diagnosis while 
avoiding the economic costs and patient hardship associated with 
surgical breast biopsies. Surgical breast biopsies are performed under 
general anesthesia, require a longer hospital stay, and result in 
noticeable scarring. For these reasons, surgical procedures are 
typically performed only in circumstances in which none of the 
minimally-invasive alternatives is

[[Page 40124]]

appropriate or available. An ability to perform surgical breast 
biopsies does not provide a meaningful competitive restraint on the 
exercise of market power by a prone SBBS monopolist.
    There are two other types of minimally-invasive breast biopsy 
systems: ultrasound and magnetic resonance (``MR'') systems. These 
systems are complementary treatment modalities, however, and are not 
competitive substitutes for a prone SBBS. Ultrasound-guided breast 
biopsies are the most prevalent type of minimally-invasive breast 
biopsy performed in the United States, and are typically used to biopsy 
suspicious masses. Ultrasound systems are not well suited for 
visualizing lesions called microcalcifications, however, and patients 
with this type of lesion are typically sent for biopsy using a prone 
SBBS. MR breast biopsy systems are currently considered a niche 
technology, and are significantly more expensive than prone SBBSs. 
Further, MR biopsies are cumbersome and time consuming compared to 
biopsies performed with a prone SBBS. Thus, MR-guided systems are used 
infrequently, and only in cases for which ultrasound or stereotactic 
systems would not be appropriate.
    Stereotactic breast biopsies may also be performed using an 
``upright'' system, which consists of a biopsy unit that attaches to an 
existing mammography system. There are significant disadvantages 
associated with using upright systems as compared to prone SBBS 
procedures, including reduced comfort and a risk of vasovagal reactions 
(fainting). These problems result from the fact that an upright system 
performs the biopsy in plain view of the patient. Also, upright systems 
occupy a mammography machine that could otherwise be used to conduct 
mammograms, thereby reducing the number of screening mammographies that 
can be performed in a given day. This makes upright systems a 
particularly unattractive option for a breast care center that has a 
significant patient volume. For these reasons, even though upright 
systems are much less expensive, they are not used commonly in the 
United States, and do not provide meaningful competition to prone SBBS 
suppliers.
    The relevant geographic market in which to analyze the effects of 
the Acquisition is the United States. Prone SBBSs are medical devices, 
and thus cannot be marketed or sold in the United States without prior 
approval by the United States Food and Drug Administration (``FDA''). 
Further, a firm wishing to sell prone SBBSs in the United States must 
establish a local sales and service organization and must not infringe 
any U.S. patents.

IV. Competitive Effects and Entry Conditions

    Fischer pioneered the prone SBBS market when it introduced its 
MammoTest product in the late 1980s. In 1992, Lorad, a company 
subsequently acquired by Hologic, introduced the MultiCare prone SBBS 
to the U.S. market as the first competitor to MammoTest. Over the next 
fourteen years, Hologic's MultiCare and Fischer's MammoTest competed 
head-to-head in the U.S. market, with each firm supplying approximately 
fifty percent of the U.S. market for prone SBBSs. This competition 
directly benefitted U.S. consumers in the form of lower prices, better 
service, and product innovations. Evidence gathered in the Commission's 
investigation demonstrates that, prior to the acquisition, customers 
received lower prices and other economic benefits such as extended 
warranties and favorable service or payment terms as a result of the 
competition between Hologic and Fischer. The evidence also shows that 
the competition between the two companies has resulted in product 
improvements, including higher resolution detectors and improved 
software for image manipulation and storage. Since the Acquisition in 
September 2005, Hologic has enjoyed a virtual monopoly in the U.S. 
prone SBBS market.
    The only other firm that sells a prone SBBS in the United States is 
Giotto USA. Giotto currently is not a significant competitor, however, 
having achieved minimal sales in the three years during which its 
product has been available in the United States. It is unlikely that 
Giotto could significantly expand its U.S. sales because it does not 
have access to critical prone SBBS patents, and in any event lacks the 
necessary infrastructure, track record, product acceptance, and 
resources to do so.
    There is little prospect for new entry into the U.S. prone SBBS 
market. The strength and breadth of Hologic's patent portfolio, 
including the patents it acquired from Fischer, insulate the U.S. prone 
SBBS market from entry. In fact, no company has ever had a meaningful 
impact on the U.S. prone SBBS market without access to these critical 
patents. Hologic's MultiCare product, the only prone SBBS ever to 
compete effectively with Fischer's MammoTest, was able to compete in 
the U.S. market only by virtue of a license to the Fischer patents that 
Hologic acquired as part of the settlement of patent infringement 
litigation. In addition to the intellectual property barriers to entry, 
potential entrants must contend with the research, development, and 
regulatory hurdles that companies seeking to market medical devices 
typically face. Finally, a new entrant would also need to develop 
manufacturing capability and potentially recruit and train a local 
sales force in order to gain market acceptance and have an impact on 
price in the U.S. prone SBBS market.

V. The Proposed Consent Agreement

    The proposed Consent Agreement effectively remedies the competitive 
harm that resulted from the Acquisition. Pursuant to the proposed 
Consent Agreement, Hologic is required to divest to Siemens all of the 
prone SBBS-related assets it acquired from Fischer no later than five 
(5) days after the Consent Agreement is accepted for public comment. 
Hologic will retain a license to Fischer's prone SBBS patents to ensure 
that Hologic can continue to compete in the U.S. prone SBBS market 
after the divestiture.
    Siemens is particularly well-positioned to manufacture and sell 
prone SBBSs in the United States. Siemens is one of the world's largest 
public corporations, with 461,000 employees and over 600 manufacturing 
plants, research facilities and sales offices worldwide. Siemens 
Medical Solutions Group is a worldwide leader in medical imaging, with 
product offerings including angiography, fluoroscopy, magnetic 
resonance imaging, ultrasound, and mammography. As an established 
supplier of breast cancer related imaging products, Siemens has earned 
a strong reputation in the field of breast cancer screening and 
detection, and already has a domestic sales and service network in 
place to make it a vigorous prone SBBS competitor. Further, although it 
already has a mammography business, Siemens does not currently compete 
in the prone SBBS market, and thus does not present any competitive 
problems as an acquirer of the divested assets.
    If the Commission determines that Siemens is not an acceptable 
purchaser, or that the manner of the divestiture is not acceptable, 
Hologic must unwind the sale and divest the prone SBBS assets within 
six (6) months of the date the Order becomes final to another 
Commission-approved acquirer. If Hologic fails to divest within that 
time frame, the Commission may appoint a trustee to divest the prone 
SBBS assets.
    The purpose of this analysis is to facilitate public comment on the 
Consent Agreement, and it is not

[[Page 40125]]

intended to constitute an official interpretation of the Consent 
Agreement or to modify its terms in any way.

    By direction of the Commission.
Donald S. Clark,
Secretary.
 [FR Doc. E6-11070 Filed 7-13-06; 8:45 am]
BILLING CODE 6750-01-P