[Federal Register Volume 85, Number 58 (Wednesday, March 25, 2020)]
[Notices]
[Pages 16939-16943]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-06212]
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FEDERAL TRADE COMMISSION
[File No. 191 0082]
Danaher Corporation; Analysis of Agreement Containing Consent
Orders To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement; request for comment.
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SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair methods of competition.
The attached Analysis of Agreement Containing Consent Order to Aid
Public Comment describes both the allegations in the 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 April 24, 2020.
[[Page 16940]]
ADDRESSES: Interested parties may file comments online or on paper, by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Please write: ``Danaher
Corporation; File No. 191 0082'' on your comment, and file your comment
online at https://www.regulations.gov by following the instructions on
the web-based form. If you prefer to file your comment on paper, please
mail your comment to the following address: Federal Trade Commission,
Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610
(Annex D), Washington, DC 20580, or deliver your comment to the
following address: Federal Trade Commission, Office of the Secretary,
Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex
D), Washington, DC 20024.
FOR FURTHER INFORMATION CONTACT: Lisa DeMarchi Sleigh (202-326-2535),
Bureau of Competition, Federal Trade Commission, 600 Pennsylvania
Avenue NW, Washington, DC 20580.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 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 of Agreement Containing Consent Order 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 website (for
March 19, 2020), at this web address: https://www.ftc.gov/news-events/commission-actions.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before April 24, 2020.
Write ``Danaher Corporation; File No. 191 0082'' on your comment. Your
comment--including your name and your state--will be placed on the
public record of this proceeding, including, to the extent practicable,
on the https://www.regulations.gov website.
Postal mail addressed to the Commission is subject to delay due to
heightened security screening. As a result, we encourage you to submit
your comments online through the https://www.regulations.gov website.
If you prefer to file your comment on paper, write ``Danaher
Corporation; File No. 191 0082'' on your comment and on the envelope,
and mail your comment to the following address: Federal Trade
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite
CC-5610 (Annex D), Washington, DC 20580; or deliver your comment to the
following address: Federal Trade Commission, Office of the Secretary,
Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex
D), Washington, DC 20024. If possible, submit your paper comment to the
Commission by courier or overnight service.
Because your comment will be placed on the publicly accessible
website at https://www.regulations.gov, you are solely responsible for
making sure that your comment does not include any sensitive or
confidential information. In particular, your comment should not
include any sensitive personal information, such as your or anyone
else's Social Security number; date of birth; driver's license number
or other state identification number, or foreign country equivalent;
passport number; financial account number; or credit or debit card
number. You are also solely responsible for making sure your comment
does not include any sensitive health information, such as medical
records or other individually identifiable health information. In
addition, your comment should not include any ``trade secret or any
commercial or financial information which . . . is privileged or
confidential''--as provided by Section 6(f) of the FTC Act, 15 U.S.C.
46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2)--including in
particular competitively sensitive information such as costs, sales
statistics, inventories, formulas, patterns, devices, manufacturing
processes, or customer names.
Comments containing material for which confidential treatment is
requested must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular,
the written request for confidential treatment that accompanies the
comment must include the factual and legal basis for the request, and
must identify the specific portions of the comment to be withheld from
the public record. See FTC Rule 4.9(c). Your comment will be kept
confidential only if the General Counsel grants your request in
accordance with the law and the public interest. Once your comment has
been posted on the public FTC website--as legally required by FTC Rule
4.9(b)--we cannot redact or remove your comment from the FTC website,
unless you submit a confidentiality request that meets the requirements
for such treatment under FTC Rule 4.9(c), and the General Counsel
grants that request.
Visit the FTC website at http://www.ftc.gov to read this Notice and
the news release describing it. The FTC Act and other laws that the
Commission administers permit the collection of public comments to
consider and use in this proceeding, as appropriate. The Commission
will consider all timely and responsive public comments that it
receives on or before April 24, 2020. For information on the
Commission's privacy policy, including routine uses permitted by the
Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.
Analysis of Agreement Containing Consent Order To Aid Public Comment
Introduction
The Federal Trade Commission (``Commission'') has accepted, subject
to final approval, an Agreement Containing Consent Orders (``Consent
Agreement'') from Danaher Corporation (``Danaher'') designed to remedy
the anticompetitive effects resulting from Danaher's proposed
acquisition of the GE Biopharma business of General Electric Company's
(``GE'') GE Healthcare Life Sciences division. Under the terms of the
proposed Consent Agreement, Danaher is required to divest all of the
rights and assets related to the following products to Sartorius AG
(``Sartorius''): (1) Microcarrier beads; (2) conventional low-pressure
liquid chromatography (``LPLC'') columns; (3) conventional LPLC skids;
(4) single-use LPLC skids; (5) three affected chromatography resins;
(6) LPLC continuous chromatography systems; (7) single-use TFF systems;
and (8) label-free molecular characterization instruments.
The proposed Consent Agreement has been placed on the public record
for thirty days for receipt of comments by interested persons. Comments
received during this period will become part of the public record.
After thirty days, the Commission will review the comments received and
decide whether it should withdraw, modify, or make the Consent
Agreement final.
Under the terms of the Equity and Asset Purchase Agreement dated
February 25, 2019, Danaher will acquire the GE Biopharma business in
exchange for $21.4 billion (the ``Acquisition''). The Commission's
Complaint alleges that the proposed Acquisition, 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, by substantially lessening
[[Page 16941]]
competition in the markets for: (1) Microcarrier beads; (2)
conventional low-pressure liquid chromatography (``LPLC'') columns; (3)
conventional LPLC skids; (4) single-use LPLC skids; (5) three affected
chromatography resins; (6) LPLC continuous chromatography systems; (7)
single-use TFF systems; and (8) label-free molecular characterization
instruments. The proposed Consent Agreement will remedy the alleged
violations by preserving the competition that otherwise would be lost
in these markets as a result of the proposed Acquisition.
The Parties
Headquartered in Washington, DC, Danaher is a leading global
manufacturer of professional, medical, industrial, and commercial
products and services through more than twenty operating companies.
Danaher sells bioprocessing products primarily through its wholly owned
subsidiary Pall Corporation (``Pall''), including instruments and
consumables that support research, discovery, process development, and
manufacturing workflows of biopharmaceutical drugs. Danaher sells other
life science instruments, including molecular characterization used
primarily in biopharmaceutical research applications, through its
Molecular Devices, LLC operating company.
GE is a global conglomerate headquartered in Boston, Massachusetts.
GE Biopharma is a division of GE Healthcare Life Sciences that
manufactures and sells instruments, consumables, and software that
support the research, discovery, process development, and manufacturing
workflows of biopharmaceutical drugs.
Products and Market Structures
I. Microcarrier Beads
Microcarrier beads are used in cell culture bioprocessing. They
provide a surface for the anchorage of dependent cells to attach and
grow in cell culture vessels and bioreactors. Danaher and GE are the
two leading global suppliers of microcarrier beads and are each other's
closest competitors. The only other significant supplier of
microcarrier beads is Corning, Inc., which is substantially smaller
than GE, the dominant supplier. The market for microcarrier beads is
highly concentrated. The parties have a combined market share of
greater than 70 percent. The Acquisition would increase concentration
in the microcarrier bead market substantially and reduce the number of
major suppliers from three to two.
II. Conventional Low-Pressure Liquid Chromatography Columns
LPLC columns separate wanted from unwanted molecules by using a
liquid or gaseous phase to carry the cell mass through an adsorbent
serving as a stationary phase. Conventional LPLC columns are containers
that hold chromatography resins used as the adsorbent during the
stationary phase. These columns are made of glass, stainless steel,
acrylic glass, or plastic. This market is highly concentrated, with
only four main suppliers, including Danaher and GE. The parties have a
combined market share of greater than 45 percent. Further, Danaher and
GE are two of very few suppliers that offer larger, process-scale
conventional LPLC columns, which is a segment of the market that is
even more concentrated. Other remaining chromatography suppliers
consist of fringe of firms, each of which account for a small share of
the market.
III. Conventional Low-Pressure Liquid Chromatography Skids
Conventional LPLC skids control the flow of liquid in the
chromatography process. Conventional LPLC skids contain a system of
pumps, valves, sensors, tubing, electronic components, software, and
flow paths composed of multi-use components. GE is the leading supplier
of conventional LPLC skids with a market share of over 30 percent.
Danaher and GE currently compete directly for sales in the market for
conventional LPLC skids, and there are few other significant suppliers.
The Acquisition would substantially increase concentration in the
market for conventional LPLC skids.
IV. Single-Use Low Pressure Liquid Chromatography Skids
Single-use LPLC skids control the flow of liquid in the
chromatography process and have the same function as conventional LPLC
skids except that the flow path is composed of single-use components.
As is the case for conventional ones, GE is the dominant supplier of
single-use LPLC skids. According to market participants, in addition to
GE and Danaher are two of only three significant suppliers. The only
other suppliers are fringe firms with few sales. Danaher and GE have a
combined market share of greater than 80 percent for single-use LPLC
skids.
V. Chromatography Resins
Chromatography resins are chemically treated consumables that
constitute the stationary phase of the LPLC process. The parties both
supply resins, although GE has a broad portfolio of resins while
Danaher has more limited offerings. Each resin type differs in its
chemical characteristics and features, and specific purification and
production steps require different resins for the processing of
particular molecules. Because of their distinct attributes and uses,
each type of resin appears to constitute a distinct antitrust market.
The parties have competitively significant overlaps in three resin
markets: Affinity resins, ion exchange resins, and mixed mode resins.
Affinity resins use binding interactions between a ligand and its
binding partner to capture the target molecule. Ion exchange resins
separate molecules based on their total electric charge. Mixed mode
resins use matrices functionalized with ligands capable of multiple
interactions that make this type of resin useful to purify target
proteins when other methods fail.
Danaher and GE are two of a limited number of competitors in the
markets for affinity, ion exchange, and mixed mode resins. Similar to
the markets for chromatography hardware, GE is dominant in
chromatography resins, holding market shares of between 65 and 73
percent, 57 and 65 percent, and 56 and 64 percent in affinity, ion
exchange, and mixed mode resins, respectively, while Danaher's market
share is significant but no greater than ten percent in each resin
market.
VI. Low-Pressure Liquid Chromatography Continuous Chromatography
Systems
A LPLC continuous chromatography system consists of a skid and
columns that functions by regulating the flow of resins through the
affixed columns in a continuous process that, for some uses, provides
greater efficiency and cost savings. The parties, however, appear to be
the leading suppliers in the market. Currently, Danaher has
approximately 28 percent market share and GE has approximately 14
percent share. Only three other suppliers compete in this market, and
the combined firm would have a market share of over 40 percent.
VII. Single-Use Tangential Flow Filtration Systems
Single-use TFF systems control the filtration process, which
removes unwanted molecules during the cell growth phase of the
bioprocessing workflow by running liquids through porous membranes.
Single-use TTF systems include sensors, valves, safety and security
items, software, and network communication hardware, as
[[Page 16942]]
well as flow kits, manifolds, and pumps composed of single-use
components. Customers typically use TFF for cell clarification and for
diafiltration, concentration, and microfiltration. TFF systems are
configurable as conventional or single-use platforms. With single-use
TFF systems, suppliers sell disposable flow kits (single-use tubing)
that are used as a consumable. In contrast, conventional TFF systems
are made with stainless steel and must be cleaned and validated after
each use. Customers typically do not switch between single-use and
conventional TFF systems, and they do not view other types of
filtration systems as an economic or practical substitute for single-
use TFF systems. Danaher and GE are two important competitors in the
market for single-use TFF systems. GE's system has gained share since
recently entering the market and currently competes closely with
Danaher's system. The parties have a combined share of the single-use
TFF filtration systems market of more than 35 percent.
VIII. Label-Free Molecular Characterization Instruments
Label-free molecular characterization instruments characterize
protein binding interaction and protein concentration based on
measurement of the optical, calorimetric, electrical, acoustic, and
other physical reactions to various stimuli. Researchers use these
instruments for a number of applications, including drug discovery and
other biological research. Label-free molecular characterization
instruments are a distinct relevant product market within the broader
universe of molecular characterization instruments By their own
estimates Danaher has approximately 23 percent share and GE has about
39 percent leaving the combined firm with share greater than 60
percent. The remainder of the market is highly fragmented and consists
of less established instrument manufacturers and firms offering niche
products.
Competitive Effects of the Acquisition
The proposed Acquisition would likely result in substantial
competitive harm to consumers in the markets for microcarrier beads;
conventional LPLC columns; conventional LPLC skids; single-use LPLC
skids; three chromatography resins; LPLC continuous chromatography
systems; single-use TFF systems; and label-free molecular
characterization. The parties are two of few significant suppliers of
these products worldwide. Eliminating the head-to-head competition
between Danaher and GE in these concentrated markets would allow the
combined firm to exercise market power unilaterally, likely resulting
in higher prices, reduced innovation, and less choice for consumers.
Entry Conditions
De novo entry in the relevant markets would not be timely, likely,
or sufficient in magnitude, character, and scope to deter or counteract
the anticompetitive effects of the proposed Acquisition. Entry into
each of the relevant product markets requires a significant amount of
time and resources. In each relevant market, a new entrant would need
to develop products with high levels of performance and reliability to
establish the brand recognition necessary to compete effectively due to
the premium customers place on suppliers' track records and reputations
for reliable, high-quality products. Attaining requisite technological
expertise and intellectual property often prevents suppliers from
developing new products in the relevant markets. These barriers can
delay the launch of new products and prevent existing suppliers of
other equipment from developing new projects. Moreover, a potential
entrant must establish a sufficient sales force that offers high-
quality technical support and is capable of establishing relationships
with customers. Such development efforts are difficult, time-consuming,
and expensive, and often fail to result in a competitive product
reaching the market.
The Consent Agreement
The Consent Agreement eliminates the competitive concerns raised by
the proposed Acquisition by requiring Danaher to divest its
microcarrier beads; chromatography hardware including conventional LPLC
chromatography columns, conventional LPLC chromatography skids, and
single-use LPLC chromatography skids; three chromatography resins; LPLC
continuous chromatography systems; single-use TFF filtration systems;
and label-free molecular characterization instruments to Sartorius.
Danaher must divest all assets and rights to research, develop,
manufacture, market, and sell these products, including all related
intellectual property and other confidential business information,
manufacturing technology, existing inventory, and all related
agreements to manufacture and distribute the products. Additionally, to
ensure that the divestiture is successful and to maintain continuity of
supply, the proposed Order requires Danaher to supply Sartorius with
these products for a limited time while Sartorius establishes its own
manufacturing capability. Further, the proposed Order requires
Sartorius to seek the Commission's approval in the event that it seeks
to sell certain divested assets or acquire certain assets that compete
with the divested assets for a period of three years. The provisions of
the Consent Agreement ensure that Sartorius becomes an independent,
viable, and effective competitor to maintain the competition that
currently exists.
Based in G[ouml]ttingen, Germany, Sartorius is a leading provider
of instruments, manufacturing systems, and associated consumables for
the life sciences industry including bioprocessing equipment used for
drug discovery, development, and commercialization. Sartorius's
existing biopharma business includes products that are highly
complementary to the divestiture assets. Sartorius has the expertise,
worldwide sales infrastructure, and resources to restore the
competition that otherwise would have been lost due to the proposed
Acquisition.
Danaher must accomplish the divestitures no later than 45 days
after consummating the proposed Acquisition or ten days after receiving
all regulatory approvals necessary to consummate the divestiture. Until
Danaher completes the divestiture, the proposed Order requires Danaher
to hold separate the entire Pall operating company and the molecular
characterization business, as well as to maintain the divested assets.
Danaher is also required to submit compliance reports to staff and to
the proposed monitor demonstrating compliance with these asset
maintenance provisions.
If the Commission determines that Sartorius is not an acceptable
acquirer, or that the manner of the divestitures is not acceptable, the
proposed Order requires Danaher to unwind the sale of rights and assets
to Sartorius and then divest the affected products to a Commission-
approved acquirer within six months of the date the Order becomes
final. To ensure compliance with the Order, the Commission has agreed
to appoint a Monitor to ensure that Danaher complies with all of its
obligations pursuant to the Consent Agreement and to keep the
Commission informed about the status of the transfer of the product
rights and assets to Sartorius. The proposed Order further allows the
Commission to appoint a trustee in the event that Danaher fails to
divest the products as required.
The purpose of this analysis is to facilitate public comment on the
Consent Agreement, and it is not intended to constitute an official
[[Page 16943]]
interpretation of the proposed Order or to modify its terms in any way.
By direction of the Commission.
April J. Tabor,
Acting Secretary.
[FR Doc. 2020-06212 Filed 3-24-20; 8:45 am]
BILLING CODE 6750-01-P