[Federal Register Volume 62, Number 43 (Wednesday, March 5, 1997)]
[Notices]
[Pages 10058-10059]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-5343]


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FEDERAL TRADE COMMISSION

[File No. 971-0009]


American Home Products Corporation; Analysis To Aid Public 
Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: In settlement of alleged violations of federal law prohibiting 
unfair or deceptive acts or practices and unfair methods of 
competition, this consent agreement, accepted subject to final 
Commission approval, will settle antitrust concerns stemming from the 
Madison, New Jersey-based company's proposed acquisition of Solvay, 
S.A.'s animal health business. The complaint accompanying the consent 
agreement alleges that the proposed $463 million acquisition would give 
American Home Products a dominant position in the market for canine 
lyme vaccines, canine corona virus vaccines, and feline leukemia 
vaccines. The agreement would require, among other things, that 
American Home Products divest Solvay's U.S. and Canadian rights to the 
three types of vaccines to the Schering-Plough Corporation or another 
Commission-approved buyer.

DATES: Comments must be received on or before May 5, 1997.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
Room 159, 6th St. and Pa. Ave., N.W., Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT: William J. Baer, Federal Trade 
Commission, H-374, 6th St. and Pa. Ave., N.W., Washington, D.C. 20580. 
(202) 326-2932; George S. Cary, Federal Trade Commission, H-374, 6th 
St. and Pa. Ave., N.W., Washington, D.C. 20580. (202) 326-3741; Casey 
R. Triggs, Federal Trade Commission, S-2308, 6th St. and Pa. Ave., 
N.W., Washington, D.C. 20580. (202) 326-2804.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46, and Section 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 accompanying complaint. An electronic copy of the 
full text of the consent agreement package can be obtained from the 
Commission Actions section of the FTC Home Page (for February 25, 
1997), 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, N.W., 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 Section 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 American Home Products Corporation (``AHP'') under which AHP would 
divest Solvay S.A.'s (``Solvay''), canine lyme vaccine, canine corona 
virus combination vaccines and feline leukemia combination vaccines. 
The agreement is designed to remedy the anticompetitive effects 
resulting from AHP's acquisition of Solvay's animal health business.
    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 
agreement and the comments received and will decide whether it should 
withdraw from the agreement or make final the agreement's proposed 
Order.
    The proposed complaint alleges that the proposed acquisition, if 
consummated, would constitute a violation of Section 7 of the Clayton 
Act, as amended, 15 U.S.C. Sec. 18, and Section 5 of the FTC Act, as 
amended, 15 U.S.C. Sec. 45, in the markets for canine lyme vaccine, 
canine corona virus combination vaccines and feline leukemia 
combination vaccines.
    The canine lyme, canine corona virus combination and feline 
leukemia combination vaccines are the only effective method to prevent 
certain companion animal diseases. These vaccines work by exposing the 
host animal's own immune system to specific antigens for the disease. 
These antigens in turn stimulate the immune system's production of 
antibodies, which protect the host animal against future exposure to 
the disease.
    Companion animal vaccine manufacturers sell vaccines such as canine 
lyme, canine corona virus combination and feline leukemia combination 
to veterinarians, who then charge consumers when they bring their 
companion animals in for treatment. Veterinarians rely on competition 
among the vaccine manufacturers to drive down the cost of services they 
provide. Where a single vaccine manufacturer controls a large share of 
a vaccine market, that manufacturer is able to extract higher prices as 
a result.
    AHP's proposed acquisition of Solvay's animal health business would 
give the combined entity a dominant position in the canine lyme, canine 
corona virus combination and feline leukemia combination vaccine 
markets. As a result, the combined entity would have the ability to 
raise prices in each of these markets. Furthermore, entry into these 
markets is difficult and time consuming because of lengthy development 
periods and the need for approvals by the United States Department of 
Agriculture (``USDA'') and is unlikely to offset the competitive harm 
that would result from the combination of AHP and Solvay's animal 
health business.
    The proposed consent order requires AHP to divest certain assets to 
Schering-Plough, Ltd. (``Schering-Plough'') relating to Solvay's canine 
lyme, canine corona virus combination and feline leukemia combination 
vaccines including, but not limited to, master seeds and cell stock, 
know-how, intellectual property and research and development. In 
addition, AHP is required to assist Schering-Plough in obtaining USDA 
certification. These

[[Page 10059]]

assets in the hands of Schering-Plough are sufficient to replace the 
lost competition that would result from the acquisition.
    Public comments regarding all aspects of the proposed divestiture 
to Schering-Plough will be considered with other comments on the 
proposed Order.
    Under the proposed Order, if Schering-Plough ceases to sell 
contract manufactured canine lyme, canine corona virus combination and 
feline leukemia combination vaccines prior to obtaining USDA 
certification, abandons its efforts to obtain USDA approval, or fails 
to obtain timely USDA approval, or in the event AHP fails to divest the 
assets absolutely and in good faith, the Commission may terminate the 
divestiture agreement and appoint a trustee to divest Solvay's canine 
lyme vaccine, canine corona virus combination vaccines, and feline 
leukemia combination vaccines, as well as Solvay's Charles City 
Facility and equine vaccines. The crown jewel provision also includes, 
at AHP's discretion, a supply contract for a term not to exceed (3) 
three years from the date of the divestiture, which requires the new 
acquirer to supply AHP (i) any swine or poultry vaccines for sale 
worldwide, (ii) any canine lyme vaccine, canine corona virus 
combination vaccines and feline leukemia combination vaccines for sale 
by AHP outside the United States and Canada and (iii) single antigen 
rabies vaccine and feline leukemia combination vaccine with rabies for 
sale worldwide being produced at the Charles City Facility at the time 
of divestiture, priced at each vaccine's average total cost. This crown 
jewel provision will ensure that a trustee can divest a package of 
assets that is sufficiently attractive to potential buyers.
    Under the provisions of the proposed Order, AHP is also required to 
provide the Commission with a report of compliance with the divestiture 
provisions of the Order within sixty (60) days following the date this 
Order becomes final, and every ninety (90) days thereafter until AHP 
has fully complied with the divestiture provisions of the proposed 
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.

Concurring Statement of Commissioner Mary L. Azcuenaga in American Home 
Products Corp., File No. 971-0009

    I concur in the decision to accept the consent agreement for public 
comment and write separately to invite comment on whether and when the 
Commission should require the firm divesting assets to give up patent 
rights beyond those acquired in the transaction at issue. Paragraph IID 
of the proposed order requires American Home Products (AHP) not only to 
license the intellectual property that is acquired from Solvay S.A., 
but also to agree not to sue the acquiring firm for infringement of 
vaccine patents that AHP owned before the acquisition. The firm 
purchasing the divested assets will obtain Solvay's intellectual 
property free and clear of any claim that the Solvay vaccines infringe 
AHP's patents. Should the Commission resolve the patent dispute 
regarding whether Solvay's vaccines infringed AHP's patents, and if so, 
how should such a dispute be resolved?

[FR Doc. 97-5343 Filed 3-4-97; 8:45 am]
BILLING CODE 6750-01-M