[Federal Register Volume 59, Number 227 (Monday, November 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-29181]
[Federal Register: November 28, 1994]
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FEDERAL TRADE COMMISSION
[File No. 941 0116]
American Home Products Corp.; Proposed Consent Agreement With
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 acts and practices and unfair methods of competition, this
consent agreement, accepted subject to final Commission approval, would
require, among other other things, a New Jersey-based corporation to
divest its tetanus and diphtheria vaccine business to a Commission-
approved buyer, to license Cyanamid's rotavirus vaccine research to a
Commission-approved licensee, and to discontinue reporting arrangements
with licensees that may provide competitively sensitive information.
The consent agreement also would prohibit, for ten years, the
respondent from acquiring any interest in any entity engaged in the
clinical development, or manufacture and sale, of tetanus, diphtheria,
or rotavirus vaccines in the United States without prior Commission
approval.
DATES: Comments must be received on or before January 27, 1995.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT:
Claudia Higgins or Ann Malester, FTC/S-2224, Washington, DC 20580.
(202) 326-2682
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 following consent agreement containing a consent order to
divest, 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. 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
Sec. 4.9(b)(b)(ii) of the Commission's rules of practice (16 CFR
4.9(b)(6)(ii)).
Agreement Containing Consent Order
The Federal Trade Commission (``Commission''), having initiated an
investigation of the Acquisition of certain stock of American Cyanamid
Company (``Cyanamid'') by American Home Products Corporation (``AHP''),
and it now appearing that AHP, hereinafter sometimes referred to as
``Proposed Respondent,'' is willing to enter into an Agreement
Containing Consent Order (``Agreement'') to (i) divest certain assets,
(ii) license certain assets, (iii) contract manufacture certain
products, (iv) cease and desist from certain acts, and (v) provide for
certain other relief:
It is hereby agreed By and between Proposed Respondent, by its duly
authorized officers and its attorneys, and counsel for the Commission
that:
1. Proposed Respondent AHP is a corporation organized, existing and
doing business under and by virtue of the laws of the state of
Delaware, with its principal place of business located at Five Giralda
Farms, Madison, New Jersey 07940.
2. Proposed Respondent admits all the jurisdictional facts set
forth in the draft of complaint here attached.
3. Proposed Respondent waives:
(a) Any further procedural steps;
(b) The requirement that the Commission's decision contain a
statement of findings of fact and conclusions of law;
(c) All rights to seek judicial review or otherwise to challenge or
contest the validity of the order entered pursuant to this Agreement;
and
(d) Any claims under the Equal Access to Justice Act.
4. This Agreement shall not become part of the public record of the
proceeding unless and until it is accepted by the Commission. If this
Agreement is accepted by the Commission it, together with the draft of
complaint contemplated thereby, will be placed on the public record for
a period of sixty (60) days and information in respect thereto publicly
released. The Commission thereafter may either withdraw its acceptance
of this Agreement and so notify the Proposed Respondent, in which event
it will take such action as it may consider appropriate, or issue and
serve its complaint (in such form as the circumstances may require) and
decision, in disposition of the proceeding.
5. This Agreement is for settlement purposes only and does not
constitute an admission by the Proposed Respondent that the law has
been violated as alleged in the draft of complaint here attached, or
that the facts as alleged in the draft complaint, other than
jurisdictional facts, are true.
6. This Agreement contemplates that, if it is accepted by the
Commission, and if such acceptance is not subsequently withdrawn by the
Commission pursuant to the provisions of Sec. 2.34 of the Commission's
rules, the Commission may, without further notice to Proposed
Respondent, (1) issue its complaint corresponding in form and substance
with the draft of complaint here attached and its decision containing
the following Order to divest and license and to cease and desist in
disposition of the proceeding, and (2) make information public with
respect thereto. When so entered, the Order shall have the same force
and effect and may be altered, modified, or set aside in the same
manner and within the same time provided by statute for other orders.
The Order shall become final upon service. Delivery by the United
States Postal Service of the complaint and decision containing the
agreed-to Order to Proposed Respondent's address as stated in this
Agreement shall constitute service. Proposed Respondent waives any
right it may have to any other manner of service. The complaint may be
used in construing the terms of the Order, and no agreement,
understanding, representation, or interpretation not contained in the
Order or the Agreement may be used to vary or contradict the terms of
the Order.
7. Proposed Respondent has read the proposed Complaint and Order
contemplated hereby. Proposed Respondent understands that once the
Order has been issued, it will be required to file one or more
compliance reports showing it has fully complied with the Order.
Proposed Respondent further understands that it may be liable for civil
penalties in the amount provided by law for each violation of the Order
after it becomes final.
Order
I
Definitions
It is ordered, That, as used in this Order, the following
definitions shall apply:
A. ``AHP'' means American Home Products Corporation, its
predecessors, subsidiaries, divisions, groups and affiliates controlled
by AHP, and their respective directors, officers, employees, agents and
representatives, and their respective successors and assigns.
B. ``Cyanamid'' means American Cyanamid Company.
C. ``Acquirer'' means the entity to whom AHP shall divest AHP's
Tetanus and Diphtheria Vaccine Assets pursuant to Paragraph II of this
Order.
D. ``New Acquirer'' means the entity to whom the trustee shall
divest AHP's Tetanus and Diphtheria Vaccine Assets pursuant to
Paragraph IV of this Order.
E. ``Rotavirus Licensee'' means the entity to whom AHP shall
license Cyanamid's Rotavirus Vaccine Research pursuant to Paragraph V
of this Order.
F. ``Respondent'' means AHP.
G. ``Commission'' means the Federal Trade Commission.
H. ``Acquisition'' means the acquisition by AHP of the common stock
of Cyanamid pursuant to a tender offer commended on August 10, 1994.
I. ``AHP's Tetanus and Diphtheria Vaccine Assets'' means AHP's
assets relating to the manufacture and sale of AHP's Tetanus and
Diphtheria Vaccines that are not part of AHP's physical facilities or
other tangible assets. ``AHP's Tetanus and Diphtheria Vaccine Assets''
include but are not limited to all formulations, patents, trade
secrets, technology, know-how, specifications, designs, drawings,
processes, production information, manufacturing information, testing
and quality control data, research materials, technical information,
distribution information, customer lists, information stored on
management information systems and specifications sufficient for the
Acquirer or the New Acquirer, as applicable, to use such information,
software used solely in connection with AHP's Tetanus and Diphtheria
Vaccines and all data, materials and information relating to United
States Food and Drug Administration (``FDA'') approvals for Tetanus and
Diphtheria Vaccines. ``AHP's Tetanus and Diphtheria Vaccine Assets'' do
not include any manufacturing assets of AHP or any assets acquired by
AHP from American Cyanamid as a result of the Acquisition or AHP's
Vaccine Filling and Packaging Assets.
J. ``AHP's Vaccine Filling and Packaging Assets'' means a non-
exclusive license to all patents, trade secrets, technology and know-
how relating to filling vials, syringes or other forms of filling or
packaging used by AHP for Tetanus and Diphtheria Vaccines at any time
up to and including the date of the Acquisition, including but not
limited to the Tubex filling system. ``AHP's Vaccine Filling
and Packaging Assets'' do not include any manufacturing assets of AHP
or any assets acquired by AHP from American Cyanamid as a result of the
Acquisition.
K. ``Tetanus and Diphtheria Vaccines'' means vaccines used to
create and maintain antitoxin levels in human beings to prevent tetanus
and/or diphtheria, including tetanus toxoid vaccine, tetanus-diphtheria
toxoids vaccine (adult) and diphtheria-tetanus toxoids vaccine
(pediatric), approved by the FDA for sale in the United States.
L. ``Contract Manufacture'' means the manufacture of Tetanus and
Diphtheria Vaccines by AHP for sale to the Acquirer or the New
Acquirer, as applicable, in Finished Packaged Form, in annual volumes
not to exceed: Tetanus Toxoid (fluid) 1,000,000 doses; Tetanus Toxoid
(absorbed) 3,000,000 doses; diphtheria-tetanus toxoids vaccine
(pediatric) 1,000,000 doses; and tetanus-diphtheria toxoids vaccine
(adult) 13,000,000 doses.
M. ``Finished Packaged Form'' means packaged in a form acceptable
for commercial sale in the United States, in each form of packaging, or
substantially similar thereto (including Tubex & prefilled
syringes) as that used by AHP (any time up to and including the date of
the Acquisition) in the distribution and sale of AHP's Tetanus and
Diphtheria Vaccines, with information including but not limited to the
name and identification codes of the Acquirer or the New Acquirer, as
applicable, inscribed on the packaging of the Tetanus and Diphtheria
Vaccines, and packaged in units specified by the Acquirer or the New
Acquirer, as applicable, as permitted by AHP's existing FDA approvals.
N. ``Cost'' means AHP's actual per unit cost of manufacturing AHP's
Tetanus and Diphtheria Vaccines, which may be adjusted once annually to
reflect any increases in AHP's actual cost, provided, however, that for
any year, the total rate of such adjustment with respect to all
components of cost other than material and labor shall not exceed the
rate of increase in the Consumer Price Index for such year.
O. ``Formulation'' means any and all information, including both
patent and trade secret information, technical assistance and advice,
relating to the manufacture of Tetanus and Diphtheria Vaccines that
meet United States Food and Drug Administration approved specifications
therefor.
P. ``Cyanamid's Rotavirus Vaccine Research'' means:
(1) All of the patents and patent applications that Cyanamid holds,
has an option to hold or is licensed to practice under and that are
directed to the development of a vaccine to protect humans against
rotavirus disease;
(2) All of the know-how that Cyanamid received from licensors or
developed itself that is directed to the development of a vaccine to
protect humans against rotavirus disease;
(3) All of the biochemical materials, including, but not limited
to, reagents, cell lines, monoclonal antibodies, bacculovirus stocks
and rotarvirus stocks that are directed to the development of a vaccine
to protect humans against rotavirus disease; and
(4) All documentation, written materials, and other relevant data
that are directed to the development of a vaccine to protect humans
against rotavirus disease;
as of that date of the licensing pursuant to Paragraph V or VI of this
Order, which can be licensed to the Rotavirus Licensee including, but
not limited to, those items enumerated in the Confidential Appendix A
attached to the Confidential version of this Agreement on file at the
Commission.
II
Tetanus and Diphtheria Vaccines Divestiture Provisions
It is further ordered, That:
A. Within four (4) months of the date this Order becomes final, AHP
shall divest, absolutely and in good faith, AHP's Tetanus and
Diphtheria Vaccine Assets and consummate an agreement that includes the
provisions required by Paragraph II.C of this Order, with an Acquirer
or a New Acquirer, as applicable, (hereinafter ``Divestiture
Agreement'').
B. Respondent shall divest AHP's Tetanus and Diphtheria Vaccine
Assets only to and consummate a Divestiture Agreement only with an
Acquirer or New Acquirer, as applicable, that receives the prior
approval of the Commission and only in a manner that receives the prior
approval of the Commission. The purpose of the divestiture of AHP's
Tetanus and Diphtheria Vaccine Assets and the Divestiture Agreement is
to ensure the continuation of AHP Tenanus and Diphtheria Vaccine Assets
as an ongoing, independent operation, engaged in the same business in
which AHP's Tetanus and Diphtheria Vaccine Assets are presently
engaged, and to remedy the lessening of competition resulting from the
proposed Acquisition as alleged in the Commission's Complaint.
C. The Divestiture Agreement shall include the following and AHP
shall commit to satisfy the following:
1. AHP shall Contract Manufacture and deliver to the Acquirer or
the New Acquirer, as applicable, in a timely manner the requirements of
the Acquirer or the New Acquirer, as applicable, for Tetanus and
Diphtheria Vaccines at AHP's Cost for a period not to exceed five (5)
years from the date the Divestiture Agreement (or the New Acquirier's
Divestiture Agreement, as applicable) is approved, or six (6) months
after the date the Acquirer or the New Acquirer, as applicable, obtains
all necessary FDA approvals to manufacture Tetanus and Diphtheria
Vaccines for sale in the United States, whichever is earlier; Provided,
however, That the five (5) year period shall be extended for a period
not to exceed twenty-four (24) months if the trustee submits to the
Commission the certification provided for in Subparagraph II.C.10 of
this Order.
2. AHP shall commence delivery of Tetanus and Diphtheria Vaccines
to the Acquirer or the New Acquirer, as applicable, within two (2)
months from the date the Commission approves the Acquirer and the
Divestiture Agreement (or the New Acquirer and its Divestiture
Agreement).
3. After AHP commences delivery of Tetanus and Diphtheria Vaccine
to the Acquirer or the New Acquirer, as applicable, pursuant to
Subparagraph II.C.2 of this Order, all inventory of Tetanus and
Diphtheria Vaccines produced by AHP at its facility located at
Marietta, Pennsylvania, regardless of the date of its production, may
be sold by AHP only to the Acquirer or the New Acquirer, as applicable.
4. AHP shall make representations and warranties to the Acquirer or
the New Acquirer, as applicable, that the Tetanus and Diphtheria
Vaccines contract manufactured by AHP for the Acquirer or the New
Acquirer, as applicable, meet the United States Food and Drug
Administration approved specifications therefore and are not
adulterated or misbranded within the meaning of the Food, Drug, and
Cosmetic Act, 21 U.S.C. 321, et seq. AHP shall agree to indemnify,
defend and hold the Acquirer or the New Acquirer, as applicable,
harmless from any and all suits, claims, actions, demands, liabilities,
expenses or losses alleged to result from the failure of the Tetanus
and Diphtheria Vaccines contract manufacturer by AHP to meet FDA
specifications. This obligation shall be contingent upon the Acquirer
or the New Acquirer, as applicable, giving AHP prompt, adequate notice
of such claim, cooperating fully in the defense of such claim, and
permitting AHP to assume the sole control of all phases of the defense
and/or settlement of such claim, including the selection of counsel.
This obligation shall not require AHP to be liable for any negligent
act or omission of the Acquirer or the New Acquirer, as applicable, or
for any representations and warranties, express or implied, made by the
Acquirer or the New Acquirer, as applicable, that exceed the
representations and warranties made by AHP to the Acquirer or the New
Acquirer, as applicable.
5. During the term of contract manufacturing, upon reasonable
request by the Acquirer or the New Acquirer, as applicable, AHP shall
make available to the Acquirer or the New Acquirer, as applicable, all
records kept in the normal course of business that relate to the cost
of manufacturing Tetanus and Diphtheria Vaccines at its Marietta,
Pennsylvania facility.
6. Upon reasonable notice and request from the Acquirer or the New
Acquirer, as applicable, AHP shall provide information, technical
assistance and advice sufficient to assist the Acquirer or the New
Acquirer, as applicable, in obtaining all necessary FDA approvals to
manufacturing Tetanus and Diphtheria Vaccines for sale in the United
States. Upon reasonable notice and request from the Acquirer or the New
Acquirer, as applicable, AHP shall also provide consultation with
knowledgeable employees of AHP and training at the Acquirer's facility
or the New Acquirer's facility, as applicable, for a period of time,
not to exceed one (1) year, sufficient to satisfy the Acquirer's
management or the New Acquirer's management, as applicable, that its
personnel are adequately trained in the manufacture of Tetanus and
Diphtheria Vaccines for sale in the United States. Respondent may
require reimbursement from the Acquirer or the New Acquirer, as
applicable, for all its direct out-of-pocket expenses incurred in
providing the services required by this Subparagraph II.C.6.
7. AHP shall offer an option for a non-exclusive license of AHP's
Vaccine Filling and Packaging Assets to the Acquirer or the New
Acquirer, as applicable, which option shall be exercisable within one
(1) year from the date the Commission approves the Divestiture
Agreement and the Acquirer or New Acquirer, as applicable. The license
granted pursuant to this Subparagraph: (a) May prohibit any
sublicensing by the Acquirer or New Acquirer, as applicable, except as
part of a sale of all of the Tetanus and Diphtheria Vaccines assets of
the Acquirer or New Acquirer, as applicable, if such sale occurs after
the Acquirer or the New Acquirer, as applicable, has obtained all
necessary FDA approvals to manufacture tetanus and diphtheria vaccines
for sale in the United States; (b) shall terminate if the Acquirer or
New Acquirer, as applicable, ceases to produce or sell Tetanus and
Diphtheria Vaccines in the United States, unless the license is
transferred to a new entity pursuant to Paragraph II.C.7 (a); and (c)
may prohibit the Acquirer or the New Acquirer, as applicable, from
using AHP's Vaccine Filling and Packaging Assets for any purpose other
than for filling and packaging products manufactured or sold by the
Acquirer or the New Acquirer, as applicable.
8. The Divestiture Agreement shall require the Acquirer or the New
Acquirer, as applicable, to submit to the Commission within sixty (60)
days of the approval by the Commission of the Divestiture Agreement
with the Acquirer or the New Acquirer, as applicable, a certification
attesting to the good faith intention of the Acquirer or the New
Acquirer, as applicable, and including an actual plan by the Acquirer
or the New Acquirer, as applicable, to obtain in an expeditious manner
all necessary FDA approvals to manufacture Tetanus and Diphtheria
Vaccines for sale in the United States.
9. The Divestiture Agreement shall require the Acquirer or the New
Acquirer, as applicable, to submit to the trustee appointed pursuant to
Paragraph III of this order, periodic verified written reports setting
forth in detail the efforts of the Acquirer or the New Acquirer, as
applicable, to sell contract manufactured Tetanus and Diphtheria
Vaccines in the United States and to obtain all FDA approvals necessary
to manufacture its own Tetanus and Diphtheria Vaccines for sale in the
United States. The Divestiture Agreement shall require the first such
report to be submitted 60 days from the date the Divestiture Agreement
is approved by the Commission and every 90 days thereafter until all
necessary FDA approvals are obtained by the Acquirer or the New
Acquirer, as applicable, to manufacture Tetanus and Diptheria Vaccines
for sale in the United States. The Divestiture Agreement shall also
require the Acquirer or the New Acquirer, as applicable, to report to
the Commission and the trustee at least thirty (30) days prior to its
ceasing the sale of contract manufactured Tetanus and Diphtheria
Vaccines in the United States for any time period exceeding sixty (60)
days or abandoning its efforts to obtain all necessary FDA approvals to
manufacture its own Tetanus and Diphtheria Vaccines for sale in the
United States.
10. The Divestiture Agreement shall provide that the Commission may
terminate the Divestiture Agreement if the Acquirer or the New
Acquirer, as applicable: (1) Voluntarily ceases for sixty (60) days or
more the sale of Tetanus and Diphtheria Vaccines in the United States
prior to obtaining all necessary FDA approvals to manufacture Tetanus
and Diphtheria Vaccines for sale in the United States; (2) abandons its
efforts to obtain all necessary FDA approvals to manufacture Tetanus
and Diphtheria Vaccines for sale in the United States; or (3) fails to
obtain all necessary FDA approvals of its own to manufacture Tetanus
and Diphtheria Vaccines for sale in the United States within five (5)
years from the date the Commission approves the Divestiture Agreement
with the Acquirer or the New Acquirer, as applicable; Provided,
however, That the five (5) year period may be extended for a period not
to exceed twenty-four (24) months if the trustees certifies to the
Commission that the Acquirer or the New Acquirer, as applicable, made
good faith efforts to obtain all necessary FDA approvals for
manufacturing Tetanus and Diphtheria Vaccines for sale in the United
States and that such FDA approvals appear likely to be obtained within
such extended time period.
11. The Divestiture Agreement shall provide that, if the
Divestiture Agreement is terminated, the AHP Tetanus and Diphtheria
Vaccine Assets shall be divested by the trustee to a New Acquirer
pursuant to the provisions of Paragraph IV of this Order.
D. While the obligations imposed by Paragraphs II, III or IV of
this Order are in effect, Respondent shall take such actions as are
necessary: (1) To maintain all necessary FDA approvals to manufacture
AHP's Tetanus and Diphtheria Vaccines for sale in the United States;
(2) to maintain the viability and marketability of AHP's Tetanus and
Diphtheria Vaccine Assets as well as all tangible assets, including
manufacturing facilities, needed to contract manufacture and sell
Tetanus and Diphtheria Vaccines; and (3) to prevent the destruction,
removal, wasting, deterioration or impairment of any of AHP's Tetanus
and Diphtheria Vaccine Assets or tangible assets including
manufacturing facilities needed to contract manufacture and sell
Tetanus and Diphtheria Vaccines except for ordinary wear and tear.
III
Tetanus and Diphtheria Vaccines Trustee Auditor Provisions
It is further ordered, That:
A. Within thirty (30) days of the date this Order becomes final,
the Commission shall appoint a trustee to ensure that AHP and the
Acquirer or the New Acquirer, as applicable, expeditiously perform
their respective responsibilities as required by the Divestiture
Agreement approved by the Commission and by Paragraph II of this Order.
AHP shall consent to the following terms and conditions regarding the
trustee's powers, duties, authorities, and responsibilities:
1. The Commission shall select the trustee, subject to the consent
of AHP, which consent shall not be unreasonably withheld. IF AHP has
not opposed, in writing, including the reasons for opposing, the
selection of any proposed trustee within ten (10) days after notice by
the staff of the Commission to AHP of the identity of any proposed
trustee, AHP shall be deemed to have consented to the selection of the
proposed trustee.
2. The trustee shall have the power and authority to assure
Respondent's compliance with the terms of Paragraph II of this Order
and with the Divestiture Agreement with the Acquirer or the New
Acquirer, as applicable.
3. Within ten (10) days after appointment of the trustee, AHP shall
execute a trust agreement that, subject to the prior approval of the
Commission, confers on the trustee all the rights and powers necessary
to permit the trustee to assure Respondent's compliance with the terms
of Paragraph II of this Order and with the Divestiture Agreement with
the Acquirer or the New Acquirer, as applicable.
4. The trustee shall serve until such time as the Acquirer or the
New Acquirer, as applicable, has received all necessary FDA approvals
to manufacture Tetanus and Diphtheria Vaccines for sale in the United
States, or for fifteen years, whichever is shorter.
5. The trustee shall have full and complete access to the
personnel, books, records, facilities and technical information related
to the manufacture of AHP's Tetanus and Diphtheria Vaccines, or to any
other relevant information, as the trustee may reasonably request,
including but not limited to all records kept in the normal course of
business that relate to the cost of manufacturing Tetanus and
Diphtheria Vaccines. Respondent shall cooperate with any reasonable
request of the trustee. Respondent shall take no action to interfere
with or impede the trustee's ability to assure Respondent's compliance
with Paragraph II of this Order and the Divestiture Agreement with the
Acquirer or the New Acquirer, as applicable.
6. The trustee shall serve, without bond or other security, at the
cost and expense of AHP, on such reasonable and customary terms and
conditions as the Commission may set. The trustee shall have authority
to employ, at the cost and expense of AHP, such consultants,
accountants, attorneys and other representatives and assistants as are
reasonably necessary to carry out the trustee's duties and
responsibilities. The trustee shall account for all expenses incurred.
The Commission shall approve the account of the trustee, including fees
for his or her services.
7. Respondent shall indemnify the trustee and hold the trustee
harmless against any losses, claims, damages, liabilities, or expenses
arising out of, or in connection with, the performance of the trustee's
duties, including all reasonable fees of counsel and other expenses
incurred in connection with the preparations for, or defense of any
claim whether or not resulting in any liability, except to the extent
that such liabilities, losses, damages, claims, or expenses result from
the misfeasance, gross negligence, willful or wanton acts, or bad faith
by the trustee.
8. If the trustee ceases to act or fails to act diligently, a
substitute trustee shall be appointed in the same manner as provided in
Paragraph III of this Order.
9. The commission may on its own initiative or at the request of
the trustee issue such additional orders or directions as may be
necessary or appropriate to assure compliance with the requirements of
Paragraph II of this Order and the Divestiture Agreement with the
Acquirer or the New Acquirer, as applicable.
10. The trustee shall evaluate reports submitted to it by the
Acquirer or the New Acquirer, as applicable, with respect to the
efforts of the Acquirer or the New Acquirer, as applicable, to obtain
all necessary FDA approvals to manufacture Tetanus and Diphtheria
Vaccines for sale in the United States and shall report in writing to
the Commission every six months concerning compliance by the Respondent
and the Acquirer or the New Acquirer, as applicable, with the
provisions of Paragraph II of this Order and the efforts of the
Acquirer or the New Acquirer, as applicable, to receive all necessary
FDA approvals to manufacture Tetanus and Diphtheria Vaccines for sale
in the United States.
B. Respondent shall comply with all reasonable directives of the
trustee regarding:
1. Respondent's obligations to contract manufacture and deliver the
Acquirer's requirements or the New Acquirer's requirements, as
applicable, for Tetanus and Diphtheria Vaccines, pursuant to Paragraphs
II.C.1 and II.C.2 of this Order;
2. Respondent's obligations to provide representations and
warranties regarding Tetanus and Diphtheria Vaccines, pursuant to
Paragraph II.C.4 of this Order; and
3. Respondent's obligations to provide information, technical
assistance and advice, pursuant to Paragraph II.C.6 of this Order.
C. If the Commission terminates the Divestiture Agreement pursuant
to Paragraph II.C.10, the Commission may direct the trustee to seek a
New Acquirer, as provided for in Paragraph IV of this Order.
IV
Tetanus and Diphtheria Vaccines Trustee Divestiture Provisions
It is further ordered, That:
A. (1) If AHP fails to divest absolutely and in good faith AHP's
Tetanus and Diphtheria Vaccine Assets and to consummate a Divestiture
Agreement with an Acquirer within four (4) months from the date this
Order becomes final, then any executed Divestiture Agreement with the
Acquirer shall be terminated and the Commission may direct the trustee
appointed pursuant to Paragraph II of this Order (a) to divest AHP's
Tetanus and Diphtheria Vaccine Assets and (b) to enter into a
Divestiture Agreement that satisfies the requirements of Paragraph II
of this Order with a New Acquirer. The trustee shall have the same
authority and responsibilities pursuant to Paragraph III of this Order
with respect to the New Acquirer.
(2) If the Commission terminates the Divestiture Agreement pursuant
to Paragraph II.C.10, the Commission may direct the trustee appointed
under Paragraph III of this Order (a) to divest AHP's Tetanus and
Diphtheria Vaccine Assets to a New Acquirer and (b) to enter into a new
Divestiture Agreement with such New Acquirer. In any case under this
subparagraph IV.A(2), the trustee shall have the same authority and
responsibilities with respect to the New Acquirer as those described in
Paragraph III of this Order.
Neither the decision of the Commission to direct the trustee nor
the decision of the Commission not to direct the trustee to divest
AHP's Tetanus and Diphtheria Vaccine Assets under subparagraph IV.A(1)
of this Paragraph shall preclude the Commission or the Attorney General
from seeking civil penalties or any other relief available to it,
including a court-appointed trustee, pursuant to section 5(l) of the
Federal Trade Commission Act, or any other statute enforced by the
Commission, for any failure by the respondent to comply with this
order.
B. If the trustee is directed under subparagraph A of this
Paragraph to divest the AHP Tetanus and Diphtheria Vaccine Assets to a
New Acquirer and to enter into a Divestiture Agreement with the New
Acquirer, Respondent shall consent to the following terms and
conditions regarding the trustee's powers, duties, authority, and
responsibilities:
1. The Commission shall extend the authority and responsibilities
of the trustee appointed under Paragraph III of this Order to include
divesting AHP's Tetanus and Diphtheria Vaccine Assets and directing AHP
to enter into a Divestiture Agreement with the New Acquirer, subject to
the consent of Respondent, which consent shall not be unreasonably
withheld. If respondent has not opposed, in writing, including the
reasons for opposing, the extension of the authority and
responsibilities of the trustee selected under Paragraph III of this
Order within ten (10) days after notice by the staff of the Commission
to Respondent that the trustee's authority and responsibilities are to
be extended pursuant to this paragraph, respondent shall be deemed to
have consented to the extension of the trustee's authority and
responsibilities.
2. Subject to the prior approval of the Commission, the trustee
shall have the exclusive power and authority to divest AHP's Tetanus
and Diphtheria Vaccine Assets to a New Acquirer pursuant to the terms
of Paragraph II of this Order and to enter into a Divestiture Agreement
with the New Acquirer pursuant to the terms of Paragraph II of this
Order, which Divestiture Agreement shall be subject to the prior
approval of the Commission. The trustee will have the authorities and
responsibilities as described in Paragraph III with respect to the New
Acquirer.
3. Within ten (10) days after extension of the trustee's authority
and responsibilities, respondent shall amend the existing trust
agreement, that, subject to the prior approval of the Commission and,
in the case of a court-appointed trustee, of the court, transfers to
the trustee all rights and powers necessary to permit the trustee to
divest AHP's Tetanus and Diphtheria Vaccine Assets to a New Acquirer
and to enter into a Divestiture Agreement with the New Acquirer.
4. The trustee shall have six (6) months from the date the
Commission extends his or her authority and responsibilities under
Paragraph IV A.(1) of this Order to divest AHP's Tetanus and Diphtheria
Vaccines Assets and to enter into a Divestiture Agreement with the New
Acquirer that satisfies the requirements of Paragraph II of this Order.
5. The trustee shall have full and complete access to the
personnel, books, records and facilities of AHP related to the
manufacture, distribution, or sale of Tetanus and Diphtheria Vaccines
or to any other relevant information, as the trustee may request.
Respondent shall develop such financial or other information as such
trustee may request and shall cooperate with the trustee. Respondent
shall take no action to interfere with or impede the trustee's
accomplishment of his or her responsibilities.
6. The trustee shall use his or her best efforts to negotiate the
most favorable price and terms available in each contract that is
submitted to the Commission, subject to respondent's absolute and
unconditional obligation to divest at no minimum price; to assure that
AHP enters into a Divestiture Agreement that complies with the
provisions of paragraph II.A; to assure that AHP complies with the
remaining provisions of paragraph II of this Order; and to assure that
the New Acquirer obtains all necessary FDA approvals to manufacture
Tetanus and Diphtheria Vaccines for sale in the United States. The
divestiture and the Divestiture Agreement shall be made to the New
Acquirer in the manner set forth in Paragraph II of this Order;
provided, however, if the trustee receives bona fide offers from more
than one acquiring entity, and if the Commission determines to approve
more than one such acquiring entity, the trustee shall divest to the
acquiring entity selected by respondent from among those approved by
the Commission.
7. The trustee shall serve, without bond or other security, at the
cost and expense of respondent, on such reasonable and customary terms
and conditions as the Commission or a court may set. The trustee shall
have the authority to employ, at the cost and expense of respondent,
such consultants, accountants, attorneys, investment bankers, business
brokers, appraisers, and other representatives and assistants as are
necessary to carry out the trustee's duties and responsibilities. The
trustee shall account for all monies derived from the divestiture and
all expenses incurred. After approval by the Commission and, in the
case of a court-appointed trustee, by the court, of the account of the
trustee, including fees for his or her services, all remaining monies
shall be paid at the direction of the respondent. The trustee's
compensation shall be based at least in significant part on a
commission arrangement contingent on the trustee's locating a New
Acquirier and assuring compliance with this Order.
8. Respondent shall indemnify the trustee and hold the trustee
harmless against any losses, claims, damages, liabilities, or expenses
arising out of, or in connection with, the performance of the trustee's
duties, including all reasonable fees of counsel and other expenses
incurred in connection with the preparation for, or defense of any
claim, whether or not resulting in any liability, except to the extent
that such liabilities, losses, damages, claims, or expenses result from
misfeasance, gross negligence, willful or wanton acts, or bad faith by
the trustee.
9. If the trustee ceases to act or fails to act diligently, a
substitute trustee shall be appointed in the same manner as provided in
Paragraph III of this order.
10. The Commission or, in the case of a court-appointed trustee,
the court, may on its own initiative or at the request of the trustee
issue such additional orders or directions as may be necessary or
appropriate to comply with the terms of this Order.
11. The trustee shall have no obligation or authority to operate or
maintain AHP's Tetanus and Diphtheria Vaccine Assets.
12. The trustee shall report in writing to respondent and the
Commission every sixty (60) days concerning his or her efforts to
divest AHP's Tetanus and Diphtheria Vaccine Assets, AHP's compliance
with the terms of this Order, and the New Acquirer's efforts to obtain
all necessary FDA approval to manufacture Tetanus and Diphtheria
Vaccines for sale in the United States.
13. If, within five (5) years from the date on which the Commission
approves the New Acquirer, the New Acquier has not obtained all
necessary FDA approvals to manufacture Tetanus and Diphtheria Vaccines
for sale in the United States, then the Divestiture Agreement between
AHP and the New Acquirer shall terminate.
V
Rotavirus Vaccine Research Licensing Provisions
It is further ordered That:
A. Within twelve (12) months after the date this Order becomes
final, Respondent shall: (1) Grant a non-exclusive license, in
perpetuity, and in good faith, of any technical information and patent
rights included in Cyanamid's Rotavirus Vaccine Research (see
Paragraphs A & C of Confidential Appendix A); and (2) provide samples
for research, adequate to satisfy the needs of the Rotavirus Licensee,
of any physical assets included in Cyanamid's Rotavirus Vaccine
Research (see Paragraph B of Confidential Appendix A) that are owned by
AHP; Provided, however, That such license shall be limited: (i) To use
solely in developing, producing and selling a vaccine to protect humans
against rotavirus disease; and (ii) to preclude its use to develop a
vector for a vaccine intended to protect against a disease other than
rotavirus.
B. Respondent shall license Cyanamid's Rotavirus Vaccine Research
only to a Rotavirus Licensee that receives the prior approval of the
Commission and only in a manner that receives the prior approval of the
Commission. The purpose of the licensing of Cyanamid's Rotavirus
Vaccine Research is to ensure the continuation of Cyanamid's Rotavirus
Vaccine Research as an ongoing research project for a rotavirus vaccine
to be approved by the FDA for sale in the United States and to remedy
the lessening of competition resulting from the Acquisition as alleged
in the Commission's complaint.
C. Upon reasonable notice and request from the Rotavirus Licensee,
Respondent shall provide reasonable assistance to the Rotavirus
Licensee regarding the Cyanamid Rotavirus Vaccine Research. Such
assistance shall include reasonable consultation with knowledgeable
employees of AHP and training at the Rotavirus Licensee's facilities or
at such other place as is mutually satisfactory to Respondent and the
Rotavirus Licensee for a period of time sufficient to satisfy the
Rotavirus Licensee's management that its personnel are appropriately
trained to proceed with the Cyanamid Rotavirus Vaccine Research.
However, AHP shall not be required to continue providing such
assistance for more than six (6) months from the date the licensing is
finally approved by the Commission. AHP may require reimbursement from
the Rotavirus Licensee for all its direct out-of-pocket expenses
incurred in providing the assistance to the Rotavirus Licensee.
D. Pending licensing of Cyanamid's Rotavirus Vaccine Research,
Respondent shall take such actions as are necessary to maintain the
viability and marketability of Cyanamid's Rotavirus Vaccine Research
and to prevent the destruction, removal, wasting, deterioration, or
impairment of Cyanamid's Rotavirus Vaccine Research except for ordinary
wear and tear.
VI
Rotavirus Vaccine Research Trustee Exclusive Licensing Provisions
It is further ordered, That:
A. If AHP has not, within twelve (12) months of the date this Order
becomes final, complied with the requirements of Paragraph V of this
Order, the Commission may appoint a trustee to (1) grant an exclusive
license, in perpetuity, and in good faith, of any technical information
and patent rights included in Cyanamid's Rotavirus Vaccine Research
(see Paragraphs A & C of Confidential Appendix A); and (2) provide
samples for research, adequate to satisfy the needs of the Rotavirus
Licensee, of any physical assets included in Cyanamid's Rotavirus
Vaccine Research (see Paragraph B of Confidential Appendix A) that are
owned by AHP; Provided, however, That: (i) Such exclusive license shall
be limited to use solely in developing, producing and selling a vaccine
to protect humans against rotavirus disease; (ii) such license shall be
limited to preclude its use to develop a vector for a vaccine intended
to protect against a disease other than rotavirus; and (iii) AHP shall
have the right to retain and use all of the Cyanamid Rotavirus Vaccine
Research assets, including samples of the assets in Paragraph B of
Confidential Appendix A, for the purpose of using them to develop a
vector for a vaccine intended to protect against a disease other than
rotavirus and for any other purpose other than developing and producing
a vaccine to protect humans against rotavirus disease. In the event the
Commission or the Attorney General brings an action against Respondent
pursuant to section 5(1) of the Federal Trade Commission Act, 15 U.S.C.
45(1), or any other statute enforced by the Commission, AHP shall
consent to the appointment of a trustee in such action. Neither the
appointment of a trustee nor a decision not to appoint a trustee under
this Paragraph shall preclude the Commission or the Attorney General
from seeking civil penalties or any other relief available to it,
including a court appointed trustee, pursuant to section 5(1) of the
FTC Act, or any other statute enforced by the Commission, for any
failure by Respondent to comply with this order.
B. If a trustee is appointed by the Commission or a court pursuant
to Paragraph VI.A of this Order, AHP shall consent to the following
terms and conditions regarding the trustee's powers, duties,
authorities, and responsibilities.
1. The Commission shall select the trustee, subject to the consent
of AHP, which consent shall not be unreasonably withheld. The trustee
shall be a person with experience and expertise in licensing
technology. If AHP has not opposed, in writing, including the reasons
for opposing, the selection of any proposed trustee within ten (10)
days after notice by the staff of the Commission to AHP of the identity
of any proposed trustee, AHP shall be deemed to have consented to the
selection of the proposed trustee.
2. Subject to the prior approval of the Commission, the trustee
shall have the exclusive power and authority to grant an exclusive
license of Cyanamid's Rotavirus Vaccine Research as described in
Paragraph VI.A. (``the Rotavirus Exclusive License'').
3. Within ten (10) days after appointment of the trustee, AHP shall
execute a trust agreement that, subject to the prior approval of the
Commission and, in the case of a court-appointed trustee, of the court,
transfers to the trustee all rights and powers necessary to permit the
trustee to enter into the Rotavirus Exclusive License as required by
this Order.
4. The trustee shall have twelve (12) months from the date the
Commission approves the trust agreement described in Paragraph VI.C.3
to accomplish the Rotavirus Exclusive License required by Paragraph VI
of this Order, which shall be subject to the prior approval of the
Commission. If, however, at the end of the twelve (12) month period,
the trustee has submitted a plan of licensing or believes that
exclusive licensing can be achieved within a reasonable time, the
twelve (12) month period may be extended by the Commission or, in the
case of a court-appointed trustee, by the court; provided, however, the
Commission may extend the twelve (12) month period only two (2) times.
5. The trustee shall have full and complete access to the
personnel, books, records, data, facilities, and technical information
related to the Rotavirus Vaccine Research, or to any other relevant
information, as the trustee may reasonably request. Respondent shall
develop such financial or other information as such trustee may request
and shall cooperate with the trustee. Respondent shall take no action
to interfere with or impede the trustee's ability to accomplish the
exclusive licensing of Cyanamid's Rotavirus Vaccine Research required
by this Order. Any delays in exclusively licensing Cyanamid's Rotavirus
Vaccine Research required by this Order caused by Respondent shall
extend the time under Paragraph VI.C.4 for accomplishing the exclusive
licensing of Cyanamid's Rotavirus Vaccine Research required by this
Order in an amount equal to the delay, as determined by the Commission
or, for the court-appointed trustee, by the court.
6. The trustee shall use his or her best efforts to negotiate the
most favorable price and terms available in each contract that is
submitted to the Commission, subject to AHP's absolute and
unconditional obligation to grant an exclusive license to Cyanamid's
Rotavirus Vaccine Research as required by this Order at no minimum
price. The exclusive license shall be made in the manner and to the
Rotavirus Licensee as set out in this Order; provided, however, if the
trustee receives bona fide offers from more than one acquiring entity,
and if the Commission determines to approve more than one such
acquiring entity, the trustee shall grant an exclusive license to the
acquiring entity selected by Respondent from among those approved by
the Commission.
7. The trustee shall serve, without bond or other security, at the
cost and expense of AHP, on such reasonable and customary terms and
conditions as the Commission or a court may set. The trustee shall have
authority to employ, at the cost and expense of AHP, such consultants,
accountants, attorneys, investment bankers, business brokers,
appraisers and other representatives and assistants as are necessary to
carry out the trustee's duties and responsibilities. After approval by
the Commission and, in the case of a court-appointed trustee, by the
court, of the account of the trustee, including fees for his or her
services, all remaining monies shall be paid at the direction of AHP
and the trustee's power shall be terminated. The trustee's compensation
shall be based at least in significant part on a commission arrangement
contingent on the trustee's ability to grant an exclusive license of
Cyanamid's Rotavirus Vaccine Research.
8. Respondent shall indemnify the trustee and hold the trustee
harmless against any losses, claims, damages, liabilities, or expenses
arising out of, or in connection with, the performance of the trustee's
duties, including all reasonable fees of counsel and other expenses
incurred in connection with the preparations for, or defense of any
claim whether or not resulting in any liability, except to the extent
that such liabilities, losses, damages, claims, or expenses result from
the misfeasance, gross negligence, willful or wanton acts, or bad faith
by the trustee.
9. If the trustee ceases to act or fails to act diligently, a
substitute trustee shall be appointed in the same manner as provided in
Paragraph VI.A. of this Order.
10. The Commission or, in the case of a court-appointed trustee,
the court, may on its own initiative or at the request of the trustee
issue such additional orders or directions as may be necessary or
appropriate to enter into the Rotavirus Exclusive License required by
this Order.
11. The trustee shall have no obligation or authority to operate or
maintain the Cyanamid Rotavirus Vaccine Research.
12. The trustee shall report in writing to AHP and to the
Commission every sixty (60) days concerning the trustee's efforts to
grant an exclusive license of Cyanamid's Rotavirus Vaccine Research as
required by this Order.
VII
GM-CSF and IL-3 Royalties
It is further ordered, That:
A. Within thirty (30) days of the date on which the FDA approves
any product that includes in whole or in part GM-CSF, as identified in
the October 9, 1987 Technology Transfer and GM-CSF Supply Agreement
between AHP and Sandoz, Ltd. (``GM-CSF Agreement''), AHP shall take
such action as may be necessary to ensure that the royalty payments
made pursuant to Section 10.2(b) of the GM-CSF Agreement and any
reports of such payments are made on a worldwide aggregated basis.
B. Within thirty (30) days of the date on which the FDA has
approved both (1) any product that includes in whole or in part IL-3,
as identified in the August 17, 1987 License Agreement for IL-3 between
AHP and Sandoz, Ltd. (``IL-3 Agreement''); and (2) any product that
includes in whole or in part Pixy321, also identified as rhIL-3/rhGM-
CSF S. cerevisiae fusion protein, AHP shall take such action as may be
necessary to ensure that the royalty payments made pursuant to Section
3.2 of the IL-3 Agreement and any reports of such payments are made on
a worldwide aggregated basis.
VIII
Prior Approval
It is further ordered, That, for a period of ten (10) years from
the date this Order becomes final or until Respondent satisfies the
requirements of Paragraphs II, III or IV, whichever is later,
Respondent shall not without the prior approval of the Commission,
directly or indirectly, through subsidiaries, partnerships, or
otherwise:
A. Acquire more than 1% of the stock, share capital, equity, or
other interest in any concern, corporate or non-corporate, presently
engaged in, or within the two years preceding such acquisition engaged
in, the (1) clinical development or (2) manufacture and sale of tetanus
or diphtheria vaccines in the United States;
B. Acquire any assets currently used for or previously used for
(and still suitable for use for) the (1) clinical development or (2)
manufacture and sale of tetanus or diphtheria vaccines in the United
States;
C. Acquire more than 1% of the stock, share capital, equity, or
other interest in any concern, corporate or noncorporate, presently
engaged in, or within the two years preceding such acquisition engaged
in, the (1) clinical development or (2) manufacture and sale in the
United States of a vaccine to protect humans against rotavirus disease;
or
D. Acquire any assets currently used for or previously used for
(and still suitable for use for) the (1) clinical development or (2)
manufacture and sale in the United States of a vaccine to protect
humans against rotavirus disease.
IX.
Reports
It is further ordered, That:
A. Within sixty (60) days after the date this Order becomes final
and every six (6) months after the date this Order becomes final until
AHP has fully complied with the provisions of Paragraphs II, IV, V and
VI of this Order, AHP shall submit to the Commission a verified written
report setting forth in detail the manner and form in which it intends
to comply, is complying, and has complied with these Paragraphs of this
Order. AHP shall include in its compliance reports, among other things
that are required from time to time, a full description of the efforts
being made to comply with these Paragraphs of this Order, including a
description of all substantive contacts or negotiations for
accomplishing the divestitures and entering into the Divestiture
Agreement required by this Order, including the identity of all parties
contacted. AHP shall include in its compliance reports copies of all
written communications to and from such parties, all internal
memoranda, and all reports and recommendations concerning the
Divestiture Agreement required by Paragraph II of this Order.
B. One (1) year from the date this Order becomes final and annually
for the next nine (9) years on the anniversary of the date this Order
becomes final or until the Acquirer or New Acquirer, as applicable, has
obtained all necessary FDA approvals to manufacture Tetanus and
Diphtheria Vaccines for sale in the United States, whichever is later,
and at such other times as the Commission may require, Respondent shall
file a verified written report with the Commission setting forth in
detail the manner and form in which it has complied and is complying
with this Order.
X.
Access
It is further ordered, That, for the purpose of determining or
securing compliance with this Order, and subject to any legally
recognized privilege, upon written request and on reasonable notice to
Respondent, Respondent shall permit any duly authorized representatives
of the Commission:
A. Access, during office hours and in the presence of counsel, to
inspect and copy all books, ledgers, accounts, correspondence,
memoranda and other records and documents in the possession or under
the control of Respondent, relating to any matters contained in this
consent order; and
B. Upon five (5) days' notice to Respondent, and without restraint
or interference from Respondent, to interview officers or employees of
Respondent, who may have counsel present, regarding such matters.
XI.
Corporate Change
It is further ordered, That Respondent shall notify the Commission
at least thirty (30) days prior to any change in Respondent such as
dissolution, assignment or sale resulting in the emergence of a
successor, the creation or dissolution of subsidiaries or any other
change that may affect compliance obligations arising out of the Order.
XII.
Sunset
It is further ordered, That, notwithstanding any other provision of
this Order, this Order shall terminate twenty years from the date this
Order becomes final.
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'') which requires AHP to
divest its tetanus and diphtheria vaccines business to a Commission-
approved purchaser. Further, AHP would be required to license American
Cyanamid Company's (``Cyanamid'') rotavirus vaccine research and to
aggregate royalty payment information relating to sales of particular
cytokines used for white blood cell and platelet restoration once FDA
approval is obtained for these products.
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.
Pursuant to an August 17, 1994, Agreement and Plan of Merger, AHP
will acquire all of Cyanamid's voting stock. The proposed complaint
alleges that the proposed acquisition would violate Section 7 of the
Clayton Act, as amended, 15 U.S.C. 18, and Section 5 of the FTC Act, as
amended, 15 U.S.C. 45, in the following five markets in the United
States:
(1) Combined tetanus and diphtheria vaccines approved for use for
adults and children at least seven years old, known as ``adult Td'';
(2) Combined diphtheria and tetanus vaccines for children between
the ages of two months and seven years old, known as ``pediatric DT'';
(3) Uncombined tetanus vaccines, known as ``tetanus toxoid'';
(4) Rotavirus vaccine research and development; and
(5) Cytokine research, development, and production.
The proposed Consent Order would remedy the alleged violation in
each of these markets. In the area of tetanus and diphtheria vaccines,
AHP would be required to divest, within four months, its tetanus and
diphtheria vaccines business to a Commission approved purchaser.
Because that purchaser will need to obtain FDA approval before it can
begin selling tetanus and diphtheria vaccines, the proposed Consent
Order also requires AHP to manufacture these vaccines for the approved
purchaser for a period of five years or until the purchaser gains FDA
approvals to manufacture its own tetanus and diphtheria vaccines. AHP
will be required to sell tetanus and diphtheria vaccines to the
purchaser at cost, with annual adjustments (exclusive of materials and
labor) indexed to the Consumer Price Index. In addition, under the
proposed Consent Order, AHP is required to provide technical assistance
and advice to assist the purchaser in obtaining FDA approval to
manufacture and sell tetanus and diphtheria vaccines. The proposed
Order also provides for a trustee to assure that AHP appropriately
divests its tetanus and diphtheria vaccines business. If AHP fails to
divest its tetanus and diphtheria business within four months, or if
the acquirer abandons its effort to obtain FDA approval to manufacture
and sell tetanus and diphtheria vaccines, then the trustee may be
directed to find another acquirer.
The proposed Consent Order also requires AHP to license, within one
year, on a nonexclusive basis, the Cyanamid rotavirus vaccine research
assets to a Commission-approved licensee. If AHP fails to find an
approved licensee within one year, then the Commission may appoint a
trustee to license the Cyanamid rotavirus vaccine research assets on an
exclusive basis to an approved licensee. AHP is also required under the
proposed Order to provide technical advice, assistance and training to
enable the licensee to continue the Cyanamid rotavirus research as an
ongoing project.
The proposed Consent Order prohibits AHP from receiving information
relating to the market for cytokines for white blood cell and platelet
restoration, unless the information is aggregated on a worldwide basis.
This provision of the proposed Consent Order does not become operative
until the FDA approves AHP's products in this area.
The proposed Consent Order will also prohibit AHP, for a period of
ten (10) years, from acquiring any interest in any entity engaged in
the clinical development, or manufacture and sale of tetanus,
diphtheria or rotavirus vaccines in the United States without prior
approval from the Commission. The proposed Order will also require AHP
to provide to the Commission a report of its compliance with the
provisions of the Order within sixty (60) days following the date this
Order becomes final, and every six (6) months thereafter until the
Commission has approved a purchaser and licensee.
One year from the date the Order becomes final and annually
thereafter for nine (9) years, AHP will be required to provide to the
Commission a report of its compliance with the Consent Order. The
Consent Order also requires AHP to notify the Commission at least
thirty (30) days prior to any change in the structure of AHP resulting
in the emergence of a successor. A sunset provision is also included
which terminates the order after 20 years.
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. 941-0116
Today, the Commission accepts for public comment a consent
agreement settling charges that American Home Products' proposed
acquisition of American Cyanamid Company is likely substantially to
lessen competition in the markets for three existing diphtheria and
tetanus vaccines and substantially to lessen competition to develop
a new rotavirus vaccine and to develop and produce cytokines. This
appears to be a strong antitrust case, but I seriously question
whether the remedy is sufficient.
Under the order, the divestiture of tetanus and diphtheria
vaccine assets is limited to certain intellectual property,
including formulations, patents, trade secrets, technology, and
know-how. The divestiture is structured so that, as a practical
matter, the only firms that could acquire the assets in question are
firms that in my opinion already would satisfy the tests under the
law for potential entrants. In short, the order will not restore the
competition lost as a result of the acquisition. Instead, the
Commission should require the divestiture of a viable business unit,
even if that business unit produces and sells products other than
the vaccines in question.
[FR Doc. 94-29181 Filed 11-25-94; 8:45 am]
BILLING CODE 6750-01-M
