Comments on: No Ovation for FTC's Latest Enforcement Theory

By: The Girl Scouts and Section 5 | TRUTH ON THE MARKET

The Girl Scouts and Section 5 | TRUTH ON THE MARKET — Fri, 05 Mar 2010 04:34:46 +0000

[...] scheme results, when coupled with Girl Scout marketing efforts, is tantamount to the evading pricing constraints imposed by current demand conditions. No word on whether the Girl Scouts have hired antitrust [...]

By: TRUTH ON THE MARKET » Ovation Reconsidered: A Response to Commissioner Leary

Thu, 17 Sep 2009 19:06:45 +0000

[...] FTC’s enforcement action in Ovation and takes on the criticism of that enforcement action in this post. You can see Commissioner Leary’s article here (I believe ABA registration and password [...]

By: Josh Wright

Josh Wright — Sat, 20 Dec 2008 03:29:36 +0000

Interesting possibility antitrust guy. Nothing to hint at that theory in the complaint. And also note that the time horizon we are talking about between the transaction and FDA approval is well less than a year (January 2006 to April 2006). But its certainly still possible a court wouldn’t view NeoProfen as a current market participating in the market. I see how Section 5 gets you around that problem because — I think its been used in way that can get around virtually any problem nowadays — but I’m still a skeptic on the virtues of the Section 2 claim in this context. If one cannot prove that the NeoPrefen transaction substantially reduces competition in the MG/ Clayton 7 sense (whether because its not a competitor at the time or Abbott wouldn’t enter or whatever reason), I think its also unlikely that one can meet the burden on a true section 2 maintenance theory. But we’ll have to see.

By: antitrust guy

antitrust guy — Thu, 18 Dec 2008 19:45:19 +0000

There may be room for both monopolization and Clayton Act claims here, at least for purposes of a complaint. Recall that Ovation acquired the rights to NeoProfen before FDA approval was received. So, at the time of the acquisition, there was no actual competition because Indocin had a monopoly. The only competition was potential competition.

So, it is possible that a court might not see the acquisition at the time it occurred as a substantial lessening of competition. Indeed, the Supreme Court has avoided deciding whether “actual potential competition” comes within the Clayton Act. Moreover, there may be a burden to prove that Abbott would have entered with NeoProfen (perhaps Abbott would have declined entry because of the same pricing constraints Merck supposedly faced, or would have found it not profitable at the Merck price level).

A Section 2/Section 5 theory may be able to avoid these concerns.

By: Kristen

Kristen — Thu, 18 Dec 2008 17:03:09 +0000

[Deleted by author --- please stop the name calling if you'd like to comment here]

By: Josh

Josh — Thu, 18 Dec 2008 16:09:51 +0000

Sam, I don’t dispute you could make a colorable Section 2 case (just going off the complaint, of course) out of the second transaction. I’m saying that monopolization would be redundant since the price hike would be evidence to support your Section 7 claim with a much lower standard than under Section 2.

To the extent you seem to be referencing a claim built around the price hike itself as the actionable conduct. Of course, this is not actionable under Section 2 unlike Article 81 excessive pricing claims. Section 5, best I can tell, is flexible enough to embrace this claim and much more under the current Commission.

By: Sam

Sam — Thu, 18 Dec 2008 14:32:02 +0000

Professor: Regarding your comments on the monopolization claim for the NeoProfen acquisition, could not the the subsequent price hike be direct evidence of abuse of monopoly power (thus the aquisition GAVE the monopoly power, and the abuse of the power was the price hike)? While this might not fit well within Section 2 (probably better under Article 82), does not Section 5 given enough flexibility? While, it may be redundant and unnecessary — since the price hike could also be direct evidence that the merger did harm competition — not sure why its not correct?

Thanks