Monday, November 02, 2009

FTC, Canada Competition Bureau Approve Schering-Plough’s Acquisition of Merck

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Schering-Plough Corporation can proceed with its proposed $41.1 billion acquisition of Merck & Co. Inc. under the terms of a proposed FTC consent order, according to the agency's October 29 announcement.

The consent order would settle FTC charges that the transaction, as originally proposed, could have reduced competition in a range of animal health markets in which the companies compete and in the market for human drugs known as NK 1 receptor antagonists, which are used to treat nausea and vomiting resulting from chemotherapy and surgery.

The companies are two of the leading animal health suppliers in the United States. According to the FTC, the proposed acquisition raised significant concerns in markets where Merck—through Merial Limited, an animal health joint venture with Sanofi-Aventis S.A—and Schering-Plough directly compete. Merck would be required to sell its interest in Merial, under the proposed consent order.

In the market for NK 1 receptor antagonists, Merck’s Emend was the first and only approved treatment for human use. Schering-Plough, however, was in the process of licensing its own NK 1 receptor antagonist, rolapitant, to a third party when the company’s acquisition of Merck was announced.

The transaction, therefore, likely would have reduced the combined firm’s incentives to launch rolapitant, delaying or eliminating a future entrant into the market for NK 1 receptor antagonist drugs for nausea and vomiting. Under the terms of the FTC’s consent order, Schering-Plough would be required to sell assets related to rolapitant.

Canada Competition Bureau Approval

Canada's Competition Bureau also announced on October 29 that it has reached an agreement with Merck and Schering-Plough to resolve competition concerns with respect to their proposed merger. The Competition Bureau said that it worked closely with the FTC in its investigation. The relief imposed by the Competition Bureau is the same as that which would be required under the proposed FTC consent order.

The complaint and proposed consent order, In the Matter of Schering-Plough Corporation, a corporation, and Merck & Co. Inc., FTC Docket No. C-4268, will appear at CCH Trade Regulation Reporter ¶16,383.

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