Tuesday, December 01, 2009

Recent Acquisition Challenges Reflect Federal/State Antitrust Cooperation

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

The Federal Trade Commission and the Department of Justice Antitrust Division have separately announced two recent acquisition challenges that reflect federal and state antitrust cooperation.

Infectious Waste Collection, Treatment

Yesterday, the Justice Department’s Antitrust Division announced an action, filed jointly with the attorneys general of the states of Missouri and Nebraska, that will require Stericycle Inc. to divest certain infectious waste collection and treatment services assets in order to proceed with its acquisition of MedServe Inc.

Stericycle is the largest provider of infectious waste collection and treatment services in the United States, and MedServe is the second-largest provider of infectious waste collection and treatment services in the United States.

The Justice Department and states filed a complaint in the federal district court in Washington D.C., on November 30. They alleged that the transaction, as originally proposed, would create a monopoly in the provision of infectious waste collection and treatment services for large quantity generator (LQG) customers, such as hospitals, large laboratories, and other large medical facilities, in the states of Kansas, Missouri, Nebraska, and Oklahoma.

A proposed consent decree, if approved by the federal district court, would resolve the charges by requiring divestiture of all of MedServe's assets primarily used in the provision of infectious waste collection and treatment services to large customers in Kansas, Missouri, Nebraska and Oklahoma. These assets include a treatment facility in Kansas and transfer stations in all four states.

Additionally, Stericycle would have to notify the Department of Justice and the attorneys general before acquiring any other assets in the region and would be prohibited from reacquiring the divested assets for 10 years.

Details of the complaint and proposed consent decree in U.S., State of Missouri, and State of Nebraska v. Stericycle, Inc., Case No.: 1:09-cv-02268, appear here on the website of the Department of Justice Antitrust Division. They will appear in the CCH Trade Regulation Reporter.

Cemetery Services

Last week, the FTC and the State of Nevada announced separate settlements with Service Corporation International (SCI), which would resolve antitrust challenges to an acquisition by the nation’s largest cemetery operator of the largest seller of cemetery services in the Las Vegas area.

In order for SCI, the third-largest provider of cemetery services in Las Vegas, to complete its proposed acquisition of local rival Palm Mortuary, Inc., SCI will have to divest Davis Memorial Park, currently its only cemetery in the Las Vegas area, as well as the funeral home on the same property.

The proposed FTC consent order would require SCI to give the Commission prior notice before acquiring any interest or assets related to the provision of cemetery services in the Las Vegas area.

In addition to the divestitures required under the state settlement agreement, SCI has agreed to notify the attorney general for the next three years of future acquisitions that involve cemetery service or funeral service markets where the company already has a presence in the state. Additionally, SCI has agreed to reimburse the state for its attorney fees and costs resulting from the investigation. The state settlement is subject to court approval.

In a November 25 announcement of the state settlement, Nevada Attorney General Catherine Cortez Masto spoke of her office's collaboration with the FTC on the investigation.

“Although my office has always had positive relationships with federal antitrust enforcers on earlier cases and joint training initiatives, the collaboration on this merger review with the Federal Trade Commission has been exceptional,” she said.

The FTC administrative complaint and proposed consent order, In the Matter of Service Corporation International, FTC Docket No. C-4275, appear here on the FTC website. Further details will appear at CCH Trade Regulation Reporter ¶16,393.

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