Inverness Medical Innovations, Inc.; Agreement Containing Consent Order To Aid Public Comment, 293-295 [E8-31366]
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Federal Register / Vol. 74, No. 2 / Monday, January 5, 2009 / Notices
conduct that is reasonably necessary to
form or participate in legitimate
‘‘qualified risk-sharing’’ or ‘‘qualified
clinically-integrated’’ joint
arrangements, as defined in the
proposed Consent Order. Also,
Paragraph II would not bar agreements
that only involve physicians who are
part of the same medical group practice,
defined in Paragraph I.B, because it is
intended to reach agreements between
and among independent competitors.
Paragraphs III and IV require AllCare
to notify the Commission before it
initiates any arrangement to act as an
agent or messenger with respect to
physician contracting with payors. The
Order also would require AllCare to
provide to the Commission key details
of the arrangement and to delay the
implementation of that arrangement to
permit further factual discovery by the
Commission at its option. Paragraph III
applies such requirements to
arrangements under which AllCare
would be acting as a messenger, and
Paragraph IV applies them to
arrangements under which AllCare
plans to achieve financial or clinical
integration.
Paragraph V.A requires AllCare to
send a copy of the Complaint and
Consent Order to its physician
members, its management and staff, and
any payors who communicated with
AllCare, or with whom AllCare
communicated, with regard to any
interest in contracting for physician
services.
Part V.B. of the Order requires AllCare
to terminate preexisting payor contracts
held by physicians who were AllCare
participants since January 1, 2005, upon
(1) receipt by AllCare of a written
request for termination by relevant
payors, or (2) the termination date,
renewal date, or anniversary date of the
contract, whichever is earlier. This
termination can be delayed for up to one
year after the effective date of the Order,
upon the written request of the payor.
This provision is intended to eliminate
the effects of AllCare’s joint price setting
behavior.
Paragraph V.C requires that AllCare
send a copy of any payor’s request for
termination to every physician who
participates in each group. Paragraph
V.D contains further notification
provisions relating to future contact
with physicians, payors, management,
and staff. This provision requires
AllCare to distribute a copy of the
Complaint and Consent Order to each
physician who begins participating in
each group; each payor who contacts
each group regarding the provision of
physician services; and each person
who becomes an officer, director,
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manager, or employee for three years
after the date on which the Consent
Order becomes final. In addition,
Paragraph V.D requires AllCare to
publish a copy of the Complaint and
Consent Order, for three years, in any
official publication that it sends to its
participating physicians.
Paragraphs V.E and VI-VII impose
various obligations on AllCare to
provide to the Commission information
that would assist in the monitoring of
Respondent’s compliance with the
Consent Order.
Pursuant to Paragraph VIII, the
proposed Consent Order will expire in
20 years from the date it is issued.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. E8–31385 Filed 1–2–09: 8:45 am]
BILLING CODE 6750–01–S
FEDERAL TRADE COMMISSION
[File No. 061 0123]
Inverness Medical Innovations, Inc.;
Agreement Containing Consent Order
To Aid Public Comment
Federal Trade Commission.
Proposed Consent Agreement.
AGENCY:
ACTION:
SUMMARY: The consent agreement in this
matter settles alleged violations of
federal law prohibiting unfair or
deceptive acts or practices or unfair
methods of competition. The attached
Analysis to Aid Public Comment
describes both the allegations in the
draft complaint and the terms of the
consent order—embodied in the consent
agreement—that would settle these
allegations.
DATES: Comments must be received on
or before January 20, 2009.
ADDRESSES: Interested parties are
invited to submit written comments.
Comments should refer to ‘‘Inverness
Medical Innovations, File No. 061
0123,’’ to facilitate the organization of
comments. A comment filed in paper
form should include this reference both
in the text and on the envelope, and
should be mailed or delivered to the
following address: Federal Trade
Commission/Office of the Secretary,
Room 135-H, 600 Pennsylvania Avenue,
N.W., Washington, D.C. 20580.
Comments containing confidential
material must be filed in paper form,
must be clearly labeled ‘‘Confidential,’’
and must comply with Commission
Rule 4.9(c). 16 CFR 4.9(c) (2005).1 The
1 The comment must be accompanied by an
explicit request for confidential treatment,
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293
FTC is requesting that any comment
filed in paper form be sent by courier or
overnight service, if possible, because
U.S. postal mail in the Washington area
and at the Commission is subject to
delay due to heightened security
precautions. Comments that do not
contain any nonpublic information may
instead be filed in electronic form by
following the instructions on the webbased form at (https://
secure.commentworks.com/ftcInverness). To ensure that the
Commission considers an electronic
comment, you must file it on that webbased form.
The FTC Act and other laws the
Commission administers permit the
collection of public comments to
consider and use in this proceeding as
appropriate. All timely and responsive
public comments, whether filed in
paper or electronic form, will be
considered by the Commission, and will
be available to the public on the FTC
website, to the extent practicable, at
www.ftc.gov. As a matter of discretion,
the FTC makes every effort to remove
home contact information for
individuals from the public comments it
receives before placing those comments
on the FTC website. More information,
including routine uses permitted by the
Privacy Act, may be found in the FTC’s
privacy policy, at (https://www.ftc.gov/
ftc/privacy.shtm).
FOR FURTHER INFORMATION CONTACT: Lore
Unt, FTC Bureau of Competition, 600
Pennsylvania Avenue, NW, Washington,
D.C. 20580, (202) 326-3019.
SUPPLEMENTARY INFORMATION: Pursuant
to section 6(f) of the Federal Trade
Commission Act, 38 Stat. 721, 15 U.S.C.
46(f), and § 2.34 of the Commission
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 thirty (30) days. The following
Analysis to Aid Public Comment
describes the terms of the consent
agreement, and the allegations in the
complaint. An electronic copy of the
full text of the consent agreement
package can be obtained from the FTC
Home Page (for December 23, 2008), on
the World Wide Web, at (https://
www.ftc.gov/os/2008/12/index.htm). A
paper copy can be obtained from the
including the factual and legal basis for the request,
and must identify the specific portions of the
comment to be withheld from the public record.
The request will be granted or denied by the
Commission’s General Counsel, consistent with
applicable law and the public interest. See
Commission Rule 4.9(c), 16 CFR 4.9(c).
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Federal Register / Vol. 74, No. 2 / Monday, January 5, 2009 / Notices
FTC Public Reference Room, Room 130H, 600 Pennsylvania Avenue, NW,
Washington, D.C. 20580, either in
person or by calling (202) 326-2222.
Public comments are invited, and may
be filed with the Commission in either
paper or electronic form. All comments
should be filed as prescribed in the
ADDRESSES section above, and must be
received on or before the date specified
in the DATES section.
Analysis of Agreement Containing
Consent Order To Aid Public Comment
I. Introduction
The Federal Trade Commission
(‘‘Commission’’) has accepted, subject to
final approval, an Agreement
Containing Consent Order (‘‘Consent
Agreement’’) from Inverness Medical
Innovations, Inc. (‘‘Inverness’’).
The proposed Consent Agreement is
designed to remedy the harm to
competition from Inverness’ conduct in
acquiring certain assets of ACON
Laboratories, Inc. (‘‘ACON’’). It would
settle charges that Inverness engaged in
an unlawful course of conduct to
maintain its monopoly power in the
lateral flow consumer pregnancy test
market and hamper the development of
future competition in that market, by
restricting ACON’s digital consumer
pregnancy test supply and development
joint venture with Church & Dwight Co.,
Inc. (‘‘Church & Dwight’’), and by
acquiring ACON’s competing watersoluble dye consumer pregnancy test
technology.
Under the terms of the proposed
Decision and Order, Inverness will
divest ACON’s water-soluble dye
consumer pregnancy test product assets.
In addition, Inverness will remove
barriers to ACON’s continued supply of
digital tests to Church & Dwight during
the remaining term of their joint
venture. The proposed Decision and
Order also limits Inverness’ ability to
interfere with the unwinding of the
ACON/Church & Dwight joint venture
by, among other things, requiring
Inverness to disclaim ownership of
intellectual property developed by
ACON and Church & Dwight during
their joint venture.
II. Background
Inverness is a leader in the research,
development, manufacture, and sale of
consumer pregnancy tests in the United
States. Nearly all retail consumer
pregnancy tests use immunoassay-based
‘‘lateral flow’’ technology, which tests a
urine sample for the presence of the
human chorionic gonadotropin (‘‘hCG’’)
hormone produced by pregnant women.
Consumer pregnancy tests consist of a
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Jkt 217001
plastic handheld stick device, which
contains a test strip embedded beneath
an indicator window. The test strip
contains chemical agents that react to
the presence of hCG in the urine
sample. If the test is positive for hCG,
a colored line will develop within the
indicator window.
Lateral flow consumer pregnancy tests
are more accurate, easier to use, and less
costly than other pregnancy tests, which
resemble laboratory test kits. There are
no viable substitutes for consumer
pregnancy tests based on lateral flow
technology.
‘‘Digital’’ consumer pregnancy tests
use and improve upon lateral flow
technology. Rather than a colored line
indicator, a digital pregnancy test
indicates results through a digital
display of words, such as ‘‘PREGNANT’’
or ‘‘NOT PREGNANT.’’ Digital
consumer pregnancy tests are more
difficult to develop and manufacture
than standard consumer pregnancy
tests, because they require more
extensive know-how and more exacting
manufacturing tolerances. Digital
consumer pregnancy tests are a growing
segment of the consumer pregnancy test
market.
Inverness is the dominant firm in the
market for consumer pregnancy tests.
Inverness maintains an approximately
70% share of the U.S. consumer
pregnancy test market. At the time of
Inverness’ acquisition of ACON,
Inverness was one of only three
independent companies marketing or
manufacturing digital consumer
pregnancy tests. The other firms exited
the market in 2006.
ACON developed, manufactured, and
sold consumer pregnancy tests in
competition with Inverness. Before
Inverness’ acquisition of the ACON
assets, ACON was developing digital
consumer pregnancy tests in a joint
venture with Church & Dwight,
Inverness’ leading competitor. The
collaboration with Church & Dwight
envisioned that ACON would
manufacture and supply the resulting
digital consumer pregnancy test
products on Church & Dwight’s behalf.
ACON also had invested in the
development of new lateral flow tests
that used water-soluble dyes, rather
than colored particles, as the reactive
agents in the test strip. ACON was one
of the only, if not the only, firm
involved in the development of
consumer pregnancy tests that used
water-soluble dye technology. Before
the acquisition, ACON had completed
prototypes of the product, and supplied
sample quantities to U.S. customers.
In 2006, Inverness acquired certain
assets from ACON, which included
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assets relating to ACON’s water-soluble
dye technology and assets relating to
ACON’s digital consumer pregnancy test
joint venture with Church & Dwight.
III. The Proposed Complaint
The proposed complaint alleges that
relevant market in which to analyze
Inverness’ conduct is the research,
development, manufacture, and sale of
consumer pregnancy tests in the United
States. Inverness is the dominant player
in the market for consumer pregnancy
tests. Barriers to entry into the consumer
pregnancy test market include
intellectual property, know-how, and
advertising.
The proposed complaint alleges that
Inverness engaged in a course of
conduct to maintain its monopoly
power in this market by threatening to
hamper or stifle future competition from
two emerging alternative consumer
pregnancy test technologies.
First, the proposed complaint alleges
that Inverness’ acquisition of the ACON
assets weakened future competition
from digital consumer pregnancy test
products. The proposed complaint
alleges that, through its acquisition of
the ACON assets, Inverness: (a) imposed
a covenant not to compete on ACON,
which limited the scope and duration of
the ACON’s digital consumer pregnancy
test joint venture with Church & Dwight;
(b) required ACON to surrender to
Inverness any profits from ACON’s joint
venture with Church & Dwight; and (c)
acquired rights to the intellectual
property developed by ACON and
Church & Dwight in their joint venture.
Through these actions, Inverness
interfered with ACON’s ability and
incentive to develop and manufacture
digital consumer pregnancy tests in its
joint venture with Church & Dwight.
Inverness’ conduct also injured
competition that might arise after the
unwinding of the joint venture between
ACON and Church & Dwight, by
interfering with ACON’s ability and
incentive to serve as an independent
developer and supplier of digital
consumer pregnancy tests, and by
hampering Church & Dwight’s ability
and incentive to introduce competing
digital consumer pregnancy test
products manufactured by another
developer.
Second, the proposed complaint
alleges that Inverness’ acquisition of the
ACON assets eliminated future
competition from water-soluble dye
lateral flow consumer pregnancy tests.
After Inverness acquired the rights to
ACON’s water-soluble dye consumer
pregnancy test product, Inverness made
no use of the test, and ceased
development and marketing efforts for
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Federal Register / Vol. 74, No. 2 / Monday, January 5, 2009 / Notices
it. Inverness’ acquisition of the ACON
assets further entrenched Inverness’
monopoly power in consumer
pregnancy tests by preventing future
competition from competing watersoluble dye consumer pregnancy tests.
IV. The Proposed Order
The proposed order will remedy the
Commission’s competitive concerns
about Inverness’ conduct in maintaining
its consumer pregnancy test product
monopoly power.
First, the proposed order contains
provisions to prevent Inverness from
interfering with the digital consumer
pregnancy test product joint venture
between ACON and Church & Dwight,
and to enable ACON and Church &
Dwight to maintain their competitive
viability after the joint venture ends.
These provisions include a requirement
that Inverness disclaim any ownership
rights on intellectual property
developed during the joint venture. The
proposed order further requires that
Inverness will not interfere with
ACON’s transfer or licensing of digital
consumer pregnancy test technology to
Church & Dwight, and that Inverness
not interfere with ACON’s ability to
manufacture digital consumer
pregnancy tests for Church & Dwight
during their collaboration.
Second, to prevent Inverness from
harming emerging competition from
water-soluble dye consumer pregnancy
test products, the proposed order
requires Inverness to divest, to Aemoh
Products, LLC, a fully-paid perpetual
exclusive sublicense to Inverness’
water-soluble dye intellectual property.
The proposed order seeks to ensure that
water-soluble dye products can be
developed without risk of infringing
Inverness’ intellectual property, by
requiring Inverness to covenant not to
assert intellectual property infringement
claims against certain lateral flow
products that use Inverness’ watersoluble dye technology. These
provisions, among others, will give
Aemoh—a start-up run by a successful
and experienced health products
entrepreneur—the ability to complete
the commercialization of water-soluble
dye based consumer pregnancy tests.
V. Opportunity for Public Comment
The proposed consent order has been
placed on the public record for 30 days
for receipt of comments by interested
persons. Comments received during this
period will become part of the public
record. After 30 days, the Commission
will again review the proposed consent
order and the comments received and
will decide whether it should withdraw
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17:13 Jan 02, 2009
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from the agreement or make the
proposed consent order final.
By accepting the proposed Consent
Agreement subject to final approval, the
Commission anticipates that the
competitive problems alleged in the
complaint will be resolved. The purpose
of this analysis is to invite public
comment on the proposed Consent
Agreement, in order to aid the
Commission in its determination of
whether to make the proposed order
final. This analysis is not intended to
constitute an official interpretation of
the proposed order nor is it intended to
modify the terms of the proposed order
in any way.
By direction of the Commission,
Commissioner Harbour recused.
Richard C. Donohue,
Acting Secretary.
[FR Doc. E8–31366 Filed 1–2–09: 8:45 am]
BILLING CODE 6750–01–S
FEDERAL TRADE COMMISSION
[File No. 081 0240]
King Pharmaceuticals, Inc. and
Alpharma Inc.; Agreement Containing
Consent Order To Aid Public Comment
AGENCY:
ACTION:
Federal Trade Commission.
Proposed Consent Agreement.
SUMMARY: The consent agreement in this
matter settles alleged violations of
federal law prohibiting unfair or
deceptive acts or practices or unfair
methods of competition. The attached
Analysis to Aid Public Comment
describes both the allegations in the
draft complaint and the terms of the
consent order—embodied in the consent
agreement—that would settle these
allegations.
DATES: Comments must be received on
or before January 27, 2009.
Interested parties are
invited to submit written comments.
Comments should refer to ‘‘King
Alpharma, File No. 081 0240,’’ to
facilitate the organization of comments.
A comment filed in paper form should
include this reference both in the text
and on the envelope, and should be
mailed or delivered to the following
address: Federal Trade Commission/
Office of the Secretary, Room 135-H,
600 Pennsylvania Avenue, N.W.,
Washington, D.C. 20580. Comments
containing confidential material must be
filed in paper form, must be clearly
labeled ‘‘Confidential,’’ and must
comply with Commission Rule 4.9(c).
ADDRESSES:
PO 00000
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295
16 CFR 4.9(c) (2005).1 The FTC is
requesting that any comment filed in
paper form be sent by courier or
overnight service, if possible, because
U.S. postal mail in the Washington area
and at the Commission is subject to
delay due to heightened security
precautions. Comments that do not
contain any nonpublic information may
instead be filed in electronic form by
following the instructions on the webbased form at (https://
secure.commentworks.com/ftcKingAlpharma). To ensure that the
Commission considers an electronic
comment, you must file it on that webbased form.
The FTC Act and other laws the
Commission administers permit the
collection of public comments to
consider and use in this proceeding as
appropriate. All timely and responsive
public comments, whether filed in
paper or electronic form, will be
considered by the Commission, and will
be available to the public on the FTC
website, to the extent practicable, at
www.ftc.gov. As a matter of discretion,
the FTC makes every effort to remove
home contact information for
individuals from the public comments it
receives before placing those comments
on the FTC website. More information,
including routine uses permitted by the
Privacy Act, may be found in the FTC’s
privacy policy, at (https://www.ftc.gov/
ftc/privacy.shtm).
FOR FURTHER INFORMATION CONTACT:
James Southworth, FTC Bureau of
Competition, 600 Pennsylvania Avenue,
NW, Washington, D.C. 20580, (202) 3262822.
SUPPLEMENTARY INFORMATION: Pursuant
to section 6(f) of the Federal Trade
Commission Act, 38 Stat. 721, 15 U.S.C.
46(f), and § 2.34 of the Commission
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 thirty (30) days. The following
Analysis to Aid Public Comment
describes the terms of the consent
agreement, and the allegations in the
complaint. An electronic copy of the
full text of the consent agreement
package can be obtained from the FTC
1 The comment must be accompanied by an
explicit request for confidential treatment,
including the factual and legal basis for the request,
and must identify the specific portions of the
comment to be withheld from the public record.
The request will be granted or denied by the
Commission’s General Counsel, consistent with
applicable law and the public interest. See
Commission Rule 4.9(c), 16 CFR 4.9(c).
E:\FR\FM\05JAN1.SGM
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]]>Agencies
[Federal Register Volume 74, Number 2 (Monday, January 5, 2009)]
[Notices]
[Pages 293-295]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-31366]
-----------------------------------------------------------------------
FEDERAL TRADE COMMISSION
[File No. 061 0123]
Inverness Medical Innovations, Inc.; Agreement Containing Consent
Order To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed Consent Agreement.
-----------------------------------------------------------------------
SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair or deceptive acts or
practices or unfair methods of competition. The attached Analysis to
Aid Public Comment describes both the allegations in the draft
complaint and the terms of the consent order--embodied in the consent
agreement--that would settle these allegations.
DATES: Comments must be received on or before January 20, 2009.
ADDRESSES: Interested parties are invited to submit written comments.
Comments should refer to ``Inverness Medical Innovations, File No. 061
0123,'' to facilitate the organization of comments. A comment filed in
paper form should include this reference both in the text and on the
envelope, and should be mailed or delivered to the following address:
Federal Trade Commission/Office of the Secretary, Room 135-H, 600
Pennsylvania Avenue, N.W., Washington, D.C. 20580. Comments containing
confidential material must be filed in paper form, must be clearly
labeled ``Confidential,'' and must comply with Commission Rule 4.9(c).
16 CFR 4.9(c) (2005).\1\ The FTC is requesting that any comment filed
in paper form be sent by courier or overnight service, if possible,
because U.S. postal mail in the Washington area and at the Commission
is subject to delay due to heightened security precautions. Comments
that do not contain any nonpublic information may instead be filed in
electronic form by following the instructions on the web-based form at
(https://secure.commentworks.com/ftc-Inverness). To ensure that the
Commission considers an electronic comment, you must file it on that
web-based form.
---------------------------------------------------------------------------
\1\ The comment must be accompanied by an explicit request for
confidential treatment, including the factual and legal basis for
the request, and must identify the specific portions of the comment
to be withheld from the public record. The request will be granted
or denied by the Commission's General Counsel, consistent with
applicable law and the public interest. See Commission Rule 4.9(c),
16 CFR 4.9(c).
---------------------------------------------------------------------------
The FTC Act and other laws the Commission administers permit the
collection of public comments to consider and use in this proceeding as
appropriate. All timely and responsive public comments, whether filed
in paper or electronic form, will be considered by the Commission, and
will be available to the public on the FTC website, to the extent
practicable, at www.ftc.gov. As a matter of discretion, the FTC makes
every effort to remove home contact information for individuals from
the public comments it receives before placing those comments on the
FTC website. More information, including routine uses permitted by the
Privacy Act, may be found in the FTC's privacy policy, at (https://
www.ftc.gov/ftc/privacy.shtm).
FOR FURTHER INFORMATION CONTACT: Lore Unt, FTC Bureau of Competition,
600 Pennsylvania Avenue, NW, Washington, D.C. 20580, (202) 326-3019.
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec. 2.34 of
the Commission 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 thirty (30) days. The following Analysis to Aid Public
Comment describes the terms of the consent agreement, and the
allegations in the complaint. An electronic copy of the full text of
the consent agreement package can be obtained from the FTC Home Page
(for December 23, 2008), on the World Wide Web, at (https://www.ftc.gov/
os/2008/12/index.htm). A paper copy can be obtained from the
[[Page 294]]
FTC Public Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW,
Washington, D.C. 20580, either in person or by calling (202) 326-2222.
Public comments are invited, and may be filed with the Commission
in either paper or electronic form. All comments should be filed as
prescribed in the ADDRESSES section above, and must be received on or
before the date specified in the DATES section.
Analysis of Agreement Containing Consent Order To Aid Public Comment
I. Introduction
The Federal Trade Commission (``Commission'') has accepted, subject
to final approval, an Agreement Containing Consent Order (``Consent
Agreement'') from Inverness Medical Innovations, Inc. (``Inverness'').
The proposed Consent Agreement is designed to remedy the harm to
competition from Inverness' conduct in acquiring certain assets of ACON
Laboratories, Inc. (``ACON''). It would settle charges that Inverness
engaged in an unlawful course of conduct to maintain its monopoly power
in the lateral flow consumer pregnancy test market and hamper the
development of future competition in that market, by restricting ACON's
digital consumer pregnancy test supply and development joint venture
with Church & Dwight Co., Inc. (``Church & Dwight''), and by acquiring
ACON's competing water-soluble dye consumer pregnancy test technology.
Under the terms of the proposed Decision and Order, Inverness will
divest ACON's water-soluble dye consumer pregnancy test product assets.
In addition, Inverness will remove barriers to ACON's continued supply
of digital tests to Church & Dwight during the remaining term of their
joint venture. The proposed Decision and Order also limits Inverness'
ability to interfere with the unwinding of the ACON/Church & Dwight
joint venture by, among other things, requiring Inverness to disclaim
ownership of intellectual property developed by ACON and Church &
Dwight during their joint venture.
II. Background
Inverness is a leader in the research, development, manufacture,
and sale of consumer pregnancy tests in the United States. Nearly all
retail consumer pregnancy tests use immunoassay-based ``lateral flow''
technology, which tests a urine sample for the presence of the human
chorionic gonadotropin (``hCG'') hormone produced by pregnant women.
Consumer pregnancy tests consist of a plastic handheld stick device,
which contains a test strip embedded beneath an indicator window. The
test strip contains chemical agents that react to the presence of hCG
in the urine sample. If the test is positive for hCG, a colored line
will develop within the indicator window.
Lateral flow consumer pregnancy tests are more accurate, easier to
use, and less costly than other pregnancy tests, which resemble
laboratory test kits. There are no viable substitutes for consumer
pregnancy tests based on lateral flow technology.
``Digital'' consumer pregnancy tests use and improve upon lateral
flow technology. Rather than a colored line indicator, a digital
pregnancy test indicates results through a digital display of words,
such as ``PREGNANT'' or ``NOT PREGNANT.'' Digital consumer pregnancy
tests are more difficult to develop and manufacture than standard
consumer pregnancy tests, because they require more extensive know-how
and more exacting manufacturing tolerances. Digital consumer pregnancy
tests are a growing segment of the consumer pregnancy test market.
Inverness is the dominant firm in the market for consumer pregnancy
tests. Inverness maintains an approximately 70% share of the U.S.
consumer pregnancy test market. At the time of Inverness' acquisition
of ACON, Inverness was one of only three independent companies
marketing or manufacturing digital consumer pregnancy tests. The other
firms exited the market in 2006.
ACON developed, manufactured, and sold consumer pregnancy tests in
competition with Inverness. Before Inverness' acquisition of the ACON
assets, ACON was developing digital consumer pregnancy tests in a joint
venture with Church & Dwight, Inverness' leading competitor. The
collaboration with Church & Dwight envisioned that ACON would
manufacture and supply the resulting digital consumer pregnancy test
products on Church & Dwight's behalf.
ACON also had invested in the development of new lateral flow tests
that used water-soluble dyes, rather than colored particles, as the
reactive agents in the test strip. ACON was one of the only, if not the
only, firm involved in the development of consumer pregnancy tests that
used water-soluble dye technology. Before the acquisition, ACON had
completed prototypes of the product, and supplied sample quantities to
U.S. customers.
In 2006, Inverness acquired certain assets from ACON, which
included assets relating to ACON's water-soluble dye technology and
assets relating to ACON's digital consumer pregnancy test joint venture
with Church & Dwight.
III. The Proposed Complaint
The proposed complaint alleges that relevant market in which to
analyze Inverness' conduct is the research, development, manufacture,
and sale of consumer pregnancy tests in the United States. Inverness is
the dominant player in the market for consumer pregnancy tests.
Barriers to entry into the consumer pregnancy test market include
intellectual property, know-how, and advertising.
The proposed complaint alleges that Inverness engaged in a course
of conduct to maintain its monopoly power in this market by threatening
to hamper or stifle future competition from two emerging alternative
consumer pregnancy test technologies.
First, the proposed complaint alleges that Inverness' acquisition
of the ACON assets weakened future competition from digital consumer
pregnancy test products. The proposed complaint alleges that, through
its acquisition of the ACON assets, Inverness: (a) imposed a covenant
not to compete on ACON, which limited the scope and duration of the
ACON's digital consumer pregnancy test joint venture with Church &
Dwight; (b) required ACON to surrender to Inverness any profits from
ACON's joint venture with Church & Dwight; and (c) acquired rights to
the intellectual property developed by ACON and Church & Dwight in
their joint venture. Through these actions, Inverness interfered with
ACON's ability and incentive to develop and manufacture digital
consumer pregnancy tests in its joint venture with Church & Dwight.
Inverness' conduct also injured competition that might arise after the
unwinding of the joint venture between ACON and Church & Dwight, by
interfering with ACON's ability and incentive to serve as an
independent developer and supplier of digital consumer pregnancy tests,
and by hampering Church & Dwight's ability and incentive to introduce
competing digital consumer pregnancy test products manufactured by
another developer.
Second, the proposed complaint alleges that Inverness' acquisition
of the ACON assets eliminated future competition from water-soluble dye
lateral flow consumer pregnancy tests. After Inverness acquired the
rights to ACON's water-soluble dye consumer pregnancy test product,
Inverness made no use of the test, and ceased development and marketing
efforts for
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it. Inverness' acquisition of the ACON assets further entrenched
Inverness' monopoly power in consumer pregnancy tests by preventing
future competition from competing water-soluble dye consumer pregnancy
tests.
IV. The Proposed Order
The proposed order will remedy the Commission's competitive
concerns about Inverness' conduct in maintaining its consumer pregnancy
test product monopoly power.
First, the proposed order contains provisions to prevent Inverness
from interfering with the digital consumer pregnancy test product joint
venture between ACON and Church & Dwight, and to enable ACON and Church
& Dwight to maintain their competitive viability after the joint
venture ends. These provisions include a requirement that Inverness
disclaim any ownership rights on intellectual property developed during
the joint venture. The proposed order further requires that Inverness
will not interfere with ACON's transfer or licensing of digital
consumer pregnancy test technology to Church & Dwight, and that
Inverness not interfere with ACON's ability to manufacture digital
consumer pregnancy tests for Church & Dwight during their
collaboration.
Second, to prevent Inverness from harming emerging competition from
water-soluble dye consumer pregnancy test products, the proposed order
requires Inverness to divest, to Aemoh Products, LLC, a fully-paid
perpetual exclusive sublicense to Inverness' water-soluble dye
intellectual property. The proposed order seeks to ensure that water-
soluble dye products can be developed without risk of infringing
Inverness' intellectual property, by requiring Inverness to covenant
not to assert intellectual property infringement claims against certain
lateral flow products that use Inverness' water-soluble dye technology.
These provisions, among others, will give Aemoh--a start-up run by a
successful and experienced health products entrepreneur--the ability to
complete the commercialization of water-soluble dye based consumer
pregnancy tests.
V. Opportunity for Public Comment
The proposed consent order has been placed on the public record for
30 days for receipt of comments by interested persons. Comments
received during this period will become part of the public record.
After 30 days, the Commission will again review the proposed consent
order and the comments received and will decide whether it should
withdraw from the agreement or make the proposed consent order final.
By accepting the proposed Consent Agreement subject to final
approval, the Commission anticipates that the competitive problems
alleged in the complaint will be resolved. The purpose of this analysis
is to invite public comment on the proposed Consent Agreement, in order
to aid the Commission in its determination of whether to make the
proposed order final. This analysis is not intended to constitute an
official interpretation of the proposed order nor is it intended to
modify the terms of the proposed order in any way.
By direction of the Commission, Commissioner Harbour recused.
Richard C. Donohue,
Acting Secretary.
[FR Doc. E8-31366 Filed 1-2-09: 8:45 am]
BILLING CODE 6750-01-S
