Elanco Animal Health and Bayer Animal Health; Analysis of Agreement Containing Consent Orders To Aid Public Comment, 44080-44083 [2020-15724]

Download as PDF jbell on DSKJLSW7X2PROD with NOTICES 44080 Federal Register / Vol. 85, No. 140 / Tuesday, July 21, 2020 / Notices Agency form number: FR 2028. OMB control number: 7100–0061. Effective Date: The revisions are effective for the December 31, 2020, asof date with the transmission period beginning on January 18, 2021, based on loan activity over the fourth quarter 2020. Frequency: Quarterly. Respondents: Domestically chartered commercial banks. Estimated number of respondents: FR 2028B: 250; FR 2028S: 250; FR 2028D: 398. Estimated average hours per response: FR 2028B: 1.4; FR 2028S: 0.1; FR 2028D: 3. Estimated annual burden hours: FR 2028B: 1,400; FR 2028S: 100; FR 2028D: 4,776. General description of report: The Survey of Small Business and Farm Lending (previously the Survey of Terms of Lending) collects unique information concerning price and certain nonprice terms of loans made to businesses and farmers each quarter (February, May, August, and November). The FR 2028B collects detailed data on individual loans funded during the first full business week of the mid-month of each quarter and the FR 2028S collects the prime interest rate for each day of the survey week from FR 2028B respondents. The FR 2028D provides focused and enhanced information on small business lending including rates, terms, credit availability, and reasons for their changes. The FR 2028D collects quarterly average quantitative data on terms of small business loans and qualitative information on changes and the reasons for changes in the terms of lending. From these sample data, estimates of the terms of business loans and farm loans extended are constructed. The aggregate estimates for business loans are published in the Federal Reserve Bank of Kansas City’s quarterly release, Small Business Lending Survey, and aggregate estimates for farm loans are published in the statistical release, Agricultural Finance Databook. Legal authorization and confidentiality: The FR 2028 is authorized by section 11(a)(2) of the Federal Reserve Act (12 U.S.C. 248(a)(2)), which authorizes the Board to require any depository institution to make such reports of its assets and liabilities as the Board may determine to be necessary or desirable to enable the Board to discharge its responsibilities to monitor and control monetary and credit aggregates. The FR 2028 survey submissions are voluntary. VerDate Sep<11>2014 17:42 Jul 20, 2020 Jkt 250001 Individual respondents may request that information submitted to the Board through a survey under FR 2028 be kept confidential. If a respondent requests confidential treatment, the Board will determine whether the information is entitled to confidential treatment on a case-by-case basis. The Board will consider whether information collected through these surveys may be kept confidential under exemption 4 for the Freedom of Information Act (FOIA), which protects privileged or confidential commercial or financial information (5 U.S.C. 552(b)(4)), or any other applicable FOIA exemption. Current actions: On March 2, 2020, the Board published a notice in the Federal Register (85 FR 12298) requesting public comment for 60 days on the extension, with revision, of the FR 2028. The Federal Reserve proposed to implement changes to the form and instructions of the FR 2028D. The revisions consist of deleting and adding items, and modifying or clarifying instructions of existing data items. The Federal Reserve is making most of these changes in an effort to reduce reporting burden for firms, clarify the expectations around and the intent of reporting instructions and requirements, and to improve data quality. A limited number of revisions would add items to increase clarity in quantitative loan data. No changes are being made to the FR 2028B and FR 2028S. The comment period for this notice expired on May 1, 2020. The Board received two comment letters from two banks. One commenter stated that the survey is burdensome and made a suggestion on how to reduce burden by formatting the requested data in a form that can be more easily automated and uploaded. Most of the revisions to the survey are intended to reduce respondent burden while still maintaining the survey’s core purpose, which is to provide economists, policymakers, and the general public with crucial small business lending data. These revisions include the removal of over 35% of the survey line items and further clarification to the definition of a small business loan. These revisions should alleviate some of the burden incurred while gathering survey data. The current format of the data is used to collect the valuable qualitative data as well as the quantitative data. However, the Federal Reserve is exploring opportunities to move the survey to an automated platform that increases standardization of the data collection with other series collected by the Federal Reserve’s Statistics business line. Another commenter supported the proposed revisions. PO 00000 Frm 00042 Fmt 4703 Sfmt 4703 The Board adopted the extension, with revision, of the FR 2028 as originally proposed effective for the December 31, 2020, as-of date. Board of Governors of the Federal Reserve System, July 13, 2020. Michele Taylor Fennell, Assistant Secretary of the Board. [FR Doc. 2020–15405 Filed 7–20–20; 8:45 am] BILLING CODE 6210–01–P FEDERAL TRADE COMMISSION [File No. 191 0198] Elanco Animal Health and Bayer Animal Health; Analysis of Agreement Containing Consent Orders To Aid Public Comment Federal Trade Commission. Proposed consent agreement; request for comment. AGENCY: ACTION: The consent agreement in this matter settles alleged violations of federal law prohibiting unfair methods of competition. The attached Analysis to Aid Public Comment describes both the allegations in the 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 August 20, 2020. ADDRESSES: Interested parties may file comments online or on paper, by following the instructions in the Request for Comment part of the SUPPLEMENTARY INFORMATION section below. Please write: ‘‘Elanco and Bayer; File No. 191 0198’’ on your comment, and file your comment online at https:// www.regulations.gov by following the instructions on the web-based form. If you prefer to file your comment on paper, please mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC–5610 (Annex D), Washington, DC 20580; or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex D), Washington, DC 20024. FOR FURTHER INFORMATION CONTACT: Joseph Lipinsky (206–220–4473), Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580. SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, notice is hereby given that the above-captioned SUMMARY: E:\FR\FM\21JYN1.SGM 21JYN1 jbell on DSKJLSW7X2PROD with NOTICES Federal Register / Vol. 85, No. 140 / Tuesday, July 21, 2020 / Notices 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 of Agreement Containing Consent Orders 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 website (for July 15, 2020), at this web address: https://www.ftc.gov/newsevents/commission-actions. You can file a comment online or on paper. For the Commission to consider your comment, we must receive it on or before August 20, 2020. Write ‘‘Elanco and Bayer; File No. 191 0198’’ on your comment. Your comment—including your name and your state—will be placed on the public record of this proceeding, including, to the extent practicable, on the https:// www.regulations.gov website. Due to the public health emergency in response to the COVID–19 outbreak and the agency’s heightened security screening, postal mail addressed to the Commission will be subject to delay. We strongly encourage you to submit your comments online through the https:// www.regulations.gov website. If you prefer to file your comment on paper, write ‘‘Elanco and Bayer; File No. 191 0198’’ on your comment and on the envelope, and mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC–5610 (Annex D), Washington, DC 20580; or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex D), Washington, DC 20024. If possible, submit your paper comment to the Commission by courier or overnight service. Because your comment will be placed on the publicly accessible website at https://www.regulations.gov, you are solely responsible for making sure that your comment does not include any sensitive or confidential information. In particular, your comment should not include any sensitive personal information, such as your or anyone else’s Social Security number; date of birth; driver’s license number or other state identification number, or foreign country equivalent; passport number; financial account number; or credit or debit card number. You are also solely responsible for making sure your comment does not include any sensitive VerDate Sep<11>2014 17:42 Jul 20, 2020 Jkt 250001 health information, such as medical records or other individually identifiable health information. In addition, your comment should not include any ‘‘trade secret or any commercial or financial information which . . . is privileged or confidential’’—as provided by Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2)— including in particular competitively sensitive information such as costs, sales statistics, inventories, formulas, patterns, devices, manufacturing processes, or customer names. Comments containing material for which confidential treatment is requested must be filed in paper form, must be clearly labeled ‘‘Confidential,’’ and must comply with FTC Rule 4.9(c). In particular, the written request for confidential treatment that accompanies the comment must include the factual and legal basis for the request, and must identify the specific portions of the comment to be withheld from the public record. See FTC Rule 4.9(c). Your comment will be kept confidential only if the General Counsel grants your request in accordance with the law and the public interest. Once your comment has been posted on the public FTC website—as legally required by FTC Rule 4.9(b)—we cannot redact or remove your comment from the FTC website, unless you submit a confidentiality request that meets the requirements for such treatment under FTC Rule 4.9(c), and the General Counsel grants that request. Visit the FTC website at http:// www.ftc.gov to read this Notice and the news release describing this matter. The FTC Act and other laws that the Commission administers permit the collection of public comments to consider and use in this proceeding, as appropriate. The Commission will consider all timely and responsive public comments that it receives on or before August 20, 2020. For information on the Commission’s privacy policy, including routine uses permitted by the Privacy Act, see https://www.ftc.gov/ site-information/privacy-policy. Analysis of Agreement Containing Consent Orders To Aid Public Comment I. Introduction The Federal Trade Commission (‘‘Commission’’) has accepted, subject to final approval, an Agreement Containing Consent Orders (‘‘Consent Agreement’’) with Elanco Animal Health, Inc. (‘‘Elanco’’), and Bayer Animal Health, GmbH (‘‘Bayer’’). The proposed Consent Agreement is intended to remedy the anticompetitive PO 00000 Frm 00043 Fmt 4703 Sfmt 4703 44081 effects that likely would result from Elanco’s proposed acquisition of Bayer (the ‘‘Proposed Acquisition’’). Pursuant to a Share and Asset Purchase Agreement dated August 20, 2019, Elanco proposes to acquire all of the Bayer Animal Health assets for approximately $7.6 billion. Both parties sell low-dose prescription treatments for canine otitis externa, fast-acting oral treatments that kill adult fleas on canines, and brand name cattle pour-on insecticides. The Commission alleges in its Complaint that the Proposed Acquisition, if consummated, would violate Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. 45, by lessening competition in the U.S. market for these three product categories. The proposed Consent Agreement will remedy the alleged violations by preserving the competition that would otherwise be eliminated by the Proposed Acquisition. Specifically, under the terms of the proposed Consent Agreement, Elanco is required to divest its canine otitis externa treatment product, Osurnia, to Dechra Pharmaceuticals PLC (‘‘Dechra’’), its fast-acting oral treatment that kills adult fleas on canines, Capstar, to PetIQ, Inc. (‘‘PetIQ’’), and its brand name cattle pour-on product, StandGuard, to Neogen Corporation (‘‘Neogen’’). II. The Relevant Products and Competitive Effects The Commission’s Complaint alleges three relevant product markets within which to analyze the Proposed Acquisition. The first relevant product market is low-dose prescription treatments for canine otitis externa. Canine otitis externa is an inflammation of the outer ear caused by bacteria and/ or yeast. Common symptoms of otitis externa include pain, itching, redness, scaling, and swelling of the ear canal, and may result in serious complications if left untreated. Numerous prescription products treat canine otitis externa, but only the parties’ products—Elanco’s Osurnia and Bayer’s Claro—require only one or two doses to treat the condition. Bayer’s prescription otitis externa treatment product, Claro, is a singledose otic solution, while Elanco’s product, Osurnia, is an otic gel given in two doses seven days apart. While other prescription products can be used to treat canine otitis externa, these other products require numerous applications to the ear canal, up to twice daily for 14 consecutive days, and are thus not reasonable substitutes for the parties’ products, which are considerably more convenient to use. As such, the E:\FR\FM\21JYN1.SGM 21JYN1 jbell on DSKJLSW7X2PROD with NOTICES 44082 Federal Register / Vol. 85, No. 140 / Tuesday, July 21, 2020 / Notices Proposed Acquisition would create a monopoly by combining the only two low-dose prescription products that treat canine otitis externa. A second relevant product market is fast-acting oral treatments that kill adult fleas on canines. While there are numerous products that kill and prevent fleas on dogs, most are slower-acting or preventative, targeting flea larvae. In contrast, Elanco’s Capstar and Bayer’s Advantus start killing adult fleas quickly (within 30 minutes for Capstar, and within 60 minutes for Advantus), and eliminate all adult fleas within four hours. Medicated shampoos and sprays that can be used to kill adult fleas are much less convenient to administer and are slower-acting. As Elanco’s Capstar and Bayer’s Advantus are the only fastacting oral treatments that kill adult fleas on canines, the Proposed Acquisition would also create a monopoly for fast-acting oral treatments that kill adult fleas on canines. A third relevant product market is brand name cattle pour-on insecticides. Cattle pour-on insecticides are liquid parasiticides administered directly to cattle’s skin that kill and deter biting flies, lice, and mites. Many customers trust and rely on brand name cattle pour-on insecticides rather than generic products. As a result, generic cattle pour-on insecticides are not a reasonable substitute for the parties’ brand-name cattle pour-on insecticides. The market for brand name cattle pouron insecticides is highly concentrated. Bayer is the market leader, selling three cattle pour-on insecticide products (Clean-Up II, Cylence, and Permectrin). The only other competitors with meaningful sales in the market are Merck & Co., Inc., which sells four products, and Elanco, which sells StandGuard. Thus, the Proposed Acquisition would allow the third largest competitor, Elanco, to acquire the market leader, Bayer, significantly increasing concentration in brand name cattle pour-on insecticides. Moreover, to avoid insects becoming resistant to the active ingredients in insecticides, cattle producers typically cycle through different pour-on insecticides. Elanco’s StandGuard and Bayer’s Cylence have similar chemical structures and may compete for and occupy the same slot in cattle producers’ pour-on insecticide rotation. The United States is the relevant geographic market in which to assess the competitive effects of the Proposed Acquisition. Each of these products must be approved by the FDA and/or EPA before being sold in the United States. Thus, products sold outside the United States, but not approved for sale VerDate Sep<11>2014 17:42 Jul 20, 2020 Jkt 250001 in the United States, are not alternatives for U.S. consumers. III. Entry Entry into the U.S. market for lowdose prescription treatments for canine otitis externa, fast-acting oral treatments that kill adult fleas on canines, and brand name cattle pour-on insecticides would not be timely, likely, or sufficient in magnitude, character, and scope to deter or counteract the anticompetitive effects of the Proposed Acquisition. Several major obstacles stand in the way of a prospective entrant. De novo entry would require significant investment to, among other things, develop products, obtain regulatory approval, where needed, and establish recognized brand names. Moreover, entry would be unlikely because the required investment would be difficult to justify given the sales opportunities in the affected markets. IV. The Proposed Consent Agreement The proposed Consent Agreement effectively remedies the Proposed Acquisition’s anticompetitive effects in the three relevant product markets by requiring the parties to divest the rights and assets related to Elanco’s products in each of the markets. The proposed Consent Agreement requires Elanco to divest Osurnia to Dechra, Capstar to PetIQ, and StandGuard to Neogen. The Order requires Elanco to divest the relevant rights and interests in these products no later than ten days after the consummation of the Proposed Acquisition. Dechra, headquartered in Northwich, England, is a global animal health company and is publicly traded on the London Stock Exchange. Dechra has significant presence and experience in the United States, operating in the United States for over 15 years and offering more than 80 U.S. products, including both prescription and nonprescription companion animal products. Osurnia will complement Dechra’s broad dermatology portfolio, which includes Animax Ointment, an antibacterial, antifungal, and antiinflammatory skin application that is a daily-dose treatment and is indicated for multiple skin conditions, anal gland infections in dogs, as well as canine otitis externa. Although Animax can treat canine otitis externa, it is not a direct competitor to Osurnia given it is an older generation product requiring daily application to treat the condition. PetIQ, headquartered in Boise, Idaho, is a rapidly growing pet health and wellness company. It has served as Elanco’s exclusive distributor of Capstar to retailers since 2018. Capstar aligns PO 00000 Frm 00044 Fmt 4703 Sfmt 4703 well with the other products for dogs in PetIQ’s portfolio. PetIQ’s products include complementary flea and tick products for dogs that offer longer lasting treatments to kill eggs and larvae and are sold under the Sergeant’s, Advecta, and Sentry brand names. PetIQ sells products through all the companion animal retail channels through which Elanco currently sells Capstar and also sells its current product lines to pet specialty retailers, mass merchandisers/grocers, club stores, and e-commerce sites. Neogen, headquartered in Lansing, Michigan, is a global animal and food safety company offering a wide portfolio of solutions, including insecticides, diagnostic test kits to detect contamination in animal feed, animal pharmaceuticals, vaccines, and diagnostics for production animals. Neogen currently markets and sells its products through the same distribution channels Elanco uses for StandGuard. In addition, Neogen manufactures and sells liquid insecticides and aerosol products used both on livestock and for in-premise insect control, and it has the capability to manufacture StandGuard in-house. Each of the divestitures requires Elanco to transfer all supply input and other manufacturing contracts, business information, product approvals (including relevant FDA marketing authorizations), intellectual property, and other related assets to the relevant divestiture buyer. The proposed Consent Agreement also contains provisions to ensure that the divestitures are successful and timely, including provisions that require Elanco to provide the purchasers the opportunity to review product contracts and to designate knowledgeable employees to assist each divestiture buyer in transferring and integrating the relevant divested product into its business. The Commission will appoint an Interim Monitor to ensure that the parties comply with all of their obligations pursuant to the Consent Agreement and to keep the Commission informed about the status of the transfer of the rights and assets to Dechra, PetIQ, and Neogen. The Commission’s goal in evaluating possible purchasers of divested rights and assets is to maintain the competitive environment that existed prior to the Proposed Acquisition. The Commission does not intend this analysis to constitute an official interpretation of the proposed Order or to modify its terms in any way. E:\FR\FM\21JYN1.SGM 21JYN1 Federal Register / Vol. 85, No. 140 / Tuesday, July 21, 2020 / Notices By direction of the Commission, Commissioner Slaughter not participating. April J. Tabor, Secretary. [FR Doc. 2020–15724 Filed 7–20–20; 8:45 am] BILLING CODE 6750–01–P Agenda items for this meeting are subject to change as priorities dictate. Dated: July 15, 2020. Virginia L. Mackay-Smith, Associate Director. [FR Doc. 2020–15684 Filed 7–20–20; 8:45 am] BILLING CODE 4160–90–P DEPARTMENT OF HEALTH AND HUMAN SERVICES Agency for Healthcare Research and Quality Notice of Meeting Agency for Healthcare Research and Quality, HHS. ACTION: Notice. AGENCY: The Agency for Healthcare Research and Quality (AHRQ) announces a Special Emphasis Panel (SEP) meeting on ‘‘AHRQ–HEOR COVID19 Revision.’’ This SEP meeting will be closed to the public. DATES: August 7, 2020. ADDRESSES: Agency for Healthcare Research and Quality (Video Assisted Review), 5600 Fishers Lane, Rockville, Maryland 20850. FOR FURTHER INFORMATION CONTACT: Jenny Griffith, Committee Management Officer, Office of Extramural Research, Education and Priority Populations, Agency for Healthcare Research and Quality, (AHRQ), 5600 Fishers Lane, Rockville, Maryland 20850, Telephone: (301) 427–1557. SUPPLEMENTARY INFORMATION: A Special Emphasis Panel is a group of experts in fields related to health care research who are invited by AHRQ, and agree to be available, to conduct on an as-needed basis, scientific reviews of applications for AHRQ support. Individual members of the Panel do not attend regularlyscheduled meetings and do not serve for fixed terms or a long period of time. Rather, they are asked to participate in particular review meetings which require their type of expertise. The SEP meeting referenced above will be closed to the public in accordance with the provisions set forth in 5 U.S.C. App. 2, section 10(d), 5 U.S.C. 552b(c)(4), and 5 U.S.C. 552b(c)(6). Grant applications for the ‘‘AHRQ–HEOR COVID19 Revision’’ is to be reviewed and discussed at this meeting. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy. jbell on DSKJLSW7X2PROD with NOTICES SUMMARY: VerDate Sep<11>2014 17:42 Jul 20, 2020 Jkt 250001 DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Disease Control and Prevention [Docket No. CDC–2020–0087] Request for Information Related to Cruise Ship Planning and Infrastructure, Resumption of Passenger Operations, and Summary Questions Centers for Disease Control and Prevention (CDC), Department of Health and Human Services (HHS). ACTION: Notice. AGENCY: The Centers for Disease Control and Prevention (CDC), a component of the U.S. Department of Health and Human Services (HHS), announces a Request for Information related to cruise ship planning and infrastructure, resumption of passenger operations, and additional summary questions. This information may be used to inform future public health guidance and preventative measures relating to travel on cruise ships. DATES: Written comments must be received on or before September 21, 2020. SUMMARY: You may submit comments, identified by Docket No. CDC–2020– 0087 by any of the following methods listed below. CDC does not accept comment by email. • Federal eRulemaking Portal: https://www.regulations.gov. Follow the instructions for submitting comments. • Mail: Maritime Unit, Centers for Disease Control and Prevention, 1600 Clifton Road NE, MS V18–2, Atlanta, GA 30329. Instructions: All submissions received must include the agency name and Docket Number. All relevant comments received will be posted without change to https://www.regulations.gov, including any personal information provided. For access to the docket to read background documents or comments received, go to https:// www.regulations.gov. ADDRESSES: FOR FURTHER INFORMATION CONTACT: Jennifer Buigut, Division of Global Migration and Quarantine, Centers for PO 00000 Frm 00045 Fmt 4703 Sfmt 4703 44083 Disease Control and Prevention, 1600 Clifton Road NE, MS V18–2, Atlanta, GA 30329. Phone: 404–498–1600. Email: dgmqpolicyoffice@cdc.gov. SUPPLEMENTARY INFORMATION: Background In response to the COVID–19 pandemic and the increased risk of spread of COVID–19 on cruise ships, HHS/CDC published an industry-wide No Sail Order on March 14, 2020, to, among other things, restrict the embarkation of cruise ships. CDC extended its No Sail Order, effective April 15, 2020, to require cruise lines, as a condition of obtaining controlled free pratique to operate in international, interstate, or intrastate waterways subject to the jurisdiction of the United States,1 to develop appropriate plans to prevent, mitigate, and respond to the spread of COVID–19 on their cruise ships. Elsewhere in this issue of the Federal Register, CDC is publishing a companion notice announcing a further extension of the ‘‘No Sail Order and Suspension of Further Embarkation; Second Modification and Extension of No Sail Order and Other Measures Related to Operations.’’ This Request for Information requests comments from the public that will be used to inform future public health guidance and preventative measures relating to travel on cruise ships. Public Participation Interested persons or organizations are invited to participate by submitting comments specifically on the following questions related to planning and infrastructure, resumption of passenger operations, and summary questions raised in this document: Planning and Infrastructure 1. Given the challenges of eliminating COVID–19 on board cruise ships while operating with reduced crew on board during the period of the April 15, 2020 No Sail Order Extension, what methods, strategies, and practices should cruise ship operators implement to prevent COVID–19 transmission when operating with passengers? 2. How should cruise ship operators bolster their internal public health programs with public health experts and invest in a robust public health infrastructure to ensure compliance with measures to detect, prevent, and control the spread of COVID–19? 3. How should cruise ship operators ensure internal public health programs 1 https://www.federalregister.gov/documents/ 2020/04/15/2020-07930/no-sail-order-andsuspension-of-further-embarkation-notice-ofmodification-and-extension-and-other. E:\FR\FM\21JYN1.SGM 21JYN1

Agencies

[Federal Register Volume 85, Number 140 (Tuesday, July 21, 2020)]
[Notices]
[Pages 44080-44083]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-15724]


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FEDERAL TRADE COMMISSION

[File No. 191 0198]


Elanco Animal Health and Bayer Animal Health; Analysis of 
Agreement Containing Consent Orders To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement; request for comment.

-----------------------------------------------------------------------

SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair methods of competition. 
The attached Analysis to Aid Public Comment describes both the 
allegations in the 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 August 20, 2020.

ADDRESSES: Interested parties may file comments online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Please write: ``Elanco and 
Bayer; File No. 191 0198'' on your comment, and file your comment 
online at https://www.regulations.gov by following the instructions on 
the web-based form. If you prefer to file your comment on paper, please 
mail your comment to the following address: Federal Trade Commission, 
Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 
(Annex D), Washington, DC 20580; or deliver your comment to the 
following address: Federal Trade Commission, Office of the Secretary, 
Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex 
D), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Joseph Lipinsky (206-220-4473), Bureau 
of Competition, Federal Trade Commission, 600 Pennsylvania Avenue NW, 
Washington, DC 20580.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, 
notice is hereby given that the above-captioned

[[Page 44081]]

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 of Agreement Containing Consent 
Orders 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 website (for July 15, 2020), at this web address: https://www.ftc.gov/news-events/commission-actions.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before August 20, 2020. 
Write ``Elanco and Bayer; File No. 191 0198'' on your comment. Your 
comment--including your name and your state--will be placed on the 
public record of this proceeding, including, to the extent practicable, 
on the https://www.regulations.gov website.
    Due to the public health emergency in response to the COVID-19 
outbreak and the agency's heightened security screening, postal mail 
addressed to the Commission will be subject to delay. We strongly 
encourage you to submit your comments online through the https://www.regulations.gov website.
    If you prefer to file your comment on paper, write ``Elanco and 
Bayer; File No. 191 0198'' on your comment and on the envelope, and 
mail your comment to the following address: Federal Trade Commission, 
Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 
(Annex D), Washington, DC 20580; or deliver your comment to the 
following address: Federal Trade Commission, Office of the Secretary, 
Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex 
D), Washington, DC 20024. If possible, submit your paper comment to the 
Commission by courier or overnight service.
    Because your comment will be placed on the publicly accessible 
website at https://www.regulations.gov, you are solely responsible for 
making sure that your comment does not include any sensitive or 
confidential information. In particular, your comment should not 
include any sensitive personal information, such as your or anyone 
else's Social Security number; date of birth; driver's license number 
or other state identification number, or foreign country equivalent; 
passport number; financial account number; or credit or debit card 
number. You are also solely responsible for making sure your comment 
does not include any sensitive health information, such as medical 
records or other individually identifiable health information. In 
addition, your comment should not include any ``trade secret or any 
commercial or financial information which . . . is privileged or 
confidential''--as provided by Section 6(f) of the FTC Act, 15 U.S.C. 
46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2)--including in 
particular competitively sensitive information such as costs, sales 
statistics, inventories, formulas, patterns, devices, manufacturing 
processes, or customer names.
    Comments containing material for which confidential treatment is 
requested must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular, 
the written request for confidential treatment that accompanies the 
comment must include the factual and legal basis for the request, and 
must identify the specific portions of the comment to be withheld from 
the public record. See FTC Rule 4.9(c). Your comment will be kept 
confidential only if the General Counsel grants your request in 
accordance with the law and the public interest. Once your comment has 
been posted on the public FTC website--as legally required by FTC Rule 
4.9(b)--we cannot redact or remove your comment from the FTC website, 
unless you submit a confidentiality request that meets the requirements 
for such treatment under FTC Rule 4.9(c), and the General Counsel 
grants that request.
    Visit the FTC website at http://www.ftc.gov to read this Notice and 
the news release describing this matter. The FTC Act and other laws 
that the Commission administers permit the collection of public 
comments to consider and use in this proceeding, as appropriate. The 
Commission will consider all timely and responsive public comments that 
it receives on or before August 20, 2020. For information on the 
Commission's privacy policy, including routine uses permitted by the 
Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.

Analysis of Agreement Containing Consent Orders To Aid Public Comment

I. Introduction

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an Agreement Containing Consent Orders (``Consent 
Agreement'') with Elanco Animal Health, Inc. (``Elanco''), and Bayer 
Animal Health, GmbH (``Bayer''). The proposed Consent Agreement is 
intended to remedy the anticompetitive effects that likely would result 
from Elanco's proposed acquisition of Bayer (the ``Proposed 
Acquisition'').
    Pursuant to a Share and Asset Purchase Agreement dated August 20, 
2019, Elanco proposes to acquire all of the Bayer Animal Health assets 
for approximately $7.6 billion. Both parties sell low-dose prescription 
treatments for canine otitis externa, fast-acting oral treatments that 
kill adult fleas on canines, and brand name cattle pour-on 
insecticides. The Commission alleges in its Complaint that the Proposed 
Acquisition, if consummated, would violate Section 7 of the Clayton 
Act, as amended, 15 U.S.C. 18, and Section 5 of the Federal Trade 
Commission Act, as amended, 15 U.S.C. 45, by lessening competition in 
the U.S. market for these three product categories.
    The proposed Consent Agreement will remedy the alleged violations 
by preserving the competition that would otherwise be eliminated by the 
Proposed Acquisition. Specifically, under the terms of the proposed 
Consent Agreement, Elanco is required to divest its canine otitis 
externa treatment product, Osurnia, to Dechra Pharmaceuticals PLC 
(``Dechra''), its fast-acting oral treatment that kills adult fleas on 
canines, Capstar, to PetIQ, Inc. (``PetIQ''), and its brand name cattle 
pour-on product, StandGuard, to Neogen Corporation (``Neogen'').

II. The Relevant Products and Competitive Effects

    The Commission's Complaint alleges three relevant product markets 
within which to analyze the Proposed Acquisition. The first relevant 
product market is low-dose prescription treatments for canine otitis 
externa. Canine otitis externa is an inflammation of the outer ear 
caused by bacteria and/or yeast. Common symptoms of otitis externa 
include pain, itching, redness, scaling, and swelling of the ear canal, 
and may result in serious complications if left untreated. Numerous 
prescription products treat canine otitis externa, but only the 
parties' products--Elanco's Osurnia and Bayer's Claro--require only one 
or two doses to treat the condition. Bayer's prescription otitis 
externa treatment product, Claro, is a single-dose otic solution, while 
Elanco's product, Osurnia, is an otic gel given in two doses seven days 
apart. While other prescription products can be used to treat canine 
otitis externa, these other products require numerous applications to 
the ear canal, up to twice daily for 14 consecutive days, and are thus 
not reasonable substitutes for the parties' products, which are 
considerably more convenient to use. As such, the

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Proposed Acquisition would create a monopoly by combining the only two 
low-dose prescription products that treat canine otitis externa.
    A second relevant product market is fast-acting oral treatments 
that kill adult fleas on canines. While there are numerous products 
that kill and prevent fleas on dogs, most are slower-acting or 
preventative, targeting flea larvae. In contrast, Elanco's Capstar and 
Bayer's Advantus start killing adult fleas quickly (within 30 minutes 
for Capstar, and within 60 minutes for Advantus), and eliminate all 
adult fleas within four hours. Medicated shampoos and sprays that can 
be used to kill adult fleas are much less convenient to administer and 
are slower-acting. As Elanco's Capstar and Bayer's Advantus are the 
only fast-acting oral treatments that kill adult fleas on canines, the 
Proposed Acquisition would also create a monopoly for fast-acting oral 
treatments that kill adult fleas on canines.
    A third relevant product market is brand name cattle pour-on 
insecticides. Cattle pour-on insecticides are liquid parasiticides 
administered directly to cattle's skin that kill and deter biting 
flies, lice, and mites. Many customers trust and rely on brand name 
cattle pour-on insecticides rather than generic products. As a result, 
generic cattle pour-on insecticides are not a reasonable substitute for 
the parties' brand-name cattle pour-on insecticides. The market for 
brand name cattle pour-on insecticides is highly concentrated. Bayer is 
the market leader, selling three cattle pour-on insecticide products 
(Clean-Up II, Cylence, and Permectrin). The only other competitors with 
meaningful sales in the market are Merck & Co., Inc., which sells four 
products, and Elanco, which sells StandGuard. Thus, the Proposed 
Acquisition would allow the third largest competitor, Elanco, to 
acquire the market leader, Bayer, significantly increasing 
concentration in brand name cattle pour-on insecticides. Moreover, to 
avoid insects becoming resistant to the active ingredients in 
insecticides, cattle producers typically cycle through different pour-
on insecticides. Elanco's StandGuard and Bayer's Cylence have similar 
chemical structures and may compete for and occupy the same slot in 
cattle producers' pour-on insecticide rotation.
    The United States is the relevant geographic market in which to 
assess the competitive effects of the Proposed Acquisition. Each of 
these products must be approved by the FDA and/or EPA before being sold 
in the United States. Thus, products sold outside the United States, 
but not approved for sale in the United States, are not alternatives 
for U.S. consumers.

III. Entry

    Entry into the U.S. market for low-dose prescription treatments for 
canine otitis externa, fast-acting oral treatments that kill adult 
fleas on canines, and brand name cattle pour-on insecticides would not 
be timely, likely, or sufficient in magnitude, character, and scope to 
deter or counteract the anticompetitive effects of the Proposed 
Acquisition. Several major obstacles stand in the way of a prospective 
entrant. De novo entry would require significant investment to, among 
other things, develop products, obtain regulatory approval, where 
needed, and establish recognized brand names. Moreover, entry would be 
unlikely because the required investment would be difficult to justify 
given the sales opportunities in the affected markets.

IV. The Proposed Consent Agreement

    The proposed Consent Agreement effectively remedies the Proposed 
Acquisition's anticompetitive effects in the three relevant product 
markets by requiring the parties to divest the rights and assets 
related to Elanco's products in each of the markets. The proposed 
Consent Agreement requires Elanco to divest Osurnia to Dechra, Capstar 
to PetIQ, and StandGuard to Neogen. The Order requires Elanco to divest 
the relevant rights and interests in these products no later than ten 
days after the consummation of the Proposed Acquisition.
    Dechra, headquartered in Northwich, England, is a global animal 
health company and is publicly traded on the London Stock Exchange. 
Dechra has significant presence and experience in the United States, 
operating in the United States for over 15 years and offering more than 
80 U.S. products, including both prescription and non-prescription 
companion animal products. Osurnia will complement Dechra's broad 
dermatology portfolio, which includes Animax Ointment, an 
antibacterial, antifungal, and anti-inflammatory skin application that 
is a daily-dose treatment and is indicated for multiple skin 
conditions, anal gland infections in dogs, as well as canine otitis 
externa. Although Animax can treat canine otitis externa, it is not a 
direct competitor to Osurnia given it is an older generation product 
requiring daily application to treat the condition.
    PetIQ, headquartered in Boise, Idaho, is a rapidly growing pet 
health and wellness company. It has served as Elanco's exclusive 
distributor of Capstar to retailers since 2018. Capstar aligns well 
with the other products for dogs in PetIQ's portfolio. PetIQ's products 
include complementary flea and tick products for dogs that offer longer 
lasting treatments to kill eggs and larvae and are sold under the 
Sergeant's, Advecta, and Sentry brand names. PetIQ sells products 
through all the companion animal retail channels through which Elanco 
currently sells Capstar and also sells its current product lines to pet 
specialty retailers, mass merchandisers/grocers, club stores, and e-
commerce sites.
    Neogen, headquartered in Lansing, Michigan, is a global animal and 
food safety company offering a wide portfolio of solutions, including 
insecticides, diagnostic test kits to detect contamination in animal 
feed, animal pharmaceuticals, vaccines, and diagnostics for production 
animals. Neogen currently markets and sells its products through the 
same distribution channels Elanco uses for StandGuard. In addition, 
Neogen manufactures and sells liquid insecticides and aerosol products 
used both on livestock and for in-premise insect control, and it has 
the capability to manufacture StandGuard in-house.
    Each of the divestitures requires Elanco to transfer all supply 
input and other manufacturing contracts, business information, product 
approvals (including relevant FDA marketing authorizations), 
intellectual property, and other related assets to the relevant 
divestiture buyer. The proposed Consent Agreement also contains 
provisions to ensure that the divestitures are successful and timely, 
including provisions that require Elanco to provide the purchasers the 
opportunity to review product contracts and to designate knowledgeable 
employees to assist each divestiture buyer in transferring and 
integrating the relevant divested product into its business.
    The Commission will appoint an Interim Monitor to ensure that the 
parties comply with all of their obligations pursuant to the Consent 
Agreement and to keep the Commission informed about the status of the 
transfer of the rights and assets to Dechra, PetIQ, and Neogen. The 
Commission's goal in evaluating possible purchasers of divested rights 
and assets is to maintain the competitive environment that existed 
prior to the Proposed Acquisition.
    The Commission does not intend this analysis to constitute an 
official interpretation of the proposed Order or to modify its terms in 
any way.


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    By direction of the Commission, Commissioner Slaughter not 
participating.
April J. Tabor,
Secretary.
[FR Doc. 2020-15724 Filed 7-20-20; 8:45 am]
BILLING CODE 6750-01-P