business news in context, analysis with attitude

by Kevin Coupe

The Federal Trade Commission (FTC) said yesterday that it has filed a federal lawsuit aimed at preventing pharmaceutical company Amgen's proposed $27.8 billion acquisition of Horizon Therapeutics, arguing that "the deal would allow Amgen to 'entrench the monopoly positions' of Horizon’s eye and gout drugs," the Wall Street Journal writes.  "The agency said that those treatments don’t face any competition today and that Amgen would have a strong incentive to prevent any potential rivals from introducing similar drugs."

This is, the story says, the first step in the process:  " A federal judge would need to approve the injunction. That is part of a two-step legal process the agency typically uses to prevent mergers it believes are illegal.

I bring this up because of one particular passage from the Journal story:

"Under Chair Lina Khan, the FTC has taken a stricter stance on deals generally, saying antitrust enforcers in the past several decades shied away from challenging many deals, allowing firms in technology, healthcare and other industries to amass excessive market power."

Which makes me wonder whether one of the "other industries" referenced could be the supermarket industry, and if this suit makes it more likely that the FTC also will try to derail Kroger's proposed $24.6 billion acquisition of Albertsons.

Sure, the pharmaceutical business is different from the retail business.  But that doesn't mean that the FTC's attitude toward consolidation and competition will be any different.

Some more context from the Journal story:

"The argument that the combination would limit potential future competition underlies some other recent FTC merger challenges and represents a novel theory for challenging deals, said Taylor Owings, an antitrust partner at Baker Botts. Among the claims behind the theory, Ms. Owings said, was that other drugs will emerge to compete with Horizon’s products, and that Amgen would smother those rivals with illegal and anticompetitive tactics … Under the Biden administration, the FTC and Justice Department have challenged more corporate deals, including some that didn’t involve mergers of rivals. The FTC has sued to stop Microsoft from acquiring the videogame maker Activision Blizzard, a deal that European Commission authorities cleared Monday. The agency has rejected Illumina’s proposed purchase of an outstanding stake in the cancer-test maker Grail."

I suspect that for the folks at Kroger and Albertsons, as well as the people at various entities working to make their merger happen, this effort by the FTC was an Eye-Opener, reflecting a reality with which they may have to deal in the not-too-distant future.