9610055 UNITED STATES OF
AMERICA COMMISSIONERS: In the Matter of Ciba-Geigy Limited, a
corporation, Docket No. C-3725 DECISION AND ORDER The Federal Trade Commission having initiated an investigation of the proposed merger between respondent Ciba-Geigy Limited, including its wholly-owned subsidiary Ciba-Geigy Corporation, and respondent Sandoz Ltd., including its wholly-owned subsidiary, Sandoz Corporation, into respondent Novartis AG, and respondents having been furnished thereafter with a copy of a draft of complaint that the Bureau of Competition presented to the Commission for its consideration and which, if issued by the Commission, would charge respondents with violations of 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; and The respondents, their attorneys, and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by respondents of all the jurisdictional facts set forth in the aforesaid draft of the complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondents that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission's Rules; and The Commission having thereafter considered the matter and having determined that it had reason to believe that respondents have violated the said Acts, and that a complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, now in further conformity with the procedure prescribed in § 2.34 of its Rules, the Commission hereby issues its Complaint, makes the following jurisdictional findings and enters the following Order: 1. Respondent Ciba-Geigy Limited is a corporation organized, existing and doing business under and by virtue of the laws of Switzerland with its office and principal place of business located at Klybeckstrasse 141, CH-4002 Basel, Switzerland. 2. Respondent Ciba-Geigy Corporation, a wholly-owned subsidiary of Ciba-Geigy Limited, is a corporation organized, existing, and doing business under and by virtue of the laws of New York with its office and principal place of business located at 520 White Plains Road, Tarrytown, New York 10591. 3. Respondent Chiron Corporation, in whom Ciba-Geigy Limited, together with its subsidiaries, is the largest shareholder, holding as of September 30, 1996, not solely as an investment, approximately 46.5% of the Chiron capital stock, is a corporation organized, existing, and doing business under and by virtue of the laws of Delaware with its office and principal place of business located at 4560 Horton Street, Emeryville, California 94608. 4. Respondent Sandoz Ltd. is a corporation organized, existing and doing business under and by virtue of the laws of Switzerland with its office and principal place of business located at Lichtstrasse 35, CH-4002 Basel, Switzerland. 5. Respondent Sandoz Corporation, a wholly-owned subsidiary of Sandoz Ltd., is a corporation organized, existing, and doing business under and by virtue of the laws of New York with its office and principal place of business located at 608 Fifth Avenue, New York, New York 10020. 6. Respondent Novartis AG, is a corporation organized, existing, and doing business under and by virtue of the laws of Switzerland with its office and principal place of business located at Centralbahnstrasse 7, CH-4010 Basel, Switzerland. 7. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest. ORDER I IT IS ORDERED that, as used in this Order, the following definitions shall apply: A. "Ciba" means Ciba-Geigy Limited, its directors, officers, employees, agents and representatives, predecessors, successors, and assigns; its subsidiaries, divisions, groups and affiliates controlled, directly or indirectly, by Ciba-Geigy Limited, including, but not limited to, Ciba-Geigy Corporation, and the respective directors, officers, employees, agents and representatives, successors, and assigns of each. B. "Chiron" means Chiron Corporation, its directors, officers, employees, agents and representatives, predecessors, successors, and assigns; its subsidiaries, divisions, groups and affiliates controlled, directly or indirectly, by Chiron, and the respective directors, officers, employees, agents and representatives, successors, and assigns of each. C. "Sandoz" means Sandoz Ltd., its directors, officers, employees, agents and representatives, predecessors, successors, and assigns; its subsidiaries, divisions, groups and affiliates controlled, directly or indirectly, by Sandoz Ltd., including, but not limited to, Genetic Therapy, Inc. and Sandoz Corporation, and the respective directors, officers, employees, agents and representatives, successors, and assigns of each. D. "Novartis" means Novartis AG, a company jointly formed by Ciba and Sandoz to effectuate the merger of Ciba and Sandoz through the acquisition of Ciba and Sandoz by Novartis. Novartis includes Ciba and Sandoz; all of Novartis's directors, officers, employees, agents and representatives, predecessors, successors and assigns; its subsidiaries, divisions, groups and affiliates controlled, directly or indirectly, by Novartis AG; and the respective directors, officers, employees, agents and representatives, successors, and assigns of each. E. "BASF" means BASF Aktiengesellschaft, a company organized under the laws of Germany with its principal office and principal place of business located at Ludwigshafen, Germany. F. "Commission" means the Federal Trade Commission. G. "EPA" means the United States Environmental Protection Agency. H. "FDA" means the Food and Drug Administration of the United States Department of Health and Human Services. I. "Respondents" means Ciba, Sandoz, or Novartis, respectively, and in Paragraphs IX.A., IX.B., IX.F., IX.G., X, XIV, XV, XVI, and XVII, Chiron, or any combination thereof. J. "Agricultural Chemical Active Ingredient" means a chemical that alone or in combination with other chemicals imparts or demonstrates herbicidal, insecticidal, fungicidal, or other pesticidal properties. K. "Agricultural Chemical Formulation" means a formulation or pre-mix containing one or more Agricultural Chemical Active Ingredients. L. "Agricultural Chemical Acquirer" means the entity or entities to whom Respondents shall divest either the Sandoz Corn Herbicide Business or the Sandoz Agricultural Chemical Business required to be divested pursuant to this Order. M. "Agricultural Chemical" means any corn herbicides and other herbicides, insecticides, fungicides, and other pesticides developed, manufactured or sold by Sandoz in the United States or Canada or developed by Sandoz outside the United States and Canada for production or sale in the United States or Canada, other than products manufactured and sold by the Sandoz Animal Health Business. N. "Base Active Flea Ingredient" means any final or intermediate form of any chemical, that alone or in combination with other chemicals is registered or under development as a Flea Control Product, including, but not limited to, Methoprene. O. "Core Data Package" means data and information required by regulatory authorities in the United States and Canada to register Flea Control Products, Other Dallas Products, and ingredients for both. P. "Corn Herbicides" means all Agricultural Chemical Active Ingredients and Agricultural Chemical Formulations used, or suitable for use, on corn crops to control weeds, including, but not limited to, Dimethenamid, Dicamba, and Pyridate. Q. "Cost" means the manufacturer's average direct per unit cost of manufacturing exclusive of any overhead expenses. R. "Dicamba" means technical concentrate of dicamba, chemical name 3,6-dichloro-o-anisic acid, and salts of dicamba, e.g., dimethylamine, diglycolamine, potassium, sodium, isopropylamine, DPL, and APM salts of dicamba, and any Agricultural Chemical Formulation containing dicamba. S. "Dimethenamid" means technical concentrate of dimethenamid, chemical name 2-chloro-N-[(1-methyl-2-methoxy)ethyl]-N-(2,4-dimethyl-thien-3-yl)-acetamide or (1RS, aRS)-2-chloro-N-(2,4-dimethyl-3-thienyl)-N-(2-methoxy-1-methylethyl)-acetamide, and any Agricultural Chemical Formulation containing dimethenamid. T. "FIFRA" means the Federal Insecticide, Fungicide, and Rodenticide Act and all statutory amendments, modifications or replacements thereof. U. "Flea Control Products" means all products used or intended to be used to treat or prevent ectoparasitic (flea) infestation in connection with canines or felines and all research and development projects to develop products to be used to treat or control ectoparasitic infestation in connection with canines and felines. V. "Merger" means the Merger of Ciba and Sandoz into Novartis. W. "Methoprene" means (S)-Methoprene, chemical name Isopropyl (2E, 4E, 7S)-11-methoxy-3,7,11-trimethyl-2,4-dodecadienoate, and (RS)-Methoprene, chemical name Isopropyl (E,E)-11-methoxy-3,7,11-trimethyl-2,4-dodecadienoate. X. "Other Dallas Products" means products, other than Flea Control Products, that are manufactured or produced at the Sandoz facility located in Dallas, Texas and are sold in the United States or Canada. Y. "Pyridate" means technical concentrate of pyridate, chemical name O-(6-chloro-3-phenyl-4-pyridazinyl)-S-octyl-carbonothioate, and includes any Agricultural Chemical Formulation containing pyridate. Z. "Registration Data" means all data relating to the applicable Agricultural Chemical Active Ingredient or Agricultural Chemical Formulation that has been, or will be, submitted to the EPA, under FIFRA, or to any state or foreign regulatory agency for purposes of obtaining or maintaining any registration or authorizations for any product containing such Agricultural Chemical Active Ingredient or Agricultural Chemical Formulation. AA. "Sandoz Corn Herbicide Business" means all physical assets, properties and business located in the United States or Canada and all goodwill, tangible and intangible assets, used by Sandoz in the research, development, manufacture, formulation, registration, distribution or sale of Corn Herbicides (other than Pyridate) in the United States or Canada, all as specified in the Asset Purchase Agreement dated as of September 26, 1996, between Sandoz and BASF. BB. "Sandoz Agricultural Chemical Business" means all physical assets, properties and business located in the United States or Canada and all goodwill, tangible and intangible assets, used by Sandoz in the research, development, manufacture, formulation, registration, distribution or sale of Agricultural Chemicals in the United States or Canada, or for production or sale in the United States or Canada, excluding the Sandoz Animal Health Business, including, without limitation, the following:
CC. "Sandoz Animal Health Business" means the business units of Sandoz that are engaged in the research, development, manufacture and production of Flea Control Products and Other Dallas Products at the Sandoz facility in Dallas, Texas which products are distributed and sold in the United States and Canada, excluding the Sandoz Agricultural Chemical Business, and all assets, properties, business and goodwill, tangible and intangible, trademarks and trade names used, in whole or in part, in the research, development, manufacture, and production of Flea Control Products and Other Dallas Products at the Sandoz facility located in Dallas, Texas which products are distributed and sold in the United States and Canada, including, but not limited to, the following:
Notwithstanding the foregoing, Sandoz Animal Health Business shall exclude the production facility located at Muttenz, Switzerland, operated by Sandoz to produce Methoprene and other materials, Flea Control Products and Other Dallas Products that are sold outside of the United States and Canada, and assets that were part of Ciba prior to the Merger. DD. "Sandoz Animal Health Business Acquirer" means the entity or entities to whom Respondents shall divest the Sandoz Animal Health Business required to be divested pursuant to this Order. EE. "Sandoz Flea Control Products" means all Flea Control Products that as of November 22, 1996, are: (1) being manufactured, distributed and sold by Sandoz in the United States and Canada; and (2) all projects in research and development by Sandoz in the United States and Canada that relate to improving existing, or developing new, Flea Control Products or Base Active Flea Ingredients therefor. FF. "Strategic Plan" means a detailed plan that sets forth inter alia the means by which the Sandoz Animal Health Business Acquirer will begin the manufacture and sale of Methoprene, including dates by which the Sandoz Animal Health Business Acquirer plans to have received necessary governmental approvals to manufacture and sell Methoprene in the United States and Canada. GG. "Anderson Patent" means US Patent Number 5,399,346 issued March 21, 1995, and any pending divisionals, continuations, continuations in part, extensions or reissues of said original US patent application number 07/365,567. HH. "Anderson Patent License" means a non-exclusive license obtained by any Person under the Anderson Patent for any gene therapy product or process. II. "Anderson Patent Licensee" means a Person that obtains an Anderson Patent License. JJ. "Cytokine License" means, as to each Respondent, a non-exclusive license or sublicense under such Respondent's Cytokine Patent Rights for use in any Cytokine Licensed Product as follows: (a) as to Respondent Chiron, with respect to IL-2, the right to use IL-2 sold by Respondent Chiron in a Cytokine Licensed Product, or if Respondent Chiron ceases offering IL-2 for sale, then the right to manufacture and use IL-2 in a Cytokine Licensed Product; and (b) as to Respondent Novartis with respect to IL-3 and IL-6, the right to manufacture and use IL-3 and/or IL-6 in a Cytokine Licensed Product. KK. "Cytokine Licensed Product" means any research protocol or commercial product and/or service incorporating or to be used with cells that have been expanded, mobilized or cultured ex vivo with IL-2, IL-3 and/or IL-6 proteins. LL. "Cytokine Licensee" means each and every Person that requests and obtains a Cytokine License. MM. "Cytokine Patent Rights" means with respect to each Respondent, all worldwide patents and patent applications, issued or pending, which, as of the date this Order becomes final, are owned or controlled by such Respondent or licensed by a third party to such Respondent with the right to sublicense, which, in the case of Respondent Chiron, are directed to the manufacture, use, or sale of IL-2 in Cytokine Licensed Products, and, in the case of Respondent Novartis, are directed to the manufacture, use, or sale of IL-3 and/or IL-6 in Cytokine Licensed Products. Additionally, at the option of the Cytokine Licensee, the Cytokine Patent Rights shall also include a cross-reference right to the licensing Respondent's respective drug regulatory files at the FDA with respect to IL-2 in the case of Respondent Chiron, and with respect to IL-3 and/or IL-6 in the case of Respondent Novartis. NN. "Gene Therapy" means a therapeutic intervention in humans based on modification of the genetic material of autologous, allogeneic, or xenogeneic living cells. Cells may be modified ex vivo for subsequent administration or altered in vivo by gene therapy products given directly to the patient. OO. "Gene Therapy License" means any and all of the HSV-tk License, Cytokine License, Anderson Patent License, and Hemophilia License. PP. "Hemophilia License" means one (1) non-exclusive license under patents and/or patent applications to which Sandoz held rights, as of October 1, 1996, to develop a gene therapy product using the beta-domain deleted Factor VIII gene for the treatment of hemophilia, including, at the option of RPR or the Subsequent Hemophilia Licensee, all technical information, know-how or materials owned or controlled by Sandoz, as of the date on which this Order becomes final, necessary for the development and manufacture of such product, including, but not limited to, hemophilia gene therapy vectors. QQ. "HSV-tk Gene Therapy" means the introduction of the HSV-tk gene into a patient by in vivo and/or ex vivo transduction for the treatment of human disease. RR. "HSV-tk License" means, as to each Respondent, the license or sublicense granted to RPR or the HSV-tk Licensee under such Respondent's HSV-tk Patent Rights, to make, use, or sell an HSV-tk Licensed Product, including, at the option of RPR or the HSV-tk Licensee, the right to sublicense in fields that are not being developed by RPR or the HSV-tk Licensee. SS. "HSV-tk Licensee" means a pharmaceutical company, other than RPR, with the demonstrated plan and ability to commercialize the HSV-tk Licensed Product, including vector production facilities and clinical gene therapy experience. TT. "HSV-tk Licensed Product" means an HSV-tk Gene Therapy product in development or to be developed by RPR or the HSV-tk Licensee. UU. "HSV-tk Patent Rights" means the following:
VV. "HSV-tk Business" means all the assets utilized by Respondent Sandoz in the research and development of HSV-tk Gene Therapy products, or at the option of all Respondents in the event that the requirements of Paragraph IX.A. have not been satisfied, all the assets utilized by Respondent Chiron in the research and development of HSV-tk Gene Therapy products. WW. "HSV-tk Sublicensee" means any Person that receives a sublicense under the HSV-tk Patent Rights from RPR or the HSV-tk Licensee in fields not being developed by RPR or the HSV-tk Licensee. XX. "MDR-1" means the multiple drug resistance-1 gene. YY. "MRP" means the multiple resistance protein gene. ZZ. "Net Sales Price" means the total amount received from the sale of royalty bearing products and/or services, less transportation charges and insurance, sales taxes, use taxes, excise taxes, value added taxes, customs duties or other imposts, normal and customary quantity and cash discounts, rebates (to the extent actually made) and disallowed reimbursements and allowances and credit on account of rejection or return of royalty bearing products or services. Royalty bearing products or services shall be considered "sold" when billed out or invoiced. The total amount received by Cytokine Licensee from the sale of Cytokine Licensed Products and/or by Anderson Patent Licensee from the sale of gene therapy products covered by the Anderson Patent Rights may or may not incorporate hospital and/or physician costs relating to the ex vivo gene therapy treatment (e.g., physician charges related to the removal and readministration of cells). AAA. "Other Cytokines" means all cytokines, other than IL-2, IL-3, and IL-6, including but not limited to, stem cell factors, interferons, colony stimulating factors, tumor necrosis factors and erythropoetins. BBB. "Person" means any natural person, corporate entity, partnership, association, joint venture, non-profit organization, university, government entity, or trust. CCC. "RPR" means Rhone Poulenc Rorer, Inc., 500 Arcola Road, Collegeville, PA 19426-0107. DDD. "Subsequent Hemophilia Licensee" means any Person, other than RPR, that may obtain a Hemophilia License from Novartis, or from Genetics Institute, Inc. if Novartis converts its exclusive license from Genetics Institute, Inc. to a non-exclusive license. II IT IS FURTHER ORDERED that: A. Respondents shall divest, absolutely and in good faith, as an ongoing business, the Sandoz Corn Herbicide Business to BASF pursuant to the agreement between Sandoz and BASF dated as of September 26, 1996, no later than ten (10) days after the date on which this Order becomes final; or, in the event that BASF breaches that agreement, Respondents shall divest, absolutely and in good faith, as an ongoing business, the Sandoz Corn Herbicide Business, at no minimum price, within sixty (60) days of the date on which this Order becomes final, to an Agricultural Chemical Acquirer that receives the prior approval of the Commission and in a manner that receives the prior approval of the Commission, and shall also divest such additional ancillary assets and businesses and effect such arrangements as are necessary to assure the marketability and the independence, viability and competitiveness of the Sandoz Corn Herbicide Business. B. The purpose of the divestiture of the Sandoz Corn Herbicide Business is to ensure the continuation of the Sandoz Corn Herbicide Business as an ongoing, viable enterprise engaged in the research, development, manufacture, distribution and sale of Corn Herbicides independent of Ciba, Sandoz, and Novartis and able to compete with Ciba, Sandoz and Novartis and to remedy the lessening of competition alleged in the Commission's complaint. C. Pending divestiture of the Sandoz Corn Herbicide Business, Respondents shall take such actions as are necessary to maintain the viability and marketability of the Sandoz Corn Herbicide Business and the Sandoz Agricultural Chemical Business and shall not cause or permit the destruction, removal, wasting, deterioration, or impairment of the Sandoz Corn Herbicide Business or of the Sandoz Agricultural Chemical Business, except in the ordinary course of business and except for ordinary wear and tear. III IT IS FURTHER ORDERED that: A. Respondents shall divest, absolutely and in good faith, as an ongoing business, within the time periods specified in Paragraph III.B. below, the Sandoz Animal Health Business. Respondents shall also enter into, and fulfill the terms of, a Contract Manufacturing Agreement ("CMA"), as specified in Paragraph V below, and effect such arrangements as are necessary to assure the marketability, independence, viability and competitiveness of the Sandoz Animal Health Business. B. Respondents shall divest the Sandoz Animal Health Business to Central Garden and Pet Company and/or its affiliates pursuant to the Asset Purchase Agreement dated as of October 11, 1996, among Sandoz Ltd., Central Garden and Pet Company, and Centic Acquisition Corp., as amended to conform to the terms of this Order in a manner that receives the prior approval of the Commission, within thirty (30) days of the date on which this Order becomes final; or, Respondents shall divest the Sandoz Animal Health Business, at no minimum price, within ninety (90) days of the date on which this Order becomes final, to a Sandoz Animal Health Business Acquirer that receives the prior approval of the Commission and in a manner that receives the prior approval of the Commission. The purpose of the divestiture of the Sandoz Animal Health Business is to ensure the continued use of the assets of the Sandoz Animal Health Business in the same business in which the assets of the Sandoz Animal Health Business are engaged at the time of the proposed divestiture and to remedy the lessening of competition from the proposed merger of Ciba and Sandoz as alleged in the Commission's complaint. C. Pending divestiture of the Sandoz Animal Health Business, Respondents shall take such actions as are necessary to maintain the viability and marketability of the Sandoz Animal Health Business and shall not cause or permit the destruction, removal, wasting, deterioration or impairment of the Sandoz Animal Health Business, except in the ordinary course of business and except for ordinary wear and tear. Respondents shall maintain research and development of all current research and development projects at the levels planned by Sandoz for such projects as of June 4, 1996. D. The contract of divestiture shall provide that, at the option of Respondent Novartis, the Sandoz Animal Health Business Acquirer shall enter into a transitional toll manufacturing agreement of up to two year's duration to produce for Respondents products currently produced at Dallas, but not subject to the divestiture pursuant to this Paragraph, for sale by Respondents outside the United States and Canada, all at a price equal to the Sandoz Animal Health Business Acquirer's Cost plus twenty percent (20%) mark-up. IV IT IS FURTHER ORDERED that: Upon reasonable notice and request to Respondents from the Sandoz Animal Health Business Acquirer, Respondents shall provide information, assistance and advice with respect to the Sandoz Animal Health Business divested pursuant to this Order such that the Sandoz Animal Health Business Acquirer or its designee will be capable of:
in substantially the same manner and quality employed, achieved or planned by the Respondents prior to divestiture. Such information, assistance and advice shall include reasonable consultation with knowledgeable employees of Respondents for a period of time sufficient to satisfy the Sandoz Animal Health Business Acquirer's management that its personnel are appropriately trained in the research, development, manufacture, distribution and sale of the products and research and development projects of the Sandoz Animal Health Business divested pursuant to this Order. Respondents shall convey all know-how necessary to manufacture or have manufactured, distribute, sell and obtain all necessary governmental approvals, including EPA approvals, and licenses to research, develop, manufacture or have manufactured, distribute and sell in the United States and Canada the products of the Sandoz Animal Health Business divested pursuant to this Order. Respondents shall provide such information, assistance and advice for one (1) year from the date Respondents divest the Sandoz Animal Health Business divested pursuant to this Order. Respondents may charge the Sandoz Animal Health Business Acquirer at a rate no greater than Respondents' Cost for providing such technical assistance. V IT IS FURTHER ORDERED that: Respondents shall enter into a Contract Manufacturing Agreement ("CMA") with the Sandoz Animal Health Business Acquirer to contract manufacture and deliver to the Sandoz Animal Health Business Acquirer, in a timely manner, Methoprene in the volumes requested by the Sandoz Animal Health Business Acquirer. The CMA shall be effective for the shorter of six (6) years from the date Respondents divest the Sandoz Animal Health Business or three (3) months after the Sandoz Animal Health Business Acquirer or its designee obtains all EPA or FDA approvals necessary to manufacture all Methoprene required for products of the Sandoz Animal Health Business. The CMA shall contain the following provisions: A. Respondents shall make representations and warranties to the Sandoz Animal Health Business Acquirer that the Methoprene manufactured pursuant to the CMA meets all applicable EPA, FDA and other governmental requirements for the United States and Canada, and Respondents shall agree to indemnify, defend and hold the Sandoz Animal Health Business Acquirer harmless from any and all suits, claims, actions, demands, liabilities, expenses or losses alleged to result from the failure of Methoprene manufactured pursuant to the CMA to meet such governmental specifications. This obligation shall be contingent upon the Sandoz Animal Health Business Acquirer giving Respondents prompt, adequate notice of such claim, cooperating fully in the defense of such claim, and permitting Respondents to assume the sole control of all phases of the defense and/or settlement of such claim, including the selection of counsel. This obligation shall not require Respondents to be liable for any negligent act or omission of the Sandoz Animal Health Business Acquirer or for any representations and warranties, express or implied, made by the Sandoz Animal Health Business Acquirer that exceed the representations and warranties made by Respondents to the Sandoz Animal Health Business Acquirer. B. Respondents shall agree to package and deliver the Methoprene manufactured pursuant to the CMA in a manner and form and according to a schedule reasonably requested by the Sandoz Animal Health Business Acquirer. C. The CMA shall require that, for the first three years during which the CMA is effective, the Sandoz Animal Health Business Acquirer shall compensate Respondents for all Methoprene supplied pursuant to the CMA at a rate not to exceed Respondents' Cost of producing such Methoprene during the period from July 1, 1995, through June 30, 1996, which Cost may be adjusted for demonstrated input expenditure increases as determined by the trustee appointed pursuant to Paragraph VIII of this Order. D. The contract of divestiture shall be submitted to and approved by the Commission prior to the divestiture of the Sandoz Animal Health Business required by this Order. Respondents' application for approval of the divestiture pursuant to this Order shall include: (1) a certification attesting to the good faith intention of the Sandoz Animal Health Business Acquirer to obtain, or to cause its designee to obtain, in an expeditious manner all FDA, EPA and other governmental approvals required in the United States and Canada to manufacture and sell Methoprene; (2) a Strategic Plan to obtain all FDA, EPA and other governmental approvals required in the United States and Canada to manufacture or have manufactured, and sell Methoprene; and (3) a CMA pursuant to this Paragraph. E. Respondents shall provide information, assistance, and advice to the Sandoz Animal Health Business Acquirer, or its designee, to enable the Sandoz Animal Health Business Acquirer, or its designee, to manufacture and sell Methoprene in the United States or Canada. Respondents shall convey all know-how required to manufacture, sell and obtain all necessary EPA, FDA and other government approvals to manufacture and sell Methoprene in the United States or Canada. Such information, assistance and advice shall include reasonable consultation with knowledgeable employees of Respondents and training at either or both the Sandoz Animal Health Business Acquirer's facilities, or those of its designee, and the Respondents' facilities for a period of time sufficient to satisfy the Sandoz Animal Health Business Acquirer's management that its personnel, or those of its designee, are appropriately trained in the manufacture of Methoprene. Respondents shall continue to provide such information, assistance and advice until the ninetieth (90th) day following the date on which the Sandoz Animal Health Business Acquirer, or its designee, obtains EPA approval to manufacture and sell Methoprene. Respondents may charge the Sandoz Animal Health Business Acquirer at a rate no greater than Respondents' direct cost for providing such technical assistance. F. Respondents shall use best efforts to facilitate the Sandoz Animal Health Business Acquirer's ability to obtain adequate supplies of Methoprene starter material, chemical name S-(3,7-Dimethyl-7-methoxy-1-octanal) from Takasago Iwata. VI IT IS FURTHER ORDERED that for a period of six (6) years from the date on which the Sandoz Animal Health Business is divested, Respondents shall not: (1) manufacture and sell, or cause to be manufactured for sale, in the United States and Canada, Methoprene to any entity other than the Sandoz Animal Health Business Acquirer, or its designee; and (2) sell any products that contain Methoprene in the United States and Canada. VII IT IS FURTHER ORDERED that for a period of six (6) years from the date this Order is placed on the public record for comment, except as required to comply with the terms of this Order, Respondents shall not provide, disclose or otherwise make available to any other Person or to any employee of Novartis, any non-public information relating to any research and development project ongoing as of March 1, 1996, at Sandoz to develop or improve any Base Active Flea Ingredient or any Sandoz Flea Control Product, if said Person or employee did not have knowledge of such non-public information as of March 1, 1996. VIII IT IS FURTHER ORDERED that: A. The Commission may appoint a trustee to ensure that Respondents and the Sandoz Animal Health Business Acquirer expeditiously perform their responsibilities required under this Order with respect to the Sandoz Animal Health Business. The trustee shall also ensure that the provisions of the Agreement to Hold Separate between Respondents and the Commission, dated November 26, 1996, are carried out in good faith. Respondents shall consent to the following terms and conditions regarding the trustee's powers, duties, authority, and responsibilities:
B. The agreement pursuant to which Respondents divest the Sandoz Animal Health Business shall require the Sandoz Animal Health Business Acquirer to submit to the trustee appointed pursuant to this Paragraph, periodic written reports setting forth in detail the efforts of the Sandoz Animal Health Business Acquirer to obtain all FDA, EPA and other governmental approvals required in the United States and Canada to continue the research, development, manufacture and sale of the products and projects of the Sandoz Animal Health Business. The first report shall be submitted within sixty (60) days after the date on which the Commission approves the Sandoz Animal Health Business Acquirer and every ninety (90) days thereafter until the Sandoz Animal Health Business Acquirer has obtained all FDA, EPA and other governmental approvals required in the United States and Canada to continue the research, development, manufacture and sale of the products and projects of the Sandoz Animal Health Business. C. Respondents shall comply with all reasonable directives of the trustee regarding Respondents' obligations to comply with this Order. IX. IT IS FURTHER ORDERED that: A.
B. For the purpose of ensuring continuation of ex vivo gene therapy research and development, and to ensure the availability of cytokines for Gene Therapy, and to remedy the lessening of competition and research and development of Gene Therapy resulting from the Merger as alleged in the Commission's complaint, commencing within thirty (30) days of the date this Order becomes final, Respondents shall perform the following obligations:
C. For the purpose of ensuring continuation of ex vivo gene therapy research and development, and to ensure the availability of Anderson Patent Licenses, and to remedy the lessening of competition in research and development of Gene Therapy resulting from the Merger as alleged in the Commission's complaint, commencing within thirty (30) days of the date this Order becomes final, Respondent Novartis shall grant to each Person who requests an Anderson Patent License a non-exclusive license or sub-license under any and all Anderson Patent Rights, in perpetuity and in good faith, in the United States. In payment for such license, Respondent Novartis shall be entitled to receive: (i) a one-time payment of Ten Thousand Dollars ($10,000) and (ii) a royalty based on the Net Sales Price of any gene therapy product covered by the Anderson Patent Rights of no greater than one percent (1%) above the royalty due from Respondent Novartis to the United States National Institutes of Health. Such royalty shall be paid from the date of first commercial sale of royalty bearing products or services in the United States, provided that the Anderson Patent is valid and enforceable, until the expiration of the last to expire patent. D. Respondent Novartis shall by no later than September 1, 1997, either (i) convert its exclusive rights to the beta-domain deleted Factor VIII hemophilia gene from Genetics Institute to a non-exclusive license; or (ii) grant a Hemophilia License to RPR in a manner that has received prior Commission approval and in a manner consistent with the Letter of Intent dated November 20, 1996 between RPR and Sandoz Ltd.; or (iii) grant a Hemophilia License to a Subsequent Hemophilia Licensee that receives the prior approval of the Commission and in a manner that receives the prior approval of the Commission, at no minimum amount. In consideration for the Hemophilia License, Respondent Novartis may request from RPR or the Subsequent Hemophilia Licensee compensation in the form of royalties and/or an equivalent cross-license. At the option of RPR or the Subsequent Hemophilia Licensee, Respondent Novartis shall, in good faith, within one (1) year of the execution of the Hemophilia License provide to RPR or the Subsequent Hemophilia Licensee, such technical information, know-how or materials, owned or controlled by Genetic Therapy, Inc. as of the date on which this Order become final, necessary for the development of a gene therapy product using the beta-domain deleted Factor VIII gene for the treatment of hemophilia. E. Respondent Novartis shall not acquire from Ingenex, Inc. or the United States National Institutes of Health exclusive rights in intellectual property related to the gene sequence for MDR-1 or MRP. F. Respondents shall include in each license granted pursuant to this Paragraph a provision that ensures Respondents have no access to any Licensee's Net Sales Price information. Respondents shall, in each license granted pursuant to this Paragraph, provide for:
G. There will be no limitations upon the rights of any Respondent or any licensee or sublicensee hereunder to license or sublicense its own patents or patent applications to other third parties. Nothing in this Order requires any Respondent to guarantee freedom of operation under any third party patents not included within such Respondent's HSV-tk Patent Rights, Cytokine Patent Rights, Anderson Patent Rights or the patent rights subject to the Hemophilia License. X IT IS FURTHER ORDERED that: A. If Respondent Novartis has not divested, absolutely and in good faith and with the Commission's prior approval, the Sandoz Corn Herbicide Business within the time required by Paragraph II of this Order, the Commission may appoint a trustee, or direct the trustee appointed pursuant to Paragraph VIII of this Order, to divest the Sandoz Agricultural Chemical Business. B. If Respondent Novartis has not divested, absolutely and in good faith and with the Commission's prior approval, the Sandoz Animal Health Business within the time required by Paragraph III of this Order, the Commission may appoint a trustee, or direct the trustee appointed pursuant to Paragraph VIII of this Order, to divest the Sandoz Animal Health Business. C. If Respondents have not complied with the requirements of Paragraph IX.A. of this Order within the time required by Paragraph IX.A. of this Order, the Commission may appoint a trustee or direct the trustee appointed pursuant to Paragraph VIII of this Order to divest the HSV-tk Business to a buyer that receives the prior approval of the Commission, and in a manner that receives the prior approval of the Commission, at no minimum price. If Respondent Novartis has not complied with the requirements of Paragraph IX.D. of this Order within the time required by Paragraph IX.D. of this Order, the Commission may appoint a trustee or direct the trustee appointed pursuant to Paragraph VIII of this Order to convert Respondent Novartis' exclusive rights to the beta-domain deleted Factor VIII gene from Genetics Institute to a non-exclusive license. D. In the event that the Commission or the Attorney General brings an action pursuant to §5(l) of the Federal Trade Commission Act, 15 U.S.C. §45(l), or any other statute enforced by the Commission, Respondents shall consent to the appointment of a trustee in such action. Neither the appointment or extension of responsibilities of a trustee nor a decision not to appoint or extend the responsibilities of a trustee under this Paragraph shall preclude the Commission or the Attorney General from seeking civil penalties or any other relief available to it, including a court-appointed trustee, pursuant to § 5(l) of the Federal Trade Commission Act, 15 U.S.C. §45(l), or any other statute enforced by the Commission, for any failure by the Respondents to comply with this Order. E. If a trustee is appointed or directed by the Commission or a court pursuant to Subparagraph A. of this Paragraph to divest the Sandoz Agricultural Chemical Business, or pursuant to Subparagraph B. of this Paragraph to divest the Sandoz Animal Health Business, or pursuant to Subparagraph C. of this Paragraph to divest the HSV-tk Business, Respondents shall consent to the following terms and conditions regarding the trustee's powers, duties, authority, and responsibilities:
XI IT IS FURTHER ORDERED that, Respondents shall comply with all terms of the Agreement to Hold Separate attached to this Order and made a part hereof as Appendix I. The Agreement to Hold Separate shall continue in effect until (a) with respect to the Sandoz Corn Herbicide Business, such time as Respondents have divested the Sandoz Corn Herbicide Business and (b) with respect to the Sandoz Animal Health Business, such time as Respondents have divested the Sandoz Animal Health Business pursuant to Paragraphs II and III of this Order; or, if a trustee is appointed or the trustee's authorities and responsibilities have been extended pursuant to Paragraph X of this Order, the Agreement to Hold Separate shall continue in effect until such time as Respondents or the trustee have divested all of the Sandoz Animal Health Business and, as applicable, the Sandoz Corn Herbicide Business or the Sandoz Agricultural Chemical Business pursuant to this Order. XII IT IS FURTHER ORDERED that, for a period of ten (10) years after the date the Order becomes final, Respondents shall not, without prior notice to the Commission, directly or indirectly, through subsidiaries, partnerships, or otherwise: A. Acquire more than 5% of any stock, share capital, equity, or other interest in any concern, corporate or non-corporate, engaged in at the time of such acquisition, or within the two years preceding such acquisition, the research, development, manufacture, distribution or sale of Flea Control Products or other products containing Methoprene in the United States; or B. Acquire any assets currently used, or used in the previous two years (and still suitable for use for) for the research, development, manufacture, distribution or sale of Flea Control Products or other products containing Methoprene in the United States. Provided, however, that this Paragraph XII shall not apply to the acquisition of equipment, machinery, supplies or facilities constructed, manufactured or developed by or for Respondents. The prior notifications required by this Paragraph shall be given on the Notification and Report Form set forth in the Appendix to Part 803 of Title 16 of the Code of Federal Regulations, as amended, (hereinafter referred to as "the Notification"), and shall be prepared and transmitted in accordance with the requirements of that part, except that no filing fee will be required for any such notification, notification shall be filed with the Secretary of the Commission, notification need not be made to the United States Department of Justice, and Notification is required only of Respondents and not of any other party to the transaction. Respondents shall provide the Notification to the Commission at least thirty (30) days prior to consummating any such transaction (hereinafter referred to as the "first waiting period"). If, within the first waiting period, representatives of the Commission make a written request for additional information, Respondents shall not consummate the transaction until twenty (20) days after substantially complying with such request for additional information. Early termination of the waiting periods in this Paragraph may be requested and, where appropriate, granted by letter from the Bureau of Competition. Notwithstanding, prior notification shall not be required by this Paragraph for a transaction for which notification is required to be made, and has been made, pursuant to Section 7A of the Clayton Act, 15 U.S.C. § 18a. XIII. IT IS FURTHER ORDERED that, Respondent Ciba and/or Respondent Novartis shall not, without prior notice to the Commission, directly or indirectly, through subsidiaries, partnerships, or otherwise acquire common stock of Chiron such as to increase by more than one percent (1%) or more the percentage of Chiron stock that Ciba owns as of the date this Order becomes final, until the receipt by the Commission of a certification by RPR, the trustee, or Respondents, that Respondents have complied with the requirements of Paragraphs IX.A. and IX.D. of this Order; provided, however, in no event shall this provision apply later than five (5) years from the date this Order becomes final. The prior notifications required by this Paragraph XIII shall be given on the Notification and Report Form set forth in the Appendix to Part 803 of Title 16 of the Code of Federal Regulations, as amended, (hereinafter referred to as "the Notification"), and shall be prepared and transmitted in accordance with the requirements of that part, except that no filing fee will be required for any such notification, notification shall be filed with the Secretary of the Commission, notification need not be made to the United States Department of Justice, and Notification is required only of Respondent Novartis and not of any other party to the transaction. Respondents shall provide the Notification to the Commission at least thirty (30) days prior to consummating any such transaction (hereinafter referred to as the "first waiting period"). If, within the first waiting period, representatives of the Commission make a written request for additional information, Respondent Novartis shall not consummate the transaction until twenty (20) days after substantially complying with such request for additional information. Early termination of the waiting periods in this Paragraph may be requested and, where appropriate, granted by letter from the Bureau of Competition. Notwithstanding, prior notification shall not be required by this Paragraph for a transaction for which notification is required to be made, and has been made, pursuant to Section 7A of the Clayton Act, 15 U.S.C. § 18a. XIV IT IS FURTHER ORDERED that: A. Within sixty (60) days after the date this Order becomes final and every sixty (60) days thereafter until Respondents have fully complied with the provisions of Paragraphs II, III, and IX.A. and IX.D. of this Order requiring, respectively, divestiture of the Sandoz Corn Herbicide Business, divestiture of the Sandoz Animal Health Business, and granting of the HSV-tk License, Respondent Novartis shall submit to the Commission verified written report(s) ("Compliance Reports") setting forth in detail the manner and form in which they intend to comply, are complying, and have complied with Paragraphs II through IX of this Order. After completing the divestitures required under Paragraphs II, III., the licensing required under Paragraph IX.A, and the requirements of Paragraph IX.D. of this Order, and until the termination of the CMA required under Paragraph V of this Order, Respondent Novartis shall submit such Compliance Reports every one hundred eighty (180) days beginning on the date of the divestiture of the Sandoz Animal Health Business. Following termination of the CMA required under Paragraph V of this Order, Respondent Novartis shall submit to the Commission annual Compliance Reports on the anniversary of the date this Order became final, until and including the tenth anniversary date of this Order. Respondents shall include in their Compliance Reports, among other things that are required from time to time, a full description of the efforts being made to comply with Paragraphs II through IX of the Order, including a description of all substantive contacts or negotiations for the divestiture or relating to the Gene Therapy License obligations. Respondents shall include in their compliance reports copies of all written communications to and from such parties, all internal memoranda, and all reports and recommendations concerning divestiture. B. One year (1) from the date this Order becomes final, annually for the next nine (9) years on the anniversary of the date this Order becomes final, and at other times as the Commission may require, Respondent Novartis shall file a verified written report with the Commission setting forth in detail the manner and form in which they have complied and are complying with Paragraphs XII and XIII of this Order. XV IT IS FURTHER ORDERED that Respondents shall notify the Commission at least thirty (30) days prior to any proposed change in the corporate Respondents such as dissolution, assignment, sale resulting in the emergence of a successor corporation, or the creation or dissolution of subsidiaries or any other change in the corporation that may affect compliance obligations arising out of this Order. XVI IT IS FURTHER ORDERED that, for the purpose of determining or securing compliance with this Order, upon written request, Respondents shall permit any duly authorized representative of the Commission: A. Access, during office hours and in the presence of counsel, to inspect and copy all books, ledgers, accounts, correspondence, memoranda and other records and documents in the possession or under the control of Respondents relating to any matters contained in this Order; and B. Upon five days' notice to Respondents and without restraint or interference from them, to interview officers, directors, or employees of Respondents. XVII IT IS FURTHER ORDERED that this Order shall terminate on March 24, 2007. By the Commission. Donald S. Clark ISSUED: March 24, 1997 [Electronic copy of Agreement to Hold Separate not enclosed here.] [Statement of Chairman Pitofsky and Commissioners Steiger, Starek, and Varney and Separate Statement of Commissioner Azcuenaga are available as separate documents on the website and not reproduced incuded as part of the decision and order here - Webmaster] |