The legal issues that relate to mergers and acquisitions (M&A) of businesses.

Today, the FTC announced that it will challenge Hologic Inc.’s 2005 purchase of the breast cancer screening and diagnosis business of Fischer Imaging Corporation. In its complaint, the FTC alleged that Hologic’s acquisition of Fischer’s prone stereotactic breast biopsy systems (SBBSs) business harmed American consumers by eliminating its only significant competitor for the sale of SBBSs in the United States.

Hologic paid $32 million for Fischer’s intellectual property and other assets in September 2005. The assets related to Fischer's mammography and breast biopsy businesses, including patents, trademarks, and customer and vendor lists for Fischer’s prone SBBS product, MammoTest. At the time, Fischer was Hologic’s only significant competitor in the U.S. market for prone SBBSs. As a result of the acquisition, Fischer relinquished all of its rights to develop, market, and sell prone SBBSs in the United States. According the government's complaint, the deal gave Hologic a "a virtual monopoly in the U.S. prone SBBS market."

Because this deal was worth less than the $56.7 million filing threshold under the Hart-Scott-Rodino Premerger Notification Act (HSR Act), it was not reportable to the federal antitrust agencies. The FTC nevertheless learned of it--likely as a result of a customer complaint--and challenged it anyway.  Hologic must now divest itself of the assets, which it has agreed to do. Siemens AG will buy the assets.

The FTC's enforcement action here is a reminder to us all--any deal, big or small, reportable or not--can get the attention of the government. There are any number of ways that could happen: news of the parties' deal gets picked up by trade press monitored by government lawyers; the acquiring company starts raising prices thereby inducing customers to contact the government and complain; or a disgruntled competitor could complain. By closing the deal with Fischer, Hologic gambled. Now, ten months later, we know the results. It lost.

The Federal Reserve has approved a plan by Spanish bank, Banco Santander Central Hispano S.A. to buy approximately 25% of Sovereign Bancorp., which owns Sovereign Bank and Independence Community Bank. Independence Community Bank is based in New York. In approving the deal, the agency noted that the transaction "would not result in any significantly adverse effect on competition or the concentration of banking resources in the New York banking market or in any other relevant banking market."

In other news, JDA Software and Manugistics announced that they have been granted early termination of the HSR waiting period. The transaction must be approved by Manugistics shareholders.

Finally, funeral-services companies, Service Corporation International and Alderwoods Group, Inc., announced that the FTC has sent them each a Request for Additional Information a/k/a a Second Request. Canada's Competition Bureau also is investigating the transaction.

Today, the FTC announced a consent agreement on the Boston Scientific/Guidant deal. According to the complaint, the transaction would have anticompetitive effects in each of the relevant product markets defined as 1) drug eluting stents (DES) with the rapid exchange delivery system; 2) percutaneous transluminal coronary angioplasty (PTCA) balloon catheters; 3) coronary guidewires; and 4) implantable cardioverter defibrillators (ICD).

The complaint alleges that Boston Scientific’s acquisition of Guidant 1) would remove Guidant as the only potential competitor in a DES market that includes only two competitors, Boston Scientific and Johnson & Johnson; 2) would cause competitive harm in the markets for PTCA balloon catheters and coronary guidewires by eliminating competition between Boston Scientific and Guidant and reducing the number of significant competitors in the market, allowing the combined Boston Scientific/Guidant to raise prices unilaterally for both PTCA balloon catheters and coronary guidewires; and 3) may adversely affect competition in the ICD market by allowing Boston Scientific to receive information and exercise control over Cameron Health, Inc. (Cameron), a potential significant competitor.

The consent agreement purports to address these competitive concerns by requiring Boston Scientific and Guidant to:

• Divest all assets – including intellectual property – related to Guidant’s vascular business to a third party, enabling that third party to sell DES products, PTCA's, and coronary guidewires; and

• Reform certain contractual rights between Boston Scientific and Cameron to limit Boston Scientific’s control over certain Cameron actions and the sharing of nonpublic information about Cameron’s ICD product.