[Federal Register Volume 82, Number 173 (Friday, September 8, 2017)]
[Notices]
[Pages 42552-42554]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-19044]
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FEDERAL TRADE COMMISSION
[File No. 171-0057]
Mars, Incorporated and VCA Inc.; Analysis To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
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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 orders--
embodied in the consent agreement--that would settle these allegations.
DATES: Comments must be received on or before September 29, 2017.
ADDRESSES: Interested parties may file a comment online or on paper, by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Write: ``In the Matter of
Mars, Incorporated and VCA Inc., File No. 171-0057'' on your comment,
and file your comment online at https://ftcpublic.commentworks.com/ftc/marsvcaconsent by following the instructions on the web-based form. If
you prefer to file your comment on paper, write ``In the Matter of
Mars, Incorporated and VCA Inc., File No. 171-0057'' 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.
FOR FURTHER INFORMATION CONTACT: Michael Barnett (202-326-2362), Bureau
of Competition, 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 consent agreement
containing a consent order to cease and desist, having been filed with
and accepted, subject to final approval, by the Commission, has been
placed on the public record for a period of thirty (30) days. The
following Analysis to Aid Public Comment describes the terms of the
consent agreement, and the allegations in the complaint. An electronic
copy of the full text of the consent agreement package can be obtained
from the FTC Home Page (for August 30, 2017), on the World Wide Web, at
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 September 29,
2017. Write ``In the Matter of Mars, Incorporated and VCA Inc., File
No. 171-0057'' 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 public Commission Web
site, at https://www.ftc.gov/policy/public-comments.
Postal mail addressed to the Commission is subject to delay due to
heightened security screening. As a result, we encourage you to submit
your comments online. To make sure that the Commission considers your
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/marsvcaconsent by following the instructions on the web-based form.
If this Notice appears at http://www.regulations.gov/#!home, you also
may file a comment through that Web site.
If you prefer to file your comment on paper, write ``In the Matter
of Mars, Incorporated and VCA Inc., File No. 171-0057'' 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
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Commission by courier or overnight service.
Because your comment will be placed on the publicly accessible FTC
Web site at https://www.ftc.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 that 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 Web site--as legally required by FTC Rule
4.9(b)--we cannot redact or remove your comment from the FTC Web site,
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 Web site at http://www.ftc.gov to read this Notice
and the news release describing it. 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 September 29, 2017. 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 Order To Aid Public Comment
The Federal Trade Commission (``Commission'') has accepted, subject
to final approval, an Agreement Containing Consent Orders (``Consent
Agreement'') with Mars, Incorporated (``Mars''), which is designed to
remedy the anticompetitive effects that would result from Mars'
proposed acquisition of VCA Inc. (``VCA'').
Pursuant to an Agreement and Plan of Merger announced January 9,
2017, Mars proposes to acquire all of the assets of VCA in a
transaction valued at approximately $9.1 billion (the ``Acquisition'').
Both parties provide specialty and emergency veterinary services in
clinics they operate in cities across the United States. The Commission
alleges in its Complaint that the 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 markets for certain specialty and
emergency veterinary services in ten different localities in the United
States. The proposed Consent Agreement will remedy the alleged
violations by preserving the competition that would otherwise be
eliminated by the Acquisition. Specifically, under the terms of the
Consent Agreement, Mars is required to divest twelve clinics. Mars and
VCA have proposed National Veterinary Associates (``NVA''), PetVet Care
Centers (``PetVet''), and Pathway Partners Vet Management Company
(``Pathway'') as buyers of these clinics.
The proposed Consent Agreement has been placed on the public record
for 30 days for receipt of comments from interested persons. Comments
received during this period will become part of the public record.
After 30 days, the Commission will review proposed Consent Agreement
and comments received, and decide whether it should withdraw, modify,
or make the Consent Agreement final.
II. The Relevant Markets and Market Structures
The relevant lines of commerce in which to analyze the Acquisition
are individual specialty and off-hours emergency veterinary services.
Specialty veterinary services are required in cases that a general
practitioner veterinarian cannot treat properly. General practitioner
veterinarians commonly refer such cases to a specialist, typically a
doctor of veterinary medicine board certified in the required
specialty. Individual veterinary specialties include cardiology,
critical care, internal medicine, neurology, oncology, ophthalmology,
and surgery. Emergency veterinary services are used in acute situations
where a general practice veterinarian is not available or in some cases
not trained or equipped to treat the animal's medical problem.
The relevant areas for the provision of specialty and off-hours
emergency veterinary services are local, delineated by the distance and
time that pet owners travel to receive treatment. The distance and time
customers travel for specialty services are highly dependent on local
factors such as the proximity of a clinic offering the required
specialty service, population density, population demographics, traffic
congestion, or specific local geographic barriers. The markets affected
by the transaction differ by area. The localities and services at issue
are:
a. Oncology in western suburbs of Chicago, IL;
b. Emergency in Corpus Christi, TX;
c. Critical Care, Emergency, Internal Medicine, and Surgery in
Kansas City, MO;
d. Critical Care and Emergency in Mesa, AZ;
e. Critical Care and Oncology in northern New York City, NY and its
northern suburbs;
f. Critical Care, Internal Medicine, Neurology, Oncology, and
Ophthalmology in Portland, OR;
g. Emergency, Internal Medicine, and Oncology in Rockville, MD;
h. Emergency in San Antonio, TX;
i. Cardiology, Critical Care, Emergency, Internal Medicine, and
Neurology in Seattle, WA; and
j. Emergency, Internal Medicine, Oncology, and Ophthalmology in
Vienna, VA.
In each locality listed above, the relevant market is highly
concentrated. In a number of these markets, the combined firm would be
the only provider following the transaction. In other markets,
consumers would only have one remaining alternative to the combined
firm following the transaction. In all of these markets, the
Acquisition would substantially increase concentration within the
described localities.
III. Entry
Entry into the relevant markets described above would not be
timely, likely, or sufficient in magnitude, character, and scope to
deter or
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counteract the anticompetitive effects of the Acquisition. For de novo
entrants, obtaining financing to build a new specialty or emergency
veterinary facility and acquiring or leasing necessary equipment can be
expensive and time consuming. The investment is risky for specialists
that do not have established practices and bases of referrals in the
area. Further, to become a licensed veterinary specialist requires
extensive education and training, significantly beyond that for a
general practitioner veterinarian. Consequently, specialists are in
short supply, and recruiting them to move to a new area often takes
more than two years, making timely expansion by existing specialty
clinics unlikely.
IV. Effects of the Acquisition
The Acquisition, if consummated, may substantially lessen
competition and tend to create a monopoly in the relevant markets by
eliminating head-to-head competition between Mars and VCA in the
provision of specialty and emergency veterinary services; increasing
the likelihood that Mars would unilaterally exercise market power; and
increasing the likelihood that customers would be forced to pay higher
prices for and degraded quality of the relevant services.
V. The Consent Agreement
The proposed Consent Agreement effectively remedies the
Acquisition's anticompetitive effects in ten markets where both Mars
and VCA operate specialty or emergency veterinary clinics by requiring
the parties to divest 12 facilities. Clinics in Kansas City, New York,
and Phoenix are to be divested to NVA. Clinics in Portland, Rockville,
and Vienna are to be divested to PetVet. Clinics in Chicago, Corpus
Christi, San Antonio, and Seattle are to be divested to Pathway. The
divestitures will preserve competition between the divested clinics and
Mars' BluePearl or VCA's clinics that offer the same specialty or
emergency services within each locality. NVA, PetVet, and Pathway are
qualified acquirers of the divested assets. Each firm has significant
experience acquiring, integrating, and operating specialty and
emergency veterinary clinics.
The divestiture includes all regulatory permits and approvals,
confidential business information, including customer information,
related to the divested clinics, and other assets associated with
providing specialty and emergency veterinary care at the divested
clinics. To ensure the divestiture is successful, the Order requires
Mars and VCA to secure all third-party consents, assignments, releases,
and waivers required to permit the buyers to conduct business at the
divested clinics.
As part of these divestitures, Mars and VCA are required to provide
reasonable financial incentives to certain employees to continue in
their positions. Such incentives may include, but are not limited to,
guaranteeing a retention bonus for the specialty veterinarians at the
divestiture clinics to assure their continued employment at such
clinic, a continuation of all employee benefits, including the funding
of regularly scheduled raises and bonuses, and the vesting of pension
benefits (as permitted by law and for those Relevant Employees covered
by a pension plan), offered by the parties. These provisions ensure
that the buyers will have the assets necessary to operate the divested
clinics in a competitive manner.
The Consent Agreement contains several additional provisions
designed to ensure that the divestitures are successful. First, the
Consent Agreement prevents Mars for a period of one year from
contracting with any specialty or emergency veterinarian affiliated
with a divested clinic. This provides the buyers with sufficient time
to build goodwill and working relationships with the veterinarians
before Mars could capitalize on its prior relationships in soliciting
their services. Second, to ensure continuity of patient care and
records as the buyers implement their own quality care, billing, and
supply systems, Mars will provide transitional services for a period of
one year. Finally, the Consent Agreement requires Mars for a period of
ten years from the date the Commission issues the Order to provide
prior notice to the Commission of its planned acquisitions of specialty
or emergency veterinary clinics in certain geographic areas.
The Order requires Mars and VCA to divest the clinics no later than
ten business days after the consummation of the Acquisition.
The Commission has appointed Thomas A. Carpenter, D.V.M. as Interim
Monitor to ensure that Mars and VCA 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 NVA, Pathway, and PetVet. Dr. Carpenter assists client
companies undergoing regulator-mandated ownership transitions and has
experience with the purchase and sale of veterinary clinics.
If the Commission determines that NVA, Pathway, and PetVet are not
acceptable acquirers of the divested assets, or that the manner of the
divestitures is not acceptable, the parties must unwind the sale of
rights and assets to NVA, Pathway, and PetVet and divest them to a
Commission-approved acquirer within six months of the date the Order
becomes final. In that circumstance, the Commission may appoint a
trustee to divest the rights and assets if the parties fail to divest
them as required.
The purpose of this analysis is to facilitate public comment on the
proposed Consent Agreement, and it is not intended to constitute an
official interpretation of the proposed Decision and Order or to modify
its terms in any way.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2017-19044 Filed 9-7-17; 8:45 am]
BILLING CODE 6750-01-P