[Federal Register Volume 85, Number 37 (Tuesday, February 25, 2020)]
[Notices]
[Pages 10686-10689]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-03687]
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FEDERAL TRADE COMMISSION
[File No. 191 0160]
Agnaten SE, Compassion First and NVA; Analysis of Agreement
Containing Consent Orders To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement; request for comment.
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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 of Agreement Containing Consent Orders 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 March 26, 2020.
[[Page 10687]]
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: ``Agnaten SE,
Compassion First and NVA; File No. 191 0160'' 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, 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, 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 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 website (for February 14, 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 March 26, 2020.
Write ``Agnaten SE, Compassion First and NVA; File No. 191 0160'' 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.
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 through the https://www.regulations.gov website.
If you prefer to file your comment on paper, write ``Agnaten SE,
Compassion First and NVA; File No. 191 0160'' 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 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 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 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 March 26, 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 Agnaten SE, the owner of Veterinary Specialists of
North America, LLC and Compassion-First Pet Hospitals (``Compassion
First'') and NVA Parent Inc. (``NVA''), which is designed to remedy the
anticompetitive effects that would result from Compassion First's
proposed acquisition of NVA.
Pursuant to a Stock Purchase Agreement dated June 3, 2019,
Compassion First proposes to acquire all of the assets of NVA in a
transaction valued at approximately $5 billion (the ``Acquisition'').
Both parties provide specialty and emergency veterinary services in
clinics located throughout 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 three different localities in the
United States.\1\ The proposed Consent Agreement will remedy the
alleged violations by preserving the
[[Page 10688]]
competition that would otherwise be eliminated by the Acquisition.
Specifically, under the terms of the Consent Agreement, Compassion
First is required to divest three clinics, one in each area,\2\ to
MedVet Associates, LLC (``MedVet''), an operator of specialty and
emergency veterinary clinics elsewhere in the country.
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\1\ In the area around Asheville, North Carolina and Greenville,
South Carolina, two Compassion First facilities compete closely with
an NVA facility to provide internal medicine, oncology,
ophthalmology, and surgery veterinary specialty services and
emergency veterinary services. In the area between Norwalk,
Connecticut and Yonkers, New York, each merging party has a clinic
that provides neurology and radiation oncology veterinary specialty
services that compete closely. Finally, in the area surrounding
Fairfax and Manassas, Virginia, a Compassion First facility and an
NVA facility compete closely to provide emergency veterinary
services.
\2\ The divested clinics are NVA's R.E.A.C.H. Specialty Clinic
in Asheville, North Carolina; Compassion First's Veterinary Referral
Center of Northern Virginia in Manassas, Virginia; and Compassion
First's Veterinary Care Center in Norwalk, Connecticut.
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The proposed Consent Agreement has been placed on the public record
for thirty days for receipt of comments from interested persons.
Comments received during this period will become part of the public
record. After thirty days, the Commission will review the proposed
Consent Agreement as well as any 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 veterinary services and emergency veterinary
services. Specialty veterinary services are required in cases where a
general practitioner veterinarian does not have the expertise or
equipment necessary to treat the sick or injured animal. General
practitioner veterinarians commonly refer such cases to a specialist,
typically a doctor of veterinary medicine who is board certified in the
relevant specialty. Individual veterinary specialties include internal
medicine, neurology, oncology, ophthalmology, radiation oncology, and
surgery. Emergency veterinary services are those used in acute
situations where a general practice veterinarian is not available or,
in some cases, not trained or equipped to treat the patient's medical
problem.
The relevant areas for the provision of specialty and 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, appointment availability, population density, demographics,
traffic patterns, or specific local geographic barriers.
The Acquisition is likely to result in consumer harm in markets for
the provision of the following services in the following localities:
a. Internal medicine, oncology, ophthalmology, and surgery
specialty veterinary services and emergency veterinary services in and
around Asheville, North Carolina and Greenville, South Carolina;
b. neurology and radiation oncology specialty veterinary services
in the area between Norwalk, Connecticut and Yonkers, New York; and
c. emergency veterinary services in and around Fairfax and
Manassas, Virginia.
All of these relevant markets are currently highly concentrated,
and the Acquisition would substantially increase concentration in each
market. In some cases, 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.
III. Entry
Entry into the relevant markets would not be timely, likely, or
sufficient in magnitude, character, and scope to deter or 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 required to become a general
practitioner veterinarian. Consequently, veterinary specialists are
often in short supply, and recruiting them to move to a new area
frequently takes more than two years, making timely expansion by
existing specialty clinics particularly difficult.
IV. Effects of the Acquisition
The Acquisition, if consummated, may substantially lessen
competition in each of the relevant markets by eliminating close, head-
to-head competition between Compassion First and NVA for the provision
of specialty and emergency veterinary services. In some markets, the
Acquisition will result in a merger to monopoly. The Acquisition
increases the likelihood that Compassion First will unilaterally
exercise market power and cause customers to pay higher prices for, or
receive lower quality, relevant services.
V. The Consent Agreement
The proposed Consent Agreement remedies the Acquisition's
anticompetitive effects in each market by requiring the parties to
divest a facility to MedVet in all three localities. The divestitures
will preserve competition between the divested clinics and the combined
firm's clinics. MedVet is a qualified acquirer of the divested assets
because it has significant experience acquiring, integrating, and
operating specialty and emergency veterinary clinics, and it does not
currently operate or have plans to operate any veterinary clinics in
the relevant markets.
The Consent Agreement requires the divestiture of all regulatory
permits and approvals, confidential business information, including
customer information, and other assets associated with providing
specialty and emergency veterinary care at the divested clinics. To
ensure the divestiture is successful, the Consent Agreement also
requires Compassion First and NVA to secure all third-party consents,
assignments, releases, and waivers necessary to conduct business at the
divested clinics.
The Consent Agreement also requires Compassion First and NVA to
provide reasonable financial incentives to certain employees to
encourage them to stay in their current positions. Such incentives may
include, but are not limited to, guaranteed retention bonuses for
specialty veterinarians at divestiture clinics. These incentives will
encourage veterinarians to continue working at the divestiture clinics,
which will ensure that MedVet is able to continue operating the clinics
in a competitive manner.
Finally, the Consent Agreement contains several other provisions to
ensure that the divestitures are successful. First, the Consent
Agreement prevents Compassion First from hiring specialty or emergency
veterinarians affiliated with the divested clinics for a period of one
year. This provides MedVet with sufficient time to build working
relationships with these important employees before Compassion First
would be able to hire them back. Second, Compassion First will be
required to provide transitional services for a period of one year to
ensure MedVet continues to operate the divested clinics effectively as
it implements its own quality care, billing, and supply systems.
Finally, the Consent Agreement requires Compassion First to provide
prior notice to the Commission of plans to acquire certain specialty or
emergency veterinary clinics for a period of ten years from the date
the Commission issues the Order.
The Order requires Compassion First and NVA to divest the clinics
no later than ten business days after the consummation of the
Acquisition.
[[Page 10689]]
The Commission has appointed Thomas A. Carpenter, D.V.M., as
Monitor to ensure that Compassion First and NVA comply with all of
their obligations pursuant to the Consent Agreement and to keep the
Commission informed about the status of the transfer of rights and
assets to MedVet. Dr. Carpenter possesses relevant experience and
expertise regarding issues relevant to the divestiture, including
experience as a monitor in previous FTC matters.
If the Commission determines that MedVet is not an acceptable
acquirer 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 MedVet and divest them to a Commission-approved acquirer
within six months of the date on which the Consent Agreement 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. It is not intended to constitute an
official interpretation of the proposed Consent Agreement or to modify
its terms in any way.
By direction of the Commission.
April J. Tabor,
Acting Secretary.
[FR Doc. 2020-03687 Filed 2-24-20; 8:45 am]
BILLING CODE 6750-01-P