FTC pharma merger enforcement is robust but needs greater clarity and consistency, Dechert tells task force

June 29, 2021

Key takeaways

  • The Federal Trade Commission (FTC) and antitrust agencies in North America and Europe have launched a Task Force to evaluate their current approach to pharmaceutical mergers reviews.
  • The Task Force has sought comments addressing more expansive theories of harm that go beyond traditional product overlaps.
  • Our antitrust/competition practice has submitted comments highlighting the already robust FTC enforcement and recommending changes to improve the transparency of agency analysis related to nascent and potential competition.
  • The Task Force’s solicitation suggests the FTC will take more aggressive approaches to pharmaceutical merger enforcement looking forward.

In March 2021, the FTC announced the formation of a working group with the U.S. Department of Justice, the European Commission, the U.K. Competition and Markets Authority, Canadian Competition Bureau, and Offices of State Attorneys General to “identify concrete and actionable steps to review and update the analysis of pharmaceutical mergers.” This Multilateral Pharmaceutical Task Force has since solicited public input into agency approaches to pharmaceutical mergers, including new and evolving theories of harm.  

On June 24, 2021, the antitrust/competition practice submitted public comments highlighting the already rigorous scrutiny given to pharmaceutical mergers and proposing improvements in the transparency of agency analyses related to theories of potential or future competition. Dechert’s comments are intended to inform the Task Force of this broader record at a time when the FTC appears poised to take more aggressive approaches to pharmaceutical mergers. The comments raise concerns about the FTC’s use of potential competition or nascent competition doctrines without clear, consistent standards.

1. FTC Merger Enforcement Levels in the Pharmaceutical Sector Have Been Robust 

Contrary to assertions by critics, data compiled by Dechert highlight the rigor of the FTC’s pharmaceutical merger enforcement efforts over the past decade. Over just the past 10 years, the agency has challenged 31 pharmaceutical mergers and required the divestiture of over 200 products. The combined deal value of the challenged transactions is approximately US$327 billion. Wide-ranging theories of harm also have been investigated that go well beyond direct product overlaps. The FTC has obtained relief in a significant number of consent orders involving both nascent and potential competition claims. In particular:

  • each of the four brand drug mergers challenged and settled during the 2011-21 period featured an overlap that included a product in either Phase 2 or Phase 3 of clinical trials;  
  • 12 of the 31 generic drug mergers challenged and settled during the 2011-21 period involved divestitures where the generic drug market had not even formed yet; and
  • 8 of the generic drug mergers involved challenged overlaps where both parties were still developing their products.

This record is particularly impressive considering setbacks the agency has faced in recent years when seeking enforcement actions based on potential competition theories in court.1

2. The FTC Should Articulate the Standard for Assessing Potential Competition and Apply It Consistently

While the FTC often imposes conditions on mergers that implicate potential or future competition, a review of these consent orders reveals that the FTC has used several formulations to describe firms that have not yet entered the relevant market but whose acquisition would likely eliminate potential or future competition. Those formulations do not necessarily align with the factors identified in the 2010 Horizontal Merger Guidelines for evaluating potential or nascent competition. As described in Dechert’s comments, both the FTC and merging parties would benefit from greater clarity regarding the standard applied by the FTC to determine whether a merger is likely to eliminate potential or future competition.

3. Existing Criteria for Evaluating Entry and Divestiture Buyers Provide Guidance for Analyzing the Likely Success of Potential Competitors

To improve its transparency in evaluating theories of potential or future competition, the Dechert comments propose aligning agency analysis of potential or future competition between the parties with existing standards for evaluating new entry by third parties and criteria for evaluating the likely success of proposed divestiture buyers. The FTC has developed rigorous criteria in both of these areas for evaluating whether a company has the attributes that make it likely to succeed in the marketplace, and the public would be well-served by the adoption of similar, more transparent criteria for evaluating potential or future competition.


1) See, e.g., United States v. Sabre Corp., 452 F. Supp. 3d 97 (D. Del. 2020) (dismissing DOJ challenge to Sabre’s proposed acquisition of Farelogix); FTC v. Steris Corp., 133 F. Supp. 3d 962 (N.D. Ohio 2015) (dismissing FTC challenge to Steris’ proposed acquisition of Synergy Health).

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