Fresenius Ag

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:I IN THE MA TIER OF FRESENIUS AG, ET AL.

CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF SEC. 7 OF THE CLAYTON ACT AND SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-3 689. Complaint, Oct. 15, 1996--Decision, Oct. 15, 1996 This consent order requires, among other their1gs, the California-based subsidiary of Fresenius AG to divest its Lewisberry, Pennsylvania hemodialysis concentrate production facility to Di-Chem, Inc., of Maple Grove, Minnesota, or to another Commission-approved acquirer, if the Di-Chem deal falls through.

• Appearances For the Commission: Howard Morse, Steven Wilensky and William Baer.' For the respondents: David Beddow and Richard Parker, O'Melveny & Myers, Washington, D.C.

COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act and of the Clayton Act, and by virtue of the authority vested in it by said Acts, the Federal Trade Commission, having reason to believe that. Fresenius AG, the parent company of Fresenius USA, Inc. (collectively "Fresenius"), has entered into an Agreement and Plan of Reorganization with W.R. Grace & Co. ("Grace") whereby Fresenius will acquire from Grace the businesses comprising National Medical Care, Inc. ("NMC"), and that such 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, and having reason to believe that Fresenius has entered into such agreement in restraint of trade in violation of Section 5 of the Federal Trade Commission Act, and it appearing to the Commission that a proceeding in respect thereof would be in the public interest, hereby issues its complaint stating its charges as follows: · FRESENnJS AG, ET AL. 311 310 Complaint I. THE RESPONDENTS 1. Respondent Fresenius AG is a corporation organized, existing and doing business under and by virtue of the laws of Germany with its office and principal place of business located at Borkenberg 14, 61440 OberurseVTs, Bad Homburg, Germany.

2. Respondent Fresenius USA, Inc. is a corporation organized, . existing and doing business under and by virtue of the laws of Massachusetts with its principal place of business located at 2637 Shadelands Drive, Walnut Creek, California. 3. At all times relevant herein, the respondents (collectively "Fresenius") have been, and are now, engaged in commerce as "commerce" is defmed in Section 4 of the Federal Trade Commission Act (15 U.S.C. 44) and Section 1 of the Clayton Act (15 U.S.C. 12), and are corporations whose business is in or affecting commerce as defined in Section 4 of the Federal Trade Commission Act (15 U.S.C. 44).

II. THE PROPOSED ACQUISITION 4. On or about February 24, 1996, Fresenius and Grace executed an Agreement and Plan ~[Reorganization-in which Fresenius would acquire the = assets and businesses comprising Grace's NMC subsidiary.

5. Fresenius and NMC are substantial direct competitors in the United States market for hemodialysis concentrate. III. THE RELEVANT ~INE OF COMMERCE 6. One relevant line of commerce within which to analyze the effects of the acquisition is the United States market for hemodialysis concentrate. Hemodialysis concentrate is a bicarbonate solution used in hemodialysis treatment of End Stage Renal Disease to carry waste materials from the patient's blood during the treatment. 7. Hemodialysis concentrate is a necessary product for hemodialysis treatment with no available substitute. The cost of the hemodialysis concentrate acco.unts for a small portion of the cost of hemodialysis tr~atment.

8. Imports ofhemodialysis concentrate into the United States are rare. The potential for significant imports is constrained by the fact Complaint 122 F.T.C. that most concentrate is ~hipped in an aqueous solution, making shipping costs very high relative to the value of the product. 9. Total sales ofhemodi~lysis concentrate in the United States are approximately $50 million.

IV. MARKET CONCENTRATION 10. Fresenius and NMC are two of a small number of producers ofhemodialysis concentrate in the United States. NMC is the leading producer. The other producers include CGH Medical, Minn-Tech Corporation, Rockwell Medical and Dana Laboratories. After the acquisition, Fresenius would have a market share of hemodialysis concentrate sales of over 50 percent in the United States. 11. The United States ·market for hemodialysis concentrate is highly concentrated as measured by the Herfindahl-Hirschmann Index ("HHI"). On the basis of capacity, the proposed acquisition would increase concentration, as measured by the HHI, by over 1250 points, to over 3100. On the basis of sales, the proposed acquisition would increase concentration, as measured by the HHI, by over 950 points, to over 3000.

V. CONDITIONS OF ENTRY 12. Entry into the hemodialysis concentrate market would not be likely to deter or offset reductions in competition resulting from the acquisition.

13. In addition to obtaining FDA.approval, a new entrant would need to obtain a relatively high volume of sales in order to have costcompetitive production, and to support the costs of product testing. The need to capture a large market share makes the success of new entry less likely, and acts as a deterrent to entry. Most of the investment in production would likely be sunk in the event that entry were unsuccessful.

14. The likelihood of new entry is also reduced by the fact that a significant proportion of the dialysis clinics that use hemodialysis concentrate, including NMC, also produce the concentrate, and therefore are unlikely to purchase from a new entrant. Vertically integrated firms account for approximately a third of patients receiving hemodialysis treatment.

15. Moreover, a new entrant into hemodialysis concentrate would need to have an effective distribution system. However, there are only FRESENIUS AG, ET AL. 313 310 Decision and Order a few large full-line distributors ofhemodialysis products, the largest of which (Fresenius, NMC, and CGH Medical) already produce hemodialysis concentrate.

VI. EFFECTS OF THE ACQUISITION 16. The acquisition of NMC by Fresenius may substantially lessen competition in the United States market for hemodialysis concentrate because, among other things:

a. It will eliminate substantial head-to-head competition between NMC and Fresenius;

b. It will increase concentration substantially in a highly concentrated market;

c. It will increase the likelihood of coordinated interaction among producers of hemodialysis concentrate;

d. Company documents project that the increased "consolidation" of suppliers will likely lead to "price stabilization;" and e. It will likely result in increased prices for hemodialysis concentrate.

VII. VIOLATIONS CHARGED 17. The acquisition agreement between Fresenius and NMC described in paragraph four violates Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. 45.

18. The proposed acquisition of NMC by Fresenius would, if consummated, 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.

Commissioner Starek dissenting.

DECISION AND ORDER The Federal Trade Commission ("the Commission"), having initiated an investigation of the proposed acquisition by Fresenius AG, the parent company of Fresenius USA, Inc. (collectively "Fresenius" or "respondents"), of National Medical Care, Inc. from W.R. Grace & Co., which acquisition is more fully described at paragraph I.D. below, and Fresenius having been furnished with a 314 FEDERAL TRADE COMMISSION DECISIONS. Decision and Order 122 F.T.C. copy of a draft complaint that the Bureau of Competition has presented to the Commission for its consideration and which, if issued by the Commission, would charge Fresenius with violations of the Clayton Act and the Federal Trade Commi~sion Act; ancl The respondents, their attorneys, and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of all the jurisdictional facts set forth in the aforesaid draft of 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 ~s 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 the respondents have violated the said Acts, and that 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 Section 2.34 of its Rules, makes the following jurisdictional findings and enters the following order: 1.. Respondent Fresenius AG is a corporation organized, existing and doing business under and by virtue of the laws of Germany, with its office and principal place of business located at Borkenberg 14, 61440 Oberursel/Ts, Bad Homburg, Germany.

2. Respondent Fresenius USA, Inc. is a corporation organized, .existing and doing business under and by virtue of the laws of Massachusetts with its principal place of business located at 2637 Shadelands Drive, Walnut Creek, California. 3. 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:

FRESENIUS AG, ET AL. 315 310 Decision and Order A. "Respondents" or "Fresenius" means Fresenius AG and Fresenius USA, Inc., their directors, officers, employees, agents and representatives, their predecessors, successors, and assigns; their subsidiaries, divisions, and groups and affiliates controlled by Fresenius, and the respective directors, officers, employees, agents, representatives, successors and assigns of each; their domestic and · foreign parents, and the subsidiaries, divisions, and groups and affiliates controlled by any other domestic or foreign parent, and the respective directors, officers, employees, agents, representatives, successors and assigns of each.

B. "NMC" means National Medical Care, Inc., its directors, officers, employees, agents and representatives, its predecessors, successors, and assigns; its subsidiaries, divisions, and groups and affiliates controlled by NMC ~ and the respective directors, officers, emptoyees, agents, representatives, successors and assigns of each; its domestic and foreign parents, including W.R. Grace & Co., and the subsidiaries, divisions, and groups and affiliates controlled by any other domestic or foreign parent, and the respective directors, officers, employees, agents, representatives, successors and assigns of each.

C. "Commission" means the Federal Trade Commission. D.' "NMC acquisition" means the acquisition by Fresenius AG of NMC that is the subject of an Agreement and Plan of Reorganization entered into on or about February 4, 1996. E. "Hemodialysis concentrate" means the acid portion of the dialysate solution used in hemodialysis treatment of End Stage Renal Disease to carry waste materials from the patient's blood during the treatment.

F. ''Assets and businesses" means assets, properties, businesses, and goodwill, tangible and-intangible, including, without limitation, the following:

1. All plant facilities, machinery, fixtures, equipment, vehicles, transportation and storage facilities, furniture, tools, supplies, stores, spare parts, and other tangible personal property; 2. All customer lists, vendor lists, catalogs, sales promotion literature, advertising materials, research materials, technical information, dedicated management information systems, information contained in management information systems, rights to software, . trademarks, patents and patent rights, inventions, trade secrets, De.cision and Order 122 F.T.C. technology, .know-how, ongoing research and development, specifications, designs, drawings, processes and quality control data; . 3. Raw material and finished product inventories and·goods in process;

4. All right, title and interest in and to·real property, together with appurtenances, licenses, and permits;

5. All right, title, and interest in and to the contracts entered into in the ordinary course of business with customers (other than contracts in which hemodialysis concentrate is sold as part of a package of products), suppliers, sales representatives, distributors, agents, personal property lessors, personal property lessees, licensors, licensees, consignors and consignees; . 6. All rights under warranties and guarantees, express or implied; 7. All separately maintained, as well as relevant portions of not s-separately maintained, books, records and files; and 8. All items of prepaid expense.

G. "Hemodialysis business to be divested" means the Fresenius Lewisberry, Pennsylvania Hemodialysis Manufacturing F~cility, and any additional Fresenius hemodialysis concentrate assets and businesses (as defined) as are necessary to assure the viability and competitiveness of the hemodialysis business to be divested in the manufacture, marketing or distribution of hemodialysis concentrate. H. "Viability and competitiveness" means that the hemodialysis concentrate business to be divested is capable of functioning independently and competitively in the hemodialysis concentrate business in substantially the same manner achieved by Fresenius prior to thy divestiture.

II.

It is further ordered, That:

A. Respondents shall, absolutely and in good faith, divest the hemodialysis business to be divested to Di-Chem, Inc. ("Di-Chem"), within 10 business days of either (i) the date this order is made final, or {ii) the closing of the NMC Acquisition, whichever is later, pursuant to and in accordance with the May 17, 1996 agreement · between Fresenius USA, Inc. and Di-Chem ("Divestiture Agreement"). If the terms of such Divestiture Agreement are changed or Sl;lpplemented in any way, notice .of such changes or FRESENIUS AG, ET AL. 317 310 Decision and Order supplementations must be provided to the-Commission, and any material changes or supplementations may be made only with the prior approval of the Commission. In the event that the Divestiture Agreement is terminated through no fault of respondents, respondents shall divest the hemodialysis business to be divested within four (4) months of either (i) the date this order is made fmal, or (ii) the closing of the NMC Acquisition, whichever is later, and respondents shall also effect such additional arrangements so as to assure the viability and competitiveness of the hemodialysis business to be divested. Respondents shall divest the hemodialysis business to be divested to an acquirer .that receives the prior approval of the Commission and only in a manner that receives the prior approval of the Commission. The purpose of the divestiture is to enable the acquirer to compete in the manufacture and sale of hemodialysis concentrate in the United States and to remedy the lessening of competition resulting from the NMC Acquisition as alleged in the Commission's complaint. B. Pending divestiture of the hemodialysis business to be divested, respondents shall take such actions as are necessary to maintain the marketability, viability and competitiveness of the hemodialysis business to be divested, including, but not limited to, taking necessary steps to ensure that the Lewisberry plant is capable of, and has been approved for, commercial production, and to prevent destruction, removal, wasting, deterioration or impairment of the hemodialysis business to be divested, other than ordinary wear and tear.

III.

It is further ordered, That:

A. If respondents have not divested the hemodialysis business to be divested within four ( 4) months of either (i) the date this order becomes final, or (ii) the closing of the NMC Acquisition, whichever is later, the Commission may appoint a trustee to divest the hemodialysis business to be divested pursuant to paragraph II of this order. In the ·event that the Commission or the Attorney General brings an action pursuant to Section 5(1) of the Federal Trade Commission Act, 15 U.S.C. 45(1), or any other statute enforced by the Commission, respondents shall consent to the appointment of a trustee in sue~ action. Neither the appointment of a trustee nor a decision not to appoint a trustee under this paragraph shall preclude Decision and Order 122 F.T.C. the Commission or the Attorney General from seeking civil penalties or any other~ relief available to it, including a court-appointed trustee, pursuant to Section 5(1) of the Federal Trade Commission Act, or any other statute enforced by the Commission, for any failure by the respondents to comply with this order. The Commission shall select the trustee qnder this paragraph, subject to the consent of !:_respondents, which consent shall not be unreasonably withheld. The trustee shall be a person with experience and expertise in acquisitions, divestitures, and licensing. If respondents have not opposed, in writing, including the reasons for opposing,. the selection of any proposed trustee within ten (10) days after notice by the staff of the Commission to respondents of the identity of any proposed trustee, respondents shall be deemed to have consented to the selection of the propo_sed trustee .

. -B. If a trustee is appointed by the Commission or a court pursuant to paragraph lila of this order, respondents shall consent to the following terms and conditions regarding the trustee's powers, duties, authority, and responsibilities:

1. Subject to the prior approval of the Commission and consistent with the provisions of paragraph II of this order, the trustee shall have the exclusive power and authority to divest the hemodialysis business to be divested.

2. Within ten (1 0) days after the appointment of the trustee, respondents shall execute a trust agreement that, subject to the prior approval of the Commission, and in the case of a court-appointed trustee, of the court, transfers to the trustee all rights and powers necessary to permit the trustee to effect the divestiture required by this order.

3. The trustee shall have twelve (12) months from the date the trust agreement described in this paragraph III.B is approved by the ~ommission to accomplish the divestiture of the h~modialysis business to be divested, which shall be subject to the prior approval of the Commission. .lf, however, at the end of this twelve (12) month period, the trustee has submitted a plan of divestiture or believes that divestiture can be achieved within a reasonable time, the divestiture period may be extended by the Commission, or, in the case of a courtappointed trus.tee, by the court.

4. The trustee shall have full and complete access to the personnel, books, records and facilities related to the hemodialysis business to be divested and to any other relevant information as the FRESENIUS AG, ET AL. 319 310 Decision and Order trustee may reasonably request. Respondents · shall develop such financial or other information as the trustee may reasonably request and shall cqoperate with the trustee. Respondents shall take no action to interfere with or impede the trustee's accomplishment of the divestiture. Any delays in divestiture caused by respondents shall extend the time for divestiture under this paragraph in an amount equal to the delay, as-determined by the Commission or, for a courtappointed trustee, by the court. · 5. The trustee shall us~ his or her best efforts to negotiate the most favorable price and terms available in each contract that is ·submitted to . the Commission, subject to respondents' absolute and unconditional obligation to divest at· no minimum price. The divestiture shall be made in the manner and to an acquirer as set out in paragraph II of this order; provided however, if the trustee receives bona fide offers from more than one acquiring entity, and if the Commission determines to approve more than one such acquiring entity, the trustee shall divest to the acquiring entity or entities selected by respondents from among those approved by the Commission.

6. The trustee shall serve without bond or other security at the cost and expense of respondents, and on such reasonable and customary terms and conditions as the· Commission or a court may set. The trustee shall have the authority to employ, at the cost and expense of respondents, such consultants, accountants, attorneys, investment bankers, business brokers, appraisers, and other representatives a:nd assistants as are reasonably necessary to carry out the trustee's duties and responsibilities. The trustee shall account for all monies -derived froni the divestiture and all expenses incurred. After approval by the Commission and, in the case of a courtappointed trustee, by the court, of the account of the trustee, including fees for his or her services, all remaining monies shail be paid at the direction of the respondents, and the trustee's power shall be terminated. The trustee's compensation shall be based at least in significant part on a commission arrangement contingent on the trustee's divesting the hemodialysis business ·to be divested. 7. Respondents shall indemnify the trustee and hold the trustee .harmless against any losses, claims, damages, liabilities, ot expenses arising out of, or in connection with, the performance of the duties of the trustee, including all reasonable fees of counsel and other expenses incurred in connection with the preparation for, or defense of any claim, whether or not resulting in any liability, except to the 3 20 FEDERAL TRADE COMMISSION DECISIONS Decision and Order 122 F.T.C. extent. that such liabilities, losses, damages, claims, or expenses result from misfeasance, gross negligence, willful or wanton acts, or bad faith by the trustee.

8. If the trustee ceases to act or fails to act diligently, a substitute trustee shall be appointed in the same manner as provided. in paragraph III. A of this order. . 9. The Commission or, in the case of a court~appointed trustee, the court, may on its own initiative or at the request of the trustee issu·e such additional orders or directions as may be necess~ry or appropriate to accomplish the divestiture required by this order. 10. The trustee shall have no-obligation or authority to operate or maintain the hemodialysis business to be divested. . 11. The trustee shall report in writing to respondents and the Commission every thirty (30) days concerning efforts to accomplish the divestiture.

IV.

It is further ordered, That:

A. Within twenty (20) days after the date this qrder becomes fmal and every thirty (30) days thereafter until respondents have fully complied with the provisions of paragraphs II and III of this order, respondents shall submit to the Commission a verified written report setting forth in detail the manner and form in which they intend to comply, are complying, and have complied with . 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 paragraph II of the order, including a description of all substantive contacts or negotiations for the divestiture and the identity of all parties contacted. 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 Clivestiture. V.

. . It is further. ordered, That, for a period of ten (1 0) years from the date this order becomes final, respondents shall cease and desist from acquiring, without Prior-Notification to. the Commission' .(as defiried below), directly or indirectly, through subsidiaries or otherwise, any FRESENIUS AG, ET AL. 321 310 Decision and Order assets for manufacturing hemodialysis concentrate or any hemodialysis concentrate manufacturing facility, that have been employed in hemodialysis concentrate m·manufacturing in the United States within one (1) year of the date of an offer by Fresenius to purchase th~ assets, or any interest in a hemodialysis concentrate manufacturing facility in the United States, or any interest in any individual, firm, partnership, corporation or other le-gal or business entity that directly or indirectly owns or operates· a hemodialysis concentrate manufacturing facility in the United States. Provided, however, that this paragraph V shall not be deemed to requjre Prior Notification to the Commission for (i) the construction of new facilities by Fresenius, (ii) the acquisition·of new or used equipment in the ordinary course of business from a person other than the acquirer of the hemodialysis business to be divested, or any other present producer of hemodialysis concentrate; or (iii) the purchase or lease by Fresenius of a facility that has not been operated as a hemodialysis concentrate manufacturing facility at any time during the year immediately prior to the purchase or lease by Fresenius. "Prior Notification to the Commission" required by paragraph V shall be given on the Notification and Report Form set forth in the Appendix to Part 803 ofTitle 16 of the Code ofFederal Regulations, as amended (hereinafter referred to as "the Notification Form"), 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 Fresenius and not of any other party to the_transaction. Fresenius shall provide the Notification Form 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, Fresenius 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, Fresenius shall not be required to provide Prior Notification to the Commission pursuant to this order for a transaction for which notification is required to be made, and has been made, pursuant to Section-? A of the Clayton Act, 15 .U.S.C. 18a. . : . Dissenting Statement 122 F.T.C. VI.

It is further ordered, That until the obligations set forth in paragraphs II, ill and V are met, respondents shall notify the Commission at least thirty (30) days prior to any proposed change in the coqjorate 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 corporations that may affect compliance obligations arising out of the order. VII.

, I ! It is further ordered, That respondents, for the purpose of determining or securing compliance with this order, and subject to I'' any legally recognized privilege, upon written request and on five days notice to respondents, shall permit any duly authorized representative(s) 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. Without restraint or interference from respondents, to interview respondents' officers, directors, or employees,· who may have counsel present, regarding such matters. Commissioner Starek dissenting.

DISSENTING STATEMENT OF COMMISSIONER ROSCOE B. STAREK, III ) There were no public comments on the consent agreement in this ~t matter, and I am not aware of any other information that has come to the Commission's attention since its acceptance of that agreement that would persuade me to join in its decision to issue the complaint and final order in this matter. The evidence accumulated in their investigation was not sufficient to give rise to reason to believe thatI respondents' acquisition of National Medical Care, Inc. ("NMC") from W.R. Grace & Co. is likely to lessen competition substantially in a United States market for hemodialysis concentrate ("HD concentrate").

FRESENIUS AG, ET AL. 323 310 Dissenting Statement HD concentrate consists of various salts (sodium chloride, magnesium chloride, calcium chloride, and potassium chloride) and dextrose in purified water, with sodium .bicarbonate (i.e., baking soda) added at a later stage. Because this easily formulated mixture does not enter the body and therefore is not a "drug" for purposes of Food and Drug Administration ("FDA") regulation, the FDA applies to HD concentrate the somewhat more lenient regulations applicable to medical devices. Regulatory delay thus does not ·significantly constrain entry by new firms or expansion by incumbents. The investigation revealed that various producers of HD concentrate -- including Fresenius itself-- entered quickly and easily into the manufacture of the product, and some stated that they could inexpensively increase their capacity to make HD concentrate by as much as 60 percent within 30 days, without substantial investment or the need for additional FDA approval. 1 The~e indicia of cheap and simple entry and expansion may explain why the delivered price of HD concentrate has fallen continuously since the product first became available.2 Thus, any assessment of this acquisition's potential to increase concentration in the market for HD concentrate -- and in tum make likelier an exercise of market power -:-- must take into account several strongly mitigating factors, including approximately 40 perce~t current excess capacity, the aforementioned ability of manufacturers to expand capacity speedily and at minimal cost, and the evident ability of customers (hemodialysis clinics) to integrate into the manufacture of HD concentrate in the event concentrate producers behave anticompetitively. Certain customers that speculated that the acquisition might lead to higher prices for HD concentrate appear to have been unaware of current plans for significant entry or capacity expansion by firms other than Fresenius and NMC. Moreover, other customer complaints seem to have been motivated by a fear that the vertical integration of Fresenius (a manufacturer of kidney dialysis products) and NMC (an operator of hemodialysis treatment centers, / 1 Given the contrast between the time required for entry in the United States and that required in Germany, it is perhaps unsurprising that the latter nation's Bundeskartellamt concluded that Fresenius' acquisition of a competitor in HD concentrate would have anticornpetitive effects. Entry into the German HD concentrate business apparently takes three to five years. In the United States, entry requires around nine months.

2 It is difficult to accept the proposition that "[m]ost of the investment in production would likely be sunk in the event that entry were unsuccessful" (complaint, 'II 13). The equipment used in the manufacture of HD concentrate appears to be adaptable to alternate uses, and indeed the investigation in this case turned up evidence of firms planning to convert some HD concentrate facil-ities to other purposes.

Dissenting Statement 122 F.T.C. among its other businesses) could make the merged firm a stronger competitor in dialysis treatment.

As I said several months ago, it is always tempting to accept the "bird in the hand" represented by a consent agreement proffered in the early stages of an investigation, such as the one entered into (apparently without significant resistance) by Fresenius. Nevertheless, when the evidence on entry, expansion, and the absence of anti competitive effects is as clear as in this case, the issuance of a consent order is unwarranted.

I therefore dissent.

I't i I ) j II ··' i ! ,,..,0 ,.

IH I., I· I ONKYO U.S.A. CORPORATION 325 325 Modifying Order