Tag Archives: Golden Gate Pharmacy v. Pfizer Wyeth 09-3854 Merck Schering Bust Up EBITDA v. Sales Analysis August 23 2009

It Seems the Pfizer/Wyeth Challenge Is an Antitrust Case, Primarily. . . .

Over the weekend, I reported on a Bloomberg story — one about which I expressed some skepticism. The story had it that some California pharmacies were in federal court, last Friday, filing a suit, to block the Pfizer/Wyeth merger — on what looked to be novel grounds. The supposed grounds were misuse of TARP funds, by Pfizer’s banks — including the same banks financing the Merck deal.

While the language summarized by Bloomberg does actually appear in the suit, this one is much more an ordinary, plain-vanilla Clayton Act and Sherman Act type of claim — than a “you can’t use TARP money that way” suit:

. . . .the conduct of the defendants and the banks financing the defendants’ merger. . . constitutes a combination and conspiracy that unreasonably restrains trade in the relevant markets. . . in the form of higher prices, diminished choice and lower quality of drugs. . . . [which conduct] violates Section 7 of the Clayton Antitrust Act, and Section 1 of the Sherman Act . . .

Interestingly though, the suit does mention the Merck/Schering-Plough deal, as being potentially anticompetitive (click to enlarge):

I guess I’d still say this has only a small chance of derailing either of these mega-mergers — even if someone were, for argument’s sake, to file a companion claim against Merck, and its banks, back here on the East Coast. I’ll keep an eye on it, just the same. Here is the full California pharmacies’ complaint, in a PDF file format.

Odd Story — Out of San Francisco — Of A Suit To Block Pfizer’s Merger

Apparently, this suit must have been filed fairly late in the day on Friday, as it has yet to show up on the electronic dockets of the US District Court, for the Northern District of California (seems to be a Pfizer/Wyeth festival weekend here!). And so, I haven’t analyzed the filings yet, but Bloomberg is reporting that several pharmacies, and a few individuals have sued to block the Pfizer-Wyeth combination, alleging that Pfizer’s financiers, JP Morgan Chase, primarily — accepted TARP/TALF funds.

If that seems a stretch, as a reason to block the merger — at first blush, I agree.

That is why I’d like to see the federal civil complaint, proper. It should be available Monday. In any event, the theory, at least as explained by Bloomberg’s reporters, is that TALF/TARP money cannot be used to reduce competition, and eliminate jobs (the 22,000 people reputed to be severed in that transaction). It would seem that such policing would grind the wheels of commerce to a halt — if all TALF/TARP money must be traced to where it has been lent, or otherwise put to work, before a transaction involving job losses may close.

As I say, seems dubious, but here’s the snippet:

. . . .The acquisition will eliminate competition for certain drugs, lead to fewer supplier choices for pharmacies, push up prices for medicines and result in 22,000 job cuts, according to a complaint filed yesterday in federal court in San Francisco.

Four of the five banks providing $22.5 billion in loans to finance the buyout have received Troubled Asset Relief Program funds, the pharmacies say. Government bailout money shouldn’t be used to finance job losses, according to the complaint. . . .

Merck’s lead financier was — you guessed it — JP Morgan Chase. Again, I am not convinced, yet, that there is much meat on these bones — but if there is, it would seem to apply with equal or greater force, to Merck’s proposed transaction with Schering-Plough, a transaction in which at least 16,000 jobs are expected to be eliminated.

I’ll keep you posted.