The FTC has challenged the proposed US$16.6 billion acquisition by Johnson & Johnson (J&J) of Pfizer’s Consumer Healthcare Division. In its complaint, the FTC alleged that the transaction as proposed would substantially reduce competition in the US markets for four categories of popular over-the-counter medications, including: hydrocortisone anti-itch treatments, H-2 blockers taken to relieve heartburn, diaper rash treatments, and night-time sleep aids.

To settle the Commission’s charges the companies have agreed to a consent order designed to remedy the harm to competition that would have resulted from the transaction. Under the consent order, the companies must: (i) sell assets related to Pfizer’s Zantac H-2 blocker to rival Boehringer Ingelheim Pharmaceuticals, Inc. (Boehringer); and (ii) sell assets related to Pfizer’s Cortizone anti-itch treatment, Pfizer’s Unisom sleep aid and J&J’s Balmex diaper rash treatment to rival Chattem, Inc. The companies also must take steps to ensure that the divested assets are transitioned successfully to Boehringer and Chattem. For example, in the case of Zantac, J&J and Pfizer must supply all relevant research and development, intellectual property and customer contracts, and must permit Boehringer the opportunity to hire key Pfizer personnel who have experience working with Zantac. The consent order contains similar requirements with respect to the products to be divested to Chattem. The consent order is subject to a 30-day period for public comment, after which the Commissioners will decide whether to grant final approval. (As discussed below, the European Commission similarly has conditioned its approval of the merger upon certain divestitures.)