The Department of Justice (DOJ) has announced that it will require Stericycle Inc. to divest certain infectious waste collection and treatment services assets in order to proceed with its acquisition of MedServe Inc. In May of 2009, Stericycle had agreed to acquire all voting shares of MedServe in a $185 million transaction.

In a complaint filed in Federal District Court, District of Columbia by the DOJ's Antitrust Division, and the states of Missouri and Nebraska through their attorneys general, the government plaintiffs state they have brought the action to prevent the proposed acquisition because it would substantially lessen competition in the provision of infectious waste collection and treatment services for a Large Quality Generator (LGQ) in Kansas, Missouri, Nebraska and Oklahoma, violating federal law. LGQs are usually hospitals, large laboratories and large medical facilities. These facilities need collection service on a daily or several times a week.

Stericycle is a Delaware corporation with its principal place of business in Lake Forest, IL. MedServe is a Delaware corporation with its principal place of business in Bellaire, TX. Stericycle is the largest and MedServe the second largest provider of infections waste collection services.

The geographic market for infectious waste collection and treatment is dependent upon transportation costs--the further away from the treating facility, the less competitive the costs. The customers in the states of Kansas, Missouri, Nebraska and Oklahoma who utilize MedServe have no other alternative service provider but Stericycle. No other facility is in a 300-mile vicinity of Stericycle or MedServ's facilities in those areas. While active competition in those areas between the two companies have benefited the customers, upon acquisition of MedServe, Stericycle would then be the monopoly provider. The complaint states this situation will lead to higher costs and lesser quality services.

"Without the divestitures required by the department, critical healthcare facilities in Kansas, Missouri, Nebraska and Oklahoma would have faced higher prices," said Christine A. Varney, Assistant Attorney General in charge of the Department of Justice's Antitrust Division, in a DOJ press release.

At the same time the complaint was filed, the DOJ and the two attorneys general filed a proposed settlement that upon court approval would resolve the competitive concerns alleged in the lawsuit. The settlement proposes that Stericycle and MedServe divest all of MedServe's assets primarily used in the provision of infectious waste collection and treatment services to LGQs in Kansas, Missouri, Nebraska and Oklahoma to a viable purchaser approved by the DOJ. These assets include MedServe facilities in Newton, KS, Kansas City, KS, Oklahoma City, Ok, Omaha, NE, and Booneville, MO.

The DOJ says the proposed settlement will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8700, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the proposed Final Judgment upon finding that it is in the public interest.

Adapted in part from a DOJ press release. Read it in full:
DOJ press release: http://www.justice.gov/opa/pr/2009/November/09-at-1283.html

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