FTC Puts Conditions on Abbott Laboratories’ proposed $25 billion Acquisition of Rival Medical Device Maker St. Jude Medical, Inc.

U.S.-based global healthcare company Abbott Laboratories has agreed to divest two medical device businesses to settle FTC charges that its proposed $25 billion acquisition of St. Jude Medical, Inc. would likely be anticompetitive.

The FTC’s complaint alleges that without a remedy, the proposed acquisition would harm competition in the U.S. markets for vascular closure devices, which are used to close holes in arteries from the insertion of catheters, and for “steerable” sheaths, which are used to guide catheters for treating heart arrhythmias.

Without a remedy, the merger will cause significant harm to competition in these two markets. Specifically:

• The merged firm would control more than 70 percent of the market for vascular closure devices.
• St. Jude has held a near-monopoly in the market for steerable sheaths for more than a decade. Abbott recently entered the market, and the transaction would eliminate any competition between them.

The proposed consent order requires the parties to divest to Tokyo-based medical device maker Terumo Corporation all rights and assets related to St. Jude’s vascular closure device business and Abbott’s steerable sheath business. Terumo does not currently sell any vascular closure devices or steerable sheaths but has sold related products and medical devices in the U.S. market for more than 30 years, and possesses the industry experience and reputation necessary to replace competition, according to the FTC. The order requires both companies to assist Terumo with establishing its manufacturing capabilities.

Under the proposed order, Abbott is also required to notify the FTC if it intends to acquire lesion-assessing ablation catheter assets from Advanced Cardiac Therapeutics, known as ACT. Lesion-assessing ablation catheters provide feedback to physicians regarding the force being applied by the catheter or the temperature of the ablation target.

Currently, only St. Jude and one other company provide lesion-assessing ablation catheters in the United States. Abbott and ACT have formed a partnership to develop these catheters. After the acquisition of St. Jude, if Abbott acquired lesion-assessing ablation catheter assets from ACT, it could eliminate additional competition that would result from an independent ACT.

More information about this proposed merger and the FTC’s consent agreement can be found in the analysis to aid public comment.

Commission staff and the staff of antitrust agencies in Brazil, Canada, China, the European Union, Israel, Korea and South Africa worked cooperatively on this investigation, including with respect to the remedy and divestiture package, to ensure a consistent outcome.

The Commission vote to issue the complaint and accept the proposed consent order for public comment was 3-0. The FTC will publish the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through January 26, 2017, after which the Commission will decide whether to make the proposed consent order final. Comments can be filed electronically or in paper form by following the instructions in the “Supplementary Information” section of the Federal Register notice.

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $40,000 per day.

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