Medtronic Agrees to Divest Avecor's Assets to Settle FTC Charges

Medtronic, Inc. will divest Avecor's non-occlusive arterial pump assets to settle Federal Trade Commission charges that Medtronic's $106 million acquisition of its competitor would lessen competition for the research, development, manufacture and sale of non-occlusive arterial pumps in the United States. According to a proposed consent order announced for public comment today, the assets will be divested to Baxter Healthcare Corporation.

The complaint also states that the market is highly concentrated, entry into the market would not be timely, likely or sufficient to prevent adverse competitive effects, and there are no competitive substitutes for non-occlusive arterial pumps -- perfusion devices used in heart/lung machines.

Medtronic, headquartered in Minneapolis, Minnesota, is engaged in the research, development, manufacture and sale of medical devices, including implantable devices, such as pacemakers and defibrillators, which regulate heart rhythm; tissue and mechanical heart valves; coronary stents; and perfusion devices for heart/lung machines. Medtronic's perfusion devices include non-occlusive arterial pumps. Medtronic's Bio-Pump is the market leader in non-occlusive arterial pumps. Avecor, also headquartered in Minneapolis, Minnesota, is engaged in the research, development, manufacture and sale of perfusion devices, including, among other things, non-occlusive arterial pumps. Avecor introduced its non-occlusive arterial pump in the Fall of 1997. Avecor's pump, which utilizes new technology, is still in the early stages of gaining market acceptance. This new pump offers consumers significant advantages over the Bio-Pump and other conventional non-occlusive pumps.

Baxter, the proposed purchaser of the assets to be divested, is a major producer of medical devices used in cardiac surgery and has substantial experience in the research, development, manufacture and sale of other perfusion devices used in cardiac surgery bypass operations. Baxter also is a major provider of perfusion services. In the event that Medtronic does not sell these assets to Baxter or another Commission-approved buyer within 90 days of the consent order becoming final, the Commission may appoint a trustee to divest the Avecor Pump assets.

The proposed consent order would require Medtronic to provide substantial assistance to the buyer of the Avecor Pump Assets to enable the buyer to obtain FDA approval to manufacture and market the Avecor pumps and reservoirs to use with the pump. For example, under the terms of the proposed consent order, Medtronic would contract to manufacture Avecor pumps and the reservoirs used with Avecor pumps for a year while the buyer establishes its own manufacturing capability. Medtronic also would continue to supply the buyer with such reservoirs for a second year if the buyer determines that it needs additional time to establish the manufacturing capability to produce a reservoir to use with the Avecor pump.

The Commission vote to publish the proposed consent order was 4-0.

An announcement regarding the proposed consent agreement will be published in the Federal Register shortly. The agreement will be subject to public comment for 60 days, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.

Copies of the complaint, proposed consent order, and an analysis to aid public comment are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. Consent agreements subject to public comment also are available by calling 202-326-3627. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC File No. 981-0329)