EC approves acquisition of St Jude Medical by Abbott Laboratories, subject to conditions
24 Nov 2016 11:53 AM
The European Commission has approved under the EU Merger Regulation the proposed acquisition of St Jude Medical by Abbott Laboratories, both US based companies that develop and market medical devices. The approval is conditional on Abbott divesting two devices used in cardiovascular treatments.
Commissioner Margrethe Vestager, in charge of competition policy, said:“When it comes to the interests of patients and healthcare systems, we have to make sure that prices stay competitive, that practitioners have sufficient choice and that promising innovative products are not abandoned by the merging companies. I am glad we have found a solution that allows this takeover to proceed, while ensuring that competition is preserved."
Commission's competition concerns
The Commission's investigation focused on the two areas of cardiovascular devices where Abbott and St Jude compete: vessel closure devices and devices used in electrophysiology procedures, in particular transseptal introducer sheaths.
- Vessel closure devices are used to close holes made in arteries in order to access the heart or vascular system for the purpose of treating a vascular disease. There are several methods for closing such holes, including manual compression, surgical suturing, closure assist devices and vessel closure devices. The market investigation revealed, however, that for certain interventions there is no alternative to using vessel closure devices. The investigation showed that the combination of Abbott and St Jude's range of vessel closure devices could have led to price rises, given the insufficient competitive pressure from the remaining players on the market.
- Electrophysiology products (EP) are used to diagnose and treat abnormalities in the timing and pattern of the heartbeat. Where these abnormalities are treated by means of minimally invasive surgery (a technique known as catheter ablation), transseptal sheaths are used for introducing and removing catheters. Prior to the merger, St Jude was the leader in the transseptal sheaths market, whilst Abbott had developed a product, Vado, which has the potential to become a strong competitor and challenge St Jude's position. The Commission has concerns that Abbott might abandon the launch of Vado after the transaction, thereby depriving doctors and patients of additional choice due to less competition.
The proposed commitments
In order to address the competition concerns identified by the Commission, Abbott offered to:
- fully divest St Jude's global vessel closure devices business, including its manufacturing site in Puerto Rico;
- divest the whole of Abbott's Vado business, including its shareholding in Kalila Medical, the company which developed Vado. Kalila Medical was purchased by Abbott in early 2016 but was not subsequently integrated into Abbott operations.
These commitments fully remove the overlap between Abbott and St Jude in the two markets where the Commission had identified competition concerns. The Commission was therefore able to conclude that the proposed transaction, as modified by the commitments, would no longer raise competition concerns. The decision is conditional upon full compliance with the commitments.
Given the global reach of the companies' activities, the Commission cooperated closely with competition agencies in other jurisdictions, including in particular the US Federal Trade Commission.
Companies and products
St Jude is a US company active in the development, manufacturing and sale of cardiovascular medical devices, including traditional cardiac rhythm management products, cardiovascular products and atrial fibrillation products.
Abbott is a US company active in the development, manufacturing and sale of various healthcare products, including medical devices comprising vascular products, optical products, diabetes care, diagnostic products and pharmaceutical products.
Merger control rules and procedures
The transaction was notified to the Commission on 3 October 2016.
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II). This deadline is extended to 35 working days in cases where remedies are submitted by the parties, such as in this case.
More information will be available on the competition website, in the Commission's public case register under the case number M.8060.
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