Mergers: EC approves acquisition of Alere by Abbott Laboratories, subject to conditions
26 Jan 2017 01:29 PM
The European Commission has approved under the EU Merger Regulation the acquisition of Alere by Abbott, both suppliers of clinical test systems. The decision is conditional on the divestment of Alere's Epoc and Triage tests, as well as Alere's BNP reagents business.
Commissioner Margrethe Vestager, responsible for competition policy yesterday commented: “Doctors and patients worldwide rely on fast and accurate tests to detect and monitor medical conditions. Today's decision ensures that they will continue to benefit from choice and competitive prices in the fast developing market for small and portable test analysers."
Commission investigation
Abbott Laboratories and Alere Inc. are both US-based companies active in in vitro diagnostics (IVD) systems. These systems perform clinical tests outside the body using blood, urine or other samples. There are two broad categories of IVD systems:
- Laboratory systems:used in hospitals and laboratories, with samples brought to the systems in both cases, and
- Point of care systems: used in emergency rooms, hospital wards, ambulances and other near-patient settings, with samples assessed at the same location.
The companies' activities are largely complementary, as Abbott has a broader portfolio of laboratory systems and Alere a focus on point of care. However, overlaps exist in particular for point of care analysers used in the testing of blood gases and cardiac markers.
- Blood gases are vital parameters monitored for patients admitted into critical care, undergoing prolonged anaesthesia or when a patient is on oxygen. Abbott and Alere produce the only handheld point of care systems for blood gases (the iSTAT and the Epoc, respectively). The two systems compete closely and the proposed merger would have led to a monopoly in this market.
- Cardiac markers are biomarkers measured to evaluate heart functions. Both Abbott's iSTAT system and Alere's Triage system measure cardiac markers. These two instruments compete closely with each other, both in functionality and in use within hospitals.
Moreover, the Commission found that the proposed merger would risk affecting the ability of Danaher, another supplier of IVD systems, to compete for laboratory systems running B-type natriuretic peptide (BNP) tests. These tests are used to check for heart failure.
For the manufacturing and sale of the BNP test used on its laboratory machines, Danaher relies on Alere. As Abbott competes with Danaher in laboratory systems, it could have stopped selling BNP tests for Danaher's machines following the proposed merger. This would have made Danaher's systems less attractive and decreased competition for certain laboratory systems.
Commitments
In order to address the competition concerns identified by the Commission, Abbott offered to:
- fully divest Alere's global Epoc business, including its manufacturing site in Ottawa, Canada,
- fully divest Alere's global Triage business, including its manufacturing site in San Diego, US. This business also manufactures essential inputs for the production of BNP reagents for Danaher laboratory devices, which are included in the divestment, and
- fully divest the Alere BNP reagents business that commercialises a BNP test with Danaher.
The commitments fully address the Commission's competition concerns. The Commission therefore concluded that the proposed merger, as modified by the commitments, would no longer raise competition concerns. The decision is conditional upon full compliance with the commitments.
Given the global nature of the transaction and the commitments, the Commission cooperated closely with other competition agencies, including in particular the US Federal Trade Commission and the Canadian Competition Bureau.
Companies and products
Abbott is a global health care company that supplies a diversified range of health care products, including diagnostic products.
Alere supplies professional diagnostic solutions for infectious diseases, cardiometabolic diseases and toxicology, with a focus on near the patient, point of care testing.
Merger control rules and procedures
The transaction was notified to the Commission on 29 November 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.7982.
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