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From Antitrust Law Daily, December 27, 2016

FTC imposes conditions on Abbott Laboratories’ proposed $25B acquisition of St. Jude Medical

By Linda O’Brien, J.D., LL.M.

Global healthcare company Abbott Laboratories has agreed to divest two medical device businesses to resolve an FTC complaint that its proposed $25 billion acquisition of St. Jude Medical, Inc. would likely be anticompetitive in U.S. markets for medical devices used in cardiac and vascular catheterization, the FTC announced today (In the Matter of Abbott Laboratories and St. Jude Medical, Inc., FTC File No. 161 0126).

St. Jude is 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 active in the development, manufacturing, and sale of various health care products, including medical devices comprising vascular products, optical products, diabetes care, diagnostic products, and pharmaceutical products.

In its complaint, the FTC alleges that 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 complaint claims, 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, which was filed simultaneously with the FTC’s complaint, 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. 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 (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, according to the FTC.

EC approval. On November 23, Abbott’s proposed acquisition of St. Jude Medical was approved by the European Commission (EC) under the European Union (EU) merger regulation. The approval was conditional upon Abbott divesting two devices used in cardiovascular treatments.

Companies: St. Jude Medical, Inc.; Abbott Laboratories

MainStory: TopStory AcquisitionsMergers Antitrust FederalTradeCommissionNews

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