NEW BRUNSWICK (dpa-AFX) - The European Commission on Thursday cleared the proposed $21 billion acquisition of Synthes Inc. (SYST.VX) by Johnson & Johnson (JNJ). The U.S. healthcare giant submitted commitments to the Commission to remove competitive concerns regarding the trauma business.
Noting that both these companies are active in the area of orthopaedic medical devices, the Commission said its investigation confirmed that, subject to Johnson & Johnson divesting its trauma business, the merged entity would continue to face competition from several strong competitors.
The Commission found that customers would still have sufficient alternative suppliers in all markets concerned.
Commission Vice President in charge of competition policy Joaquín Almunia said: 'This was the first time the Commission examined these product markets. We obtained remedies to ensure that competition will remain strong in these markets, for the ultimate benefit of patients and social security systems.'
After examining the competitive effects of the deal in several markets, the Commission concluded that there were no competitive concerns for spine, shoulder replacement and cranio-maxillofacial devices as well as for surgical power tools.
However, the investigation showed that for trauma devices the transaction would significantly affect competition in certain markets in the member states.
The concerns for the Commission are that the merging entities will have very high combined market shares in these markets and the products have a rather mature character.
Additionally, the AO Foundation, a Swiss-based surgeon-led organisation, has an exclusive relationship with Synthes. Hence, surgeons are generally reluctant to switch to other suppliers of trauma devices, which will make entry difficult or unattractive for competitors.
Johnson & Johnson has submitted commitments to the Commission, consisting of the divestiture of its entire trauma business in the European Economic Area. This divestment will remove the overlap in the area of trauma devices and thus the competition concerns.
JNJ closed on Thursday at $63.03, down $0.23 or 0.36 percent, on a volume of 15.19 million shares.
Copyright RTT News/dpa-AFX