EU Commission OKs J&J’s buy of Synthes, but with conditions

The Commission’s investigation confirmed that, subject to the divestment of J&HJ’s trauma business, the merged entity would continue to face competition from a number of other strong competitors and that customers would still have sufficient alternative suppliers in all of the markets concerned.Commission Vice President in charge of competition policy Joaquin 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 “.The Commission examined the competitive effects of the proposed acquisition in various affected markets. It concluded that there were no competitive concerns for spine, shoulder replacement and cranio-maxillofacial devices (CMF) as well as for surgical power tools.Trauma devices competition concerns in several EU marketsHowever, the investigation showed that for trauma devices the transaction would significantly impede effective competition in a number of markets in different European Union member states.These concerns were based on very high combined market shares of the merging entities in these markets, the rather mature character of the products, and the strong position of the AO Foundation, a highly reputed Swiss-based surgeon-led organization with an exclusive relationship with Synthes. As a result, surgeons are generally reluctant to switch to other suppliers of trauma devices, making entry by competitors difficult or unattractive.In order to remove the significant impediment of effective competition resulting from the proposed transaction, Johnson & Johnson submitted commitments to the Commission, consisting of the divestiture of its entire trauma business in the EEA (European Economic Area). This divestment removes the overlap in the area of trauma devices and thus the competition concerns. On this basis the Commission was able to clear the transaction.