The FINANCIAL — The European Commission has approved under the EU Merger Regulation the proposed acquisition of Biomet Inc by Zimmer Holdings Inc., both of the United States.
Both companies produce orthopaedic implants and related surgical products. The approval is conditional upon a commitments package submitted by Zimmer. The Commission had concerns that the merger, as initially notified, could have resulted in price increases for a number of orthopaedic implants in the European Economic Area (EEA). The commitments offered by Zimmer remove these concerns, according to European Commission.
“Orthopaedic implants affect the mobility and quality of life of thousands of people across Europe. The remedies obtained by the Commission will ensure that patients continue to benefit from sufficient choice and innovation and that healthcare providers enjoy competitive prices.” said Margrethe Vestager, Commissioner in charge of competition policy.
The Commission assessed the proposed transaction’s effect on competition in particular in the marketsfor:
(a)partial (unicondylar) knee implants in Austria, Belgium (including sales in Luxembourg), the Czech Republic, Denmark, Finland, France, Germany, Greece, Italy, The Netherlands, Poland, Portugal, Slovenia, Spain, Sweden and the UK;
(b)elbow implants in Austria, Belgium (including sales in Luxembourg), the Czech Republic, Denmark, France, Germany, Italy, Norway, Portugal, Spain, Sweden and the UK; and
(c)total knee implants in Denmark (primary and revision) and Sweden (primary).
On these markets, the merged entity would have faced insufficient competitive constraint from the remaining players, which are much smaller. In addition, barriers to entry are relatively high. Thus, the merger would have led to less innovation and choice, as well as to price increases for the products concerned.
To address these concerns, Zimmer offered to divest the Zimmer Unicondylar Knee implant(“ZUK”) and Biomet’s Discovery Elbow (“Discovery”), both across the EEA, and the Biomet Vanguard total Knee system for primary and revision implants (“Vanguard Knee”) in Denmark and Sweden. In addition, Zimmer committed to grant to the purchaser of the Vanguard knee in Denmark and Sweden an EEA-wide, non-exclusive license to the rights and know-how that are currently used and are needed for the manufacturing, marketing and sale of an exact copy of the Vanguard Knee.
The three divestment businesses include instrumentation, any improvements and pipeline projects. The divestments also include intellectual property rights and know-how; the transfer of licences, permits and authorisations; the transfer of access toCE marks (the certification that allows a medical device to be sold in the EEA); customer contracts, leases, commitments, orders and records; key personnel, technical assistance and training. Furthermore, Zimmer committed for a transitional period to supply the divestment businesses’ product lines at reasonable conditions.
The remedy ensures that the purchasers of the ZUK and the Discovery will acquire the positions that Zimmer and Biomet currently hold in the unicondylar knee and elbow implants markets, respectively. The Vanguard Knee remedy will transfer the largest part of Biomet’s market share to a competitor.
A set of additional purchaser criteria will ensure that these assets are sold to one or several purchasers capable of running the businesses as a competitive force in the market. In addition, the companies committed not to implement the transaction beforeone or more suitable purchasers are found and approved by the Commission for all of the divested businesses.
The Commission concluded that the transaction, as modified by the commitments, would no longer raise competition concerns. This decision is conditional upon full compliance with the commitments.
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