As expected, Johnson & Johnson was yesterday given the European green light for its $24 billion dollar purchase of rival Guidant, despite concerns over anti-competitiveness [[18/08/05b]]. The news will come as somewhat of a relief to J&J, which has faced a rollercoaster ride on the back of this acquisition. Back in April, the European Commission launched an extensive investigation into the deal, which it said may have impeded effective competition” because of overlaps in the cardiac device field. Then, in June and July, Guidant’s fortunes took a turn for the worse following the recall of defibrillators and pacemakers [[21/06/05e]], [[20/07/05j]].
The EC has said that divestment of J&J or Guidant’s endoscopic vessel harvesting products, Guidant’s endovascular business and J&J’s Steerable Guidewires business in Europe, must take place for the merger to go ahead. Competition Commissioner, Neelie Kroes, said: “I wanted to ensure that consumers would not have to pay higher prices for the life-saving medical devices produced by these two companies and that any changes to the competitive structure in these markets would not be to the detriment of consumer welfare. I am therefore satisfied that the commitments given by J&J allow the Commission to approve this merger.”
Because of the recent entry of Medtronic and Abbott into the drug-eluting stent marketplace, the EC believes this will compensate for the loss of competition resulting from J&J’s Guidant buy. However, in the case of peripheral stents, the Commission found that competition would have been impeded by the union of Guidant and J&J – hence the agreed to divestment of the endoscopic vessel harvesting products, the endovascular business and the coronary guidewires business.
The transaction is also being reviewed by the US Federal Trade Commission, with a decision anticipated in October. J&J had hoped to tie up the deal by the end of September.