In an effort to preserve competition in the cardiac device market, Abbott Laboratories (NYSE: ABT) will comply with the Federal Trade Commission's proposed consent order to abnegate two of its
medical device businesses prior to the company's $25 billion acquisition of St. Jude Medical, Inc. (NYSE:
STJ).
According to the order, Abbott must divest the rights and assets of its steerable sheath business and St. Jude's closure device
business to Terumo Corporation (OTC: TRUMF),
a device maker based in Tokyo.
Terumo is not currently in the market for either product but has stakes in parallel U.S. markets through a New Jersey
subsidiary. The FTC ordered Abbott and St. Jude to bolster the budding rival's manufacturing capacity in order to ensure sufficient
competition.
The Commission initially filed a
complaint against Abbott alleging that its St. Jude merger would limit competition for vascular closure devices and steerable
sheaths in the U.S. market. The equipment is respectively used to close catheter holes in arteries and direct catheters for heart
arrhythmias.
Together, the two corporations own all of the steerable sheath market and more than 70 percent of the vascular closure device
market — and they are close to controlling another branch of medical technology.
The FTC is monitoring Abbott's growth in the industry for lesion-assessing ablation catheters, which allow physicians to monitor
the temperature of targeted tissues and the force of catheters. St. Jude and only one competitor — Advanced Cardiac Therapeutics —
control the U.S. market. Because Abbott's acquisition of ACT or its assets would effectively forge a monopoly, the FTC is requiring
Abbott to provide notification if it intends to merge with ACT.
The proposed consent agreement will be available for public comment in the Federal Register until January 26, when the FTC will vote to
finalize the order.
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