European Union (EU) antitrust regulators are opening an in-depth investigation into the Zimmer Holdings, Inc. /Biomet, Inc. merger.
European Regulators Take Second Look at Zimmer/Biomet
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Reuters, quoting “unnamed people, ” reported on October 2, 2014 that the European Commission, which has been reviewing the deal since August, will open the “in-depth investigation” because of concerns that the deal may reduce competition. The Commission had set a deadline of October 3, 2014 to make a decision about approving the merger or digging deeper.
Unicompartmental Knees and Shoulder Divestitures?
Wells Fargo analyst Larry Biegelsen said that if the report is true, then the review will extend into January 2015 according to his legal consultant, but is still likely to be resolved through divestitures in the consultant’s view. A second phase investigation, similar to issuance of the early July second request made by the U.S. Federal Trade Commission (FTC) would extend the review for 90 working days (18 weeks plus holidays).
The likely areas of divestiture, according to Biegelsen, are unicompartmental knees and shoulders, given the high combined market share.
Biegelsen points out that the EU antitrust regulators also launched an in-depth investigation into the JNJ/Synthes merger on November 3, 2011, and that deal was cleared on April 19, 2012 after JNJ agreed to divest its trauma business to Biomet.
EU/FTC Coordination
BofA Merrill Lynch analyst Bob Hopkins said that regarding the U.S. timelines, “based on past experience, generally if things go well, ” a second request may only take three months to turn, but that four to five months is more the norm.
“The possibility remains that the FTC could comment soon, but our conversations with FTC experts suggest FTC and EU regulators will likely coordinate the investigation to the extent permissible in order to reach agreement on any potential conditions placed on the deal. Coordination between the U.S. and EU could potentially push out the FTC ruling into early next year, ” writes Hopkins.
Both analysts believe the deal is still on track.
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This is a fascinating development. In my practice we've seen similar outcomes with the revised protocol. The key differentiator seems to be patient selection criteria. Has anyone else noticed the correlation with BMI thresholds?
Great point. I'd push back slightly on the conclusion, the sample size in the cited study is too small to draw population-level inferences. That said, the directional signal is compelling and worth a larger RCT.
We implemented a similar approach last year. Early results are promising but we're still gathering 12-month follow-up data. Happy to share our protocol if anyone is interested.
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