[Federal Register Volume 82, Number 1 (Tuesday, January 3, 2017)]
[Notices]
[Pages 120-122]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-31800]


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FEDERAL TRADE COMMISSION

[File No. 161 0126]


Abbott Laboratories and St. Jude Medical, Inc.; Analysis to Aid 
Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair methods of competition. 
The attached Analysis to Aid Public Comment describes both the 
allegations in the complaint and the terms of the consent orders--
embodied in the consent agreement--that would settle these allegations.

DATES: Comments must be received on or before January 26, 2017.

ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/abbottjudeconsent online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``In the Matter of St. 
Jude Medical, Inc./Abbott Laboratories, File No. 161 0126- Consent 
Agreement'' on your comment and file your comment online at https://ftcpublic.commentworks.com/ftc/abbottjudeconsent by following the 
instructions on the web-based form. If you prefer to file your comment 
on paper, write ``In the Matter of St. Jude Medical, Inc./Abbott 
Laboratories, File No. 161 0126--Consent Agreement'' on your comment 
and on the envelope, and mail your comment to the following address: 
Federal Trade Commission, Office of the Secretary, 600 Pennsylvania 
Avenue NW., Suite CC-5610 (Annex D), Washington, DC 20580, or deliver 
your comment to the following address: Federal Trade Commission, Office 
of the Secretary, Constitution Center, 400 7th Street, SW., 5th Floor, 
Suite 5610 (Annex D), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Jordan Andrew (202-326-3678), Bureau 
of Competition, 600 Pennsylvania Avenue NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, 
notice is hereby given that the above-captioned consent agreement 
containing consent orders to cease and desist, having been filed with 
and accepted, subject to final approval, by the Commission, has been 
placed on the public record for a period of thirty (30) days. The 
following Analysis to Aid Public Comment describes the terms of the 
consent agreement, and the allegations in the complaint. An electronic 
copy of the full text of the consent agreement package can be obtained 
from the FTC Home Page (for December 27, 2016), on the World Wide Web, 
at http://www.ftc.gov/os/actions.shtm.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before January 26, 
2017. Write ``In the Matter of St. Jude Medical, Inc./Abbott 
Laboratories, File No. 161 0126--Consent Agreement'' on your comment. 
Your comment--including your name and your state--will be placed on the 
public record of this proceeding, including, to the extent practicable, 
on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the Commission tries to 
remove individuals' home contact information from comments before 
placing them on the Commission Web site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment does not include any 
sensitive personal information, like anyone's Social Security number, 
date of birth, driver's license number or other state identification 
number or foreign country equivalent, passport number, financial 
account number, or credit or debit card number. You are also solely 
responsible for making sure that your comment does not include any 
sensitive health information, like medical records or other 
individually identifiable health information. In addition, do not 
include any ``[t]rade secret or any commercial or financial information 
which . . . is privileged or confidential,'' as discussed in Section 
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 
4.10(a)(2). In particular, do not include competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    If you want the Commission to give your comment confidential 
treatment, you must file it in paper form, with a request for 
confidential treatment, and you have to follow the procedure explained 
in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment will be kept 
confidential only if the FTC General Counsel, in his or her sole 
discretion, grants your request in accordance with the law and the 
public interest.
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    \1\ In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request, and must identify the specific portions 
of the comment to be withheld from the public record. See FTC Rule 
4.9(c), 16 CFR 4.9(c).
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    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/abbottjudeconsent by following the instructions on the web-based 
form. If this Notice appears at http://www.regulations.gov/#!home, you 
also may file a comment through that Web site.
    If you file your comment on paper, write ``In the Matter of St. 
Jude Medical, Inc./Abbott Laboratories, File No. 161 0126- Consent 
Agreement'' on your comment and on the envelope, and mail your comment 
to the following address: Federal Trade Commission, Office of the 
Secretary, 600 Pennsylvania Avenue NW., Suite CC-5610 (Annex D), 
Washington, DC 20580, or deliver your comment to the following address: 
Federal Trade Commission, Office of the Secretary, Constitution Center, 
400 7th Street SW., 5th Floor, Suite 5610 (Annex D), Washington, DC. If 
possible, submit your paper comment to the Commission by courier or 
overnight service.
    Visit the Commission Web site at http://www.ftc.gov to read this 
Notice and the news release describing it. The FTC Act and other laws 
that the Commission administers permit the collection of public 
comments to consider and use in this proceeding as appropriate. The 
Commission will consider all timely and responsive public comments that 
it receives on or before January 26, 2017. You can find more 
information, including routine uses permitted by the Privacy Act, in 
the Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

[[Page 121]]

Analysis of Agreement Containing Consent Orders To Aid Public Comment

Introduction

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an Agreement Containing Consent Orders (``Consent 
Agreement'') from Abbott Laboratories (``Abbott'') and St. Jude 
Medical, Inc. (``St. Jude'') that is designed to remedy the 
anticompetitive effects that otherwise would have resulted from 
Abbott's proposed acquisition of St. Jude. Under the terms of the 
proposed Consent Agreement, the parties are required to divest St. 
Jude's vascular closure device business and Abbott's steerable sheath 
business to Terumo Corporation (``Terumo''). Abbott is also required to 
provide notice if it intends to acquire the assets of Advanced Cardiac 
Therapeutics, Inc. (``ACT'').
    The Consent Agreement has been placed on the public record for 
thirty days to solicit comments from interested persons. Comments 
received during this period will become part of the public record. 
After thirty days, the Commission will again review the Consent 
Agreement, along with the comments received, and decide whether it 
should withdraw from the Consent Agreement, modify it, or make final 
the Decision and Order (``Order'').
    Pursuant to an Agreement and Plan of Merger dated April 27, 2016, 
Abbott proposes to acquire St. Jude in exchange for cash and stock 
valued at approximately $25 billion (the ``Proposed Acquisition''). The 
Commission's Complaint alleges that the Proposed Acquisition, if 
consummated, would violate Section 7 of the Clayton Act, as amended, 15 
U.S.C. 18, and Section 5 of the Federal Trade Commission Act, as 
amended, 15 U.S.C. 45, by lessening competition in the U.S. markets for 
vascular closure devices, steerable sheaths, and lesion-assessing 
ablation catheters. The proposed Consent Agreement will remedy the 
alleged violations by preserving the competition that would otherwise 
be eliminated by the Proposed Acquisition.

The Parties

    Headquartered in Abbott Park, Illinois, Abbott is a global health 
care company that offers a large portfolio of vascular products, 
including coronary, endovascular, vascular closure, electrophysiology, 
and structural heart devices.
    St. Jude, headquartered in St. Paul, Minnesota, is a leading 
manufacturer of vascular products and medical devices. St. Jude's 
vascular products include vascular closure devices, pressure 
measurement guidewires, percutaneous catheter introducers, heart 
failure monitoring devices, cardiac mapping and navigation systems, 
diagnostic catheters, ablation catheters, and introducer sheaths.

The Relevant Products and Structure of the Markets

    Vascular closure devices are used to close arterial holes resulting 
from vascular catheterization procedures. Physicians perform these 
catheterization procedures to diagnose or treat a cardiovascular 
condition. Typically, physicians access the femoral artery and direct a 
specialized catheter to the heart or peripheral arteries to deploy a 
balloon, diagnose an arrhythmia, or insert a stent or other device. The 
procedures leave a hole in the artery that must be closed quickly after 
the catheter is removed. Vascular closure devices provide a fast and 
effective way for physicians to close these holes while minimizing 
complications and the time patients must spend recovering from the 
procedure. Abbott and St. Jude are the two largest suppliers of 
vascular closure devices in the United States, with a combined market 
share of over 70%. The only other firms that supply vascular closure 
devices in the U.S. market are Cardinal Health, Inc. and Cardiva 
Medical, Inc.
    Steerable sheaths are used in electrophysiology procedures to treat 
complex heart arrhythmias, such as atrial fibrillation. Unlike a fixed 
sheath, the tip of a steerable sheath is deflectable, which provides 
better maneuverability and stability for an ablation catheter. 
Steerable sheaths allow physicians to more easily puncture the 
transseptal wall of the heart and guide the sheath and catheter into 
the left atrium or ventricle of the heart. St. Jude is, by far, the 
largest supplier of steerable sheaths in the U.S. market. Abbott 
recently entered this market through its acquisition of Kalila Medical, 
Inc. (``Kalila'') in early 2016. Other suppliers in this market, though 
not recent entrants, have low single-digit market shares.
    Lesion-assessing ablation catheters are used during ablation 
procedures to treat heart arrhythmias. They also provide feedback to 
physicians regarding the force being applied by the catheter or the 
temperature of the ablation target. These products are becoming more 
important, and more frequently used, as physicians treat more cases of 
complex atrial fibrillation. Currently, only St. Jude and Biosense 
Webster Inc. (``Biosense'') provide lesion-assessing ablation catheters 
in the United States. Abbott and ACT entered into a strategic 
partnership to develop lesion-assessing ablation catheters.
    The United States is the relevant geographic market in which to 
assess the competitive effects of the Proposed Acquisition. Vascular 
closure devices, steerable sheaths, and lesion-assessing ablation 
catheters are all medical devices that are regulated by the FDA. 
Products that are sold outside the United States, but not approved for 
sale in the United States, are not alternatives for U.S. consumers.

Effects of the Acquisition

    The Proposed Acquisition would cause significant competitive harm 
in the U.S. markets for vascular closure devices, steerable sheaths, 
and lesion-assessing ablation catheters. For vascular closure devices, 
the merger would combine the largest and second-largest suppliers in 
the United States. The merger would eliminate the substantial price 
competition that currently exists between these competitors.
    In the market for steerable sheaths, St. Jude is currently the 
largest supplier in the United States and has held a near-monopoly 
position in this market for over a decade. Abbott entered this market 
recently and its product is well positioned to compete head-to-head 
with St. Jude. The Proposed Acquisition would eliminate the competition 
that would have occurred between Abbott and St. Jude in this market.
    Finally, if Abbott acquires ACT's lesion-assessing ablation 
catheter assets, it could eliminate potential competition in the U.S. 
market for lesion-assessing ablation catheters. ACT's lesion-assessing 
ablation catheter currently in development would compete directly with 
offerings from St. Jude and Biosense. It would thus be the third 
competitor in the highly-concentrated U.S. market for lesion-assessing 
ablation catheters. Abbott's acquisition of the ACT assets would reduce 
the additional competition that would have resulted from an additional 
U.S. supplier of lesion-assessing ablation catheters.

Entry

    Entry into the U.S. markets for vascular closure devices, steerable 
sheaths, and lesion-assessing ablation catheters would not be timely, 
likely, or sufficient in magnitude, character, and scope to deter or 
counteract the anticompetitive effects of the Proposed Acquisition. The 
development process for each of these devices is difficult, time-
consuming, and expensive. It can take tens of millions of dollars of 
research and development, significant

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further funding for clinical trials, and an extensive amount of time to 
even reach the stage of applying to the FDA for approval. The 
regulatory approval process itself can also be time-consuming as the 
FDA reviews the volume of material and data a company submits in 
support of its application.

The Consent Agreement

    The Consent Agreement remedies the competitive concerns raised by 
Abbott's proposed acquisition of St. Jude by requiring that the parties 
divest to Terumo all of the assets and resources needed for it to 
become an independent, viable, and effective competitor in the U.S. 
markets for vascular closure devices and steerable sheaths. It also 
requires Abbott to provide notice if it intends to acquire ACT's 
lesion-assessing ablation catheter assets.
    Terumo possesses the industry experience and reputation necessary 
to replace competition that would be lost in the U.S. markets for 
vascular closure devices and steerable sheaths. Terumo is headquartered 
in Tokyo, Japan. It has been active in the U.S. medical device market 
for over thirty years and has a U.S. subsidiary based in Somerset, New 
Jersey. Terumo offers a portfolio of products that are highly 
complementary to the vascular closure and steerable sheath products 
being acquired but does not sell any competing products. Through its 
Interventional Systems business unit, Terumo manufactures and sells 
guidewires, catheters, and sheaths, as well as other vascular access 
devices. As a result, it currently sells its products to many of the 
same customers as Abbott and St. Jude. Terumo is thus well positioned 
to restore the benefits of competition that would be lost through the 
Proposed Acquisition.
    Pursuant to the Order, Terumo will receive all rights and assets 
related to St. Jude's vascular closure device business and Abbott's 
steerable sheath business, including all of the intellectual property 
used in those businesses. In addition, Terumo will take over part of 
the facility in Caguas, Puerto Rico where St. Jude currently 
manufactures most of its vascular closure device products. In order to 
ensure continuity of supply for certain vascular closure devices and 
components that are not currently manufactured in the Puerto Rico 
facility, the Order requires that St. Jude supply Terumo with finished 
vascular closure devices and components for up to two years while 
Terumo transitions to independent manufacturing.
    To ensure that the divestiture is successful, the Order requires 
the parties to enter into a transitional services agreement with Terumo 
to assist the company in establishing its manufacturing capabilities. 
Further, the Order requires that the parties transfer all confidential 
business information to Terumo, as well as provide access to employees 
who possess or are able to identify such information. Terumo also will 
have the right to interview and offer employment to employees 
associated with St. Jude's vascular closure device business and 
Abbott's steerable sheath business.
    The parties must accomplish the divestiture no later than forty-
five days after the consummation of the Proposed Acquisition. If the 
Commission determines that Terumo is not an acceptable acquirer, or 
that the manner of the divestiture is not acceptable, the Order 
requires the parties to unwind the sale and accomplish the divestiture 
within 180 days of the date the Order becomes final to another 
Commission-approved acquirer.
    To ensure compliance with the Order, the Commission has agreed to 
appoint an Interim Monitor to ensure that Abbott and St. Jude comply 
with all of their obligations pursuant to the Consent Agreement and to 
keep the Commission informed about the status of the transfer of the 
rights and assets to Terumo. Further, the Order allows the Commission 
to appoint a Divestiture Trustee to accomplish the divestiture should 
the parties fail to comply with their divestiture obligations. Lastly, 
the Order terminates after ten years.
    The purpose of this analysis is to facilitate public comment on the 
proposed Consent Agreement, and it is not intended to constitute an 
official interpretation of the proposed Order or to modify its terms in 
any way.

    By direction of the Commission.
April J. Tabor,
Acting Secretary.
[FR Doc. 2016-31800 Filed 12-30-16; 8:45 am]
 BILLING CODE 6750-01-P