[Federal Register Volume 87, Number 98 (Friday, May 20, 2022)]
[Notices]
[Pages 30953-30955]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-10935]


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FEDERAL TRADE COMMISSION

[File No. 211 0184; Docket No. C-4763]


Medtronic/Intersect ENT; Analysis of Agreement Containing Consent 
Orders To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement; request for comment.

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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 of Proposed Consent Orders 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 June 21, 2022.

ADDRESSES: Interested parties may file comments online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Please write: ``Medtronic/
Intersect ENT; Docket No. C-4763'' on your comment and file your 
comment online at https://www.regulations.gov by following the 
instructions on the web-based form. If you prefer to file your comment 
on paper, please 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.

FOR FURTHER INFORMATION CONTACT: Charles Dickinson (202-326-2617), 
Bureau of Competition, Federal Trade Commission, 400 7th Street SW, 
Washington, DC 20024.

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 a consent order 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 of Agreement Containing Consent Orders 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 website at 
this web address: https://www.ftc.gov/news-events/commission-actions.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before June 21, 2022. 
Write ``Medtronic/Intersect ENT; Docket No. C-4763'' 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 https://www.regulations.gov website.
    Due to protective actions in response to the COVID-19 pandemic and 
the

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agency's heightened security screening, postal mail addressed to the 
Commission will be delayed. We strongly encourage you to submit your 
comments online through the https://www.regulations.gov website.
    If you prefer to file your comment on paper, write ``Medtronic/
Intersect ENT; Docket No. C-4763'' 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.
    Because your comment will be placed on the publicly accessible 
website at https://www.regulations.gov, you are solely responsible for 
making sure your comment does not include any sensitive or confidential 
information. In particular, your comment should not include sensitive 
personal information, such as your or anyone else'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 your comment does not include 
sensitive health information, such as medical records or other 
individually identifiable health information. In addition, your comment 
should not include any ``trade secret or any commercial or financial 
information which . . . is privileged or confidential''--as provided by 
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)--including competitively sensitive information such 
as costs, sales statistics, inventories, formulas, patterns, devices, 
manufacturing processes, or customer names.
    Comments containing material for which confidential treatment is 
requested must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with FTC Rule 4.9(c). 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). Your comment will be kept 
confidential only if the General Counsel grants your request in 
accordance with the law and the public interest. Once your comment has 
been posted on https://www.regulations.gov--as legally required by FTC 
Rule 4.9(b)--we cannot redact or remove your comment from that website, 
unless you submit a confidentiality request that meets the requirements 
for such treatment under FTC Rule 4.9(c), and the General Counsel 
grants that request.
    Visit the FTC website at https://www.ftc.gov to read this Notice 
and the news release describing this matter. The FTC Act and other laws 
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 it receives on 
or before June 21, 2022. For information on the Commission's privacy 
policy, including routine uses permitted by the Privacy Act, see 
https://www.ftc.gov/site-information/privacy-policy.

Analysis of Agreement Containing Consent Orders To Aid Public Comment

I. Introduction

    The Federal Trade Commission (``Commission'') has accepted for 
public comment, subject to final approval, an Agreement Containing 
Consent Orders (``Consent Agreement'') from Medtronic plc, Medtronic, 
Inc. (``Medtronic''), and Intersect ENT, Inc. (``Intersect'') 
(together, ``Respondents''). The Consent Agreement is designed to 
remedy the anticompetitive effects that otherwise would result from 
Medtronic's acquisition of Intersect.
    Pursuant to an Agreement and Plan of Merger dated as of August 6, 
2021, Medtronic proposes to acquire all of the issued and outstanding 
securities of Intersect for approximately $1.1 billion (the 
``Acquisition''). The Commission's Complaint alleges that the 
Acquisition violated Section 7 of the Clayton Act, as amended, 15 
U.S.C. 18, and that the Acquisition agreement constitutes a violation 
of Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. 
45, by substantially lessening competition in the U.S. markets for 
balloon sinus dilation products and ear, nose, and throat (``ENT'') 
navigation systems.
    The proposed Decision and Order (``Order'') contained in the 
Consent Agreement requires Respondents to divest to Hemostasis, LLC 
(``Hemostasis'') the assets and business of Intersect's subsidiary 
Fiagon AG Medical Technologies (``Fiagon''). Respondents must complete 
the transfer no later than 10 days after Medtronic consummates its 
acquisition of Intersect. The Commission has issued, and Respondents 
have agreed to comply with, an Order to Maintain Assets that requires 
Respondents to operate and maintain the divestiture assets in the 
normal course of business through the date the approved buyer acquires 
the divested assets.
    The Commission has placed the Consent Agreement on the public 
record for 30 days to solicit comments from interested persons. 
Comments received during this period will become part of the public 
record. After 30 days, the Commission will review the comments received 
and decide whether it should withdraw, modify, or make the proposed 
Order final.

II. The Relevant Market and Competitive Effects

    The Commission's Complaint alleges that the relevant product 
markets in which to analyze the Acquisition are the research, 
development, licensing, manufacturing, marketing, distribution, and 
sale of (a) balloon sinus dilation products and (b) ENT navigation 
systems. Balloon sinus dilation products are catheter devices used to 
clear blocked sinuses in patients suffering from chronic 
rhinosinusitis. ENT navigation systems allow physicians to view and 
track the location of operating instruments such as balloon sinus 
dilation products during sinus surgery.
    The relevant geographic market in which to analyze the competitive 
effects of the Acquisition is the United States. Balloon sinus dilation 
products and ENT navigation systems are medical devices subject to 
approval by the U.S. Food and Drug Administration before sale in the 
United States. As such, medical devices not approved for sale in the 
United States do not provide competitive alternatives for U.S. 
consumers.
    The Acquisition would likely substantially lessen competition in 
the relevant markets. The U.S. markets for balloon sinus dilation 
products and ENT navigation systems are both highly concentrated. The 
Acquisition, if consummated, would reduce the number of independent 
manufacturers of balloon sinus dilation products from four to three. 
Fiagon, having just entered the U.S. market in 2021 after securing 
regulatory approvals for its balloon sinus dilation products, is poised 
to become an important competitive constraint on the established ENT 
market leaders, including Medtronic. In ENT navigation systems, 
Medtronic currently holds a dominant position, and the Acquisition 
would eliminate a nascent competitive threat in Fiagon.

III. The Proposed Order and the Order To Maintain Assets

    The proposed Order and the Order to Maintain Assets would remedy 
the Acquisition's likely anticompetitive effects by requiring 
Respondents to

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divest the entirety of the Fiagon business and assets to Hemostasis. 
Hemostasis is an established participant in the ENT medical device 
segment and has the expertise, sales infrastructure, and resources to 
restore the competition that otherwise would have been lost pursuant to 
the Acquisition. The parties must divest all facilities and equipment, 
intellectual property, business information, and other assets used with 
and related to the Fiagon business. Hemostasis also intends to retain 
Fiagon employees. Because Hemostasis will acquire all assets related to 
the Fiagon business, and the parties are required to obtain all third-
party consents before the divestiture transaction is consummated, 
Hemostasis will be able to begin manufacturing its own supply of ENT 
navigation systems and balloon sinus dilation products from day one.
    The proposed Order contains additional provisions designed to 
ensure the effectiveness of the relief. For example, the proposed Order 
requires the Respondents to assist and cooperate in the defense against 
any intellectual property litigation related to the Fiagon assets. 
Respondents are required to provide Hemostasis with transition 
assistance for up to one year following the divestiture of the assets 
and must cooperate with and assist Hemostasis to evaluate and offer 
employment to employees involved in the business and assets subject to 
divestiture. Respondents have also agreed not to enforce any employee 
noncompete or confidentiality agreements against Hemostasis relating to 
employees that interview or accept employment with Hemostasis. The 
proposed Order and the Order to Maintain Assets further require 
Medtronic to operate and maintain the divestiture assets in the 
ordinary course of business, including maintaining the economic 
viability, marketability, and competitiveness of the Fiagon business 
until the divestiture transaction takes place.
    The Commission will appoint Jeryl Hilleman to act as an independent 
Monitor to oversee the Respondents' compliance with the requirements of 
the Order, and to keep the Commission informed about the status of the 
transfer of the Fiagon business to Hemostasis. The proposed Order 
requires that the divestiture to Hemostasis be completed no later than 
10 days after Medtronic consummates the Acquisition.
    In addition to requiring the divestiture of the Fiagon assets and 
business, the proposed Order requires Respondents to obtain prior 
approval from the Commission before making certain future acquisitions 
in the relevant markets for a period of ten years from the date the 
Order is issued. The proposed Order also requires Hemostasis to obtain 
prior approval from the Commission before transferring any of the 
divested assets to any buyer for the first three years after Hemostasis 
acquires the divestiture assets. For the seven years following the 
initial three-year period, the proposed Order requires Hemostasis to 
obtain prior approval from the Commission before transferring any of 
the divested assets to any buyer engaged in the research, development, 
manufacture, marketing, or sale of any balloon sinus dilation products 
or ENT navigation systems.
    The purpose of this analysis is to facilitate public comment on the 
Consent Agreement, and the Commission does not intend this analysis 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,
Secretary.
[FR Doc. 2022-10935 Filed 5-19-22; 8:45 am]
BILLING CODE 6750-01-P