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Publish Date : 06-Oct-2014

The European Commission has opened an in-depth investigation to assess whether the planned acquisition of Biomet Inc. (Biomet) by Zimmer Holdings Inc. (Zimmer), both of the US, is in line with the EU Merger Regulation. Both companies design and manufacture orthopaedic implants and related surgical products. The Commission has concerns that the transaction may lead to less innovation and choice and to higher prices in these sectors. The opening of an in-depth inquiry does not prejudge the outcome of the investigation. The Commission now has 90 working days, until 16 February 2015, to take a decision.

Commission Vice President in charge of competition policy Joaquín Almunia said: “Maintaining competition in these medical sectors is essential, as competition is a driver of innovation, quality and price. The proposed acquisition would remove a leading competitor for orthopaedic implants and ancillary products from a number of markets across Europe. These markets are already concentrated and the Commission needs to make sure that effective competition is maintained to prevent harm to patients and taxpayers." The Commission’s initial market investigation indicated that the proposed acquisition may substantially lessen competition in the markets for hip, knee, elbow and shoulder implants, as well as for other products, such as bone cement, bone cement accessories and a surgical tool called pulse lavage. The transaction would combine two leading designers and manufacturers of orthopaedic implants, with significant market power in a large number of European Economic Area (EEA) countries.

At this stage, the Commission has concerns that the remaining competitors in many of the markets may not be able to exert a sufficiently strong competitive constraint on the merged entity. In addition, orthopaedic implants and the ancillary products markets are characterised by relatively high barriers to entry, as product track records are considered a prerequisite by hospitals, who are the main purchasers. The Commission is concerned that the removal of an important competitor may have a negative impact on the level of innovation, leading to a reduction of choice and potentially on the level of prices for the orthopaedic implants and other products concerned. The Commission will now investigate the proposed acquisition in-depth to determine whether these initial concerns are confirmed or not. The Commission will in particular examine questions such as how close competitors the parties are, the position of the competitors on the markets, the role of procurement processes in each EEA country, the barriers to entry and expansion from one geographic area to another and the plans of Zimmer and Biomet after the merger.

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