EU Opens In-Depth Probe Into Johnson & Johnson Deal for Synthes

EU Opens In-Depth Probe Into Johnson & Johnson Deal for Synthes

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Nov. 4 (Bloomberg) — European Union antitrust regulators opened an in-depth probe into Johnson & Johnson’s proposed acquisition of Synthes Inc., which would make the company the leader in the $5.5 billion market for devices that treat trauma victims.

“The proposed acquisition would remove a competitor from some markets which are already concentrated,” Joaquin Almunia, the EU commissioner for competition, said today in a statement. The European Commission, the EU regulator, “needs to make sure that effective competition is preserved.”

The deal would be the biggest in J&J’s 125-year history, giving it a device company with an operating margin of 35 percent, the highest among medical-products makers with stock values of more than $5 billion.

“The remaining competitors in many of the markets may not be able to exert a sufficiently strong restraint on the behavior of the merged entity,” the EU said. “The removal of an important competitor may also have a negative impact on the level of innovation, leading to a reduction of choice for patients and potentially an increase in prices for the orthopedic medical devices concerned.”

The commission now has 90 working days, until March 19, 2012, to take a final decision on whether the transaction would reduce “effective competition” in the region, the regulator said.

–Editor: Jones Hayden

To contact the reporters on this story: Jim Brunsden in Brussels at jbrunsden@bloomberg.net; Aoife White in Brussels at awhite62@bloomberg.net.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.

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