Antitrust Law Daily FTC tells prosthetic limb maker to divest business before acquisition
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Tuesday, April 7, 2020

FTC tells prosthetic limb maker to divest business before acquisition

By J. Preston Carter, J.D., LL.M.

Before a prosthetic manufacturer, which plans to develop a myoelectric elbow, can acquire a leading supplier in that market, that supplier must divest itself of that business, so that the acquisition does not violate federal antitrust law.

Ossur Hf and College Park Industries, Inc., both makers of prosthetic limbs, have agreed to divest College Park’s myoelectric elbow business to settle FTC charges that Ossur’s proposed acquisition of College Park would violate federal antitrust law. The complaint alleges that the U.S. market for myoelectric elbows is highly concentrated and that College Park is a leading supplier in that market. Iceland-based Ossur is developing its own myoelectric elbow, and without the proposed acquisition, it would probably compete with College Park for U.S. sales of myoelectric elbows, according to the FTC. Michigan-based College Park will divest all assets of its myoelectric elbow business to Hugh Steeper Ltd, a prosthetics company based in the UK and San Antonio, Texas (In the matter of Ossur Hf, et al., FTC File No. C-4712).

Relevant market. The FTC said that the relevant product market in which to assess the competitive effects of the proposed acquisition is the development, manufacturing, marketing, distribution, and sale of myoelectric elbows. The myoelectric elbows, which use electromyographic signals and battery-powered motors, have substantial functional advantages over mechanical elbows because they are easier and more natural to control than mechanical elbows. Apart from College Park and Ossur, which is developing its own product, there are only two other participants in the U.S. market.

Acquisition. Without a divestiture, the FTC stated, the acquisition would likely harm U.S. customers of myoelectric elbows, as College Park is currently a leading manufacturer of the device, and Ossur, is the largest prosthetic manufacturer in the United States that does not currently offer a myoelectric elbow. Without the acquisition, the highly concentrated myoelectric elbow market likely would benefit significantly from Ossur’s entry, and Ossur would compete directly for College Park’s customers, according to the FTC.

Consent agreement. The proposed order would remedy the competitive concerns raised by the proposed transaction by requiring Ossur to divest to Steeper the worldwide College Park myoelectric elbow business, including intellectual property, confidential business information, manufacturing technology, existing inventory, and agreements to manufacture and distribute myoelectric elbows. The order also requires a monitor to oversee Ossur’s compliance with its obligations.

Attorneys: Colin Kass (Proskauer Rose LLP) for Ossur Americas Holdings, Inc. Sheldon H. Klein, Butzel Long for College Park Industries, Inc.

Companies: College Park Industries, Inc.; Hugh Steeper Ltd; Ossur Hf

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