Baxter/Gambro gets ACCC tick of approval

Published On 05/09/2013 | By Christopher Murphy | Mergers

Adding to the regulatory approvals in China (blogged about in our previous post), New Zealand and Europe, the ACCC has announced that it will not oppose the proposed acquisition of Gambro AB by Baxter International Inc. The approval was subject to an undertaking offered by Baxter to divest parts of its Renal Replacement Therapy business.

Both parties are global suppliers of dialysis products and, in particular, both are significant suppliers of Continuous Renal Replacement Therapy (CRRT) products.  In Australia, the parties are the two largest suppliers of CRRT products (out of a possible three suppliers).

As part of its public consultation, the ACCC had discussions with hospitals, state health boards, clinicians and alternative suppliers and, through these discussions, the ACCC identified that the proposed acquisition would raise competition concerns in relation to the supply of CRRT products and that the proposed acquisition could lead to increased prices for CRRT products and procedures in hospitals.

The ACCC’s concern largely reflected the same issues that were identified by other competition regulators, including the European Commission, the Chinese Ministry of Commerce and the New Zealand Commerce Commission.  As a result, and in order to address those concerns, Baxter agreed to divest its global CRRT business to Nikkiso Co Ltd (Nikkiso).

In order to secure ACCC approval in Australia, the parties have provided a court enforceable undertaking requiring the sale of the CRRT business in Australia and, as part of the undertaking, the ACCC is required to approve the purchaser of the CRRT business.  The parties have already obtained approval from the ACCC to sell the CRRT business to Nikkiso on the basis that the ACCC considers Nikkiso is likely to create a viable and effective long term competitor to Baxter, which will address the competition concerns raised.

The ACCC indicated that, in light of the divestment undertaking, overall it was satisfied that the acquisition was unlikely to substantially lessen competition in Australia. The ACCC has indicated that it will issue a public competition assessment in the near future which will provide more detail on the analysis of the impact of the transaction on the relevant markets.

Photo credit: Unhindered by Talent / Foter / CC BY-SA

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