Mergers: In-depth investigation into proposed acquisition of Tachosil by Johnson & Johnson
A phase II in-depth investigation has been opened to assess the proposed acquisition of Tachosil (the dominant dual haemostatic patch product in Europe and owned by a Japanese pharmaceutical company) by US-established Johnson & Johnson (leading supplier of haemostats, which are life-saving products used to manage bleeding during surgeries).
It has opened the investigation on the grounds that the acquisition may reduce potential competition and innovation for the supply of dual haemostatic patches, reduce choice for surgeons and patients, and lead to higher prices for health services, in breach of the EU Merger Regulation and EU competition rules.
The main concerns that arose during the Commission’s initial investigation primarily focused on haemostats and dual haemostatic patches, the latter being considered as a distinct product market currently dominated by Tachosil across the EEA/UK. That potential market was seen as characterised by high barriers to entry and expansion (related to significant development costs), strong brand loyalty among surgeons, and Tachosil’s established position and clinical track-record. The Commission will investigate whether the proposed transaction may (i) remove Johnson & Johnson as the best placed potential entrant in the already concentrated market for dual haemostatic patches, and (ii) enable Johnson & Johnson, through the reinforcement of its leading position in the haemostats space, to hinder competitors’ expansion. It will consider whether, without the transaction, it would have strong incentives to enter the EEA/UK markets for dual haemostatic patches, which according to the initial investigation, is unlikely for other players in the market, thus potentially significantly reducing competition and innovation. If competitors were hindered , that could also result in higher prices, less choice and less innovation.
The Commission now has 90 working days, until 10 August 2020, to take a decision. The opening of an in-depth investigation does not prejudge the outcome of the investigation.
For more information, read the Commission’s press release here.