By Yoon Ja-young
The country's anti-trust agency ordered a global medical device manufacturer to sell part of its assets to address concerns that its acquisition of a competitor would hamper competition in the market.
The Fair Trade Commission (FTC) said Sunday that the acquisition of St. Jude Medical by Abbott Laboratories triggers concern that it could restrict competition in the country's "vessel closure device" market. Vessel closure devices are used to close small holes doctors make in arteries to examine or treat heart and vascular problems.
Abbott Laboratories is a global healthcare and medical device company based in the United States. Medical devices comprise around 25 percent of its total sales, including cardiovascular products as well as optical instruments and products for the treatment of diabetes.
St. Jude Medical, also based in the United States, is a global medical device manufacturer, mostly known for cardiovascular products and devices related to atrial fibrillation.
The two companies are competing with each other in cardiovascular medical devices markets both in Korea and globally.
Abbott signed a deal to acquire St. Jude Medical in April, and notified Korea's FTC of the deal in August. The purchasing price is $25 billion.
The FTC determined that the takeover restricts competition in the country's vessel closure device market, since the market share of the two companies combined stands at 99 percent ― Abbott Laboratories with 58 percent and St. Jude Medical with 41 percent.
"Since products of St. Jude Medical had been pressuring Abbott as a competitor in the market, the takeover will be the end of the two companies' competition, which makes it highly likely that prices will be raised," said Sun Joong-kyu, director in charge of corporate merger at the FTC.
Cardinal Health, which is the third player in the market, has only a 1 percent market share.
"When considering its small market share, Cardinal Health is likely to only follow the price set by the company born through the takeover," he added.
The FTC thus ordered Abbott Laboratories to sell all of its assets as well related with the development, manufacturing or sales of the vessel closure device. This is the first time for the FTC to make an order regarding a corporate takeover in the medical device industry.
The anti-trust agency said that it is fundamentally preventing damage to consumers by maintaining competition in the market.