Competition Bureau statement regarding the acquisition by Abbott of Alere

OTTAWA, September 28, 2017 — The Competition Bureau announced today that it has entered into a Consent Agreement with Abbott Laboratories (Abbott) that resolves the Bureau's concerns related to Abbott's proposed acquisition of Alere Inc. (Alere).Footnote 1

Both Abbott and Alere (the Parties) sell in vitro (meaning performed outside of the body) diagnostic testing products in Canada, which are used in a healthcare setting to detect the presence of diseases, conditions, or infections. This type of testing is typically performed using a system comprised of an analyzer and reagents. The reagents, which are often sold in cartridge form, react with a test sample to produce a measurable result.

Both Parties sell products that are used to test for blood gases and cardiac markers. Blood gas testing measures the levels of oxygen and carbon dioxide in the blood and may be used when a patient has difficulty breathing. Cardiac marker testing measures the levels of cardiac markers in the blood, such as Troponin and BNP, and may be used when a patient has chest pain.

The Bureau determined that Abbott's acquisition of Alere would likely result in a substantial lessening of competition in the supply of certain types of blood gas and cardiac marker testing products in Canada. To resolve this concern, the Consent Agreement requires the sale of Alere's Epoc blood gas testing system to Siemens AG (Siemens) and its Triage cardiac marker testing system to Quidel Corporation (Quidel).

Throughout its review, the Bureau worked with international counterparts, including the United States Federal Trade Commission (U.S. FTC) and the European Commission.

Background

Abbott is a global healthcare company, which is headquartered in Illinois, USA. It is active in a number of areas within the healthcare sector, including pharmaceuticals, nutritional products, medical devices, and diagnostics products. Alere is a global medical diagnostics company, which is headquartered in Massachusetts, USA.

On February 1, 2016, Abbott and Alere announced that they had entered into an agreement, which was amended on April 13, 2017, pursuant to which Abbott would acquire Alere for approximately US$5.3 billion.

Competition Analysis

Both Parties are active in the Point of Care (POC) testing segment. POC testing, as compared to lab testing, is done near the patient and can be performed by doctors or nurses. Within the POC segment, Abbott offers a system called the i-STAT, which is used for blood gas and cardiac marker testing as well as a number of other diagnostic tests. Within the POC segment, Alere offers the Epoc system and the Triage system, which are used to test for blood gases and cardiac markers respectively.

The i-STAT, Epoc and Triage systems all have small, portable analyzers and single-use test cartridges. These POC systems are considered “bedside” and are appropriate for settings with a low volume of use. In Canada, they are often used in rural hospitals or clinics that would not require larger, higher-throughput systems. The Bureau's analysis concentrated on the Canadian geographic market, since Health Canada regulatory approvals are required for the sale of these testing systems.

The Bureau determined that the Epoc and i-STAT systems are the largest competitors for bedside blood gas testing. Similarly, the Bureau determined that the Triage and i-STAT systems are the largest competitors for bedside cardiac marker testing. In addition to finding that the Parties face limited competition, the Bureau found that there are high barriers to entry into the market for new competitors. For example, the process of researching, developing and obtaining regulatory approvals for a product can take several years. As well, the Parties' analyzers have multi-year life cycles, and the Bureau determined that customers may be reluctant to switch to a new product if they are comfortable with the operation and results of their existing system. 

Abbott and Alere also manufacture versions of their i-STAT and Epoc systems for the veterinary market, which have different branding and are distributed by third-party veterinary companies. The Commissioner found that the Parties' products are also close competitors in the veterinary market and face limited competition.

Remedy

To remedy the Bureau's concerns related to the Parties' POC blood gas and cardiac marker testing systems, the Consent Agreement requires the sale of Alere's Epoc and Triage businesses. In particular, the Consent Agreement requires Abbott to divest Alere's facility in Ottawa, Ontario, which manufactures the Epoc system, as well as Alere's facility in San Diego, California, which manufactures the Triage system, and intellectual property related to these systems.

The Consent Agreement provides that Abbott has 32 days following closing of its proposed acquisition of Alere to complete the sale of the Epoc business to Siemens and the Triage business to Quidel. In the event that Abbott fails to complete the sales to Siemens and Quidel within this 32 day period, the Commissioner will appoint a divestiture trustee to sell the businesses. The Consent Agreement also requires the appointment of a monitor to ensure Abbott's compliance with the terms of the Consent Agreement.

Where remedies are required to resolve competition concerns within Canada stemming from a global transaction, the Bureau may either take specific action or it may determine that action beyond what will be taken in foreign jurisdictions is not required. Given the global nature of the Parties' in vitro diagnostics businesses, the Bureau coordinated its review with other jurisdictions, including the European Commission and the U.S. FTC. In this case, the Bureau determined that it was necessary to have a formal remedy, particularly since the Epoc manufacturing assets are located in Canada.  

The Bureau is satisfied that the Consent Agreement will preserve competition in Canada, including with respect to price and innovation, in the supply of bedside blood gas and cardiac marker testing systems for human health and POC blood gas testing systems for animal health.

This publication is not a legal document. The Bureau’s findings, as reflected in this Position Statement, are not findings of fact or law that have been tested before a tribunal or court. Further, the contents of this Position Statement do not indicate findings of unlawful conduct by any party.

However, in an effort to further enhance its communication and transparency with stakeholders, the Bureau may publicly communicate the results of certain investigations, inquiries and merger reviews by way of a Position Statement. In the case of a merger review, Position Statements briefly describe the Bureau's analysis of a particular proposed transaction and summarize its main findings. The Bureau also publishes Position Statements summarizing the results of certain investigations, inquiries and reviews conducted under the Competition Act. Readers should exercise caution in interpreting the Bureau’s assessment. Enforcement decisions are made on a case‑by‑case basis and the conclusions discussed in the Position Statement are specific to the present matter and are not binding on the Commissioner of Competition.


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