To offset the anticompetitive effects of Stryker Corporation’s acquisition of Wright Medical Group N.V., the Federal Trade Commission (FTC) will require Stryker to divest its total ankle replacement and finger joint implant businesses. Stryker will divest these businesses to DJO Global, Inc.
A year ago, Kalamazoo, Michigan-based Stryker announced a definitive agreement to acquire Memphis based (but registered in Amsterdam, The Netherlands) Wright for $5.4 billion. The acquisition was completed on November 11, 2020. For OTW’s initial coverage of the acquisition, see “Stryker to Buy Wright Medical for $5.4 Billion.”
This month, the FTC accepted an Agreement Containing Consent Orders (consent agreement) from Stryker. The proposed consent agreement is intended to resolve anticompetitive issues raised in a recent FTC complaint. The complaint alleges that Stryker’s proposed acquisition may “substantially lessen competition” and “tend to create a monopoly in the relevant markets” in violation of federal law.
According to the complaint, the first, second, and third largest suppliers of total ankle replacements in the United States are Wright, Integra LifeSciences, and Stryker. The complaint asserts that “[t]ogether, Stryker and Wright would account for approximately 75 percent of the market.”
The complaint also argues that “Stryker and Wright are two of only three significant suppliers for finger joint implants in the United States.” According to the complaint, Stryker and Wright are the second and third-largest suppliers. The complaint asserts that if the two combined, the companies would “have a market share in the United States in excess of 50 percent.”
To remedy the competitive issues raised in the complaint, the proposed consent agreement requires Stryker to divest its total ankle replacement and finger joint implant businesses to Vista, California-based DJO Global. DJO Global is a global orthopedic device company. The divesture would enable DJO Global to “become an independent, viable, and effective competitor in the U.S. markets for total ankle replacements and finger joint implants.” Thus, DJO Global would maintain the current market competition.
Interested parties may file comments with the FTC regarding the proposed consent agreement. To consider a comment, the FTC must receive it on or before December 9, 2020. After this time, the FTC will review the comments and make a decision regarding the consent agreement.
