SummaryJohnson & Johnson proposed to acquire Guidant Corporation, and sought informal clearance from the ACCC in relation to the acquisition. Johnson & Johnson is the ultimate parent of a global group of companies which manufacture health care products including medical devices. Guidant is the ultimate parent of a global group of companies specialising in the development and manufacture of cardiovascular medical products. The areas of overlap were in the supply of certain devices used in interventional cardiac and endovascular procedures. There was also potential overlap in the area of drug-eluting stents in the future.
Market definitionThe relevant markets were considered to be the national markets for each of coronary guiding catheters, coronary steerable guidewires, endovascular guiding catheters, percutaneous transluminal angioplasty (PTA) balloon catheters, endovascular steerable guidewires and endovascular balloon expandable stents.
Competition analysisIn the national market for the supply of endovascular steerable guidewires, Johnson & Johnson will have a relatively small market share. Together with the existence of several significant competitors in this market, this led the ACCC to conclude that Johnson & Johnson would continue to be constrained post-acquisition and that the acquisition is unlikely to result in a substantial lessening of competition in this market.
In the national markets for the supply of coronary guiding catheters, coronary steerable guidewires, endovascular guiding catheters, PTA balloon catheters and endovascular balloon expandable stents, the ACCC formed the view that the acquisition would be unlikely to raise competition concerns on the basis that Johnson & Johnson would continue to be constrained by several well-established competitors in each of these markets, substitutes are readily available and switching costs appear to be low. Additionally, the markets appear to be mature and highly competitive, with customers unlikely to tolerate price increases and/or reductions in quality. Consequently, the ACCC considered it unlikely that Johnson & Johnson could increase prices above competitive levels in any of these markets.
After consideration of the merger factors and conducting market inquiries, the ACCC formed the view that the proposed acquisition is unlikely to result in a substantial lessening of competition in any relevant market and the ACCC did not oppose the acquisition.