The U.S. Federal Trade Commission last week said it may force companies to divest assets outside of the market the anti-monopoly bureau its trying to regulate.
The FTC and other international anti-trust regulators often requires companies to sell off assets that are similar to some of the assets being acquired in a merger, to reduce the chance of 1 company dominating a market.
Recent examples include Covidien‘s sale of its Stellarex drug-eluting balloon to Spectranetics (NSDQ:SPNC), so that its $50 billion union with Medtronic‘s (NYSE:MDT) could win the FTC’s blessing, and Zimmer (NYSE:ZMH) and crosstown rival Biomet dealing knee and elbow assets they’d pledged to sell off in order to win European anti-trust regulators’ approval.
Dan Ducore of the FTC’s Bureau of Competition wrote last week that certain M&A deals may prompt his agency to require the sale of assets in other product or geographic markets to "maintain the competitive status quo."
“If out-of-market assets are needed to make up a competitive business in the relevant market, then they go into the divestiture package as well," Ducore wrote. "With divestitures, as with antitrust generally, facts matter, and ultimately, the remedy must restore or replace the competition lost due to the merger. When appropriate, the Commission will include out-of-market assets in the divestiture package to ensure the buyer has what it needs to compete in the post-merger marketplace."
