Antitrust Lawyer Blog Commentary on Current Developments

KYPHON’S ACQUISITION OF DISC-O-TECH IS APPROVED

On October 9, 2007 the Federal Trade Commission entered into a settlement agreement with Kyphon, Inc. (“Kyphon”) that allows Kyphon to acquire the spinal assets of Disc-O-Tech Medical Technologies, Ltd. and Discotech Orthopedic Technologies, Inc. (collectively “Disc-O-Tech”).
According to the complaint filed with the settlement agreement, the post-merger U.S. market for minimally invasive vertebral compression fracture (“MIVCF”) treatment products would become anticompetitive. The parties will be required to divest Disc-O-Tech’s Confidence product lines within 60 days, under the terms of a consent order that allows the transaction to proceed. Allegedly, the competitive overlap between the two companies is in the U.S. market for MIVCF treatment products. These products are used to treat vertebral compression fractures, which can cause severe and incapacitating pain for some patients.

The complaint contends that Confidence is Kyphon’s main potential competitor and would present the only significant challenge to Kyphon’s near-monopoly position. The complaint also suggests that Kyphon’s acquisition of Confidence could be a product of its desire to keep the assets of the Confidence line out of the hands of other major medical equipment companies that have the ability to properly develop and market the Confidence lines. The proposed acquisition would have allowed Kyphon to avoid the competition that another acquirer would have brought to the MIVCF treatment product market. The FTC’s consent order is intended to remedy the anticompetitive effect that would otherwise result from the proposed merger.

Robert Doyle
(202) 589-1834
rdoyle@dbmlawgroup.com