FTC Puts Conditions on Thermo Fisher Scientific Inc.’s Proposed Acquisition of Life Technologies Corporation
- Created on Friday, 31 January 2014 10:51
- Written by IVN
Washington, DC - Thermo Fisher Scientific Inc. (Thermo Fisher), a leading manufacturer of products used in scientific research, has agreed to sell assets to GE Healthcare to settle Federal Trade Commission charges that its proposed $13.6 billion acquisition of Life Technologies Corporation (Life) would likely substantially lessen competition.
The FTC complaint challenging the transaction alleges that the deal, as it was originally proposed, would have eliminated close competition between Thermo Fisher and Life and substantially increased concentration in the markets for short/small interfering ribonucleic acid (siRNA) reagents, cell culture media, and cell culture sera, enabling the combined firm to raise prices and reduce quality for consumers.
Thermo Fisher, headquartered in Waltham, Massachusetts, is a leading global manufacturer and distributor of scientific products and laboratory equipment and consumables. It supplies siRNA reagents under its Dharmacon brand, and cell culture media and sera under its HyClone brand.
Headquartered in Carlsbad, California, Life manufactures and supplies a wide range of laboratory equipment and consumables to customers worldwide. Life sells siRNA reagents under its Ambion brand, and cell culture media and sera under its Gibco brand. Pursuant to an agreement signed on April 14, 2013, Thermo Fisher proposed to acquire Life for approximately $13.6 billion.
The FTC identified three relevant product markets in which the transaction likely would have harmed competition:
- siRNA reagents. siRNA reagents are used to study gene function by selectively turning off, or “silencing,” gene expression and inhibiting protein synthesis. Scientists use siRNA reagents for studying the cause of disease, conducting genetic research, and in connection with agricultural research and crop production. Customers can buy siRNA reagents either individually or in “libraries,” which are curated collections of reagents used to study gene silencing and its effect on groups of interrelated genes.
- Cell culture media. Cell culture media are mixtures of ingredients, including salts, sugars, amino acids, and vitamins, which create an environment conducive to growing cells outside the body.
- Cell culture sera. Cell culture sera are liquids derived from animal blood that are rich in nutrients and growth factors. Scientists use serum as a supplement to cell culture media to propagate the growth of mammalian cells. Serum is most commonly a byproduct of the cattle industry. The most common variety of cell culture serum is fetal bovine serum, which is preferred by scientists and researchers due to its high quality and low contamination risk.
According to the FTC’s complaint, aside from Thermo Fisher and Life, there are few meaningful competitors in these three relevant markets. Moreover, the two merging companies are particularly close competitors in each relevant market, and because they are difficult markets to enter, the deal as proposed would likely substantially lessen competition in each market. The FTC alleges that the combined company would have a share of more than 50 percent of the worldwide market for individual siRNA reagents, and greater than 90 percent of the market for siRNA reagent libraries. Post-acquisition, Thermo Fisher would have at least a 50 percent share of the worldwide market for cell culture media, and 60 percent of the market for cell culture sera.
More information about market shares and entry conditions in each relevant market can be found in the analysis to aid public comment for this matter.
The proposed order settling the FTC’s charges requires Thermo Fisher to divest its gene modulation business Dharmacon, which contains the siRNA reagents business, as well as its cell culture media and sera business including the HyClone brand to GE Healthcare, along with all intellectual property and know-how necessary to operate each of the divested businesses. GE Healthcare, which is headquartered in the United Kingdom, has the experience, reputation, and resources to maintain the benefits of competition that otherwise would have been lost as a result of the acquisition.
Competition enforcement agencies around the world reviewed this transaction. Throughout the investigation, Commission staff cooperated with antitrust agencies in Australia, Canada, China, the European Union, Japan, and Korea, often working closely with the staff of these agencies on the analysis of the proposed transaction and potential remedies to reach outcomes that benefit consumers in the United States. For example, the Commission and the European Commission approved GE Healthcare as the divestiture buyer on the same day. The FTC acknowledges the exemplary work done by all agencies, which led to compatible approaches on a global scale.
The Commission vote to accept the agreement containing the proposed consent order for public comment was 4-0. The FTC will publish a description of the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through March 3, 2014, after which the Commission will decide whether to make the proposed consent order final. Interested parties can submit written comments electronically or in paper form by following the instructions in the “Invitation To Comment” part of the “Supplementary Information” section.
Comments in paper form should be mailed or delivered to: Federal Trade Commission, Office of the Secretary, Room H-113, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC is requesting that any comment filed in paper form near the end of the public comment period be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions. Comments can also be submitted electronically.