Two parties that manufacture equipment to assist end-stage heart disease patients awaiting heart transplants abandoned their planned combination after the Federal Trade Commission (FTC) filed an administrative complaint challenging the deal. The FTC’s action demonstrates continued aggressive action on the merger enforcement front. The two parties both make left ventricular assist devices (LVADs), devices that augment the pumping power of diseased hearts. Thoratec Corporation had announced its plan to acquire HeartWare International, Inc. for $282 million. Thoratec is currently the dominant manufacturer of LVADs in the United States. HeartWare’s product represented the next generation of LVAD technology and, according to the FTC, was a competitive threat to Thoratec’s monopoly position in the market. While not yet approved, the HeartWare product is in Food and Drug Administration trials and is expected to be approved sometime in late 2011 or early 2012.
Despite the fact that other manufacturers were developing their own LVAD products, the FTC stated in its complaint that Thoratec’s acquisition of HeartWare would have “profound anticompetitive effects” by short-circuiting the potential competition that would flow from HeartWare’s entry into the market. The complaint alleged that even though HeartWare was only a potential competitor, it was the only company poised to compete effectively with Thoratec. According to the complaint, the eventual competition between the two companies would lower the price of LVADs and lead to technological advances. Therefore, the FTC found that the pro-competitive benefits of blocking the transaction outweighed any possible efficiencies that allowing it created.
See FTC Complaint, In re Thoratec Corp., FTC Docket No. 9339, available here.