Competition Bureau statement regarding the acquisition by Medtronic of Covidien

Position statement

OTTAWA, November 26, 2014 — The Competition Bureau announced today that it has reached a consent agreement with Medtronic Inc. (Medtronic) and Covidien plc (Covidien) that resolves the Bureau’s concerns related to Medtronic’s proposed acquisition of Covidien.Footnote 1 Both companies sell medical devices in Canada for the treatment of various conditions.

The Bureau determined that Medtronic’s acquisition of Covidien would likely result in a substantial prevention of competition in the supply of drug-coated balloon catheters (DCBs) for the treatment of peripheral artery disease. To remedy this concern, the consent agreement requires the sale of Covidien’s DCB business, together with a perpetual, non-exclusive license to certain intellectual property. DCBs offer an emerging, innovative treatment method to clear blocked arteries.

Throughout the review, the Bureau worked closely with other jurisdictions including the United States Federal Trade Commission (U.S. FTC). As the assets being divested are primarily located in the United States, but serve both the U.S. and Canadian markets, the Bureau coordinated with the U.S. FTC to ensure an effective remedy in both jurisdictions.

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Pursuant to an agreement dated June 15, 2014, Medtronic agreed to acquire all of the shares of Covidien for an aggregate price of USD42.9 billion in cash and shares of the new combined entity, Medtronic plc.

Medtronic is engaged in the research, design, manufacture and sale of medical technology. In Canada, Medtronic sells, services and distributes medical devices used in cardiovascular medicine, diabetes, spinal and neurosurgery, and ear, nose and throat surgery.

Covidien also develops, manufactures and sells a diverse range of medical devices and medical supplies. In Canada, Covidien distributes a range of medical devices and medical supplies, including devices for the treatment of vascular diseases and disorders.

Analysis and competitive effects

The Parties each have a DCB product that is in the process of coming to market in Canada.

Medtronic manufactures the IN.PACT line of DCBs, which is currently available in Europe, but has not yet been licensed for sale in Canada. Covidien is developing a line of DCBs under its STELLAREX brand, which is currently undergoing clinical trials around the world. Covidien’s DCB is not yet available in Canada. The only DCB that is currently approved by Health Canada for sale in Canada is manufactured by C.R. Bard.

Given that the Parties’ DCB products are both in the developmental and approval process in Canada, the Bureau’s review focused on determining whether the Parties’ products would likely enter the Canadian market in a timely fashion. This entry process includes extensive research and development; conducting clinical trials; obtaining the appropriate license for the device and the manufacturing facility from Health Canada; and, establishing a marketing network capable of serving the Canadian market. In the case of DCBs, which combine a medical device with a pharmaceutical drug, the regulatory approval process is clear and well-defined, but often quite long. That said, there are identifiable stages and timeframes that provide a degree of transparency and predictability, and therefore allow the Bureau to have a high degree of confidence about the likely future state of competition in the supply of DCBs in Canada. Given this, the Bureau was able to conclude that both Parties would have likely entered the market several years ahead of anyone else. As a result, absent an effective remedy, the merger would have prevented the timely entry of a third player in the DCB market and led to substantial competitive harm.

In addition to the DCB overlap, there was also limited overlap among the Parties with respect to the sale of certain other medical devices that are already on the market in Canada, including:

  1. energy devices;
  2. laparoscopic hand instruments; and,
  3. peripheral vascular devices.

In each instance of such overlap, the Bureau found there to be effective remaining competition in Canada.


Given the global nature of the Parties’ DCB businesses, the Bureau coordinated its review with foreign jurisdictions, in particular, the U.S. FTC. Based on its determination that the merger would likely have anti‑competitive effects in Canada that are similar to those in the United States, the Bureau coordinated with the U.S. FTC to ensure an effective remedy in both jurisdictions. To effectively resolve its concerns given, among other things, the different competitive landscape in Canada, the Bureau determined that a negotiated remedy formalized by way of a consent agreement was necessary.

Pursuant to the terms of the consent agreement, Covidien’s DCB business will be sold to The Spectranetics Corporation (Spectranetics) within 10 days of completing the proposed transaction. Prior to entering into the consent agreement, the Parties sought out potential purchasers for the DCB catheter business, and proposed Spectranetics for the Commissioner’s approval. Upon careful review, the Bureau determined that Spectranetics was committed to carrying on the DCB business and had the managerial, operational and financial capability to effectively compete in Canada; thereby, resolving the likely substantial prevention of competition. The identification of an up-front buyer helps to ensure the timeliness of the divestiture and the viability of the assets to be divested. In this instance, as the DCB business is to be divested within 10 days of completion of the merger, it also avoided the need for hold-separate provisions.

A joint monitor has been appointed by the Bureau and the U.S. FTC to ensure the completion of the sale of the DCB business and the transfer of certain pending approvals required to bring the device to market in Canada, including Health Canada application materials and patent applications.

By requiring that the DCB business be sold, the Bureau is satisfied that the consent agreement will preserve competition for the sale of medical devices for the treatment of peripheral vascular diseases in Canada.

The Competition Bureau, as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace.

This publication is not a legal document. The Bureau’s findings, as reflected in this Position Statement, are not findings of fact or law that have been tested before a tribunal or court. Further, the contents of this Position Statement do not indicate findings of unlawful conduct by any party.

However, in an effort to further enhance its communication and transparency with stakeholders, the Bureau may publicly communicate the results of certain investigations, inquiries and merger reviews by way of a Position Statement. In the case of a merger review, Position Statements briefly describe the Bureau's analysis of a particular proposed transaction and summarize its main findings. The Bureau also publishes Position Statements summarizing the results of certain investigations, inquiries and reviews conducted under the Competition Act. Readers should exercise caution in interpreting the Bureau’s assessment. Enforcement decisions are made on a case‑by‑case basis and the conclusions discussed in the Position Statement are specific to the present matter and are not binding on the Commissioner of Competition.

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