FTC Alleges Harm to Innovation Competition and Sets Aside Two Controversial Merger Settlements; DOJ Accepts a Weakened Competitor Defense in One Merger and Accepts Divestitures in Another
The Trump Administration continues to differentiate its merger enforcement policy from the Biden Administration's, largely but not entirely suggesting a more balanced evaluation of mergers and greater acceptance of divestitures to address competitive concerns. In the past few months:
- The Federal Trade Commission ('FTC' or 'Commission') challenged a proposed combination of Edwards Lifesciences Corporation ('Edwards') and JenaValve Technology ('JenaValve'), two medical device companies, neither of which has yet commercialized a product in the alleged 'overlapping' market.
- The Department of Justice ('DOJ') abandoned, prior to trial, the previous administration's challenge to American Express Global Business Travel's ('GBT') proposed acquisition of CWT Holdings ('CWT'), apparently accepting the parties' argument that CWT was unlikely to continue to be a significant competitor in the future, absent the merger.
- The FTC set aside two merger settlements of the previous administration which it deemed contrary to the public interest.
- The DOJ settled, prior to trial, the previous administration's challenge to UnitedHealth's proposed acquisition of Amedisys, Inc.
FTC Challenges Edwards Lifesciences' Acquisition of JenaValve Technology, Alleging Harm to Innovation Competition
The FTC is seeking a preliminary injunction to enjoin Edwards' proposed acquisition of JenaValve, pending the FTC's in-house administrative trial on the transaction. Edwards, through its ownership of JC Medical and JenaValve are both engaged in the development of a transcatheter aortic valve replacement ('TAVR') device for the treatment of aortic regurgitation ('AR'), a potentially fatal heart condition. Edwards and JenaValve are characterized as horizontal competitors because both firms have a product in clinical trials; however, neither firm has commercialized a TAVR-AR device nor has either firm received Food and Drug Administration ('FDA') approval to sell a TAVR-AR device. Nevertheless, the FTC challenged the proposed combination, alleging that it will eliminate existing head-to-head innovation and quality competition between the two firms in the market for TAVR-AR devices.
The FTC's willingness to litigate this matter is aggressive and novel. The FTC has raised innovation concerns in many merger matters, but outside of mergers involving pharmaceutical products, it rarely alleges merger-related harm in a market where neither party has commercialized a product in the 'overlapping' relevant market. (For a compendium of such cases for the period 1993-2022, see Bilal Sayyed, Actual Potential Entrants, Emerging Competitors and the Merger Guidelines.) The major innovation cases of the Biden Administration were more limited. The Commission's challenge builds on the Fifth Circuit's previous acceptance of the FTC's theory of harm to innovation in its criticized but ultimately successful challenge to Illumina Inc.'s consummated acquisition of Grail, Inc. (a vertical transaction). See Illumina (Grail) v. Federal Trade Commission, 88 F.4th 1036 (5th Cir. 2023) (vacating the Commission's order and remanding for reconsideration; the parties subsequently agreed to unwind the transaction). But in Illumina (Grail), both parties were already operating in their respective relevant and related markets. The FTC's previous challenge during the Biden Administration to Sanofi's proposed (and subsequently abandoned) acquisition of an exclusive license from Maze Therapeutics (2023) alleged the transaction would eliminate the introduction of a new (but nascent) competitive threat to Sanofi's existing monopoly product.
The FTC's competitive effects theory in Edwards/JenValve contrasts with the theory in the FTC's unsuccessful challenge to Meta Platforms' ('Meta') proposed acquisition of Within Unlimited ('Within') (in 2022/2023) and its unsuccessful challenge to Steris Corporation's proposed acquisition of Synergy Health ('Synergy') (in 2015). In both matters, only one of the merging parties was an active participant in the relevant market; the other, according to the FTC, was a potential future competitor. In Meta/Within, the Commission alleged that the proposed acquisition would eliminate the potential for future actual competition from Meta as an entrant to the market for Virtual Reality Dedicated Fitness Apps, but for the acquisition (The FTC also alleged that the acquisition would...
