[Federal Register Volume 63, Number 194 (Wednesday, October 7, 1998)]
[Notices]
[Pages 53919-53920]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-26855]
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FEDERAL TRADE COMMISSION
[File No. 981-0324]
Medtronic, Inc.; Analysis to Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
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SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair or deceptive acts or
practices or unfair methods of competition. The attached Analysis to
Aid Public Comment describes both the allegations in the draft
complaint that accompanies the consent agreement and the terms of the
consent order--embodied in the consent agreement--that would settle
these allegations.
DATES: Comments must be received on or before December 7, 1998.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th St. and Pa. Ave., NW, Washington DC 20580.
FOR FURTHER INFORMATION CONTACT:
William Baer, FTC/H-374, Washington, DC 20580, (202) 326-2932 or Ann
Malester, FTC/S-2308, Washington, DC 20580, (202) 326-2820.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of
the Commission's
[[Page 53920]]
Rules of Practice (16 CFR 2.34), notice is hereby given that the above-
captioned consent agreement containing a consent order to cease and
desist, having been filed with and accepted, subject to final approval,
by the Commission, has been placed on the public record for a period of
sixty (60) days. The following Analysis to Aid Public Comment describes
the terms of the consent agreement, and the allegations in the
complaint. An electronic copy of the full text of the consent agreement
package can be obtained from the FTC Home Page (for October 1, 1998),
on the World Wide Web, at ``http://www.ftc.gov/os/actions97.htm.'' A
paper copy can be obtained from the FTC Public Reference Room, Room H-
130, Sixth Street and Pennsylvania Avenue, NW, Washington, DC 20580,
either in person or by calling (202) 326-3627. Public comment is
invited. Such comments or views will be considered by the Commission
and will be available for inspection and copying at its principal
office in accordance with Section 4.9(b)(6)(ii) of the Commission's
Rules of Practice (16 CFR 4.9(b)(6)(ii)).
Analysis of Proposed Consent Order to Aid Public Comment
The Federal Trade Commission (``Commission'') has accepted, subject
to final approval, an agreement containing a proposed Consent Order
from Medtronic, Inc. (``Medtronic''). The proposed Consent Order
contains a number of provision designed to remedy the anticompetitive
effects resulting from Medtronic's acquisition of Physio-Control
International Corporation's (``Physio-Control'') automated external
defibrillator business and its ownership interest in SurVivaLink
Corporation ``SurVivaLink), a direct competitor of Physio-Control.
The proposed Consent Order has been placed on the public record for
sixty (60) days for reception of comments by interested persons.
Comments received during this period will become part of the public
record. After sixty (60) days, the Commission will again review the
agreement and the comments received and will decide whether it should
withdraw from the agreement or make final the proposed Order.
On June 27, 1998, Medtronic entered into an Agreement and Plan of
Merger with Physio-Control to acquire all of the voting stock of
Physio-Control in exchange for Medtronic voting stock valued at $530
million. The proposed compliant alleges that the transaction, if
consummated, would constitute a violation of Section 7 of the Clayton
Act, as amended, 15 U.S.C. 18, and Section 5 of the FTC Act, as
amended, 15 U.S.C 45, in the market for the research, development,
manufacture and sale of automated external defibrillators.
Automated external defrillators are portable, automated devices
used in emergency situation, by persons with limited medical training,
such as policemen, firemen and lifeguards, to treat people suffering
from sudden cardiac arrest. The market for automated external
defibrillators is highly concentrated with only three significant
players in the United States: Physio-Control, SurVivaLink and Hewlett-
Packard/Heartstream.
The relevant geographic market is the United States. Only companies
that have received U.S. Food and Drug Administration approval to sell
their devices in the United States may supply automated external
defibrillators to U.S. customers.
In addition, new entry into the market for automated external
defibrillators is unlikely and would not occur in a timely manner to
deter or counteract the adverse competitive effects of Medtronic's
acquisition of Physio-Control. Entry into this market is unlikely and
would not be timely because of the time and expense required to design
and develop a competitively viable product, obtain approvals from the
U.S. Food and Drug Administration, and establish a sales and
distribution network.
Medtronic's acquisition of Physio-Control raises serious
competitive concerns in the market for automated external
defibrillators because of its ownership interest in SurVivaLink,
Physio-Control's direct competitor. Pursuant to an investment agreement
entered into between Medtronic and SurVivaLink, Medtronic was given the
explicit right to name a member to SurVivaLink's Board of Directors and
to receive certain non-public competitively sensitive information.
Medtronic also has the right to receive certain non-public
competitively sensitive information under Minnesota law. In addition,
Medtronic has the right as a shareholder in SurVivaLink to vote on all
matters requiring a shareholder vote. Medtronic's entanglements with
SurVivaLink and its acquisition of Physio-Control would cause
anticompetitive harm in the market for automated external
defibrillators by potentially eliminating direct competition,
increasing the likelihood of coordinated interaction, reducing
innovation and ultimately increasing prices for automated external
defibrillator customers.
The proposed Consent Order remedies the acquisition's
anticompetitive effects in the market for automated external
defibrillators by making Medtronic a passive investor in SurVivaLink
and by preventing Medtronic from exercising its right to name a member
to SurVivaLink's Board of Directors. The proposed Consent Order also
prevents Medronic from exercising its rights, pursuant to its
investment agreement with SurVivaLink or under Minnesota law, to
receive non-public competitively sensitive information relating to
SurVivaLink.
The proposed Consent Order also limits Medtronic's ability to vote
on any matter that requires a vote of SurVivaLink's shareholders by
requiring Medtronic to delegate its voting rights to be voted in a
manner proportional to the votes of all other shareholders. The propose
Consent Order would also prohibit Medronic from proposing any corporate
action or participating in any business decisions of SurVivaLink.
Additionally, the proposed Consent Order prevents Medronic from
increasing its ownership interest in SurVivaLink without prior written
notice to the Commission. Finally, the proposed Consent Order requires
Medtronic to return to SurVivaLink any documents that contain any trade
secrets, commercial information or financial information relating to
SurVivaLink.
Under the provisions of the proposed Order, Medtronic is also
required to provide the Commission with a report of compliance with the
provisions of the order within sixty (60) days following the date this
Order becomes final, and annually thereafter until such time as
Medtronic sells or transfers all of its ownership interest in
SurVivaLink or Physio-Control.
The purpose of this analysis is to facilitate public comment on the
proposed Order, and it is not intended to constitute an official
interpretation of the agreement and proposed Order or to modify in any
way their terms.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 98-26855 Filed 10-6-98; 8:45 am]
BILLING CODE 6750-01-M
