Stryker Corp. will have to divest ankle and finger implant businesses under a proposed agreement with federal trade regulators to allow a $4 billion deal to proceed with Wright Medical Group N.V., a Netherlands-based maker of various orthopedic products.
The Federal Trade Commission settlement requires both companies to divest all assets related to Stryker’s total ankle replacements and finger joint implant products. The agreement settles an FTC complaint alleging Kalamazoo-based Stryker’s planned acquisition of Wright Medical would “substantially lessen competition and tend to create a monopoly in the relevant markets.”
The FTC said Wright Medical and Stryker are the largest and the third-largest suppliers, respectively, in the U.S. of total ankle replacements and together would control 75 percent of the market.
The two will sell their total ankle replacements and finger joint implant businesses to DJO Global Inc., a Carlsbad, Calif. manufacturer of orthopedic products. The FTC’s proposed order includes the appointment of a monitor — France-based global advisory business Mazars — and allows the commission to appoint a divestiture trustee if the two companies fail to divest the product lines.
The five-member FTC voted unanimously to approve the complaint and accept a proposed consent order for public comment.
FTC Commissioner Rohit Chopra said in a statement that he wanted the agency to do more and “strengthen the conflict-of-interest and transparency provisions in our orders related to monitors across the FTC’s mission.”
“The agency’s order requires the monitor to simply self-report any potential conflicts of interest. While this is better than nothing, it is not adequate, particularly when the monitor is employed by a large firm that offers a wide array of consulting and compliance-related services to companies like the targets in this matter,” Chopra said. “I am skeptical that the Commission can truly remedy anticompetitive harm with complex settlements that require independent monitors. While many monitors certainly provide independent advice and analysis, it is critical that their actions are never distorted by any real or perceived conflicts of interest.”
Stryker (NYSE: SYK) did not immediately comment on the proposed settlement. The company last week reported increased sales and earnings for the third quarter after falling sharply in the prior three months and early weeks of the COVID-19 pandemic.