Wednesday, October 14, 2009

Pfizer’s Acquisition of Wyeth Clears Antitrust Hurdles

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Pfizer, Inc.’s proposed $68 billion acquisition of Wyeth was conditionally approved by the Federal Trade Commission (FTC) today. The agency signed off on the combination of the pharmaceutical giants, subject to divestitures aimed at preserving competition in multiple U.S. markets for animal pharmaceuticals and vaccines.

The FTC alleged that, if the acquisition were to proceed as proposed, it could have had anticompetitive effects in 21 U.S. markets for vaccines, antibiotics, and other treatments for animals. It was determined, however, that the transaction did not raise anticompetitive concerns in the markets for human pharmaceuticals.

In announcing the complaint and proposed consent order, the FTC took the somewhat unusual step of issuing a separate statement. Commission statements are more commonly issued when the agency seeks to explain a decision not to take an action or when there are dissenting views. In this matter, there were no dissents. Only two commissioners approved the proposed settlement, with Commissioners Pamela Jones Harbour and William E. Kovacic recused.

The statement was issued by the Commission to explain [the] decision, provide greater visibility into this important investigation, and, in the event that there are future such transactions, describe the framework . . . used in [the] analysis.”

The Commission’s statement noted that the transaction involved the combination of the largest prescription pharmaceutical company in both the United States and the world (Pfizer) and the twelfth-largest prescription pharmaceutical company in the United States (Wyeth). It explained the agency’s investigation into the competitive effects analysis of the acquisition with respect to markets for human pharmaceuticals, including Alzheimer’s disease treatments.

While it was determined that the merger was not likely to substantially reduce competition or potential competition in any relevant human health market in which Pfizer and Wyeth might compete, the Commission expressed its intention to monitor the markets and continue to evaluate future transactions “to ensure that any merger or acquisition does not undermine the pharmaceutical industry’s competitiveness.”

International Approvals

Canada’s Competition Bureau also approved the transaction today, subject to the divestiture of a significant number of animal health products. The U.S. and Canadian approvals are the last significant antitrust hurdles for the acquisition. Today’s settlements follow clearances from competition authorities in Europe in July, and more recently in China and Australia in September. Approval in each of these jurisdictions was also conditioned on the divestment of certain animal health assets. The FTC’s announcement noted that the U.S. agency’s cooperation with its foreign counterparts.

Details of the complaint and proposed consent order, In the Matter of Pfizer
Inc. and Wyeth
, FTC Dkt. C-4267, appear on the FTC website and will appear at CCH Trade Regulation Reporter ¶16,376.

The statement of the Canada Competition Bureau appears on the Competition Bureau's website.

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