June 7, 2005
Antitrust and High Tech: The Johnson & Johnson and Guidant merger
Antitrust authorities are going to be sorely tested by the new wave of mergers in the high tech industries. They are going to be asked to get a bead on very fast moving targets. Consider the Johnson & Johnson acquisition of Guidant Corporation. J&J is much larger, with $48 B in revenues to Guidant's $4B, and some of Guidant's products will fill holes in J&J's product line. But there is the matter of stents. There are only two companies that can sell drug coated stents and J&J is one of the two with 35% of the market. There are three other companies seeking regulatory approval to offer stents and Guidant is one of the three. So in the stent market, the merger will give J&J 50% of the market. What do regulators do? Block the deal; make Guidant sell the stent business before the merger; or let it go, assuming that the market and technology is evolving too fast to make any decisions on market power.
June 7, 2005 | Permalink
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