Watchdog gives green light to Cochlear after nearly two years, imposing acquisition conditions

MedTech & Diagnostics News: Cochlear, Australian manufacturer and supplier of implantable hearing solutions has secured approval from the Australian Competition and Consumer Commission (ACCC) for the revised acquisition of the cochlear implants business of Oticon Medical from its parent company, Demant.

The ACCC took the reins in August 2022, commencing an informal review of Cochlear’s acquisition plans. Their concerns crystallised by December of the same year, as they flagged preliminary issues about potential competition constraints, especially regarding bone conduction solutions.

Seeking clarity, the ACCC probed further in January 2023, temporarily halting their review timeline. Across the Atlantic, the Competition and Markets Authority (CMA) in the United Kingdom reached a pivotal decision in June 2023, identifying the merger’s potential to significantly diminish competition in the bone conduction solutions market. Consequently, they imposed partial restrictions, prohibiting Cochlear from acquiring Oticon Medical’s bone conduction solutions arm while subjecting the cochlear implants business transfer to rigorous safeguards.

Cochlear and Oticon Medical revisited their acquisition proposal in response to concerns voiced by multiple jurisdictions. This resulted in a revised arrangement where Demant, Oticon Medical’s parent company, would retain control of the bone conduction solutions business while relinquishing the cochlear implants division to Cochlear.

The European Commission added its voice to the chorus in October 2023, granting approval under the EU Merger Regulation for Cochlear’s acquisition of Oticon Medical’s cochlear implants business, citing no discernible threats to competition.

Fast forward to February 2024, Cochlear made a calculated move by seeking informal merger clearance from the ACCC for its scaled-down acquisition strategy, solely targeting Oticon Medical’s cochlear implants arm. With renewed focus, the ACCC resumed its review in March 2024, buoyed by the alleviation of concerns surrounding bone conduction solutions.

Commenting on the modified transaction, ACCC Commissioner Stephen Ridgeway stated “The transaction has now been changed to remove the bone conduction solutions business, which addresses the significant concerns the ACCC had.”

However, the saga is not over, as the CMA has not yet made a decision on the execution of the proposed revised transaction.

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