The Federal Trade Commission (FTC) has initiated legal action to prevent GTCR BC Holdings, LLC from acquiring Surmodics, Inc. The FTC claims the merger would consolidate over half of the market for outsourced hydrophilic coatings, which are critical for medical devices like catheters and guidewires.
Daniel Guarnera, Director of the FTC’s Bureau of Competition, stated, “Medical device makers rely on high-quality coatings in designing and bringing to market life-saving devices, such as neurovascular catheters. This merger threatens to disrupt competitive dynamics that have ultimately benefited patients. Today, the FTC is stepping in to protect patients from this unlawful acquisition.”
GTCR holds a majority stake in Biocoat, Inc., currently the second-largest provider of these coatings. Surmodics leads the market as the largest provider. The FTC argues that merging these companies would reduce competition and lead to higher prices and less innovation.
Hydrophilic coatings are essential for safely maneuvering medical devices within tight body spaces without causing damage. They are used in various medical procedures involving neurovascular and cardiovascular interventions.
The complaint highlights how both companies monitor each other's strategies closely and compete aggressively for original equipment manufacturers (OEMs). This rivalry has resulted in improved quality and lower prices for their products.
According to the FTC's complaint, new competitors are unlikely to emerge due to the specialized expertise required and significant investment costs involved in producing hydrophilic coatings.
The FTC's decision to issue an administrative complaint was unanimous with a 4-0 vote. A statement from Commissioner Rebecca Kelly Slaughter is expected soon. The case will be filed in U.S. District Court for the Northern District of Illinois as part of efforts to halt the transaction pending further proceedings.
The Mergers I Division of the FTC’s Bureau of Competition conducted this investigation.
The administrative complaint signifies that there is "reason to believe" a law may have been violated, warranting public interest intervention through formal hearings before an administrative law judge.
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