9910095
B259499

UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

In the Matter of

SNIA S.p.A., a corporation.

Docket No. C-3889

COMPLAINT

The Federal Trade Commission ("Commission"), having reason to believe that Respondent SNIA S.p.A. ("SNIA"), a corporation subject to the jurisdiction of the Commission, has agreed to acquire 100% of the outstanding voting securities of COBE Cardiovascular, Inc., as well as certain cardiopulmonary and other cardiovascular assets and liabilities from COBE Laboratories, Inc. and other subsidiaries of Gambro AB ("Gambro"), a corporation subject to the jurisdiction of the Commission, in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C.  18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C.  45, and it appearing to the Commission that a proceeding in respect thereof would be in the public interest, hereby issues its Complaint, stating its charges as follows:

I. THE RESPONDENT

1. Respondent SNIA is a corporation organized, existing and doing business under and by virtue of the laws of Italy, with its principal place of business located at Borgonuovo 14, 20121 Milano, Italy.

2. Respondent is engaged in, among other things, the research, development, manufacture and sale of heart-lung machines.

3. Respondent is, and at all times relevant herein has been, engaged in commerce as "commerce" is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C.  12, and is a corporation whose business is in or affecting commerce as "commerce" is defined in Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C.  44.

II. THE ACQUIRED COMPANY

4. Gambro is a corporation organized, existing and doing business under and by virtue of the laws of Sweden, with its principal place of business located at Hamangatan 2, 10391 Stockholm, Sweden.

5. Gambro, through COBE Cardiovascular, Inc., COBE Laboratories, Inc. and other subsidiaries, is engaged in, among other things, the research, development, manufacture and sale of heart-lung machines.

6. Gambro is, and at all times relevant herein has been, engaged in commerce as "commerce" is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C.  12, and is a corporation whose business is in or affecting commerce as "commerce" is defined in Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C.  44.

III. THE ACQUISITION

7. Pursuant to a November 23, 1998 Asset and Stock Purchase Agreement, SNIA has agreed to acquire 100% of the outstanding voting securities of COBE Cardiovascular, Inc., as well as certain cardiopulmonary and other cardiovascular assets and liabilities from COBE Laboratories, Inc. and other subsidiaries of Gambro, for approximately $260 million ("Acquisition").

IV. THE RELEVANT MARKET

8. For purposes of this Complaint, the relevant line of commerce in which to analyze the effects of the Acquisition is the research, development, manufacture and sale of heart-lung machines. Heart-lung machines are life-sustaining medical devices used during open-heart surgery to replace the functions of the heart and lungs. Heart-lung machines are the durable equipment portion of an extracorporeal bypass system that circulates and provides oxygen to blood during surgery by shunting blood away from the heart, oxygenating the blood and returning it to the body.

9. For purposes of this Complaint, the United States is the relevant geographic area in which to analyze the effects of the Acquisition in the relevant line of commerce.

V. STRUCTURE OF THE MARKET

10. The market for the research, development, manufacture and sale of heart-lung machines is highly concentrated as measured by the Herfindahl-Hirschman Index ("HHI"). The post-acquisition HHI is 4,638 points, which is an increase of 1,554 points over the pre-acquisition HHI level. Gambro and SNIA are, respectively, the largest and third largest suppliers of heart-lung machines in the United States.

11. SNIA and Gambro are actual competitors in the relevant market for the research, development, manufacture and sale of heart-lung machines.

VI. BARRIERS TO ENTRY

12. Entry into the relevant market would not be timely, likely or sufficient to deter or counteract the adverse competitive effects described in Paragraph 13 because of, among other things, the difficulties involved in designing and developing a new product, obtaining U.S. Food and Drug Administration approval, developing a nationwide service and sales network and establishing a track record for product quality and reliability.

VII. EFFECTS OF THE ACQUISITION

13. The effects of the Acquisition, if consummated, may be substantially to lessen competition and to tend to create a monopoly in the relevant market in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C.  18, and Section 5 of the FTC Act, as amended, 15 U.S.C.  45, in the following ways, among others:

(a) by eliminating actual, direct and substantial competition between SNIA and Gambro in the relevant market for the research, development, manufacture and sale of heart-lung machines;

(b) by increasing the likelihood of coordinated interaction in the heart-lung machine market;

(c) by increasing the likelihood that customers of heart-lung machines would be forced to pay higher prices; and

(d) by increasing the likelihood that innovation will be reduced in the relevant market for the research, development, manufacture and sale of heart-lung machines.

VIII. VIOLATIONS CHARGED

14. The Acquisition agreement described in Paragraph 7 constitutes a violation of Section 5 of the FTC Act, as amended, 15 U.S.C. 45.

15. The Acquisition described in Paragraph 7, if consummated, would constitute a violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, and Section 5 of the FTC Act, as amended, 15 U.S.C. 45.

WHEREFORE, THE PREMISES CONSIDERED, the Federal Trade Commission on this twenty-eighth day of July, 1999, issues its Complaint against said Respondent.

By the Commission.

Donald S. Clark
Secretary

SEAL: