Ottobock expresses disappointment as US Trade Commission prepares to unravel major acquisition
Following German prosthetic giant Ottobock’s acquisition of California-based Freedom Innovations in September 2017 and subsequent anticompetitive challenge by the US Federal Trade Commission (FTC), a judge’s Initial Decision has supported the FTC’s position to unravel the merger.
The FTC released the Administrative Law Judge D. Michael Chappell’s Initial Decision on the matter on the 7th May, recommending to the FTC Commission the divestiture of certain assets of Freedom Innovations.
Specialising solely on the development of lower limb prosthetic solutions, Freedom Innovation was founded in 2002 and was quickly recognized for innovative, patented product designs.
The acquisition of Freedom Innovations – the number three player in the US prosthetic market – by Ottobock – the number one player – aimed to expand Ottobock’s market share in the USA and close a gap in its product portfolio.
Stating both companies would benefit from their combined sales power and portfolios, Ottobock signed a binding purchase agreement with Freedom Innovations previous owner, private equity company Health Evolution Partners in September 2017.
The FTC, however, challenged the merger, arguing that the combination would create an anti-competitive position within microprocessor-controlled knee products for patients.
The ruling by FTC Administrative Law Judge Chappell will mean Ottobock HealthCare North America Inc. must divest the recently acquired Freedom Innovations to an FTC-approved buyer within 90 days if the decision becomes final, which will happen 30 days after the decision is served on the parties unless an appeal is filed.
Following the FTC’s announcement, Ottobock expressed disappointment over the Initial Decision, emphasising that it acquired Freedom Innovations in September of 2017 with the goal of strengthening the prosthetic product choices and technology for the benefit of amputees and consumers.
“Ottobock is committed to serving customers by providing them with a selection of the most innovative products to meet their needs. As we have throughout our 100-year history, we will persist in exploring and advancing all efforts necessary to ensure patients have access to the smart technology and care that they deserve, and will actively pursue strategies that deliver on this mission,” says Brad Ruhl, Managing Director of Otto Bock HealthCare North America.
The leading German prosthetics, orthotics and mobility manufacturer asserted it “will continue to work in a collaborative manner with the FTC to promptly reach a mutually beneficial resolution.”
Striking a more defiant tone, a statement from Dave Reissfelder, CEO of Freedom Innovations, said: “It is important to know that this latest development is just that – a development in the case. It is not a final decision and it does not decide the ultimate outcome of the case.
“We do not know when this case will be settled as a final matter, but this latest interim step has no bearing on and does not impact Freedom’s operations, products, customer relationships or other agreements. We will continue to compete vigorously and operate as an independent entity. The structure, resources, personnel – and most importantly, the mission – of Freedom remain unchanged.”