Baxter International Inc. (NYSE:BAX), a medical device manufacturer in the United States received a conditional approval from the European Commission regarding its proposal to acquire Gambro AB, manufacturer of dialysis equipment in Sweden..

baxter international European Commission

Baxter International’s sale of CRRT

According to the European Commission, the approval is subject to the completion of Baxter International Inc. (NYSE:BAX)’s sale of its Continuous Renal Replacement Therapy (CRRT) business, which provides services for patients suffering from acute kidney failure.

The European Commission was concerned that the transaction’s competitiveness in the market has been reduced. However, the commission said the commitments submitted by Baxter International Inc. (NYSE:BAX) resolve its concerns.

European Commission investigation findings

The investigation of the European Commission found that the combined company would have a high market share in a significant number of member states of the European Union, and it would not face sufficient competitive constraints from other suppliers. In addition, customers would face difficulties if they switch to alternative suppliers.

Baxter International Inc. (NYSE:BAX) addressed the concerns of the European Commission by divesting its CRRT business including its employees, supply agreement, intellectual property rights, product marketing authorizations, and customer portfolio.

In addition, the U.S.-based medical device manufacturer also offered to set up a line for the production of fluids used in CRRT at a location that will be chosen by the purchaser in any of the European Economic Area (EEA) or Switzerland.

European Commission on Baxter and Gambro’s merger

The European Commission said, “The proposed commitments completely remove the increment in market share that would have resulted from the transaction as originally notified and will enable the eventual purchaser of the CRRT business to operate a viable business in competition with Baxter and other market participants.”

Furthermore, the European Commission also evaluated the impact of the merger between Baxter International Inc. (NYSE:BAX) and Gambro AB in the hemodialysis market, another treatment method for kidney dialysis. Hemodialysis is used to treat patients with chronic kidney problems.

According to the commission, Baxter International Inc. (NYSE:BAX) and Gambro AB are not in close competition in the hemodialysis market, and the combined entity will continue to face strong competition from different players, particularly Fresenius Medical Care Ag & Co (ADR) (NYSE:FMS).

The European Commission concluded the transaction would not raise competition concerns based on the modified commitments submitted by Baxter International Inc (NYSE:BAX). “The decision is conditional upon full compliance with the commitments,” said the commission.