A member of the US Federal Trade Commission says that the agency should review its 2012 decision to approve the acquisition of a small ventilator company by medical device maker Covidien Ltd, a deal that might have stymied a government effort to produce the machines.
FTC Commissioner Rebecca Kelly Slaughter, a Democrat at the Republican-controlled commission, said on Monday she wants to know more about what the companies disclosed to the agency when the FTC granted antitrust approval of the merger without an in-depth investigation.
The New York Times on Sunday reported that US health officials, worried about a shortage of ventilators more than a decade ago, contracted a small California device maker, Newport Medical Instruments Inc, to produce inexpensive, easy-to-use machines to add to the national stockpile.
Newport planned to sell the devices for about one-third of the price that other companies were charging.
Covidien, which also made ventilators, agreed to buy Newport for US$108 million, and then sought to get out of the contract, the Times reported.
The government agreed to cancel the agreement.
The failure of the project to produce ventilators raises questions about whether Covidien bought Newport to block competition from a rival product and protect its own ventilator business and whether the transaction received the appropriate scrutiny from federal antitrust officials.
Antitrust enforcers are paying increasing attention to whether companies are buying emerging rivals as a way to eliminate emerging threats to their businesses, sometimes by shutting them down.
FTC Chairman Joe Simons in February said that the agency would investigate small acquisitions by the biggest US technology companies to determine if the deals were anticompetitive.
Medtronic PLC, which later bought Covidien in 2014, denies the Newport deal shut down a competitor.
Ben Petok, director of corporate communications at Medtronic, said that Covidien and Newport were not direct competitors, and Medtronic continues to sell Newport ventilators today.
The government canceled the ventilator contract when both parties concluded there were technical issues that prevented Newport from completing the project and obtaining regulatory clearance, Petok said.
Medtronic is now ramping up production of ventilators, including in collaboration with Elon Musk’s Tesla Inc.
While in-depth merger investigations can last a year or longer, the FTC approved Covidien’s purchase of Newport a month after it was announced under a fast-track process known as “early termination.”
FTC spokeswoman Cathy MacFarlane declined to comment.
Slaughter, who is one member of the five-member FTC, said she wants to know what information the agency analyzed when it made that decision.
“When we get new information that causes us to question our original analysis, then we should absolutely go back and take a second look to find out whether there’s something we should have done differently or better,” she said.
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