Ottobock’s 2017 acquisition of Irvine-based prosthetics maker Freedom Innovations is being rolled back after three years, due to anti-competition issues.
The Germany-based parent company said this month it would sell a significant portion of Freedom’s portfolio to Proteor USA, a subsidiary of France-based Proteor Group.
Terms of the financial transaction were not disclosed.
Prosthetic knees with microprocessors made by Freedom offer more rapid response to stumbles and falls. They are considered the best option for active patients and those in need of more stability.
When the deal was made in 2017, Ottobock, the No. 1 seller of prosthetics in the U.S., was able to acquire Freedom, the No. 3 player. Combined, the companies count more than 80% of the market, according to regulatory filings.
The transaction was not required to be reported under antitrust laws at the time and the U.S. Federal Trade Commission said it did not become aware of the transaction until after it had closed.
Last November, the FTC ruled the acquisition lessened competition and would likely lead to higher prices and less innovation, and thus ordered Ottobock to divest Freedom’s “entire business with limited exceptions.”
Anticompetitive Complaints
The FTC said in a statement the order marks the first time the current Commission ordered an acquisition be divested after its completion.
“The Commission is committed to ensuring competitive markets for the benefit of consumers, and there will be times when it has to act after a merger has been consummated,” FTC Chairman Joseph Simons said in the statement.
Ottobock reported 1 billion euros in worldwide sales in 2019, an 8% increase from the year before.
Proteor will acquire Freedom’s microprocessor knee, ankle and feet products, in addition to its teams in Irvine, Utah and Germany.
The deal, subject to the final approval of the FTC, is expected to close by the end of the year.
