The ACCC says it has outlined "significant preliminary competition concerns" with Cochlear’s (ASX:COH) proposed acquisition of Oticon Medical in a statement of issues published today.
Cochlear is proposing to acquire shares in and certain assets of Demant’s hearing implants business, Oticon Medical.
Cochlear and Oticon Medical manufacture and supply non-surgical bone conduction devices, surgical bone anchored devices, and cochlear implant hearing devices.
There are few suppliers of these devices globally.
The ACCC says it is concerned the proposed acquisition would substantially lessen competition in already highly concentrated markets.
“Cochlear is by far the largest supplier of surgical bone anchored devices and cochlear implants in Australia. It is also an important supplier of non-surgical bone conduction devices,” said ACCC chair Gina Cass Gottlieb.
“Although Oticon Medical has a much smaller presence in Australia, we have significant concerns that the proposed acquisition will remove one of Cochlear’s few competitors in the supply of these three types of hearing devices in Australia.”
“These devices are critically important in providing choice to consumers with hearing loss about the way they manage their hearing needs,” said Ms Cass-Gottlieb. “Market feedback has indicated that demand for these devices is likely to increase and so it is important to ensure acquisitions in this market do not lead to higher prices or reduced innovation over time.”
The ACCC says it is also concerned about the impact of the proposed acquisition on incentives to innovate.
“Market feedback indicates brand awareness is important to the clinicians and surgeons that recommend these devices to Australian patients. In addition to significant technical and regulatory barriers, new entrants would need to overcome clinicians’ reluctance to switch to new or unknown providers,” said Ms Cass-Gottlieb said.
"In the statement of issues, the ACCC has also outlined the issues it is considering that are relevant to the likely future without the acquisition. Demant has publicly announced its intention to exit its hearing implants business," said the regulator.
The ACCC is inviting feedback on the public statement of issues by 22 December 2022.