Australia’s competition watchdog is no longer opposing Cochlear’s planned buy of rival implants provider after its competing bone conduction business was carved out of the deal.
The Australian Competition and Consumer Commission (ACCC) flagged a challenge to the Cochlear’s planned $170 million acquisition of Oticon Medical from its Danish multinational parent company in 2022.
Oticon Medical is a close competitor of Cochlear and one of only three suppliers of non-surgical bone conduction devices that bypass parts of the ear that aren’t working to help users with advanced hearing loss.
The UK regulator formally knocked back the full deal last year based on similar concerns, casting doubt on an acquisition Cochlear had hoped to finalise by the end of 2022.
The challenges led to a restructured deal last year that removed the bone conduction solutions business, with Oticon’s loss making cochlear implant business to be acquired for a zero headline purchase price instead.
The ACCC on Thursday said it will not oppose the revised deal that will see Demant retain Oticon’s bone conduction solutions business and sell only its cochlear implants business to the Australian company.
“We concluded that Cochlear’s proposed acquisition of Oticon’s cochlear implants business was unlikely to substantially lessen competition in Australia,” ACCC Commissioner Stephen Ridgeway said.
“We were concerned that the original proposed acquisition would lead to higher prices, lower quality or service levels and less innovation in the supply of surgical and non-surgical bone conduction solutions.”
The European Union’s competition regulator has approved the revised deal as well, but the UK watchdog is yet to make a decision.
The Albanese government is currently reforming national competition policy through a new Treasury and outside expert taskforce providing iterative advice. The ACCC is continuing a push for new powers to monitor merger proposals and block potential acquisitions without the need to go to the Federal Court.
Cochlear has said it will continue to support Oticon Medical’s current base of around 20,000 cochlear implant recipient.
The Australian company said the deal will add around $10 million to its annual revenue and it will prioritise a return to profitability as quickly as possible after the deal closes.
Cochlear received undisclosed state government support in 2022 to expand its Sydney manufacturing facilities.
