The FTC ordered Otto Bock to divest from the acquired prosthetic manufacturing company with limited exceptions.
Retained by the Federal Trade Commission
The Federal Trade Commission issued a complaint related to the acquisition of Freedom Innovations (Freedom) by Otto Bock HealthCare North America Inc. (Otto Bock) in September 2017. The FTC retained Cornerstone Research and Christine Hammer, a certified public accountant and senior advisor with Cornerstone Research.
In a hearing before the Chief Administrative Law Judge, Ms. Hammer provided testimony related to:
Ms. Hammer concluded that Freedom did not meet any of the three circumstances to be considered a failing firm under the Merger Guidelines. She found that Freedom would have been able to meet its financial obligations in the near future and there was no evidence that Freedom initiated or seriously considered a Chapter 11 reorganization. She also determined that Freedom did not make “good faith” efforts to elicit reasonable alternative offers during the sales process.
With regard to alleged merger-specific efficiencies, Ms. Hammer opined that Otto Bock had not presented any verifiable efficiency claims. Because Otto Bock only presented ambiguous assertions, it was not possible to evaluate the merger specificity of the claims. The efficiencies as alleged were therefore not cognizable under the Merger Guidelines.
In an April 2019 decision, as a remedy, the Chief Administrative Law Judge ordered Otto Bock to fully divest Freedom to a FTC-approved acquirer, with limited potential exceptions to a complete divestiture of all of Freedom. The Chief Administrative Law Judge cited Ms. Hammer’s expert report and testimony throughout his decision.
In November 2019, the FTC issued its opinion, stating “We hold that, to fully restore the competition lost from the Acquisition, Respondent must divest Freedom’s entire business with the limited exceptions granted by the ALJ. We enter an order consistent with this Opinion.”