The Justice Department is investigating whether acquisitions by Medtronic PLC limited competition in ventilator manufacturing, according to people familiar with the matter, an antitrust probe that emerged from complaints about device shortages during the coronavirus pandemic.
Medtronic has received a civil subpoena from the Justice Department formally requesting more information, the people said.
The probe is centered on two related acquisitions that date to 2012, when Covidien PLC, a device maker that sold ventilators, bought Newport Medical Instruments, a small California-based manufacturer of ventilator systems, for $108 million.
Newport had secured a contract with the federal government in 2010 to develop and supply low-cost ventilators, but the project stalled after Covidien bought Newport, and the two sides eventually agreed to end the contract before any ventilators were delivered.
Nearly three years after Covidien bought Newport, Medtronic bought Covidien in a roughly $50 billion deal, inheriting Newport in the process. Both deals received antitrust clearance from the Federal Trade Commission.
"Medtronic is cooperating fully with DOJ's review of the 2012 Covidien-Newport transaction," Medtronic spokesman Ben Petok said, adding that the deal was appropriately assessed and approved by the FTC.
Mr. Petok said the ventilator market remains competitive, "with at least 10 major players in which the top five account for approximately 50% market share. Indeed, Covidien purchased Newport to expand its ventilator portfolio in a highly competitive and fractured market, and, rather than discontinue the Newport family of ventilators, Medtronic continues to market Newport ventilators today."
A Justice Department spokeswoman didn't respond to requests for comment.
Fears of a ventilator shortage in the spring sent states and hospitals scrambling for whatever supplies they could secure to treat patients suffering the most severe symptoms of Covid-19. The demand also threatened to exhaust a federal stockpile of the lifesaving machines, spurring the Trump administration to sign contracts with manufacturers, including Medtronic, to ramp up supplies quickly. Some of the new ventilators came from nontraditional sources such as auto makers Ford Motor Co. and General Motors Co., which shifted some of their manufacturing capabilities to ventilators in the spring.
Medtronic boosted production of new ventilators in response to a surge in demand from the pandemic, including a partnership to produce some at a Foxconn Technology Group plant in Wisconsin. Medtronic said sales of its ventilators more than doubled in the quarter ended July 31 to meet higher global demand.
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