In a statement of objection ("Abmahnung") issued yesterday, the German Federal Cartel Office (FCO) expressed competition concerns regarding the proposed acquisition, which could lead to a prohibition. This statement of objection is not a definite prohibition of the transaction. Phonak is in contact with the FCO in order to make the combination possible through additional measures.
The Phonak Group has received all but one of the required clearances from the merger control authorities relating to the closing of the acquisition of the ReSound Group; only the approval of the German FCO is outstanding. Yesterday, the FCO forwarded its appraisal of the investigation to Phonak. In the "statement of objections" delivered to Phonak, the FCO indicated its intention to prohibit the combination. This is not a final decision, and Phonak will attempt to make the acquisition possible by offering additional measures.
Phonak is surprised by the recent developments communicated by the FCO. The concerns of the FCO are not motivated by a fear that Phonak as an individual competitor could obtain a dominant market position. Rather, the FCO claims that there will be an oligopoly (collective market dominance) in the German hearing aid market as a result of the combination. Phonak is convinced that competition in Germany is very intense today, and that this situation will not change after the closing of the combination.
The FCO will take its final decision in April 2007. Based on the documentation currently available, Phonak will continue its efforts to make the acquisition possible, and will determine its options and decide on the way forward after the final decision has been rendered.
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German Federal Cartel Office Issues Statement of Objection Relating to Phonak's Acquisition of the ReSound Group
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