The ACCC has brought a cartel case against biologics company Cryosite for agreeing to coordinate with competitor Cell Care prior to the completion of their merger agreement.
The ACCC claims the agreement amounted to cartel conduct because it restricted Cryosite’s supply of cord blood and tissue banking services and allocated potential customers from Cryosite to Cell Care.
The ACCC said senior executive for the companies — including Stephen Roberts, former Chairman of Cryosite, and Andrew Kroger, director of Cryosite and brother of Victorian Liberal Party president Michael Kroger — negotiated the terms of the asset sale agreement. No charges were brought against them.
The case is the first in Australia over so-called gun jumping, in which parties to a merger begin coordinating before the merger process, including antitrust review, has been completed. Competition regulators around the world have been tough on gun jumping. In April, the European Commission handed down the largest gun jumping fine ever of €124.5 million against French telecom Altice for beginning its acquisition of PT Portugal before the deal was approved.
“When parties implement a transaction before the regulatory approval process is finalised, they undercut the competitive process. Gun jumping undermines the effective functioning of the ACCC and the merger process,” ACCC Chair Rod Sims said.
Cryosite and Cell Care were the only private suppliers of cord blood and tissue banking services in Australia when the sale agreement was signed.
The ACCC announced in December that it would not decide on whether to grant clearance for the deal, but that it was continuing to investigate the transaction.
“The ACCC is continuing to investigate the circumstances surrounding entry into the agreement and the closing of Cryosite’s cord blood and tissue collection operations,” Sims said.
“We are concerned by the closure of Cryosite’s cord blood and tissue marketing, collection and processing operations for new customers, and the failure of the parties to approach the ACCC for clearance.”
“While parties are not obliged to approach the ACCC for clearance, it is concerning that an acquisition in a highly concentrated market such as this would not prompt the parties to contact the ACCC,” Sims said.
In January, Cryosite announced the deal would not be completed. The ACCC said it has not re-entered the market and has retained the $500,000 it received from Cell Care.
Cryosite did not immediately respond to requests seeking comment on the lawsuit.
The ACCC is seeking penalties, costs and declarations.
The ACCC is represented by Corrs Chambers Westgarth.
The case is ACCC v Cryosite Limited.
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