AstraZeneca hits U.K. antitrust roadblock with $39B Alexion buy despite U.S. FTC clearance

AstraZeneca investors breathed a sigh of relief last month when the U.S. antitrust watchdog cleared the company’s proposed $39 billion acquisition of Alexion Pharma. Turns out, that go-ahead was no guarantee of a regulatory free pass ahead.

Tuesday, the U.K.’s Competition and Markets Authority (CMA) said it has launched an anti-competition investigation into the AstraZeneca-Alexion deal.

The agency wonders whether the transaction would hurt competition “within any market or markets in the United Kingdom,” it said in a notice.

The CMA is now soliciting public comments until June 3 to help with its evaluation and aims to reach a decision by July 21. If, at that time, the agency found any reason to believe a “realistic prospect” of threats to competition, it may launch a more in-depth, phase 2 assessment that may last up to 24 weeks or even 32 weeks in special circumstances, according to the CMA rules.

For months, industry watchers have been watching for increased deal-making scrutiny from the U.S. Federal Trade Commission (FTC). In March, the U.S. antitrust authority launched a review of its current product-by-product approach to evaluating biopharma M&A. The FTC, now led by Democrats after last year's election, said a rise in mega deals such as those between Bristol Myers Squibb and Celgene could be contributing to high drug prices and anti-competitive behaviors such as pay-for-delay settlements.

But to pharma watchers’ surprise, the FTC last month blessed the Alexion takeover without raising any issues. Still, the FTC’s initiative includes a collaboration with competition authorities in other countries.

As Jeny Maier, a partner at law firm Axinn, Veltrop & Harkrider, pointed out during a recent interview, the FTC has to convince a federal judge to block a merger, while its counterparts elsewhere can block M&A deals by themselves. So if the FTC and other regulators—the CMA, for example—agreed that a proposed deal would hurt competition, the U.S. agency may be able to bypass the onerous legal fighting and get its intended outcome by simply letting other jurisdictions block the deal, she said.

For AZ's part, the drugmaker has pictured the Alexion deal as a way to establish a strong presence in rare disease and immunology beyond its current focus in oncology and cardiovascular and metabolic diseases. Both companies’ shareholders have approved the transaction. AZ has stated that it intends to wrap up the deal in the third quarter.

In addition to the U.S., the deal has snagged green lights from competition authorities in Brazil, Canada, Russia and Japan, among others, according to AZ. Besides the U.K., other notable missing decisions include the EU and China.

May 25, 2021

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