NEW YORK ( The Deal) -- Detailed and aggressive plans by United Kingdom-based Synergy Health to enter the U.S. market for medical sterilization services put the company and its would-be merger partner Steris (STE) on shaky ground in defending their $1.9 billion merger against the Federal Trade Commission legal challenge issued May 29, according to some antitrust lawyers.
The FTC in its complaint seeking to block the acquisition argues that Mentor, Ohio-based Steris would be able to eliminate Synergy Health's introduction of a potentially disruptive new technology into the sterilization market by acquiring its rival.
According to the FTC's complaint, Synergy Health had mapped out plans to offer sterilization services based on X-ray technology that will compete directly with gamma radiation-based services being used.
The two companies are the second- and third-largest sterilization companies in the world, though Synergy Health has only a small presence in the United States. The largest provider is Sterigenics International.
Steris and Synergy Health argue that their services are complementary.
Sterilization is essential to the manufacture of many health care products and is required by the Food and Drug Administration to eliminate bacteria and other microorganisms from products such as implantable medical devices and human tissue products.
There are three primary methods of sterilization: gamma radiation, e-beam radiation and EO gas.
Gamma radiation, which sterilizes by exposing a product to the radioactive isotope Cobalt 60, is favored by makers of implantable medical devises and other dense products that require deep penetration to be sterilized. E-beam doesn't penetrate as deeply as gamma radiation, and EO gas is effective only for products in which the gas can make contact with the entire product surface.
X-ray technology that Synergy Health has planned to introduce offers comparable and possibly superior depth of penetration as gamma, the FTC said.
"For many products, X-ray is the only functional alternative to gamma," according to the complaint.