Pfizer-Wyeth Merger Questioned on Innovation and Bail-Out Financing

Feb 12 2009
Testimony and Interventions

The American Antitrust Institute presented U.S. Attorney General Eric Holder and the Commissioners of the Federal Trade Commission with an analysis of the proposed merger between two leading pharmaceutical companies: Pfizer Pharmaceuticals and Wyeth Laboratories.  Drafted by two esteemed former heads of the FTC’s Bureau of Economics, Professors William Comanor of the University of California and F.M. Scherer of Harvard, the paper calls attention to possible effects of the merger on innovation in the drug industry and to macroeconomic issues that are not typically the focus of antitrust analyses, namely that the financing depends substantially on TARP funds intended to stimulate the economy through increased credit flows.  

The memorandum suggests that the proposed merger is not likely to benefit the public and will, to the contrary, threaten the future competitiveness and creativity of the domestic pharmaceutical industry. It concludes, “A careful and skeptical investigation by the responsible antitrust agency is very much in the national interest.”

In delivering the paper, AAI President Bert Foer urged the antitrust authorities to take a broad view of the merger and not to limit their attention to direct overlaps of products. Foer stressed that the handling of this merger will send an important message as to whether the new administration will seriously question large mergers or whether it will succumb to anti-consumer arguments favoring consolidation as a tactic for coping with economic stress. It is now understood that this merger is being investigated by the Federal Trade Commission.

Read the memorandum here.