Compass Lexecon advised Google during merger proceedings in multiple jurisdictions to acquire Fitbit

In December 2020, the European Commission (‘EC’) conditionally cleared the $2.1 billion merger between Google and Fitbit, following a Phase II investigation. Google and Fitbit showed limited horizontal overlap in their activities, as Fitbit is a small player in the rapidly growing smartwatch sector and Google does not sell smartwatches.

The investigations by the EC and the US Department of Justice (‘DoJ’) focused on theories of harm related to vertical foreclosure, as well as the aggregation of personal data which could be gathered by Google and used for advertising and other purposes. In particular, the EC expressed concerns that Google may restrict competitors’ access to Fitbit’s Web Application Programming Interface which would harm start-ups in the growing digital healthcare space. Similarly, Google could foreclose competing manufacturers of smartwatches by degrading their interoperability with smartphones that run on Google’s Android operating system.

Compass Lexecon provided economic advice to Google during merger proceedings before various competition authorities, including the European Commission, the US DoJ, the Australian Competition & Consumer Commission (ACCC), the Canada Competition Bureau, and the Japan Fair Trade Commission. Given concerns on the data aspect of the transaction, we conducted a 4-V (variety, volume, velocity, value) analysis of the Fitbit data. Our European and US teams cooperated on a quantitative analysis to assess the merged entity’s incentive to foreclose competing smartwatch vendors through degrading interoperability with Android. This “vertical math” analysis was the focus of multiple submissions to competition authorities, and the US team led several meetings with the US DoJ and the ACCC to address these regulators’ concerns regarding this potential theory of harm. We also produced an economic rebuttal in response to submissions by complainants to the deal.

Compass Lexecon’s European team included Thilo Klein, Miguel de la Mano, Christopher Milde, Tom Bowman, Manuel Zanoni, Rebecca Reichert, Tim Ciesla, Tara Ghobadian, Tianyu Chen, and Terhi Torronen, and closely cooperated with the CL US team that included Andres Lerner, Emmett Dacey, Joshua Waller, Janin Wimer, Michael Sabor, and Steve Stanis. The teams worked closely with Google’s counsel in various jurisdictions, including Robbert Snelders, Elaine Ewing, Leah Brannon, Christian Fischoeder, Paul Stuart, and Conor Opedebeeck-Wilson at Cleary Gottlieb; Darren Tucker at Vinson & Elkins; Wayne Leach at King & Wood Mallesons; Elisa Kearney at Davies; and Kaori Yamada at Freshfields Bruckhaus Deringer.