By Foo Yun Chee and Bart H. Meijer
(Reuters) -EU antitrust regulators have started an investigation into whether Zoetis (NYSE:ZTS) blocked the market launch of a rival pain medicine for dogs, the European Commission said on Tuesday, a move that could result in a hefty fine for the U.S. pet products maker.
Antitrust regulators on both sides of the Atlantic have recently cracked down on Big Tech and Big Pharma acquiring start-ups or small rivals in order to shut them down in what is known as killer acquisitions.
Zoetis' Librela is currently the first and only monoclonal antibody medicine approved in Europe to treat pain associated with osteoarthritis in dogs.
Zoetis said the matter referred to an experimental compound from an acquisition completed seven years ago.
"We believe that both the acquisition of the compound and our subsequent decision to cease development of it were sound, rigorous, and lawful," the company said in an emailed statement.
"While we cannot comment in detail on the specifics of the investigation, we will continue to cooperate with the European Commission throughout this process and are confident it will conclude that any potential concerns are unfounded."
Zoetis shares were down about 1% at 1515 GMT after initially falling 1.4% on the news of the EU antitrust probe.
The EU competition watchdog said the investigation would focus on Zoetis' acquisition of a late-stage pipeline product to treat dog pain, which was going to be commercialised in Europe by a third party.
"Zoetis may have engaged in exclusionary behaviour contrary to EU antitrust rules by terminating the development of this alternative pipeline product and refusing to transfer this pipeline medicine to the third party which in the EEA had exclusive commercialisation rights," the Commission said in a statement.
EEA refers to the 27-country European Union, Iceland, Liechtenstein and Norway.
The EU executive said this was the first formal investigation into a potential abuse relating to the exclusionary termination of a pipeline product which was to be commercialised by a third party.
Companies risk fines as high as 10% of their global turnover for breaching EU antitrust rules.