AKZO Nobel/Hoechst-Roussel Vet - Animal health business
Background
Transaction whereby Akzo Nobel through its wholly-owned subsidiaries, Intervet International BV and Intervet GmbH, acquires the shares and assets in the Hoechst Roussel Vet Group, the animal health business presently held by Hoechst and its wholly-owned subsidiary, Hoechst Roussel Vet Participations S.A.
The transaction concerns the production, distribution and sale of animal healthcare products. Animal health products can be divided into three core areas, namely (i) medicinal food additives, (ii) biologicals and (iii) pharmaceuticals. The parties only have overlapping activities in the sectors for veterinary pharmaceuticals and biologicals.
In the Commission’s view, for both veterinary pharmaceuticals and biologicals the geographic markets have been regarded as national because the sale of animal health products is still influenced by administrative procedures with different national registrations. In addition, competitors' market shares, prices of competing products and distribution systems differ widely between Member States.
Assessment
The Commission approved the concentration subject to substantial commitments to divest of veterinary pharmaceuticals and biological products. In the pharmaceutical sector, the parties are active in antimicrobials and endocrine treatment. In the Commission’s view, the concentration would have caused serious competition concerns by threatening to create or strengthen dominant positions in the markets for mastitis treatments as regards dry cow products based on cephalosporins in France. In the market for endocrine treatments, the operation raised concerns of collective dominance in the market for synthetic prostaglandins in Portugal and of single dominance in the market for gonadotrophins in Spain. Moreover, competition concerns with regard to possible range effects also arose as both parties hold strong positions in particular in France and Germany for different endocrine treatments.
In the biological sector, both parties are active in animal vaccines. In was concluded that the concentration would have caused serious competition concerns by threatening to create or strengthen dominant positions in: the market for pig vaccines; the market for horse vaccines; and the market for dog vaccines.
In order to address these concerns, the parties have committed to divest products in the markets where the Commission had serious competition doubts. The parties have agreed to license and transfer to a viable independent third party each product subject to competition concerns in a given national market. This commitment covers all know-how that has been received or generated by AKZO or by subsidiary Intermit relating to the product, the products’ trademark for commercialisation, the access to registration and supply agreement entered with the licensee for its needs with respect to the supply of the product. These undertakings will materially reduce the market shares of the merged entity in each market where competition doubts were identified by the Commission.
In view of the substantial undertakings submitted to by the parties, the Commission found that the modified concentration no longer raised serious doubts and declared it compatible with the Common market. (Case n° COMP/M.1681, Decision of 22 November 1999).
