Short Reads

Recent European Commission merger decisions signal an increased focus on innovation

Recent European Commission merger decisions signal an increased focus on innovation

03.07.2017 EU law

On 27 March 2017, the European Commission approved a merger between chemical companies Dow and DuPont subject to major remedies, including the divestment of DuPont's global R&D organisation. In this case, the Commission's review extended to the merger's potential impact on innovation "at the overall industry level". 

The Commission considered that innovation is a key competitive parameter in the pesticides industry. According to the Commission, post-merger, only three integrated players could effectively compete with Dow/DuPont at a global level throughout the entire (R&D) value chain (from discovering new active ingredients, to the manufacture and sale of final products). The Commission relied on evidence showing that the parties intended to cut back on R&D expenditure, and that the merged entity would have less incentives to innovate than Dow and DuPont would have separately. As a result, the Commission found that the merger would have significantly reduced "innovation competition" for pesticides, and called for the divestment of the vast majority of DuPont's global R&D organisation.

The importance of "innovation" as an assessment parameter under EU merger control law is not particularly new and is reflected in the Commission's horizontal merger guidelines (the Guidelines). The Guidelines, for example, recognise that a merger between two important innovators developing competing "pipeline" products (in a specific product market) may, under certain conditions, impede competition.

The assessment of such "pipeline overlaps" has played a role in numerous pharmaceutical merger decisions over the years. Traditionally, the Commission focused its review on pipeline products that have entered late phase (phase III) clinical trials. Such products have a higher likelihood of entering the market within a reasonably foreseeable timeframe. In recent years, however, the Commission has extended its review to products in the early stages of development, many of which may never be marketed. In Novartis/GSK Oncology, for example, the Commission analysed the merger's potential impact on the parties' overall clinical research programmes for ovarian and skin cancer treatments, including very early phase (phase I) pipeline products. More recently, on 9 June 2017, the Commission cleared a merger between J&J and Actelion, subject to commitments ensuring that the parties' phase II pipeline products would not be delayed or discontinued.

These developments show that – at least in innovation intensive industries – the Commission will continue to review the merging parties' full R&D portfolios in detail. This may require significant additional preparatory work (e.g. in terms of document collection and preparing economic analyses) before mergers are filed.

This article was published in the Competition Law Newsletter of July 2017. Other articles in this newsletter:

  1. Google gets a record EUR 2.42 billion antitrust fine for its shopping service
  2. ACM fines Dutch rail operator (NS) for an alleged abuse of dominance
  3. New Belgian Act on damage claims for competition law infringements

Team

Related news

02.01.2018 EU law
Court of The Hague confirms that the ACM can copy mobile phones during an inspection

Short Reads - On 22 November 2017, the District Court of The Hague dismissed a legal challenge that was brought against the Authority for Consumers and Markets (ACM) in preliminary relief proceedings. In the course of an inspection, the ACM had made a copy of (virtually) all data on the business mobile phones of six employees who worked for the company subject to the inspection. The Court ruled that the ACM was permitted to do so.

Read more

02.01.2018 EU law
Court of Justice: Suppliers of luxury goods may prohibit their authorised distributors from selling on third party internet platforms

Short Reads - On 6 December 2017, the Court of Justice rendered its much anticipated judgment in a dispute between a supplier of luxury cosmetics (Coty) and one of its authorised resellers. The central question was whether Coty is allowed under the competition rules to forbid its resellers to sell Coty products over third party internet platforms with visible logos (like eBay or Amazon).

Read more

19.12.2017 EU law
L’arrêté wallon portant conditions sectorielles des parcs d'éoliennes a été annulé par le Conseil d’Etat!

Articles - Trois ans et demi après avoir fait l’objet d’un recours en annulation et après un détour préjudiciel à la Cour de Justice de l’Union européenne, le Conseil d’Etat a finalement annulé l’arrêté wallon fixant les conditions sectorielles s’appliquant aux parcs éoliens. Cette décision ne créera cependant pas le séisme annoncé. Le Conseil d’Etat a, en effet, décidé de maintenir définitivement les effets de l'arrêté tant pour le passé que pendant les trois prochaines années.

Read more

02.01.2018 EU law
Court of Justice dismisses appeal by Telefónica on non-compete clause in telecoms transaction

Short Reads - On 13 December 2017, the Court of Justice dismissed the appeal brought by Telefónica against a judgment of the General Court (GC) regarding a non-compete agreement [see our July 2016 Newsletter]. The judgment confirms the finding of the GC that the non-compete clause agreed upon between Telefónica and Portugal Telecom (PT) amounted to a market sharing agreement with the object of restricting competition.

Read more

07.12.2017 BE law
Décision Inédite de la Cour de justice de l’Union européenne en matière de protection de l’environnement : menace de sanctions financières pour la Pologne.

Articles - Dans son ordonnance du 20 novembre 2017, la Cour de Justice de l’Union européenne a ordonné, sous astreinte, à la Pologne de cesser immédiatement les opérations de gestion forestière active dans la forêt de Białowieża. Cette ordonnance sort de l’ordinaire parce qu’elle contient des mesures provisoires mais également parce qu’elle est assortie de sanctions financières. Ces deux aspects sont pourtant des gages de l’efficacité du contrôle de la Cour devant laquelle la procédure au fond. L’impact de cette ordonnance va donc bien au-delà du seul cas de la forêt de Białowieża en Pologne.  

Read more

Our website uses cookies: third party analytics cookies to best adapt our website to your needs & cookies to enable social media functionalities. For more information on the use of cookies, please check our Privacy and Cookie Policy. Please note that you can change your cookie opt-ins at any time via your browser settings.

Privacy and Cookie Policy