COMMISSION DECISION of 17 July 1996 in a proceeding pursuant to Council Regulation (EEC) No 4064/89 (Case No IV/M.737 - Ciba-Geigy/Sandoz) (Only the German text is authentic) (Text with EEA relevance) (97/469/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EEC) No 4064/89 of 21 December 1989 on the control of concentrations between undertakings (hereinafter referred to as 'the Merger Regulation`) (1), and in particular Article 8 (2) thereof,

Having regard to the EEA Agreement, an in particular Article 57 thereof,

Having regard to the Commission decision of 2 May 1996 to initiate proceedings in this case,

Having regard to the opinion of the Advisory Committee on Concentrations (2),

Whereas:

1. The notification under consideration, which was made on 27 March 1996, concerns the proposed merger between Ciba-Geigy AG (Ciba) and Sandoz AG (Sandoz), both of Basle, to form a new single enterprise, Novartis AG (Novartis).

2. By decision of 18 April 1996, the Commission ordered the suspension of the notified merger, pursuant to Articles 7 (2) and 18 (2) of the Merger Regulation, until it had taken a final decision.

3. Having examined the notification, the Commission found that the project fell within the scope of the Merger Regulation and raised serious doubts as to its compatibility with the common market. By decision of 2 May 1996, the Commission accordingly initiated proceedings pursuant to Article 6 (1) (c) of the Merger Regulation.

4. The Advisory Committee discussed the draft of this Decision on 2 July 1996.

I. THE PARTIES

5. Ciba is a manufacturer of biological and chemical products in the health, agricultural and industrial sectors.

6. Sandoz is a manufacturer of biological and chemical products in the health, food, agricultural and building chemicals sectors.

II. THE CONCENTRATION

7. The parties' proposed concentration is a merger within the meaning of Article 3 (1) (a) of the Merger Regulation. Ciba and Sandoz are to be merged into a new single undertaking, Novartis. Under the exchange of shares which is to take place, Sandoz shareholders will receive 55 % of the shares in Novartis and Ciba shareholders 45 %.

8. The parties intend that the concentration should not include three sectors. Ciba's speciality chemicals business (industrial chemicals), consisting of the textile dyes, chemicals, additives, pigments and polymers divisions, is, after the merger as a single undertaking, to be accommodated in separate companies whose controlling company will be quoted on the stock exchange and will be transferred from Novartis to its shareholders. Following this transfer, according to the information provided by the parties, there will be no group link between Novartis and the new controlling company. According to the information provided by the parties, the Ciba division Mettler-Toledo was sold off to the American investor group AEA MT Inc. on 2 April 1996. The contract of sale is to be implemented once the necessary official approval has been given. The Sandoz building and environment division (building chemicals) is comprised within MBT Holding AG and is to be sold off before or after the merger. These three sectors are to be regarded as parts of the undertakings concerned, within the meaning of Article 1 (2), in so far as they are initially brought into Novartis.

III. COMMUNITY DIMENSION

9. The combined aggregate worldwide turnover of Ciba and Sandoz is more than ECU 5 billion. The aggregate worldwide turnover of Ciba is some ECU 13,1 billion and that of Sandoz some ECU 9,1 billion. Each of the two undertakings has an aggregate Community-wide turnover of more than ECU 250 million. The aggregate Community-wide turnover of Ciba is more than ECU 4 billion and that of Sandoz more than ECU 2,5 billion. Neither Ciba nor Sandoz achieves more than two thirds of its aggregate Community-wide turnover within one and the same Member State.

IV. APPRAISAL UNDER ARTICLE 2 OF THE MERGER REGULATION

10. Ciba and Sandoz have partly overlapping business activities in health-care products, crop protection products, animal health products and seeds.

11. According to the information provided by the parties, there are no overlaps in industrial chemicals, nutrition, building chemicals and weighing equipment. In these sectors, one of the parties has shares of more than 25 % on a number of markets, although the existing market positions will not be strengthened by the merger given the lack of overlaps.

A. HEALTH-CARE PRODUCTS

12. According to the information provided by the parties, the term 'health-care products` comprises pharmaceutical products, contact lenses and lens care products. The only overlaps in the activities of Ciba and Sandoz are in the case of pharmaceutical products.

13. According to the information provided by the parties, Ciba's market shares in the case of contact lenses and lens care products are below 25 % on a EEA-wide basis. At national level, Ciba has achieved market shares of between 25 % and 41 % in seven Member States in the case of contact lenses and in six Member States in the case of lens care products. In view of the lack of market share additions, and in the absence of other indications that the merger will strengthen Ciba's market position, there is no evidence to suggest that the merger will lead to the creation or reinforcement of a dominant market position.

14. However, the proposed merger will lead to market share additions on a large number of markets in pharmaceutical products. A close appraisal needs to be made only of the effects in the case of Rauwolfia, beta blockers, calcitonins, muscle relaxants and one aspect of HS-TK gene therapy. But even here the merger will not lead to the creation or reinforcement of a dominant market position.

1. Definition of the product market

15. The Commission has on many occasions dealt with the definition of the relevant market in the case of pharmaceutical products and has established a number of principles in its previous decisions (see decisions of 10 June 1991, Sanofi/Sterling Drug; 29 April 1993 Procordia/Herbamond; 18 April 1994, Rhône-Poulenc/Cooper; 20 June 1993, La Roche/Syntex; 19 September 1994, AHP/Cyanamid; 28. February 1995, Glaxo/Wellcome; 3 April 1995, Behringwerke AG/Armour Pharmaceutical Co.; 22 June 1995, Hoechst/Marion Merrell Dow; 28 September 1995, Upjohn/Pharmacia).

(a) Medicines

16. Medicines may be subdivided into therapeutic classes by reference to the 'Anatomical Therapeutic Classification` (ATC), which is recognized and used by the World Health Organization. This classification, which was used by the Commission in earlier cases, allows medicines to be grouped together by reference to their composition and their therapeutic properties.

17. The third level of the ATC classification allows medicines to be grouped in terms of their therapeutic indications, i. e. their intended use, and can therefore be used as an operational market definition. However, it may be appropriate to carry out analyses at other levels of the ATC classification. For example, it might be necessary to combine certain groups. This would be the case where certain products from different ATC classes are substitutes for the treatment of a specific illness or disease. On the other hand, it might also be appropriate to apply a narrower market definition where the medicines in question have clearly differing indications. Account should also be taken of the fact that the use of medicines may also vary nationally.

18. Medicines may, moreover, be subdivided into various segments on the basis of a variety of criteria, and in particular demand-related criteria. A possible distinction is that between medicines which can be issued only on prescription and those which can be sold over the counter. A further distinction is that between medicines whose costs are refunded in whole or in part by sickness insurance schemes and those whose costs are not reimbursed. These segments partly overlap. Most medicines issued only on prescription are reimbursed, whereas most of those which may be sold over the counter are not reimbursed. Furthermore, the allocation of a medicine to a particular segment is not permanent. It is based instead on decisions by the authorities, which may lead to changes between segments.

19. The parties agree with the Commission that in most cases it is appropriate to base the market definition on the third level of the ATC classification since the third level products generally serve the same treatment purpose and are not interchangeable with products from other classes. The parties also argue, however, that this definition does not always meet the need for functional substitutability from the viewpoint of the other side of the market. In the view of the parties, exceptions arise where the ATC classes are distinguished not according to therapeutic application areas but, at the very least, also according to pharmacological active principles and application formulae. The market definition could therefore be too narrow in some cases and too wide in others.

20. This view is confirmed in principle by the parties' competitors consulted by the Commission. In their view too, a definition of product markets based on the third level of the ATC classification is not appropriate in every individual case and may be either too narrow or too wide.

21. The interchangeability of products depends in principle not on their physical, technical or chemical properties but on their functional substitutability as viewed by those supervising their consumption. In the case of medicines available on prescription only, therefore, these would be established medical practitioners. But the prescription practices of medical practitioners are regularly influenced by the objective scientific knowledge available to them concerning the active properties and similarities of medicines (see, for example, Bundesgerichtshof WuW/E BGH 1445, 1447 et seq., Valium). Factors militating against any more far-reaching market definition include different degrees of tolerance of medicines by the patient and differences in price. In the case of medicines available on prescription only, therefore, the market definition cannot be based simply on whether different medicines are prescribed for the same illness (i. e. in the same indication group). The criterion is that prescription is based on fundamentally the same medical grounds. For such prescription practice, account can be taken of whether the medicines correspond to each other, for example in terms of active principle, tolerance, toxicity, and side effects.

22. Since, according to their information, appropriate data do not exist for the ATC classification, the parties have, in the market breakdown presented by them and in the corresponding data, made reference to a classification drawn up by the European Pharmaceuticals Manufacturers Association (EPHMRA), which underlies the IMS figures and, according to the parties, is very largely the same as the ATC classification. The Commission's investigations have shown that the parties' competitors also consider the two to be very largely identical. For reasons of practicability, therefore, the Commission has used the breakdown and nomenclature employed by the parties.

23. With regard to the product markets relevant to the appraisal of the merger, the parties take the view that the definition based on the third level of the ATC classification is too narrow for certain medicines used in the treatment of high blood pressure (Rauwolfia, beta blockers) and osteoporosis (calcitonins), which, in terms of their main indications, are interchangeable and interchanged with other products from other ATC classes. In the case of muscle relaxants, by contrast it is too wide. In the opinion of the parties, the market definition based on the third level of the ATC classification is largely appropriate for the other medicines relevant to the appraisal of the merger. The Commission's investigations do not contradict this.

(1) Rauwolfia and beta blockers

24. Rauwolfia is a medicine used to reduce blood pressure. According to the information provided by the parties, C2D Rauwolfia and Comb. Diuretics are medicines which are typically made up of reserpine and a diuretic. Reserpine is a plant-derived active substance which has the disadvantage that it can sometimes induce depression when taken over a lengthy period. In the case of diuretics, a possible side effect is lack of potassium, particularly when taken in large doses over a lengthy period. Combinations of a number of active substances are used to attempt to reduce the side effects.

25. According to the information provided by the parties, Rauwolfia preparations are the oldest blood-pressure medicines on the market. According to the parties, there are various other substance classes used in the treatment of high blood pressure. These consist mainly of, in order of market entry, diuretics, centrally active anti-hypertensives, beta blockers, vasodilators (blood vessel - dilating agents), calcium antagonists and ACE inhibitors. According to the parties, in all EEA Member States these medicines are available on prescription only. Treatments are chosen according to the seriousness of the high blood pressure, accompanying complaints, previous treatment and the therapeutic experience of the medical practitioner in the case in question. There would normally be a number of possible ways of achieving the same treatment aim. A number of the parties' competitors have also cited various preparations of different third-level ATC classes used in the treatment of high blood pressure as exceptions to the basic suitability of the third level of the ATC classification for the market definition.

26. According to the information provided by the parties, Rauwolfia was one of the fastest-selling blood-pressure medicines between ten and fifteen years ago in a number of countries, including, for example, Germany, Austria and Italy. According to the parties, Rauwolfia preparations have been medically outdated for a number of years now. Many younger doctors no longer use these medicines but base their treatments exclusively on the high-blood-pressure-treatment table. The Commission's investigations have confirmed that Rauwolfia would appear no longer to be designated a first-choice blood-pressure treatment in relevant publications. According to the information provided by the parties, however, Rauwolfia preparations are still prescribed for the continued treatment of elderly patients in countries in which they were formerly used on a large scale. They are used predominantly for patients who have been well adjusted to these medicines for a long time. However, the proportion of Rauwolfia preparations used in the treatment of high blood pressure is steadily contracting. Even though the extent of this substitution varies in individual Member States, the Commission's investigations have not justified different national product market definitions for Rauwolfia.

27. Despite the abovementioned increasing substitution of Rauwolfia by other blood-pressure medicines, there are misgivings about the presumption that Rauwolfia preparations can be combined with the other high-blood-pressure-treatment medicines mentioned to form a single product market. There is, for example, the fact that the choice of medicine depends, among other things, on the age of the patient and the possible side-effects. The various medicines used in the treatment of high blood pressure sometimes have considerably different side-effects which are likely to rule out mutual substitutability for some patients. Furthermore, in Germany, for example, the Deutsche Liga zur Behandlung des hohen Blutdrucks e. V. has drawn up a table showing specific treatment levels of high blood pressure with different preparations. This too militates against the assumption of complete mutual interchangeability. In addition, there are the characteristic features of Rauwolfia products also reported by the parties. It would seem that these products are no longer recommended as first-choice medicines for the treatment of high blood pressure. This limits their interchangeability with such preparations as beta blockers and diuretics. The further fact that demand for Rauwolfia preparations is steadily diminishing shows hat these preparations are nowadays prescribed predominantly for a particular category of patient only. The parties also point out that Rauwolfia is nowadays prescribed predominantly for elderly patients only. Given the substitution of Rauwolfia by other blood-pressure medicines, the relevant market is ultimately at any rat broader than C2D Rauwolfia.

28. Consideration might also be given to combining beta blockers and diuretics in a single market because, according to the Commission's investigations, both medicines are recognized first-choice means of treating high blood pressure. In view of the different ways in which these preparations work and their different side-effects, however, such a combination is highly questionable. According to the Commission's investigations, however, C7B Betablocker Comb. and C7A Betablocker plain can be combined as one market. Betablocker Comb. are combinations of beta blockers and other preparations predetermined by the manufacturer. This form of application is apparently in decline and can be replaced by a corresponding combined dosage of pure beta blockers and various other medicines. The preference for dosages made up of various medicines stems from the improved dosage options available to the physician in charge. The advantage of the combinations is, reportedly, that the patient has to take fewer tablets and does not himself have to adhere carefully to the correct dosage. The combination of pure beta blockers and beta blocker combination preparations also corresponds to the Rauwolfia and Comb. Diuretics class in the ATC classification. The division of pure beta blockers and beta blocker combinations into two markets would lead to an inappropriate subdivision of commercially connected products into two markets. For the purpose of this decision, no further examination of the question of the interchangeability of beta blockers with other blood-pressure medicines is necessary.

(2) Calcitonins

29. According to the information provided by the parties, calcitonin is a hormone which occurs naturally in the human body. It is used for bone formation and is normally in balance with the hormones which cause bone resorption. In old age, this balance sometimes shifts towards bone resorption. This then results in osteoporosis. H4A calcitonins are accordingly used primarily for the treatment of osteoporosis. According to the information provided by the parties, calcitonins are authorized in Sweden and the Netherlands only for the treatment of Paget's disease, a rare bone disease.

30. The parties argue that all the preparations used for the treatment of osteoporosis are substitutable for calcitonins. At any rate, they argue, this applies to the H4A calcitonins and to most of the preparations in the product class M5B Bone Calcium Regulators (diphosphonates), which, according to the information provided by the parties, can be obtained only on prescription. In addition, they argue, according to the German school, fluorides (A12C other mineral supplements) and calcitonins are to a limited extent substitutable for one another. The parties also see some substitutability in the mineral preparations (A12A calcium) used in particular in the prevention of osteoporosis. Lastly, in the view of the parties, hormone preparations (G3C Oestrogens and Comb.) offer moderate substitutability.

31. According to the information provided by the parties, there is from the doctor's point of view no clear-cut distinction between prevention and treatment when treating osteoporosis. The boundaries are fluid. The parties argue that there are as yet no internationally recognized, uniform and objective criteria on the question of when medication should begin. Cost considerations, the experience and training of the doctor, differences between national schools and the patient's symptoms are the key parameters determining the treatment chosen. However, the information provided by the parties also indicates that there are certain main types of uses to which the preparations are put.

32. The Commission's investigations have shown that, at any rate, calcitonins and most diphosponates may be regarded as predominantly substitutable one for another and may consequently be grouped within a single product market. Both are used mainly in the treatment rather than the prevention of osteoporosis. Both, according to the parties, increase bone density and, if used as intended, have few side-effects. According to the parties, the side-effects of calcitonins, rarely encountered, are a sensation of warmth, irritation of the nasal mucous membrane and nausea. Diphosphonates can, according to the parties, lead to heartburn and stomach complaints if not used as directed. More recent diphosponates, they say, are better tolerated. According to the parties, studies on both are being carried out to obtain evidence of a long-term decrease in the risk of bone fracture, a decrease in risk which is already recognized in the medium term. They are therefore, the parties argue, substitutable for one another, at any rate for the majority of patients. The parties submitted several publications showing similar use of diphosphonates and calcitonins.

33. The results of the Commission's investigations support this. The Swedish competition authority has also pointed out to the Commission that its enquiry to the Medical Products Agency confirmed that diphosphonates are in most cases substitutable for calcitonins. It also pointed out that this may apply to the other preparations referred to by the parties.

34. It is true that the fact that the preparations contain different active principles may argue against any substitutability of calcitonins and diphosphonates. The bones which the preparations help to form are also reported to be somewhat differently structured. Calcitonins are reported by the parties to have an additional analgesic effect. However, this aspect is irrelevant since osteoporosis does not in general cause pain. In view of the lack of proper knowledge of the causes of osteoporosis, however, neither of the two active principles seems at present a priori to be any more or less suitable for patients. According to the information provided by the parties, calcitonin can at present be administered only nasally or by injection, while the diphosphonates authorized in osteoporosis are administered orally. However, the parties point out that a British firm has announced that is has successfully tested an oral administration form and will apply for authorization by the end of this year. In addition, an Italian firm is reported to have successfully developed a calcitonin to be administered orally. Any difference that still exists in the form of application cannot be regarded as relevant as far as patients receiving caltitonins are concerned. The oral administration of diphosphonates does not at any rate represent any disadvantage for the patient in this respect and does not therefore affect substitutability. Furthermore, in individual ATC classes, differing forms of administration are grouped together in a product market, so that this difference cannot in general be adduced as a decisive argument. However, not all diphosphonates can be included in a single market. Ciba's diphosphonate (Aredia brand) covers only a limited range of application and is not authorized and not suitable for the treatment of osteoporosis. It is available only as a solution for infusion, whereas, according to the information provided by the parties, all other modern diphosphonates are available in oral form.

35. All in all, diphosphonates which are authorized for the treatment of osteoporosis are, at any rate for merger control purposes, to be regarded as substitutable for calcitonins. Since it is not possible to pursue separate price strategies vis-à-vis a minority of purchasers for whom calcitonins are not interchangeable with other preparations, the competitive room for manoeuvre of the suppliers of calcitonins vis-à-vis all purchasers is limited by the suppliers of diphosphonates used for the treatment of osteoporosis. Calcitonins are moreover also replaceable by diphosphonates in the case of Paget's disease.

(3) Muscle relaxants

36. The muscle relaxants included in the third level of the ATC comprise, in the parties' opinion, different indications which are distinguished only at the fourth level and, in such distinction, are once again interchangeable with pharmaceuticals from other classes.

37. M3B muscle relaxants are, according to the parties, in all Member States of the EEA available on prescription only. According to the parties, the relevant preparations of Ciba (Lioresal) and Sandoz (Sirdalud) have areas of use which overlap to only an insignificant extent. The differences in their indications justify the assumption of separate markets. According to the parties, a distinction may be made between severe muscle spasms in the case of multiple sclerosis, etc. and harmless muscle spasms caused by strain resulting in lumbago or similar spasm conditions. Lioresal is reported to be used almost exclusively in the first area and Sirdalud almost exclusively in the second.

38. The Ciba preparation is authorized only for spasticity in the case of diseases of the central nervous system, and the Sandoz preparation for spasticity in diseases of the central nervous system and muscle spasms. The marketing of the Sandoz product is, according to the parties, oriented entirely towards muscle spasms. According to the parties, the prescription panels for Europe show the following average indications: for Lioresal, [. . .] (3) spasticity in diseases of the central nervous system, [. . .] (4) spasticity in diseases of the central nervous system, [. . .] (5) muscle spasms and [. . .] (6) other, for Sirdalud [. . .] (7) muscle spasms, [. . .] (8) spasticity in diseases of the central nervous system and [. . .] (9) other. 'Other` includes a large number of sub-indications both in the central nervous system and in the spasm area, which, according to the parties, account for under [. . .] (10), and illegible data or data which for other reasons cannot be properly classified. The higher proportion of 'other` uses in the case of Lioresal may, according to the information provided by the parties, be due to the fact that there are many rare disease syndromes of differing names which are associated with spasticity and which should really come under the heading of spasticity in diseases of the central nervous system.

39. With a breakdown of M3B muscle relaxants into two relevant product markets, there are, according to the parties, substitutabilities in the case of both indications with N5C tranquillizers, and in the case of spasticity with N2B analgesics, C4A cerebro-peripheral vasodilators, N3A antiepileptics and G4B urulogics, and in the case of harmless spasms with N2B analgesics and M1A antirheumatics. For the purposes of this Decision, however, it is not necessary to decide on any further market definition.

40. In conclusion, therefore, it is clear that the third level of the ATC classification M3B muscle relaxants is to be broken down into two separate product markets one of which comprises the corresponding medical products for the treatment of spasticity in diseases of the central nervous system and the other medicinal products for the treatment of simple muscle spasms, with these then once again being substitutable with individual products of other ATC classes.

(b) Active substances

41. The manufacture of pharmaceutical products generally takes place in two separate processes: manufacture of the active substances and manufacture of the pharmaceuticals. Manufacture of the pharmaceuticals means the mixing of the active substance with other substances and the manufacture of the galenic form such as capsules or tablets. Active substances are both manufactured for in-house purposes and also traded. There are therefore separate markets for active substances which are upstream from the markets for pharmaceuticals.

(c) Future markets

42. In the pharmaceuticals industry, a full assessment of the competitive situation requires examination of the products which are not yet on the market but which are at an advanced stage of development (normally after extremely large sums of money have been invested). The potential for these products to enter into competition with other products, which are either at the development stage or already on the market, can be assessed only by reference to their characteristics and intended therapeutic use. In so doing, it must be borne in mind that research and development cannot as a rule be traded between pharmaceutical companies, but are rather intended primarily for the development of a company's own active substances and products. On the other hand, cooperation takes place in the research field between pharmaceutical companies and public and private research institutes and small biotechnology undertakings which, although they have the relevant know-how, do not themselves have the resources and facilities for the clinical testing that must be carried out prior to market authorization and for the manufacture of the pharmaceuticals. The Commission has to look at R & D potential in terms of its importance for existing markets, but also for future markets.

43. Some of the parties' competitors surveyed by the Commission point out that there is a trend towards commissioning firms to carry out research and development. Some do not see research and development as a separate market. This is evidently based essentially on the fact that research and development, at least by pharmaceutical undertakings engaging in research, is still carried out predominantly for in-house purposes.

44. In so far as research and development must be assessed in terms of its importance for future markets, the relevant product market must, by its very nature, be defined in a less clear-cut manner than in the case of existing markets. Market definition can be based on the existing ATC classes only if existing products are to be replaced. Otherwise it must be guided primarily by the indications to which the future products are to be applied. Here, fundamentally different modes of action must be taken into account. The merger in question calls for closer examination of the parties' research activities in the field of HS-TK gene therapy for the treatment of brain tumours and other tumours. HS-TK gene therapy, according to the parties, does not involve the healing of a genetically conditioned disease, but a method of applying a therapeutic substance to the appropriate place. HS-TK gene therapy is, according to the parties, a process of suicide gene therapy in which an enzyme gene is fed through a vector system into diseased cells. A prodrug is then administered which is activated by the enzyme gene. Prodrug means a drug pre-stage which, in conjunction with the enzyme gene, has the effect of killing the cell. In this way, the diseased cells are killed off. The healthy cells, the parties claim, are not affected. The parties argue that HS-TK gene therapy is in direct competition with other gene therapies and with other processes such a chemotherapy, immunotherapy and radiation.

45. The parties can be agreed with only in so far as there are other therapies being pursued for the treatment of tumours. However, these clearly differ in their mode of action from HS-TK gene therapy. As also in the case of the market definition for medicinal products, reference cannot be made solely to a common treatment objective. Rather, account must also be taken of different active principles which lead to different degrees of effectiveness and tolerance. In the same way as the market definition for medicinal products, HS-TK gene therapy for the treatment of brain tumours and other tumours could be regarded as a separate future product market. However, for the purposes of this Decision, it is not necessary to take any final decision on the inclusion of other therapies.

46. Research work being carried out by an American subsidiary of Sandoz, GTI, in the HS-TK gene therapy area is currently at R & D phases II/III. This means that GTI has already achieved substantial progress in this area and that market entry seems possible within the next three to five years. The parties point out that, despite GTI's advances, it is still very uncertain whether this form of therapy will ever be used. The market interest in this area noted by the Commission indicates that it is by no means an area that has as yet no business relevance. Rather, the Commission has established that large amounts of financial expenditure have already been incurred and that the market is already giving consideration to the marketing of HS-TK gene therapy.

2. Geographic market

(a) Manufacture of medicinal products

47. The markets for pharmaceutical products have been defined as national markets in the decisions hitherto adopted by the Commission. The inquiries in this procedure have shown that there is no reason to depart from the decision-making practice so far. The results of the Commission's investigations among competitors of the parties bear this out.

48. There are, however, efforts at European standardization. The harmonization of technical provisions within the Community and the entry into force of new registration procedures for medicines represent the completion of the programme for the common market in terms of the scientific and technical requirements applying to medicines. Since the beginning of 1995, pharmaceutical companies have had the option (and indeed, in the case of biotechnology products, the obligation) of submitting an application for registration of a new medicine to the European Agency for the Evaluation of Medicinal Products, which then issues a recommendation to the Commission, whose decision is binding on all Member States. At present, medicines can be registered in different Member States for different indications.

49. The sale of medicines is influenced by the administrative procedures or purchasing policies which the national health authorities have introduced in the Member States. Some countries exercise a direct or indirect influence on prices, and there are different levels of reimbursement by the social security system for different categories of medicines. For this reason, the prices for medicinal products may differ from one Member State to another. In addition, there are far-reaching differences in terms of brand and pack-size strategies and in distribution systems. These differences mean that markets are national in character.

(b) Manufacture of active substances

50. The markets for active substances, which are situated upstream from the pharmaceuticals markets, are, by contrast, international markets that have to be examined at least at Community level. In view of the lack of customs barriers and the frequent mutual recognition of product licences between the United States and the European Economic Area, consideration may also be given to a wider market definition. The parties' competitors questioned by the Commission incline to the assumption of worldwide markets.

(c) Future markets

51. To the extent that future product markets can be considered on the basis of research and development in particular areas, the said national restrictions do not have the same impact. A characteristic of future markets is that no products have yet been registered. Because research and development is normally global, the consideration of future markets should therefore focus on the territory of the Community at least, and possibly on worldwide markets. This view is for the most part confirmed by the competitors questioned. Reference is sometimes also made to the fact that, depending on the relevant project, the market definition could differ in individual cases. The geographic coverage of patents may also be relevant for the geographic definition of future markets. In the case of HS-TK gene therapy, patents are separately applied for and granted in the United States and Europe. The patent situation has considerable influence on the marketing opportunities of the competitors of patent holders. Patent differences may in future lend themselves to different competitive situations inside and outside the Community. At any rate for the purposes of this Decision, it can be assumed that the Community is the relevant geographic market.

3. Competitive assessment

52. The setting-up of Novartis will create the second largest supplier of pharmaceutical products in the world after Glaxo Wellcome. Next come a number of other large suppliers such as Hoechst Marion Roussel, Merck & Co., Bristol Myers Squibb, American Home Products, Johnson & Johnson, Pfizer, Rhône-Poulenc Rorer and Smith Kline Beecham. The share of Novartis in worldwide sales of pharmaceutical products will probably be under 5 %.

53. Ciba and Sandoz are involved in the research, development and production of active chemical substances and in the production and marketing of pharmaceutical products. According to the information provided by the parties, Novartis will be active mainly in seven medicinal fields, namely immunology/inflammation, diseases of the central nervous system, cardiovascular diseases, hormonal and metabolic diseases, cancer, dermatology and asthma.

(a) Medicinal products

(1) General market conditions

54. Drug manufacturers distribute their products, possibly through their national distribution companies. to wholesalers, which in turn sell to pharmacies, clinics and other large customers. Sometimes the manufacturer or its national distribution company sells direct to large customers. The distribution systems differ in each of the Member States. Pharmaceutical wholesalers, as the major purchasers, generally distribute all the pharmaceutical products supplied in the country concerned. They carry comprehensive stocks and have little influence on the selection and quantity of the pharmaceutical products they purchase. In general they simply pass on the decisions of doctors and pharmacists.

55. The prices of most medicinal products are regulated directly or indirectly by national laws. Differences in the systems for reimbursing prices and costs lead to wide differences in the prices of medicinal products in the Member States.

56. A general characteristic of the markets for pharmaceutical products is that products are introduced onto the market after completion of their development and testing before undergoing - though with considerable time differences from product to product - a phase of expansion during which, depending on the patent situation, other competitors also enter the market. Depending on the product's success on the market, additional competitors enter the market once patent protection has ended and supply the same medicinal products in the form of generic products.

57. According to the statements made by the pharmaceutical companies questioned, the main barriers to market entry are the length of time needed for research and development and the heavy expenditure involved in marketing these products, which is partly the result of the need for national registrations.

58. Future market entry is possible for companies which currently have products undergoing research and development. The parties draw a distinction between various phases of development. Phase I marks the start of clinical testing on humans (some 8 to 12 years before the product is marketed). Projects in phase I are claimed to have no more than a 10 % chance of being successful. As a rule, phase I activities are not publicized by the undertakings concerned. Phase II (some 6 to 7 years before the product is marketed) involves working out the proper dose for the patient and defining the areas of application. Here the success rate is said to be 30 %. Phase III (starting 3 to 4 years before the product is marketed) involves establishing the product's effectiveness on larger groups of patients. In phase III, the risks of failure may still amount to over 50 %. Once the clinical testing has been completed, there is the registration phase which as a rules takes at least 1 to 2 years. After registration has been obtained, it takes 6 to 12 months, depending on the Member State, until the price is established and approved and cost reimbursements by social security worked out, whereupon the product can finally be placed on the market (11).

59. On e patent protection has expired, market entry is, the parties state, less costly for a competitor already active in pharmaceuticals manufacture. So long as the active substance for a medicinal product is covered by patent protection, market entry costs are, according to the information provided by the parties, high. A competitor would have to acquire a licence or invent another active ingredient that worked in the same or a similar way without infringing the original patent. Such a parallel product would then have to go through the entire preclinical and clinical development process, which, according to the parties, could take up to 10 years and cost up to ECU 300 million.

60. According to the parties, if a group's medicinal product is registered for only one indication, it can generally be assumed that it will also actually be used only for that indication. All types of advertising or sales promotion for an unregistered indication are prohibited. If a doctor were to prescribe for an unregistered indication, he would also incur specific liability risks. With regard to cost reimbursement, systems differ from country to country, the parties state. In some cases, costs can be reimbursed even when the medicinal product is used outside the indication area for which it is registered, on condition that the doctor provides specific justification for this. On the whole, the parties argue, the use of medicinal products for indications other than those for which they are registered is not quantitatively significant.

61. The special features of the production of medicines affect the significance of market shares when appraising the market situation, at any rate when generic products are able to compete on the affected market and other competitors are active on the market with original preparations. The competition provided by such products remaining on or entering the market should normally be given more weight in the pharmaceutical industry than in other industries, mainly because it is much easier for a manufacturer to extend capacity: this restricts the competitive scope of leading suppliers deriving from market share to a much greater extent than on markets on which competitors can extend capacity only by utilizing substantial resources and frequently only after a considerable delay. The competitive scope arising from such a delay largely disappears in the case of suppliers of medicines inasmuch as a supplier already present on the market can generally extend its capacity relatively quickly, either by using its own production capacities or, particularly in the case of medicines not protected by patent, by contracting-out production to a third party. According to the information provided by the parties, the capacity utilization of manufacturers of active substances and pharmaceutical preparations is estimated at some 50 % industry-wide. However, in the case of new preparations protected by patent, which, if production is contracted out, may give rise to problems to do with the protection of business secrets, this mechanism is not fully operative.

(2) Effects of the merger

62. The parties are active on a variety of pharmaceutical product markets and achieve substantial market shares on a large number of national markets. If the product markets are broken down in accordance with the third level of the World Health Organization ATC classification, the proposed merger will not lead to additional market shares on many national markets, even if one of the parties is often in a very strong position on those markets.

63. In the notification the parties name 48 national markets which are affected markets within the meaning of the implementing Regulation and involve a total of 23 different product groups (A4A Antinauseants, C1E Nitrites, C2D Rauwolfia & Comb. & Diuretics, C5C Variocose therapie. syst., C7A Betablocker plain, C7B Betablocker Comb., D4A Topical Antipuritics, G3C Estrogens, G3F Estrogen & Progesteron Comb., H4A Calcitonins, LA4 Immunosuppressive Agents, M1A Antirheumatic, nonsteroidal, M3B Muscle Relaxants, central, N2C Antimigraines, N7B Antismoking Products, R2A Throat Preps., S1X Other Ophthalmological, A12B Potassium, A12C other mineral supplements, H2B Corticosteroids Comb., R1B Syst. Nasal preparations, R3C N-Steroidal Resp., R5D Antitussives).

64. The parties' combined market shares on many of the affected markets are small. Furthermore, patent protection for the medicines they manufacture has often expired and generic products exist. Market entry by generic products seems, however, to take place primarily on the larger markets. This may be due to the fact that, for a generic-product producer, market entry costs, which derive from national requirements for the registration of medicines, still represent a substantial barrier to market entry on markets where turnover is small, so that the expiry of patent protection does not on its own necessarily entail a change in supply on such markets. The costs involved in obtaining a national registration comprise the registration costs themselves and the costs of preparing the necessary dossier, although a dossier produced for registration in one Member State can also be used at least in part for applications in other Member States.

65. On a further 13 national markets involving 7 different products (C1C, C2C, C5B, D1A, D6A, J1H, N4A), one of the parties achieves a market share of over 25 %. Although both parties are active here on individual product markets in the EEA, this does not lead to combined market shares on national markets. Nor is there any sign that in this respect the parties are in an - at least potential - competitive relationship with each other. The markets are generally small and the parties' activities throughout the Community tend to be insignificant. There are no discernible incentives for the parties to enter the market.

66. On a further 137 national product markets involving 37 different products, for which in each case only one of the parties achieves sales in the EEA, one of the parties has market shares of at least 25 %. On these markets the proposed concentration cannot be expected to create or strengthen a dominant position. Since activities do not overlap, the concentration does not lead to any reduction in actual competition. Even if the parties as suppliers of pharmaceutical products were both to be regarded as potential competitors in principle, this would also hold good for the other large suppliers of pharmaceutical products. For this reason, no relevant restriction of potential competition would result here either.

67. Even for products eligible for a market definition other than the third level of the ATC classification, a broader market definition gives rise neither to additional overlapping in the parties' activities nor to larger market shares on the markets on which there are market share additions.

68. Where the parties have research and development projects in phases II and III, these too do not give rise to any further overlapping on markets on which one of the parties already has a strong market position.

69. When evaluating the effects of the concentration on the product markets, a number of general market conditions can basically be taken into account:

- Prices are often regulated by the national authorities, and this restricts the supplier's scope for competitive behaviour,

- General pressure exists to reduce health-care costs, which increases the price pressure on suppliers,

- The suppliers of pharmaceutical products present on the market generally find it much simpler to extend capacity than suppliers in a number of other economic areas experiencing equivalent success on the market. The greater flexibility with which competitors can react reduces the significance of high market shares.

(a) Rauwolfia & Comb. Diuretics

70. Taking the area of blood-pressure products as a whole, the parties' share is a relatively small one. According to the information provided by a competitor, the parties achieve on a correspondingly broadly defined market a Community-wide share of some 6,2 %, which is tending to fall slightly. This overall position of the parties puts into perspective from the outset the market shares they achieve on individual products markets.

71. The parties will have no scope for competitive behaviour - typical of a company in a dominant position - in the case of Rauwolfia even after the concentration because of the competition from other suppliers of Rauwolfia preparations and other blood-pressure products.

72. Taking the sales of Rauwolfia alone, the parties would achieve a higher share. But it can also be seen that other Rauwolfia suppliers are present on all affected markets.

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73. It should also be borne in mind that sales of C2D Rauwolfia & Comb. & Diuretics are falling sharply. The parties' sales in absolute terms have also fallen. According to the information they provide, their medicines are also no longer protected by patent. Their basic patents for two active substances expired between 1976 and 1979.

74. According to the information provided by the parties, the prices in Germany of Ciba products rose by over 10 % between 1993 and 1995 and those of Sandoz products by over 5 %. These price increases are, however, barely above the general rate of inflation which occurred in this period, so that they cannot in general be regarded as a sign of scope for dominant behaviour. This is particularly true of the markedly smaller price increases of Sandoz, which indicate that even Sandoz, by far the largest supplier on the German market, had no more scope for setting prices than its competitors.

75. Finally, scope for competitive behaviour typical of dominant companies is ruled out in the case of Rauwolfia by the considerable pressure of competition from other high-blood-pressure products. If betablockers alone are taken into consideration, the parties' combined share in 1995 falls to some 11 % in Germany, some 18 % in Italy, some 7 % in Austria, some 5 % in Spain and under 9 % in the EEA. The proposed concentration cannot therefore be expected to lead to the creation of a dominant position.

(b) Betablockers

76. In the case of C7B Betablockers Comb. the parties' products basically no longer have any patent protection. There are generic products on the market. Ciba still has a patent for specific fractionable sustained-release tablets containing, for example, Logroton; this patent will expire in the year 2000.

77. France is the only country where the parties achieve high combined shares for C7B Betablocker Comb. In 1995 these, it is said, amounted to around 55,1 % for Ciba and to around 11,6 % for Sandoz, or a combined total of some 66,7 %. According to the information provided by the parties, the only large supplier of these products was Merck Sharp and Dohm at around 33,3 % The total turnover achieved for these products in France was, however, only ECU 3,6 million. While sales of Betablocker Comb. are shrinking in France and throughout the EEA, sales of Betablocker plain are in each case showing a marked rise. The parties' combined market shares in France on the market for betablockers including Betablocker plain were some 7,8 % in 1993, some 6,8 % in 1994 and some 6 % in 1995. According to the information provided by the parties, Zeneca is the leading supplier of betablockers throughout the EEA. The parties are not expected to acquire a dominant position as a result of the concentration.

(c) Calcitonins and diphosphonates

78. The parties as a rule do not have high market shares on the markets for calcitonins and disphosphonates for the treatment of osteoporosis or Paget's disease. Their competitive strength on this product market is based solely on their calcitonin activities. They are not involved in disphosphonates for the treatment of Paget's disease and osteoporosis.

79. The strengths of the parties vary as regards calcitonins. Sandoz is the first supplier to have brought calcitonin onto the market as a nasal spray. The advantages over injection led to a considerable increase in the Sandoz sales figures. But, according to the information provided by the parties, nasal sprays are also supplied in Italy by Rhône-Poulenc, Procter & Gamble and generics manufacturers. The registration of nasal sprays can also be expected in other countries. On the other hand, Ciba has been unsuccessful in trying to develop a nasal spray. According to the information provided by the parties, it is a fact that the human calcitonin used by Ciba can only be injected and is unsuitable for administration in the form of a nasal spray or an oral preparation. This is why Ciba has in the meantime largely ceased its efforts to compete with calcitonin.

80. According to the information provided by the parties, their basic patents for calcitonins have expired in all the EEA countries. Ciba still has two patents: Stable Solutions Containing Human Calcitonin (patent protection until December 2011) and Fibrillated Human Calcitonin (patent protection until April 2012). In the case of Miacalcin (salmcalcitonin), Sandoz only has process protection in Austria until 1997 and a patent for a nasal spray formulation until 2003. Miacalcin is reported to be one of the parties' most successful products. The parties say that they have other products under development in this area which could come onto the market in the next few years. Two developments of Sandoz for calcitonin are in research phase III and so, according to the information provided by the parties, could be brought onto the market in three or four years' time. They relate to a special form of osteoporosis caused by taking cortisone preparations over a long period.

81. Exact sales figures exist only for the calcitonins product group, but not for the relevant market. The following information on market shares is therefore based on estimates provided by the parties. Because of the market structures, the proposed concentration cannot be expected to lead to the creation or strengthening of a dominant position for the parties in any Member State on the markets for calcitonins an diphosphonates registered for the treatment of osteoporosis and Paget's disease.

- Belgium

82. The parties achieve a combined market share of some 21 % (Sandoz around 21 %, Ciba around 0 %). The parties assume that Ciba will be forced out of the Belgian market in the next few years.

- Germany

83. According to the information provided by the parties, Sandoz had a dominant market position in Germany until 1990. Since 1991 a number of new manufacturers have entered the market. At the same time sales have fallen. This has considerably intensified competition, as can also be seen from the market successes of the new entrants. If diphosphonates are included, the parties' market share, on the basis of their own estimates, falls to around 51 % (Sandoz some 34 %, Ciba some 17 %). This market share will tend to fall further since disphosphonates have only just been introduced into Germany for the treatment of osteoporosis. According to the information provided by the parties, Boehringer Mannheim is by far the leading supplier of diphosphonates, and Medac, Procter & Gamble and Gehe are also active in Germany.

84. The parties have submitted a calculation of shares for calcitonin for Germany on the basis of pack units which shows up clearly the market success of generics manufacturers. The calculation also shows that, on the basis of pack units, the share of the Sandoz preparation Karil fell from 95,12 % in 1986 to 22,23 % in 1995. The share of Cibalcalcin between 1989, when it entered the market, and 1994 rose to 18,83 % and in 1995 fell to 15,87 %. According to the information provided by the parties, Ciba's market success, which peaked in 1994, is connected with the strong publicity devoted to human calcitonin. In comparison, Calci, made by Hexal, entered the market in 1992 and, although its shares rose only slightly after 1993, it was the leading preparation in 1995 at 25,34 %, and Calcitonin, made by Ratiopharm, entered the market in 1994 and had already reached 10 % in 1995. Ostostabil, made by Jenapharm, achieved a share of 1,69 % in 1995. Other suppliers include Rhône-Poulenc Rorer, Azupharma, Tosse, Durachemie and Pharmacia Upjohn. In the view of the parties, the fact that in the long run calcitonin, which can only be injected, has no market prospects can be clearly ascertained from the trend characterizing the market share of Rhône-Poulenc Rorer's Calsynar, which can also only be injected and which peaked at 16,92 % in 1991 but reached only 4,49 % in 1995.

- France

85. In France the parties' combined market shares have been falling since 1991. Sandoz is expecting to be able to bring the nasal spray onto the French market around 1998. It is assumed that at that time other manufacturers will also introduce the nasal or oral form of preparation. Diphosphonate, which is interchangeable with calcitonin for the treatment of osteoporosis, has achieved the same large market volume as calcitonin. On the basis of the parties' estimates, if disphosphonates are included, their combined market share is only some 21 % (Sandoz some 6 %, Ciba some 15 %).

- Greece and Portugal

86. The calcitonin markets in Greece and Portugal have grown considerably in recent years. Sandoz market shares have fallen markedly since 1993, while Ciba market shares have fallen to under 2 % and 3 % respectively. At the same time, new competitors, such as Rhône-Poulenc Rorer, have entered the market and have achieved an appreciable market share. On the basis of the estimates submitted by the parties, if disphosphonates are included, the combined market share in Greece is some 54 % (Sandoz some 54 %, Ciba some 1 %). Since disphosphonates have just been introduced in Greece, this market share can be expected to fall substantially. On the basis of the estimates submitted by the parties, if disphosphonates are included, the combined market share in Portugal is some 66 % (Sandoz some 63 %, Ciba some 3 %). Disphosphonates are just being introduced into Portugal and, according to the information provided by the parties, will largely replace calcitonins for the treatment of osteoporosis, partly because this use of calcitonin is to be restricted by government measures. For this reason it is possible that the market will contract in the same way as it did in Italy.

- Italy

87. In 1990 Italy was by far the largest market for calcitonin with a market volume of some ECU 350 million. According to the information provided by the parties, the high expenditure on calcitonin in Italy led to a situation in which the health authorities wished to limit its prescription and refused to reimburse the cost of calcitonin. Since 1994 the market has shrunk by 85 %. Competition has intensified. In the view of the parties, Ciba will not be able to continue there much longer. According to the estimates submitted by the parties, if disphosphonates are included, the parties' combined market share is still only some 11 % (Sandoz some 11 %, Ciba some 0 %).

- Austria

88. In Austria Ciba market shares have been falling sharply. The competing product, Elcimen, made by Nycomed, the Norwegian manufacturer, has a considerable market position. According to the estimates submitted by the parties, if disphosphonates are included, the parties will have a combined market share of only 24 % or so (Sandoz some 21 %, Ciba some 3 %).

- Sweden and Netherlands

89. In Sweden and the Netherlands calcitonin is not registered for the treatment of osteoporosis, but only for Paget's disease. Market volume is therefore very small in these countries. Osteoporosis is predominantly treated with hormonal preparations and the new disphosphonates. If calcitonin were to be registered for the treatment of osteoporosis, market volume would increase substantially. This would provide an incentive for other suppliers to enter the market. According to the communication from the Swedish competition authorities, six disphosphonates interchangeable with calcitonins are registered in Sweden the suppliers of which include Astra, Roche and Boehringer Mannheim. They also say that all patents have expired in Sweden so that it seems possible that competitors active in other Member States would enter the market if the parties were to raise their prices.

(d) Muscle relaxants

90. For M3B Muscle relaxants, the parties' combined market shares will be insignificant. The parties' products are basically to be found on other markets. Even taking all M3B Muscle Relaxants together, the concentration cannot be expected to give rise to the creation or strengthening of a dominant position because of whole range of competing preparations.

91. It is difficult to calculate actual market shares because of the different uses of the medicines and the fact that they can be partially replaced by other preparations. According to the information provided by the parties, severe spasticity occurs as a symptom of various illnesses.

92. In the case of harmless muscle tension, the combined market shares will not be appreciable. Only the Sandoz preparation is registered for this indication. Admittedly, according to the information in the prescription panel, use of the Ciba preparation for simple muscle tension stands at 3 %, although it is not registered for this condition. Because of the inevitable simplifications in this kind of statistical evaluation and the insignificant share of sales, the Ciba preparation cannot be regarded as a competing product with the Sandoz preparation in this area. Even assuming a slight strengthening effect, this would not lead to the creation or strengthening of a dominant position. According to the information provided by the parties, Sandoz has substance protection for Sirdalud only until 1998 in Belgium and procedure protection for it only until 1997 in Spain. Otherwise, patent protection no longer exists. There are a large number of generics and competing products.

93. The parties' activities will not overlap significantly on the markets for medicines for the treatment of spasticity in the case of diseases of the central nervous system. While both products are registered for this indication, the marketing of the Sandoz product is geared only to its use in the case of simple muscle tension. Sales on prescriptions for the spasticity indication are only 8 % of the total in the case of the Sandoz product. Since the Sandoz product is also registered for this indication, the parties' activities do overlap to a certain extent. But this is very slight and does not lead to the creation or strengthening of a dominant position. First, according to the information provided by the parties, the patent protection for the Ciba preparation has expired. According to the information provided by the parties, a number of generics have existed for Lioresal since the expiry of patent protection. In addition, according to the information provided by the parties, the scope for competitive behaviour is limited by a number of other products for the treatment of severe spasticity, e.g. by preparations of the benzodiazepine group.

(b) Active substances

94. According to the information provided by Ciba and Sandoz, their activities on the markets for the manufacture of active substances are marginal. They manufacture active substances almost exclusively for their own purposes. The concentration cannot therefore be expected to lead to the creation or strengthening of a dominant position.

(c) Future markets

95. The market strength of the undertakings in research and development is difficult to estimate since success in R & D can usually be assessed only after the R & D has been completed. Nevertheless, the undertakings' existing R & D potential cannot be ignored in the competitive assessment since their future competitive strength is bases precisely on such potential.

96. The parties are particularly strong in the biotechnology and genetic engineering fields. Their strength is based primarily on a number of cooperation agreements with and stakes in US undertakings and research establishments. Through these holdings and cooperative arrangements, the parties also have access to patents in this field. This calls for closer examination in the area of genetic engineering research on the treatment of brain tumours and other types of tumour. Of particular importance in this connection are Sandoz's stake in GTI and Ciba's 49,9 % stake (which can be increased) in Chiron.

97. GTI's research on HS-TK gene therapy is now at phase II/III. Patents in the EC have been applied for. According to the information provided by the parties, Viagen, a subsidiary of Chiron, has research work at the preclinical stage, i.e. before phase I. Little can be said with certainty about the time required to achieve results in this area. Since the diseases to be treated are as a rule ones which hitherto could not be adequately treated, authorization of developed processes can possibly be given much more quickly than in the case of traditional medicinal products which merely replace ones that are already available and effective.

98. The Commission has established in the curse of its investigations that the parties could, as a result of these holdings, have exclusive access to a combination of broadly defined patents covering retroviral HS-TK (herpes simplex thymidine kinase) constructs, retroviral vectors and methods for the treatment of brain tumours and other tumours using such retroviral vectors. Sandoz in particular seems to be in a strong position in this area through its subsidiary GTI, which is endeavouring to develop gene therapy for brain tumours in the United States. Viagen has patent applications in related areas that could be useful for the development of successful gene therapy for brain tumours. The patent applications cover such a wide spectrum of patent claims that, if the patents are issued with the coverage applied for or with similar coverage, their combination as a result of the merger could mean that other competitors were largely excluded from parts of this field of research (gene therapy for brain tumours and other tumours).

99. Patent rights may pose considerable entry barriers to competitors on future markets. When R & D results are marketed, a number of patents held by other undertakings must often be taken into account. Undertakings must then either find ways of marketing their R & D results without infringing other patent rights or acquire the relevant licences. The more patents exist in a particular area of research and the wider the coverage of such patents, the more difficult the situation may be in individual cases. Particular problems may arise where individual suppliers have a combination of patents that make it difficult or indeed impossible for other suppliers to gain market access without infringing such patents. Where a merger leads to the holding of such a combination of patents, market foreclosure can result.

100. The parties argue that some at least of the patent applications, in particular those attributable to Chiron, are so broadly formulated that it is highly improbable that they will be granted without a more detailed specification. Furthermore, they argue, the patents attributable to Chiron, as currently specified, do not cover the treatment of brain tumours and other tumours. They therefore take the view that, even if the relevant patents are granted, the proposed merger will not lead to any combining of patents that might result in market foreclosure. Lastly, the parties object that they do not have any exclusive access to the patents attributable to Chiron.

101. According to information deriving from the market, any combining of the future patent rights of GTI and Viagen could block the development of gene therapies for tumours or other treatment methods by other undertakings. It is still uncertain whether this situation will actually apply. At any rate, the merger may place competitors in a substantially worse negotiating position for obtaining a licence from GTI or Chiron after the merger. Whether this worsening of competitors' negotiating positions might actually result in market dominance depends essentially on three conditions:

(1) It is not certain that gene therapy will ultimately prove to be a successful method of treatment;

(2) Other research results may open up ways of circumventing any obstacle created by the combining of patents;

(3) The patent situation is very unclear. The parties have as yet submitted only patent applications. Patents have still to be granted.

102. If these three conditions become reality, the proposed merger may lead to a structural danger of foreclosure of the future market for HS-TK gene therapies for tumours. The parties would then have power over other competitors' market access through the issue of licences.

103. The first condition is one which applies in any examination of future markets. What it ultimately amounts to is that the market must be created before any problem can arise. As stated above, GTI's research projects are already at phase II/III. Even if it cannot yet be predicted whether this new method for treating tumours will actually be applied, there is nevertheless, in view of the progress being made in research, sufficient probability to warrant protecting the market in terms of competition.

104. The second condition is difficult to assess in current terms. In so far as the parties' competitors may in future be prevented from marketing their products as a result of patents, they will, in view of the large amounts of expenditure incurred on research, try to find a way of circumventing this difficulty if they cannot obtain any licences. There is not enough information available to be able to say whether such a way will be found. Although any such endeavour may require additional time and money, the possibility can by no means be ruled out that competitors might seek and find such ways.

105. A key question regarding the creation of any competition problem is whether the parties will obtain patents that may have a blocking effect. This applies primarily to the blocking effect which patent applications attributable to Chiron may create for competitors of GTI in their pursuit of a competing product. The Commission's investigations have identified substantial market fears in this respect. The granting of such patents depends on two preconditions. First, the parties must assert their patent claims on the basis of a specification that includes areas of HS-TK gene therapy for tumours. This precondition is solely in the hands of the parties. To this extent, the proposed merger may pose an increased structural danger of market foreclosure. The second precondition is the actual granting of such patents, and this is not in the hands of the parties. The patent applications could of course exert some disruptive effect. Undertakings wishing to market a HS-TK gene therapy for tumours would have to bear in mind that patents having a broad specification might possibly be granted. They are therefore confronted with the question of whether they should carry out investment in this area at all and whether they would have seek a way of getting round any patent. Viewed in abstract terms, this could pose an obstacle to competitors wishing to gain market access. However, this alone is not sufficient to conclude that the parties would have a dominant position on this market.

106. It cannot therefore ultimately be said with sufficient probability that the merger will on any future market lead to the creation or strengthening of a dominant position.

107. The Commission notes that, in the course of these merger-control proceedings, the parties made the following statement: 'Both undertakings hereby make the following binding statement on behalf of Novartis AG: Novartis will exercise the potential legal and contractual influence which it has as a result of its holding in Chiron Corporation, Emeryville, California, United States of America and through the Board Members appointed by it in such a way as to ensure that the Chiron subsidiary Viagene issues to interested firms on the terms and conditions customary in trade and industry non-exclusive licences for each European patent and for national patents derived therefrom that are based on the international patent applications Nos WO 89/09271 and WO 90/07936 for HSTK (Herpes simplex Thymidine Kinase) gene therapy for tumours. This obligation is subject to the proviso that the conduct of Novartis and of the Board Members appointed by it must in accordance with US law be in the best interests of Chiron and its shareholders. The obligation will apply for 10 years following the issue of the European patents.`

B. PLANT PROTECTION

1. Relevant product market

108. In the plant protection area, a distinction is usually made between the following:

- herbicides for weed control,

- fungicides for disease control,

- insecticides for insect control,

- seed treatment for the protection of seeds and subsequent plants against disease and insects,

- trace elements to overcome deficiency symptoms, e.g. iron deficiency,

- growth regulators.

(a) Herbicides

109. On the demand front, the type of plant to be protected by the relevant herbicide is one of the main factors determining substitutability. Other factors such as the type of weed, the active ingredient and the time of application of the plant protection product also influence the substitutability of different herbicides.

110. There are herbicides that can treat weeds affecting different types of plants, e.g. maize and cereals. In many cases, however, herbicides for the protection of different plants are not substitutable one for another. There is, for example, only limited substitutability between herbicides for the protection of cereals, fruit and sugar beet. Consequently, herbicides which protect different types of plants constitute separate relevant product markets (see IV/M.392 Hoechst/Schering, points 16 et seq., and IV/M.354 American Cyanamid/Shell, points 11 et seq.). In assessing competitive relationships, however, it must be borne in mind that a large number of herbicides have a very wide spectrum of activity.

111. A breakdown of herbicides in terms of the weed which they are intended to treat is also conceivable (see IV/M.354 American Cyanamid/Shell, point 12). However, a specific type of plant is mostly affected by a mixed 'weed population` comprising grasses and broadleaved weeds. Herbicides are therefore made up in such a way that an entire population of weeds can be treated with them. However, the make-up of any such weed population is seasonally variable. There are therefore herbicides which are more suitable for treating grasses and herbicides which are better suited to treating broadleaved weeds. According to the Commission's investigations, farmers usually purchase a whole series of herbicides with specific selectivities and mix these in accordance with the types of weeds that appear, or they purchase a ready-made product containing the desired mixture. In principle, therefore, there is substitutability between products with a narrower spectrum of activity and those with a broader spectrum. In addition, the dividing lines between the two product groups are fluid, making it impossible to draw up a hard-and-fast classification.

112. A breakdown based on the time at which the herbicide is applied must also be disregarded since pre-sowing, pre-emergence and post-emergence herbicides (12) are all used to treat the same types of weeds and display the same degree of effectiveness. Before sowing at least, therefore, the herbicides in the groups specified are, as far as the farmer is concerned, substitutable for one another.

(b) Fungicides

113. Fungicides are used to prevent the deterioration of plants and plant products through fungi and moulds prior to and after harvesting. Fungicides having the same chemical compositions may be used against fungi and moulds in a number of different types of plants. Thus, the same fungicide may be used for the protection of fruit, cereals, potatoes and sugar beet. For the purchaser, therefore, the key question determining which product he purchases is the harmful organism which the relevant fungicide treats, i.e. not the type of plant to be protected (see IV/M.392 Hoechst/Schering, points 18 et seq.).

114. Fungicides are, as a rule, used not to combat individual harmful organisms, but to combat (often preventively) entire complexes of harmful organisms. Examples include the typical cereal diseases rust, powdery mildew, eyespot, septoria and fusarium. In the case of sugar beet, the four main types of disease which occur are powdery mildew, rust, cercospora and ramularia, and combinations of them. Potatoes, on the other hand, are affected almost exclusively by late blight. Since the various plants display differing (albeit partly overlapping) disease patterns, a breakdown of fungicides by type of plant is appropriate.

115. There is, in the Commission's view, no need for an additional breakdown of fungicide markets. Although, for example, potato fungicides can be subdivided into contact products, penetrant products and systemic products, such products are all used to combat the same disease, can be used partly preventively and partly curatively, vary in the duration of their effectiveness and are in some cases already mixed together in the products or are mixed by growers in order to achieve optimum effectiveness for specific circumstances. A further breakdown into the product groups specified is therefore not appropriate and would in any case lead to double and triple counting, since the breakdown by type of plant already contains a partial subdivision by broad and narrow selectivity. A breakdown into products with a broad spectrum and those with a narrow spectrum can also be disregarded since, in the case of some plants, only a single harmful organism has to be controlled (e.g. late blight in the case of potatoes), while with other plants an entire complex of harmful organisms occurs. Consequently, fungicides predominantly have a broad spectrum, or a broad spectrum with a simultaneous particular effectiveness against a particular type of harmful organism. For the rest, the comments made in respect of herbicide markets (see above) apply. Similarly, a breakdown of fungicides in terms of their use at differing stages of development of the plant is not appropriate since, in some cases, no such fungicides exist or, if they combat specific harmful organisms in the early, middle or late development stage of the cultivated plant, may also be used or are effective during other development stages (see also the comments on the treatment of seeds below).

(c) Insecticides

116. Insecticides are products used to control insects that damage cultivated plants. Here, as in the case of fungicides, the same insecticide may be used to control a specific type of insect, irrespective of the type of plant affected. Since not all plants are attacked by the same insects and since there are no plant-specific insects, a breakdown of insecticides by type of plant is appropriate. In assessing competitive relationships, it will have to be borne in mind here too that a large number of insecticides may be used to treat different plants.

117. Farmers and growers generally purchase products that combat the groups of harmful insects whose composition varies by type of plant. Consequently, they purchase either products with a broad spectrum of activity, combination products (broad spectrum with specific selectivity) or insecticides with a narrow spectrum, which they themselves mix. From the farmers' point of view, therefore, insecticides with a broad spectrum and a combination of insecticides with a narrow spectrum are basically substitutable. In addition, the breakdown of markets by type of plant already contains a breakdown of insecticides by spectrum, so that any additional breakdown in terms of broad or narrow spectrum is, for this reason as well, not appropriate.

(d) Seed treatment

118. Seed treatment with plant protection products is intended to protect seeds and the subsequent plant against disease and insects. Since the treatment of seeds must be based on a prediction of what diseases and what insects the seed and the subsequent plant might be affected by, the corresponding products (fungicides and insecticides for use on seeds) are basically plant-specific in their composition. There is therefore only slight substitutability between products for the treatment of seeds of different plants. The relevant product markets should therefore be defined by type of plant.

119. The parties argued in their notification that the treatment of seeds constitutes a separate product group in the plant protection area, but they left open the question of whether what was involved here was actually a separate market. Similarly in the publication 'Novartis, Backgrounder` attached to the notification, the product group 'seed treatment` is identified on page 17 as being separate from fungicides and insecticides.

120. In two later submissions, the parties took the view that seed treatment is not a separate market. This was essentially for the following reasons:

The final purchaser (farmer) can purchase ready-treated seed or can treat the seed himself. As far as insecticides are concerned, the farmer can, instead of treated seed, apply granulated insecticide into the seed row during sowing or can carry out blanket or row spraying with a liquid preparation. In addition to these prophylactic procedures, the farmer has also the possibility of deferring treatment until the first signs of infestation occur. One of the charts attached to the submission sows that the time of application, the duration of effectiveness, the duration of application and the effectiveness profile of seed treatment involving, on the one hand, soil treatment with granulates and, on the other, the blanket treatment of the soil with liquid preparations prior to sowing overlap.

The same essentially applies in the case of fungicides. The following diseases can occur in beans and peas: damping-off of seedlings, downy mildew, ascochyta leaf blight and botrytis. Seedling diseases are controlled either by seed treatment products, which allow only protection of the seed, or by seed protection products, which control both seedling diseases and also downy mildew and leaf blight. Downy mildew and leaf blight are controllable both by means of seed treatment and through spray treatments. Botrytis can be controlled only by means of spray treatment, and products which are effective against botrytis can also be used against leaf blight. Seed treatment is therefore a particular type of application of insecticides and fungicides, but serves the same purpose as products which are applied to the soil or sprayed.

121. In seed treatment, the seed grains are dressed. Ciba and Sandoz do not dress the seed grains themselves but supply the seed treatment products to other firms which have the appropriate dressing plants. However, in the Commission's view, this fact cannot be taken as a justification for identifying a separate market for seed treatment but, at most, a market for the dressing of seeds. As noted above, treated seed is form the farmer's point of view ultimately substitutable for fungicides and insecticides applied to the soil or sprayed. The Commission has therefore concluded that there are no separate markets for seed treatment.

(e) Trace elements

122. Trace elements are used to treat deficiency symptoms such as iron deficiency. Here too, a breakdown by type of plant may be regarded as appropriate since a given type of plant suffers predominantly from the same nutrient deficiency.

(f) Growth regulators

123. Growth regulators for individual plant types form separate relevant markets. On such markets, the merger will not create any market share additions since Sandoz neither markets nor produces growth regulators.

(g) Active substances

124. The manufacture of plant protection products takes place in three stages: the manufacture of the active substances, the manufacture of the formulations (formulated products) from the active substances, and the packaging of such formulations. Ciba and Sandoz manufacture the active substances for plant protection in central factories. The manufacture of the formulation and its packaging, by contrast, are carried out in several plants. Ciba, Sandoz and other competitors also sell or exchange active substances to or with other firms. There are therefore markets for active plant-protection substances.

125. Each active substance has unique properties and, where appropriate, is patented. Upon registration, i.e. authorization of a particular plant protection product, information must be given on the active substance(s) contained in the product. If the manufacturer uses another active substance, this gives rise to anther product for which, though it may have a similar effect to the first product, authorization must once again be sought. According to the Commission's investigations, it takes between six months and three years for such authorization to be obtained. In addition, the manufacturer will have to formulate the product anew and test the new product's effectiveness before applying for authorization, and this once again will take some time. For these reasons, active substances are basically not substitutable for one another.

2. Relevant geographic market

126. In the parties' view, the relevant markets for plant protection products are Community-wide markets. This market definition is supported by the following: the existence of a large number of major multinational groups, central production plants, low transport costs as a proportion of total costs and, in most cases, Community-wide patent protection for individual plant protection products. In addition, the marketing of plant protection products in the Community has been harmonized by Council Directive 91/414/EEC (13).

127. On the other hand, plant protection products, including the active substances and the formulations, must be registered in a Member State before they may be marketed. Between six months and three years are required from the time of the application until the authorization of the product, depending on the Member State and the product involved (generics, new active substance and/or formulation). Price differences between Member States for one and the same product are substantial; there are no signs of any tendency for alignment of prices. Furthermore, customers (agricultural cooperatives, other wholesalers) purchase the relevant products at national level, i.e. not on a Europe-wide basis. The suppliers therefore in most cases have national sales organizations or distribute their products via the sales organization of another manufacturer operating in the relevant Member State. The distribution of market shares in the Member States also differs quite widely, and this similarly suggests national differences in competitive relationships. In addition, there are differences as regards the composition of the individual products and also in the methods of use, depending on the different conditions existing in the individual Member States as regards agriculture, plant health, the environment, climate, soil properties and topography (see IV/M.392 Hoechst/Schering, points 20 et seq., and IV/M.354 American Cyanamid/Shell, points 17 et seq.).

128. The definition of the relevant geographic market may, however, be left open as far as the herbicide, insecticide and trace element markets are concerned since, even applying the narrowest (national) market definition and any other market definitions, the merger will not create or strengthen a dominant position.

129. As far as the markets for active substances used in plant protection are concerned, the markets are assumed to be at least Community-wide. The customers are, for the most part, large or fairly large undertakings that have a good overview of the market and even purchase the products on a world-wide basis. In addition, transport costs are insignificant, and there are not market access restrictions as a result of national authorization requirements on these markets.

3. Competitive assessment

130. The comments on the markets for active substances are dealt with first. Because competitive relationships in the fungicide, herbicide and insecticide areas are very similar, they are combined under heading (b). Discussion of trace elements follows under heading (c).

(a) Active substances for plant protection products

131. In each individual case, the markets for active substances consist of a single substance. In so far as the active substance enjoys patent or know-how protection, the manufacturing firm has a monopoly. The merger will not alter this situation.

132. On the markets for commodities (non-protected active substances), there are a number of suppliers; it is in principle possible for each undertaking that has the relevant technology to supply such active substances. Only Ciba operates on these markets. On the markets for active substances used in plant protection products, therefore, the merger will not create or strengthen a dominant position.

133. The manufacturers of plant protection products purchase active substances from competitors and use them for the formulation of their own products. If the active substance purchased is a patented product, the purchaser enters into a relationship of dependency. Where the patent holder manufactures an active substance which is widely used on downstream product markets, he enjoys a potentially strong position on such downstream markets, even if his own market share on such markets is relatively small.

134. According to the Commission's investigations, the parties also buy and sell active substances from and to competitors. It cannot therefore be ruled out that competitors will no longer be supplied in future and that Novartis could, as a result, strengthen its position on the downstream markets. However, such conduct is thought to be highly unlikely by the market participants surveyed. Since the competitors buy and sell active substances from and to one another, the relationships are ones of mutual dependency.

(b) Fungicides, herbicides and insecticides

135. According to the Commission's investigations, the merger will affect the markets listed below in the fungicide, herbicide and insecticide areas. The Commission's investigations have shown that the market shares can, in some cases, differ substantially (+/-10 %). As discussed below, the market shares also vary from year to year by up to 10 %, and in some cases indeed by more. This means that, depending on the base year taken, other markets would to some extent be affected by the merger. However, this applies in only a few cases and, even then, the combined shares in markets that would be affected if a year other than the base year 1995 were taken as the reference year would be just over 15 %. The base year 1995 therefore gives a sufficiently accurate picture of the markets that would actually be affected by the merger.

136. The market share calculations are based - at any rate as far as the larger Member States are concerned - on so-called 'panel` studies carried out by other undertakings. In the case of the smaller Member States, the calculations were carried out by the parties and were checked by the Commission on the basis of comparative data provided by competitors. Ciba and Sandoz, though other manufacturers as well, sell fungicides and herbicides in some cases to other suppliers of plant protection products who in turn supply the products to the trade. In their notification, the parties attributed such sales of Sandoz or Ciba products to the relevant suppliers. Similarly, sales of plant protection products by other suppliers to Ciba and Sandoz were attributed to Ciba and Sandoz where they went on to supply them to customers. This type of market share calculation is in line with that used in the 'panel` studies.

137. In the Commission's view, the market share calculation carried out by the parties and used in the 'panel` studies does not correctly reflect the actual market position of the parties and of competitors. This applies in particular in the Member States in which Sandoz (Ciba) does not have its own sales organization, while Ciba (Sandoz) does. In such cases, it is to be assumed that the sole of products following the merger will be carried out by Novartis. Even where Sandoz and/or Ciba have established their own sales organizations but, none the less, market their own products through other suppliers, the parties' market share is based on all the products manufactured by them since the parties could, in principle, at any time threaten the undertaking doing the actual marketing with a move to take over the sale of products entirely themselves (periods of notice of twelve months are usually agreed in sales contracts). Since third parties market Ciba and Sandoz products in order to supplement their own product ranges and since therefore the Ciba or Sandoz product is to some extent sold as part of the 'package` of the other undertaking's products, it is open to question whether the product sales of Ciba and Sandoz would not decline if the sales agreements with third parties were terminated. Consequently, the assessment of the parties' market shares could in some instances be somewhat too high. However, this does not matter here since, even if no appropriate reduction is made in the parties' combined market shares, the merger will not create or strengthen a dominant position.

138. Following the merger, the parties will have a very broad product range, with some of the products being in direct competition with one another. It is therefore to be assumed that, following the merger, the product range will be rationalized. This will affect in particular products which Ciba and Sandoz have hitherto marketed for third parties in order to supplement their own product range. For this reason, and because the other undertaking could in principle terminate the sales agreement within twelve months, there are grounds for reducing the parties' market shares by those volumes which the parties have achieved through the sale of third-party products.

139. A market share calculation including products sold to competitors and excluding products purchased from competitors does not, at any rate in the fungicide sector, show any different or additional affected markets than in the case of a calculation in accordance with the 'panel` studies, and in only one instance is there a significant difference in market share of just over 5 % (potato fungicides in France, where the parties' combined market share is reduced by 5 %). In the herbicide sector, the market shares show a significant difference in the case of fruit and nuts in France, where there is similarly a reduction of 5 %. New affected markets are identified in the case of maize herbicides. Without inclusion of the products marketed through competitors, four markets with combined shares of a maximum [30-40 %] (14) (1995) are affected by the merger. If the products marketed through competitors are included, there are eight affected markets with combined market shares of up to[50-60 %].

140. Accordingly, the following markets are affected by the merger in the fungicide, herbicide and insecticide sectors:

Fungicides for fruit and nuts

- in France ([20-30 %]; Ciba [10-20 %], Sandoz [10-20 %])

- in Portugal ([10-20 %]; Ciba [10-20 %], Sandoz [under 10 %])

Fungicides for vegetables

- in Belgium ([10-20 %]; Ciba [10-20 %], Sandoz [under 10 %])

- in France ([10-20 %]; Ciba [10-20 %], Sandoz [10-20 %])

- in Italy ([20-30 %]; Ciba [20-30 %], Sandoz [under 5 %])

Fungicides for cereals

- in Belgium ([30-40 %]; Ciba [10-20 %], Sandoz [10-20 %])

- in Germany ([10-20 %]; Ciba [10-20 %], Sandoz [under 5 %])

- in France ([20-30 %]; Ciba [20-30 %], Sandoz [under 10 %])

- in Great Britain ([20-30 %]; Ciba [10-20 %], Sandoz [under 10 %])

- in the Netherlands ([20-30 %]; Ciba [10-20 %], Sandoz [under 10 %])

- in Austria ([20-30 %]; Ciba [20-30 %], Sandoz [under 5 %])

- in Spain ([20-30 %]; Ciba [10-20 %], Sandoz [10-20 %])

Fungicides for potatoes

- in Belgium ([20-30 %]; Ciba [10-20 %], Sandoz [10-20 %])

- in Germany ([10-20 %]; Ciba [10-20 %], Sandoz [under 5 %])

- in France ([40-50 %]; Ciba [under 10 %], Sandoz [40-50 %])

- in Great Britain ([20-30 %]; Ciba [10-20 %], Sandoz [under 10 %])

- in Italy ([20-30 %]; Ciba [10-20 %], Sandoz [10-20 %])

- in Portugal ([30-40 %]; Ciba [20-30 %], Sandoz [10-20 %])

- in Spain ([30-40 %]; Ciba [30-40 %], Sandoz [under 10 %])

Fungicides for sugar beet

- in Belgium ([40-50 %]; Ciba [20-30 %], Sandoz [20-30 %])

- in France ([50-60 %]; Ciba [20-30 %], Sandoz [30-40 %])

- in Italy ([20-30 %]; Ciba [10-20 %], Sandoz under 10 %])

- in Austria ([20-30 %]; Ciba [under 5 %], Sandoz [20-30 %])

- in Spain ([20-30 %]; Ciba [20-30 %], Sandoz [under 5 %])

Fungicides for beans and peas used as cattle fodder

- in France ([30-40 %]; Ciba [under 10 %], Sandoz [20-30 %])

Herbicides for fruit and nuts

- in France ([30-40 %]; Ciba [20-30 %], Sandoz [under 10 %])

Herbicides for vegetables

- in Belgium ([20-30 %]; Ciba [20-30 %], Sandoz [under 5 %])

- in Great Britain ([20-30 %]; Ciba [10-20 %], Sandoz [under 10 %])

Herbicides for maize

- in Belgium ([40-50 %]; Ciba [under 10 %], Sandoz [30-40 %])

- in France ([30-40 %]; Ciba [20-30 %], Sandoz [10-20 %])

- in Italy ([30-40 %]; Ciba [20-30 %], Sandoz [under 10 %])

- in Austria ([40-50 %]; Ciba [20-30 %], Sandoz [20-30 %])

- in Germany ([50-60 %]; Ciba [30-40 %], Sandoz [20-30 %])

- in the Netherlands ([30-40 %]; Ciba [10-20 %], Sandoz [10-20 %])

- in Portugal ([10-20 %]; Ciba [10-20 %], Sandoz [under 5 %])

- in Great Britain ([40-50 %]; Ciba [30-40 %], Sandoz [10-20 %])

Insecticides for fruit and nuts

- in France ([20-30 %]; Ciba [10-20 %], Sandoz [10-20 %])

Insecticides for vegetables

- in Italy ([20-30 %]; Ciba [10-20 %], Sandoz [under 50 %])

Insecticides for beans and peas used as cattle fodder

- in France ([30-40 %]; Ciba [under 10 %], Sandoz [30-40 %])

141. The following comments are concerned with the markets on which the parties have achieved joint market shares of 25 % or more. However, they also apply mutatis mutandis to the conditions of competition on the other markets affected.

(1) Market volumes, market shares and competitors

Fungicides

142. The EEA-wide volume in value terms of th