Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE  
Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel,   BELGIË  
 
Tel: +32 229 -91111. Fax: +32 229 -64301. E -mail: COMP -MERGER -REGISTRY@ec.europa.eu .  EUROPEAN COMMISSION  
Brussels, 23.06.2021  
C(2021 ) 4678  final 
PUBLIC VERSION  
 
 
Nordic Capital X Limited  
26 Esplanade  
JE2 3QA St. Helier  
Jersey  
 
LEO Foundation    
 Lautrupsgade 7, 5 .    
 2100 Copenhagen  
Denmark  
 
Subject : Case M. 10238 – NORDIC CAPITAL / LEO FOUNDATION / LEO 
PHARMA  
Commission decision pursuant to Article 6(1)(b) of Council Regulation 
No 139/20041 and Article 57 of the Agreement on the European Economic 
Area2 
Dear Sir or Madam,  
(1) On 21 May 2021 , the European Commissio n received notification of a proposed 
concentration pursuant to Article 4 of the Merger Regulation by which Nordic  
                                                 
1  OJ L 24, 29.1.2004, p. 1 (the ’Merger Regulation ’). With effect from 1 December 2009,  the Treaty on the 
Functioning of the European Union ( ‘TFEU ’) has introduced certain changes, such as the replacement of  
‘Community ’ by ‘Union ’ and ‘common market ’ by ‘internal market ’. The terminology of the TFEU will 
be used throughout this decision.  
2  OJ L 1, 3.1.1994, p. 3  (the ‘EEA Agreement’).  
In the published version of this decision, 
some information has been omitted 
pursuant to Article 17(2) of Council 
Regulation (EC) No 139/2004 concerning 
non-disclosure of business secrets and other  
confidential information. The omissions are 
shown thus […] . Where possible the 
information omitted has been replaced by 
ranges of figures or a general description.  
 
2 Capital Fund X (“Nordic Capital”, Jersey) and Leo Foundation (“Leo Foundation”, 
Denmark) acquire within the meaning of Articles 3(1)(b) and 3 (4), joint control of 
the whole of Leo Pharma A/S (“Leo Pharma”, Denmark)  by way of purchase of 
shares  (“the Transaction”)3. Nordic Capital  and Leo Foundation  are referred to 
hereinafter as the “Notifying P arties ” or the “Parties”.  
1. THE  PARTIE S  
(2) Nordic Capital is a group of private equity funds focusing on investments primarily 
in the Nordic region of Europe and selected Northern European sectors. Nordic 
Capital invests across a wide range of industries but has a particular focus on 
healthcare, technolog y and payments, financial services, industrial and business 
services and consumer products.  
(3) LEO Foundation is a private foundation established under Danish law, which, apart 
from LEO Pharma, does not control any other operating undertakings and which is 
itself not controlled by any other entities. LEO Foundation’s financial assets are held 
in LEO Holding, where the investments activities of the LEO Foundation are carried 
out. 
(4) LEO Pharma is headquartered in Denmark and develops, manufactures and markets 
pharmaceutical products to be used predominantly for treatment of dermatological 
and thrombotic diseases.  
2. THE TRANSACTION   
(5) Pursuant to an Investment Agreement dated 16 March 2021, Nordic Capital will 
acquire […]% of the shares and LEO Foundation will retain […]% of the shares of 
LEO Pharma.  
(6) In addition, the Parties will enter into a Shareholder Agreement according to which a 
number of “reserved matters” will require the prior consent of both Parties. The 
reserved matters include (i) material amendments to the b usiness plan, (ii) material 
amendments to and adoption of the annual budget, and (iii) the appointment and 
removal of each member of the executive management.4 Post-Transaction , LEO 
Foundation and Nordic Capital will therefore jointly control LEO Pharma.  
(7) LEO Pharma is an existing company, with management and staff dedicated to its 
day-to-day operations and access to sufficient resources (including finance and 
assets) to conduct its business on a lasting basis. Moreover, LEO Pharma has its own 
market presenc e. This will not change post -Transaction. It can therefore be 
concluded that LEO Pharma will be a full-functional JV.  
(8) The Transaction is therefore a concentration within the meaning of Article 3(1)(b) 
and 3(4) of the Merger Regulation.  
                                                 
3  Publication in the Official Journal of the European Union No C 207, 1.6.2021 , p. 6. 
4  […]. 
 
3 3. UNION  DIME NSION  
(9) The undertakings concerned have a combined aggregate worldwide  turnover of more 
than EUR 5 000 million .5 Each of them has a  Union -wide turnover in excess of EUR 
250 million, but they do not achieve more than two -thirds of their aggregate U nion-
wide turnove r within one and the same Member State. The notified Transaction  
therefore has a U nion dimension  by virtue of Article 1(2) of the Merger Regulation .  
4. RE LE VANT MARKE TS  
(10) The Transaction concerns the pharmaceutical sector, where both Leo Pharma and 
some of Nordic Capital’s portfolio companies are active.  
(11) Leo Pharma is active in the provision of pharmaceutical contract manufacturing 
organisation (“CMO”)  services, as well as in the distribution of finished dose 
pharmaceuticals (“FDPs”)  globally . 
(12) Two of Nordic Capital’s portfolio companies are involved in these markets, namely 
Advanz Pharma Corp. Limited, (“Advanz”, Jersey) in FDPs and Acino International 
AG (“Acino”, Switzerland) in FDPs and CMO  services . 
(13) Limited horizontal overlaps arise in the market for the distribution of FDPs between 
Leo Pharma and Advanz in two ATC3 categories (see paragraph (15)). These are 
D6A (topical antibacterials) in Italy where the Parties have a combined market share 
of [10-20]%, and J1X (other antibacterials) in France where the P arties have a 
combined market share of [0-5]% and in Italy with a combined market share of [0-
5]%. Moreover, limited horizontal overlaps also arise between Leo Pharma and 
Acino in the market for CMO  services . The Notifying Parties confirm that the 
combined  market share s of LEO Pharma and Acino are well below 5% under any 
plausible product and geographic market definition.  As these do not result in affected 
markets, they will not be discussed in the present decision.   
(14) Moreover,  the Transaction  results in a v ertical relationship  between the activities of 
Leo Pharma in the upstream market CMO  services  in the EEA  and Advanz in the 
downstream market for the distribution of FDPs for ophthalmological anti -infectives  
(ATC3  class S1A ) in Sweden . This vertical relationship is further discussed in the 
present decision.  
4.1. Finished Dose Pharmaceuticals  - Ophthalmologi cal anti-infectives (ATC3 class 
S1A)  
4.1.1.  Product market definition  
(15) In previous decisions concerning finished dose pharmaceutical products , the  
Commission has followed the approach of dividing the products into therapeutic 
classes by reference to  the ATC (Anatomical Therapeutic Chemical) classification 
devised by EphMRA (European Pharmaceutical Market Research  Association).6 
                                                 
5  Turnover calculated in accordance with Article 5 of the Merger Regulation . 
6  See e.g. Cases M.8889 – Teva/Pgt Otc Assets, Decision of 29 June 2018, paragraphs 16 – 18; M.7919 - 
Sanofi/Boehringer Ingelheim Consumer healthcare Business, Decision of 4 August 2016, paragraphs 9 – 
 
 
4 More specifically, th e Commission referred to the ATC3 level, where 
pharmaceuticals are grouped in terms of their therapeutic indications, as the starting 
point for defining the relevant product market, but it also recognized that it may be 
appropriate to depart from it if the  circumstances of the case show that competitive 
constraints are situated at another level (i.e. by using the more detailed ATC4 level 
or based on active ingredients or other therapeutic criteria).7 
(16) The ATC3 class relevant for this Transaction  is S1A (Opht halmological anti -
infectives ).  
(17) In previous decisions, the Commission considered that the appropriate level for 
market definition of  ophthalmological anti -infectives (S1A)  is ATC3 , but ultimately 
left the product market definition open .8  
(18) According to the EphMRA classification, class S1A is not further subdivided at 
ATC4. Nevertheless, the Commission has also considered in the past an alternative 
market definition, namely the combination of ATC 3 class S1A and ATC 4 class 
S1C1  (ophthalmological anti -inflammat ory and anti -infective combinations 
containing corticosteroids) , but ultimately left the market definition open.9 The 
combination of classes S1A and S1C1 is not relevant for this Transaction as t he 
Parties are not active in the S1C1 class.  
(19) In the present case, the exact market definition can be left open since the transaction 
does not give rise to serious doubts as to its compatibility with the internal market or 
the functioning of the EEA agreement under any plausible product market definition.  
4.1.2.  Geographic market definition  
(20) According to previous Commission decisions , the relevant geographic market for 
FDPs is national in scope.10 The Commission d oes not find any reason to depart 
from this approach in the present case.  
4.2. Contract manufacturing organisation  services 
4.2.1.  Product market definition  
(21) CMO services  is an arrangement under which a manufacturer provides upstream 
manufacturing services of FDPs under contract on behalf of a third party.  
(22) In previous decisions, the Commission has left open the market definition for 
contract manufacturing. Specifically, the Commission has left open whether the 
CMO services market should be defined as an overall market, or whether it could be 
                                                                                                                                                      
12; M.6969 - Valeant Pharmaceuticals International/Bausc h & Lomb Holdings, Decision of 5 August 
2013, paragraph 10.  
7  See Case M.9995   Permira Holdings Limited/  Neuraxpharm  Midco S.C.A , Decision of 4 December 2020 
paragraphs 7 – 8. 
8  See e.g. Cases M.6969 – Valeant Pharmaceuticals International/Bausch & Lom b Holdings, Decision of 5 
August 2013, paragraph 28; M.5778 – Novartis/Alcon, Decision of 9 August 2010, paragraph 35.  
9  See e.g. Cases M.6969 – Valeant Pharmaceuticals International/Bausch & Lomb Holdings, Decision of 5 
August 2013, paragraphs 22 - 28; M .5778 – Novartis/Alcon, D ecision of 9 August 2010, paragraph 34. 
10  See e.g. Cases M.8889 – Teva/Pgt Otc Assets, Decis ion of 29 June 2018, paragraph 29; M .8675, 
CVC/Teva's Women's Health Business, Decision of 20 December 2017, paragraph  20. 
 
5 further segment ed into four product markets, namely contract manufacturing of: (i) 
solid dose and powder pharmaceuticals, (ii) liquids and semi -solid pharmaceuticals, 
(iii) sterile liquid pharmaceuticals, and (iv) medicated confectionary 
pharmaceuticals.11 
(23) For the purpose of the assessment of the transaction, the relevant segment of the 
upstream CMO services product market is the one of sterile liquid pharmaceuticals, 
as Leo Pharma produces anti -infective eye drops.  
(24) In any event, for the purposes of this Decision, it is not  necessary to conclude on the 
exact product market definition for CMO services as , regardless of the market 
definition considered , the transaction does not give rise to serious doubts as to its 
compatibility with the internal market and the functioning of the EEA Agreement.  
4.2.2.  Geographic market definition  
(25) In previous decisions, the Commission found that t he relevant geographic market for 
CMO services is worldwide or at least EEA -wide, as CMO services are generally 
procured anywhere in the world , regardless of  the country where the pharmaceutical 
products are subsequently marketed .12 Neither of the plausible alternative geographic 
market definitions ( worldwide or EEA-wide) affects the outcome of the competitive 
assessment of the Transaction as to its compatibili ty with the internal market or the 
functioning of the EEA Agreement.  
5. COMPE TITIVE ASSE SSME N T 
5.1. Analytical framework  
(26) Under Articles 2(2) and 2(3) of the Merger Regulation, the Commission must assess 
whether a proposed concentration would significantly impede e ffective competition 
in the internal market or in a substantial part of it, in particular through the creation 
or strengthening of a dominant position.  
(27) A concentration can entail horizontal effects. When the Commission analyses such 
cases it does so in lin e with the Commission Guidelines on the assessment of 
horizontal merge rs under the Merger Regulation.13  
(28) Furthermore, a concentration can entail vertical and/or conglomerate effects. The 
Commission Guidelines on the assessment of non -horizontal mergers under the 
Merger Regulation14 (the “Non -Horizontal Merger Guidelines”) distinguish between 
two main ways in which non -horizontal mergers may significantly impede effective 
competition: (a) when they give rise to input and/or customer foreclosure (non -
                                                 
11  See e.g. Cases M.9962 – Mylan/A spen’s EU Thrombosis Business, D ecision of 15  October 2020, 
paragraphs 14 -15; M.5953 - Reckitt Benckister/SSL, D ecision of 25  October 2010, paragraphs 58 – 59 and 
63. 
12  See e.g. Cases M.5953 - Reckitt Benckiser/SSL , Decision of 25 Octo ber 2010, paragraph 64;  M.6613 - 
Watson/Actavis , Decision of 5 October 2012, paragraph 34.  
13  Commission Guidelines on the assessment of horizontal mergers under the Merger Regulation (OJ C 31, 
5.2.2004, p. 5).  
14  Commission Guidelines on the assessment of non -horizontal mergers under the Merger Regulation (OJ 
C 265, 18 .10.2008, p . 6).  
 
6 coordi nated effects); and (b) when the merger changes the nature of competition in 
such a way that firms that previously were not coordinating their behaviour, are now 
more likely to coordinate to raise prices or otherwise harm effective competition 
(coordinated  effects).15 The Non -Horizontal Merger Guidelines distinguish two 
types of foreclosure: (a) where the merger is likely to raise the costs of downstream 
rivals by restricting their access to an important input (input foreclosure) and (b) 
where the merger is likely to foreclose upstream rivals by restricting their access to a 
sufficient customer base (customer foreclosure)16.  
(29) In assessing the likelihood of an anticompetitive input foreclosure strategy, the 
Commission has to examine whether (i) the merged entit y would have the ability to 
substantially foreclose access to inputs; (ii) whether it would have the incentive to do 
so; and (iii) whether a foreclosure strategy would have a significant detrimental 
effect on competition downstream.17 In assessing the likel ihood of an 
anticompetitive customer foreclosure strategy, the Commission has to examine 
whether (i) the merged entity would have the ability to foreclose access to 
downstream markets by reducing its purchases from upstream rivals; (ii) whether it 
would ha ve the incentive to do so; and (iii) whether a foreclosure strategy would 
have a significant detrimental effect on consumers in the downstream market.18 
According to the Non -Horizontal Merger Guidelines, the Commission is unlikely to 
find concern in non -horizontal mergers, where the market share post -merger of the 
new entity in each of the markets concerned is below 30%.19  
(30) The Non -Horizontal Merger Guidelines define conglomerate mergers as mergers 
between firms that are in a relationship which is neither hor izontal (as competitors in 
the same relevant market) nor vertical (as suppliers or customers).20 
(31) As the Transaction only gives rise to vertically affected markets, this Section 
addresses only input and customer foreclosure concerns.  
5.2. Vertically affected mark et: CMO services  in the EEA  (for sterile liquid 
pharmaceuticals) (upstream) – ATC3 class S1A in Sweden (downstream)  
(32) Both Parties are active upstream in the provision of CMO services in the EEA, with 
a combined market share well below [5-10]%.21 Moreover , the Notifying Parties 
submit that Leo Pharma provides CMO  services to Advanz for one product […] in 
the ATC3 class S1A. Leo Pharma’s market share in the EEA market for CMO  
services is [0-5]%.22 World -wide market shares are not higher under any plausible 
market definition . 
                                                 
15  Non-horizontal Merger Guidelines , paragraphs 17 -19. 
16  Non-horizontal Merger Guidelines , paragraph 30.  
17  Non-horizontal Merger  Guidelines, paragraph 32. 
18  Non-horizontal Merger Guidelines, paragraph 59. 
19  Non-horizontal Merger Guidelines, paragraph 25.  
20  Non-horizontal Merger Guidelines , paragraph 5 . 
21  See Form CO, paragraph 143. The market share is a combined market share of  Leo Pharma and Acino in 
the overall CMO market in the EEA. […]. 
22  See Reply to RFI 6, of 1 June 2021.  
 
7 (33) With regards to the downstream market for ophthalmological anti -infectives , Advanz 
only distributes  […] in ATC3 class S1A . The only Member State where its market 
share exceeds 30% is Sweden, where Advanz holds a market share [of 30 -40]%.23 
(34) Therefore, on the basis of the Parties’ activities and the market definitions discussed 
in Section 4, the following two vertical relationships result in affected markets:  
(a) The provision of CMO s ervices in the EEA (upstream) and the distribution of 
ophthalmological anti -infectives (ATC3 class S1A) in Sweden  (downstream) .  
(b) The provision of CMO services for sterile liquid pharmaceuticals in the EEA 
(upstream) and the distribution of ophthalmological  anti-infectives (ATC3 
class S1A) in Sweden  (downstream) . 
(35) The following sections address input foreclosure and customer foreclosure concerns 
in all of the vertically affected markets.  
5.2.1.  Input foreclosure  
(36) The Transaction is unlikely to give rise to input foreclosure concerns. The combined 
entity would not have the ability to foreclose its downstream competitors in the 
distribution of ophthalmological anti -infectives (ATC3 class S1A) in Sweden for the 
following reasons:  
(a) For input foreclosure to be a concern , the combined entity must have a 
significant degree of power in the upstream market.24 However, the Parties 
have a very limited position in the CMO services market . Both in the overall 
CMO services market and in the CMO services market for sterile liquid 
pharmaceuticals in the EEA  and worldwide ([…]) the Parties’ combined 
market share is [5-10]%. Furthermore , many alternative CMO services’  
suppliers would remain available to the downstream competitors , if Le o 
Pharma were to stop providing CMO services to Advanz’s competitors in the 
downstream market for ATC3 class S1A . 
(b) The combined entity would not have the ability to restrict access to CMO 
services by downstream competitors, as it cannot negatively affect the  overall 
availability of inputs for the downstream market.25 […]. 
(37) As the Commission found that the combined entity would have no ability to restrict 
access to CMO services by its downstream competitors in the distribution of 
ophthalmological anti -infectives  (ATC3 class S1A) in Sweden , it is not necessary to 
assess in detail the incentives of the combined entity to do so or the overall impact of 
such an input foreclosure strategy . 
                                                 
23  See Annex 1, Reply to RFI 4, of 26  May 2021.  
24  Non-horizontal Merger Guidelines, paragraph 35.  
25  Non-horizontal Merger Guidelines, paragraph 36.  
 
8 5.2.2.  Customer foreclosure  
(38) The Transaction is unlikely to lead to customer foreclosur e concerns due to the 
combined entity’s lack of ability to foreclose its upstream competitors for the 
following reasons:  
(a) For customer foreclosure to be a concern, the combined entity must be an 
important customer with a significant degree of market power i n the 
downstream market.26 However, Advanz only has a modest position in ATC3 
class S1A in Sweden , with a market share [of 30 -40]%.27 Therefore, 
downstream customers will remain available to Leo Pharma ’s competitors 
providing CMO services  within the ATC3 cla ss S1A in Sweden . 
(b) Moreover, w hen assessing customer foreclosure, the Commission takes into 
account the existence of different uses for the upstream product. These can 
ensure that a sufficiently large customer base remains for that product post -
Transaction .28 In the present case, distributors of all liquid pharmaceuticals in 
the EEA (of which ATC3 class S1A distributors  in Sweden present only a 
small proportion)  purchase  CMO services for sterile liquid pharmaceuticals. 
The Parties estimate that turnover relat ed to ATC3 category S1A represents  
[less than 10 ]% of the total turnover related to  CMO  services  for sterile liquid 
pharmaceuticals in the EEA.29 
(c) Customer foreclosure is less likely when the combined entity is not an 
important customer for the upstream pro duct.30 This is the case here, as 
[…].31 
(39) As the Commission found that the combined entity would have no ability to restrict 
access to customers by its upstream competitors in the CMO services’ market  in the 
EEA, it is not necessary to assess in detail the in centives of the combined entity to 
do so or the overall impact of such a customer foreclosure strategy.  
5.3. Conclusion  
(40) In light of the above considerations, the Commission concludes that the transaction 
does not raise serious doubts as to its compatibility with the internal market and the 
functioning of the EEA agreement as a result of either input or customer foreclosure 
on the markets for CMO services in the EEA (for sterile liquid pharmaceut icals) 
(upstream) and the distribution of ophthalmological anti -infective (ATC3 class S1A) 
in Sweden (downstream).  
                                                 
26  Non-horizontal  Merger Guidelines, paragraph 61 . 
27  See Reply to RFI 6, of 1 June 2021.  
28  Non-Horizontal Merger Guidelines, paragraphs 61 and 66.  
29  See Reply to RFI 6, of 1 June 2021.  
30  Non-horizontal Merger Guidelines, paragraph 61.  
31  See Reply to RFI  6, of 1 June 2021.  
 
9 6. CONCLUSION  
(41) For the above reasons, the European Commission has decided not to oppose the 
notified concentration  and to declare it compatible w ith the internal  market and with 
the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of the 
Merger Regulation and Article 57 of the EEA Agreement .  
For the Commission  
 
 
(Signed)  
Margrethe VESTAGER  
Executive Vice-President