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, 16.7.2019  
C(2019) 5442 final  
PUBLIC VERSION  
      
 
 
 
To the notifying part ies 
Subject : Case M.9315 – Chr. Hansen/Lonza/JV  
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 11 June 2019 , the European Commission received notification of a proposed 
concentration pursuant to Article 4 of the Merger Regulation by which Chr. Hansen 
Holding A/S ("Chr. Hansen", Denmark) and Lonza Ltd  ("Lonza", Switzerland), 
controlled by Lonza Group Ltd (Switzer land), acquire within the meaning of Article 
3(1)(b) and 3(4) of the Merger Regulation joint control over a newly created 
undertaking (the "JV", Switzerland) by way of purchase of shares (the 
"Transaction").3 In this decision, Chr. Hansen and Lonza are col lectively designated 
as the "Notifying Parties", while Chr. Hansen, Lonza and the JV are referred to as 
the "Parties".  
                                                 
1  OJ L 24, 29.1.2004, p. 1 (the "Merger Regulation"). With effect from 1 December 2009,  the Treaty on 
the Funct ioning 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").  
3  Publication in the Official Journal of the European Union No C 208, 19.06.2019, p. 6.  
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omitted has been replaced by ranges of 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 1. THE PARTIES  
(2) Chr. Hansen is a global bioscience company that mainly develops natural solutions 
for the food, nutritional, and agricultural  industries. Chr. Hansen develops and 
produces cultures, enzymes, probiotics and natural colours for a rich variety of 
foods, confectionery, beverages, dietary supplements and animal feed.  
(3) Lonza is active in the supply of various services in the pharmaceu tical, consumer 
health and nutrition industries. It notably provides contract development and 
manufacturing organisation ( "CDMO ") services for active pharmaceutical 
ingredients ( "API") and finished dose pharmaceuticals ( "FDP") under current Good 
Manufactur ing Practice ( "cGMP ") and offers , since 20174, delivery mechanisms 
technology.  
(4) The JV will provide cGMP -certified CDMO services to pharmaceutical companies 
active in the microbiome space5 and exclusively in relation to the development and 
manufacture of li ve biotherapeutics6 and bacteriophages7 (together referred to as 
"LBP"). Contrary to existing CDMO players in this specific field, the JV will be 
active across the whole CDMO value chain, from the initial development of 
manufacturing processes for the prod uction of LBP -based APIs to the final 
commercial -scale manufacturing of LBP -based FDP.  
2. THE TRANSACTION  
(5) On 2 April 2019, Chr. Hansen and Lonza entered into a joint venture agreement 
relating to the establishment of the JV as a full -functional joint venture.  The 
Transaction consists in the acquisition of joint control by Chr. Hansen and Lonza 
over the JV by way of purchase of shares.  
2.1. Joint control  
(6) Post-Transaction, Chr. Hansen and Lonza will each hold 50% of the shares in the 
JV. 
(7) In terms of governance, the J V will be run by a board of eight directors, half of 
which will be appointed by Chr. Hansen and Lonza respectively. The board will take 
key strategic decisions such as the approval of the JV’s annual budget, business plan, 
major investments, and the appoin tment of top management positions. The adoption 
                                                 
4  Following Lonza’s acquisition of Capsugel SA (Luxembourg). Case COMP/M. 8362 – Lonza 
Group/Capsugel , decision of 21 April 2017.  
5  The microbiome space is a nascent research area in the biopharmaceutical industry involving 
microorganisms that reside in an environmental niche such as humans, animals or plants. For 
instance, the human microbiome includes communities of bacteria, fungi, archaea and viruses, the 
majority of which live in the guts. In recent years, research on the human microbiome has 
significantly intensified and is currently perceived as very promising for the treatment of human 
health and diseases in the coming 5 to 10 y ears.  
6  LBPs are biological products made of living organisms (such as bacteria), that are suitable for the 
prevention, treatment and/or cure of a human diseases and that are not vaccines. LBPs are not 
filterable viruses or products intended as gene thera py. Contrary to vaccines, LBPs are not 
administered by injection but rather by oral, rectal, vaginal or topical delivery mechanisms.  
7  Bacteriophages, also called “phages” or “bacterial viruses”, refer to any viruses that infect and 
ultimately kill bacter ia. 
 
 
3 of these key strategic decisions will require the affirmative votes of all directors 
present with the obligation that at least one director nominated by each of Chr. 
Hansen and Lonza is present.  Thus, the app roval of key strategic decisions will 
require joint action from both Notifying Parties and neither Chr. Hansen nor Lonza 
will benefit from de facto  sole control on these matters.  Pursuant to the joint venture 
agreement, a ll other decisions will be taken on  a simple majority basis, with the 
express approval of at least one director nominated by each of Chr. Hansen and 
Lonza. Consequently, the JV will be jointly controlled by Chr. Hansen and Lonza.  
2.2. Full functionality  
(8) The JV will operate by performing the func tions normally carried out by 
undertakings active on the same markets, independently from its parents.8 The JV 
will also have sufficient resources to operate independently, including its own staff 
dedicated to its day -to-day management. The JV’s activities  will go beyond one 
specific function performed by the parents, as the JV will provide new services  to 
third -party pharmaceutical companies that are not currently offered by either of its 
parents. Although the JV will have several contractual agreements wi th its respective 
parents in relation to IP licensing, leasing or transitional service and supplies, these 
commercial arrangements will be entered into on an arm’s length basis and at market 
price. Neither Lonza nor Chr. Hansen are expected to become futur e clients of the 
JV. Conversely, the JV may potentially enter into supply agreements with Lonza 
with respect to the procurement of solid oral dosage delivery (SODDM) 
mechanisms. However, the Notifying Parties indicated that the choice of SODDM 
provider wil l ultimately remain with the JV’s final customer.  Finally, the JV will 
operate on a lasting basis.  
(9) The Transaction will therefore lead to the creation of a full -functional joint venture.  
2.3. Conclusion  
(10) In view of the above, the Transaction constitutes a conce ntration within the meaning 
of Article 3(1)(b) and 3(4) of the Merger Regulation.  
3. EU DIMENSION  
(11) The undertakings concerned have a combined aggregate worldwide turnover of more 
than EUR 5 000 million9 (Chr. Hansen: EUR  1 097 million; Lonza: 
EUR  4 792 million). Each of them has an EU -wide turnover in excess of EUR 250 
million (Chr. Hansen: EUR  […] million; Lonza: EUR  […] million), but they do not 
achieve more than two -thirds of their aggregate EU -wide t urnover within one and 
the same Member State.  
(12) The Transaction therefore has an EU dimension pursuant to Article 1(2) of the 
Merger Regulation.  
                                                 
8  Commission Consolidated Jurisdictional Notice under Council Regulation (EC) No 139/2004 on the 
control of concentrations between undertakings, OJ C 95, 16.4.2008, recital 94 (the "Notice").  
9  Turnover calculated in accordance with Article 5 of the Merger Regulation.  
 
 
4 4. RELEVANT MARKETS  
(13) The Transaction reflects the Notifying Parties’ intention to expand their activities 
into the microbiome space. To that end, the JV will combine Lonza’s 
biopharmaceutical cGMP CDMO capabilities (that are not suitable for the 
development and manufacture of LBPs) and delivery mechanisms technology, with 
Chr. Hansen's experience with bacterial strains  (microbial physiology, fermentation 
and freeze drying science).10  
(14) The JV is said to become the first player to offer a complete range of cGMP CDMO 
services for pharmaceutical products in the LBP space. More specifically, the JV 
will provide the following services to pharmaceutical companies:  
- CDMO services in relation to LBP -based API, i.e. contract development  
organisation services at the API level ( "API CDO " services ) and contract 
manufacturing  organisation services at the API level ( "API CMO " services ) of 
LBP-based API; and  
- CDMO services in relation to LBP -based FDP, i.e. the supply of dosage -related 
technology and development solution services ( "FDP CDO " services ) for LBP -
based pharmaceutical products and the commercial -scale manufacturing ( "FDP 
CMO " services ) of FDP based on LBP -API.11  
(15) The JV will be involved in the evaluation of strains selected by its customer to 
determine whether these can be scaled -up safely and whether production is feasible 
on a commercial basis,  as part of the supply of API CDO s ervices, but it will not be 
active within the area of drug discovery. Thus, the identification and establishment 
of the clinical benefit of the bacterial strains, as well as the clinical trial and 
commercialisation of the FDP, will be undertaken by the JV’ s customers.  
4.1. Market definitions  
4.1.1.  Supply of CDMO services to pharmaceutical companies  
4.1.1.1.  Product market definition  
(16) The Notifying Parties submit that the relevant product market should be defined as 
encompassing all CDMO services to pharmaceutical companies, wit hout any further 
segmentation.  
(17) In previous decisions, the Commission considered the existence of a market for the 
supply of CDMO services for API distinct from the market for the supply of contract 
manufacturing for FDP.12 The results of the market investi gation confirmed the 
relevance of such a distinction. First, from a demand -side perspective, the respective 
CDMO services for API and FDP address separate needs. On the one hand, CDMO 
                                                 
10  In fact, Chr. Hansen essentially is a contract manufacturer with experience in bacterial strains for the 
food and nutrition industry [confidential details in relation to the business strategy  of Chr. Hansen].  
11  Importantly, neither Chr. Hansen nor Lonza are currently active in this specific business segment, as 
Chr. Hansen [confidential details relating to business strategy of Chr. Hansen]  while Lonza does not 
have [confidential details relating to the business strategy of  Lonza].  
12  Cases COMP/M. 8362 – Lonza Group/Capsugel , decision of 21 April 2017 and COMP/M.8541 – 
Thermo Fisher Scientific/Patheon , decision of 23 August 2017  
 
 
5 services at the API level involve the evaluation, characterisation, deve lopment of 
production and scaling -up processes in relation to the manufacture of API. On the 
other hand, CDMO services at the FDP level mainly pertain to the development of 
an appropriate dosage formulation and the large -scale manufacture of the final drug  
products. Second, from a supply -side perspective, CDMO services at the API and 
FDP levels do not involve the same equipment and require specific know -how and 
expertise. In fact, multiple CDMO players do not have the capability to be active 
throughout the CDMO value chain and several respondents to the market 
investigation indicated to be exclusively active either at the API level or at the FDP 
level.13   
(18) Within the market for the supply of CDMO services at the API level , the Commission 
previously considered  a separate product market for biopharmaceutical CDMO 
services (as opposed to CDMO services in relation to chemically -synthesised drugs). 
The Commission also envisaged, but ultimately left open, the question of whether 
the product market for biopharmaceuti cal CDMO services should be further 
segmented (i) based on the host system used in the manufacturing process ( i.e. 
mammalian cell cultures or microbial fermentation processes) and (ii) between 
process development and large -scale manufacturing of biopharmac euticals.14  
(19) The results of the market investigation confirmed the relevance of a distinction 
between the supply of CDMO services for biopharmaceuticals and chemically -
synthesised API, as the production processes require different equipment and 
expertise.15 Market participants further explained that, within the segment for 
biopharmaceutical CDMO services, (i) the development and manufacturing of LBPs 
usually requires dedicated equipment16 because of the risks of cross -contamination 
with other products,17 and ( ii) a distinction could be made between the supply of 
CDO services (i.e. process development) and the provision of CMO services (i.e. 
large -scale commercial production). Indeed, certain pharmaceutical companies 
observe that certain CDO service providers in  relation to biopharmaceuticals do not 
have sufficient capacity to ensure a large -scale CMO activity.18 Conversely, other 
respondents further explained that they generally procure CDO services in -house and 
outsource CMO services only.19 
(20) Within the market for  the supply of CDMO services at the FDP level , the 
Commission previously considered the existence of a separate market for the supply 
of contract manufacturing services (CMO) but left open the question of whether this 
market should be further segmented acc ording to: (i) the pharmaceutical form (solid 
dose and powder pharmaceuticals, liquid and semi -solid pharmaceuticals, sterile 
                                                 
13  Responses to questionnaire Q1 to CDMO competitors, question 2.  
14  Case COMP/M.5479 – Lonza/Teva/JV , decision of 14 May 2005.  
15  Responses to questionnaire Q3 to potential customers of the JV, question 5 and responses to 
questionnaire Q1 to CDMO competitors, question 5.  
16  Responses to questionnaire Q1 to CDMO competitors, question 5.  
17  Responses to ques tionnaire Q3 to potential customers of the JV, question 6. In the Form CO, the 
Notifying Parties also explain: “ LBP-APIs are different in nature  [from other API] because the APIs 
are not the molecules expressed during the reproduction process, but rather the entire bacteria. Other 
differences also exist in the manufacturing process as well, such as the fact that the manufacturing of 
LBP-APIs requires larger tanks ”. 
18  Responses to questionnaire Q3 to potential customers of the JV, question 9.  
19  Responses to questionnaire Q3 to potential customers of the JV, question 8 and non -confidential 
version of the minutes of a call with a pharmaceutical company held on 6 June 2019.  
 
 
6 liquid pharmaceuticals, and medicated confectionary pharmaceuticals);20 (ii) the 
conditions of manufacture (toxicity, sterile envir onment, the nature of the 
technology/know -how needed to produce the FDP);21 and (iii) the type of API used.  
(21) In addition, in its recent Lonza Group/Capsugel  decision,22 the Commission 
considered a market for dosage formulation and development services (CDO) b ut 
left open whether this market is part of a broader market for the supply of CDMO 
services (i.e. comprising both CMO and CDO services for FDP) or whether CDO 
should be considered separately and potentially further segmented by technology.23  
(22) The Commissio n’s market investigation confirmed that several relevant 
segmentations could be envisaged for the market for the supply of CDMO services 
at the FDP level ,24 based on (i) the type of API used (chemically -synthesised and 
biopharmaceutical API) and (ii) the de livery mechanism used, but also (iii) between 
the supply of CDO and CMO services.  
(23) In any event, for the purpose of the present decision, the Commission considers that 
the exact product market definition for the supply of CDMO services to 
pharmaceutical com panies can be left open since the Transaction does not raise 
serious doubts as to its compatibility with the internal market  irrespective of whether 
the market is defined as encompassing all CDMO services or is segmented by type 
of services.25 
4.1.1.2.  Geographic ma rket definition  
(24) The Notifying Parties submit that the market for CDMO services to pharmaceutical 
companies is at least EEA -wide in scope, if not global.  
(25) The Commission previously left open the question of whether the respective markets 
for CDMO services at  the API and FDP levels and their possible segmentations are 
worldwide or EEA -wide in scope.26 
(26) The results of the market investigation confirmed that the geographic market for 
CDMO services to pharmaceutical companies, and its potential segments, is likely to 
be global in scope and, in any event, at least EEA -wide.27 
(27) For the purpose of this decision, the question of whether the market for CDMO 
services to pharmaceutical companies and its potential segments is at least EEA -
                                                 
20  Cases COMP/M.8541 – Thermo Fisher Scientific/Patheon , decision of 23 August 2017; 
COMP/M.5253 – Sanofi -Aventis/Zentica , decision of 4 February 2009; and COMP/M.5953 – Reckitt 
Benckiser/SLL , decision of 25 October 2010.  
21  Cases COMP/M.5253 – Sanofi -Aventis/Zentica , decision of 4 February 2009 and COMP/M.5555 – 
Novartis/Ebewe , decision of  22 September 2009.  
22  Case COMP/M. 8362 – Lonza Group/Capsugel , decision of 21 April 2017.  
23  Case COMP/M. 8362 – Lonza Group/Capsugel , decision of 21 April 2017.  
24  Responses to questionnaire Q3 to potential customers of the JV, questions 5, 6 and 10 and  responses 
to questionnaire Q1 to CDMO competitors, questions 5, 6, 11 and 13.  
25  See recitals 41 and 42, as well as sections 5.1, 5.2.1 (in particular recital 54) and 5.2.2. (in particular 
recitals 61 and 63).  
26  Cases COMP/M. 8362 – Lonza Group/Capsugel , decision of 21 April 2017 and COMP/M.8541 – 
Thermo Fisher Scientific/Patheon , decision of 23 August 2017.  
27  Responses to questionnaire Q3 to potential customers of the JV, question 14 and responses to 
questionnaire Q1 to CDMO competitors, question 15.  
 
 
7 wide or global in scope can be left o pen since the Transaction does not raise serious 
doubts as to its compatibility with the internal market under any of the alternative 
definitions.28 
4.1.2.  Manufacture and supply of SODDM  
4.1.2.1.  Product market definition  
(28) The Notifying Parties submit that the relevant product market should include all 
types of SODDM, without any further segmentation.29 
(29) In previous decisions, the Commission considered a market for the manufacturing 
and supply of SODDM to the pharmaceutical/over -the-counter and nutrition 
industries that co uld be segmented into the following categories: (i) hard gelatine 
capsules; (ii) soft gelatine capsules; (ii) liquid filled hard capsules; and (iv) 
alternative polymer capsules. However, the Commission left open the exact product 
market definition.30 
(30) Lonza is also developing a new technology of hard capsules designed for enteric 
delivery. These enteric delivery capsules are currently used only in clinical trials by 
a limited number of customers.31 The Notifying Party considers that enteric delivery 
capsules do not constitute a separate market since, from a technical perspective, the 
same delivery mechanism can be achieved by coating normal hard capsules in latex. 
The results of the market investigation confirmed the Notifying Parties’ claim.32 
(31) In any event, fo r the purpose of this decision, the product market definition can be 
left open, since the Transaction does not lead to serious doubts as to its compatibility 
with the internal market  irrespective of whether the market for the manufacture and 
supply of SODD M is defined as encompassing all SODDM or is segmented by type 
of capsules (hard gelatine, soft gelatine, alternative polymer and liquid filled).33 
4.1.2.2.  Geographic market definition  
(32) The Notifying Parties submit that the relevant geographic market for the 
manufac ture and supply of SODDM is at least EEA -wide in scope, if not global.  
(33) In previous decisions, the Commission left open the question of whether the 
manufacture and supply of SODDM and its possible segments are EEA -wide or 
worldwide in scope.34 The market in vestigation confirmed that the geographic 
markets would be either EEA -wide or worldwide in scope.   
                                                 
28  See recitals 41 and 42, as well as sections 5.1, 5.2.1 (in particular recital 54) and 5.2.2. (in particular 
recital 63).  
29  In particular, the Notifying Parties consider that even enteric capsules can be used interchangeably 
with hard capsules dipped into  latex (in order to offer similar properties in terms of gastric acid 
resistance).  
30  Case COMP/M. 8362 – Lonza Group/Capsugel , decision of 21 April 2017.  
31  Currently, Lonza’s enteric delivery capsules are [confidential]  sold to [confidential]  customers w ho 
use them for drugs in clinical trials, namely [confidential details relating to customer sales].  
32  Responses to questionnaire Q1 to CDMO competitors, question 28, and to questionnaire Q3 to 
potential customers of the JV, question 25.  
33  See section 5.2 .1 (in particular recitals 52, 53, 56, 57 and 58).  
34  Case COMP/M. 8362 – Lonza Group/Capsugel , decision of 21 April 2017.  
 
 
8 (34) In any event, for the purpose of this decision, the question of whether the market for 
the manufacture and supply of SODDM and its potential segments is EEA -wide or 
global in scope can be left open since the Transaction does not lead to serious doubts 
as to its compatibility with the internal market under any of the alternative 
definitions.35 
4.1.3.  Bacterial strains  
4.1.3.1.  Product market definition  
(35) The Notifying Parties co nsider that the relevant product market for bacterial strains 
encompasses all possible bacterial strains without a need for any segmentation.  
(36) The Commission did not previously assess the market for bacterial strains. In the 
context of the present case, the market investigation  envisaged  five alternative 
approaches to segment the market for bacterial strains based on their scientific 
classification, their end -use application, their technical characteristics, their property 
of occurring naturally or being ge netically modified, or, finally, the types of related 
services offered by the bacterial strain provider. However, the results of the market 
investigation did not reveal any evidence suggesting that the market for bacterial 
strains should be segmented into narrower relevant product markets.36 
(37) For the purpose of the present decision, the Commission therefore considers that the 
exact product market definition for bacterial strains can be left open  since the  
Transaction does not lead to serious doubts as to its compatibility with the internal 
market irrespective of the alternative product market definition considered.37 
4.1.3.2.  Geographic market definition  
(38) The Notifying Parties submit that the geographic market for bacterial strains is 
worldwide in scope or at least EEA -wide. 
(39) The Commission did not previously assess the market for bacterial strains. The 
results of the market investigation carried out in the context of the present case did 
not reveal any evidence suggesting that the geographic market for bacterial strains o r 
any of its hypothetical segments would be narrower than the EEA.38 
(40) For the purpose of the present case, the geographic market definition for bacterial 
strains and its potential segments can be left open since the Transaction does not lead 
to serious doubt s as to its compatibility with the internal market irrespective of the 
alternative geographic definitions considered.39 
                                                 
35  See section 5.2.1 (in particular recitals 52, 53 and 57).  
36   Responses to questionnaire Q1 to CDMO competitors, question 23; responses to questionnaire Q3 to 
potential customers of the JV, questions 19 and 20, and responses to questionnaire Q4 to bacterial 
strain service providers, questions 4 and 5.  
37  See section  5.2.2 (in particular recitals 61 and 62).  
38   Responses to questionnaire Q4 to bacterial strain service providers, questions 1 and 7.  
39  See section 5.2.2 (in particular recital 62).  
 
 
9 5. COMPETITIVE ASSESSMEN T 
(41) The JV does not currently commercialise any products but is set up to supply CDMO 
services in relation to API and FDP, including small -scale manufacturing to 
pharmaceutical companies engaged in pre -clinical and phase I / phase II clinical 
trials from 2019 onwards. Consequently, there is presently no horizontal overlap 
between the JV's activities and Lonza's activities  on the markets for the supply of 
CDMO services. Still, the Transaction leads to affected markets in some of the 
possible relevant markets where Lonza is active and the JV will be active (i.e. supply 
of (i) biopharmaceutical CDMO services at the API level (including LBP and non 
LBP-based API), and (ii) biopharmaceutical CMO services at the API level 
(including LBP and non LBP -based API).  
(42) The Transaction also leads to two vertically affected relationships between:  
– Lonza’s supply of hard gelatine capsules (upstream), where Lonza holds EEA 
and global market shares in excess of 30%, and the JV’s future activities in 
CDMO services at the FDP level (downstream); and  
– Chr. Hansen’s activities in relation to bacterial strains (upstream) and Lonza’s 
and the JV’s ac tivities in the supply of biopharmaceutical CDMO services  at the 
API level (downstream), where Lonza’s and the JV’s combined market share 
would be in excess of 30%.  
(43) For the avoidance of doubt, the present decision and the below competitive 
assessment remai n without prejudice to the legal obligation of the JV and its parents 
to comply with Articles 101 and 102 TFEU.  
5.1. Horizontal non -coordinated effects  
(44) The JV will supply a complete range of CDMO services in relation to LBPs to 
pharmaceutical companies, both at  the API and FDP levels. Neither the activities of 
Lonza (who supplies CDMO services for chemical and non -LBP biological 
products) nor the activities of Chr. Hansen’s (who supplies CDMO services, 
including for LBPs, exclusively to the health and nutrition industries and not to 
pharmaceutical companies40) will specifically overlap with the JV’s activities. The 
Transaction therefore does not lead to any horizontal overlap between the JV and its 
parents on the hypothetical segment for the supply of CDMO service s for LBPs at 
the API and/or FDP levels.  
(45) Nevertheless, horizontally affected markets arise when considering the broader 
hypothetical markets, at global level41, for the supply of (i) biopharmaceutical 
CDMO services at the API level (including both LBP -based  and non -LBP-based 
API), and (ii) biopharmaceutical CMO services at the API level (including both 
                                                 
40  Internal documents assessing the creation of the JV show that Chr. H ansen [confidential details 
relating to the sales strategy and the business and marketing plan of Chr. Ha nsen]  (Annex 5.4.6 of the 
Form CO). An additional internal analysis undertaken by Chr. Hansen concludes that [confidential 
details relating to the sale s strategy and the business and marketing plan of Chr. Hansen]  (Annex 1 to 
the Notifying Parties’ response to RFI6).  
41  Under the alternative on an EEA -wide geographic market definition, the markets for the supply of 
biopharmaceutical CDMO services at the API level and for biopharmaceutical CMO services at the 
API level are not affected by the Transaction.  
 
 
10 LBP-based and non -LBP-based API) due to Lonza’s market share on each of these 
markets (i.e. [30-40]%  on the market for CDMO services at the API level worldwid e 
and [30-40]%  on the market for CMO services at the API level worldwide).  
(46) On each of these markets, the JV’s market share is expected to remain fairly limited 
(up to [0-5]%) over the […] year period following the start of its activities. This is 
due to t he fact that the LBP space currently constitutes a niche area of the market for 
the provision of biopharmaceutical CDMO and CMO services to pharmaceutical 
companies worldwide.42 
(47) Post-Transaction, Lonza and the JV would continue to face numerous other large 
suppliers of biopharmaceutical CDMO services at the API level, including 
Boehringer Ingelheim ( [10-20]% on the markets for CDMO and CMO services at 
the  API level worldwide), Samsung Biologics ( [10-20]%  on the markets for CDMO 
and CMO services at the API level worldwide), Wuxi Biologics ( [5-10]%  on the 
market for CDMO and CMO services at the API level worldwide), and other smaller 
players such as, among others, Fujifilm Diosynth, Luina Bio, SynCo Wacker and 
Biose.  
(48) Moreover, Lonza and the JV would not be c lose competitors, as they would offer 
biopharmaceutical CDMO and CMO services in relation to different types of API 
(LBP -based API for the JV as opposed to chemical and non -LBP biological API for 
Lonza). Multiple alternative biopharmaceutical cGMP CDMO pla yers such as Luina 
Bio, SynCo Wacker or Biose will directly compete with the JV on the hypothetical 
markets for the supply of biopharmaceutical CDMO and CMO services in relation to 
LBP-based API, where the Transaction aims to create a new player on the mar ket.43 
(49) Eventually, the vast majority of market participants consider the impact of the 
Transaction to be neutral on the overall market for CDMO and CMO services in 
relation to biopharmaceutical products. More specifically, no customer expects any 
negative i mpact of the Transaction on these broad markets and some even expect the 
Transaction to have a positive impact on their activities.44 While some competitors 
pointed out that the JV would become the first player active throughout the whole 
production chain i n the nascent LPB space and therefore expect it to rapidly acquire 
a strong position on this hypothetical market, the creation of the JV would also entail 
additional production capacity (in particular, commercial manufacturing capacity).45  
(50) In view of the a bove and all the information obtained over the course of the market 
investigation, the Commission considers that the Transaction does not raise serious 
doubts as to its compatibility with the internal market with respect to its horizontal 
                                                 
42  Market shares are expressed in terms of sales (value). Considering Lonza’s production capacity and 
the JV’s (future production capacity), their combined market share would remain below 20% under 
all plausible market definitions.  
43  In the context of the present case, merger -specific horizontal coordinated effects are unlikely to arise 
since the supply of biopharmaceutical CDMO services at the API level and its potential segment for 
biopharmaceutical CMO services at the API level involve multiple players of various sizes, non -
homogeneous products (services addressing specific customer needs) and are characterised by a 
dynamic environment driven by r esearch and innovation (as evidenced by the expected emergence of 
CDMO services in relation to LBP). Therefore, the Transaction is unlikely to enable or facilitate 
market players in the supply of biopharmaceutical CDMO services at the API level to reach co mmon 
terms of coordination.  
44  Responses to questionnaire Q3 to potential customers of the JV, question 27.1.  
45  Responses to questionnaire Q1 to CDMO competitors, question 31.4.  
 
 
11 non-coordinated e ffects in the supply of CDMO services and its potential relevant 
segments.  
5.2. Vertical effects  
5.2.1.  Vertical relation between Lonza’s supply of hard gelatine capsules (upstream) and 
the JV’s supply of CDMO services at the FDP level (downstream)  
(51) Lonza manufactures and supplies SODDM that are  used in the production of FDP, 
including LBP -based drugs.  
(52) The Transaction gives rise to one vertically affected relationship involving the 
hypothetical upstream market for hard gelatine capsules, where Lonza held relatively 
high market shares in 2018 both in the EEA and globally (see Table 1).  
Table 1 – Worldwide and EEA -wide market shares (based on 2018 sales and volume) 
in the market for hard gelatine capsules  
 Global  EEA  
Market player  volume  value  volume  value  
JV 0% 0% 0% 0% 
Chr. Hansen  0% 0% 0% 0% 
Lonza  [20-30]%  [40-50]%  [50-60]%  [50-60]%  
ACG  [10-20]%  [10-20]%  [10-20]%  [10-20]%  
Qualicaps  [5-10]%  [10-20]%  [10-20]%  [10-20]%  
GS Capsule  [0-5]% [0-5]% (incl. in Others)  (incl. in Others)  
SuHeung  [0-5]% [0-5]% (incl. in Others)  (incl. in Others)  
Roxlor  (incl. in Others)  (incl. in Others)  [5-10]%  [5-10]%  
Others  [30-40]%  [20-30]%  [5-10]%  [5-10]%  
Total  100%  100%  100%  100%  
Total market  
size 475 billion  
units  EUR 986  
million  62 billion  
units  EUR 197  
million  
Source: Parties’ estimates  
(53) In the hypothetical global market for hard gelatine capsules, Lonza held 2018 market 
shares of up to [40-50]%  (based on value), followed by ACG [10-20]%  and 
Qualicaps [10-20]% . Under the alternative of an EEA -wide geographic market 
definition, Lonza’s share was at [50-60]%  (based on value) and [50-60]%  (based on 
volume), followed by ACG ([10-20]%)  and Qualicaps ([10-20]%) . However, 
irrespective of Lonza’s strong market positio n in the hypothetical segment for hard 
gelatine capsules at either global or EEA level, no foreclosure risks appear likely to 
arise post -Transaction.  
(54) On the downstream market for the supply of CDMO services at FDP level, the JV is 
expected to hold a very limited market presence (well below [0-5]%both at EEA -
wide and global level) over the […] year period following the start of its activities. 
Customer foreclosure is unlikely to occur, as the Notifying Parties represented that 
the JV will account for less t han [0-5]% of the total demand for hard gelatine 
capsules. Suppliers of this type of capsules will therefore retain a large array of 
customers to whom to sell their products.  
 
 
12 (55) Similarly, input foreclosure regarding access to Lonza’s hard gelatine capsules i s 
unlikely to materialise.  
(56) First, there is no technical bundling possible between Lonza’s hard gelatine capsules 
(including its enteric capsules) and the FDP manufactured by the JV because, as 
explicitly and repeatedly confirmed by the Notifying Parties, the JV’s customers will 
remain free to purchase capsules from any alternative supplier such as AGC, 
Qualicaps or Roxlor.46 
(57) Second, a sufficient number of alternative players will remain active in the supply of 
hard gelatine capsules, including AGC, Qualicap s, and Roxlor both at EEA and 
worldwide level. Should Lonza engage into an input foreclosure strategy towards 
competing CDMO service providers at the FDP level, these downstream competitors 
would still be able to source the necessary capsules on the market . As regards enteric 
delivery capsules more specifically, all potential customers who replied to the 
market investigation indicated that there are alternatives to enteric capsules for the 
manufacture of LBP -based FDPs, so that these specific capsules do no t constitute a 
critical input.47 
(58) Third, given the limited size of the JV's future purchases of hard gelatine capsules 
(less than [0-5]%) compared to Lonza’s total current sales of hard gelatine capsules, 
it is unlikely that Lonza would have any economic inc entive of discontinuing 
supplies to its other downstream customers, which are not necessarily CDMO 
players (e.g., pharmaceutical companies with in -house capabilities at the FDP level) 
or active in the development and manufacture of LBP -based drugs at the F DP level.  
(59) In view of the above and all the information obtained over the course of the market 
investigation, the Commission considers that the Transaction does not raise serious 
doubts as to its compatibility with the internal market with respect to the v ertical link 
between Lonza’s upstream activities in the supply of hard gelatine capsules, on the 
one hand, and the JV’s future downstream activities in the supply of CDMO services 
at the FDP level, on the other hand.  
5.2.2.  Vertical relation between the Chr. Hansen’s supply of bacterial strains (upstream) 
and Lonza and the JV’s supply of biopharmaceutical CDMO services at the API 
level  
(60) The Transaction gives rise to a vertically affected link between the downstream 
market for biopharmaceutical CDMO services, wh ere both Lonza and the JV will be 
active, and the upstream market for bacterial strains, where only Chr. Hansen is 
active.  
(61) The vertical relationship between Chr. Hansen’s upstream activities in relation to 
bacterial strains and the JV’s future downstream a ctivities in the supply of 
                                                 
46  For instance: “ Ultimately  […], the choice of SODDM provider, will remain w ith the customers of the 
Joint Venture ” (Form CO, paragraph 71); “ The choice of a specific delivery mechanism (and its 
supplier) will ultimately be decided by the customer of the Joint Venture in each case ” (Form CO, 
paragraph 113); “ Lonza will not have an  exclusive SODDM supply agreement with the Joint Venture, 
and the delivery mechanism and choice of supplier will ultimately be decided by the Joint Venture’s 
customers ” (Form CO, footnote 27); “ The Joint Venture will purchase SODDM either from Lonza  
[…], or from an alternative supplier as instructed by its customers ” (Form CO, paragraph 287).  
47  Responses to questionnaire Q3 to potential customers of the JV, question 25 and 25.1.  
 
 
13 biopharmaceutical CDMO services is indirect since the JV’s customers (and not the 
JV itself) will be involved in the drug discovery process and the selection of 
bacterial strains.  Irrespective of this, even if the JV were to lice nse bacterial strains 
directly from Chr. Hansen and rely on them to develop and manufacture LBP -based 
API, no risk of foreclosure is likely to materialise in the context of the present case.  
(62) In fact, Chr. Hansen only holds a limited position on the upstrea m market for the 
supply of bacterial strains and any of its possible segments ([0-5]% both at EEA -
wide and global level), in particular in relation to bacterial strains suitable for LBPs. 
Respondents to the Commission’s market investigation confirmed that there is a 
large number of suppliers that could provide bacterial strains for the development of 
LBP-based API.48 Given Chr. Hansen’s limited presence in the upstream market, the 
Parties would lack the ability to successfully engage into any input foreclosu re 
strategy.  
(63) Likewise, customer foreclosure regarding access to bacterial strains is unlikely to 
materialise post -Transaction given the marginal position that the JV is expected to 
hold at the downstream level (up to [0-5]%  both at EEA -wide and global lev el) over 
the […] year period following the start of its activities . 
(64) In view of the above and all the information obtained over the course of the market 
investigation, the Commission considers that the Transaction does not raise serious 
doubts as to its com patibility with the internal market with respect to the vertical link 
between Chr. Hansen’s activities in the upstream supply of bacterial strains and any 
of its potential segments, on the one hand, and  the activities of Lonza and the JV i n 
the downstream supply of biopharmaceutical CDMO services at the API level, on 
the other hand.  
6. CONCLUSION  
(65) For the above reasons, the European Commission has decided not to oppose the 
notified operation and to declare it compatible with 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  
Member of the Commission  
 
 
                                                 
48  Responses to questionnaire Q1 to CDMO competitors, question 24.