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,  8.6.2020  
C(2020 ) 3949 final  
PUBLIC VERSION  
 
Elanco Animal Health Inc.  
2500 Innovation Way  
46140 Greenfield, Indiana  
United States of America  
Subject : Case M.9554 – Elanco Animal Health/Bayer Animal Health Division  
Commiss ion decision pursuant to Article 6(1)(b) in conjunction with 
Article 6(2) of Council Regulation No  139/20041 and Article 57 of the 
Agreement on the European Economic Area2 
Dear Sir or Madam,  
(1) On 14 April 2020, the Commission received notification of a propo sed concentration 
pursuant to Article 4 of Council Regulation (EC) No 139/2004 (the “Merger 
Regulation”) by which Elanco Animal Health Inc. (“Elanco” , USA ) acquires sole 
                                                 
1  OJ L 24, 29.1.2004, p. 1 (the "Merger Regulation"). With effect from 1 December 2009,  the Treaty on the 
Functioni ng 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.  
Although the United Kingdom (t he “UK”) withdrew from the European Union as of 1 February 2020, under the 
Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union 
and the European Atomic Energy Community (the “Withdrawal Agreement”) , Union law continues to apply to the 
UK during the transition period. Accordingly, any reference to Member States shall be understood as including the 
UK. Similarly any references made to the EEA in this Decision are meant to also include the UK.  
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possible the information omitted has been 
replaced by ranges of figures or a general 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 control of Bayer AG’s (“Bayer” , Germany ) animal health business (“BAH”) (the 
“Transact ion”).3 Elanco and BAH are designated hereinafter as the “Parties” and 
Elanco as the “Notifying Party” to the Transaction.  
1. THE  PARTIES  AND  THE  OPERATION  
(2) Elanco  is a US -based animal health company that develops, manufactures and 
markets veterinary products  for companion animals  (“CA”) and production animals  
(“PA”) worldwide. Formerly part of the US pharmaceutical group Eli Lilly, Elanco 
became a fully independent company in March 2019.  
(3) BAH  comprises Bayer’s animal health business, which is active in the dev elopment, 
production and marketing of veterinary products for CA and PA worldwide. BAH 
represented approximately 3.5% of Bayer’s turnover in 2019.  
(4) On 20 August 2019, the Parties entered into a share and asset purchase agreement 
pursuant to which Elanco wil l acquire sole control over BAH.  The Transaction 
would therefore give rise to a concentration within the meaning of Article 3(1)(b) of 
the Merger Regulation.  
2. UNION  DIMENSION  
(5) Based on 2019  data, the combined aggregate world -wide turnover of the Parties was 
more than EUR 2 500 million (Elanco: EUR 2 744 million; BAH: EUR 1 5 71 
million). Each of the Parties had an EU -wide turnover of more than EUR 100 
million (Elanco: […]; BAH: […]). In at least three Member States, the Parties had 
combined turnover of more th an EUR 100 million and individual turnover of more 
than EUR 25 million ( […]). Neither of the Parties achieved more than two -thirds of 
its aggregate EU -wide turnover within one and the same Member State.  
(6) The concentration therefore has a Union dimension pu rsuant to Article 1(3) of the 
Merger Regulation.  
3. MARKET  DEFINITION  
3.1. Product market definition  
3.1.1.  Introduction  
(7) The Transaction will combine the number four (Elanco) and five (BAH) players  in 
the animal health industry, creating the number two supplier in the E EA and 
worldwide (in terms of sales) after Zoetis . 
(8) As regards product market definition, in previous cases in this sector ,4 the 
Commission has divided animal health products into three main categories: (i) 
biologicals (such as vaccines);5 (ii) pharmaceutic als; and (iii) feed supplements.6 
                                                 
3  Publication in the Official Jour nal of the European Union No C 13 2, 23.4.2020 , p. 12 . 
 
 
3 (9) In the present case, the Parties’ activities mainly overlap in animal pharmaceuticals.7 
Animal p harmaceuticals encompass a wide group of products that contain a variety 
of active substances to prevent or treat a large rang e of animal diseases and 
disorders. Within pharmaceuticals, the Commission’s past decisional practice8 
distinguishes: (i) parasiticides,9 (ii) otitis products, (iii) antimicrobials, (iv) endocrine 
treatments, (v) anti -inflammatories, and (vi) analgesics.  
(10) Furthermore, when defining relevant product markets in the area of animal 
pharmaceuticals, the Commission considered the following factors as important :10 (i) 
species ( e.g. cats and dogs within CA; poultry, swine and cattle within PA), (ii) 
active ingredien t/chemical class, (iii) targeted pathology/indication, (iv) mode of 
administration  (“MoA”)  (e.g. oral, topical, injection), (v) duration of efficacy  for PA ; 
and (vi) duration of the withdrawal period for PA.11 Not each factor was considered 
for each type of  pharmaceutical s. 
(11) In the present case, the Transaction gives rise to horizontally affected markets in the 
supply of pharmaceuticals for PA and CA. The Parties ’ activities mainly overlap in 
relation to the following products: (i) CA parasiticides, antimicro bials, and otitis 
products and (ii) PA anticoccidials, parasiticides and antimicrobials.12   
                                                                                                                                                      
4  See notably cases M.7917 - Boehringer Ingelheim/Sanofi Animal Health Business, paragraph 10; M.7277 - Eli 
Lilly/Novartis A nimal Health , paragraph 12; M.6205 - Eli Lilly/Janssen Pharmaceutical Animal Health Business 
Assets, paragraph 11; and M.2922, Pfizer / Pharmacia, paragraph 111.  
5  Biologicals are products triggering an immune response against viral and bacterial diseases , as well as occasionally 
parasitic or fungal infections in animals. Biologicals include in particular animal vaccines. The Parties’ activities do 
not give raise to affected markets with regards to vaccines or biologicials more broadly.  
6  Feed supplements  are pharmaceutical or nutritional substances which are not natural feedstuffs and are added to 
made -up and stored feeds, chiefly to control infectious diseases or to promote growth. The Parties’ activities give rise 
to minor horizontal overlaps in relatio n to feed supplements, but without affected market.  
7  Additionally, both Parties supply certain additional, miscellaneous products: (i) ketosis products for cattle, (ii) 
rehydration treatments, (iii) premise applications, (iv) anaesthetics, (v) dermatitis  products, (vi) topical ear cleaners, 
(vii) hormones, (viii) probiotics, (ix) immuno -stimulants. No competition concern arises with respect to any of these 
additional products, regardless of the market definition (see Section 4 below).  
8  See footnote 4 a bove.  
9  As further explained in Section 3.1.2.1 below, within parasiticides, the Commission distinguished products targeting 
multi -celled parasites ( e.g. fleas and worms) and products targeting single -celled parasites (“anticoccidials”) (see e.g. 
case M. 7277, Eli Lilly/ Novartis Animal Health, paragraph 16). In this Decision, a ny references to “parasiticides” shall 
be understood as parasiticides targeting multi -celled parasites ( i.e. excluding anticoccidials).  
10  See cases M.7917 - Boehringer Ingelheim/Sa nofi Animal Health Business , paragraph 142; M.7277 - Eli Lilly/Novartis 
Animal Health , paragraph 14; M.6205 - Eli Lilly/Janssen Pharmaceutica Animal Health Business Assets , paragraph 
14; and M.5476 - Pfizer/Wyeth,  paragraph 120.  
11  The withdrawal period co rresponds to the period after treatment during which an animal’s meat or milk is considered 
unsuitable for human consumption.  
12  Within pharmaceuticals, minor overlaps also arise for anti -inflammatories and analgesics. No competition concern 
arises with re spect to these products, regardless of the market definition (see Section 4 below).  
 
 
4 3.1.2.  Companion animals  
3.1.2.1.  Parasiticides  
(a) Commission’s precedents  
(12) In its previous decisional practice, the Commission considered that feline and canine 
parasiticides belong to a single market for CA parasiticides .13  
(13) Within parasiticides, the Commission found that products targeting multi -celled 
parasites ( e.g. fleas and worms) and products targeting single -celled parasites 
(“anticoccidials”) constitute distinct product market s.14 As regards multi -celled 
parasiticides, the Commission distinguished three categories .15 (i) ectoparasiticides  
(or ecto products), used to control external parasites ( e.g. fleas, ticks), (ii) 
endoparasiticides  (or endo products), used to control internal  parasites ( e.g. flukes, 
tapeworms, roundworms ), and (iii) endectocides  (or endecto products), used to 
control both external and internal parasites. Given the existence of a certain degree 
of substitutability, the Commission also envisaged alternative mark et segments 
comprising (i) ecto/endecto products together and (ii) endo/endecto products 
together, but ultimately left the market definition open.16  
(14) The Commission also envisaged additional sub -segmentations of the CA 
parasiticides markets including (i) a segmentation by mode of administration  (e.g. 
oral, injectable, topical), which was ultimately left open ;17 and (ii) a segmentation 
based on the indication/targeted parasites , considering that heartworm products 
constitute a separate market.18 In contrast, pr evious decisions did not envisage a 
segmentation of parasiticides by active ingredient/ chemical class  (such as 
isoxazolines  (“isox”)) or by duration of efficacy .19 
(b) The Part ies’ views  
(15) The Parties do not contest the fact that products targeting multi -celled p arasites and 
anticoccidials are part of distinct product markets. They also agree with the 
distinction between (i) ectoparasiticides, (ii) endoparasiticides, and (iii) 
endectocides. However, they consider that market segments comprising (i) 
ecto/endecto pr oducts and (ii) endo/endecto products are not plausible. The Parties 
also submit that CA parasiticides are usually authorised for use specifically in either 
cats or dogs, and cannot be used interchangeably. Conversely, they do not consider 
meaningful to fu rther segment the markets for parasiticides by mode of 
administration, indication or chemical class. In particular, they contest the existence 
of a distinct market segment for isox products on the ground that (i) the chemical 
                                                 
13  See cases M.7277 - Eli Lilly/Novartis Animal Health, paragraph 14; M.5476 - Pfizer/Wyeth, paragraph 110; M.4691 - 
Schering -Plough/Organon Biosciences, paragraph 21; and M.885 - Merck/Rhone -Poulenc -Merial, paragraph 36.  
14  See cases M.7277 - Eli Lilly/Novartis Animal Health, paragraph 16; M.5476 - Pfizer/Wyeth, paragraph 287; and 
M.4691 - Schering -Plough/Organon Biosciences, paragraph 422.  
15  See cases M.5476 - Pfizer/Wyet h, paragraph 289; and M.4691 - Schering -Plough/Organon Biosciences, paragraph 
422. 
16  See case M.7277 - Eli Lilly/Novartis Animal Health, paragraph 24.  
17  See cases M.7277 - Eli Lilly/Novartis Animal Health , paragraph 19; and M.4691 - Schering -Plough/Organ on 
Biosciences, paragraph 438.  
18  See case M.7277 - Eli Lilly/Novartis Animal Health,  paragraph 26.  
19  See case M.6205 - Eli Lilly/Janssen Pharmaceutica Animal Health Business Assets, paragraph 57.  
 
 
5 class of parasiticide s does no t drive customer choice s and that (ii) products may 
combine various compounds in order to extract the benefit of multiple different 
chemical classes. The Parties  claim that the differences in terms of mode of 
administration, indication and chemical class are relevant when assessing closeness 
of competition rather than identifying separate product markets. The Parties also 
argue that, within these hypothetical sub -segments, the overlaps between their 
activities are limited.20 
(c) The Commission's assessment  
Segme ntation between ecto, endo and endecto products  
(16) Nothing in the market investigation suggested that the Commission should depart in 
the present case from its previous practice concerning the distinction between endo, 
ecto and endecto products.  
(17) As regards th e alternative market segments, which were envisaged in previous 
decisions, comprising (i) CA ecto/endecto products and (ii) CA endo/endecto 
products, the market investigation yielded mixed results.  
(18) On the one hand, several market participants consider that  endo and ecto products 
are not interchangeable with endecto products as they are generally used for different 
indications or situations. For instance, a competitor indicated that, in situations 
where veterinarians have to “ address a specific issue related  either to 
gastroinstestinal worms (EndoP) or fleas and flies (EctoP) […] , EndectoP are not 
relevant from both a medical and customer point of view .” Another player stated that 
“endecto products are typically used for prevention (e.g., for prevention of 
heartworm, lungworm, or flea and tick) ”, while “ Endo products […] are typically 
used for the treatment of [gastrointestinal] parasites ”. Similarly, a customer 
submitted that “for serious infections, exclusively endo should be used” .21  
(19) On the other hand, a nu mber of respondents confirmed the existence of a certain 
degree of substitutability indicating that  endecto products may be used 
interchangeably with ecto or endo products in some situations. For example, a 
customer stressed that endo and endecto products are interchangeable “for minor 
infections ” and a competitor submitted that “ENDECTOS products can replace 
ENDOS products as they cover the endoparasiticide spectrum ”. Market participants 
also explained that “in practice, this depends very much on the custo mer and 
prescribing vet’s preferences, as well as the individual products at issue ”. Some 
competitors also emphasised the fact that e ndecto sales have a “ direct impact ” on the 
revenues and trends of endo and ecto products.22 
(20) In view of the above, for the pu rpose of this Decision, the Commission concludes 
that (i) endo, ecto and endecto products constitute distinct product markets and that 
(ii) the question of whether there exist alternative product market s comprising endo / 
endecto products and ecto / endect o products can be left open as it does not affect the 
Commission’s conclusions regarding the  compatibility of the Transaction with the 
internal market.  
                                                 
20  Form CO, paras. 6.93 and ff.  
21  Questionnaires Q1 to co mpetitors (question 11) and Q2 to CA customers (questions 10 and 11).  
22  Questionnaires Q1 to competitors (question 11) and Q2 to CA customers (questions 10 and 11).  
 
 
6 Segmentation by species  
(21) The results of the market investigation largely confirmed the Parties’ claim tha t CA 
parasiticides are usually authorised for use specifically in either cats or dogs, and 
cannot be used interchangeably. In particular, market participants stressed the facts 
that (i) CA parasiticides indicated for both cats and dogs are “ very rare ”, tha t (ii) 
drugs are “ developed, tested and approved for [a particular pet] and should not be 
used on a different animal (and vets would not do so) ” and that (iii) “ giving a dog 
product to a cat is dangerous and can kill the cat ”. Some competitors also explain ed 
that, albeit parasiticides for cats and dogs can be marketed under the same brand  and 
based on the same active ingredient, the dosage and the mode of administration is 
likely to vary from one species to another. For instance, “ dogs get a much higher 
dose of active depending on their weight ” and oral parasiticides are more commonly 
used on dogs than on cats (as it is difficult to administer pills to cats).23   
(22) In view of the above, for the purpose of this Decision, the Commission concludes 
that parasiticid es for cats and dogs are likely to constitute distinct product markets . 
Segmentation by mode of administration  
(23) The market investigation was inconclusive on the question of whether the CA 
parasiticides markets should be further segmented by mode of administ ration. 
Although a majority of market participants indicate that CA parasiticides with 
different modes of administration can be used interchangeably, a significant number 
of customers disagree.24 Moreover, both customers and competitors consider that the 
mode of administration is an important parameter of competition in the markets for 
CA parasiticides.25 This is notably illustrated by the fact that, in some CA 
parasiticides markets (in particular canine parasiticides), the demand tends to switch 
to oral prod ucts due to their ease of administration.  
(24) In any event, for the purpose of this Decision, the segmentation of the markets for 
CA parasiticides by mode of administration can be left open as it does not affect the 
Commission’s conclusions regarding the  comp atibility of the Transaction with the 
internal market.  
Segmentation by indication (heartworm)  
(25) The results of the market investigation revealed that market participants have a clear 
preference for products with a broad spectrum of claims as it is more conve nient ( i.e. 
customers favour products that can be used to treat or prevent several parasites  rather 
than using several different products ).26 […].27 That being said, the market 
investigation also confirmed that products for the treatment and prevention of 
heartworms are likely to constitute a distinct product market. Heartworm is an 
endoparasitic worm residing in the heart of the host animal, which can be fatal and 
                                                 
23  Questionnaires Q1 to competitors (question 15) and Q2 to CA customers (question 9).  
24  Questionnaires Q1 to competitors (question 14) and Q2 to CA customers (question 14).  
25  Questionnaires Q1 to competitors (question 17) and Q2 to CA customers (question 15).  
26  Questionnaires Q1 to competitors (question 12) and Q2 to CA customers (questio n 12). For instance, a competitor 
expressly stated that: “ customers ─ prescribers, veterinarians and end customers ─ increasingly favor broad 
spectrum products ”. See also non -confidential minutes of a conference call with a competitor dated 6 February 2020, 
p. 2: “ veterinaries generally prescribe two different pr oducts to treat ectoparasites like fleas and ticks, and 
endoparasites like heartworm and lungworm but, since there are products which can treat both at the same time, 
these would be more appealing to vets and pet owners. ”  
27  […]. 
 
 
7 difficult to treat once contracted. In the EEA, heartworm is endemic only in southern 
Europe. G iven these specific features, market participants consider that heartworm 
“is a very specific claim and also a unique product” .28 The results of the market 
investigation did not suggest the existence of distinct market segments for other 
indications.29 
(26) In vi ew of the above, and in line with its previous practice, the Commission 
concludes that , for the purpose of this Decision, products for the treatment and 
prevention of heartworm constitute a distinct product market . 
Segmentation by chemical class  
(27) Subject to  isox (see below) , the results of the market investigation generally suggest 
that a segmentation of the markets for CA parasiticides by chemical class is not 
relevant. All competitors and half of the customers consider that parasiticides for CA 
with differ ent chemical class es can be used interchangeably.  
(28) More specifically, a large number of respondents  indicated that products based on 
isox,30 i.e. the newest chemical class of ectoparasiticides (which is also used as 
endecto products in combination with endo  chemical classes), are interchangeable 
with other  parasiticides.31 
(29) However , the Commission also found that isox products are subject to different 
competitive dynamics, with different pricing (isox products are significantly more 
expensive) and competitive landscape (only a limited number of players have isox -
based products). In recent years, isox products have rapidly increased sales at the 
expense of older ecto/endecto products and market participants expect the demand 
for isox products to increase further  in the coming years. Some respondents consider 
that isox products are “ changing the dynamic ” in CA parasiticides .32 The success of 
isox products  is linked to the facts that (i) they are effective against a wide range of 
ectoparasites (including fleas and t icks), (ii) they can be administered orally, (iii) 
they have a long duration of efficacy (between one and three  months) and (iv) they 
act systematically, protecting all part s of the animals’ body. By comparison, older 
ecto chemical classes are either topic al or injectable products, only effective against 
a sub -set of ectoparasites (or have encountered resistance issues with fleas or ticks) 
or do not produce systemic effects for one month or longer . For these reasons and 
also given that isox products are pre scription -only (whereas older ecto chemical 
classes are often also available in the  other -than-vet (“OTV”) distribution channel 
(including  over-the-counter ( “OTC ”) and online distribution  channels), isox 
products are increasingly  endorsed by vets.33 
(30) In any  event, for the purpose of this Decision, the exact delin eation of the product 
market can be left open since t he Transaction gives rise to serious doubts as to its 
compatibility with the internal market regardless of whether isox-based parasiticides 
for CA  constitute a distinct market segment or are part of broader markets for CA 
ecto and endec to. 
                                                 
28  Questionnaires Q1 to c ompetitors (questions 12 and 13) and Q2 to CA customers (question 12).  
29  Questionnaires Q1 to competitors (question 12) and Q2 to CA customers (question 12).  
30  Isox products are GABA (gamma -aminobuyric acid) receptor antagonists, causing the uncontrolled  activity of the 
nervous system of the ectoparasites, which leads to its paralysis and death.  
31  Questionnaires Q1 to competitors (question 16) and Q2 to CA customers (question 13).  
32  Questionnaire Q1 to competitors (question 18). See Section 4.2.1.3 belo w.  
33  See Annex 78 to the Form CO.  
 
 
8 Segmentation by duration of efficacy  
(31) As previously indicated, the past decisional practice did not consider a segmentation 
of the CA parasiticide s markets by dura tion of efficacy. Nothing in the market 
investigation suggested that the Commission should depart in the present case from 
its previous practice.  
(d) Conclusion  
(32) Based on the results of the market investigation, for the purposes of this Decision, 
the Commission  concludes that (i) endo, ecto and endecto products  for CA ; (ii) 
parasiticides for cats and for dogs; and (iii) products for the treatment and prevention 
of heartworm constitute distinct product markets/market segments .  
(33) For the purposes of this Decision, the Commission also considers  that it can be left 
open (i) whether there exist alternative product markets comprising endo / endecto 
products and ecto / endecto products  for CA ; (ii) whether the markets for CA 
parasiticides should be further segmented by m ode of administration; and (iii) 
whether isox-based parasiticides for CA constitute a distinct market segment or are 
part of broader markets for CA ecto and endecto, as these alternative market 
delineations do not affect the Commission’s conclusions regard ing the  compatibility 
of the Transaction with the internal market.  
3.1.2.2.  Antimicrobials  
(34) Antimicrobials (also known as antibiotics) are pharmaceutical products that destroy 
or prevent the growth of microbes such as bacteria, mycoplasma or fungi and treat 
disease s associated with them. Antimicrobials can be administered in various ways, 
notably by injection and orally (including as a tablet; a soluble powder, concentrate 
or solution that is added to drinking water; and as a pre -mix). Antimicrobial products 
can be used to treat multiple species.  There are a number of chemical classes used in 
antimicrobials.  
(a) Commission’s precedents  
(35) In previous decisions, the Commission considered possible segmentations based on 
the following factors : (i) the species, (ii) the active ingredient/chemical class  
(including sulphona mides, penicillins, cephalosporins, phenicols, fluoroquinolones 
and tetracyclines) , and (iii) the mode of administration  (oral vs. injectable) .34 The 
exact delineation of the market was ultimately left open.35 
(b) The Parties’ views  
(36) The Parties agree with the Commission’s previous position that there is a limited 
demand -side substitutability between antimicrobials based on different chemical 
classes. For instance, different chemical classes have received different 
categorisations from the European Medicines Agency ( “EMA ”) regarding their 
impact on disease resistance in humans ,36 and those defined as higher risk are not 
                                                 
34  See cases M.7277 - Eli Lilly/Novartis Animal Health, paragraphs 36 and 39; M.5476 - Pfizer/Wyeth, paragraph 324; 
and M.4691 - Schering -Plough/Organon Biosciences, paragraph 329.  
35  See case M.7277 - Eli Lilly/Novarti s Animal Health, paragraph 43.  
36  Growing awareness of antimicrobial resistance in bacteria has led to regulation surrounding the use of antibiotics in 
animals. Prudent and responsible use of antibiotics in both animals and humans can lower the risk of bac teria 
 
 
 
9 recommended for use except as a last resort. Lower risk classes include macrolides 
(which form the base  of the majority of Elanco’s antimicrobials), alongside 
pleuromutilins, various types of penicillins, cephalosporins, aminoglycosides, 
lincosamides and tetracyclines. Higher risk classes include, in particular, 
fluoroquinolones (which is the basis of BAH’s  core Baytril product, which makes up 
the […] majority of BAH’s sales in Group 1 affected markets37). Moreover, different 
chemical classes have different properties, meaning that they may typically be used 
at different stages of a given treatment.  
(37) As regard s methods of administration, the Parties agree with the Commission’s past 
assessment that there is limited demand -side substitutability between different 
methods of administration.  
(38) As regards a potential segmentation by species, the Parties argue that many  
antimicrobials can be administered to a range of species and that distinguishing 
between different species for the purposes of market definition is not appropriate 
from both a supply - and demand -side perspective.   
(c) The Commission’s assessment  
(39) As regards a segmentation by mode of administration  (i.e. oral and injectable) , the 
results of the market investigation were mixed. From the demand side, a large 
majority of customers do not consider antimicrobials with different modes of 
administration to be interchan geable and some respondents specified that the choice 
may depend on the circumstances of the individual animal .38 On the other side, the 
majority  of suppliers consider them to be interchangeable, specifying that often a vet 
will administer the same antimicr obial by injection and the pet owner will follow the 
treatment at home with an oral version .39 
(40) As regards a segmentation by species  (i.e. cats and dogs) , the results of the market 
investigation were mixed. From the demand side, the large  majority of custome rs do 
not consider antimicrobials for different species to be interchangeable, but some 
respondents specified that most products are indicated for use in both cats and 
dogs .40 Most suppliers consider that customers use antimicrobials for different 
species i nterchangeably to treat the same disease, confirming that many 
antimicrobials are authoris ed for use in both cats and dogs .41  
(41) Also as regards segmentation by chemical class  (the relevant classes for the Parties’ 
CA antimicrobials being fluoroquinolones, pe nicillin and sulphon amides) , the results 
of the market investigation were mixed. From the demand side, a large majority of 
customers do not consider antimicrobials with different chemical classes to be 
interchangeable, and some respondents further specifie d that it is linked to the target 
                                                                                                                                                      
becoming resistant. This is particularly important for antibiotics that are used to treat both people and animals and for 
antibiotics that are the last line of treatment for critical infections in people. See  
https://www.ema.europa.eu/en/documents/report/categorisation -antibiotics -use-animals -prudent -responsible -
use en.pdf   
37  See paragraph 89 below.  
38  Questionnaire Q2 t o to CA customers, question 26.  
39  Questionnaire Q1 to competitors, question 31.  
40  Questionnaire Q2 to CA customers, question 27.  
41  Questionnaire Q1 to competitors, question 32.  
 
 
10 bacteria .42 However, most suppliers consider that antimicrobials with different 
chemical c lasses are interchangeable , while vets tend to have first and second line 
preferences to treat certain infections .43 One supplier ment ioned that “ The choice of 
active ingredient will usually vary depending on the pathogen/bacteria causing the 
disease. A disease can be caused by a pathogen and several antibiotics can be 
acceptable for use .” 
(d) Conclusion  
(42) In the present case, the question of the segmentation of the market by mode of 
administration, species or chemical class can be left open as the Transaction does not 
raise serious doubts as to its compatibility with the internal market under any 
plausible market definition.  
3.1.2.3.  Otitis products  
(a) Commission’s precedents  
(43) Otitis externa  is an inflammation of the external ear canal . Sometimes,  otitis may 
progress further into the ear (otitis media). Otitis  is not a disease in itself but rather a 
symptom of other diseases, such as an infection. It is com mon in dogs but less 
frequent in cats.  
(44) According to the Commission’s past decisional practice, otitis pharmaceuticals are 
considered as a separate market. Previously, the Commission has left open the exact 
delineation of the relevant market for otitis products as to whether further 
segmentation based on the mode of administration was warranted, indicating 
however that the otitis externa market is mainly a topical market and that oral and 
injectable products are rarely used.44 
(b) The Part ies’ views  
(45) The Parties  agree with the Commission’s precedents in that otitis products constitute 
a separate market and submits that there exist significant differences between (i) a 
new generation of long -acting otitis products that are applied only once or twice by 
the veterina rians (“long -acting otitis products”) and (ii) older daily -use otitis 
products that need to be applied daily for one to three weeks by pet owners (“daily -
use otiti s products”). The Parties point  to the important difference in price between 
both products. R BB Economics’ analysis of third party data sources indicates that, 
for example, in the UK, Osurnia (long -acting product) was approximately […] more 
expensive than Canaural (daily -use product) in 2019.  
                                                 
42  Questionnaire Q2 to CA customers, question 28.  
43  Questionnaire Q1 to com petitors, question 33.  
44  See cases M.7277 - Eli Lilly/Novartis Animal Health , paragraph 33; and M.4691 - Schering -Plough/Organon 
Biosciences , paragraph 327.  
 
 
11 (c) The Commission’s assessment  
(46) The market investigation co nfirmed that in line with precedents and the Parties’ 
views, otitis product s constitute a separate product market.45 The market 
investigation also confirmed the views of the Parties that very significant differences 
exist based on the duration of efficacy o f the products, between long -acting and 
daily -use otitis products.  
(47) Long -acting otitis products currently include in the EEA only the Parties ’ products: 
Elanco’s Osurnia and BAH’s recently launched Neptra. These products are 
administered by a veterinarian a nd only require a single (in the case of Neptra) or a 
dual (in the case of Osurnia) application. Both products are effective against Gram-
positive bacteria and fungal infections. Long -acting products are significantly more 
expensive than daily dose product s. 
(48) Daily -use otitis products cover most of the topical otitis products in the market, 
including Elanco’s Surolan, Dechra’s Canaural, Vetoquinol’s Aurizon and 
Oridermyl, Ecuphar’s Conofite Forte, Virbac’s Easotic and Merck’s Posatex. These 
products normally  require daily ear drop administration by pet owners for one to 
three  weeks. Most of these products are effective against both Gram-positive and 
Gram-negative bacteria, as well as fungal infections.  
(49) As long -acting products , Osurnia and Neptra  only need to be applied once or twice 
and are administered by a vet . They eliminate or greatly reduce the risk of non-
compliance ( i.e. non-adherence to the treatment regimen  due to  difficulties to apply 
the products to the animal by pet owners without any training). A significant share of 
customer s are ready to pay a significant premium for a convenient solution which 
eliminate s the need for them to apply the product  and the risk of ineffective 
treatment . In contrast, daily dose products are seen as a cheap option, and will be 
used in cases where compliance is not a primary concern or for pet owners which 
prefer a more economical alternative.  
(50) In this respect , half of the suppliers consider that long -acting and daily -use otitis 
product are not interchangeable, while the o ther half indicate they are 
interchangeable for customers.46 However, it seems that suppliers that answered that 
long-acting and daily -use product are interchangeable refer only to substitutability 
from a medical point of view. For example, one of the suppl iers who deem ed these 
products substitutable  explains that “from a medical point of view they are 
interchangeable. The main benefit of long duration products is perceived by pet 
owners who no longer apply any product at home as it has been administered at the 
veterinary clinic”.47 Other supplier s considering the products interchangeable, 
explain that ease of administration and price are key factors for customers and vets 
to decide on a specific product, as well as the ability of the owner to administer the 
product.48 Some supplier s consider that even if they believe long -acting and daily -
                                                 
45  Considering that otitis is an inflammation of the external ear canal which sometimes may progre ss further into the ear, 
a further sub -segmentation by indication is not meaningful. Moreover, the market investigation did not provide any 
element suggesting that a further segmentation by chemical class would be adequate.  
46  Questionnaire Q1 to competito rs, non -confidential replies to question 47.  
47  Questionnaire Q1 to competitors, non -confidential replies to question 47.  
48  Questionnaire Q1 to competitors, non -confidential replies to question 47.  
 
 
12 use products are interchangeable, “ long acting treatments are more and more used 
as first line otitis treatment in dogs .”49 
(51) Another supplier explains that “compliance with the treatment regime is critical to 
success. In cases where the vet is concerned about an owners ability to administer 
the treatment on a daily basis they will opt for a long term treatment option […] The 
choice would therefore be predominantly based upon […] the ability of the owner to 
apply the ear suspension for several consecutive days. Both Neptra (Bayer) and 
Osurnia (Elanco) are applied by the veterinary surgeon in the clinic rather than by 
the pet owner at home which is ensuring full compliance of treatm ent and therefore 
peace of mind for the vets as when a treatment does not work we can never be sure if 
the diagnostic was not good, if the treatment protocol was not respected by the pet -
owner at home (not easy to put a liquid in the ear of a dog) or if th e product failed. 
For this reason, vets tend to prescribe these long acting products at the place of the 
short acting ones”.50 
(52) Moreover, the vast majority of customers considers that long -acting and daily -use 
otitis products cannot be used interchangeably.51 For example, one customer  
explains that “ the advantage of long duration products is highly appreciated by 
customers and veterinarians ”.52 
(53) In fact, competitors indicated clearly that the most important parameters to choose an 
otitis product are duration of efficacy and frequency of administration  while price, 
chemical class or reputation of suppliers would be less relevant.53 Customers also 
identify duration of efficacy  and frequency of administration as the most important 
parameters to select an otitis produ ct, followed by price, while chemical class or 
reputation of the supplier would be less relevant.54 Long -acting and daily -use 
products ’ main differences are precisely duration of effect and frequency of 
administration.  
(54) Based on the significant differences i n terms of price, duration of effect, frequency 
of administration and customers ’ preferences and taking into consideration the 
results of the market investigation, the Commission considers that long -acting and 
daily -use products belong to separate product markets.  
(55) With regards to mode of administration, the Commission notes that most otitis 
products are topical and the market investigation did not provide any element 
suggesting that a segmentation by mode of administration would be meaningful. 
Moreover, thi s differentiation would be only relevant for daily -use products. Should 
the market be segmented by mode of administration, there would be no overlap 
between the daily -use products of the Parties. Therefore, this distinction will not be 
further considered i n this Decision.  
(56) With regards to a distinction by species, it would not be relevant for long -acting 
products, as long -acting products are only indicated for dogs. With regards to daily -
                                                 
49  Questionnaire Q1 to competitors, non -confidential repl ies to question 47.  
50  Questionnaire Q1 to competitors, non -confidential replies to question 47.  
51  Questionnaire Q2 to customers, non -confidential replies to question 40.  
52  Questionnaire Q2 to customers, non -confidential replies to question 40.  
53  Questi onnaire Q1 to competitors, non -confidential replies to question 48.  
54  Questionnaire Q2 to customers, non -confidential replies to question 41.  
 
 
13 use otitis products, the question as to whether a segmentation by speci es is needed 
can be left open as the Transaction does not raise concerns with regards to daily -use 
otitis products irrespective of the exact product market definition retained.  
(d) Conclusion  
(57) The Commission concludes, in light of the above, that, for the purp oses of this case, 
long-acting and daily -use otitis products constitute distinct product markets. The 
precise market definition can be left open as to whether daily -use products for 
different species (cats and dogs) or via different modes of administration  constitute a 
separate market or form part of a wider daily -use otitis products market, as the 
Transaction does not raise serious doubts as to its compatibility with the internal 
market for daily -use otitis products irrespective of whether the relevant pro duct 
market is defined as comprising all species and all modes of administration or not .  
3.1.3.  Production animals  
3.1.3.1.  Parasiticides  
(a) Commission’s precedents  
(58) The Commission’s decisional practice referred to in Section 3.1.2.1(a) above 
concerning parasiticides for CA is to a large extent also relevant for PA. In 
particular, in Eli Lilly/Novartis Animal Health , the Commission adopted for PA the 
same approach as for CA, (i) distinguishing ecto, endo and endecto products and (ii) 
envisaging alternative market segments com prising ecto/endecto products and 
endo/endecto products. In th at decision, the Commission also envisaged to sub -
segment the PA parasiticides markets (i) by species, (ii) by mode of administration, 
and (iii) by indication, but ultimately left open the exact  delineation of the market.55 
In contrast, previous decisions did not envisage a segmentation of PA parasiticides 
by chemical class , period of efficacy or period of withdrawal . 
(b) The Part ies’ views  
(59) The Parties did not provide any specific views regarding the product market 
definition for PA parasiticides and referred to the approach taken for CA.56  
(c) The Commission’s assessment  
Segmentation between ecto, endo and endecto products  
(60) Nothing in the market investigation suggested that the Commission should depart in 
the present case from its previous practice concerning the split between endo, ecto 
and endecto products. As regards the alternative market segments comprising (i) PA 
ecto/endecto products and (ii) PA endo/endecto products, the market investigation 
was inc onclusive, with respondents providing mixed responses . For instance, a 
competitor submitted that these products cannot be used interchangeably as “ it 
depends on the type of prevention program and breeding conditions of the target 
animal group” , while anoth er player indicated that “ most customers use endecto for 
comfort and consider specific products when necessary ”, suggesting the existence of 
                                                 
55  See case M.7277 - Eli Lilly/ Novartis Animal Health, paragraphs 44 to 51.  
56  Form CO, para. 6.146. See also Se ction 3.1.2.1(b) above.  
 
 
14 a certain degree of demand -side substitutability.57 In any event, for the purpose of 
this Decision,  the Commission c onsiders that the exact scope of the product market 
can be left open since the Transaction does not give rise to serious doubts as to its 
compatibility with the internal market under any plausible product market definition.  
Segmentation by species  
(61) The resu lts of the market investigation largely confirmed that PA parasiticides for 
different species ( e.g. swine, cattle, etc.) cannot be used interchangeably. For 
example, a competitor explained that “ many products are only indicated for a 
particular species or group of species. This limitation of use is largely driven by: (i) 
the size of the animal which may justify a different strength/dosage; and (ii) the 
animal’s intended use (e.g. human consumption). ”58 In view of the above, and 
similarly to CA, the Commissio n consider that , for the purpose of this Decision, the 
markets for PA parasiticides should be segmented by species.  
Segmentation by mode of administration  
(62) The results of the market investigation suggest some demand -side substitutability 
between PA parasiti cides with different modes of administration. However, some 
customers also stressed the fact that depending on the situations products with 
different modes of administration may not be used interchangeably ( e.g. “it depends 
whether I have to do mass treatm ents, if I have to treat only a few animals, it 
depends on age and how the animals are housed ”).59 In any event, for the purpose of 
this Decision, the segmentation of the markets for PA parasiticides by mode of 
administration can be left open since the Tran saction does not give rise to serious 
doubts as to its compatibility with the internal market under any plausible product 
market definition.  
Segmentation by indication  
(63) The results of the market investigation were inconclusive as to whether the markets 
for PA parasiticides should be further segmented by indication. In any event, for the 
purpose of this Decision, the exact relevant product market definition  can be left 
open since t he Transaction does not give rise to serious doubts as to its compatibility 
with the internal market under any plausible product market definition.  
Segmentation by chemical class  
(64) The market investigation revealed that PA parasiticides with different chemical 
class es can be used interchangeably and that the chemical class is not a key  
parameter of competition. For instance, a competitor stated: “efficacy and price are 
the main drivers, the chemical class is not that relevant” .60 In any event, for the 
purpose of this Decision, the exact relevant product market definition  can be left 
open  since t he Transaction does not give rise to serious doubts as to its compatibility 
with the internal market under any plausible product market definition.  
                                                 
57  Questionnaires Q1 to competitors (question 62) and Q3 to PA customers (questions 10 and 11).  
58  Questionnaires Q1 to competitors (question 64) and Q3 to PA Customers (question 9).  
59  Questionnaires Q1 to competitors (question 6 3) and Q3 to PA customers (question 13).  
60  Questionnaires Q1 to competitors (questions 65 and 66) and Q3 to PA customers (questions 12 and 14).  
 
 
15 Segmentation by duration of efficacy or withdrawal period  
(65) The past decisional practice did not consi der a segmentation of the PA parasiticide s 
markets by period of efficacy or by period of withdrawal. Nothing in the market 
investigation suggested that the Commission should depart in the present case from 
its previous practice.  
(d) Conclusion  
(66) Based on the res ults of the market investigation, for the purposes of this Decision, 
the Commission concludes that endo, ecto and endecto products for PA constitute 
distinct product markets/market segments and that the markets for PA parasiticides 
should be segmented by s pecies.   
(67) For the purposes of this Decision, the Commission also considers that it can be left 
open (i) whether there exist alternative product markets comprising PA endo / 
endecto products and PA ecto / endecto products; (ii) whether the markets for PA 
parasiticides should be further segmented by mode of administration, indication or 
chemical class, since t he Transaction does not give rise to serious doubts as to its 
compatibility with the internal market under any plausible product market definition . 
3.1.3.2.  Antim icrobials  
(a) Commission’s precedents  
(68) The Commission’s decisional practice and the approach outlined in Section 3.1.2.2 
(a) above concerning antimicrobials for CA are also applicable to PA.  As regards the 
mode of administration for PA antimicrobials, the Commi ssion previously also 
considered a possible further sub -segmentation of oral PA antimicrobials into pre -
mixes and solubles, but ultimately left the question open .61 In previous cases, the 
Commission has also considered that mastitis treatments for cattle ca n be 
distinguished from other forms of antimicrobial treatment on the basis of their 
singular mode of administration, namely intra -mammary injections .62 As the Parties’ 
activities do not overlap in mastitis treatments, this segment will not be considered in  
the rest of this Decision.  
(b) The Part ies’ views  
(69) The Parties submit the same views for PA antimicrobials as for CA antimicrobia ls 
described in Section 3.1.2.2 (b). In respect of defining markets for antimicrobials by 
reference to chemical class or mode of adm inistration, the Parties agree with the 
Commission’s previous paractice  that there can be limited demand -side 
substitutability between antimicrobials that make use of different chemical classes  or 
modes of administration . Moreover, within oral antimicrobia ls, the Parties consider 
that there is a meaningful difference from a customer perspective between pre -mixes 
and other products like water solubles.  As regards a potential segmentation by 
reference to species, the Parties do not consider this appropriate f rom both supply - 
and demand -side substitutability.  
                                                 
61  See case M.7277 - Eli Lilly/Novartis Animal Health, paragraph 41.  
62  See cases M.4691 - Schering -Plough/Orga non Biosciences , paragraph 340; M.5476 - Pfizer/Wyeth , paragraph 358; 
and M.7917 - Boehringer Ingelheim/Sanofi Animal Health Business , 200.  
 
 
16 (c) The Commission’s assessment  
(70) As regards a segmentation by mode of administration  (i.e. oral vs. injectable) , the 
results of the market investigation were not conclusive. From the demand side, most  
customers  do not consider antimicrobials with different modes of administration to 
be interchangeable, wi th some respondents specifying “ except in certain cases .”63 
The majority  of suppliers do consider them to be interchangeable, however 
specifying that it depends on the target indication .64 
(71) As regards a segmentation by species, the results of the market investigation 
confirmed that this is not appropriate. The l arge majority of customers65 and 
suppliers responded that most antimicrobials are indicated for multiple sp ecies .66  
(72) As regards a segmentation by chemical class, the results of the market investigation 
were mixed. From the demand side, the majority of customers do not consider 
antimicrobials with different chemical classes  to be interchangeable ,67 while the 
large  majority of suppliers responded that antimicrobials with different chemical 
classes are considered interchang eable , specifying that it depends on the target 
bacteria .68  
(d) Conclusion  
(73) Based on the results of the market  investigation,  for the purposes of this Decision  the 
Commission does not consider further segmentation of the PA antimicrobials market 
by species. T he question of segmentation of the market by mode of administration or 
chemical class can be left open in the present case as the Transaction does n ot raise 
serious doubts as to its compatibility with the internal market under any plausible 
market definition.  
3.1.3.3.  Anticoccidials  
(a) Commission’s precedents  
(74) Anticoccidials act against single -celled parasites known as coccidia. Various types of 
drug are used for coccidiosis prevention and control: (i) prophylactic anticoccidials 
approved on an EEA -wide scale as preventative feed -in anticoccidials to be 
administered routinely, in particular for poultry (including turkey); (ii) 
pharmaceutical coccidiostats authorise d as veterinary medicinal products available 
throughout the EEA for prevention, treatment or aid in the control of coccidiosis 
(dependent on the pharmacokinetic characteristics of their active substances); and 
(iii) coccidiosis vaccines: used as a preventa tive preparation, to induce active 
immunity against coccidiosis, in particular for poultry.  
                                                 
63  Questionnaire Q3 to PA customers, question 41.  
64  Questionnaire Q1 to competitors, question 99.  
65  Questionnaire  Q3 to PA customers, question 42.  
66  Questionnaire Q1 to competitors, question 100.  
67  Questionnaire Q3 to PA customers, question 44.  
68  Questionnaire Q1 to competitors, question 101.  
 
 
17 (75) The Commission has considered PA anticoccidials in previous cases .69 In these 
cases, the Commission has defined a separate market  for poultry  anticoccidials 
compared  to anticoccidials for other species . Within poultry anticoccidials, the 
Commission further defined the following categories : (i) prophylactic anticoccidials, 
(combining categories (i) and (iii) above in paragraph 74) with a possible market 
segmentation between vaccines and feed additives, and (ii) pharmaceutical 
coccidiostats , corresponding to category (ii) above in paragraph 74.70 The sub -
segmentation of prophylactic anticoccidials  between vaccines and feed additives was 
ultimately left open.  
(76) As regards ot her species (cattle, sheep and swine), the Commission has not 
previously assessed these products and therefore has not considered any potential 
segmentation .  
(b) The Part ies’ views  
(77) As regards poultry, the Parties  support the above segmentation distinguishing 
between pharmaceutical coccidiostats and prophylactic anticoccidials , potentially 
with separate sub -markets within the latter for vaccines and feed additives .  
(78) As regards other species, the Parties  submit  that only pharmaceutical coccidiostats 
are availabl e on the market and, that for each of cattle, sheep and swine, there is a 
single market for species -specific pharmaceutical coccidiostats.  
(79) The Parties  submit  that there is no basis for further segmentation by mode of 
administration or indication, as the r elevant anticoccidials are all administered orally, 
and all products indicated for each of cattle, sheep and swine target all of the 
coccidiosis -causing species relevant for the respective species.  
(c) The Commission’s assessment  
(80) As regards the separation of a nticoccidials for poultry  from other species, and the 
segmentation of poultry anticoccidials into prophylactic anticoccidials and 
pharmaceutical coccidiostats , the market investigation did not provide any element 
to depart from the previous decisional prac tice and the Part ies’ views .71 On this 
basis, no overlap among the Parties’ activities would arise and therefore poultry 
products will not be considered further in this Decision.  
                                                 
69  See cases M.6205 - Eli Lilly/Janssen Pharmaceutica Animal Health Busi ness Assets ; and M.885 - Merck/Rhone -
Poulenc -Merial.  
70  See case M.6205 - Eli Lilly/Janssen Pharmaceutica Animal Health Business Assets , paragraph 19.  
71  Questionnaires Q1 to competitors (questions 81 and 82) and Q3 to PA customers (questions 27 and 28).  
 
 
18 (81) As regards segmentation by single species for non -poultry species, the market 
investigation did not confirm the Parties’ views that this is appropriate. The majority 
of responding competitors and customers  confirm that PA pharmaceutical 
coccidiostats are indicated for multiple species  and not single species. Respondents  
highlighted that there are products indicated for ruminants ( i.e. both cattle and sheep)  
suggesting this possible grouping of species within the non -poultry species72.  
(82) As only pharmaceutical coccidiostats are available for non-poultry  species, further 
segmentation bet ween prophylactic anticoccidials  and pharmaceutical coccidiostats 
for these species was not considered meaningful and as such was not investigated 
further .  
(83) The Commission does no t consider any further segmentation by mode of 
administration or indication  to be meaningful as the relevant anticoccidials are all 
administered orally, and all products indicated for each of cattle, sheep and swine 
target all of the coccidiosis -causing species relevant for the respective species. 
Furthermore, the market investigat ion results did not indicate that  any segmentation s 
by chemical class, period of efficacy or period of withdrawal are relevant and they 
are not considered  for the purpose of this case.  
(d) Conclusion  
(84) In the present case, the question of segmentation of the non-poultry PA anticoccidial 
market by (groups of) species (i.e. considering ruminants and swine separately or 
together) can be left open as the Transaction raises serious doubts as to its 
compatibility with the internal market under any plausible market defi nition.  
3.2. Geographic market definition  
(a) Commission’s precedents and the Part ies’ view  
(85) The Commission has consistently defined the geographic markets for marketed 
animal pharmaceuticals as being national in scope .73 With respect to pipeline 
pharmaceuticals, the  Commission has consistently held that the geographic scope of 
the market is either global or EEA -wide.74   
(86) The Parties  agree  with th e above approach but submit s, with respect to marketed 
products, that there is a growing trend towards competition across bo rders in the 
EEA (due to the increasing harmonisation of the regulation at European level and the 
fact that many animal health players are active in multiple EEA countries), which 
should be taken into account in the comp etitive assessment.75 
                                                 
72  Questionnaires Q1 to competitors (question 80) and Q3 to PA customers (question 26).  
73  See cases M.7917 - Boehringer Ingelheim/Sanofi Animal Health Business, paragraph 148; M.7277 - Eli Lilly/Novartis 
Animal Health, paragraph 58; M.6205 - Eli Lilly/Jans sen Pharmaceutica Animal Health Business Assets, paragraph 
15; and M.5476 - Pfizer/Wyeth, paragraph 126.  
74  See notably case M.8955 - Takeda/Shire , paragraph 56.  
75  In particular, Elanco submits that, although the geographic market for marketed animal phar maceutical is still national 
in scope, the barriers to entry/expand to other geographies have been significantly reduced and that suppliers in a 
given EEA country are constrained not just by actual competitors but also by potential entrants already active in other 
EEA countries.  
 
 
19 (b) Commission’s as sessment  and conclusion  
(87) As regards marketed products , the results of the market investigation confirmed that 
the geographic market for animal pharmaceuticals  should be defined at national 
level. However, the market investigation also supports, at least to some extent, the 
growing supranational dimension of competition put forward by the Parties . For 
example,  although most competitors fix price s and organise their sales and 
marketing teams  at national level, this is also done by some players at regional or 
EEA level.76 Similarly, although customers typically source animal pharmaceuticals 
at national level, some of them organise their procurement at regional or EEA 
level.77 Therefore, for the purpose of this Decision, the Commission considers that 
the geographic  market for marketed animal pharmaceuticals is national  in scope , and 
it will consider the growing supranational dimension  of competition in its 
competitive assessment . 
(88) As regards pipeline products , nothing in the market investigation suggest s that the 
Com mission should depart in the present case from its previous decisional practice 
concerning the geographic market definition. In fact, companies which invest 
significant resources in R&D to develop new products  expect to sell th ose products 
in as many count ries as possible. It is not possible to allocate pipeline products to 
specific countries. Therefore, pipeline products should be considered at EEA or 
global level.  
4. COMPETITIVE  ASSESSMENT  
4.1. Methodology for the identification and the assessment of affected mar kets 
(89) In line with Commission  precedents  in pharmaceutical mergers  with a large number 
of affected markets (involving numerous product and geographic markets), the 
Commission has applied a system of filters aimed at determining the group of 
markets where co ncerns are most likely and on which it focuses its analysis.  In line 
with Commission precedents in the pharmaceutical sector,78 affected markets can be 
classified in four categories:  
 Group 1 , where the Parties' combined market share exceeds 35% and the 
increment exceeds 1%;  
 Group  1+, where either (i) the combined market share is below 35% (but 
above 20%), and only one other competitor remains on the market, or where 
(ii) the combined market share exceeds 35% and the increment is below 1%, 
but the party with  the small increment is a recent entrant ;79 
 Group 2 , where the Parties' combined market share exceeds 35% but the 
increment is below 1%; and  
                                                 
76  Questionnaire 1 to Competitors, non -confidential replies to questions 5 and 6.  
77  Questionnaires Q2 to CA Customers (question 5), Q3 to PA Customers (question 5) and Q 1 to Competitors (question 
7). 
78  See cases M.8889  - Teva/PGT  OTC Assets , paragraph 35; M.7746 – Teva/Allergan Generics , paragraph 58; and 
M.9044 - CVC/Recordati , paragraph 25.  
79  See case M.5778 - Novartis/Alcon , paragraph 25.  
 
 
20  Group 3 , where the Parties' combined market share is between 20% and 35% , 
and Group 1+ conditions are not met.  
(90) The Commission has analysed all markets affected by the Transaction  under all 
plausible market definitions.   
(91) In line with precedents,80 Group 3 markets are not discussed individually in this 
Decision.81 The Commission assessed the competitive situation in these  markets by 
considering the combined market shares of the Parties and their competitors over the 
last three years, other factors including the presence of competitors with a significant 
presence, the date of patent expiry and competition from generics, the  Parties’ 
pipeline products , as well as the results of the market investigation. The Commission 
reached the conclusion that the Transaction does not raise serious doubts as to its 
compatibility with the internal market in relation to the possible Group 3 m arkets 
arising from the Transaction, due to the limited market shares of the Parties and the 
presence of significant competitors remaining on the market post -Transaction that 
will likely sufficiently constrain the merged entity.  
(92) Similarly,  in line with pr ecedents ,82 Group 2 markets are not discussed individually 
in this Decision. Generally , the Parties have combined market shares below 50%83 
                                                 
80  See cases M.8889  - Teva/PGT OTC Assets , paragraph 36; M.7746 – Teva/Allergan Generics , paragraph 58; M.7645 – 
Mylan/Perrigo , paragraph 30; and M.7379 – Mylan/Abbott EPD -DM, paragraph 36.  
81  Based on 2019 market shares provided by the Parties, Group 3 markets arise in the following possible product 
markets/country pairs: Antimicrobials for  CA, oral mode of administration, in Austria; Antimicrobials for PA, oral 
mode  of administration, in Hungary, Ireland and Spain; Antimicrobials for PA, oral -non-premix mode of 
administration, in Greece and Netherlands; Antimicrobials for cats, oral mode of  administration, in Austria; 
Antimicrobials for dogs, all modes of administration, fluoroquinolones in Spain; Antimicrobials for dogs, oral mode 
of administration, fluoroquinolones in Spain; Antimicrobials for cats, all modes of administration, fluoroquino lones in 
Spain; Antimicrobials for cats, oral mode of administration, fluoroquinolones in Spain; Antimicrobials for CA, all 
modes of administration, fluoroquinolones in Spain; Antimicrobials for CA, oral mode of administration, 
fluoroquinolones in Spain; E cto products for cats, all modes of administration, in Austria, Bulgaria, Poland and the 
UK; Ecto and Endecto products for cats, all modes of administration, in Belgium, Czechia, France, Poland, Romania 
and the UK; Ecto products for dogs, all modes of admi nistration, in Austria, Bulgaria, France, Portugal and Spain; 
Ecto and Endecto products for dogs, all modes of administration, in Austria, Belgium, Bulgaria, France, Hungary, 
Ireland, Netherlands, Portugal, Spain and the UK; Ecto and Endecto products for c attle, all modes of administration, 
in Germany; Ecto and Endecto products for sheep, all modes of administration, in Germany; Endecto products for 
cattle, all modes of administration, in Germany; Endecto products for dogs, all modes of administration, in A ustria 
and Poland; Endo products for dogs, all modes of administration, in Finland, Italy and Poland; Endo products  for 
dogs, oral mode of administration, in Finland, Italy and Poland; Endo products  for dogs against heartworm, all modes 
of administration, in Greece, Portugal and Spain; Endo and Endecto products  for dogs, all modes of administration, in 
Finland, France, Greece, Hungary, Italy, Netherlands, Poland, Romania and Spain; Endo products  for cats, all modes 
of administration in Hungary and Poland; E ndo products  for cats against heartworm, all modes of administration, in 
France; Endo and Endecto products  for cats, all modes of administration, in Belgium, Czechia, France, Greece, 
Hungary, Ireland and Poland; Endo products  for poultry, all modes of admi nistration, in Germany; Endo and Endecto 
products  for poultry, all modes of administration, in Germany; Endo and Endecto products  for sheep, all modes of 
administration in France; Endo products  for swine, all modes of administration, in Austria; Otitis dai ly-use products 
for CA (all species), all modes of administration in Belgium, Czechia, Greece, Italy, Netherlands, Romania and 
Sweden; Otitis daily -use products for cats, all modes of administration in Italy and Netherlands; Otitis daily -use 
products for d ogs, all modes of administration in Austria, Belgium, Czechia, Greece, Ireland, Italy, Netherlands and 
Romania; Ketosis products in Spain; Dermatitis products for dogs and for CA in Germany; Rehydration treatments for 
cattle in Germany; Sedatives and tranq uilizers for CA in the UK; Injectable NSAIDS for cats in Germany; and 
Corticosteroids for all species in Italy.  
82  See cases M.7645 – Mylan/Perrigo , paragraph 30; M.7379 – Mylan/Abbott EPD -DM, paragraph 36; and M.5865 - 
Teva/Ratiopharm , paragraphs 386 -390. 
83  Based on 2019 market shares provided by the Parties, Group 2 markets arise in the following possible product 
markets/country pairs: Otitis daily -use products for CA (all species), all modes of administration, in Austria, Finland, 
Germany, Ireland and the UK; Otitis daily -use products for dogs, all modes of administration, in Germany and the 
UK; Ecto/Endecto products for dogs, all modes of administration, in Poland; Ecto products for dogs, all modes of 
administration, in Poland; Endecto products for dog s, all modes of administration in Germany and the UK; Ecto 
products for cats, all modes of administration in Romania.  
 
 
21 with a de minimis  increment below 1%. In some markets, combined market shares 
are above 50% ,84 with a de minimis  increm ent below 1%. Post -Transaction, the 
Parties will face at least three  competitors with market shares  equal or  above the 
increment (including meaningful players with market share above 5%)  in all these 
markets . Moreover, the market investigation did not reve al any concern s in these 
markets. In light of the above, the Commission considers that the Transaction is 
unlikely to remove any significant competitive constraint on the Group 2 markets 
and, thus, will not lead to any competition concerns on these markets . 
(93) In the following, the Commission individually assesses all Group 1  and 1 + markets . 
4.2. Companion animals  
4.2.1.  Parasiticides  
4.2.1.1.  Endoparasiticides85 
(a) Overview of the market and the Parties’ products  
(94) As explained in Section 3 above, endoparasiticides are used to control  internal 
parasites, such as flukes, tapeworms and roundworms . Each type of endo -product 
has a different mode of administration and works on endoparasiticides more or less 
effectively. The Parties estimate that , in 2018,  the total size of the endoparasitic ides 
segment in the EEA was […].86 The Parties explained that the demand for CA 
endoparasiticides is growing and expected to further grow in the next years due to 
increasing pet adoption and expenditure on veterinary healthcare.  
(95) Endoparasiticides for CA can  be administered (i) topically, with a typical frequency 
of application/duration of a month or once every three months ; (ii) by injection, with 
a typical frequency of application/duration of one time per year; (iii) orally 
(including both preventive and tr eatment endoparasiticides; in the former case, they 
can be administered monthly or quarterly, while in the latter  case, they should be 
administered daily, for a certain number of days).  
(96) There are a number of chemical classes used in endo products. The cor e chemical 
classes used in currently marketed endo products are: avermectins, benzimidazoles 
and isoquinoles. Avermectins are a class of endos used also as endectos. This class is 
effective against intestinal worms, heartworms and lungworms, as well as 
ectoparasites. Benzimidazoles are a class of endos with a broad spectrum of action 
and a high safety profile; they are effective against roundworms (such as  hookworms  
and whipworms ) and some tapeworms. Isoquinolines include praziquantel and 
                                                 
84  Based on 2019 market shares provided by the Parties, Group 2 markets with combined market shares above 50% arise 
in the following possi ble product markets/country pairs: Otitis daily -use products for dogs, all modes of 
administration, in Fin land (Combined market shares: [50 -60]%, number of competitors above or equal to increment: 
6); Otitis daily -use products for cats, all modes of admini stration, in Belgium (Combined market shares: [50-60]%, 
number of competitors above increment: 4), Czechia (Combined market shares: [60-70]%, number of competitors 
above or equal to increment: 7), Denmark (Combined market shares: [50-60]%, number of compet itors above or equal 
to increment: 6), Germany (Combined market shares: [70-80]%, number of competitors above or equal to increment: 
6), Ireland (Combined market shares: [70-80]%, number of competitors above or equal to increment: 4), the UK 
(Combined mark et shares: [50-60]%, number of competitors above or equal to increment: 7).  
85  Endoparasiticides include heartworm products which are assessed separately in Section 4.2.1.4.  
86  See Form CO, paragraph 6.266.  




 
 
26 players ( i.e. BI, Merck and Zoetis), which have a significant presence in most EEA 
national markets, and (ii) several smaller competitors (such as Ceva and Virbac), 
with market shares comparable to Elanco’s in certain national mark ets. Second , the 
Parties claim that their products face fierce competition from generics (several of the 
Parties’ products being off -patent, including Elanco’s Milbemax, as well as most of 
BAH’s Drontal family of products). Third , the Parties argue that th eir products do 
not closely compete with each other as they are differentiated (i) in terms of 
spectrum of indications . Elanco’s Milbemax can be used against a wider range of 
worms, while BAH’s Drontal, Drontal Plus and Profender are not effective against 
either hear tworm or lungworm. In addition, Droncit can only be used in cases of 
tapeworm and is not effective against other gastro -intestinal worms; and (ii) in terms 
of distribution channels , Elanco focusing on veterinaries, whereas BAH increasingly 
distributes its products through the OTV  channel. Finally , the Parties  argue that 
barriers to entry from neighbouring geographic markets in which certain CA 
endoparasiticides are already sold are relatively low.  
(102)  In any event, the Parties have agreed to divest BAH’s Drontal and Profender families 
of products in the EEA in order to remove the full overlap between their activities in 
the market for CA endoparasiticides. More details on this remedy are provided in 
Section 5 below .  
(d) The Commission’s assessment  
(103)  As a preliminary remark, it should be noted that, unless otherwise specified, the 
findings set out in this Section 4.2.1.1, and in particular the results of the market 
investigation, do not materially differ depending on the species and MoAs.89 As 
regards possib le differences depending on the analysed EEA country, although 
national specificities exist  (with e.g. market share variation s at national level) , the 
main characteristics of supply and demand in the markets for feline and canine 
endoparasiticides (and sub -segments) do not appear to vary significantly across 
countries. Therefore, unless otherwise specified, the findings of Section 4.2.1.1 
(regarding e.g. closeness of competition, generic competition and the feedback 
received from market participants) do not  materially differ depending on the 
geographic market at stake.  
(104)  For the reasons set out below, the Commission considers that the Transaction raises 
serious doubts as to the compatibility of the Transaction with the internal market and 
the functioning of th e EEA Agreement in some markets for CA endoparasiticid es 
(and potential sub -segments) . 
(105)  First , the Commission notes that the Transaction leads to large or very large 
combined market shares in a number of affected markets (see Table 3 above).90 As 
                                                 
89 Questionnaires Q1 to competitors ( e.g. questions 18.1, 18.2, 21.2, 21.3, 22 .6) and Q2 to CA customers ( e.g. questions 
16.1, 22.6, 23.6).  
90  The Commission notes that, in relation to the markets mentioned in Table 3  but not assessed individually in 
paragraph 105, that is to say (i) Austria, endo/endecto canine and endo/endecto fel ine, (ii) Belgium, endo/endecto 
canine, (iii) Czechia, endo/endecto canine, (iv) Denmark, endo feline, (v) Finland, endo feline (oral) and endo/endecto 
feline, (vi) France, endo canine (all MoAs), endo canine (oral) and endo feline (oral), (vii) Germany, e ndo/endecto 
canine, (viii) Greece, endo canine (all MoAs), endo canine (oral) and endo feline (oral), (ix) Hungary, endo canine (all 
MoAs) and endo canine (oral), (x) the Netherlands, endo canine (all MoAs), endo canine (oral) and endo/endecto 
feline, (xi)  Portugal, endo canine (both all MoAs and oral only), endo feline (both all MoAs and oral only), 
endo/endecto (both canine and feline), (xii) Romania, endo feline (both all MoAs and oral only), (xiii) Spain, endo 
canine (all MoAs and oral only) and endo fe line (oral), and (xiv) the UK, endo/endecto (both canine and feline) and 
 
 
 
27 set out in the Horizontal Merger Guidelines, market shares provide a useful first 
indication of the market structure and of the competitive importance of both the 
Parties and their competitor.91 In the present case, the Commission considers that the 
high market shares  would lead to a significant increase of market power and/or the 
strengthening or creation of a dominant position of the merged entity post -
Transaction. More specifically:  
(a) In Austria : the Parties have high combined market shares with a significant 
increme nt in (i) the canine endo market , both encompassing all modes of 
administration and including oral products only  ([50-60]% combined market 
share , with a [20-30]% increment  brought by BAH ); in (ii) the feline endo 
market ( [60-70]% combined market share , wit h a [30-40]% increment  
brought by Elanco ); and in  (iii) the feline endo market including only 
products administered orally ( [60-70]% combined market share , with a [10-
20]% increment  brought by BA H). Post -Transaction , (a) in the canine endo 
market, both encompassing all modes of administration  and including oral 
products only , the new entity would face five competitors, with Ceva and 
Virbac being the largest ( [10-20]-[10-20]%), followed by Zoetis, Merck and 
Vetoquinol (with market share s between [5-10]% and below [0-5]%); and (b) 
in the feline endo market, both encompassing all modes of administration and 
considering oral products only, the new entity would face four competitors, 
the largest being Ceva and Virbac, with market shares between [10-20]-[10-
20]%, followed by Merck, Zoetis, Vetoquinol and BI, wit h market shares 
below [5-10]%.     
(b) In Belgium : the Parties have high combined market shares in (i) the canine 
endo market , both encompassing all modes of administration and including 
oral products only  ([60-70]% combined market share , with a [30-40]% 
increment  brought by Elanco ), in (ii) the feline endo market ( [60-70]% 
combined market share , with a [20-30]% increment  brought by Elanco ), 
similarly  in the (iii) the feline endo market including only products 
administered orally ( [50-60]% combined market share , with a [20-30]% 
increment  brought by BAH ). Post -Transaction, (a) in the canine endo market, 
both encompassing all modes of administration and considering the products 
administered orally only, the new enti ty would face seven competitors, with 
Ceva and Virbac being the largest (with market share s of [5-10]% and [10-
20]%, respectively ); and (b) in the feline endo market, both encompassing all 
modes of administration and considering oral products only, the new  entity 
would face four competitors, the largest being Virbac and Zoetis, with market 
shares between [10-20]-[10-20]%, followed by Ceva and K rka, with market 
shares between [0-5]-[5-10]%.  
(c) In Czech ia: the Parties have high combined market shares in (i) the  canine 
endo market , both encompassing all modes of administration and including 
                                                                                                                                                      
endo feline (oral), the Parties’ combined market shares are moderate, with the presence of a sufficient number of 
competitors post -Transaction, and thus do not raise serious doubts. I n any event, the Final Commitments aimed at 
remedying the horizontal non -coordinated effects of the Transaction in other endoparasiticides markets also exclude 
the possibility that the Transaction would lead to horizontal non -coordinated effects in those m arkets. Indeed, the 
Final Commitments will fully remove the full overlap between the Parties’ activities in the markets for CA 
endoparasiticides at EEA level.  
91  Guidelines on the assessment of horizontal mergers under the Council Regulation on the contro l of concentrations 
between undertakings (“Horizontal Merger Guidelines”), OJ C 31, 5.2.2004, p. 5, para. 14.  
 
 
28 oral products only  ([50-60]% combined market share , with a [20-30]% 
increment  brought by BAH ); and in (ii) the feline endo market , both 
encompassing all modes of administratio n and considering oral products only  
([60-70]-[50-60]% combined market share , with a [5-10]-[5-10]% increment  
brought by Elanco ). Post -Transaction, (a) in the canine endo market, both 
encompassing all modes of administration and considering only the produc ts 
administered orally, the new entity would face 13 -12 competitors, all with a 
very limited market presence (between [5-10]% and below [0-5]% market 
share), and only with K rka having a larger market share of [10-20]%; and (b) 
in the feline endo market, bo th encompassing all modes of administration and 
considering oral products only, the new entity would face eight competitors, 
all with a limited market presence (between [5-10]% and below [0-5]% 
market share) and only with K rka having a larger market share between [10-
20]-[20-30]%. 
(d) In Denmark : the Parties have high combined market shares in (i) the canine 
endo market , both encompassing all modes of administration and considering 
only oral products  ([50-60]% combined market share , with a [20-30]% 
increment  brought by BAH ), in (ii) the feline endo market ( [60-70]% 
combined market share , with a [20-30]% increment  brought by Elanco ). 
Similarily, the Parties have high combined market shares in (iii) the canine 
endo/endecto market ( [60-70]% combined market share , with a [20-30]% 
increment  brought by Elanco ) and (iv) the feline endo/endecto market ( [60-
70]% combined market share , with a [20-30]% increment  brought by 
Elanco ). Post -Transaction, (a) in the canine endo market, both encompassing 
all modes of administratio n and considering only the products administered 
orally, the new entity would face four competitors, two of which (Merck and 
Virbac) with a larger market presence between [20-30]-[10-20]% market 
share and the other two (Ceva and Zoetis) with a negligible m arket share 
between [0-5]% and below [0-5]%; similarily, (b) in the feline endo market, 
the new entity would face four competitors, all with a limited  market 
presence (between [5-10]% and below [0-5]% market share) , with the only 
exception represented by  Virbac h olding  a larger market share of [20-30]%; 
(c) in the canine endo/endecto market, the new entity would face four 
competitors, the largest ones being Merck ( [10-20]%) and Virbac ( [10-20]%) 
and the other two with a market share betwee n [5-10]% and [0-5]%; and (d) 
in the feline endo/endecto market, the new entity would face five 
competitors, the largest one being Virbac ( [20-30]%) and the others with a 
negligible market share between [0-5]% and [0-5]%.  
(e) In Finland : the Parties have high combined market s hares in the feline endo 
market ( [50-60]% combined market share , with a [10-20]% increment  
brought by Elanco ). Post -Transaction, in the feline endo market, 
encompassing all modes of administration, the new entity would face only 
three competitors, the larg est one being Merck with a [30-40]% market share 
and the two remaining ones (Virbac and Zoetis), with market shares between 
[10-20]% and below [0-5]%. 
(f) In France : the Parties have high combined market shares in the feline endo 
market ( [50-60]% combined mark et share , with a [20-30]% increment  
brought by BAH ). Post -Transaction, in the feline endo market, encompassing 
all modes of administration the new entity would face five competitors, with 
 
 
29 the larger ones being Ceva ( [10-20]%) and Virbac ( [10-20]%), followe d by 
Clément Thekan ( [10-20]%), and Merck and Zoetis with a market share 
between [0-5]% and below [0-5]%.   
(g) In Germany : the Parties have high combined market shares in (i) the canine 
endo market , both encompassing all modes of administration and 
considerin gonly oral products  ([50-60]% combined market share , with a [10-
20]% increment  brought by BAH ), in (ii) the feline endo market ( [70-80]% 
combined market share , with a [30-40]% increment  brought by Elanco ). 
When considering (iii) the feline endo market, inc luding oral products only, 
the increment brought by BAH is less significant but still contributes to high 
combined market shares for the Parties ( [50-60]% combined market share , 
with a [0-5]% increment  brought by BAH ). Post -Transaction, (a) in the 
canine e ndo market, both encompassing all modes of administration and 
considering only the products administered orally, the new entity will face 6 -
5 competitors, the largest being Virbac, Merck and Ceva ( [20-30]-[10-20]%) 
and the others with a more negligible mar ket presence ; and (b) in the feline 
endo market, both encompassing all modes of administration and considering 
oral products only, the new entity would face 5 -4 competitors, the largest 
being Virbac ( [10-20]-[20-30]%) and the others holding a more negligib le 
market share . 
(h) In Greece : the Parties have high combined market shares in the feline endo 
market , encompassing all modes of administration ([50-60]% combined 
market share , with a [20-30]% increment  brought by Elanco ). Post -
Transaction, in the feline endo  market, encompassing all modes of 
administration, the new entity would face four competitors, with Virbac and 
Zoetis being the largest ( [10-20]-[20-30]%) and the others with a more 
limited market presence ( [10-20]-[0-5]%). 
(i) In Ireland : the Parties have hig h combined market shares in (i) the canine 
endo market , both encompassing all modes of administration and considering 
oral products only  ([50-60]% combined market share , with a [20-30]% 
increment  brought by BAH ); (ii) the feline endo market , both encompass ing 
all modes of administration and considering oral products only  ([50-60]-[50-
60]% combined market share , with a [20-30]-[10-20]% increment  brought by 
BAH ) and (iii) the canine endo/endecto market  ([50-60]% combined market 
share , with a [20-30]% incremen t brought by Elanco ). Post -Transaction, (a) 
in the canine endo market, both encompassing all modes of administration 
and considering only the products administered orally, the new entity would 
face six competitors, the largest being Virbac ( [30-40]%) and t he others 
having a more negligible presence (between [5-10]% and below [0-5]%); (b) 
in the feline endo market, both encompassing all modes of administration and 
considering only the products administered orally, the new entity would face 
four competitors, the largest one being Virbac ( [30-40]-[30-40]%) and the 
others having a more negligible market presence (between [5-10]% and 
below [0-5]%); and (c) in the canine endo/endecto market, the new entity 
would face seven competitors, the largest one being Virbac  ([30-40]%) and 
the others having a more negligible market presence (all well below [5-
10]%).  
 
 
30 (j) In Italy : the Parties have high combined market shares in the feline endo 
market, both encompassing all modes of administration and considering only 
oral product s ([70-80]-[60-70]% combined market share , with a [30-40]-[30-
40]% increment  brought by Elanco ). Post -Transaction, in the feline endo 
market, both encompassing all modes of administration and considering only 
oral products, the new entity would face nine c ompetitors, the largest one 
being Merck ( [10-20]-[10-20]%) and all the others with a very negligible 
market presence equal to or well below [5-10]%. 
(k) In the Netherlands : the Parties have high combined market shares in (i) the 
feline endo market , both encomp assing all modes of administration and 
considering oral products only  ([60-70]-[50-60]% combined market share , 
with a [10-20]-[5-10]% increment  brought by BAH ). Post -Transaction, in the 
feline  endo market, both encompassing all modes of administration and 
considering only the products administered orally, the new entity would face 
8-7 competitors, with Virbac and Beaphar being the largest ( [10-20]-[10-
20]%) and the others with a more limited market presence (between [5-10]% 
and below [0-5]%).  
(l) In Norway : the Parties have high combined market shares (i) in the canine 
endo market, both encompassing all modes of administration and considering 
oral products only ( [70-80]% combined market share , with a [20-30]% 
increment  brought by BAH ); (ii) in the feline endo m arket, the increment 
brought by Elanco being equally significant, leading to a situation of quasi -
monopoly ( [90-100]% combined market share , with a [20-30]% increment  
brought by Elanco ) and (iii) in the feline endo market, including oral 
products only ( [90-100]% combined market share , with a [20-30]% 
increment  brought by BAH ). Still very high is the increment brought by 
BAH and Elanco, respectively, (iv) in the canine endo/endecto market ( [60-
70]% combined market share , with a [20-30]% increment  brought by BAH ) 
and (v) in the feline endo/endecto market ( [80-90]% combined market share , 
with a [20-30]% increment  brought by Elanco ). Post -Transaction, across the 
various segments, the new entity would face only 2 -3 competitors, the largest 
being Merck and Zoetis.  
(m) In Romania : the Parties have high combined market shares in the canine 
endo market, both encompassing all modes of administration and considering 
only oral products ( [50-60]-[50-60]% combined market share , with a [5-10]-
[5-10]% increment  brought by Elanco ). Post -Transaction, in the canine endo 
market, both encompassing all modes of administration and considering only 
oral products, the new entity would face only four competitors, the largest 
ones being Ceva ( [30-40]%) and K rka ([10-20]%), the two  others wi th a 
negligible market presence equal to or well below [0-5]%. 
(n) In Spain : the Parties have high combined market shares  in the feline endo 
market, encompassing  all modes of administration ( [50-60]% combined 
market share , with a [20-30]% increment  brought by BAH ). Post -
Transaction, in this segment , the new entity would face 9 competitor s, the 
largest being Virbac ( [10-20]%) and the others with a mo derate to  negligible 
market presence (between [10-20]% and below [0-5]%). 
 
 
31 (o) In Sweden : the Parties have high combine d market shares (i) in the canine 
endo market, both encompassing all modes of administration and considering 
oral products only ( [70-80]% combined market share , with a [10-20]% 
increment  brought by BAH ); (ii) in the feline endo market, both 
encompassing al l modes of administration and considering oral products only 
([90-100]% combined market share , with a [10-20]-[5-10]% increment  
brought by BAH ), leading to a situation of quasi -monopoly, and (iii) in the 
canine and feline endo/endecto markets ( [70-80]-[80-90]% combined market 
share , with a [10-20]% increment  brought by BAH ). Post -Transaction, in all 
segments, the new entity would face only 3 -4 competitors, the largest being 
Merck ( [0-5]-[10-20]%) and the others (Zoetis, Virbac and BI) with a much 
more limit ed market presence (equal to or well below [5-10]%, with the 
exception of Zoetis which holds a [10-20]% in the canine endo/endecto 
market).  
(p) In the UK : the Parties have high combined market shares with a significant 
increment brought by Elanco in (i) the ca nine endo market, both 
encompassing all modes of administration and including oral products only, 
([50-60]-[50-60]% combined market share , with a [20-30]% increment  
brought by Elanco ); and (ii) the feline endo market, encompassing all modes 
of administrati on ( [60-70]% combined market share , with a [10-20]% 
increment  brought by Elanco ). Post -Transaction, across the various 
segments, the new entity would face between 1 0 and 8 competitors, the 
largest being BI, Merck, Virbac and Zoetis (with market shares vary ing 
between [20-30]% and [0-5]% across the different segments) and the others 
with a more limited market presence (between [5-10]% and, more frequently, 
below [0-5]%). 
(106)  Second , the results of the market investigation confirm that Elanco and BAH are 
perceive d as close competitors and as the two largest players in the EEA markets for 
CA endoparasiticides, followed by BI, Ceva and Virbac. Zoetis and Merck are also 
mentioned among the top five competitors, although to a lesser extent.92 Competitors 
also stressed that (i) Elanco is an innovative player and is particular ly strong thanks 
to its well known brands and large portfolio of products and (ii) BAH also benefits 
from a large portfolio of strong brands and, although less innovative than Elanco, it 
has a signif icant presence in the OTV  distribution channel, which represents one of 
its major strengths, against other competitors.93 
(107)  Third , a large majority of competitors indicated that the Parties are the only 
alternatives available or among the very few suppliers i n the EEA with respect to 
certain CA endoparasiticides. One competitor indicated that the merged entity would 
be “Dominant on the tapewormer market with Milbemax, Drontal and 
Profender ”.94 95  
                                                 
92  Questionnaires Q1 to competitors (question 18) and Q2 to CA customers (question 16).  
93  Questionnaires Q1 to competitors (question 19) and Q2 t o CA customers (question 17).  
94  Some competitors stressed the existence of specific concerns with regards to some of the Parties’ CA 
endoparasiticides products targeting tapeworms. As indicated above in Section 3.1.2.1, the market investigation did 
not su ggest the existence of a distinct market segment for tapeworms. In any event, any potential competition concern 
related to tapeworms would be addressed by the divestiture of the Drontal and Profender families of products.  
95  Questionnaire Q1 to competitor s (question 20.1).  
 
 
32 (108)  Fourth , the market investigation results were mixed with regards to the competitive 
pressure exercised by generic products over branded products in the market for CA 
endoparasiticides.  
(109)  Fifth , respondents to the market investigation indicated that there has been no 
material originator entry in the EEA in the past three years nor is  such entry  expected 
to occur in the next three years in the market for CA endoparasiticides and that, 
generally, entry in this market is perceived as difficult.96    
(110)  Finally , both competitors and customers, who responded to the market investiga tion, 
confirmed the existence of serious competition concerns in relation to the 
combination of the Parties’ marketed feline and canine endoparasiticides.  
(e) Conclusion  
(111)  In view of the above considerations, taking into account the market investigation and 
all the evidence available, the Commission concludes that the Transaction raises 
serious doubts as to its compatibility with the internal market and functioning of the 
EEA Agreement with respect to overlaps between the Parties’ marketed 
endoparasiticides for CA in the markets/market segments listed and assessed in 
paragraph  105. The Commission notes that, in relation to the markets mentioned in 
Table 3 but not listed and assessed in paragraph  105 (see foonote 90  above) , the 
Parties’ combined market shares and the presence of a sufficient number of 
competitors post -Transaction do not raise serious doubts. In any event, the Final 
Commitments aimed at remedying the horizontal non -coordinated effects of the 
Transaction in other CA endoparasiticides markets also exc lude the possibility that 
the Transaction would lead to horizontal non -coordinated effects in those markets. 
Indeed, the Final Commitments will fully remove the overlap between the Parties’ 
activities in CA endoparasiticides at EEA level .  
4.2.1.2.  Ectoparasiticide s97 
(a) Overview of the market and the Parties’ products  
(112)  As explained in Section 3 above, ectoparasiticides are used to control external 
parasites, such as fleas and ticks.   
(113)  The Parties estimate  that the total size of the CA ectoparasiticide sector was […] in 
the EEA in 201898 and explain that demand is growing due to increasing pet 
adoption and expenditure on veterinary healthcare.  
(114)  A number of chemical classes are used in ecto products. Most of them were 
originally developed for crop protection applications and subsequently applied to 
animal health. The main ecto chemical classes currently available on the market 
(which can be used alone or in combination) are: pyrazoles, neonicotinoids, 
pyrethroids, insect growth regulators, spinosyns and isox products  (the newe st class 
                                                 
96  Questionnaires Q1 to competitors (question 24) and Q2 to CA customers (question 21).  
97  The present Section only assesses the marketed -to-marketed overlaps in CA ectoparasiticides. In CA ectoparasiticides, 
the Transaction also gives r ise to overlaps involving pipeline products (isox) which are assessed in Section 4.2.1.3 
below.  
98  See Form CO, paragraph 6.213.  


 
 
35 new entity would face significant competition across the EEA from a range of 
competitors, inclu ding (i) three significant players ( i.e. BI, Merck and Zoetis), with 
at least two of them equalling or surpassing BAH in size, and (ii) several smaller 
rivals (such as Ceva and Virbac), with market shares comparable to Elanco’s. Third , 
the Parties claim th at their products face strong competitive constraints from 
generics (several of their products being off -patent, including Elanco’s Comfortis 
and Capstar, as well as most of BAH’s Advantage family of products). Fourth , it is 
argued that competitors supplyi ng CA ectoparasiticides in other EEA countries can 
easily and quickly expand to countries giving rise to Group 1 markets. Finally , 
Elanco and BAH argue that their products do not closely compete as they are 
differentiated (i) in terms of MoAs , Elanco’s key  brands ( i.e. Comfortis, Credelio, 
Capstar) being all administered orally, whereas BAH’s key brands ( i.e. Advantix, 
Advantage and Seresto) are administered topically or by collar; (ii) in terms of 
spectrum of indications , BAH’s key brands being indicated f or use against a broader 
range of ectoparasites compared to Elanco’s portfolio (Comfortis and Capstar, being 
only active against fleas) and (iii) in terms of distribution channels , Elanco focusing 
on veterina rians, whereas BAH increasingly distributes its products through the 
OTV channel.  
(d) The Commission’s assessment  
(122)  As a preliminary remark, it should be noted that, unless otherwise specified, the 
findings set out in this Section 4.2.1. 2, and in particular the results of the market 
investigation, do not mate rially differ depending on the species  or the mode of 
administration .102 As regards possible differences depending on the analysed EEA 
country, although national specificities exist  (with e.g. market share variations at 
national level) , the main characterist ics of supply and demand in the markets for 
feline and canine ectoparasiticides do not appear to vary significantly across 
countries. Therefore, unless otherwise specified, the findings of Section 4.2.1. 2 
(regarding e.g. closeness of competition, generic c ompetition and the feedback 
received from market participants) do not materially differ depending on the 
geographic market at stake.  
(123)  The evidence in the Commission’s file generally confirms the Parties’ claim s. It 
allows the Commission to exclude serious d oubts as to the compatibility of the 
Transaction with the internal market and the functioning of the EEA Agreement 
resulting from the overlap of the Parties ’ activities in feline and canine 
ectoparasiticites  regardless of possible further segmentations . 
(124)  First, it appears from Table 6 above that the Transaction gives rise to Group  1 
markets for CA ecto in only seven countries, with combined shares not exceeding 
50% and a moderate increment brought by Elanco comprised between 1% and 10% 
(except in two cases w here the increment is above 10%). More specifically:  
(a) In Belgium : the Parties have medium combined market shares with a limited 
or moderate increment brought by Elanco in (i) the canine ecto market ( [30-
40]%, with a [0-5]% increment), and (ii) the feline ec to market ( [40-50]%, 
with a [5-10]% increment). Post -Transaction, in both markets, the new entity 
                                                 
102 Questio nnaires Q1 to competitors ( e.g. questions 18.1, 18.2, 21.2, 21.3, 22.6) and Q2 to CA customers ( e.g. questions 
16.1, 22.6, 23.6).  
 
 
36 would face significant competitors, with market shares above [20-30]%, 
namely Merck and BI, as well as several other players (including Zoetis, 
Ceva and Virba c);  
(b) In Czechia : the Parties have medium combined market shares with a modest 
increment brought by Elanco in (i) the canine ecto market ( [30-40]%, with a 
[0-5]% increment), (ii) the feline ecto market ( [40-50]%, with a [0-5]% 
increment), and (iii) the cani ne ecto/endecto market ( [30-40]%, with a [0-5]% 
increment). Post -Transaction, in the above markets, the new entity would 
face at least three competitors with market shares well above the increment 
(between [5-10]% and [40-50]%), namely Merck, BI and Zoetis , as well as 
several other players, such as Ceva, Virbac, Vetoquinol and Kr ka (whose 
market shares are comparable to Elanco’s);  
(c) In France : the Parties have a combined market share of [40-50]% in the 
feline ecto market ( [10-20]% for Elanco and [20-30]% for BAH). Post -
Transaction, the new entity would face (i) two significant competitors, with 
market shares above [10-20]%, namely BI ( [20-30]%) and Merck ( [10-
20]%), (ii) several other meaningful players, including Clement Thekan ( [5-
10]%) and Virbac ( [5-10]%), as well as (iii) generic players (such as 
Biocanina, Kr ka and Vetoquinol) ; 
(d) In Italy : the Parties have medium combined market shares with a modest 
increment brought by Elanco in (i) the canine ecto market ( [40-50]%, with a 
[0-5]% increment), and (ii) the c anine ecto/endecto market ( [30-40]%, with a 
[0-5]% increment). Post -Transaction, in both markets, the new entity would 
face two significant competitors, with market shares comprised between [10-
20]% and [30-40]%, namely BI and Merck, and several other play ers, 
including three rivals with market share above the increment ( i.e. Zoetis, 
Ceva and Virbac);  
(e) In the Netherlands : the Parties’ combined market shares do not exceed [50-
60]%, with a limited or moderate increment brought by Elanco in (i) the 
canine ecto  market ( [30-40]%, with a [0-5]% increment), (ii) the feline ecto 
market ( [50-60]%, with a [5-10]% increment), and (iii) the feline 
ecto/endecto market ( [30-40]%, with a [5-10]% increment). Post -Transaction, 
in the above markets, the new entity would face many competitors, including 
significant players with market shares well above [10-20]% (such as Merck 
and BI, as well as Zoetis in the feline ecto/endecto market) and several other 
players (such as Ceva, Virbac, and Fengo);  
(f) In Portugal : the Parties have me dium combined market shares with a 
moderate increment brought by Elanco in (i) the feline ecto market ( [40-
50]%, with a [5-10]% increment), and (ii) the feline ecto/endecto market 
([30-40]%, with a [5-10]% increment). Post -Transaction, in both markets, the  
new entity would face two significant competitors, with market shares 
comprised between [10-20]% and [20-30]%, namely BI and Merck, as well 
as several other players (such as Calier, Ceva, Virbac, Zoetis, and 
Vetoquinol); and  
(g) In Spain : the Parties have a m edium combined market share of [30-40]% in 
the feline ecto market ( [10-20]% for Elanco and [20-30]% for BAH). Post -
 
 
37 Transaction, the new entity would face many competitors, including (i) one 
rival with a comparable market share, namely BI ( [30-40]%), (ii) t wo other 
meaningful players, i.e. Merck ( [5-10]%) and Virbac ( [5-10]%), and (iii) 
several other competitors ( e.g. Ceva, Ecuphar, Beaphar, Karizoo, 
Vetoquinol).  
(125)  Second , the results of the market investigation confirm ed that, post -Transaction, the 
new entity  would continue to face strong competitive constraints from a number of 
rivals. Although BAH is generally perceived by competitors as the main player in 
the EEA markets for CA ectoparasiticides , Elanco is typically ranked number five  in 
the EEA , after Merc k, BI and Zoetis.103 In fact, the vast majority of customers and 
most competitors indicated that there would remain sufficient alternative suppliers 
post-Transaction.104  
(126)  Third , a large majority of customers confirmed the Parties’ claim that generics exert 
pressure on the prices of branded CA ectoparasiticides  that are off -patent .105  
(127)  Fourth , the market investigation confirmed the Parties’ claim that their marketed 
products are differentiated. Indeed, most customers and a large number of 
competitors consider that  Elanco’s and BAH’s marketed CA ectoparasiticides do not 
closely compete.106 The market investigation also confi rmed that the MoAs and the 
spectrum of indications  are key factors in the choice of CA ectoparasiticides for 
customers,107 two parameters that diffe rentiate the Parties’ main products: (i) BAH’s 
key brands ( i.e. Advantix, Advantage and Seresto, which together account for more 
than […] of BAH’s CA ecto sales in the EEA) are administered topically or by collar 
and are indicated for use against a broad r ange of ectoparasites, whereas (ii) Elanco’s 
key brands ( i.e. Comfortis, Credelio, Capstar, which together account for more than 
[…] of Elanco’s CA ecto sales in the EEA) are all administered orally, and two of 
these brands are only active against fleas.  
(128)  Finally , market participants did not express competition concerns in relation to the 
combination of the Parties’ marketed feline and canine ectoparasiticides.108  
(e) Conclusion  
(129)  In view of the above considerations, taking into account the market investigation and  
all the evidence available to it, 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  with respect to overlaps between the Parties’ 
marketed ectoparasiticides for CA .109 
  
                                                 
103  Questionnaires Q1 to competitors (question 18) and Q2 to CA customers (question 16).  
104  Questionnaires Q1 to competitors (q uestion 27, see also question 20) and Q2 to CA customers (question 22, see also 
question 18).  
105  Questionnaire Q2 to CA customers (question 20).  
106  Questionnaires Q1 to competitors (question 22) and Q2 to CA customers (question 19).  
107  Questionnaires Q1 to  competitors (question 17) and Q2 to CA customers (question 15).  
108  Questionnaires Q1 to competitors (questions 27, 28 and 131) and Q2 to CA customers (questions 22, 23 and 58).  
109  In CA ectoparasiticides, the Transaction also gives rise to overlaps involv ing pipeline products (isox) which are 
assessed in Section 4.2.1.3 below.  

 
 
39 (133)  As detailed above:  
 Elanco  has two marketed isox products in the EEA, which are marketed under 
the same brand and based on the same API ( Lotilaner ), namely Credelio Dog 
(canine ecto product) and Credelio Cat (feline ecto product). In addition to its 
marketed products, Elanco has […] isox pipelines (including both feline and 
canine ecto and endecto products) , […]114 […]; 
 BAH  has no marketed isox products in the EEA (and worldwide) but  […] pipeline 
isox products, […].115 […]116, […].  
(b) The Part ies’ views  
(134)  The Pa rties submit that the Transaction does not raise competition concerns in 
relation to isox for several reasons.117 First , as indicated in Section 3.1.2.1(b) above, 
they strongly contest the existence of a distinct market segment for isox products, 
arguing tha t isox  products  compete with other chemical classes. Second , they claim 
that, in the hypot hetical isox segment, Elanco is “ weak ” on the ground that Credelio 
(i) is the fourth isox launched in the EEA, with modest sales and market shares 
across the EEA (wel l behind Merck, BI and Zoetis) and (ii) does not enjoy any 
beneficial differentiation compared to other isox products. Third , the Parties submit 
that, from a chemical point of view, BAH’s pipelines are not strictly speaking isox 
compounds ( […]). Fourth , they argue  that many of the overlapping pipelines are at 
an early stage of development, with low probability of success and several years 
away from an hypothetical market launch. The Parties consider that such early -stage 
pipelines are too speculative to hav e an impact on the competitive assessme nt. Fifth , 
the Parties  claim that, post -Transaction, the new entity would face many competitors 
(irrespective of the market defini tion), including (i) the established and well -known 
isox products marketed by BI (NexGa rd), Merck (Bravecto) and Zoetis (Simparica); 
(ii) several “isox -like” products currently on the market ( i.e. products which are no t 
based on isox but have similar features and closely compete with isox products) 
(such as BI’s Frontline and Broadline and C eva’s Vectra 3D); (iii) generics, with the 
expiration of Bravecto (Merck)’s and NexGard (BI)’s patents in the coming years; 
and (iv) potential entrants, with  the existence of  considerable R&D opportunities 
regarding both isox and isox -like compounds. Final ly, the Parties also claim that, 
post-Transaction, the new entity would have incentives to continue the development 
of BAH’s pipeline products, which are differentiated from and, thus, complementary 
with Elanco’s product portfolio.  
(c) The Commission’s assessm ent 
(135)  As detailed in Table 7 above, the Parties’ isox activities give rise to several market -
to-pipeline and pipeline -to-pipeline overlaps.  
                                                 
114  […].  
115  […]. 
116  […].  
117  See Annex 74 to the Form CO, and the Parties’ submission on isox theory of harm dated 11 May 2020.  
 
 
40 (136)  In line with the four-layer competitive assessment framework118 used in the 
Commission’s past decisional practice ,119 the Commission has assessed the overlaps 
involving the Parties’ isox pipeline  products  in terms of both (a) potential  (product 
and price) competition , assessing the overlaps (i) between the Parties’ existing 
(marketed) and pipeline products at advanced stages  of development  and (ii) 
between the Parties’ pipeline products at advanced stages of development; and (b) 
innovation competition in relation to the Parties’ early stage  pipeline 
products/ projects , assessing the risk of significant loss of innovation compe tition 
resulting from the discontinuation, delay or redirection of one party’s early stage 
pipeline  products/ projects overlapping with the other Party’s existing products or 
advanced or early stage pipeline products/proje cts .  
(137)  For the reasons set out belo w, the results of the market investigation and the 
evidence in the Commis sion’s file strongly suggest that the combination of the 
Parties’ isox activities would raise serious doubts a s to its compatibility with the 
internal market and the functioning of th e EEA Agreement  under any plausible 
market definitions.   
Isox products as a distinct market segment  
(138)  Should isox products constitute a distinct market segment,  the Transaction gives rise 
to (i) marketed -to-pipeline overlap s in the canine ecto segment  betwe en Elanco’s 
Credelio Dog (marketed), on t he one hand,  and BAH’s […] (pipelines) on the other 
hand;  (ii) a marketed -to-pipeline overlap in the feline ecto segment between Elanco’s 
Credelio  Cat (marketed) and BAH’s […] (pipeline);120 and (iii ) a pipeline -to-pipeline 
overlap in the feline endecto segment between […].  
(139)  The Commission finds that the above overlaps would raise competition concerns for 
the following reasons.  
(140)  First , the number of players with marketed isox products is limited . As detailed 
in Table 8 below, in the EEA, only four companies are currently supplying isox 
products. In several sub -segments, the number of players is even more limited, with 
duopolies in the feline ecto and endecto segments, as well as in the canine endecto 
segment.  
  
                                                 
118  The four layers correspond to the overlaps between the parties’ activities  in terms of: (1) Actual (product and price) 
competition (i.e. assessment of the overlaps between the parties' existing (marketed) products), (2) Potential (product 
and price) competition ( i.e. assessment of the overlaps (i) between the parties’ existing ( marketed) and pipeline 
products at advanced stages of development and (ii) between the parties’ pipeline products at advanced stages of 
development); (3) Innovation competition in relation to the parties’ early stage pipeline projects ( i.e. assessment of t he 
risk of significant loss of innovation competition resulting from the discontinuation, delay or redirection of one 
party’s early stage pipeline products/projects overlapping with the other party’s existing products or advanced or early 
stage pipeline pr oducts/projects; and (4) Innovation competition in relation to the capability and incentives to innovate 
(i.e. assessment of the risk of a significant loss of innovation competition resulting from a structural reduction of the 
overall level of innovation).   
119  See cases M.7932 - Dow/Dupont , recitals 272 -302; M.8084 - Bayer/Monsanto , recitals 48 -54; M.9294 – 
BMS/Celgene , paragraph 22; and M.9461 -– AbbVie/Allergan , paragraph 19.  
120  In the canine and feline ecto segment, Elanco also has […] pipelines, […]. 

 
 
42 compounds of the family (those with better pro file), too significant research and 
development costs  for mid -size players ( huge barriers of entry ).”124 
(146)  Fourth , the market investigation revealed that very few players are currently 
developing either isox products or isox -like products  (i.e. compounds, whic h are 
not isox from a chemical point of view but have similar features in terms notably of 
spectrum of claim, method and ease of administration, duration of efficacy and 
systemic effects).125  
(147)  In fact, the Phase I investigation did not allow the Commission t o identify 
potential entrants other than BAH .   
(148)  The Parties contest the above on the ground that BAH’s […] pipelines are not 
strictly speaking isox compounds (from a chemical point of view). In this respect, 
the Commission notes that […],126 […] some industr y reports127 and some market 
participants128, qualify these pipelines as isox. Similarly, the World Health 
Organisation also classifies […] as an “ isoxazoline compound ”, together with 
Afoxolaner, Fluralaner, Lotilaner and Sarolaner ( i.e. the APIs of the isox p roducts 
currently marketed in the EEA).129  
(149)  In any event, the Parties  acknowleged that […]’s features are similar to isox in terms 
of spectrum of claim, method and ease of administration, duration of efficacy and 
systemic effects. In fact, the Parties expres sly indicated that […]130 
(150)  As regards the Parties ’ claim that BAH’s pipelines are at a too early stage to have an 
impact on  the market  and that forecasts about market entry are too speculative , the 
Commission notes that (i) in previous pharmaceutical cases, t he Commission has 
regularly assessed overlaps involving pipelines which were several years away from 
the market and requested their divestment when necessary;131 (ii) BAH’s pipeline s 
are expected to reach the market in the short/medium term: […] should be la unched 
in less than […], while […] pipelines ’ commercialisation is anticipated in […] (by 
comparison the total development process of animal pharmaceuticals can take up to 
13 years according to the Parties and up to 15 years according to competitors);132 and 
(iii) the methodology used by BAH to compute […] probability of success is 
unclear.  
                                                 
124  Questionaire Q1 to competitors (questions 9, 23 and 26). See also non -confidential minutes of a conference call with a 
competitor dated 21 January 2020, para. 18.  
125  Questionaires Q1 to competitors (question 9 ) and R1 to competitors (question 36). See also the replies to the RFI sent 
to KOL on 18 May 2020.  
126  […]. 
127  Parties’ Reply to RFI 1, Attachment A.26, Vetnosis report “Bayer PP July 2019”, (pp.78 and 82) and the Parties’ 
Reply to RFI 4, question 26.  
128  Non-confidential minutes of a conference call with a competitor dated 17 January 2020, p.2.  
129  See https://www.who.int/medicines/services/inn/StemBook_2018.pdf  (p.116). Fluralaner  is the API of Bravecto 
(Merck); Sarolaner is the API of Simparica (Zoetis); Afoxolaner is the API of NexGard (BI) and Lotilaner is the API 
of Credelio (Elanco). […]. 
130  Form CO, Annex 74, para. 1.16.  
131  See case M.8401 – J&J/Actelion.  
132  See Form CO, para . 8.77 and Questionnaire Q1 to competitors (question 128).  
 
 
43 (151)  Fifth , BAH’s pipelines are expected to be very competitive due […]. In this 
respect, the Parties’  internal documents stress […].133 Internal documents also 
emphasise […]. For instance, an internal presentation of BAH indicates that […].134 
Similarly, another internal presentation states that […].135 The competitivity of 
BAH’s pipelines is also supported by the fact that […].  
(152)  It stems from the above that the Parties’ isox product s will likely be close 
competitors, with a significant risk of cross -cannibalisation. In this context, post -
Transaction, the new entity will most likely have limited incentives to develop and 
market in parallel BAH’s and Elanco’s isox products. Conversely,  it is likely that 
Elanco will have the incentive to maximise the profits it could generate by 
developing and marketing its isox products, by avoiding to the maximum extent 
possible competition between them. To this end, Elanco would likely make change s 
to the development programs that Elanco and BAH had planned absent the merger. 
Changes may include the termination of specific programs, a change in their timing 
(for example to introduce a new product on the market only when another product is 
losing patent  protection), or a change in their scope (for example overlapping 
indications with other products). Therefore, the Commission consider s that there is a 
significant risk that the new entity would discontinue, delay or reorient the isox 
products of either on e of the Parties to eliminate or mitigate the risk of 
cannibalisation. As a result, the Transaction would lead to a reduction in the number 
of players that is already very low (especially in the feline isox segments), leading to 
potentially less choice and  higher prices.  
Isox products as part of b roader markets for CA ecto and endecto  
(153)  Should isox  products be part of the markets for CA ecto and endec to, the 
Transaction gives rise to several overlaps between the Parties’ marketed and pipeline 
ecto and endect o products for CA, the most relevant ones being the marketed -to-
pipeline and pipeline -to-pipeline overlap s listed in paragraph  138 above .  
(154)  The risk of discontinuation, delay or reorientation of the isox products of either one 
of the Parties (see previous S ection) would also have a detrimental impact on the se 
broader markets for the following reasons.  
(155)  First , as explained in Section 3.1.2.1(c) above, the market investigation largely 
confirmed that isox have a singular profile resulting from the combination of  various 
features (in terms of mode of administration, duration, efficacy, distribution channel, 
etc.). For instance, a competitor stated that isox products are very “ strong ” due to 
their “larger spectrum (including ticks), the oral administration which is  seen by 
owners as a safe and environmental friendly option, and for some of them, the longer 
time of action, up to 3 months ” and noted that “ when topical and collar parasiticides 
became OTC, new prescription -only oral products [isox] were favoured by a 
growing number of vets ”.136 It follows that, within the markets for CA ecto and 
endecto products, isox products are close competitors .  
                                                 
133  […]. 
134  Parties’ reply to RFI 11, Annex 2.2.5, p.18.  
135  […]. 
136  Non-confidential minutes of a conference call with a competitor dated 21 January 2020, para. 17. S imilarly, the 
Parties submitted that, contrary to isox, “ other ecto chemical classes are either only effective against a sub -set of 
ectoparasites, do not produce systemic effects for one month or greater, or have encountered resistance issues with 
fleas or ticks […] ” and that “ for these reasons and also given that isox products are prescription -only (whereas ecto 
 
 
 
44 (156)  Conversely, the market investigation revealed that non -isox based ecto and endecto 
products for CA currently marketed in the  EEA are “ distant competitors ” to isox -
based ecto and endecto products for CA . In particular, the results of the market 
investigation contradicted the Parties ’ claim that (i) BI’s Frontline/ Broadline; (ii) 
Virbac’s Effipro/Effitix, and (iii) Ceva’s Vectra /Vectra 3D have similar features and 
closely compete with isox  products . For instance, a respondent indicated that “ None 
of these products come close to Isox products . […] Isox products are mainly tablets 
that work 4 to 12 weeks, which is completely differ ent in administration to a topical ” 
and that isox are favoured by vets “ giving the advise that Isox products are better 
than anything else on the market (mainly because it brings them more margin).”  
Another competitor indicated: “ All the products above are  based on fipronil and are 
topical . The products they are compared to have a new active instead of Fipronil 
(Isox) which is able to overcome any developing resistance  and have a long duration 
action (monthly or longer) when given orally. ”137 
(157)  Second , the Comm ission found that isox products are cannibalising the sales of 
other ecto/endecto products and are perceived by  several market participants as 
‘game changer ’.138 In fact, the market investigation showed that isox products are 
very popular and have rapidly in creased market share at the expense of other 
ecto/endecto products. According to the Parties’ estimate s, oral isox products 
account now for […]% of total global canine flea treatments and […]% of total 
global feline flea treatments, and will continue to ga in market shares.  
(158)  Competitors generally share the Parties’ view  on the above . For instance, a rival 
stressed the fact that “ the market dynamic is largely in favor of isox -based products ”, 
explaining that in EEA, (i) between 2015 and 2019, all isox -based p roduct (ecto and 
endecto) had compound annual growth rate of +34% vs. -3% for non isox -based 
products and that (i) since 2015, isox -based ecto and endecto products have grown 
respectively by 27% and +117% per year, while ecto and endecto products based on 
other chemical class have dropped respectively by -2% and -7% per year over the 
same period.139 
(159)   The fact that isox products are cannibalising other CA ecto an d endecto products is 
also corroborated by the Parties ’ internal documents. […].140 
(160)  Finally , several market participants  raised concerns about  the combination of the 
Parties’ isox products and its negative impact on the other ecto/endecto classes . 
For example, a competitor indicated that “ the combined entity will have a very 
strong position in the ecto - and endecto markets due to leveraging isox mono and 
combination products ”.141 Another player submitted that the combination of the 
Parties’ isox products may lead to the foreclosure of mid -size players : “the merged 
entity will probably hold three products fro m this isoxazoline class of compounds 
                                                                                                                                                      
spot-on products are also broadly available in OTV channels where applicable), isox products are increasingly 
endorsed by vets ” (Form CO, Annex 74, para. 1.8).  
137  Questionnaires R1 to competitors (question 37) and R2 to CA customers (question 10). See also the replies to the RFI 
sent to KOL on 18 May 2020.   
138  For instance a competitor indicated that isox products are “ changing the dynamic ” in CA parasiticides (see 
Questionnaire Q1 to competitors, question 18). See also Non -confidential minutes of a conference call with a 
competitor dated 17 January 2020, p.2: “ The antiparasiticide segment has recently had new entrants leveraging a new 
innovative isoxazoline molecule. […] This is changing the antiparasiticide landscape […]. ” 
139  Questionnaire R1 to competitor, question 37.  
140  […]. 
141  Questionnaire Q1 to competitor, question 27.  
 
 
45 […] the unchallenged […] positions of the top 4 leaders on this segment makes the 
competition totally unfair on the total parasiticides segments by leveraging strong 
ectos positions […] to dominate the full market, als o developing ENDECTOS to eat 
the ENDOS market of mid -size players like us . […] ELANCO/BAYER are already 
dominating the ENDOS and ECTOS segments . By combining their forces and 
launching the [isox] products they have in their pipeline (ENDECTOS) they will 
dominate the entire market ”.142 
(161)  As a result of the above , some market participant expressly stressed the need for a 
remedy in relation to isox: “ In our mind, the Parties should divest also in the flea 
and tick category, in particular an ISOX compound (CREDELIO )”.143  
(d) Conclusion  
(162)  In view of the above considerations, taking into account the market investigation and 
all the evidence available to it, the Commission concludes that the Transaction raises 
serious doubts as to its compatibility with the internal market an d the functioning of 
the EEA Agreement  with respect to overlaps between the Parties’ isox products  due 
to its likely  horizontal non -coordinated effects in the EEA markets for feline ecto 
and endecto products and their potential sub -segments for isox -based feline ecto and 
endecto products . In the present case, the Commission does not need to take a view 
on whether the overlaps between the Parties’ isox products raise serious doubts in 
the EEA markets for canine ecto markets and their potential sub -segments f or isox -
based ca nine ecto , as in any event the remedy offered by the Parties covers the full 
overlap in the EEA for viability reasons . 
4.2.1.4.  Heartworm products  
(a) Overview of the market and the Parties’ products  
(163)  Heartworm is an endoparasitic worm that primarily res ides in the heart of the host 
animal (mainly dogs  and to a lesser extent cats) and that is spread through mosquito 
bites. Heartworms can be fatal and are difficult to treat once contracted, so 
preventative treatments are typically used. In the EEA, heartwo rm is endemic only in 
southern Europe, including in particular in Greece, Italy, Portugal, Spain and France.  
(164)  Treatments against heartworm for cats and dogs (i) include endoparasiticides that are 
exclusively indicated for heartworms, as well as (ii) endo an d endecto products that 
have a broader spectrum of claims and can also treat other parasites.  
(165)  In the EEA, the Parties market several products indicated for the 
treatment/prevention of heartworm in CA (see Table 9 below). Only Elanco’s 
Guardian SR product i s indicated for heartworm alone.  
  
                                                 
142  Questionnaire Q1 to competitor, question 18.  
143  Questionnaire Q1 to competitor, question 29.  

 
 
47 (c) The Part ies’ views  
(167)  The Parties submit that the Transaction does not raise competition concerns in 
relation  to the supply of heartworm products for CA in France and Hu ngary for 
several reasons.147 First , the Parties submit that the increment brough t by the 
Transaction is modest, with no material impact on the market, and that their market 
shares are declining. Second , post -Transaction, the new entity would face a wide 
range of competing originator products (both endo and endecto) indicated for the 
treatment of heartworm, including BI’s Broadline and Heartgard, Zoetis’ 
Revolution/Stronghold, as well as numerous generic versions of their own products 
which are all off -patent . Finally , the Parties claim that their products are 
differentiated : while BAH’s Advocate product is a spot -on endecto, Elanco’s main 
heartworm products are endos that are administered orally or by injection.  
(d) The Commission’s assessment  
(168)  As a preliminary re mark, it should be noted that, unless otherwise specified, the 
findings set out in this Section 4.2.1.4, and in particular the results of the market 
investigation, do not materially differ depending on the species.148 As regards 
possible differences dependin g on the analysed EEA country, although national 
specificities exist, the overall structure and the main characteristics of supply and 
demand in the markets for heartworm products do not appear to vary significantly in 
France and Hungary.  Therefore, unless  otherwise specified, the findings of Section 
4.2.1.4 (regarding e.g. closeness of competition, generic competition and the 
feedback received from market participants) do not materially differ depending on 
the geographic market at stake.  
(169)  The evidence in th e Commission’s file generally confirms the Parties’ claim s. It 
allows the Commission to exclude serious doubts as to the compatibility of the 
Transaction with the internal market and the functioning of the EEA Agreement 
resulting from the overlap of the Pa rties’ activities in heartworm products for CA.  
(170)  First , it appears from Table 10 above that the Transaction gives rise to only two 
Group 1 markets for the supply of heartworm product for CA in France and 
Hungary, where (i) the Parties have combined shares b elow 50% and declining sales, 
(ii) the increment brought by the Transaction is modest (below 5%) and (iii) several 
competitors will remain post -Transaction. More specifically:  
(a) In France , in the canine heartworm market, the Parties have (i) a combined 
marke t shares of [40-50]%, with a [0-5]% increment brought by BAH, and 
(ii) declining sales (in the past four year s, Elanco and BAH lost respectively 
[10-20] and [5-10] percentage points of market shares). Post -Transaction, the 
new entity would face many rivals , including four competitors with market 
shares above the increment, namely BI ( [20-30]%), Ceva ( [10-20]%), Virbac 
([5-10]%) and Clement Thekan ( [5-10]%); and  
(b) In Hungary , in the feline heartworm market, the Parties (i) have a combined 
market share of [40-50]%, with a [0-5]% increment brough by Elanco, and 
                                                 
147  See Form CO, paras. 6. 347 and ff.  
148 Questionnaires Q1 to competitors ( e.g. questions 18.1, 18.2, 21.2, 21.3, 22.6) and Q2 to CA customers ( e.g. questions 
16.1, 22.6, 23.6).  
 
 
48 (ii) declining market shares (in the past four year s, BAH and Elanco lost 
respectively [10-20] and [0-5] percentage points of market shares). Post -
Transaction, the new entity would face four competitors wi th market shares 
above the increment, namely Zoetis ( [20-30]%), Krka ( [10-20]%), BI ( [10-
20]%) and Merck ( [5-10]%). 
(171)  It stems from the above that the Transaction is unlikely to have a material impact on 
competition in the above markets. In fact, Elanco has de minimis  sales in Hungary 
(below […]), whereas BAH has de minimis  sales in France (below […]).  
(172)  Second , the results of the market investigation confirmed that, post -Transaction, the 
new entity would continue to face strong competitive constraints from a number of 
rivals.149 In particular, market participants emphasised that BI has a very efficacious 
heartworm product, with a well -known and established brand ( i.e. Heartguard).150 
Other significant competing (originator) products include Stronghold Plus (Zoetis ) 
and Broadline (BI). The Parties also stressed the fact that Zoetis has recently 
launched in the EEA an isox -based endecto with a heartworm claim (Simparica 
Trio), which is expected to be very successful: Elanco expects Simparica Trio to 
gain a [20-30]% m arket share in the EEA countries where heartworm is endemic in 
the next six years. In fact, the vast majority of customers and competitors indicated 
that there would remain sufficient alternative suppliers post -Transaction.151  
(173)  Third , a large majority of cus tomers confirmed that generics exert pressure on the 
prices of originator heartworm products.152 Several competitors offer generic endo or 
endecto product with heartworm claim, including generic versions of the Parties’ 
products. For instance, in France and Hungary, generic versions of Elanco’s key 
product (Milbemax) are offered by Ceva (Milbactor), Virbac (Milpro) and Krka 
(Milprazon), which explains the decline in Elanco’s sales in these two countries.  
(174)  Fourth , the market investigation confirmed the Parties’  claim that their marketed 
products are differentiated. Indeed, most customers and competitors consider that 
Elanco and BAH do not closely compete.153 The market investigation also confimed 
the MoAs, the spectrum of claim and the duration of efficacy are key  factors in the 
choice of heartworm products for customers,154 three parameters that differentiate the 
Parties’ main products: (i) all of BAH’s sales derive from Advocate, which is an 
endecto product administered topically once a month, whereas (ii) Elanco’s  two 
main products ( i.e. Guardian SR and Milbemax) are pure endo products 
administered orally or by injection and one of them (Guardian SR) is only applied 
once for the entire season.  
(175)  Finally , the market investigation  did not reveal any substantiated compe tition 
concerns in relation to the combination of the Parties’ heartworm products.155  
                                                 
149  Questionnaires Q1 to competitors (question 18) and Q2 to CA customers (question 16).  
150  Questionnaire Q1 to competitors (question 19).  
151  Questionnaires Q1 to competitors (question 27, see also question 20) and Q2 to CA customers (question 22, see also 
question 18).  
152  Questionnaire Q2 to CA customers (question 20).  
153  Questionnaires Q1 to competitors (que stion 22) and Q2 to CA customers (question 19).  
154  Questionnaires Q1 to competitors (question 17) and Q2 to CA customers (question 15).  
155  Questionnaires Q1 to competitors (questions 27, 28 and 131) and Q2 to CA customers (questions 22, 23 and 58).  


 
 
51 (c) The Part ies’ views  
(182)  The Partie s make the following observations on these Group 1 markets for 
fluoroquinolone antimi crobials for CA. The increment is caused by Elanco’s Zobuxa 
product  in all markets except Czechia, where in four putative segments the increment 
is caused by BAH’s Baytril . Notably, in all the countries in which Group 1 affected 
markets for CA antimicrobials arise and in which Zobuxa represented at some point 
in the 2016 -2018 period more than 5% of the total market, typically, more than 50% 
of all fluoroquinolones sold comp rise Baytril generics, the majority of which are not 
attributable to Zobuxa. As such, the Parties argue that the Transaction would not 
lead to a material loss of competitive pressure on Baytril, since other generic 
versions of Baytril would continue to con strain it, and Baytril generics present in 
other geographies could also enter these Group 1 markets in the short -term. 
Moreover, the Parties note that the extent and strength of the presence of generic 
Baytril products may not be fully captured in the mark et share estimates, given the 
general lack of visibility into generic activity by reference to the CEESA156 dataset.  
(d) The Commission’s assessment  
(183)  The evidence in the Commission’s file generally confirms the Parties’ claim s. It 
allows the Commission to exclude  serious doubts as to the compatibility of the 
Transaction with the internal market and the functioning of the EEA Agreement 
resulting from the overlap of the Parties ’ activities in antimicrobials for CA.  
(184)  First , the market investigation confirmed the Parti es’ claim that generics exert 
pressure on the prices of branded CA antimicrobials.157 In addition to Elanco’s 
Zobuxa, there are several enrofloxacin generics marketed in the EEA by Vetoquinol, 
Virbac and Ceva. In each of the countries listed in Table 12 except for Czechia, 
there is at least one other enrofloxacin generic besides Zobuxa. Further, in each of 
the countries listed in Table 12 including Czechia, there is at least one other 
fluoroquinolone antimicrobial (marbofloxacin being the active ingredient) m arketed 
by competitors . 
(185)  Second , the results of the market investigation confirm that, generic entry into the 
antimicrobials market is straightforward. One supplier explained that “ We believe 
this [entry] would be relatively easy for generics… ”158 and another  mentioned that 
“…these [development and registration] costs are significantly lower when the 
product is a generic copy… The level of cost and difficulty would also be lower 
depending on the supplier – a supplier that has an existing product, established in  
one country market would be able to enter another country with that product at a 
lower cost and with less difficulty than a supplier developing and establishing a 
product from scratch .” Provided they have established commercial presence in the 
country, ot her players could also enter these segments with generic products.  
                                                 
156  In Europe, the main third -party data source for the animal health industry is the European Animal Health Study Centre 
or Centre Européen d’Etudes pour la Santé Animale (“CEESA”). CEESA is a non -profit international association, 
based in Belgium, which collects  sales data on the animal health market worldwide, including data on 22 countries in 
the EEA. There are 31 reporting members within the EEA. However, most regional or local firms and most generic 
manufacturers do not report their sales to CEESA. To estimat e market shares, the Parties relied on CEESA data in 
addition to their own sales data and business intelligence.  
157  Questionnaire Q1 to competitors (questions 39) and Questionnaire Q2 to CA customers (question 35).  
158  Questionnaire Q1 to competitors, ques tion 42.  
 
 
52 (186)  Third, the use of fluoroquinolones is expected to decline due to the impact of EMA 
regulation159, according to which it is classified as higher risk , and pressure on prices 
may be expected i n such shrinking markets, with customers seeking alternatives to 
antimicrobial use altogether . The overarching trend in respect of antimicrobials is the 
growing awareness of bacterial resistance to human antibiotics. As a result of this 
growing awareness, there continues to be significant regulatory focus (at both the 
European and national levels). This focus has already resulted in a significant decline 
in antimicrobial usage across Europe. This decline (at a rate of an estimated 5 -10% 
per annum, based on annual declines in antimicrobial usage to date) will continue in 
the near and longer term in the EEA. While concerns have been more focused on the 
use of antimicrobials in PA, the use of high risk antibiotics is also discouraged by 
regulation for CA. Indee d, the majority of competitors and customers confirmed that 
regulation has had an impact on the CA antimicrobials market as well. 160 One CA 
customer explained that “ Antimicrobials in the veterinary sector have been reduced, 
especially … and Fluorochinolons .” 161 As such, competitors and customers both 
stressed the fact that while BAH has a strong brand, a key weakness is that the 
molecule is a fluoroquinolone . 162  
(187)  Fourth , the market investigation  did not reveal any substantiated competition 
concerns in relation  to the combination of the Parties’ CA antimicrobials.  Overall, 
the large majority of customers and competitors indicated that there would remain 
sufficient alternative suppliers post -Transaction and do not expect a price increase in 
CA antimicrobials.163 
(188)  Lastly, looking at the individual countries,  the Transaction gives rise to Group 1 
markets for CA antimicrobials in six countries. More specifically:  
(a) In Austria : the Parties have combined market shares below [50-60]% with 
moderate increments in (i) fluoroqui nolone antimicrobials for all CA ( [5-
10]% for Elanco and [40-50]% for BAH), (ii) oral fluoroquinolone 
antimicrobials for all CA ( [5-10]% for Elanco and [40-50]% for BAH), (iii) 
canine fluoroquinolone antimicrobials ( [5-10]% for Elanco and [30-40]% for 
BAH) , (iv) oral canine fluoroquinolone antimicrobials ( [5-10]% for Elanco 
and [30-40]% for BAH), and above [50-60]% in (v) feline fluoroquinolone 
antimicrobials ( [5-10]% for Elanco and [50-60]% for BAH) and (vi) oral 
feline fluoroquinolone antimicrobials ( [5-10]% for Elanco and [50-60]% for 
BAH). Post-Transaction, in all segments , the new entity would continue to 
face three competitors, two of which have market shares significantly above 
the increment . Specifically, Ceva has market shares of [30-40]%, [30-40]%, 
[30-40]%, [40-50]%, [20-30]% and [20-30]% in markets (i) -(vi) respectively, 
while Vetoquinol has market shares of [10-20]%, [10-20]%, [10-20]%, [10-
20]%, [10-20]% and [10-20]% respectively. The new entity would also 
continue to face  the possibility of fur ther generic entry . Moreover, the market 
investigation did not reveal any  substantiated concerns , and the majority of 
                                                 
159  See paragraph 36.  
160  Questionnaire Q1 to competitors (questions 35) and Questionnaire Q2 to CA customers (question 30).  
161  Questionnaire Q2 to CA customers (question 30).  
162  Questionnaire Q1 to competitors (questions 37) and Questionnaire Q2 to  CA customers (question 32).  
163  Questionnaire Q1 to competitors (questions 44, 45) and Questionnaire Q2 to CA customers (question 37, 38).  
 
 
53 customers and competitors consider that there will remain sufficient suppliers 
and do not see a risk of price increases in this market . 
(b) In Czechia : the Parties have combined market shares above [50-60]% in (i) 
fluoroquinolone antimicrobials for all CA  ([40-50]% for Elanco and [30-
40]% for BAH) , (ii) oral fluoroquinolone antimicrobials for all CA  ([40-
50]% for Elanco and [30-40]% for BAH) , (iii) canine fluoroquinolone 
antimicrobials  ([50-60]% for Elanco and [10-20]% for BAH) , (iv) oral canine 
fluoroquinolone antimicrobials  ([50-60]% for Elanco and [5-10]% for BAH) , 
(v) feline fluoroquinolone antimicrobials  ([20-30]% for Elanco and [60-70]% 
for BAH)  and (vi) oral feline fluoroquinolone antimicrobials  ([20-30]% for 
Elanco and [60-70]% for BAH) . The increment brought by Elanco in these 
segments ranges between [5-10]% and [30-40]% (corresponding to between 
EUR […] and […] ). Post-Transaction, the ne w entity would continue to face 
one competitor , Vetoquinol , with market shares above [10-20]% in all 
segments , as well as the possibility of further generic entry. In addition to 
Vetoquinol , a number of suppliers (Ceva, K rka, Chanelle, Pharmagal and Le 
Vet Beheer) have marketing authorizations for generic CA fluoroquinolones 
in Czechia.  In addition , BI was active in the market until 2018, so could re -
enter . Moreover, the market investigation did not reveal any concerns, and 
the majority of customers and com petitors consider that there will remain 
sufficient suppliers and do not see a risk of price increases in this market.  
(c) In Germany : the Parties have combined market shares above [50-60]% with 
a limited increment brought by Elanco  in (i) fluoroquinolone anti microbials 
for all CA ( [0-5]% for Elanco and [50-60]% for BAH), (ii) oral 
fluoroquinolone antimicrobials for all CA ( [0-5]% for Elanco and [50-60]% 
for BAH), (iii) canine fluoroquinolone antimicrobials ( [0-5]% for Elanco and 
[40-50]% for BAH) , (iv)  oral ca nine fluoroquinolone antimicrobials ( [0-5]% 
for Elanco and [40-50]% for BAH), (v) feline fluoroquinolone antimicrobials 
([0-5]% for Elanco and [60-70]% for BAH) and (vi) oral feline 
fluoroquinolone antimicrobials ( [0-5]% for Elanco and [60-70]% for BAH). 
Post-Transaction, the new entity would continue to face three competitors, 
Vetoquinol, Ceva and Virbac  (at least one of which has significantly higher 
market shares than the increment , and above [10-20]% in any case ), as well 
as the possibility of further g eneric entry. Moreover, the market investigation 
did not reveal any substantiated concerns, and the majority of customers and 
competitors consider that there will remain sufficient suppliers and do not see 
a risk of price increases in this market.  
(d) In Hunga ry: the Parties have combined market shares above [50-60]% with 
a limited increment brought by Elanco  in (i) fluoroquinolone antimicrobials 
for all CA ( [0-5]% for Elanco and [70-80]% for BAH), (ii) oral 
fluoroquinolone antimicrobials for all CA ( [0-5]% for  Elanco and [70-80]% 
for BAH), (iii) canine fluoroquinolone antimicrobials ( [5-10]% for Elanco 
and [60-70]% for BAH ), (iv) oral canine fluoroquinolone antimicrobials ( [5-
10]% for Elanco and [50-60]% for BAH), (v) feline fluoroquinolone 
antimicrobials ( [0-5]% for Elanco and [90-100]% for BAH) and (vi) oral 
feline fluoroquinolone antimicrobials ( [0-5]% for Elanco and [90-100]% for 
BAH). The increment brought by Elanco in these segments ranges between 
[0-5]% and [5-10]% (corresponding to  between EUR […] and [… ]). Post-
Transaction, the new entity would continue to face two competitors, 
 
 
54 Vetoquinol and Ceva  (both of which have higher market shares than the 
increment  in all segments ), as well as the possibility of further generic entry. 
Indeed Ceva has increased it s market shares significantly since entering in 
2017, while BAH’s have dropped in the same period. In addition to 
Vetoquinol and Ceva  (Krka , Le Vet, Animedica, Livisto, and CP -Pharma ) 
have marketing authorizations for generic CA fluoroquinolones in Hungary . 
Moreover, the market investigation did not reveal any substantiated concerns, 
and the majority of customers and competitors consider that there will remain 
sufficient suppliers and do not see a risk of price increases in this market.   
(e) In Italy : the Parti es have combined market shares above [50-60]% with a 
moderate increment brought by Elanco in (i) fluoroquinolone antimicrobials 
for all CA ( [5-10]% for Elanco and [50-60]% for BAH), (ii) oral 
fluoroquinolone antimicrobials for all CA ( [5-10]% for Elanco an d [50-60]% 
for BAH), (iii) canine fluoroquinolone antimicrobials ( [5-10]% for Elanco 
and [60-70]% for BAH), (iv) oral canine fluoroquinolone antimicrobials ( [5-
10]% for Elanco and [60-70]% for BAH), (v) feline fluoroquinolone 
antimicrobials ( [10-20]% for E lanco and [40-50]% for BAH) and (vi) oral 
feline fluoroquinolone antimicrobials ( [10-20]% for Elanco and [40-50]% for 
BAH). Post -Transaction, the new entity would continue to face fou r 
competitors, Vetoquinol, Virbac, Fatro and Ceva  (at least one of which has a 
higher market share than the increment and above [10-20]% in all segments ), 
as well as the possibility of further generic entry. Indeed Ceva has increased 
its market shares significantly since entering in 2017, while BAH’s have 
dropped in the same pe riod. Moreover, the market investigation did not 
reveal any substantiated concerns, and the majority of customers and 
competitors consider that there will remain sufficient suppliers and do not see 
a risk of price increases in this market.  
(f) In Poland : the P arties have combined market shares above [50-60]% with a 
limited increment brought by Elanco in (i) feline fluoroquinolone 
antimicrobials ( [0-5]% for Elanco and [60-70]% for BAH) and (ii) oral feline 
fluoroquinolone antimicrobials ( [0-5]% for Elanco and [60-70]% for BAH), 
and below [50-60]% in (iii) fluoroquinolone antimicrobials for all CA ( [0-
5]% for Elanco and [30-40]% for BAH). Post -Transaction, the new entity 
would continue to face two competitors, Vetoquinol and Ceva  (both of which 
have higher market shares than the increment , and at least one of which has a 
market share above [20-30]% in all segments ), as well as the possibility of 
further generic entry. Moreover, the market investigation did not reveal any 
substantiated concerns, and the majority of customers and competitors 
consider that there will remain sufficient suppliers and do not see a risk of 
price increases in this market.   
(e) Conclusion  
(189)  In view of the above considerations, taking into account the market investigation and 
all the evidence avail able to it, 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  with respect to antimicrobials for CA  in Austria, 
Czechia, Germany, Hungary, I taly, Poland  under any potential market definition . 
 
 
55 4.2.3.  Otitis  
4.2.3.1.  Long -acting  otitis products  
(190)  In the EEA, both Parties market long -acting otitis products. However, based on 2019 
market  shares, the Transaction does not give rise to any overlap, as BAH started 
comm ercializing its product Neptra in 2020. In 2019, Elanco was the only supplier 
commercializing a long -acting otitis product in the EEA. Therefore, currently 
Elanco’s Osurnia and BAH’s Neptra are the only long -acting otitis products 
currently available in th e EEA.  
(a) The Part ies’ views  
(191)  To expedite the clearance of the Transaction, the Parties propose to divest Elanco’s 
Osurnia otitis product at global level to a suitable purchaser . 
(b) The Commission’s assessment  
(192)  Osurnia was launched in 2015 in the EEA, and Neptra l aunched in 2020.  Following 
the launch of BAH’s Neptra otitis product across the EEA at the beginning of 2020, 
horizontal overlaps arise in the long -acting otitis product market. Market shares are 
not available as Neptra was launched in 2020. Neptra and Osu rnia being the only 
long-acting otitis products available in the EEA, the Transaction would suppose a 
merger to monopoly in this market and the merged entity would control 100% of the 
market without other alternatives available. Osurnia and Neptra being th e only two 
long-acting products in the EEA will compete closely against each other.  
(193)  This is confirmed by the market  investigation. Competitors indicated that the only 
alternatives available in the EEA for long -acting otitis products are the Parties ’ 
produc ts. For example, one competitor explains that “Osurnia from Elanco was the 
unique long lasting offer until Bayer launched Neptra in Europe”.164 In the same 
vein, several customers also explained that only the Parties offer long -acting otitis 
products. For ex ample, one customers submitted that  “Osurnia and Neptra are the 
only long duration otitis products”.165 
(c) Conclusion  
(194)  In view of the above considerations, taking into account the market investigation and 
all the evidence available to it, the Commission consider s that the Transaction raises 
serious doubts as to its compatibility with the internal market and the functioning of 
the EEA Agreement due to its likely horizontal non -coordinated effects as regards 
long-acting otitis products in the EEA, in particular giv en the absence of alternative 
competitors.  
4.2.3.2.  Daily -use otitis  products  
(195)  In the EEA, both Parties market daily -use otitis products. The Transaction does not 
give rise to any Group 1/1+ in 2019 considering a market for daily -use otitis 
                                                 
164  Questionnaire Q1 to competitors, non -confidential replies to question 48.  
165  Questionnaire Q2 to customers, non -confidential replies to question 44.  

 
 
57 otitis externa. Moreover, even if a systemic antibiotic were used by a vet, because 
Baytril contains a fluoroquinolone, which is classified as Group B ‘Restrict’ in the  
EMA Antimicrobial Expert Group (“ AMEG ”) list (and ha s been classified as a 
restricted antibi otic since the first AMEG list was published in 2014), it would 
typically be used as a second -choice antibiotic. Indeed, the use of high risk 
antibiotics is discouraged by EMA regulation for CA166. In this vein, the majority of 
competitors and customers conf irmed that regulation has had an impact on the CA 
antimicrobials market as well. One CA customer explained that “ Antimicrobials in 
the veterinary sector have been reduced, especially … and Fluorochinolons .” Finally 
the mode of administration is also differ ent: Baytril Injectable is administered by 
injection and Baytril Tablets are administered orally. In contrast, Surolan is 
administered topically to the ear, as is the case for most otitis externa treatments.  
(202)  Second , BAH is not a strong player in otitis da ily-use products. Market shares across 
all EEA countries are very low, generally below [0-5]% and always below [0-5]%. 
This is confirmed by the market investigation. Competitors indicated that Elanco, 
Virbac, Vetoquinol , Merck and Dechra are the top suppli ers. BAH was not identified 
among the top 5 suppliers by any of the competitors responding to the market 
investigation.167 Similarly, customers identified as top suppliers Elanco, Virbac, 
Vetoquinol, Merck and Dechra, but not BAH. Moreover, customers identif ied a 
significant number of additional suppliers of otitis daily -use products.168 
(203)  Third , the majority of suppliers and customers consider that post -Transaction there 
will remain  sufficient alternative suppliers of otitis products for customers in the 
EEA to obtain competitive offers .169  
(204)  Finally , the majority of suppliers and customers consider that the Transaction will 
not lead to price increases with respect to otitis products in the EEA.170 
Austria  
(205)  A group 1 market arises in Austria for the supply of daily -use otitis products for 
cats171. 
(206)  The value market shares of the Parties and their competitors for daily -use otitis 
products for cats are provided below in Table 14. 
                                                 
166  See Section 4.2.2.  
167  Questionnaire Q1 to competitors, non -confidential replies to question 49.  
168  Questionnaire Q2 to customers, non -confidential replies to question 42.  
169  Questionnaire Q1 to competitors, non -confide ntial replies to question 57 and Questionnaire Q2 to customers, non -
confidential replies to question 48.  
170  Questionnaire Q1 to competitors, non -confidential replies to question 58 and Questionnaire Q2 to customers, non -
confidential replies to question 49.  
171  Market shares for otitis daily -use products may include sales of general antibiotics with an otitis indication, similar to 
BAH products.  





 
 
63 number of competitors active in Germany and in other EEA countries which exert 
significant competitive pressure on the Parties.  
(d) The Commission’s assessment  
(235)  As a preliminary remark, it should be no ted that, unless otherwise specified, the 
findings set out in this Section 4.3.1.1 , and in particular the results of the market 
investigation, do not materially differ depending on the species. As regards possible 
differences depending on the analysed EEA country, although national specificities 
exist, the overall structure and the main characteristics of supply and demand in the 
markets for endoparasiticides and endo/endecto products for PA do not appear to 
vary significantly across countries. Therefore, u nless otherwise specified, the 
findings of Section 4.31.1  (regarding e.g. closeness of competition, generic 
competition and the feedback received from market participants) do not materially 
differ depending on the geographic market at stake.  
(236)  The evidence i n the Commission’s file generally confirms the Parties’ claim s. It 
allows the Commission to exclude serious doubts as to the compatibility of the 
Transaction with the internal market and the functioning of the EEA Agreement 
resulting from the overlap of th e Parties ’ activities in PA endoparasiticides and 
endo/endecto  products , under all plausible market definitions . 
(237)  First, it appears from Table 18 above that the Transaction gives rise to Group 1 
markets for PA endoparasiticides and PA endo/endecto products in only two 
countries, with combined shares not exceeding 50%. More specifically:  
(a) In France : the Parties have moderate combined market shares of [30-40]%, 
with a [10-20]% increment brought by BAH, in the PA endoparasiticides 
market for sheep. Post -Transact ion, the new entity would face five 
competitors, the largest one being Zoetis with a market share higher than the 
Parties’ combined market share ( [40-50]%).   
(b) In Germany : the Parties have higher combined market shares in (i) the 
endoparasiticides market fo r sheep ( [40-50]% combined market share, with a 
20% increment brought by Elanco), (ii) endoparasiticides market for swine 
([40-50]% combined market share, with a minor increment of [0-5]% brought 
by BAH), (iii) endo/endecto products market for sheep ( [40-50]% combined 
market share, with a [20-30]% increment brought by Elanco) and (iv) 
endo/endecto products market for swine ( [40-50]% combined market share, 
with a [10-20]% increment, brought by BAH). Albeit the higher combined 
market shares, post -Transaction,  the new entity would face competition from 
a significant large player , Zoetis , with [40-50]-[40-50]% market share, 
depending on the segment, and other competitors with a more negligible 
market presence  (Merck, BI, Ceva, Virbac ).  
(238)  Second , the market invest igation results indicated that Merck is perceived as the 
market leader, followed by Elanco and Zoetis in endoparasiticides and 
endo/endectoparasitices for PA. BAH is also mentioned among the top five 
competitors but to a lesser extent.  


 
 
66 (251)  Third , similarly to the market feedback received for PA endoparasitici des, according 
to most competitors, there are no specific PA parasiticides for which the Parties are 
either the only alternatives available or among the very few suppliers in the EEA.  
(252)  Fourth , similarly to the market feedback received for PA endoparasitici des, 
competitors indicated that generics exert a competitive constraint over branded PA 
endecto cides .  
(253)  Fifth, the large majority of market respondents indicated that Elanco and BAH are 
not close competitors in the market for PA endecto cides , since their pr oducts can be 
differentiated by indication and withdrawal period .  
(254)  Finally,  customers and competitors did not indicate any substantiated competition 
concerns in relation to the combination of the Parties’ marketed endecto cides  for PA.  
(e) Conclusion  
(255)  In view o f the above considerations, taking into account the market investigation and 
all the evidence available to it, 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  with respect to overlaps between the Parties’ 
marketed endecto cides  for swine in Germany , under all plausible market definitions . 
4.3.1.3. Ectoparasiticides  
(a) Overview of the market and the Parties’ products  
(256)  As explained in Section 3 above, ectop arasiticides are used to control external 
parasites and present similar characteristics to ectoparasiticides for CA. There are a 
number of classes of ecto products, with different mechanisms of action, that are 
used alone or in combination. The major chemi cal classes of ecto products are 
organophosphates, synthetic pyrethroids, formamidines and insect growth regulators. 
With specific regard to ecto products for sheep, they are generally administered 
topically.  
(257)  Similarily to endoparasiticides for PA  (see paragraph  228 above ), the Parties expect 
a reduction of the demand for PA ectoparasiticides, as a consequence of the decrease 
in the number of farm animals and farms in the EEA in the future. They also observe 
an increase in buyer power, through the concentr ation of veterinaries into large 
clinics and hospitals, buying groups and the expansion of large corporate customers 
in the PA sector. An other trend indicated by the Parties is the increase in the 
presence of generics, which would lead to downward pricing pressure on animal 
health companies in the future.  
(258)  In the EEA, both Parties market several PA ectoparasiticides and t he Transaction 
gives rise to the following Group 1/1+ markets  in 2019 .  

 
 
68 (d) The Commission’s assessment  
(262)  As a preliminary remark, it should be noted that, unless otherwise specified, the 
findin gs set out in this Section 4.3.1.3 , and in particular the results of the market 
investigation, do not materially differ depending on the species. As regards possible 
differences depending on the analysed EEA country, although national specificities 
exist, the overall structure and the main characteristics of supply and demand in the 
markets for ectoparasiticides and ecto/endecto products for PA do not appear to vary 
significantly across countries. Therefore, unless otherwise specified, the findings of 
Secti on 4.3.1.3  (regarding e.g. closeness of competition, generic competition and the 
feedback received from market participants) do not materially differ depending on 
the geographic market at stake.  
(263)  The evidence in the Commission’s file generally confirms the Parties’ claim s. It 
allows the Commission to exclude serious doubts as to the compatibility of the 
Transaction with the internal market and the functioning of the EEA Agreement 
resulting from the overlap of the Parties ’ activities in PA ectoparasiticides , under all 
plausible market definitions . 
(264)  First , it appears from Table 22 above that the Transaction gives rise to Group 1 
markets for PA ectoparasiticides in only two countries. More specifically:  
(a) In France : the Parties have (i) high combined market shares of [60-70]%, 
with a [10-20]% increment brought by BAH, in the PA ectoparasiticides 
market for sheep and (ii) more moderate combined market shar es of [30-
40]%, with a [10-20]% increment brought by BAH, in the PA ecto/endecto 
products market for sheep. Albei t the significant combined market shares  in 
the PA ectoparasiticides market for sheep , post -Transaction, the new entity 
would face a strong competitor, Merck ( [30-40]% market share)176. The new 
entity would face  strong competitors also in the ecto/endecto pr oducts market 
for sheep, such as  BI ([20-30]% market share), followed by Merck ( [10-
20]%) and Zoetis ( [10-20]%). In addition, the Parties indicated that the 
market share estimates provided to the Commission do not capture all the 
generic competitors active  in the above market (the Parties’ estimates are 
based on the CEESA database, which does not systematically report the sales 
of all the generic players active in the EEA). Therefore, it is likely that the 
new entity will also face competition from generics , which is corroborated by 
the feedback received from market participants (see paragraphs 266 and 267  
below).  
(b) In Germany : the Parties have high combined market shares of [70-80]%, 
with an increment of [5-10]% brought by Elanco, in the ecto/endecto 
products  market for swine. Albeit the higher combined market shares, the 
increment brought by the Transaction ( [5-10]% brought by Elanco) is 
relatively small ; in addition, post -Transaction, the new entity would still face 
competition from a strong player (BI, with  [30-40]% market s hare). In 
addition, the Parties indicated that the market share estimates provided to the 
Commission do not capture all the generic competitors active in the above 
market (the Parties’ estimates are based on the CEESA database, which does  
not systematically report the sales of all the generic players active in the 
                                                 
176  Also Vetoquinol is active in this segment with a negligible market share of below 1%.  
 
 
69 EEA). Therefore, it is likely that the new entity will also face competition 
from generics, which is corroborated by the feedback received from market 
participants (see paragraph s 266 and 267  below).  
(265)  Second , the market investigation results indicated that , with regard to, more broadly, 
the EEA market for ectoparasiticides for PA,  Merck is perceived as the market 
leader, followed by Elanco, BAH and Zoetis in ectoparasiticides for P A. Other 
players, such as BI, Virbac and Bimeda, are also often mentioned among the top five 
competitors in this segment.   
(266)  Third , similar ly to the considerations made above for PA endoparasiticides and PA 
endecto cides , according to most competitors, there  are no specific PA parasiticides 
for which the Parties are either the only alternatives available or among the very few 
suppliers in the EEA.  
(267)  Fourth , similar ly to the considerations made above for PA endoparasiticides and PA 
endecto cides , competitors ind icated that generics exert a competitive constraint over 
branded PA ectoparasiticides.  
(268)  Finally,  customers and competitors did not indicate any substantiated competition 
concerns in relation to the combination of the Parties’ marketed ectoparasiticides for  
PA.  
(e) Conclusion  
(269)  In view of the above considerations, taking into account the market investigation and 
all the evidence available to it, the Commission concludes that the Transaction does 
not raise serious doubts as to its compatibility with the internal m arket and the 
functioning of the EEA Agreement with respect to overlaps between the Parties’ 
marketed ectoparasiticides for sheep in France and ecto/endecto  products for sheep 
in France and for Swine in Germany , under all plausible market definitions . 
4.3.2.  Antimicrobials  
(a) Overview of the market and the Parties’ products  
(270)  As explained in Section 3 above, a ntimicrobials (also known as antibiotics) are 
pharmaceutical products that destroy or prevent the growth of microbes such as 
bacteria, mycoplasma or fungi and tre at diseases associated with them.  
(271)  Elanco  supplies two products in countries giving rise to Group 1 / 1+ markets; Tylan 
and Denagard. Tylan is a macrolide antimicrobial indicated for swine, poultry and 
cattle; Denagard is a pleuromutilin antimicrobial indic ated for swine and poultry. 
Both are chiefly administered orally.  
(272)  BAH supplies one product in the same markets; Baytril, a fluoroquinolone 
antimicrobial indicated for cattle, poultry, swine, goats and rabbits (as well as CA). 
Baytril is predominantly admi nistered by way of injection, but also comes in oral 
pharmaceutical forms. Fluoroquinolones are categorised as higher risk antimicrobials  
than macrolides or pleuromutilins, mentioned above . 


 
 
72 macrolides, pleuromutilins or other) have already been used. Importantly, Baytril 
(including the Bayt ril 10% oral solution product that determines BAH’s market 
position in all Group 1 affected markets) has a specific contraindication that states 
that it should not be used for prophylaxis i.e. preventative treatments.  Thus they are 
typically used at differ ent stages of the treatment.  
(279)  On the other hand, a number of competitor products are in the same chemical family 
as one or other of the Parties’ products. For example, Zoetis and Virbac both market  
macrolide antimicrobials, which compete more closely with Elanco’s products, and 
Hipra markets fluoroquinolone antimicrobials, which compete more closely with 
BAH’s product.  
(280)  Further, the Parties’ respective portfolios differ materially in the withdrawal periods 
following administration, before which animals canno t be slaughtered. These relative 
differences reflect the portfolios’ differing underlying chemical classes: Baytril’s 
oral products require withdrawal periods of a minimum of 5-13 days depending on 
the species, compared to 0 -1 days for Elanco’s oral produc ts. From a customer 
perspective, therefore, switching between the Parties’ products would require 
meaningful adjustment to planning and organisation in order to incorporate different 
withdrawal periods.  
(281)  Lastly, a ll of the Parties’ key antimicrobial product s are off -patent and g enerics play 
a particularly significant role in the supply of antimicrobial products in Europe.  
(d) The Commission’s assessment  
(282)  The evidence in the Commission’s file generally confirms the Parties’ claim s. It 
allows the Commission to excl ude serious doubts as to the compatibility of the 
Transaction with the internal market and the functioning of the EEA Agreement 
resulting from the overlap of the Parties ’ activities in antimicrobials for PA. 
(283)  First , most customers confirm the Parties’  view s that antimicrobials with different 
chemical classes are not interchangeable . Indeed, with the EMA categorisation of 
antibiotics by chemical class177, and consequent restriction of the use of antibiotics 
belonging to certain chemical classes, there are eleme nts to indicate that antibiotics 
with chemical classes in different risk categorisations (as are Elanco’s and BAH’s 
products respectively) do not compete closely. Indeed, one customer elaborated 
further that “ Avoiding antimicrobial resistance plays a big p art in product 
choice …”178 Most customers also confirmed  that the withdrawal period is the most 
important factor in the selection for a PA antimicrobial179. As such, the Parties’ 
products, being of different chemical classes, and different withdrawal periods, are 
not close competitors.  In the EEA Virbac (Pharmasin), BI (Suanovil) and Zoetis 
(Zactran and Draxxin) all supply macrolides (the same class as Elanco’s Tylan); and 
Virbac (Stalimox), Calier (Caliermutin) and Ceva (Timavet) all supply 
pleuromutilins (the  same class as Elanco’s Denagard); while as regards BAH’s 
Baytril product, Zoetis (Dicural and Advocin), Hipra (Hiprolana), Calier (Roxacin) 
and Ceva (Flumisol) all supply fluoroquinolones.  
                                                 
177  See paragraph 36.  
178  Questionnaire Q3 to PA customers (question 44).  
179  Questionnaire Q3 to PA customers (questions 41, 45) . 
 
 
73 (284)  Second , the results of the market investigation confirm that, post -Transaction, the 
new entity would continue to face competitive constraints from rivals. Competitors 
and customers consider Zoetis  as the leader in the overall EEA PA Antimicrobials 
markets, followed by Merck, Ceva, BAH, BI and Virbac , whereas Elanco is no t 
widely considered to be among the top players180. The results of the market 
investigation also confirm that the Parties are not close competitors.181  
(285)  Third , the market investigation confirmed the Parties’ claim that generics exert 
pressure on the prices of branded PA antimicrobials182. In the EEA there are several 
generics of Tylan, Denagard and Baytril marketed by larger players such as Ceva, 
Vetoquinol, Huvepharma and Krka as well as a number of smaller, regional players. 
Further, competitors noted that gene ric entry into the antimicrobials market is 
straightforward  and that suppliers active in some EEA countries can also enter 
others . One supplier explained that “ It [entry] will be easier / less intensive capital 
investment for generic entrants. ” Another not ed “Overall there is no significant 
different barriers of entry between … countries in the EEA zone. ” 183 Provided they 
have established commercial presence in the country, other players could also enter 
these segments with generic products. The Parties esti mate that it would be low cost 
([…]) and quick ( […]) for suppliers to obtain authorisations in Norway and Sweden 
for generic versions of the Parties’ products.   
(286)  Fourth , the market investigation  did not reveal any substantiated competition 
concerns in relat ion to the combination of the Parties’ PA antimicrobials.184 Overall, 
the large majority of customers and competitors indicated that there would remain 
sufficient alternative suppliers post -Transaction and do not expect a price increase in 
PA antimicrobials.  
(287)  Lastly , looking at the individual countries,  the Transaction gives rise to Group 1 
markets for PA antimicrobials  in two countries. More specifically:  
(a) In Norway : the Parties have a combined market share of [80-90]% with 
BAH’s increment of [10-20]% (or EUR […]) in the oral antimicrobials for all 
species and oral non -premix antimicrobials for all species segments , which 
are the same in Norway. However, in Norway  Elanco’s only product in th ese 
segments is Denagard, which is exclusively used for swine in Norway  
(Denagard is not registered for species other than swine in Norway).  BAH’s 
products  (Baytril 2.5% and 10%), on the other hand, are used solely for 
poultry and cattle185. As such, the Parties are effectively not competing  in 
these segments.  The third supplie r in this market, Virbac, targets niche 
species other than swine, poultry or cattle, and thus in the pre -transaction 
situation none of the three suppliers compete closely. Moreover, the so -called 
PA antimicrobials market leaders Zoetis and Merck were prese nt in these 
                                                 
180  Questionnaire Q1 to competitors (question 104) and Questionnaire Q3 to PA customers (question 47).  
181  Questionnaire Q1 to competitors (question 108) and Questionnaire Q3 to PA customers (question 50).  
182  Questionnaire Q1 to competitors (question 107) and Questionnaire Q3 to PA customers (question 51).  
183  Questionnaire Q1, Questionnaire to competitors (question 110).  
184  Questionnaire Q1 to competitors (questions 112, 113) and Questionnaire Q3 to PA customers (questions 53, 54).  
185  Indeed , the usage of f luoroquinolones in PA is increasingly rare in  Nordic countries in particular for swine (given the 
detrimental effects on antibiotic  resistance for human health purposes) – for instance , in Denmark the usage of  
fluoroquinolones is prohibited in swine.  
 
 
74 segments in previous years, and would presumably have the commercial 
presence to be able to re-enter and compete with the new entity. Further, for 
generic fluoroquinolone products there is currently  a marketing authorisation 
in Norway for Exofl ox (Le Vet Beheer) and were previously a number of 
additional marketing authorizations which were then withdrawn by the 
holders (including Enrotron of antiMedica and Fenoflox of Chanelle) . The 
Parties estimate that it would be low cost ( […]) and quick ( […]) for suppliers 
to obtain Norwegian authorisations for these products. Lastly , no competitors 
or customers have raised concerns for this market during the investigation.  
(b) In Sweden : the Parties have high combined market shares with limited 
increments; (i) [90-100]% ([0-5]% or EUR […] increment from BAH ) in the 
oral antimicrobials  for all species segment  and (ii) [90-100]% ([0-5]% or 
EUR […] increment from BAH) in the overall oral non -premix 
antimicrobials for all species segment . In Sweden, Elanco supplied D enagard 
and Tylan in 2018, over [70-80]% of which is supplied to swine, with the 
remainder going to poultry. BAH’s products, on the other hand (Baytril 2.5% 
and 10%), are used predominantly for poultry ( [80-90]%) and cattle ( [20-
30]%). As such the Parties are not considered to compete closely in these 
segments.  The new entity will face competitors with higher market shares 
than BAH, namely Ceva ( [0-5]% and [0-5]% respectively) and Vetoquinol 
([0-5]% and [0-5]% respectively). Further, for generic fluoroquino lone 
products there is currently a marketing authorisation in Norway for Exoflox 
(Le Vet Beheer) and Fenoflox (Chanelle), and there were previously a 
number of additional marketing authorizations which were then withdrawn 
by the holders (including Enrotron  of antiMedica). The Parties estimate that it 
would be low cost ( […]) and quick ( […]) for suppliers to obtain Swedish 
authorisations for these products. Lastly , no competitors or customers have 
raised concerns for this market during the investigation.  
(e) Conc lusion  
(288)  In view of the above considerations, taking into account the market investigation and 
all the evidence available to it, 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  with respect to antimicrobials for PA under any 
potential market definition . 
4.3.3.  Anticoccidials  
(a) Overview of the market and the Parties’ products  
(289)  As explained in Section 3 above, anticoccidials act against coccidiosis, a par asitic 
disease of the intestinal tract of animals caused by pathogenic coccidia.  
(290)  The Parties’ products giving rise to Group 1  / 1+ markets are Elanco’s Vecoxan 
indicated for cattle and sheep and BAH’s Baycox product indicated for cattle, sheep 
and swine.  Both products  are licensed for the prevention rather than treatment of 
coccidiosis.186 These products are principally used to prevent coccidiosis in an entire 
                                                 
186  Only in the UK, Vecoxan is licensed for both prevention and treatment of coccidiosis.  






 
 
81 (309)  First , most competitors consider that the Parties are close competitors in 
anticoccidials for cattle and sheep.188 A number of customers also highlighted that 
for ruminant anticoccidials  the Parties’ products are the only alternatives or are 
among very f ew suppliers available189. Moreover, both customers and competitors 
consider BAH and Elanco to be in the top three players  in ruminant anticoccidials190. 
(310)  Second , while the market investigation does confirm  the Parties’ claim that generics 
exert pressure on the  prices of branded products, generics accounted for less than 
20% of m ost customers’ PA anticoccidial purchases191. One supplier points out that 
for PA anticoccidials “ Generics create price competition but branded products 
benefit from brand loyalty. ”  
(311)  Third , the large majority of competitors consider that entering the EEA markets for 
PA anticoccidials is difficult , with the main barriers to entry cited being R&D costs, 
access to APIs, and the need for large volume production facilities.192. 
(312)  Fourth , most compet itors consider that there is a risk of price increase in  ruminant 
anticoccidials as a result of the transaction.193 One supplier notes that “… Elanco & 
Bayer are major providers of … (toltrazuril, diclazuril). There is no alternative 
except generics that are  not a lot. ” 
(313)  Lastly , looking at the individual countries, the Commission notes that the 
Transaction leads to high or moderate  combined market shares in a number of 
affected markets. More specifically:  
(a) In Austria : the Parties have high combined market share s in Anticoccidials 
for cattle and sheep  ([80-90]%, with a [40-50]% increment). There are two 
competitors, even the larger of which has significantly a lower market share  
([10-20]%) than the increment.  
(b) In Belgium : the Parties have high combined market sha res in Anticoccidials 
for cattle and sheep ( [80-90]%, with a [30-40]% increment). There is one 
competitor with a significantly lower market share  ([10-20]%) than the 
increment .  
(c) In Czechia : the Parties have moderate  combined market shares in 
Anticoccidials  for cattle and sheep ( [40-50]%, with a [5-10]% increment). 
There are two  competitor s, both  with higher  market shares  ([30-40]% and 
[20-30]%) than the increment . 
(d) In France : the Parties have high combined market shares in Anticoccidials 
for cattle and sheep  ([70-80]%, with a [10-20]% increment). There are three 
competitors, all with market shares ([5-10]%, [5-10]%, [5-10]% respectively) 
lower than the increment.  
                                                 
188  Questionnaire Q1 to competitors (question 91) and Questionnaire Q3 to PA customers (question 35).  
189  Questionnaire Q3 to PA customers (question 34).  
190  Ques tionnaire Q1 to competitors (question 87) and Questionnaire Q3 to PA customers (question 32).  
191  Questionnaire Q1 to competitors (question 90) and Questionnaire Q3 to PA customers (questions 4, 36).  
192  Questionnaire Q1 to competitors (question 93).  
193  Questionnaire Q1 to competitors (question 96) and Q uestionnaire Q3 to PA customers (question 39).  
 
 
82 (e) In Germany : the Parties have high combined market shares Anticoccidials 
for cattle and sheep ( [80-90]%, with a [20-30]% increment). There are two 
competitors, both with significantly lower market shares ([10-20]% and [0-
5]%) than the increment.  
(f) In Greece : the Parties have high combined market shares in Anticoccidials 
for cattle and sheep ( [60-70]%, with a [0-5]% increment). There are two 
competitors, one with  a significantly higher market share ([30-40]%) than the 
increment.  
(g) In Hungary : the Parties have high combined market shares in Anticoccidials 
for cattle and sheep ( [80-90]%, with a [20-30]% inc rement). There is only 
one competitor , with a lower  market share ([10-20]%) than the increment . 
(h) In Ireland : the Parties have high combined market shares in Anticoccidials 
for cattle and sheep ( [80-90]%, with a [10-20]% increment). There is one 
competitor with a lower market share ([10-20]%) than the increment.  
(i) In the Netherlands : the Parties have high combined market shares in 
Anticoccidials for cattle and sheep ( [60-70]%, with a [5-10]% increment). 
There are four competitors, two of which have higher mark et shares ([10-
20]% and [10-20]%) than the increment.  
(j) In Spain : the Parties have moderate  combined market shares in 
Anticoccidials for cattle and sheep ( [40-50]%, with a [20-30]% increment). 
There are two competitors,  one with a higher  market share ([50-60]%) than 
the Parties’ combined market share .  
(k) In the UK: the Parties have high combined market shares in  Anticoccidials 
for cattle and sheep ( [50-60]%, with a [0-5]% increment). There are two  
competitor s, both with significantly  higher market share s ([30-40]% and [10-
20]%) than the increment .  
(e) Conclusion  
(314)  The Commission considers that the high market shares, combined with the closeness 
of competition between the Parties’ products, the lack of sufficient competitors and 
the other elements of the market inves tigation described above, point  to a significant 
increase of market power of the merged entity post -Transaction  in a number of 
countries . It derives from th is assessment that the Transaction raises serious doubts 
as to its compatibility with the internal m arket, due to its likely horizontal non -
coordinated e ffects in Anticoccidials  for cattle and sheep i n Austria , Belgium , 
France, Germany , Hungary , and Ireland.  In the present case, the Commission does 
not need to take a view on the markets in Czechia, Greec e, the Netherlands, Spain 
and the UK, as in any event the remedy offered by the Parties covers the full overlap 
on an EEA -wide basis for viability purposes.  
  
 
 
83 4.4. Innovation  
(a) The Commission’s assessment  
(315)  The Commission has assessed whether the Transaction could lead to a reduction in 
innovation competition in relation to the capability to innovate in certain innovation 
spaces, assessing the risk of a significant loss of innovation competition resulting 
from a structural reduction of the overall level of innovatio n, in line with the four -
layer competitive assessment framework used in previous decisions .194 This 
assessment has been conduct ed looking at the general innovation capabilities of the 
Parties and the ir competitors, over and beyond the competitive situation f or specific 
marketed and pipeline  product s, which have been assessed in detail in the sections 
above.  
(316)  The market investigation showed that  barriers to entry with regards to innovation in 
the animal health sector are high in particular for parasiticides due  to substantial 
development costs  and th e synergies stemming from internal R&D capabilities to 
develop para siticides for crops in the  develop ment of  parasiticides  for animal 
health .195  
(317)  This notwithstanding , the Commission found that the Transaction will not  result in a 
significant loss of innovation for several reasons.  
(318)  First , the Parties are well below the top 3 undertakings  in term of R&D ( i.e. Zoetis, 
Merck, and BI). In particular, the results of the market investigation revealed that:  
(a) According to the d ata provided by  the Parties , […]. Moreover, the market 
investigation revealed that the Parties underestimated the R&D expenditure 
and number of full time employees of several of their competitors. It follows 
that, post -Transaction, several competitors will have significant resources in 
terms of budget and number of employees to compete in innovation with the 
merged entity;  
(b) BAH has not been a particularly strong innovator in recent  years, including in 
parasiticides. For instance, contrary to its competitors (including also 
medium size companies), BAH has launched no new parasiticides (based on 
new molecules) in recent years. In this vein, one of the top competitor s 
explained that “ BAH is not considered in the same league as Zoetis, BI, 
Merck and Elanco in ter ms of innovation”  and explained that animal health 
was no longer a priority of Bayer .196 This is indeed confirmed by Bayer’s 
decision to exit the animal health  business ; 
(c) Customers  perceive  Merck, Zoetis and Boe hringer as the strongest innovators  
in animal he alth and in parasiticides in particular, while Elanco, BAH and 
Ceva would be number four, five and six respectively.197 
                                                 
194  See paragraph 138 and foonote 119 above.  
195  Questionnaires Q1 to Competitors, non -confidential replies to questions 127 and 128.  
196  Questionnaires Q1 to Compe titors, non -confidential replies to question 124.  
197   Questionnaires Q2 to Customers, non -confidential replies to question 55 and Questionnaire Q3 to Customers, 
non-confidential replies to question 60.  
 
 
84 (319)  Second , the market investigat ion showed that  medium -size companies have the 
capability  to develop new products in all relevant product cat egories concerned by 
this Transaction, including parasiticides. In fact,  thirteen companies indicated they 
would be capable of develop ing new originator products based on new molecules or 
active  ingredients and fourteen  companies have the capabilities to d evelop new 
products based on life cycle management .198 The market investigation revealed that 
medium -size companies (without internal crop R&D) have the possibility to 
conclude partnerships with third -parties . In fact, in recent years, several parasiticides 
originator products have been launched to the market by medium -size companies, 
such as Ceva, Fatro or Beaphar.199  
(320)  Finally , the overwhelming majority of customers and competitors indicated that the 
impact of the Transaction in R&D and innovation would  be neu tral or positive. In 
fact, some of the most important competitors believe that the Transaction may create 
synergies and lead to faster development of products.200 
(b) Conclusion  
(321)  Based on the above considerations, taking into account the market investigation and 
all the evidence available to it, the Commission concludes that the Transaction does 
not raise serious doubts as to its compatibility with the internal market or the 
functioning of the EEA agreement in relation to effects on innovation.  
5. COMMITMENTS  
5.1.  Framewo rk for the assessment of the Commitments   
(322)  Where a notified concentration raises serious doubts as to its compatibility with the 
internal market, the parties may undertake to modify the concentration to remove the 
grounds for the serious doubts identified b y the Commission. Pursuant to Article 
6(2) of the Merger Regulation, where the Commission finds that, following 
modification by the undertakings concerned, a notified concentration no longer 
raises serious doubts, it shall declare the concentration compati ble with the internal 
market pursuant to Article 6(1)(b) of the Merger Regulation.  
(323)  As set out in the Commission's Remedies Notice,201 the commitments have to 
eliminate the competition concerns entirely, and have to be comprehensive and 
effective from all po ints of view.202  
(324)  In assessing whether commitments will maintain effective competition, the 
Commission considers all relevant factors, including the type, scale and scope of the 
proposed commitments with reference to the structure and the particular 
characte ristics of the market in which the Transaction is likely to significantly 
                                                 
198  Questionnaires Q1 to Competitors, non -confidential replies to question 116.  
199   Questionnaires Q1 to Competitors, non -confidential replies to question 117.  
200  Questionnaires Q2 to Customers, non -confidential replies to question 55; Questionnaires Q3 to Customers, non -
confidential replies to question 61; an d Questionnaires Q1 to Competitors, non -confidential replies to question 129.  
201  Commission Notice on remedies acceptable under Council Regulation (EC) No 139/2004 and under Commission 
Regulation (EC) No 802/2004 (OJ C 267, 22.10.2008, p. 1 -27), the "Remed ies Notice".  
202  Remedies Notice, paras. 9 and 61.  
 
 
85 impede effective competition, including the position of the Parties and other 
participants on the market .203 
(325)  In order for the commitments to comply with those principles, they must be capable 
of being implemented effectively within a short period. Concerning the form of 
acceptable commitments, the Merger Regulation gives discretion to the Commission 
as long as the commitments meet the required standards. Structural commitments 
will meet  the conditions set out above only in so far as the Commission is able to 
conclude with the requisite degree of certainty, at the time of its Decision, that it will 
be possible to implement them and that it will be likely that the new commercial 
structures  resulting from them will be sufficiently workable and lasting to ensure that 
effective competition will be maintained.204 Divestiture commitments are normally 
the best way to eliminate competition concerns resulting from horizontal overlaps.  
(326)  The divested a ctivities must consist of a viable business that, if operated by a 
suitable purchaser, can compete effectively with the merged entity on a lasting basis 
and that is divested as a going concern. The business must include all the assets 
which contribute to i ts current operation or which are necessary to ensure its viability 
and competitiveness and all personnel which are currently employed or which are 
necessary to ensure the business' viability and competitiveness.205  
(327)  The intended effect from  the divestiture will only be achieved if and once the 
business is transferred to a suitable purchaser in whose hands it will become an 
active competitive force in the market. The potential of a business to attract a 
suitable purchaser is an important element of the Commis sion's assessment of the 
appropriateness of the proposed commitment.206  
(328)  Even though normally the divestiture of an existing viable stand -alone business is 
required, the Commission, by observing  the principle of proportionality, may also 
advise the Parties t o consider the divestiture of businesses which have existing 
strong links or are partially integrated with businesses retained by the parties and 
therefore need to be ‘carved out’ in those respects. Conversely, carving -out a 
business from the scope of the commitments can only be accepted by the 
Commission if it can be certain that, at least at the time when the business is 
transferred to the purchaser, a viable business on a stand -alone basis will be divested 
and the risks for the viability and competitiven ess caused by the carve -out will 
thereby be reduced to a minimum.  
5.2.     Procedure  
(329)  In order to render the concentration compatible with the internal market, the Parties 
have submitted a set of commitments under Article 6(2) of the Merger Regulation on 
13 May  2020 (the "Initial Commitments"). The Commission market tested the Initial 
Commitments on 14 May  2020 in order to assess whether they were sufficient and 
suitable to remedy the serious doubts identified at Section 4 above. Following the 
feedback received from  market test, amended commitments were submitted on 3 
                                                 
203   Remedies Notice, para. 12.  
204   Remedies Notice, para. 10.  
205   Remedies Notice, paras. 23 -25. 
206   Remedies Notice, para. 47.  
 
 
86 June 2020 (the “Final Commitments”). The Final Commitments are annexed to this 
Decision207 and form an integral part thereof.  
5.3.     The Initial Commitments  
5.3.1.  Description of the Initial Commitments  
(330)  The Initial Com mitments are set out in two submissions : the “ Main Commitments” 
and the “ Additional  Commitments”.  
(331)  Under the Main Commitments , the Parties offered  the divestiture of the following 
products (together referred as the “Main Divestment Businesses”) : 
(i) Elanco’s VECOXAN (anticoccidials for ruminants)  at global level  (the 
“Anticoccidials Divestment Business”) ;  
(ii) Elanco’s OSURNIA (long lasting otitis treatment) at global level  (the 
“Otitis Divestment Business”); and 
(iii) BAH’s Drontal and Profender family of products208 (CA e ndoparasiticides) 
at EEA level (the “Parasiticides Divestment Business”) . 
(332)  The Main Commitments provide that the divestiture of the Anticoccidial Divestment 
Business, the Otitis Divestment Busines and the Parasiticide Divestment Business 
would be implemente d by way of asset sales  and that each of them may be sold to 
different suitable purchasers (the “Purchaser(s)”) . The Main Divestment Businesses 
would include all rights, title, and interest in the concerned products (including the 
rights to develop, improv e, manufacture, commercialise and distribute these 
products), as well as all the assets that are necessary to ensure its viability, in 
particular: (i) all contracts related to these products ( such as supply and distribution 
agreements); (ii) all licences, product registrations and authorisations ; (iii) all 
intellectual property rights related to the development, manufacturing and 
exploitation of the concerned products; (iv) all customer orders and records and (v) 
all other tangible and intangible assets (e. g., inventory, regulatory files, books and 
records). At the option of the Purchaser(s), the Main Divestment Businesses would 
also include staff currently employed by the Main Divestment Business es (the 
“Personnel”). Furthermore, with the aim of ensuring a smooth transfer of the Main 
Divestment Businesses, the Parties committed to offer a number of transitional 
supply arrangements to the Purchaser (s).  
(333)  In addition to the standard purchaser requirements contained in the Commission’s 
template for divestiture r emedies, the Main Commitments provide that the 
Purchaser(s) must have: (i) established capabilities or a track record in the 
manufacture, marketing and distribution of animal health products in the EEA; (ii) 
adequate manufacturing and regulatory capabiliti es to successfully implement a 
production transfer in relation to the Main Divestment Businesses (where relevant); 
(iii) sufficient R&D ressources and experience to develop the relevant pipeline 
                                                 
207  See Annex II, which comprises two parts: part 1 includes the Final Main Com mitments ("Annex II.1") and part 2 
includes the Final Additional Commitments ("Annex II.2").  
208  Including the following products: Drontal (Cat), Drontal Plus (Dog), Drontal Puppy/Welpan (Dog), Droncit Injectable 
(Cat and Dog) / Spot On (Cat) / Tablet (Cat and Dog); Profender Spot -on (Cat) / Tablet (Dog), Dronspot (Cat), and 
Procox (Dog).  
 
 
87 products included in the scope of the Main Divestment Busines ses (where relevant); 
(iv) complementary products and expertise to the Main Divestment Businesses.  
(334)  Furthermore , the Main Commitments provide for an upfront buyer provision 
pursuant to which the Transaction cannot be implemented until the Commission has 
given its approval to the purchase of the Main Divestment Businesses by the 
Purchaser(s).  
(335)  Under the Additional  Commitments , the Parties offered to divest globally  to one 
or several Purchaser (s) BAH isox pipelines , comprising […] (together referred as the 
“ESP Divestment Business”)  or, alternatively, Elanco’s marketed and pipeline isox 
products […] at EEA level (the “Alternative Divestment Business”) .209 […],210 […]. 
The Parties would be obliged to implement the Alternative Divestment Busines s if 
they are not able to implement the divestiture of the BAH Divestment Business 
within the time frame of the first Divestiture Period.211  
(336)  The ESP Divestment Businesses, or the Alternative Dives tment  Business (as 
applicable) , would be divested by way of asset sales . They would include  all rights, 
title, and interest s to develop, improve, manufacture and commercialise the products 
concerned , as well as all the assets necessary to ensure their viability  (insofar as they 
relate to the ESP Divestment Business or the Alternative Dive stment Business) , in 
particular: (i) all contracts related to these products; (ii) all product licences,  permits, 
registrations and authorisations ; (iii) all intellectual property rights related to to the 
development, improvement, manufacturing and exploit ation of the concerned 
products; and ( iv) all other tangible and intangible assets (e.g., inventory, regulatory 
files, books and records). In addition, the ESP Divestment Business include s certain 
employees working on the development of BAH’s isox pipeline  (the “Key 
Personnel”) . Furthermore, with the aim of ensuring a smooth transfer of the ESP 
Divestment Business, or the Alternative Divestment Business (as applicable), the 
Parties committed to offer a number of transitional supply arrangements to the 
Purch aser.  
(337)  Moreover, at the option of the Purchaser(s), the ESP Divestment Businesses, or the 
Alternative Divestment Business (as applicable), would also include personnel .212   
(338)  […].  
(339)  In addition to the standard purchaser requirements contained in the Commission ’s 
template for divestiture remedies, the Additional  Commitments provide that the 
Purchaser(s) must have: (i) established capabilities or a track record in the clinical 
development of animal health products in the EEA (including with regard to having 
interactions with relevant EEA -wide or n ational bodies that decide on approval of 
animal health products) ; (ii) established capabilities or a track record in the 
                                                 
209  […]. For more details, see Table 7  in Section 4.2.1.3(a) above.  
210  […]. 
211  The Anticcocidials Divestment Business, the Otitis Divestment Business, the Parasiticides Dive stment Business, as 
well as the ESP Divestment Business and the Alternative Isox Divestment Business are together referred as the 
“Divestment Businesses”.  In addition, with regard to the scope of the Parties’ obligation to implement the Alternative 
Divestm ent Business, paragraph 2 of the Additional Commitments provides that, should Elanco not enter into a final 
binding sale and purchase agreement for the sale of the ESP Divestment Business by the end of the first Divestiture 
Period, it shall sell the Altern ative Divestment Business.  
212  Paragrapghs 9 and 18 of the Additional Commitments.  
 
 
88 manufactur e, commercialisation and distribution of animal health products in the 
EEA ; (iii) suffici ent R&D ressources and experience to develop the relevant pipeline 
products included in the scope of the ESP Divestment Business  or, if applicable, the 
Alternative Divestment Business ; (iv) complementary products and expertise to the 
ESP Divestment Busines s or, if applicable, the Alternative Divestment Business . 
5.3.2.  Assessment of the Initial Commitments  
(340)  The Commission analysed the suitability of the Initial Commitments to remedy the 
serious doubts raised by the Transaction, in particular under the principles se t out in 
the Commission Remedies Notice. In its assessment, the Commission relied inter 
alia on the results of the market test launched on 14 May 2020.  
(a) The Initial Commitments appear generally capable to address the competition 
concerns identified in Sect ion 4.  
(341)  For the reasons set out below, the Commission considers that the Initial 
Commitments appear generally capable to fully address the competition concerns 
identified in Section 4.  
(342)  First , respondents to the market test were generally positive about the Initial 
Commitments and confirmed that they are suitable to eliminate the competition 
concerns identified by the Commission.213   
(343)  Second , in terms of scope, the vast majority of market participants considered that 
the Divestment Businesses contain all the ne cessary assets to remain a viable and 
competitive force in the relevant markets .214 In fact, virtually all market participants 
generally consider that the divestiture of the Divestment Businesses will not result in 
a reduction of their sales.215 More specifica lly, competitors confirmed that no 
transfer of other assets or  personnel is needed to ensure the viability and 
competitiv eness  of the Divestment Businesses, other than the Key Personnel of ESP 
Divestment Business. In this respect, competitors confirmed tha t the Key Personnel 
as identified in the Additional Commitments covered all the necessary roles.216 
(344)  Third , the results of the market test confirmed that all the Divestment Businesses are 
attractive businesses.217 In particular, many competitors expressed inter est in the 
acquisition of either the ESP Divestment Business or the Alternative Divestment 
Business.218 
(345)  Fourth , the results of the market test confirmed the relevance of the purchaser 
requirements included in the Initial Commitments. Indeed, respondents cons ider 
almost unanimously that the Purchaser Criteria are sufficient to ensure the 
                                                 
213  Market test of the Initial Commitments (R1, R2 and R3).  
214  Questionnaires R1 to Competitors (questions 1, 11, 21 and 31); R2 to CA Customers (questions 1, 4 and 7); and R 3 to 
PA Customers (question 1).  
215  Questionnaires R1 to Competitors (questions 6, 16 and 26); and R2 to CA Customers (questions 13 and 15); and R3 to 
PA Customers (question 6).  
216 Questionnaire R1 to Competitors (question 2, 12, 22, 32 and 33).  
217  Questionn aire R1 to Competitors (questions 3, 13, 23 and 34).  
218  Questionnaire R1 to Competitors (questions 35.1 and 35.2).  
 
 
89 Purchaser(s) is/are able to compete actively and effectively in the relevant 
markets.219 
(346)  Fifth , virtually all competitors consider that the proposed transitional agreements 
provided for in the Initial Commitments were sufficient, both in terms of scope and 
duration, to ensure  a smooth transfer of the Divestment Business es.220  
(347)  Finally , respondents to the market test were generally positive about the Initial 
Commitments and confirme d, almost unanimously,  that the  sales of the Divestment 
Businesses would be sufficient to solve any competition concerns arising from the 
Transaction in the relevant markets .221 
(b) Shortcomings of the Initial Commitments  
(348)  Nonetheless , the results of the market test also identified a few issues with the Initial 
Commitments requiring further improvements  in order to make the Parasiticides 
Divestment Business and the Additional Dives tment Business viable and 
competitive . The market test did not identify any shortco mings with regards to the 
Otitis Divestment Busin ess or the Anticoccidials Divestment Business. On the basis 
of the results of the Market Test, the Commission consider ed the following 
amendments to the Initial Commitments to be necessary.   
(349)  As regards the P arasiticides Divestment Business , the market test revealed that 
the […] Pipeline  is closely related to one of the […] products included in the 
Parasiticides Divestment Business , namely […]. Indeed, t he […] pipeline product is 
[…]. As a result, the […] pipeline product is expected to closely compete with […]. 
Taking these considerations into account, some respondents to the market test […] 
and indicated that  this product should be divested together with […] to ensure the 
viability of the Parasiticides Divest ment Business  ([…]). In particular, one 
competitor indicated that “ the only possibility to remove them [the competition 
concerns]  completely is to couple the sale of the Endoparasiticides Divestment 
Business and of […]”.222 […].223 
(350)  Moreover,  the market test al so revealed that the […] Pipeline is very advanced, the 
drug having reached the final process of registration , with only a few ongoing 
studies, and that the marketing authorisation of the […] pipeline could be 
jeopardiz ed without the support of BAH to fina lise the on going studies and the final 
process with the E MA.  
(351)  As regards the Additional  Commitments , and more specifi cally the Alternative  
Divestment Business, the Commission consider ed that (i) additional safeguards were 
needed to ensure that the developm ent of the pipeline products included in the 
Alternative Divestment Business (which is conducted under the supervision of the 
Purchaser and the Monitoring Trustee ) and that (ii) to ensure the viability of the 
                                                 
219  Questionnaires R1 to Competitors (questions 4, 14, 24 and 38); R2 to CA Customers (question 11); and R3 to PA 
Customers (question 4).  
220  Questionnaire R1 to Competitors (questions 7, 17, 27 and 39).  
221  Questionnaires R1 to Competitors (questions 10, 20 and 30); R2 to CA Customers (question 3, 6 and 8); and R3 to PA 
Customers (question 3).  
222  Questionnaire R1 to Competitors (question 30).  
223  […]. 
 
 
90 Alternative Divestment Business,  all the obliga tions for the interim period (e.g., 
preservation of viability, ring fencing mechanism, hold -separate manager) (the 
“Inter im Obligations”) should apply to the Alternative Divestment Business from the 
date of the adoption of the present Decision (the “ Effect ive Date ”). 
5.4.    The Final Commitments  
(352)  In order to address the shortcomings discussed in Section 5.3, the Parties submitted 
the Final Commitments, on 3 June 20 20.  
5.4.1.  Description of the Final Commitments  
(353)  The Final Commitments are set out in two submissions: the “F inal Main 
Commitments” and the “Final Additional Commitments”.  
(354)  With regards to the Parasiticides Divestment Business, the Final Commitments 
include the following improvements:  
(a) The […] Pipeline is now part of the Parasiticides Divestment Business  
and will b e sold to the same Purchaser together with all assets included in the 
Initial Commitments with regards to the Parasiticides Divestment Business.  
(b) The Final Commitments include an obligation for the Parties to support the 
Purchaser of the Parasiticides Dives tment Business […]. 
(355)  With regards to the Additional Divestment Business , the Final Commitments include 
the following improvements:  
(a) Enhanced safeguards for the Alternative Divestment Business in relation 
to the development of the pipeline  products included i n the Alternative 
Divestment Business . In particular: (i) the c linical development will be 
conducted under the supervision of the Purchaser , as well as the M onitoring 
Trustee ; (ii) Elanco should devote sufficient resources in terms of budget and 
personnel,  specifically, to conclude the clinical development phase without 
delays; (iii) the Purchaser will be granted a final say on all decisions related 
to the clinical development of the pipeline, which could impact the 
development and entry into market of the products in the EEE and ; (iv)  the 
Final Commitments provide for a fast-track  dispute resolution mechanism  in 
case of disputes between Elanco and the Purchaser in relation to the 
development of the the above -mentioned pipeline products .  
(b) Interim Obligations  will be  applicable  to the Alternative Divestment 
Business  as of the Effective Date.  All the obligations for the interim period 
(e.g., preservation of viability, ring fencing mechanism, hold -separate 
manager) apply to the Alternative Divestment Business  from the Effective 
Date.  
5.4.2.  Assessment  of the Final Commitments  
(356)  The Commission considers that these amendments adequately address the concerns 
raised by the market test respondents and the Commission itself in relation to the 
Initial Commitments. The Commissio n notes in particular that the changes done to 
 
 
91 the Initial Commitments as described in Section 5. 3, contributes to the viability and 
competitiveness of the Divestment Businesses.  
(357)  On the basis of the above, the Commission concludes that the Divestment 
Busin esses are viable businesses and the modalities foreseen for their transfer under 
the Final Commitments will allow suitable Purchaser(s) to operate them in a 
competitive and viable manner.  
(358)  The Final Commitments fully address the competition concerns identif ied in the 
Decision as they remove the overlap between Elanco and BAH in all markets where 
serious doubt arise.  
(359)  Moreover, the Final Commitments are comprehensive, effective, and are capable of 
being implemented effectively within a short period of time.  
5.4.3.  Conclusion  
(360)  Based on the reasoning in Sections 5.3 and 5.4 and taking into consideration the 
results of the market test, t he Commission therefore considers that the Final 
Commitments are sufficient to eliminate all serious doubts as to the compatibility of 
the Transaction with the internal market and the EEA Agreement.  
5.5.    Conditions and obligations  
(361)  Under the first sentence of the second subparagraph of Article 6(2) of the Merger 
Regulation, the Commission may attach to its decision conditions and obligations 
intended to ensure that the undertakings concerned comply with the commitments 
they have entered into vis -à-vis the Commission with a view to rendering a notified 
concentration compatible with the internal market.  
(362)  The achievement of the measure that gives r ise to the structural change of the market 
is a condition, whereas the implementing steps which are necessary to achieve this 
result are generally obligations on the Parties. Where a condition is not fulfilled, the 
Commission’s decision declaring the conce ntration compatible with the internal 
market no longer stands. Where the undertakings concerned commit a breach of an 
obligation, the Commission may revoke the clearance decision in accordance with 
Article 8(6) of the Merger Regulation. The undertakings co ncerned may also be 
subject to fines and periodic penalty payments under Articles 14(2) and 15(1) of the 
Merger Regulation.  
(363)  In accordance with the distinction described above, this Decision in this case is 
conditioned on the full compliance with the requi rements set out in Section B  or 
Section C, as the case may be,  of the Final Commitments (including the Schedules), 
which constitute conditions. The remaining requirements set out in the other sections 
of the Final Commitments constitute obligations on the Parties.  
(364)  The detailed text of the Final Commitments is annexed to this Decision. The full text 
of the Final Commitments forms an integral part of this Decision.  
 
 
92 6. CONCLUSION   
(365)  For the above reasons, the Commission has decided not to oppose the notified 
operation as modified by the Final Commitments and to declare it compatible with 
the internal market and with the functioning of the EEA Agreement, subject to full 
compliance with the conditions in Section B  (or Section C as applicable)  (including 
the Schedule s) of the Final Commitments annexed to this Decision and with the 
obligations contained in the other sections of the said Final Commitments. This 
Decision is adopted in application of Article 6(1)(b) in conjunction with Article 6(2) 
of the Merger Regulatio n and Article 57 of the EEA Agreement.  
For the Commission  
 
 
(Signed)  
Margrethe VESTAGER  
Executive Vice-President  
 
 
 
 
 Annex 1  
 
2016 - 2019 market share data base of affected potential seg ments (in 2016 -18 and/or 
2019)  
 
[…]
 
 
 Case M.9554 – Elanco / Bayer Anim al Health  
 
COMMITMENTS TO THE EUROPEAN COMMISSION  
 
Pursuant to Article 6(2) of Council Regulation (EC) No 139/2004 (the “Merger Regulation ”), 
Elanco Animal Health Inc. (“Elanco ”) and Bayer AG (together with its affiliates referred to as 
“Bayer ”) (the “Parties”, each a “Party ”) hereby enter into the following Commitments (the 
“Commitments ”) vis-à-vis the European Commission (the “Commission ”) with a view to 
rendering Elanco ’s acquisition of Bayer ’s animal health business (“Bayer Animal Health ” or 
“BAH ”) (the “Concentration ”) compatible with the internal market and the functioning of the 
EEA Agreement.  The Commitments bind Bayer only in so far as necessary with regard to 
actions that must be taken by Bayer with regards to the Parasiticides Divestment Busines s (as 
defined below).  
This text shall be interpreted in light of the Commission ’s decision pursuant to Article 6(1)(b) of 
the Merger Regulation to declare the Concentration compatible with the internal market and the 
functioning of the EEA Agreement (the “Decision ”), in the general framework of European 
Union law, in particular in light of the Merger Regulation, and by reference to the Commission 
Notice on remedies acceptable under Council Regulation (EC) No 139/2004 and under 
Commission Regulation (EC) No 802/2004 (the “Remedies Notice ”). 
SECTION A.  DEFINITIONS  
1. For the purpose of the Commitments, the following terms shall have the following 
meaning:  
Affiliated Undertakings : undertakings controlled by the Parties and/or by the ultimate 
parents of the Parties , whereby the notion of control shall be interpreted pursuant to 
Article 3 of the Merger Regulation and in light of the Commission Consolidated 
Jurisdictional Notice under Council Regulation (EC) No 139/2004 on the control of 
concentrations between underta kings (the " Consolidated Jurisdictional Notice "). 
Anticoccidials Divestment Business : the Divestment Business described in more 
detail in Schedule 1. 
API: active pharmaceutical ingredient(s).  
Assets : the tangible and intangible assets that contribute to the current operation or are 
necessary to ensure the viability and competitiveness of the Divestment Businesses 
including but not limited to the assets in Section B, paragraphs 6.1, 6.2, and 6.3 and 
described in more detail in the Schedules.  
Best Efforts : Best effort obligations shall be interpreted in light of the Commission's 
decision purs uant to Article 6(1)(b) of the Merger Regulation to declare the 
Concentration compatible with the internal market and the functioning of the EEA 
Agreement, the Merger Regulation and the general principles of EU law.  Any 
interpretation that may be given to  this term under the law of other jurisdictions is not 
relevant solely for the purpose of interpreting and/or implementing the Commitments.  
 
2 
 Closing : the transfer of the legal title to the Divestment Businesses to the Purchaser(s).  
Closing Period : For each Divestment Business the period of […] from the approval of 
the Purchaser and the terms of sale by the Commission for that Divestment Business.  
Confidential Information : any business secrets, know -how, commercial information, or 
any other information of a p roprietary nature that is not in the public domain.  
Conflict of Interest : any conflict of interest that impairs the Trustee's objectivity and 
independence in discharging its duties under the Commitments.  
Contract : any written contract, agreement, lease, su blease, licence, sub -licence or 
other legally binding commitment or arrangement.  
Divestment Businesses : the businesses as defined in Section B and in the Schedules 
which Elanco commits to divest, and “Divestment Business ” shall mean any one of the 
Divestme nt Businesses, as relevant.  
Divestiture Trustee : one or more natural or legal person(s) who is/are approved by the 
Commission and appointed by Elanco and who has/have received from Elanco the 
exclusive trustee mandate to sell the Divestment Businesses to o ne or more Purchasers 
at no minimum price.  
Effective Date : the date of adoption of the Decision.  
Endectocide Assets : part of the Parasiticides Divestment Business, described in 
further detail in Part 2 of Schedule 3. 
Endoparasiticides Assets : part of the Parasiticides Divestment Business, described in 
further detail in Part 1 of Schedule 3. 
Field : means animal health.  
First Divestiture Period : the period of […] from the Effective Da te. 
Hold Separate Manager(s) : the person(s) appointed by Elanco and/or Bayer (as 
relevant) for the Divestment Businesses to manage the day -to-day business under the 
supervision of the Monitoring Trustee.  
Key Personnel : all personnel necessary to maintain t he viability and competitiveness of 
the Endectocide Assets, as listed in Schedule 3. 
Monitoring Trustee : one or more natural or legal person(s) who is/are approved by the 
Commission and appointed by Elanco, and who has /have the duty to monitor the 
Parties ’ compliance with the conditions and obligations attached to the Decision.  
Otitis Divestment Business : the Divestment Business described in more detail in 
Schedule 2. 
 
3 
 Overlapping Re tained Business : (a) in the case of Personnel of the Anticoccidials 
Divestment Business, any business to be retained by Elanco that is related to 
anticoccidials for lambs and calves; (b) in the case of Personnel of the Otitis Divestment 
Business, any busin ess to be retained by Elanco that is related to long -lasting canine 
otitis externa treatments; (c) in the case of Personnel of the Parasiticides Divestment 
Business, any business to be retained by the Parties that is related to canine and/or 
feline parasit icides (or in the case of Key Personnel, any business to be retained by the 
Parties that is related to canine and/or feline isoxazoline or isoxazoline -like 
parasiticides).  
Parasiticides Divestment Business : the Divestment Business described in more 
detail in Schedule 3, including both the Endoparasiticides Assets and the Endectocide 
Assets.  
Personnel : all staff currently employed by the Divestment Businesses, including staff 
seconded to the Divestment Business and shar ed personnel.   
Purchaser(s) : one or more entities approved by the Commission as the acquirer(s) of 
the Divestment Businesses in accordance with the criteria set out in Section D.  For the 
avoidance of doubt, (i) the Anticoccidials Divestment Business cann ot be split and shall 
be sold to one entity approved by the Commission; (ii) the Otitis Divestment Business 
cannot be split and shall be sold to one entity approved by the Commission; and (iii) the 
Parasiticides Divestment Business cannot be split and shal l be sold to one entity 
approved by the Commission.  
Purchaser Criteria : the criteria laid down in paragraph 21 of these Commitments that 
the Purchaser(s) must fulfil in order to be approved by the Commission.  
Schedules : the schedules to these Commitments describing more in detail the 
Divestment Businesses.  
Trustee(s) : the Monitoring Trustee and/or the Divestiture Trustee as the case may be.  
Trustee Divestiture Period : the period of […] from the end of the First Divestiture 
Period.  
SECTION B.  THE COMMITMENT TO DIVEST AND THE DIVESTMENT 
BUSINESSES  
Commitment to divest  
2. In order to maintain effective competition, Elanco commits to divest, or procure the 
divestiture of, each of the Divestment Businesses by the end of the Trustee Divestiture 
Period as a going concern to a Purchaser or Purchasers and on terms of sale approved 
by the Commission in accordance with the procedure described in paragraph 22 of 
these Commitments.  To  carry out the divestiture, Elanco commits to find a Purchaser or 
Purchasers and to enter into a final binding sale and purchase agreement or 
agreements for the sale of the Divestment Businesses by the end of the First Divestiture 
Period.  If Elanco has no t entered into such an agreement at the end of the First 
Divestiture Period in relation to any Divestment Business, Elanco shall grant the 
 
4 
 Divestiture Trustee an exclusive mandate to sell the relevant Divestment Business in 
accordance with the procedure de scribed in paragraph 34 in the Trustee Divestiture 
Period.  
3. The Concentration shall not be implemented before Elanco or the Divestiture Trustee 
has entered into a final binding sale and purchase agreement or agre ements for the 
sale of the Divestment Businesses and the Commission has approved these 
Purchaser(s) and the terms of sale in accordance with paragraph 21. 
4. Elanco shall be deemed to have complied with this commit ment if:  
(i) By the end of the Trustee Divestiture Period, Elanco or the Divestiture Trustee 
has entered into a final binding sale and purchase agreement or agreements 
and the Commission approves the proposed Purchaser(s) and the terms of sale 
as being consist ent with the Commitments in accordance with the procedure 
described in paragraph 21; and  
(ii) The Closing of the sale of the Divestment Businesses to the Purchaser(s) takes 
place within the Closing Period.  
5. In order t o maintain the structural effect of the Commitments, Elanco shall, for a period 
of 10 years after Closing, (i) not acquire, whether directly or indirectly, the possibility of 
exercising influence (as defined in paragraph 43 of the Remedies Notice, footnote  3) 
over the whole or part of the Divestment Businesses or (ii) not market generic versions 
of the divestment products, unless, following the submission of a reasoned request from 
Elanco showing good cause and accompanied by a report from the Monitoring Tr ustee 
(as provided in paragraph 48 of these Commitments), the Commission finds that the 
structure of the market has changed to such an extent that the absence of influence 
over the Divestment Businesses is no lo nger necessary to render the proposed 
Concentration compatible with the internal market.  
Structure and definition of the Divestment Businesses  
6. The Divestment Businesses comprise:  
6.1 The Anticoccidials Divestment Business, as described in more detail in Schedu le 1, 
which includes all assets that contribute to the current operation or are necessary to 
ensure the viability and competitiveness of the Anticoccidials Divestment Business 
globally, inter alia : 
(i) All contracts relate d exclusively or primarily to the Anticoccidials Divestment 
Business and, according to the Purchaser ’s needs, the rights and benefits of the 
relevant portion of contracts that are material and/or necessary to, but not 
exclusively or primarily related to, t he Anticoccidials Divestment Business to the 
extent they are capable of being assigned. Elanco undertakes to use Best 
Efforts to obtain all necessary third -party consents where applicable ; 
(ii) All Assets;  
 
5 
 (iii) All licences, product registrations and authorisations issued by governmental 
organisations or other bodies for the benefit of the Anticoccidials Divestment 
Business;  
(iv) All intellectual property and intellectual property rights (including product -
specific know -how), which are owned, maintained, used and/or cont rolled by 
Elanco (as applicable), and related to the development, manufacturing and 
exploitation of the divestment products in the Field or for the maintenance of the 
product registrations being transferred;  
(v) All customer orders and customer records of the  Anticoccidials Divestment 
Business; and  
(vi) The benefit of transitional arrangements to ensure the viability and 
competitiveness of the Anticoccidials Divestment Business for a transitional 
period following Closing.  
6.2 The Otitis Divestment Business, as describe d in more detail in Schedule 2, which 
includes all assets that contribute to the current operation or are necessary to ensure 
the viability and competitiveness of the Otitis Divestment Business globally, inter alia : 
(i) All contracts related exclusively or primarily to the Otitis Divestment Business 
and, according to the Purchaser ’s needs, the rights and benefits of the relevant 
portion of contracts that are material and/or necessary to, but not exclusively or 
primarily rel ated to, the Otitis Divestment Business to the extent they are 
capable of being assigned  Elanco undertakes to use Best Efforts to obtain all 
necessary third -party consents where applicable ; 
(ii) All Assets;  
(iii) All licences, product registrations and authorisations  issued by governmental 
organisations or other bodies for the benefit of the Otitis Divestment Business;  
(iv) All intellectual property and intellectual property rights (including product -
specific know -how), which are owned, maintained, used and/or controlled by 
Elanco (as applicable), and related to the development, manufacturing and 
exploitation of the divestment products in the Field or for the maintenance of the 
product registrations being transferred;  
(v) All customer orders and customer records of the Otitis  Divestment Business; 
and 
(vi) The benefit of transitional arrangements to ensure the viability and 
competitiveness of the Otitis Divestment Business for a transitional period 
following Closing.  
6.3 The Parasiticides Divestment Business, as described in more detail  in Schedule 3, 
which includes all assets that contribute to the current operation or are necessary to 
ensure the viability and competitiveness of the Parasiticides Divestment Business 
 
6 
 including the Endoparasiticides A ssets in the EEA/UK and the Endectocide Assets 
globally, for which purposes:  
(i) The Endoparasiticides Assets include inter alia : 
(a) All contracts related exclusively or primarily to the Endoparasiticides 
Assets and, according to the purchaser ’s needs, the rights  and benefits 
of the relevant portion of contracts that are material and/or necessary 
to, but not exclusively or primarily related to, the Endoparasiticides 
Assets to the extent they are capable of being assigned  Elanco/BAH 
undertake to use Best Efforts to  obtain all necessary third -party 
consents where applicable ; 
(b) All Assets;  
(c) All licences, product registrations and authorisations issued by 
governmental organisations or other bodies for the benefit of the 
Endoparasiticides Assets;  
(d) All intellectual property  and intellectual property rights (including 
product -specific know -how), which are owned, maintained and/or 
control by the Parties (as applicable), and related to the development, 
manufacturing and exploitation of the divestment products in the Field in 
the EEA/UK or for the maintenance of the product registrations being 
transferred;  
(e) All customer orders and customer records of the Endoparasiticides 
Assets; and  
(f) The benefit  of all transitional arrangements (including a transitional 
manufacture and supply agr eement, pending completion of the 
technology transfer) that are necessary to ensure the viability and 
competitiveness of the  Endoparasiticides Assets for a transitional period 
following Closing.  
(ii) The Endectocide Assets include inter alia : 
(a) All rights , title and interests to develop, improve, manufacture and 
commercialise (including the right to conduct the ongoing clinical trials 
for) the products concerned for use in the Field;  
(b) All contracts related exclusively or primarily to the Endectocide Assets 
and, acc ording to the Purchaser ’s needs, the rights and benefits of the 
relevant portion of contracts that are material and/or necessary to, but 
not exclusively or primarily related to, the Parasiticide Divestment 
Business to the extent they are capable of being a ssigned.  Elanco 
undertakes to use Best Efforts to obtain all necessary third party 
consents where applicable;  
(c) All Assets;  
 
7 
 (d) Key Personnel ; 
(e) All product  licences, permits, authorisations and registrations 
(“regulatory approvals ”) for the products concerned as , and all other 
product registrations or regulatory approvals to the extent exclusively or 
primarily relating to the products concerned for use in the Field ; 
(f) All intellectual property and intellectual property rights (including 
product -specific know -how) w hich are owned, maintained, used and /or 
controlled by Bayer (as applicable) and related to the development, 
improvement, manufacturing and commercialisation of the products 
concerned for use in the Field or for the maintenance of the regulatory 
approvals being transferred;  
(g) All customer orders and customer records of the Endectocide Assets; 
and 
(h) The benefit of transitional arrangements, including an R&D and 
regulatory transitional service agreement, transitional manufacturing 
and supply services, and a tech nology transfer (including know -how) to 
the Purchaser(s), to ensure the viability and competitiveness of the 
Endectocide Assets for a transitional period of […] following Closing 
[…], to ensure the smooth transfer of the Endectocide Assets.  
7. All the Assets,  which are necessary to, but not exclusively or primarily related to, the 
viability and competitiveness of the Divestment Business(es) and also relate to 
products/businesses retained by the Parties, shall also be transferred to the 
Purchaser(s) but only to  the extent they relate to the Divestment Business(es) (and at 
the Purchaser ’s option). In the event that materials to be transferred to the Purchaser(s) 
pursuant to the Commitments contain information that is confidential to the 
Elanco/BAH ’s retained busi nesses and not relevant to the Divestment Business(es), the 
information shall be redacted as appropriate.   
8. For the sake of clarity, with the exception of the Otitis Divestment Business, the 
Divestment Businesses shall not include any physical production a ssets, equipment or 
manufacturing units owned or operated by Elanco or the Parties (as applicable).  
Further, the Divestment Businesses shall not include any Personnel (save for Key 
Personnel and as provided for at paragraph 9 below).  
9. At the option of the Purchaser(s), the Divestment Business(es) will include the 
Personnel who would reasonably be considered necessary to maintain the viability, 
marketability and competitiveness of the Divestment Business(es).  The exercise of 
such option shall be supervised by the Monitoring Trustee and subject to applicable 
local employment legislation and employee consent. Should Elanco not agree with the 
request of the Purchaser, the Monitoring Trustee shall prepare a reasoned op inion 
within 7 working days and the Commission shall ultimately decide on the merits of the 
Purchaser proposal.  
 
8 
 10. The sale of each Divestment Business shall be structured as an asset sale with licences 
and rights of access to certain shared assets.  The man ufacturing transfer for each 
Divestment Business will be effected as follows.  
(i) As regards the Anticoccidials Divestment Business and the Otitis Divestment 
Business, a transfer of  the relevant third -party supply contracts (or transfer of 
the rights and benef its of the relevant portion thereof where the supply contract 
is not exclusively or primarily used for that Divestment Business) related to the 
manufacture of the relevant product(s).  
(ii) As regards the Parasiticides Divestment Business:  
(a) For the Endoparasitici des Assets, a technology transfer (including 
know -how) relating to the production of the Drontal/Profender Family, 
together with transitional arrangements for the manufacture and supply 
of finished products to the Purchaser for a period of […] following 
Closing ([…]), pending completion of the technology transfer process, 
as overseen by the Monitoring Trustee.  
(b) For the Endectocide  Assets, a technology transfer (including know -
how), transitional manufacturing and supply services and an R&D and 
regulatory tran sitional service agreement for a period of […] following 
Closing ([…]).  
11. Strict firewall procedures will be adopted so as to ensure that any competitively 
sensitive information related to, or arising from, such supply arrangements (for example, 
product road maps) will not be shared with, or passed on to, anyone outside the 
Divestment Businesses ’ operations, beyond what is reasonably required for the 
compliance with obligations relating to the transfer of the Divestment Businesses and 
supply of transitional se rvices.  
SECTION C.  RELATED COMMITMENTS  
Preservation of viability, marketability and competitiveness  
12. From the Effective Date until Closing, the Parties shall preserve or procure the 
preservation of the economic viability, marketability and competitiveness o f the 
Divestment Businesses, in accordance with good business practice, and shall minimise, 
as far as possible, any risk of loss of competitive potential of the Divestment 
Businesses.  In particular, the Parties undertake:  
(i) Not to carry out any action that might have a significant adverse impact on the 
value, management or competitiveness of the Divestment Businesses or that 
might alter the nature and scope of activity, the industrial or commercial 
strategy, and/or the investment policy of the Divestment Bus inesses;  
(ii) To make available, or procure to make available, sufficient resources for the 
development of the Divestment Businesses, on the basis and continuation of 
the existing business plans; and  
 
9 
 13. Furthermore, Elanco undertakes to take all reasonable steps,  or procure that all 
reasonable steps are being taken, including appropriate incentive schemes (based on 
industry practice), to encourage all Key Personnel to remain with the Parasiticides 
Divestment Business, and not to solicit or move any Personnel to El anco ’s remaining 
business.  Where, nevertheless, individual members of the Key Personnel exceptionally 
leave the Parasiticides Divestment Business, Elanco shall provide a reasoned proposal 
to replace the person or persons concerned to the Commission and th e Monitoring 
Trustee.  Elanco must be able to demonstrate to the Commission that the replacement 
is well suited to carry out the functions exercised by those individual members of the 
Key Personnel.  The replacement shall take place under the supervision o f the 
Monitoring Trustee, who shall report to the Commission.  
Hold-separate obligations  
14. The Parties commit, from the Effective Date until Closing, to procure that the 
Divestment Businesses are kept separate from the business(es) that the Parties will be 
retaining and, after closing of the Concentration to keep the Divestment Businesses 
separate from the businesses they are retaining and to ensure that unless explicitly 
permitted under these Commitments:  
(i) Management and staff of the businesses retained by th e Parties have no 
involvement in the Divestment Businesses; and  
(ii) Key Personnel and Personnel can be involved in businesses retained by the 
Parties only to the extent that (a) they are bound by the terms of non -disclosure 
agreements or similar arrangements p reventing the disclosure of any 
information related to the Divestment Businesses; (b) they are not involved in a 
relevant Overlapping Retained Business; and (c) their involvement in other 
businesses retained by the Parties is compatible with their required  involvement 
in the Divestment Businesses.  
15. Until Closing, the Parties shall assist the Monitoring Trustee in ensuring that the 
Divestment Businesses are managed as distinct and saleable entities separate from the 
businesses which they are retaining.  Immed iately after the adoption of the Decision, the 
Parties shall appoint a Hold Separate Manager or Managers for the Divestment 
Businesses.  The Hold Separate Manager(s) shall manage the Divestment Businesses 
independently and in the best interests of the rele vant Divestment Business with a view 
to ensuring its continued economic viability, marketability and competitiveness and its 
independence from the businesses retained by the Parties.  The Hold Separate 
Manager(s) shall closely cooperate with and report to the Monitoring Trustee and, if 
applicable, the Divestiture Trustee.  In case of replacement of a Hold Separate 
Manager, the Parties shall provide a reasoned proposal to replace the person or person 
concerned to the Commission and the Monitoring Trustee.  T he Parties must be able to 
demonstrate to the Commission that the replacement is well suited to carry out the 
functions exercised by that individual.  The replacement shall take place under the 
supervision of the Monitoring Trustee, who shall report to the  Commission.  The 
Commission may, after having heard the Parties, require the Parties to replace a Hold 
Separate Manager.  
 
10 
 Ring-fencing  
16. The Parties shall implement, or procure to implement, all necessary measures to ensure 
that they do not, after the Effect ive Date, obtain any Confidential Information relating to 
the Divestment Businesses and that any such Confidential Information obtained by the 
Parties before the Effective Date will be eliminated and not be used by them.  In 
particular, the participation o f the Divestment Businesses in any central information 
technology network shall be severed to the extent possible, without compromising the 
viability of the Divestment Businesses.  The Parties may obtain or keep information 
relating to the Divestment Busin esses which is reasonably necessary for the divestiture 
of the Divestment Businesses or the disclosure of which to the Parties is required by 
law. 
Non-solicitation clause  
17. The Parties undertake, subject to customary limitations, not to solicit, and to procu re 
that Affiliated Undertakings do not solicit, any Key Personnel or Personnel transferred 
with the Divestment Businesses for a period of two years  after Closing.  
Due diligence  
18. In order to enable potential purchasers to carry out reasonable due diligence o f the 
Divestment Businesses, the Parties shall, subject to customary confidentiality 
assurances and dependent on the stage of the divestiture process:  
(i) Provide to potential purchasers sufficient information as regards the Divestment 
Businesses;  
(ii) Provide to p otential purchasers sufficient information relating to the Personnel 
and allow them reasonable access to the Personnel to the extent required 
under paragraph 9 above.  
Reporting  
19. Elanco shall submit written report s in English on potential purchasers of the Divestment 
Businesses and developments in the negotiations with such potential purchasers to the 
Commission and the Monitoring Trustee no later than 10 days after the end of every 
month following the Effective Da te (or otherwise at the Commission ’s request).  Elanco 
shall submit a list of all potential purchasers having expressed interest in acquiring the 
Divestment Businesses to the Commission at each and every stage of the divestiture 
process, as well as a copy of all the offers made by potential purchasers within five days 
of their receipt.  
20. Elanco shall inform the Commission and the Monitoring Trustee on the preparation of 
the data room documentation and the due diligence procedure and shall submit a copy 
of any  information memorandum to the Commission and the Monitoring Trustee before 
sending such memorandum out to potential purchasers.  
 
11 
 SECTION D.  THE PURCHASER  
21. In order to be approved by the Commission, the Purchaser(s) must fulfil the following 
criteria:  
(i) The Pu rchaser(s) shall be independent of and unconnected to Elanco and BAH 
and their Affiliated Undertakings (this being assessed having regard to the 
situation following the divestiture);  
(ii) The Purchaser(s) shall have the financial resources, proven expertise and  
incentive to maintain and develop the Divestment Businesses as a viable and 
active competitive force in competition with the Parties and other competitors;  
(iii) The acquisition of the Divestment Businesses by the Purchaser(s) must neither 
be likely to create, in light of the information available to the Commission, prima 
facie  competition concerns nor give rise to a risk that the implementation of the 
Commitments will be delayed.  In particular, the Purchaser(s) must reasonably 
be expected to obtain all necessa ry approvals from the relevant regulatory 
authorities for the acquisition of the Divestment Businesses; and  
(iv) The Purchaser(s) shall have:  
(a) Established capabilities or a track record in the manufacture, marketing 
and distribution of animal health products in the EEA/UK;  
(b) Adequate manufacturing and regulatory capabilities to successfully 
implement a production transfer in relation to the Divestment 
Businesses (where relevant);  
(c) Sufficient R&D resources and experience to develop the relevant 
pipeline products incl uded in the scope of the Divestment Business(es); 
and 
(d) Complementary products and expertise relevant to the Divestment 
Businesses.  
22. The final binding sale and purchase agreement or agreements (as well as ancillary 
agreements) relating to the divestment of th e Divestment Businesses shall be 
conditional on the Commission ’s approval.  When Elanco has reached an agreement 
with a purchaser, it shall submit a fully documented and reasoned proposal, including a 
copy of the final agreement(s), within one week to the Commission and the Monitoring 
Trustee.  Elanco must be able to demonstrate to the Commission that the purchaser(s) 
fulfil the Purchaser Criteria and that the Divestment Businesses is being sold in a 
manner consistent with the Commission's Decision and thes e Commitments.  For the 
approval, the Commission shall verify that the purchaser fulfils the Purchaser Criteria 
and that the Divestment Businesses are being sold in a manner consistent with the 
Commitments including their objective to bring about a lasting  structural change in the 
market.  The Commission may approve the sale of the Divestment Businesses without 
one or more Assets or any or part of any Personnel, or by substituting one or more 
Assets or parts of any Personnel with one or more different asset s or different personnel 
 
12 
 or support, if this does not affect the viability and competitiveness of the Divestment 
Businesses after the sale, taking account of the proposed purchaser(s).  
SECTION E.  TRUSTEE  
I. Appointment procedure  
23. Elanco shall appoint a Moni toring Trustee to carry out the functions specified in these 
Commitments for a Monitoring Trustee.  Elanco commits not to close the Concentration 
before the appointment of a Monitoring Trustee.  
24. If Elanco has not entered into a binding sale and purchase agr eement or agreements 
regarding the Divestment Businesses one month before the end of the First Divestiture 
Period, or if the Commission has rejected a purchaser proposed by Elanco at that time 
or thereafter, Elanco shall appoint a Divestiture Trustee.  The  appointment of the 
Divestiture Trustee shall take effect upon the commencement of the Trustee Divestiture 
Period.  
25. The Trustee shall:  
(i) At the time of appointment, be independent of Elanco and its Affiliated 
Undertakings;  
(ii) Possess the necessary qualifications  to carry out its mandate, for example 
having sufficient relevant experience as an investment banker or consultant or 
auditor; and  
(iii) Neither have nor become exposed to a Conflict of Interest.  
26. The Trustee shall be remunerated by Elanco in a way that does not impede the 
independent and effective fulfilment of its mandate.  In particular, where the 
remuneration package of a Divestiture Trustee includes a success premium linked to 
the final sale value of the Divestment Businesses, such success premium may only be  
earned if the divestiture takes place within the Trustee Divestiture Period.  
Proposal by Elanco  
27. No later than two weeks after the Effective Date, Elanco shall submit the name or 
names of one or more natural or legal persons whom Elanco proposes to appoint  as the 
Monitoring Trustee to the Commission for approval.  No later than one month before the 
end of the First Divestiture Period or on request by the Commission, Elanco shall submit 
a list of one or more persons whom Elanco proposes to appoint as Divesti ture Trustee 
to the Commission for approval.  The proposal shall contain sufficient information for the 
Commission to verify that the person or persons proposed as Trustee fulfil the 
requirements set out in paragraph 25 and shall include:  
(i) The full terms of the proposed mandate, which shall include, for the avoidance 
of doubt, all provisions necessary to enable the Trustee to fulfil its duties under 
these Commitments;  
 
13 
 (ii) The outline of a work plan which describes how  the Trustee intends to carry out 
its assigned tasks; and  
(iii) An indication whether the proposed Trustee is to act as both Monitoring Trustee 
and Divestiture Trustee or whether different trustees are proposed for the two 
functions.  
Approval or rejection by the  Commission  
28. The Commission shall have the discretion to approve or reject the proposed Trustee(s) 
and to approve the proposed mandate subject to any modifications it deems necessary 
for the Trustee to fulfil its obligations.  If only one name is approved, Elanco shall 
appoint or cause to be appointed the person or persons concerned as Trustee, in 
accordance with the mandate approved by the Commission.  If more than one name is 
approved, Elanco shall be free to choose the Trustee to be appointed from among t he 
names approved.  The Trustee shall be appointed within one week of the Commission ’s 
approval, in accordance with the mandate approved by the Commission.  
New proposal by Elanco  
29. If all the proposed Trustees are rejected, Elanco shall submit the names of a t least two 
more natural or legal persons within one week of being informed of the rejection, in 
accordance with paragraphs 23 and 28 of these Commitments.  
Trustee no minated by the Commission  
30. If all further proposed Trustees are rejected by the Commission, the Commission shall 
nominate a Trustee, whom Elanco shall appoint, or cause to be appointed, in 
accordance with a trustee mandate approved by the Commission.  
II. Functions of the Trustee  
31. The Trustee shall assume its specified duties and obligations in order to ensure 
compliance with the Commitments.  The Commission may, on its own initiative or at the 
request of the Trustee or Elanco, give any orders or instructions to the Trustee in order 
to ensure compliance with the conditions and obligations attached to the Decision.  
Duties and obligations of the Monitoring Trustee  
32. The Monitoring Trustee shall:  
(i) Propose in its first report to the Commission a detailed work plan des cribing 
how it intends to monitor compliance with the obligations and conditions 
attached to the Decision;  
(ii) Oversee, in close co -operation with the Hold Separate Manager(s), the on -
going management of the Divestment Businesses with a view to ensuring their 
continued economic viability, marketability and competitiveness and monitor 
compliance by the Parties with the conditions and obligations attached to the 
Decision.  To that end the Monitoring Trustee shall:  
 
14 
 (a) Monitor the preservation of the economic viabilit y, marketability and 
competitiveness of the Divestment Businesses, and the keeping 
separate of the Divestment Businesses from the business retained by 
the Parties, in accordance with paragraphs 12 and 14 of these 
Commitments;  
(b) Supervise the management of the Divestment Businesses as distinct 
and saleable entities, in accordance with paragraph 15 of these 
Commitments;  
(c) With res pect to Confidential Information:  
(I) Determine all necessary measures to ensure that the Parties do 
not after the Effective Date obtain any Confidential Information 
relating to the Divestment Businesses,  
(II) In particular, strive for the severing of the Divestmen t 
Businesses ’ participation in a central information technology 
network to the extent possible, without compromising the 
viability of the Divestment Businesses,  
(III) Make sure that any Confidential Information relating to the 
Divestment Businesses obtained by t he Parties before the 
Effective Date is eliminated and will not be used by the Parties, 
and 
(IV) Decide whether such information may be disclosed to or kept by 
the Parties as the disclosure is reasonably necessary to allow 
the Parties to carry out the divestitu re or as the disclosure is 
required by law;  
(d) Monitor the splitting of assets and the allocation of Personnel (to the 
extent required under paragraph 9) between the Divestment 
Businesses and the Parties or Affiliat ed Undertakings;  
(iii) Propose to the Parties such measures as the Monitoring Trustee considers 
necessary to ensure the Parties ’ compliance with the conditions and obligations 
attached to the Decision, in particular the maintenance of the full economic 
viability , marketability or competitiveness of the Divestment Businesses, the 
holding separate of the Divestment Businesses and the non -disclosure of 
competitively sensitive information;  
(iv) Review and assess potential purchasers as well as the progress of the 
divestit ure process and verify that, dependent on the stage of the divestiture 
process:  
(a) Potential purchasers receive sufficient and correct information relating 
to the Divestment Businesses and Personnel (to the extent required 
under paragraph 9) in particular by reviewing, if available, the data room 
 
15 
 documentation, the information memorandum and the due diligence 
process, and  
(b) Potential purchasers are granted reasonable access to Personnel (to 
the extent required under pa ragraph 9); 
(v) Act as a contact point for any requests by third parties, in particular potential 
purchasers, in relation to the Commitments;  
(vi) Provide to the Commission, sending Elanco a non -confidential copy at the s ame 
time, a written report within 15 days after the end of every month that shall 
cover the operation and management of the Divestment Businesses as well as 
the splitting of assets and the allocation of Personnel (to the extent required 
under paragraph 9) so that the Commission can assess whether the business is 
held in a manner consistent with the Commitments and the progress of the 
divestiture process as well as potential purchasers;  
(vii) Promptly report in writing t o the Commission, sending Elanco a non -confidential 
copy at the same time, if it concludes on reasonable grounds that the Parties 
are failing to comply with these Commitments;  
(viii) Within one week after receipt of the documented proposal referred to in 
paragrap h 22 of these Commitments, submit to the Commission, sending 
Elanco a non -confidential copy at the same time, a reasoned opinion as to the 
suitability and independence of the proposed purchaser(s) and the viabil ity of 
the Divestment Businesses after the sale and as to whether the Divestment 
Businesses are sold in a manner consistent with the conditions and obligations 
attached to the Decision, in particular, if relevant, whether the sale of the 
Divestment Busines ses without one or more Assets or none, or not all, of the 
Personnel (to the extent required under paragraph 9) affects the viability of the 
Divestment Businesses after the sale, taking account of the proposed 
purchaser(s); and  
(ix) Assume the other functions assigned to the Monitoring Trustee under the 
conditions and obligations attached to the Decision.  
33. If the Monitoring and Divestiture Trustee are not the same legal or natural persons, the 
Monitoring Trustee and the  Divestiture Trustee shall cooperate closely with each other 
during and for the purpose of the preparation of the Trustee Divestiture Period in order 
to facilitate each other's tasks.  
Duties and obligations of the Divestiture Trustee  
34. Within the Trustee Div estiture Period, the Divestiture Trustee shall sell at no minimum 
price the Divestment Businesses to a purchaser or purchasers, provided that the 
Commission has approved both the purchaser(s) and the final binding sale and 
purchase agreement or agreements (and ancillary agreements) as in line with the 
Commission's Decision and the Commitments in accordance with paragraphs 21 and 
22 of these Commitments.  The Divestitur e Trustee shall include in the sale and 
purchase agreement (as well as in any ancillary agreements) such terms and conditions 
 
16 
 as it considers appropriate for an expedient sale in the Trustee Divestiture Period.  In 
particular, the Divestiture Trustee may i nclude in the sale and purchase agreement or 
agreements such customary representations and warranties and indemnities as are 
reasonably required to effect the sale.  The Divestiture Trustee shall protect the 
legitimate financial interests of Elanco, subjec t to Elanco ’s unconditional obligation to 
divest at no minimum price in the Trustee Divestiture Period.  
35. In the Trustee Divestiture Period (or otherwise at the Commission ’s request), the 
Divestiture Trustee shall provide the Commission with a comprehensive  monthly report 
written in English on the progress of the divestiture process.  Such reports shall be 
submitted within 15 days after the end of every month with a simultaneous copy to be 
sent to the Monitoring Trustee and a non -confidential copy to be sent  to Elanco.  
III. Duties and obligations of the Parties  
36. The Parties shall provide and shall cause its advisors to provide the Trustee with all 
such co -operation, assistance and information as the Trustee may reasonably require to 
perform its tasks.  The Tru stee shall have full and complete access to any of the Parties ’ 
or the Divestment Businesses ’ books, records, documents, management or other 
personnel, facilities, sites and technical information necessary for fulfilling its duties 
under the Commitments an d the Parties and the Divestment Businesses shall provide 
the Trustee upon request with copies of any document.  The Parties and the Divestment 
Businesses shall make available to the Trustee one or more offices on their premises 
and shall be available for meetings in order to provide the Trustee with all information 
necessary for the performance of its tasks.  
37. The Parties shall provide the Monitoring Trustee with all managerial and administrative 
support that it may reasonably request on behalf of the manage ment of the Divestment 
Businesses.  This shall include all administrative support functions relating to the 
Divestment Businesses which are currently carried out at headquarters level.  Elanco 
shall provide and shall cause its advisors to provide the Monit oring Trustee, on request, 
with the information submitted to potential purchasers, and in particular give the 
Monitoring Trustee access to the data room documentation and all other information 
granted to potential purchasers in the due diligence procedure.   Elanco shall inform the 
Monitoring Trustee on possible purchasers, submit lists of potential purchasers at each 
stage of the selection process, including the offers made by potential purchasers at 
those stages, and keep the Monitoring Trustee informed of  all developments in the 
divestiture process.  
38. The Parties shall grant or procure Affiliated Undertakings to grant comprehensive 
powers of attorney, duly executed, to the Divestiture Trustee to effect the sale (including 
ancillary agreements), the Closing a nd all actions and declarations which the Divestiture 
Trustee considers necessary or appropriate to achieve the sale and the Closing, 
including the appointment of advisors to assist with the sale process.  Upon request of 
the Divestiture Trustee, the Parti es shall cause the documents required for effecting the 
sale and the Closing to be duly executed.  
39. Elanco shall indemnify the Trustee and its employees and agents (each an 
“Indemnified Party ”) and hold each Indemnified Party harmless against, and hereby 
agrees that an Indemnified Party shall have no liability to Elanco for, any liabilities 
 
17 
 arising out of the performance of the Trustee ’s duties under the Commitments, except to 
the extent that such liabilities result from the wilful default, recklessness, gros s 
negligence or bad faith of an Indemnified Party.  
40. At the expense of Elanco, the Trustee may appoint advisors (in particular for corporate 
finance or legal advice), subject to Elanco ’s approval (such approval not to be 
unreasonably withheld or delayed) if the Trustee considers the appointment of such 
advisors necessary or appropriate for the performance of its duties and obligations 
under the mandate, provided that any fees and other expenses incurred by the Trustee 
are reasonable.  Should Elanco refuse to approve the advisors proposed by the Trustee 
the Commission may approve the appointment of such advisors instead, after having 
heard Elanco.  Only the Trustee shall be entitled to issue instructions to the advisors.  
Paragraph  39 of these Commitments shall apply mutatis mutandis .  In the Trustee 
Divestiture Period, the Divestiture Trustee may use advisors who served Elanco during 
the Divestiture Period if the Divestiture Trustee considers this in the best interes t of an 
expedient sale.  
41. The Parties agree that the Commission may share Confidential Information proprietary 
to the Parties with the Trustee.  The Trustee shall not disclose such information and the 
principles contained in Article 17 (1) and (2) of the Mer ger Regulation apply mutatis 
mutandis . 
42. Elanco agrees that the contact details of the Monitoring Trustee are published on the 
website of the Commission's Directorate -General for Competition and they shall inform 
interested third parties, in particular any p otential purchasers, of the identity and the 
tasks of the Monitoring Trustee.  
43. For a period of 10 years from the Effective Date the Commission may request all 
information from the Parties that is reasonably necessary to monitor the effective 
implementation of these Commitments.  
IV. Replacement, discharge and reappointment of the Trustee  
44. If the Trustee ceases to perform its functions under the Commitments or for any other 
good cause, including the exposure of the Trustee to a Conflict of Interest:  
(i) The Commiss ion may, after hearing the Trustee and Elanco, require Elanco to 
replace the Trustee; or  
(ii) Elanco may, with the prior approval of the Commission, replace the Trustee.  
45. If the Trustee is removed according to paragraph 44 of these Commitments, the Trustee 
may be required to continue in its function until a new Trustee is in place to whom the 
Trustee has effected a full hand over of all relevant information.  The new Trustee shall 
be appointed in accordance with the pr ocedure referred to in paragraphs 23 to 30 of 
these Commitments.  
46. Unless removed according to paragraph 44 of these Commit ments, the Trustee shall 
cease to act as Trustee only after the Commission has discharged it from its duties after 
all the Commitments with which the Trustee has been entrusted have been 
 
18 
 implemented.  However, the Commission may at any time require the rea ppointment of 
the Monitoring Trustee if it subsequently appears that the relevant remedies might not 
have been fully and properly implemented.  
SECTION F.  THE REVIEW CLAUSE  
47. The Commission may extend the time periods foreseen in the Commitments in 
response t o a request from Elanco or, in appropriate cases, on its own initiative.  Where 
Elanco requests an extension of a time period, it shall submit a reasoned request to the 
Commission no later than one month before the expiry of that period, showing good 
cause .  This request shall be accompanied by a report from the Monitoring Trustee, who 
shall, at the same time, send a non -confidential copy of the report to Elanco.  Only in 
exceptional circumstances shall Elanco be entitled to request an extension within the 
last month of any period.  
48. The Commission may further, in response to a reasoned request from Elanco showing 
good cause, waive, modify or substitute, in exceptional circumstances, one or more of 
the undertakings in these Commitments.  This request shall be accompanied by a report 
from the Monitoring Trustee, who shall, at the same time, send a non -confidential copy 
of the report to Elanco.  The request shall not have the effect of suspending the 
application of the undertaking and, in particular, of suspendin g the expiry of any time 
period in which the undertaking has to be complied with.  
SECTION G.  ENTRY INTO FORCE  
49. The Commitments shall take effect upon the date of adoption of the Decision.  
(Signed)  
 
duly authorised for and on behalf of  
Elanco Animal Health Inc. 
 
duly authorised for and on behalf of  
Bayer AG  
 
 
 SCHEDULE 1  
1. The Anticoccidials Divestment Business consists of the worldwide rights, title and 
interests in (including the right to develop, improve, manufacture and commercialise 
worldwide) the products  marketed under the brand Vecoxan (“Vecoxan ”) and a private 
label version of Vecoxan currently sold in the UK, Cocci -Drench.1  
2. The Anticoccidials Divestment Business as operated to date is not a stand -alone 
business, rather it is integrated into a wider op erational and commercial organisation;  it 
will therefore be separated from Elanco ’s current operations as described below at 
paragraph 3 of this Schedule.  As regards its legal and functional structure:  
(i) The Anti coccidials Divestment Business forms part of Elanco ’s production 
animal Ruminants & Swine business segment, which also encompasses 
vaccines, antibiotics, implants and other parasiticides targeting ruminants and 
swine species.  The Anticoccidials Divestment  Business covers the entirety of 
Elanco ’s anticoccidials product line for cattle and sheep.  Please refer to the 
structure chart provided as Annex 1  for further detail.  
(ii) […].  Specifically, the EEA/UK supply chain is as follows:  
(a) The API, diclazuril microfi ne, is manufactured by […].  The API is stored 
[…].  The API is then shipped to […].   
(b) […]. 
(iii) The sales, technical and marketing Personnel for the Anticoccidials Divestment 
Business are located in […]. 
(iv) In the  EEA/UK, Vecoxan is distributed by […].  
3. In accord ance with Section B, paragraph 6.1 of these Commitments, subject to third 
party consent where relevant and to the extent in Elanco ’s ownership, control or 
possession at Closing, the Anticoccidials Divestment Busi ness includes, but is not 
limited to, the following on a worldwide basis:  
(i) All Contracts exclusively or primarily related to Vecoxan, and the rights and 
benefits of the portion of Contracts which are material or necessary to, but not 
exclusively or primaril y used in, the Anticoccidials Divestment Business or the 
manufacture of Vecoxan (being ‘shared contracts ’), including, but not limited to, 
the contracts  defined and listed in Annex 2 . Elanco undertakes to use Best 
Efforts to obtain all necessary third -party consents where applicable.  To the 
extent any such third -party consent could not be obtained, or any contract could 
                                                 
1  For the avoidance of doubts, the Anticoccidials Divestment Business includes (a) all products in any 
dosage, strength or formulation containing diclazuril as the sole active pharmaceutical ingredient to 
the extent being sold by or on behalf of Ela nco for the treatment or prevention of coccidial infections 
in lambs, calves and other ruminants and (b) pipeline products containing diclazuril as the sole active 
pharmaceutical ingredient to the extent such product has been developed or is being develope d by 
Elanco  for the treatment or prevention of coccidial infections in lambs, calves and other ruminants . 
 
20 
 not be otherwise transferred, the Elanco will, as appropriate, either: (i) assist the 
Purchaser and the relevant third party to put in pla ce arrangements to transfer 
any work product and work in progress, and support the Purchaser to put in 
place alternative arrangements; or (ii) enter into back -to-back agreements with 
the Purchaser under the same terms and conditions as the relevant contrac t for 
a transitional period of […] and up to the duration of the existing relevant 
contract (if longer than […]). 
(ii) All inventory related to Anticoccidials Divestment Business  (to the extent that it 
has not been sold to a third party), as well as all rights to market and sell such 
inventory including but not limited to:  
(a) Vecoxan in finished packaged form (together with any product 
packaging materials) labelled and held for sale for the treatment or 
prevention of coccidial infections in lambs, calves and other ruminants ; 
and  
(b) Bulk API used or held for use exclusively or primarily in the manufacture 
of Vecoxan for sale by the Anticoccidials Divestment Business.  
(iii) Product registrations for Vecoxan listed at Annex 3 , and all other product 
registrations to the extent exclusively or primarily relating to Vecoxan for use in 
the treatment or prevention of coccidial infections in lambs, calves and other 
ruminants . 
(iv) All documentation comprising the product registrations in Annex 3  and, to the 
extent exclusively or primarily related to Vecoxan for use in the treatment or 
prevention of coccidial infections in lambs, calves and other ruminants:  
(a) Correspondence and reports submitted to or received from 
governmental authorities;  
(b) Other dossiers or compilations necessary to obtain or  maintain any of 
the product registrations in Annex 3 ; 
(c) Literature safety reports and documents relating to good manufacturing 
practices or issues, animal clinical trials, animal research, including 
laboratory and target animal research and all veterinary m aster files 
contained or referenced to in the product registrations in Annex 3 ; 
(d) Environmental and safety documentation; and  
(e) Data referenced in any documentation and materials referred to above 
or necessary to commercialise and develop Vecoxan or any pipel ine 
transferred as part of the divestment business , 
but in all cases except where explicitly excluded, and excluding all intellectual 
property rights of any third party unless they are necessary for the functioning of 
the Anticoccidials Divestment Business  (in which instance, Elanco shall use 
 
21 
 Best Efforts to work with the Purchaser to reach an agreement with the entity 
that is able to grant a licence) .   
(v) All books and records, including customer records, relating exclusively or 
primarily to the Anticoccidia ls Divestment Business in such form as maintained 
by Elanco (except where explicitly excluded).  
(vi) All existing advertising, promotional and media materials, sales training 
materials, customer lists, other marketing data and materials and trade show 
materials  and videos in such form as maintained by Elanco to the extent they 
are exclusively or primarily used or held for exclusive or primary use in the 
Anticoccidials Divestment Business (except where explicitly excluded).  
(vii) All intellectual property rights exclus ively or primarily related to the 
Anticoccidials Divestment Business, including, but not limited to, the intellectual 
property rights listed at Annex 4 , which, broadly, comprise:  
(a) Product -specific know -how and registered or unregistered intellectual 
propert y that is identified or identifiable in tangible form that is or has 
been used for or held for use by or on behalf of Elanco exclusively or 
primarily for or exclusively in connection with the manufacturing of 
Vecoxan for the treatment or prevention of cocc idial infections in lambs, 
calves and other ruminants, or the maintenance of any product 
registration being transferred;  
(b) The trademark  Vecoxan, as registered in certain territories;  for the 
avoidance of doubts, the Purchaser will have  all rights to market and 
sell the inventory transferred as part of the Anticoccidials Divestment 
Business;  
(c) Any copyrights or know -how owned by Elanco that comprise or are 
contained or embodied in any of the product promotional materials 
being transferred; and  
(d) An exclusive, per petual, irrevocable, royalty -free, worldwide sub -
licensable and transferable licence to with respect to necessary 
registered and unregistered intellectual property and know -how used or 
held for use by or on behalf of Elanco for or in connection with the 
conduct of the Anticoccidials Divestment Business or the manufacturing 
of Vecoxan (as applicable and further specified in Annex 4 ).   
(viii) Details of customers of the Anticoccidials Divestment Business, including, but 
not limited to, the customer details listed a t Annex 5 .  
(ix) Arrangements for the supply of services by Elanco to the Purchaser for a 
transitional period […] following Closing, […], to ensure the smooth transfer of 
the Anticoccidials Business (including, inter alia , quality release and quality 
control te sting, regulatory activities support, pharmacovigilance activities 
support and assistance in connection with the sale of Vecoxan in the EEA/UK).  
 
22 
 4. All the Assets, which are necessary to, but not exclusively or primarily related to, the 
viability and competit iveness of the Anticoccidials Divestment Business and also relate 
to products/businesses retained by Elanco, shall also be transferred to the Purchaser 
(at the option of the Purchaser) but only to the extent they relate to the Anticoccidials 
Divestment Bus iness.   
5. In the event that materials to be transferred contain information that is confidential to the 
Parties ’ retained businesses and not relevant to the Anticoccidials Divestment Business, 
the information shall be redacted as appropriate.  
6. The Anticoccidi als Divestment Business shall not include any right, title or interest in or 
to any of the assets of the Parties or their Affiliated Undertakings other than those 
specified in paragraphs 6.1 and 7 of the Commitments and paragraphs 3 and 4 of this 
Schedule and, for the avoidance of doubt, will not include ( inter alia ): 
(i) Any right to man ufacture, market or sell any other product of the Parties other 
than Vecoxan for use in the treatment or prevention of coccidial infections in 
lambs and calves or any licence to use any asset of the Parties in connection 
with any product other than Vecoxan . 
(ii) Any asset that is not an Asset, and any asset that does not relate to the 
manufacture, marketing and sale of Vecoxan.  
(iii) The Parties ’ names (specifically, Elanco, Bayer or Bayer Animal Health), or any 
trading name of the Parties, together with all variation s thereof and all 
trademarks, service marks, domain names, trade names, corporate names, 
logos and other identifiers of source containing, incorporating or associated with 
any of the foregoing.  
(iv) Personnel, except where (at the option of the Purchaser) reaso nably considered 
necessary to maintain the viability, marketability and competitiveness of the 
Divestment Business(es) as further set out in paragraph 9 of these 
Commitments).  
(v) Real property and tangible personal property of Elanco.  
(vi) Any shared Contracts retained by Elanco.  
(vii) Human resources and any other employee books and records (subject to 
paragraph 9 of the Commitments).  
(viii) Items to the extent applicable law prohibits their transfer.  
(ix) […]. 
7. If there is any asset or p ersonnel which is not covered by paragraph 3 of this Schedule 
but which is both used (exclusively or not) in the Anticoccidials Divestment Business 
and necessary for the continued viability and competitiveness of  the Anticoccidials 
Divestment Business, that asset or an adequate substitute will be offered to potential 
Purchaser.   
 
23 
 SCHEDULE 2  
1. The Otitis Divestment Business consists of the worldwide rights, title and interests in 
(including the right to develop, impro ve, manufacture and commercialise in at worldwide 
level) Osurnia ear gel (“Osurnia ”), […] (as defined below).  
2. The Otitis Divestment Business as operated to date is not a stand -alone business, 
rather it is integrated into a wider operational and commercial organisation; it will 
therefore be separated from Elanco ’s current operations as described below at 
paragraph 3 of this Schedule.  As regards its legal and functional structure:  
(i) The Otitis Divestment Business for ms part of Elanco ’s companion animal 
therapeutics business segment, which also encompasses pain, osteoarthritis, 
cardiovascular and dermatological products targeting cats and dogs.  The Otitis 
Divestment Business is part of Elanco ’s wider otitis product li ne which also 
includes Surolan, a daily dose product applied by the pet owner for otitis 
externa in felines and canines.  Please refer to the structure chart provided as 
Annex 6  for further detail.  
(ii) The manufacturing process is as follows:  
(a) The three APIs a re manufactured by, and purchased from, […]. 
(b) […].   
(c) […]. 
(iii) The EEA/UK (a) sales, technical and marketing and (b) manufacturing and 
quality Personnel for the Otitis Divestment Business are located in […]. 
(iv) […].  
3. In accordance with Section B, paragraph 6.2 of these Commitments, subject to third 
party consent where relevant and to the extent in Elanco ’s ownership, control or 
possession at Closing, the Otitis Divestment Business includes but is not limited to, the 
follow ing on a worldwide basis:  
(i) All Contracts exclusively or primarily related to Osurnia, […], and the rights and 
benefits of the portion of Contracts which are material and necessary to, but not 
exclusively used in, the Otitis Divestment Business or manufactur e of Osurnia 
(being ‘shared contracts ’), including, but not limited to, the contracts  listed in 
Annex 7 .  Elanco undertakes to use Best Efforts to obtain all necessary third -
party consents where applicable.  To the extent any such third -party consent 
could  not be obtained, or any contract could not be otherwise transferred, 
Elanco will, as appropriate, either: (i) assist the Purchaser and the relevant third 
party to put in place arrangements to transfer any work product and work in 
progress, and support the  Purchaser to put in place alternative arrangements; 
or (ii) enter into back -to-back agreements with the Purchaser under the same 
terms and conditions as the relevant contract for a transitional period of […] and 
up to the duration of the existing relevant  contract (if longer than […]). 
 
24 
 (ii) According to the Purchaser ’s needs, rebate, promotional and other similar 
programs related to the Otitis Divestment Business.  
(iii) All inventory of (to the extent that it has not been sold to a third party)  including 
all rights to market and sell such inventory  
(a) Osurnia in finished packaged form (together with any product packaging 
materials thereon) labelled and held for sale for the treatment of otitis 
externa complicated by susceptible strains of yeast in dogs;  
(b) Bulk API, work -in-progress, excipients, labelling materials and 
packaging materials held for use exclusively or primarily in the 
manufacture of Osurnia, […] for sale in the relevant fields;2 and 
(c) Samples of Osurnia, […] in finished packaged form labelled and held for 
use in the relevant fields.  
(iv) The manufacturing equipment listed in Annex 8 . 
(v) The product registrations for Osurnia as listed in Annex 9 . 
(vi) All documentation  comprising the product registrations in Annex 9 , and to the 
extent exclusively or primarily related to Osu rnia, […] and the relevant fields for 
the products and necessary to, or otherwise limiting the ability to, exploit those 
products in the relevant fields at Closing:  
(a) Correspondence and reports submitted to or received from 
governmental authorities;  
(b) Other do ssiers or compilations necessary to obtain or maintain any 
product registrations in Annex 9  with regard to any of Osurnia, […]; 
(c) Literature safety reports and documents relating to good manufacturing 
practices or issues, animal clinical trials, animal resea rch, including 
laboratory and target animal research and all veterinary master files 
contained or referenced in the product registrations in Annex 9  with 
regard to each of Osurnia, […]; and 
(d) Data (including clinical and pre -clinical data) referenced in any of the 
documentation and materials referred to above or necessary to develop 
and commercialise Osurnia, […], 
but in all cases except where explicitly excluded and excluding all intellectual 
property rights of any third party (in which instance, Elanco shal l use Best 
Efforts to work with the Purchaser to reach an agreement with the entity that is 
able to grant a licence) . 
                                                 
2  In the case of: (i) Osurnia, the treatment of otitis e xterna complicated by susceptible strains of yeast 
in dogs ; […], together being “the relevant  fields” for the Otitis Divestment Business.  
 
25 
 (vii) All books and records, including customer records, relating exclusively or 
primarily to the manufacture of Osurnia, […] for exploitation i n the relevant fields 
or the product business in such form as maintained by Elanco to the extent 
necessary and used to manufacture or exploit Osurnia, […] in the relevant fields 
as manufactured or exploited by or on behalf of Elanco at Closing (but 
excludi ng any assets explicitly excluded and all intellectual property rights of 
any third party) . 
(viii) All existing advertising, promotional and media materials, sales training 
materials, customer lists, other marketing data and materials and trade show 
materials and  videos, in such form as maintained by Elanco, to the extent 
exclusively or primarily used or held for exclusive and primary use in the 
product business, and necessary to exploit (but not manufacture) Osurnia, […] 
in the relevant fields as exploited by Ela nco as of Closing (but excluding any 
assets explicitly excluded and all intellectual property rights of any third party) . 
(ix) All intellectual property rights exclusively or primarily relating to the Otitis 
Divestment Business including, but not limited to, th e intellectual property rights 
listed at Annex 10  which broadly comprise:  
(a) Product -specific know -how and registered or unregistered intellectual 
property that is identified or identifiable in tangible form that is owned by 
Elanco and is used by or on behalf  of Elanco exclusively or primarily for 
or exclusively in connection with the manufacturing of Osurnia, […] for 
the exploitation in the relevant fields, or the maintenance of any product 
registration being transferred;  
(b) The copyrights  set out in Annex 10 ; 
(c) Registered  domain names for Osurnia, as registered in certain 
territories;  
(d) The trademark Osurnia; for the avoidance of doubts, the Purchaser will 
have all rights to market and sell the inventory transferred as part of the 
Otitis Divestment Business ; and  
(e) A non-exclusive, perpetual, irrevocable, royalty -free and licence with 
respect to necessary registered and unregistered copyright and know -
how owned or controlled by Elanco as of Closing and used by or on 
behalf of Elanco in connection with the exploitation o r manufacturing of 
Osurnia, […] for exploitation in the relevant fields or the maintain of any 
project registration being transferred (as applicable and further specified 
in Annex 10 ).  
(x) All rights to claims , demands, causes of action or litigation set out in Annex 11 . 
(xi) Arrangements for the supply of services by Elanco to the Purchaser for a 
transitional period of […] following Closing, […], to ensure the smooth transfer 
of the Otitis Business (including, inter alia , qualified person release services, 
quality  control of batch release testing and stability services, pharmacovigilance 
 
26 
 activities support in line with a separate pharmacovigilance agreement, 
regulatory affairs support for the ongoing product registration applications in 
certain territories, regulat ory chemistry manufacturing and control activities to 
support certain ongoing technology transfers, preparation of renewals for 
marketing authorisations, and in the jurisdictions where Elanco is not the holder 
of record, provide the Purchaser with support to transfer product registrations to 
the Purchaser).  
4. All the Assets, which are necessary to, but not exclusively or primarily related to, the 
viability and competitiveness of the Otitis Divestment Business and also relate to 
products/businesses retained by  Elanco, shall also be transferred to the Purchaser (at 
the option of the Purchaser) but only to the extent they relate to the Otitis Divestment 
Business.   
5. In the event that materials to be transferred contain information that is confidential to the 
Partie s’ retained businesses and not relevant to the Otitis Divestment Business, the 
information shall be redacted as appropriate.   
6. The Otitis Divestment Business shall not include any right, title or interest in or to any of 
the assets of the Parties or their Affiliated Undertakings other than those specified in 
paragraphs 6.2 and 7 of the Commitments and paragraphs 3 and 4 of this Schedule 
and, for the avoidance of doubt, will not include ( inter alia ): 
(i) Any right to manufacture, market or sell any other product of the Parties other 
than Osurnia or any licence to use any asset of Elanco in connection with any 
product other than Osurnia, […]. 
(ii) Any asset that is not an Asset and any asset that does not relate to the 
development, manufacture, marketing and sale of Osurnia, […]. 
(iii) The Parties ’ names (specifically, Elanco, Bayer or Bayer Animal Heal th), or any 
trading name of the Parties, together with all variations thereof and all 
trademarks, service marks, domain names, trade names, corporate names, 
logos and other identifiers of source containing, incorporating or associated with 
any of the foreg oing.  
(iv) Personnel, except where (at the option of the Purchaser) reasonably considered 
necessary to maintain the viability, marketability and competitiveness of the 
Divestment Business(es) as further set out in paragraph 9 of these 
Commitments).  
(v) Real property and tangible personal property of Elanco.  
(vi) All manufacturing -related assets of Elanco (other than as listed in Annex 8 ). 
(vii) Any shared Contracts to be retained by Elanco.  
(viii) Trade secrets unrelated to the Otitis Dive stment Business.  
 
27 
 (ix) Human resources and any other employee books and records (subject to 
paragraph 9 of the Commitments).  
(x) Items to the extent applicable law prohibits their transfer.  
7. If there is any asset or personn el which is not covered by paragraph 3 of this Schedule 
but which is both used (exclusively or not) in the Otitis Divestment Business and 
necessary for the continued viability and competitiveness of the Otitis Di vestment 
Business, that asset or an adequate substitute will be offered to potential purchasers.  
 
  
 
28 
 SCHEDULE 3  
1. The Parasiticides Divestment Business comprises the Endoparasiticides Assets and the 
Endectocide Assets as described at Parts 1 and 2 of this Sc hedule 3.  
 PART 1:  
2. The Endoparasiticides Assets consist of the EEA/UK -wide rights, title and interests in 
the BAH canine and feline endoparasiticide products marketed under the following 
brands, […] and all associated assets (including the right to develop , improve, 
manufacture and commercialise in the EEA/UK):  
(i) Drontal (Cat) , which is indicated for the treatment of gastrointestinal 
roundworms, hookworm and tapeworm in cats, and is administered orally as a 
tablet.3 Its active ingredients are praziquantel and  pyrantel;  
(ii) Drontal Plus (Dog) , which is indicated for the treatment of roundworms, 
hookworms, whipworms and tapeworms in dogs, and is administered orally as 
chewable or non -chewable and flavoured or non -flavoured tablets in a bone -
shaped form.4 Its active ingredients are febantel, pyrantel and praziquantel;  
(iii) Drontal Puppy/Welpan (Dog) , which is indicated for the treatment of 
roundworm, hookworm and whipworm in puppies and young dogs up to one 
year of age.  It is administered orally as a solution.  Its active  ingredients are 
pyrantel and febantel ; 
(iv) Droncit Injectable (Cat and Dog) / Spot On (Cat) / Tablet (Cat and Dog): Droncit 
Tablet , which are used for the treatment of tapeworm in cats and dogs, and is 
administered orally as a tablet.  Droncit spot -on is used  in cats only and Droncit 
injection is available for cats and dogs. All Droncit versions have praziquantel as 
their active ingredient ; 
(v) Profender Spot -on (Cat ), which is indicated for treatment of mixed parasitic 
infections caused by roundworm, tapeworm, an d lungworm in cats. It is 
administered as a spot -on treatment,5 Profender ’s active ingredients are 
emodepside and praziquantel ; 
                                                 
3  Including the following products: (i) Drontal Tablet Cat 4kg; and (ii) Drontal Tablet Cat 6kg.  
4  Including the following products: (i) Drontal Plus Tasty Tablet Dog 10kg; (ii) Drontal Plus Tablet 
Dog 10kg; a nd (iii) Drontal Plus Flavor Tablet Dog 10kg; and (iv) Drontal Plus Tasty Tablet Dog 
35kg; (v) Drontal Plus Tablet Dog 35kg; and (vi) Drontal Plus Flavour Tablet 35kg.  
5  Including the following products: (i) Profender Spot -on 0.35ml Cat > 0.5 -2.5kg; (ii) Profender Spot -
on 0.7ml Cat >2.5 -5kg (iii) Profender Spot -on 1.12ml Cat > 5.0 -8.0kg; and (iv) Profender Spot -on 
14.0ml Cat.  
 
29 
 (vi) Profender Tablet (Dog) , which is indicated for treatment of mixed parasitic 
infections caused by roundworm, and tapeworm in dogs . It is administered 
orally as a tablet6 and has emodepside and praziquantel as active ingredients ; 
(vii) Dronspot (Cat) , which is indicated for treatment of mixed parasitic infections in 
cats caused by roundworms and tapeworms. It is administered as a spot -on 
treatment and has emodepside and praziquantel as active ingredients ; 
(viii) Procox (Dog) , which  is an oral suspension that  indicated for the treatment of 
mixed parasitic infections caused by roundworms and coccidia in dogs, and is 
primarily used in puppies with co ccidia. It is administered orally as a suspension 
for dogs only and has emodepside and toltrazuril as its active ingredients ; 
(ix) All second brands and private label versions of the above -mentioned products;7 
(x) […] 
(xi) […], as more fully outlined in Annex 12. 
(toget her, the “Drontal/Profender Family ”).  
3. The Endoparasiticides Assets as operated to date are not currently run as a stand -alone 
business, rather are integrated into a wider operational and commercial organisation; 
they will therefore be separated from BAH ’s current operations as described below at 
paragraph 4 of this Schedule.  As regards its legal and functional structure:  
(i) The Endoparasiticides Assets is the EEA/UK product line within BAH ’s 
companion animal endoparasiticides business, which encompasses the 
Drontal/Profender Family products (for sale in EEA/UK).  Please refer to the 
structure chart provided as Annex 13  for further detail.  
(ii) The manufacture of finished products intended for sale in the EEA/UK is 
conducted […].   
(a) Specifically, for the Drontal pr oducts8 (including private label versions):  
(I) Praziquantel (for Drontal tablets, Drontal Plus and Droncit) was 
until recently supplied by […], but BAH has now terminated that 
contract and is in the process of switching supplier to […]. 
(II) Pyrantel (for Drontal,  Drontal Plus, and Welpan) is supplied by 
[…]. 
                                                 
6  Including the following products: Profender Tablet Dog 3kg; and (ii) Profender Tablet Dog 10kg; 
and (iii) Profender Tablet Dog 30 kg. 
7  […]. 
8  This includes Drontal, Drontal Plus, Droncit and Drontal Puppy/Welpan.  Drontal and Drontal Plus 
are also sold as second brands under the brand name Mansonil (in the Netherlands).  
 
30 
 (III) Febantel is supplied by […]. 
(IV) The artificial flavouring used in Drontal tablets is supplied by 
[…].   
(b) For the Profender products:9 
(I) BAH has licensed emodepside (for Profender and Procox) for 
use in the animal he alth field from Bayer AG.  The pre -cursor 
“PF1022A ” of emodepside (for Profender and Procox) is 
currently produced […]. Emodepside is neither patent protected 
by Bayer AG, nor […].   
(II) Toltrazuril (for Procox) is produced by […].   
(III) Praziquantel (for Profende r) is sourced in the same way as for 
the Drontal products.  
(iii) BAH conducts the production, fill and packaging of the finished products 
intended for sale in the EEA/UK […].  
(iv) The Personnel for the Endoparasiticides Assets are based […].  
(v) The Endoparasiticides A ssets includes […]: 
(a) […]; and  
(b) […]. 
(vi) In the EEA/UK, the Drontal/Profender Family is distributed […].  
4. In accordance with Section B, paragraph 6.3 of these Commitments, subject to third 
party consent where relevant a nd to the extent in Elanco/BAH ’s ownership, control or 
possession at Closing, the Endoparasiticides Assets includes, but is not limited to, the 
following on an EEA/UK -wide basis (as Elanco/BAH will continue to market the 
Drontal/Profender Family products e x-EEA/UK):  
(i) All Contracts exclusively or primarily related to the Drontal/Profender Family for 
exploitation in the EEA/UK, and the rights and benefits of the relevant portion of 
Contracts which are material and/or necessary to, but not exclusively or 
primar ily related to, the Endoparasiticides Assets (being ‘shared contracts ’), 
including, but not limited to, the contracts listed in Annex 14 . The Parties 
undertake to use Best Efforts to obtain all necessary third -party consents where 
applicable. To the extent  any such third -party consent could not be obtained, or 
any contract could not be otherwise transferred, the Parties will, as appropriate, 
either: (i) assist the Purchaser and the relevant third party to put in place 
arrangements to transfer any work produ ct and work in progress, and support 
                                                 
9  This includes Profender Tablet, Profender Spot -on, Dronspo t and Procox.  
 
31 
 the Purchaser to put in place alternative arrangements; or (ii) enter into back -to-
back agreements with the Purchaser under the same terms and conditions as 
the relevant contract for a transitional period of at least […]) and up to the 
duration of the existing relevant contract (if longer than […]). 
(ii) Elanco/BAH commit to use their commercially reasonable efforts to procure that 
Purchaser shall have the rights to acquire emodepside directly from […]. 
(iii) All rebates,  promotion al and other similar programs related to the 
Endoparasiticides Assets.  
(iv) All inventory (to the extent that it has not been sold to a third party) of 
Drontal/Profender Family products including inventory in finished packaged 
form labelled and held for sale in  the EEA/UK and all forms of non -saleable 
inventory intended for the sale of Drontal/Profender Family products in the 
EEA/UK ( e.g. blister cards with tablets, bulk tablets, printed packaging 
materials, API). For the avoidance of doubts, the purchaser will have all rights to 
market and sell the inventory transferred as part of the divestment business;  
(v) All relevant regulatory files and product registrations which Elanco/BAH owns or 
has the right to own (as applicable) that are used by or on behalf of Elanco/B AH 
for, or exclusively or primarily in connection with, the Endoparasiticides Assets 
including, but not limited to, the regulatory files and product registrations listed 
at Annex 15 . 
(vi) All documentation related exclusively or primarily to the Endoparasiticid es 
Assets, including inter alia : 
(a) Documentation comprising the product registrations as listed at Annex 
15; and  
(b) To the extent exclusively or primarily related to the Drontal/Profender 
Family products in the EEA/UK and/or necessary to (or limiting the 
ability to) exploit these products in the EEA/UK:  
(I) Correspondence and reports submitted to or received from 
governmental authorities;  
(II) Other dossiers or compilations necessary to obtain or maintain 
any product registrations to be transferred with regard to such 
products;  
(III) Literature safety reports and documents relating to good 
manufacturing practices or issues, animal clinical trials, animal 
research, including laboratory and target animal research and 
all veterinary master files contained or referenced in the prod uct 
registrations to be transferred with regard to such products; and  
(IV) Data (including clinical and pre -clinical data) referenced in any 
of the documentation and materials referred to above, or 
 
32 
 necessary to commercialise or develop any product or pipeline 
included in the Endoparasiticides Assets.  
but in all cases except where explicitly excluded, and excluding all intellectual 
property rights of any third party (in which instance, Elanco shall use Best 
Efforts to work with the Purchaser to reach an agreement  with the entity that is 
able to grant a licence) . 
(vii) All books and records relating exclusively or primarily to the Endoparasiticides 
Assets, in such form as maintained and to the extent necessary and used to 
develop, manufacture or exploit the Drontal/Profe nder Family products in the 
EEA/UK . 
(viii) All customer lists, customer orders and customers records of the 
Endoparasiticides Assets.  
(ix) All existing advertising, promotional and media materials, sales training 
materials, other marketing data and materials, trade sh ow materials and videos 
to the extent exclusively or primarily used or held for exclusive or primary use in 
the Endoparasiticides Assets.  
(x) All intellectual property rights exclusively or primarily relating to the 
Endoparasiticides Assets including but not l imited to the intellectual property 
rights listed in Annex 16 , which, broadly, comprise:  
(a) Product -specific know -how used exclusively or primarily for or 
exclusively or primarily in connection with the development, 
manufacturing, exploitation or the maintena nce of any purchased 
product registrations of the Drontal /Profender Family products in the 
EEA/UK (“Purchased Product Know -How ”); as well as a  non-
exclusive, perpetual, irrevocable, and royalty -free licence (covering the 
exploitation or manufacture of the Drontal/Profender Family of products 
in the EEA/UK) for know -how and any proprietary information other than 
Purchaser Product Know -How that are used by Elanco/BAH for or in 
connection with the manufacturing of the Drontal/Profender Family 
products or the m aintenance of these product registration (“Licensed 
Product Know -How ”); 
(b) All copyrights used exclusively or primarily for or exclusively or primarily 
in connection with (i) the manufacturing of the Drontal/Profender Family 
products for exploitation in the E EA/UK, or (ii) the Endoparasiticides 
Assets (“Purchased Copyrights ”); as well as a  non-exclusive, 
perpetual, irrevocable, and royalty -free licence (covering the 
exploitation or manufacture of the Drontal/Profender Family products in 
the EEA/UK) with respec t to the copyrights other than Purchased 
Copyrights that are used for or in connection with the exploitation of the 
Drontal/Profender Family products in the EEA/UK (“Licensed 
Copyrights ”); 
 
33 
 (c) The domain names for the Drontal/Profender Family products in the 
EEA/UK (“Purchased Domain Names ”); 
(d) All trademarks registered in the EEA/UK and used exclusively or 
primarily for or exclusively or primarily in connection with the 
Endoparasiticides Assets  (“Purchased Trademarks ”); for the 
avoidance of doubts, the Purchaser  will have all rights to market and 
sell the inventory transferred as part of the Endoparasiticides Assets ;  
(e) An exclusive , perpetual, irrevocable, and royalty -free licence, under all 
patents necessary for the exploitation of the  Drontal/Profender Family 
products in the EEA/UK; and a non -exclusive, perpetual, irrevocable, 
and royalty -free licence, under all patents necessary for the 
manufacture of  the Drontal/Profender Family products (and product 
improvements) in and outside the EEA/UK for exploitation in t he 
EEA/UK (together the “Licensed Patents ”). 
(xi) All rights to claims, demands, causes of action or litigation set out in Annex 17 . 
(xii) All goodwill relating to the Drontal/Profender Family products in the EEA/UK.  
(xiii) In order to ensure the smooth transfer of producti on technology and sales 
activities to the Purchaser, arrangements for:  
(a) A transitional manufacturing and supply agreement  – For a period of 
[…], the Purchaser will be able to benefit from manufacturing and 
supply arrangement, […], pursuant to which Elanco/B AH (or a 
subcontractor) will manufacture the Drontal/Profender Family products, 
and will be responsible for procuring the product API and maintaining 
product API inventory sufficient to meet the Purchaser ’s forecasts.  
Elanco/BAH will also assist the Purch aser with technology transfer 
including the CMC transfer of the manufacturing process for the 
Drontal/Profender Family products, however not including any 
technology transfer relating to the manufacture of the product API.  In 
that regard, Elanco/BAH will provide, free of charge, training for the 
Purchaser ’s personnel with regard to all product presentations (i.e. 
pipettes, tablets, non -sterile liquid).  Concurrently, under the supervision 
of the Monitoring Trustee, Elanco/BAH and the Purchaser will enter i nto 
a quality agreement, […], that will detail the roles and responsibilities, 
expectations, timelines, deliverables and quality standards between the 
parties with regards to the manufacture, packaging, quality control, 
quality assurance, testing, release,  storage and shipping of the 
Drontal/Profender Family products and Elanco/BAH ’s obligations 
relating to the maintenance of records and the rights to inspect the 
premises;  
(b) A transitional services agreement  – For a period of […]), and under the 
supervision o f the Monitoring Trustee, Elanco/BAH shall also provide (or 
cause to be provided), […], to the Purchaser a number of services (for 
specified periods which shall not exceed […] following Closing) 
 
34 
 including ( inter alia ) qualified person release services, qua lity control of 
batch release testing services, pharmacovigilance activities support in 
line with a separate pharmacovigilance agreement, assistance for the 
transfer of production, regulatory affairs support for the transfer and 
preparation of renewals of the marketing authorizations for the 
Drontal/Profender Family products, sales force training (provision of 
product technical training (including adverse events training), and 
product -positioning training to sales force, marketing, customer service, 
veterin ary team) and procurement support in setting up point of contact 
with API suppliers and the other critical suppliers engaged in the 
manufacturing process for the Drontal/Profender Family products; and  
(c) A (transitional) distribution compliance agreement  – During the 
transition period, for so long as Elanco/BAH is the holder of any 
Purchased Product Registrations (on a country by country basis), which 
shall not exceed […] following Closing, the Purchaser is authorised to 
distribute the Drontal/ Profender Fami ly products in the EEA/UK.   
5. All the Assets, which are necessary to, but not exclusively or primarily related to, the 
viability or competitiveness of the Endoparasiticides Assets and also relate to 
products/businesses retained by the Parties, shall also be  transferred to the Purchaser 
(at the option of the Purchaser) but only to the extent they relate to the 
Endoparasiticides Assets.  
6. In the event that materials to be transferred to the Purchaser pursuant to the 
Commitments contain information that is confid ential to the Elanco/BAH ’s retained 
businesses and not relevant to the Endoparasiticides Assets, the information shall be 
redacted as appropriate.   
7. BAH shall retain, and Elanco shall acquire at Closing of the Concentration, the 
Drontal/Profender Family ou tside of the EEA/UK.  This shall be effected by means of 
exclusion of any ex -EEA/UK specific rights, title or interests in the Drontal/ Profender 
Family, or any ex -EEA/UK assets relating to the same, in the sale and asset purchase 
agreement, and/or a rever se carve -out of ex -EEA/UK specific rights, from the items 
listed in paragraph 4 of this Schedule.  
8. Subject to the provisions in Part 2 of Schedule 3, the Endoparasiticides Assets shall not 
include any right, title or interest in or to any of the assets of t he Parties or their Affiliated 
Undertakings other than those specified in paragraphs 6.3 and 7 of the Commitments 
and paragraphs 4 and 5 of this Schedule (including, fo r clarity, any right, title or interest 
in the Drontal/Profender Family outside of the EEA/UK) and, for the avoidance of doubt, 
will not include ( inter alia ): 
(i) Any right to manufacture, market or sell any products of the Parties other than 
the Drontal/Profe nder Family in the EEA/UK or any licence to use any asset of 
the Parties in connection with any products other than the Drontal/Profender 
Family in the EEA/UK.  
 
35 
 (ii) Any asset that is not an Asset and any asset that does not relate to the 
manufacture, marketing and sale of the Drontal/Profender Family in the 
EEA/UK.  
(iii) The Parties ’ names (specifically, Elanco, Bayer or Bayer Animal Health), or any 
trading name of the Parties, together with all variations thereof and all 
trademarks, service marks, domain names, trad e names, corporate names, 
logos and other identifiers of source containing, incorporating or associated with 
any of the foregoing.  
(iv) Personnel, except where (at the option of the Purchaser) reasonably considered 
necessary to maintain the viability, marketabi lity and competitiveness of the 
Divestment Business(es) as further set out in paragraph 9 of these 
Commitments).  
(v) Real property and tangible personal property of Elanco/BAH.  
(vi) All manufacturing assets of the Partie s. 
(vii) Any rights or interests exclusively or primarily relating to any Drontal/Profender 
Family product outside of the EEA/UK.  
(viii) Any shared Contract retained by the Parties.  
(ix) Trade secrets unrelated to the Endoparasiticides Assets.  
(x) Human resources and any other employee books and records (subject to 
paragraph 9 of these Commitments).  
(xi) Items to the extent applicable law prohibits their transfer.  
9. If there is any asset or personnel which is not covered by paragraph 4 of this Schedule 
but which is both used (exclusively or not) in the Endoparasiticides Assets and 
necessary for the continued viability and competitiveness of the Endoparasiticides 
Assets, that asset or an adequate subs titute will be offered to potential purchasers.  
 
PART 2:  
10. The Endectocide Assets consist of:  
(i) […] (the “Full Stage Pipeline Product ”).10 
11. The Endectocide  Assets as operated to date is not a stand -alone business, rather it is 
integrated into a wider operational  and commercial organisation; it will therefore be 
separated from BAH ’s current operations as described below at paragraph 12.  As 
regards its legal and functional structure:  
                                                 
10  […].  
 
36 
 (i) The Endectocide  Assets forms part of BAH’s companion animal therapeutics 
business segment and part of BAH ’s R&D function.  
(ii) The Full Stage Pipeline Product […].  
12. In accordance with Section B of these Commitments, subject to third party consent 
where relevant and to the extent in the Parties ’ ownership, control or possession at 
Closing, the Endectocide  Assets includes, but is not limited to, the following on a 
worldwide basis:  
(i) All rights , title and interests in the Full Stage Pipeline Product (including the 
right to conduct the ongoing clinical trials (listed inter alia  in Annex [18]) and to 
develop, improve, manufacture and commercialise) for use in the Field.  
(ii) All Contracts exclusively or primarily related to the Full Stage Pipeline Products, 
and the benefit of the portion of Contracts which ar e material or necessary to, 
but not exclusively or primarily related to the Full Stage  Pipeline Product, 
including but not limited to, the Contracts listed in Annex [19].  The Parties 
undertake to use Best Efforts to obtain all necessary third -party consen ts where 
applicable. To the extent any such third -party consent could not be obtained, or 
any contract could not be otherwise transferred, the Parties will, as appropriate, 
either: (i) assist the Purchaser and the relevant third party to put in place 
arran gements to transfer any work product and work in progress, and support 
the Purchaser to put in place alternative arrangements; or (ii) enter into back -to-
back agreements with the Purchaser under the same terms and conditions as 
the relevant contract for a transitional period of […] and up to the duration of the 
existing relevant contract (if longer than […]). 
(iii) Elanco/BAH commit to use their commercially reasonable efforts to procure that 
the Purchaser shall have the rights to acquire emodepside directly from  […]. 
(iv) All inventory of (to the extent that it has not been sold to a third party) including, 
but not limited to, the inventory listed at Annex 20:  
(a) Full Stage  Pipeline Product in finished form (together with any product 
packaging materials and any samples) labelled and held for use by the 
Endectocide Assets; and  
(b) bulk API, work -in-progress, excipients, labelling materials and 
packaging materials used or held for use exclusively or primarily in the 
manufacture of Full Stage  Pipeline Product for use by the Ende ctocide 
Assets.  
(v) All licences, permits, authorisations and registrations (“Regulatory Approvals ”) 
for the Full Stage  Pipeline Product, and all other product registrations or 
regulatory approvals to the extent exclusively or primarily relating to the Full 
Stage Pipeline Product for use in the Field . 
 
37 
 (vi) All documentation comprising any Regulatory Approvals, and to the extent 
exclusively or primarily related to the Full Stage Pipeline Product for use in the 
Field:  
(a) correspondence and reports submitted to or receive d from relevant 
regulatory authorities relating to the research, development, 
manufacture, testing, storage, import, export, use, labelling, distribution, 
sale, offer for sale, commercialisation, licensing, advertising, marketing 
and promotion (“exploitati on”) of the Full Stage Pipeline Product;  
(b) other dossiers or compilations necessary to obtain or maintain any of 
the product registrations and Regulatory Approvals ; 
(c) literature safety reports and documents relating to good manufacturing 
practices or issues, a nimal clinical trials, animal research, including 
laboratory and target animal research and all veterinary master files 
contained or referenced to in the product registrations and Regulatory 
Approvals;  
(d) environmental and safety documentation; and  
(e) data that  resulted from any of BAH ’s research or development activities 
related to the Full Stage Pipeline Product , or data referenced in any 
documentation and materials referred to above , 
but in all cases except where explicitly excluded and excluding all intellec tual 
property rights of any third party unless they are necessary for the functioning of 
the Endectocide Assets (in which instance, Elanco shall use Best Efforts to work 
with the Purchaser to reach an agreement with the entity that is able to grant a 
licence).   
(vii) All relevant reports, databases and analysis (including all technical, clinical and 
marketing files, protocols, clinical data and studies, reports, plans, books and 
records) relating exclusively or primarily to the Endectocide Assets in such form 
as maintained by BAH (except where explicitly excluded).  
(viii) All existing marketing materials, plans and forecasts which are specific to the  
Full Stage Pipeline Product in such form as maintained by BAH to the extent 
they are exclusively or primarily related t o the Endectocide Assets (except 
where explicitly excluded).  
(ix) All intellectual property rights, to the extent exclusively or primarily relating to 
the Full Stage  Pipeline Product for use in the Field, including, but not limited to, 
the intellectual property  rights listed at Annex 21 which, broadly, comprise:  
(a) The patents exclusively or primarily relating to the Full Stage Pipeline 
Product for use in the Field, which include […]    
(b) Worldwide licenses to the patents shared with the Drontal/Profender 
family and relating to the Full Stage Pipeline Product, for use in the 
 
38 
 development, manufacture or sale of the Full Stage  Pipeline Product, 
which are: […]; 
(c) the proposed trademarks relating to the brands […]; 
(d) product -specific know -how that is identified or identifiabl e in tangible 
form that is or has been used for or held for use by or on behalf of BAH 
exclusively for or exclusively in connection with the Full Stage  Pipeline 
Product for use in the Field;  
(e) any copyrights or know -how owned by BAH that comprise or are 
contained or embodied in any of the marketing materials, plans and 
forecasts being transferred; and  
(f) an exclusive, perpetual, irrevocable, royalty -free sub -licensable and 
transferable licence with respect to necessary unregistered intellectual 
property and know -how used or held for use by or on behalf of BAH for 
or in connection with the conduct of the Endectocide Assets or the 
development, manufacture or sale of the Full Stage  Pipeline Product.  
(x) The Key Personnel listed at Annex 22.  
(xi) The obligation for Elanco/BAH  to use Best Efforts to: (a) complete the Full 
Stage Pipeline Product related ongoing studies in a timely manner; (b) inform 
the Purchaser of any information or communication exchanged with the EMA in 
relation to the Full Stage Pipeline Product; and (c) pr ovide the Purchaser with 
monthly reports on development process of the Full Stage Pipeline Product.  
(xii) The obligation for Elanco/BAH to use Best Efforts (a) to file before Closing all 
then-available studies and claims consistent with the summary of product 
characteristics of the Full Stage  Pipeline Product with the EMA and (b) to obtain 
the targeted product profile claims of the Full Stage  Pipeline Product.  
(xiii) The benefit of transitional arrangements to ensure the smooth transfer of the 
Endectocide Assets and to enable the continuity of the clinical trials, including 
an R&D and regulatory transitional service agreement, transitional 
manufacturing and supply services, and a technology transfer (including know -
how) to the Purchaser, to ensure the viability and compe titiveness of the 
Endectocide Assets for a transitional period of […] following Closing […]. 
13. All the Assets, which are necessary to, but not exclusively or primarily related to, the 
viability and competitiveness of the Endectocide Assets and also relate to  the 
products/businesses retained by the Parties, shall also be transferred or licensed to the 
Purchaser but only to the extent that they relate to the Endectocide Assets (at the option 
of the Purchaser).  In the event that materials to be transferred cont ain information that 
is confidential to the Parties ’ retained businesses and not relevant to the Endectocide 
Assets, the information shall be redacted as appropriate.  
14. The Parties also undertake to respond promptly (to the best of their abilities) to any 
questions from the Purchaser of the Endectocide Assets.  
 
39 
 15. Subject to the provisions of Part 1 of Schedule 3, the Endectocide Assets shall not 
include any right, title or interest in or to any of the assets of the Parties or their Affiliated 
Undertakings other than those specified in paragraph 12 of this Schedule and, for the 
avoidance of doubt, will not include, ( inter alia ): 
(i) Any right to develop, manufacture, market or sell any product of the Parties 
other than the Full Stage Pipeline Product for use in the Fi eld. 
(ii) Any asset that is not an Asset, and any asset that does not relate to the 
development, manufacture, marketing and sale of the Full Stage Pipeline 
Product.  
(iii) The Parties ’ names (specifically, Elanco, Bayer or Bayer Animal Health), or any 
trading name of the Parties, together with all variations thereof and all 
trademarks, service marks, domain names, trade names, corporate names, 
logos and other identifiers of source containing, incorporating or associated with 
any of the foregoing.  
(iv) Subject to the Commitm ents with regard to Personnel and Key Personnel in 
paragraphs 6 and 9, employees, real property and tangible personal property of 
the Parties.  
(v) Any shared Contracts retained by the Parties.  
(vi) Trade Secrets unrelated to the Endectocide Assets.  
(vii) Human resources  and any other employee books and records (subject to 
paragraphs 6 and 9 of these Commitments).  
(viii) Items to the extent applicable law prohibit their transfer.  
16. If there is any asset or personnel which is not covered by paragraph 12 of this Schedule 
but which is both used (exclusively or not) in the Endectocide Assets and necessary for 
the continued viability and competitiveness of the Endectocide Assets, that asset or an 
adequate substitute will be offered to the Purchaser.  
 

 
 
 Case M.9 554 – Elanco / Bayer Animal Health  
 
ADDITIONAL COMMITMENTS TO THE EUROPEAN COMMISSION  
 
Pursuant to Article 6(2) of Council Regulation (EC) No 139/2004 (the “Merger Regulation ”), 
Elanco Animal Health Inc. (“Elanco ”) and Bayer AG (together with its affiliat es referred to as 
“Bayer ”) (the “Parties ”, each a “Party ”) hereby enter into the following Additional Commitments 
(the “Additional Commitments ”) vis-à-vis the European Commission (the “Commission ”) with 
a view to rendering Elanco ’s acquisition of Bayer ’s animal health business (“Bayer Animal 
Health ” or “BAH ”) (the “Concentration ”) compatible with the internal market and the functioning 
of the EEA Agreement. The Additional Commitments bind Bayer only in so far as necessary with 
regards to actions that must b e taken by Bayer with regards to the ESP Divestment Business 
(as defined below).   
This text shall be interpreted in light of the Commission ’s decision pursuant to Article 6(1)(b) of 
the Merger Regulation to declare the Concentration compatible with the in ternal market and the 
functioning of the EEA Agreement (the “Decision ”), in the general framework of European 
Union law, in particular in light of the Merger Regulation, and by reference to the Commission 
Notice on remedies acceptable under Council Regulat ion (EC) No 139/2004 and under 
Commission Regulation (EC) No 802/2004 (the “Remedies Notice ”). 
SECTION A.  DEFINITIONS  
1. For the purpose of the Additional Commitments, the following terms shall have the 
following meaning:  
Affiliated Undertakings : undertakings  controlled by the Parties and/or by the ultimate 
parents of the Parties, whereby the notion of control shall be interpreted pursuant to 
Article 3 of the Merger Regulation and in light of the Commission Consolidated 
Jurisdictional Notice under Council Regu lation (EC) No 139/2004 on the control of 
concentrations between undertakings (the " Consolidated Jurisdictional Notice "). 
Alternative Divestment Business : the business as described in further detail in 
Section C of the Additional Commitments and Schedule 2. 
API: active pharmaceutical ingredient(s).  
Assets : the tangible and intangible assets that contribute to the current operation or are 
necessary to ensure the viability and competitiveness of the ESP Divestment Busine ss 
or, if applicable, the Alternative Divestment Business as including but not limited to the 
assets in paragraphs 6 and 14 respectively and described in more detail in the 
Schedules 1 and 2. 
Best Efforts : Best effort obligations shall be interpreted in light of the Commission's 
decision pursuant to Article 6(1)(b) of the Merger Regulation to declare the 
Concentration compatibl e with the internal market and the functioning of the EEA 
Agreement, the Merger Regulation and the general principles of EU law. Any 
interpretation that may be given to this term under the law of other jurisdictions is not 
 
2 
 relevant solely for the purpose o f interpreting and/or implementing the Additional 
Commitments.  
Closing : the transfer of the legal title to the ESP Divestment Business to the Purchaser 
or, if applicable, of the Alternative Divestment Business, to the Purchaser.  
Closing Period : the period of […] from the approval of the Purchaser and the terms of 
sale by the Commission.  
Confidential Information : any business secrets, know -how, commercial information, or 
any other information of a proprietary nature that is not in the public domain.  
Conflict  of Interest : any conflict of interest that impairs the Trustee's objectivity and 
independence in discharging its duties under the Additional Commitments.  
Contract : any written contract, agreement, lease, sublease, licence, sub -licence or 
other legally bin ding commitment or arrangement.  
Divestiture Trustee : one or more natural or legal person(s) who is/are approved by the 
Commission and appointed by Elanco and who has/have received from Elanco the 
exclusive trustee mandate to sell the Alternative Divestment  Business to a Purchaser at 
no minimum price.  
Elanco Pipeline Products : means the pipeline products as described in further detail in 
Schedule 2. 
Effective Date : the date of adoption of the Decision.  
ESP Divestment Bus iness : the business as described in further detail in Section B of 
the Additional Commitments and Schedule 1. 
Fast-Track Dispute Resolution Procedure : the procedure provided for in Section G 
below and in Annex 2.7.  
Field: means animal health.  
First Divestiture Period : the period of […] from the Effective Date.  
Hold Separate Manager : the person appointed by Elanco or Bayer (as relevant) for the 
ESP Divestment Business or, if applicable, the Alternative Divestment Busines s, to 
manage the day -to-day business under the supervision of the Monitoring Trustee.  
Key Personnel : all personnel necessary to maintain the viability and competitiveness of 
the ESP Divestment Business, as listed in Schedule 1. 
Licensor : as described in further detail in Schedule 1. 
Licensor Agreement : as described in further detail in Schedule 1. 
 
3 
 Monitoring Trustee : one or more natural or legal  person(s) who is/are approved by the 
Commission and appointed by Elanco, and who has/have the duty to monitor the 
Parties ’ compliance with the conditions and obligations attached to the Decision.  
Overlapping Retained Business : any business to be retained by Elanco or BAH that is 
related to canine and/or feline isoxazoline or isoxazoline -like parasiticides.  
Personnel : all staff currently employed by the ESP Divestment Business or, if 
applicable, the Alternative Divestment Business, including staff seconded to the ESP 
Divestment Business or, if applicable, the Alternative Divestment Business and shared 
personnel.   
Purchaser : the entity approved by the Commission as the acquirer of the ESP 
Divestment Business or, if applicable, the Alternative Divestment Busi ness in 
accordance with the criteria set out in Section D.   
Purchaser Criteria : the criteria laid down in paragraph 21 of these Additional 
Commitments that the Purchaser must fulfil in order to be approved by the Commission.  
Trustee(s) : the Monitoring Trustee and/or the Divestiture Trustee as the case may be.  
Trustee Divestiture Period : the period of […] from the end of the First Divestiture 
Period.  
SECTION B.  THE COMMITMENT TO DIVEST AND THE DIVESTMENT BUSINESS  
 Commitment to divest  
2. In order to maintain effective competition, Elanco commits to divest, or procure the 
divestiture of, the ESP Divestment Business by the end of the First Divestiture Period as 
a going concern to a Purchaser and on terms of sale approved by the Commis sion in 
accordance with the procedure described in paragraph 22 of these Additional 
Commitments.  To carry out the divestiture, Elanco commits to find a Purchaser and to 
enter into a final binding sale and purcha se agreement for the sale of the ESP 
Divestment Business by the end of the First Divestiture Period. If Elanco has not 
entered into such an agreement at the end of the First Divestiture Period, Elanco shall 
grant the Divestiture Trustee an exclusive mandat e to sell the Alternative Divestment 
Business in accordance with the procedure described in paragraph 34 in the Trustee 
Divestiture Period.  
 
3. Elanco shall be deemed to have complied with these Additional Commitme nts if:  
(a) by (i) the end of the First Divestiture Period, Elanco has entered into a final 
binding sale and purchase agreement for the ESP Divestment Business or the 
Alternative Divestment Business (as applicable) or (ii) by the end of the Trustee 
Divestiture  Period, the Divestiture Trustee has entered into a final binding sale 
and purchase agreement for the Alternative Divestment Business, provided that  
the Commission approves the proposed Purchaser and the terms of sale as 
being consistent with the Addition al Commitments in accordance with the 
procedure described in paragraph 22; and  
 
4 
 (b) the Closing of the sale of the ESP Divestment Business or the Alternative 
Divestment Business (as applicable) to the Purchaser takes  place within the 
Closing Period.  
4. In the event that the Licensor terminates the Licensor Agreement within a week 
following the acquisition of BAH by Elanco, Elanco shall instead be deemed to have 
complied with these Additional Commitments and, for the avo idance of doubt, shall not 
be required to sell the Alternative Divestment Business.  Elanco undertakes to use Best 
Efforts to ensure that the Licensor does not terminate the Licensor Agreement upon the 
acquisition of BAH by Elanco.   
5. In order to maintain t he structural effect of the Additional Commitments, Elanco shall, for 
a period of 10 years after Closing, (i) not acquire, whether directly or indirectly, the 
possibility of exercising influence (as defined in paragraph 43 of the Remedies Notice, 
footnote 3) over the whole or part of the ESP Divestment Business and (ii) not market 
generic versions of the divestment products, unless, following the submission of a 
reasoned request from Elanco showing good cause and accompanied by a report from 
the Monitoring Trustee (as provided in paragraph 48 of these Additional Commitments), 
the Commission finds that the structure of the market has changed to such an extent 
that the absence of influence over the ESP Divestment Business is no lon ger necessary 
to render the proposed Concentration compatible with the internal market.  For the 
avoidance of doubt, Elanco will still be bound by this obligation even if the Licensor 
terminates the Licensor Agreement.    
Structure and definition of the ES P Divestment Business  
6. The ESP Divestment Business, as described in more detail in Schedule 1, includes all 
assets that contribute to the current operation or are necessary to ensure the viability 
and competitiveness of  the ESP Divestment Business at a worldwide level, in particular:  
(i) All rights , title and interests to develop, improve, manufacture and 
commercialise (including the right to conduct the ongoing clinical trials for) the 
products concerned for use in the Fie ld; 
(ii) All contracts related exclusively or primarily to the ESP Divestment Business 
and, according to the Purchaser ’s needs, the rights and benefits of the relevant 
portion of contracts that are material and/or necessary to, but not exclusively or 
primarily related to, the ESP Divestment Business to the extent they are 
capable of being assigned;  
(iii) Elanco undertakes to use Best Efforts to obtain all necessary third party 
consents where applicable;  
(iv) All Assets;  
(v) Key Personnel;  
(vi) All product  licences, permits, authori sations and registrations (“regulatory 
approvals ”) for the products concerned as, and all other product registrations or 
regulatory approvals to the extent exclusively or primarily relating to the 
products concerned for use in the Field ; 
(vii) All intellectual p roperty and intellectual property rights (including product -
specific know -how) which are owned, maintained, used and /or controlled by the 
 
5 
 Parties (as applicable) and related to the development, improvement, 
manufacturing and commercialisation of the produ cts concerned for use in the 
Field or for the maintenance of the regulatory approvals being transferred;  
(viii) All customer orders and customer records of the ESP Divestment Business; 
and 
(ix) the benefit of transitional arrangements, including an R&D and regulatory  
transitional service agreement, transitional manufacturing and supply services, 
and a technology transfer (including know -how) to the Purchaser, to ensure the 
viability and competitiveness of the ESP Divestment Business for a transitional 
period of […] following Closing […], to ensure the smooth transfer of the ESP 
Divestment Business.  
7. All the Assets, which are necessary to, but not exclusively or primarily related to, the 
viability and competitiveness of the ESP Divestment Business and also relate to the 
products/businesses retained by the Parties, shall also be transferred to the Purchaser 
but only to the extent they related to the ESP Divestment Business (and at the 
Purchaser ’s option). In the event that materials to be transferred to the Purchaser 
pursu ant to the Additional Commitments contain information that is confidential to 
Elanco/BAH ’s retained businesses and not relevant to the ESP Divestment Business, 
the information shall be redacted as appropriate.  
8. For the sake of clarity, the ESP Divestment B usiness shall not include any physical 
production assets, equipment or manufacturing units owned or operated by the Parties.  
Further, the ESP Divestment Business shall not include any Personnel (save for Key 
Personnel and as provided for at paragraph 9 below).   
9. At the option of the Purchaser, the ESP Divestment Business will include the Personnel 
who would reasonably be considered necessary to maintain the viability, marketability 
and competitiveness of the ESP Divestment Busin ess.  The exercise of such option 
shall be supervised by the Monitoring Trustee and subject to applicable local 
employment legislation and employee consent.  Should Elanco not agree with the 
request of the Purchaser, the Monitoring Trustee shall prepare a reasoned opinion 
within seven working days and the Commission shall ultimately decide on the merits of 
the Purchaser proposal.  
10. The sale of the ESP Divestment Business shall be structured as an asset sale with 
licences and rights of access to certain share d assets.  Strict firewall procedures will be 
adopted so as to ensure that any competitively sensitive information related to, or 
arising from, transitional arrangements (for example, product roadmaps) will not be 
shared with, or passed on to, anyone outsi de the ESP Divestment Business ’s 
operations, beyond what is reasonably required for the compliance with obligations 
relating to the transfer of the ESP Divestment Business and supply of transitional 
services.  
SECTION C.  THE ALTERNATIVE DIVESTMENT BUSINESS  
11. During the First Divestiture Period, Elanco can choose to divest the Alternative 
Divestment Business instead of the ESP Divestment Business to remove competition 
concerns where the European Commission has found serious doubts as to the 
compatibility of the  Transaction with the internal market (the “Alternative Divestiture 
Commitment ”).  Elanco ’s decision to divest the Alternative Divestment Business shall 
be notified to the Monitoring Trustee. To carry out the divestiture, Elanco commits to find 
a Purchaser  and enter into a final binding sale and purchase agreement for the sale of 
the Alternative Divestment Business within the First Divestiture Period.  To the extent 
that at the end of the First Divestiture Period Elanco has not entered into such an 
 
6 
 agreemen t, Elanco shall grant the Divestiture Trustee an exclusive mandate to sell the 
Alternative Divestment Business within the Trustee Divestiture Period in accordance 
with the procedure described in paragraph 34 below.  
12. Elanco shall  be deemed to have complied with the Additional Commitments if the 
conditions set out in paragraph 3 or 4 are met.  
13. In order to maintain the structural effect of the Additional Commitments, Elanco shall, for 
a period of 10 years  after Closing, (i) not acquire, whether directly or indirectly, the 
possibility of exercising influence (as defined in paragraph 43 of the Remedies Notice, 
footnote 3) over the whole or part of the Alternative Divestment Business and (ii) not 
market gener ic versions of the divestment products, unless, following the submission of 
a reasoned request from Elanco showing good cause and accompanied by a report 
from the Monitoring Trustee (as provided in paragraph 48 of these Additio nal 
Commitments), the Commission finds that the structure of the market has changed to 
such an extent that the absence of influence over the Alternative Divestment Business 
is no longer necessary to render the proposed Concentration compatible with the 
internal market.  
Structure and definition of the Alternative Divestment Business  
14. The Alternative Divestment Business, as described in more detail in Schedule 2, 
includes all assets that contribute to the current operatio n or are necessary to ensure 
the viability and competitiveness of the Alternative Divestment Business at EEA/UK 
level, in particular:  
(i) All rights , title and interests to develop, improve, manufacture and 
commercialise (including the right to conduct the ong oing clinical trials for) the 
products concerned for use in the Field;  
(ii) All contracts related exclusively or primarily to the Alternative Divestment 
Business and, according to the Purchaser ’s needs, the rights and benefits of the 
relevant portion of contrac ts that are material and/or necessary to, but not 
exclusively or primarily related to, the Alternative Divestment Business to the 
extent they are capable of being assigned;  
(iii) Elanco undertakes to use Best Efforts to obtain all necessary third party 
consents where applicable;  
(iv) All Assets;  
(v) All product  licences, permits, authorisations and registrations (“regulatory 
approvals ”) for the products concerned as, and all other product registrations or 
regulatory approvals to the extent exclusively or primarily relatin g to the 
products concerned for use in the Field ; 
(vi) All intellectual property and intellectual property rights (including product -
specific know -how) which are owned, maintained, used and /or controlled by 
Elanco (as applicable) and related to the development , improvement, 
manufacturing and commercialisation of the products concerned for use in the 
Field or for the maintenance of the regulatory approvals being transferred;  
(vii) All customer orders and customer records of the Alternative Divestment 
Business; and  
 
7 
 (viii) the benefit of transitional arrangements, including an R&D and regulatory 
transitional service agreement, transitional manufacturing and supply services, 
and a technology transfer (including know -how), a transitional agreement for the 
manufacture and supply of finished products to the Purchaser, to ensure the 
viability and competitiveness of the Alternative Divestment Business for a 
transitional period of […] following Closing […], to ensure the smooth transfer of 
the Alternative Divestment Business.  
15. The Alte rnative Divestment Business includes a perpetual, irrevocable, royalty -free 
exclusive licence for the Purchaser to develop, improve, manufacture and market the 
Elanco Pipeline Products (including the right to sub -license to third parties) in the 
EEA/UK for  use in the Field upon completion of clinical development.  The clinical 
development of the Elanco Pipeline Products shall be conducted and completed by 
Elanco under the supervision of the Purchaser (to the extent necessary for the 
exploitation of the Elan co Pipeline Products in the Field under the license in the 
EEA/UK) and in accordance with the provisions of Schedule 2. Any of the assets 
outlined in paragraph 14 relating to the Elanco Pipeline Products will be transferred 
upon  completion of clinical development, to the extent necessary or useful for the 
development, improvement, manufacture and marketing of the Elanco Pipeline Products 
in the Field under the licence.  
16. All the Assets, which are necessary to, but not exclusively o r primarily related to, the 
viability and competitiveness of the Alternative Divestment Business and also relate to 
products/businesses retained by the Elanco, shall also be transferred to the Purchaser 
but only to the extent they relate to the Alternative  Divestment Business (at the 
Purchaser ’s option). In the event that materials to be transferred to the Purchaser 
pursuant to the Additional Commitments contain information that is confidential to the 
Elanco/BAH ’s retained businesses and not relevant to the  Alternative Divestment 
Business, the information shall be redacted as appropriate.  
17. For the sake of clarity, the Alternative Divestment Business shall not include any 
physical production assets, equipment or manufacturing units owned or operated by the 
Parties.  Further, the Alternative Divestment Business shall not include any Personnel 
(save as provided for at paragraph 18 below).   
18. At the option of the Purchaser, the Alternative Divestment Business will include the 
Personnel who would reasonably be considered necessary to maintain the viability, 
marketability and competitiveness of the Alternative Divestment Business.  The exercise 
of such option shall be supervised by the Monitoring Trustee and subject to applicable 
local emp loyment legislation and employee consent. Should Elanco not agree with the 
request of the Purchaser, the Monitoring Trustee shall prepare a reasoned opinion 
within seven working days and the Commission shall ultimately decide on the merits of 
the Purchaser  proposal.  
19. The sale of the Alternative Divestment Business shall be structured as an asset sale 
with licences and rights of access to certain shared assets.  Strict firewall procedures 
will be adopted so as to ensure that any competitively sensitive inform ation related to, or 
arising from, transitional arrangements (for example, product roadmaps) will not be 
shared with, or passed on to, anyone outside the Alternative Divestment Business ’s 
operations, beyond what is reasonably required for the compliance wi th obligations 
relating to the transfer of the Alternative Divestment Business and supply of transitional 
services.  
 
8 
 SECTION D.  RELATED COMMITMENTS  
Preservation of viability, marketability and competitiveness  
20. From the Effective Date until Closing, the Parti es shall preserve or procure the 
preservation of the economic viability, marketability and competitiveness of the ESP 
Divestment Business, in accordance with good business practice, and shall minimise, 
as far as possible, any risk of loss of competitive po tential of the ESP Divestment 
Business.  In particular, the Parties undertake:  
(i) not to carry out any action that might have a significant adverse impact on the 
value, management or competitiveness of the ESP Divestment Business or that 
might alter the natur e and scope of activity, the industrial or commercial 
strategy, and/or the investment policy of the ESP Divestment Business;  
(ii) to make available, or procure to make available, sufficient resources for the 
development of the ESP Divestment Business, on the b asis and continuation of 
the existing business plans; and  
21. Furthermore, Elanco undertakes to take all reasonable steps, or procure that all 
reasonable steps are being taken, including appropriate incentive schemes (based on 
industry practice), to encourage all Key Personnel to remain with the ESP Divestment 
Business, and not to solicit or move any Personnel to Elanco ’s remaining business.  
Where, nevertheless, individual members of the Key Personnel exceptionally leave the 
ESP Divestment Business, Elanco sha ll provide a reasoned proposal to replace the 
person or persons concerned to the Commission and the Monitoring Trustee.  Elanco 
must be able to demonstrate to the Commission that the replacement is well suited to 
carry out the functions exercised by those individual members of the Key Personnel.  
The replacement shall take place under the supervision of the Monitoring Trustee, who 
shall report to the Commission.  
Hold-separate obligations  
22. The Parties commit, from the Effective Date until Closing, to procure that the ESP 
Divestment Business is kept separate from the business(es) that the Parties will be 
retaining and, after closing of the Concentration to keep the ESP Divestment Business 
separate from the retained business and to ensure that unless explicitly permitted under 
these Additional Commitments:  
(i) Management and staff of the retained business have no involvement in the ESP 
Divestment Business; and  
(ii) Key Personnel and Personnel can be involved in businesses retained by the 
Parties only to the extent that (a ) they are bound by the terms of non -disclosure 
agreements or similar arrangements preventing the disclosure of any 
information related to the ESP Divestment Business; (b) they are not involved in 
the Overlapping Retained Business; and (c) their involvemen t in other 
businesses retained by the Parties is compatible with their required involvement 
in the ESP Divestment Business.  
23. Until Closing, the Parties shall assist the Monitoring Trustee in ensuring that the ESP 
Divestment Business is managed as a distinct  and saleable entity separate from the 
businesses which they are retaining.  Immediately after the adoption of the Decision, the 
Parties shall appoint a Hold Separate Manager(s) for the ESP Divestment Business.  
The Hold Separate Manager shall manage the E SP Divestment Business independently 
 
9 
 and in the best interests of the business with a view to ensuring its continued economic 
viability, marketability and competitiveness and its independence from the businesses 
retained by the Parties.  The Hold Separate Manager shall closely cooperate with and 
report to the Monitoring Trustee and, if applicable, the Divestiture Trustee. In case of 
replacement of a Hold Separate Manager, the Parties shall provide a reasoned proposal 
to replace the person or person concerne d to the Commission and the Monitoring 
Trustee.  The Parties must be able to demonstrate to the Commission that the 
replacement is well suited to carry out the functions exercised by that individual.  The 
replacement shall take place under the supervision of the Monitoring Trustee, who shall 
report to the Commission.  The Commission may, after having heard the Parties, require 
the Parties to replace a Hold Separate Manager.  
Ring-fencing  
24. The Parties shall implement, or procure to implement, all necessary mea sures to ensure 
that they do not, after the Effective Date, obtain any Confidential Information relating to 
the ESP Divestment Business and that any such Confidential Information obtained by 
the Parties before the Effective Date will be eliminated and not be used by them.  In 
particular, the participation of the ESP Divestment Business in any central information 
technology network shall be severed to the extent possible, without compromising the 
viability of the ESP Divestment Business.  The Parties may obt ain or keep information 
relating to the ESP Divestment Business which is reasonably necessary for the 
divestiture of the ESP Divestment Business or the disclosure of which to the Parties is 
required by law.  
Non-solicitation clause  
25. The Parties undertake, su bject to customary limitations, not to solicit, and to procure 
that Affiliated Undertakings do not solicit, any Key Personnel or Personnel transferred 
with the ESP Divestment Business or, if applicable, the Alternative Divestment Business 
for a period of [ …] years  after Closing.  
Due diligence  
26. In order to enable potential purchasers to carry out reasonable due diligence of the ESP 
Divestment Business and, if applicable, the Alternative Divestment Business, the Parties 
shall, subject to customary confidential ity assurances and dependent on the stage of 
the divestiture process:  
(i) provide to potential purchasers sufficient information as regards the ESP 
Divestment Business and, if applicable, the Alternative Divestment Business;  
(ii) provide to potential purchasers suf ficient information relating to the Personnel 
and allow them reasonable access to the Personnel to the extent required 
under paragraph 9 above (and, if applicable, under paragraph 18 above).  
Reporting  
27. Elanco shall submit written reports in English on potential purchasers of the ESP 
Divestment Business and, if applicable, the Alternative Divestment Business and 
developments in the negotiations with such potential purchas ers to the Commission and 
the Monitoring Trustee no later than 10 days after the end of every month following the 
Effective Date (or otherwise at the Commission ’s request).  Elanco shall submit a list of 
all potential purchasers having expressed interest i n acquiring the ESP Divestment 
Business and, if applicable, the Alternative Divestment Business to the Commission at 
each and every stage of the divestiture process, as well as a copy of all the offers made 
by potential purchasers within five days of their  receipt.  
 
10 
 28. Elanco shall inform the Commission and the Monitoring Trustee on the preparation of 
the data room documentation and the due diligence procedure and shall submit a copy 
of any information memorandum to the Commission and the Monitoring Trustee bef ore 
sending such memorandum out to potential purchasers.  
 Other  
29. The obligations described in paragraphs 12 to 24 above shall also apply to the 
Alternative Divestment Business from the Effective Date until Closing (or some earlier 
time as agreed with the Commission).   
30. As soon as Elanco informs the Monitoring Trustee of its decision to divest the 
Alternative Divestment Business pursuant to paragraph 11, the commitments provi ded 
for in Section D shall no longer apply to the ESP Divestment Business.  
SECTION E.  THE PURCHASER  
31. In order to be approved by the Commission, the Purchaser must fulfil the following 
criteria:  
(i) the Purchaser shall be independent of and unconnected to Elanco  and BAH 
and their Affiliated Undertakings (this being assessed having regard to the 
situation following the divestiture);  
(ii) the Purchaser shall have the financial resources, proven expertise and incentive 
to maintain and develop the ESP Divestment Business or, if applicable, the 
Alternative Divestment Business as a viable and active competitive force in 
competition with the Parties and other competitors;  
(iii) the acquisition of the ESP Divestment Business, or if applicable, the Alternative 
Divestment Business by the Purchaser must neither be likely to create, in light 
of the information available to the Commission, prima facie  competition 
concerns nor give rise to a risk that the implementation of the Additional 
Commitments will be delayed.  In particular, the Pur chaser must reasonably be 
expected to obtain all necessary approvals from the relevant regulatory 
authorities for the acquisition of the ESP Divestment Business or, if applicable, 
the Alternative Divestment Business; and  
(iv) the Purchaser shall have:  
(a) Establish ed capabilities or a track record in the clinical development of 
animal health products in the EEA/UK, including with regard to having 
interactions with relevant EEA -wide and national bodies that decide on 
approval of animal health products;  
(b) Established ca pabilities or a track record in the manufacture, 
commercialisation and distribution of animal health products in the 
EEA/UK;  
(c) Sufficient R&D resources and experience to develop the relevant 
pipeline products included in the scope of the ESP Divestment Busin ess 
or, if applicable, the Alternative Divestment Business; and  
(d) Complementary products and expertise relevant to the ESP Divestment 
Business or, if applicable, the Alternative Divestment Business.  
 
11 
 32. The final binding sale and purchase agreement (and, if appl icable, with respect to the 
Alternative Divestment Business, a licence agreement) (as well as ancillary 
agreements) relating to the divestment of the ESP Divestment Business or, if applicable, 
the Alternative Divestment Business, shall be conditional on th e Commission ’s approval.  
When Elanco has reached an agreement with a purchaser, it shall submit a fully 
documented and reasoned proposal, including a copy of the final agreement(s), within 
one week to the Commission and the Monitoring Trustee.  Elanco mus t be able to 
demonstrate to the Commission that the Purchaser fulfils the Purchaser Criteria and 
that the ESP Divestment Business or, if applicable, the Alternative Divestment Business 
is being sold in a manner consistent with the Commission's Decision and  these 
Additional Commitments.  For the approval, the Commission shall verify that the 
purchaser fulfils the Purchaser Criteria and that the ESP Divestment Business or, if 
applicable, the Alternative Divestment Business are being sold in a manner consisten t 
with the Additional Commitments including their objective to bring about a lasting 
structural change in the market.  The Commission may approve the sale of the ESP 
Divestment Business or, if applicable, the Alternative Divestment Business without one 
or more Assets or any or part of any Personnel, or by substituting one or more Assets or 
parts of any Personnel with one or more different assets or different personnel or 
support, if this does not affect the viability and competitiveness of the ESP Divestmen t 
Business or, if applicable, the Alternative Divestment Business after the sale, taking 
account of the proposed purchaser.  
SECTION F.  TRUSTEE  
I. Appointment procedure  
33. Elanco shall appoint a Monitoring Trustee to carry out the functions specified in these 
Additional Commitments for a Monitoring Trustee.  Elanco commits not to close the 
Concentration before the appointment of a Monitoring Trustee.  
34. If Elanco has not entered into a binding sale and purchase agreement regarding the 
ESP Divestment Business or, i f applicable, the Alternative Divestment Business one 
month before the end of the First Divestiture Period, or if the Commission has rejected a 
purchaser proposed by Elanco at that time or thereafter, Elanco shall appoint a 
Divestiture Trustee.  The appoin tment of the Divestiture Trustee shall take effect upon 
the commencement of the Trustee Divestiture Period.  
35. The Trustee shall:  
(i) at the time of appointment, be independent of Elanco and its Affiliated 
Undertakings;  
(ii) possess the necessary qualifications to car ry out its mandate, for example 
having sufficient relevant experience as an investment banker or consultant or 
auditor; and  
(iii) neither have nor become exposed to a Conflict of Interest.  
36. The Trustee shall be remunerated by Elanco in a way that does not impede the 
independent and effective fulfilment of its mandate.  In particular, where the 
remuneration package of a Divestiture Trustee includes a success premium linked to 
the final sale value of the Alternative Divestment Business, such success premium may 
only be earned if the divestiture takes place within the Trustee Divestiture Period.  
 
12 
 Proposal by Elanco  
37. No later than two weeks after the Effective Date, Elanco shall submit the name or 
names of one or more natural or legal persons whom Elanco proposes to appo int as the 
Monitoring Trustee to the Commission for approval.  No later than one month before the 
end of the First Divestiture Period or on request by the Commission, Elanco shall submit 
a list of one or more persons whom Elanco proposes to appoint as Dive stiture Trustee 
to the Commission for approval.  The proposal shall contain sufficient information for the 
Commission to verify that the person or persons proposed as Trustee fulfil the 
requirements set out in paragraph 25 and shall include:  
(i) the full terms of the proposed mandate, which shall include, for the avoidance of 
doubt, all provisions necessary to enable the Trustee to fulfil its duties under 
these Additional Commitments;  
(ii) the outline of a work plan which describes how t he Trustee intends to carry out 
its assigned tasks; and  
(iii) an indication whether the proposed Trustee is to act as both Monitoring Trustee 
and Divestiture Trustee or whether different trustees are proposed for the two 
functions.  
Approval or rejection by the C ommission  
38. The Commission shall have the discretion to approve or reject the proposed Trustee(s) 
and to approve the proposed mandate subject to any modifications it deems necessary 
for the Trustee to fulfil its obligations.  If only one name is approved, El anco shall 
appoint or cause to be appointed the person or persons concerned as Trustee, in 
accordance with the mandate approved by the Commission.  If more than one name is 
approved, Elanco shall be free to choose the Trustee to be appointed from among the  
names approved.  The Trustee shall be appointed within one week of the Commission ’s 
approval, in accordance with the mandate approved by the Commission.  
New proposal by Elanco  
39. If all the proposed Trustees are rejected, Elanco shall submit the names of at least two 
more natural or legal persons within one week of being informed of the rejection, in 
accordance with paragraphs 23 and 28 of these Additional Commitments.  
Trustee nominated by the Commissi on 
40. If all further proposed Trustees are rejected by the Commission, the Commission shall 
nominate a Trustee, whom Elanco shall appoint, or cause to be appointed, in 
accordance with a trustee mandate approved by the Commission.  
II. Functions of the Trustee  
41. The Trustee shall assume its specified duties and obligations in order to ensure 
compliance with the Additional Commitments.  The Commission may, on its own 
initiative or at the request of the Trustee or Elanco, give any orders or instructions to the 
Trust ee in order to ensure compliance with the conditions and obligations attached to 
the Decision.  
 
13 
 Duties and obligations of the Monitoring Trustee  
42. The Monitoring Trustee shall:  
(i) propose in its first report to the Commission a detailed work plan describing how 
it intends to monitor compliance with the obligations and conditions attached to 
the Decision.  
(ii) oversee, in close co -operation with the Hold Separate Manager, the on -going 
management of the ESP Divestment Business or, if applicable, the Alternative 
Divestme nt Business, with a view to ensuring its continued economic viability, 
marketability and competitiveness and monitor compliance by the Parties with 
the conditions and obligations attached to the Decision.  To that end the 
Monitoring Trustee shall:  
(a) monitor the preservation of the economic viability, marketability and 
competitiveness of the ESP Divestment Business or, if applicable, the 
Alternative Divestment Business, and the keeping separate of ESP 
Divestment Business or, if applicable, the Alternative Dive stment 
Business from the business retained by the Parties, in accordance with 
paragraphs 21 and 24 of these Additional Commitments;  
(b) supervise the management of the ESP Divestment Business or, if 
appli cable, the Alternative Divestment Business as distinct and saleable 
entities, in accordance with paragraph 22 of these Additional 
Commitments;  
(c) with respect to Confidential Information:  
(I) determine all necessary measures to ensure that the Parties do 
not after the Effective Date obtain any Confidential Information 
relating to the ESP Divestment Business or, if applicable, the 
Alternative Divestment Business,  
(II) in particular, strive for the severing of the ESP Divestment 
Business ’s par ticipation in a central information technology 
network to the extent possible, without compromising the 
viability of the ESP Divestment Business or, if applicable, the 
Alternative Divestment Business, as applicable,  
(III) make sure that any Confidential Informat ion relating to the ESP 
Divestment Business or, if applicable, the Alternative 
Divestment Business, obtained by the Parties before the 
Effective Date is eliminated and will not be used by the Parties; 
and 
(IV) decide whether such information may be disclosed to  or kept by 
the Parties as the disclosure is reasonably necessary to allow 
the Parties to carry out the divestiture or as the disclosure is 
required by law;  
(d) monitor the splitting of assets and the allocation of Personnel (to the 
extent required under parag raph 9) between the ESP Divestment 
 
14 
 Business or, if applicable, the Alternative Divestment Business, and the 
Parties or Affiliated Undertakings;  
(iii) propose to the Parties such measures as the Monitoring Trustee considers 
necessary to ensure the Parties ’ compli ance with the conditions and obligations 
attached to the Decision, in particular the maintenance of the full economic 
viability, marketability or competitiveness of the ESP Divestment Business or, if 
applicable, the Alternative Divestment Business, the hol ding separate of the 
ESP Divestment Business or, if applicable, the Alternative Divestment Business, 
and the non -disclosure of competitively sensitive information;  
(iv) review and assess potential purchasers as well as the progress of the 
divestiture process an d verify that, dependent on the stage of the divestiture 
process:  
(a) potential purchasers receive sufficient and correct information relating to 
the ESP Divestment Business or, if applicable, the Alternative 
Divestment Business, and Personnel (to the extent r equired under 
paragraph 9) in particular by reviewing, if available, the data room 
documentation, the information memorandum and the due diligence 
process, and  
(b) potential purchasers are granted reasonable access to Personnel (to 
the extent required under pa ragraph 9); 
(v) act as a contact point for any requests by third parties, in particular potential 
purchasers, in relation to the Additional Commitments;  
(vi) provide to the Commission, sending Elanco a non -confidential co py at the same 
time, a written report within 15 days after the end of every month that shall 
cover the operation and management of the ESP Divestment Business or, if 
applicable, the Alternative Divestment Business as well as the splitting of assets 
and the  allocation of Personnel (to the extent required under paragraph 18) so 
that the Commission can assess whether the business is held in a manner 
consistent with the Additional Commitments and the progress of the d ivestiture 
process as well as potential purchasers;  
(vii) promptly report in writing to the Commission, sending Elanco a non -confidential 
copy at the same time, if it concludes on reasonable grounds that the Parties 
are  failing to comply with these Additional C ommitments;  
(viii) within one week after receipt of the documented proposal referred to in 
paragraph 22 of these Additional Commitments, submit to the Commission, 
sending Elanco a non -confidential copy at the same time , a reasoned opinion 
as to the suitability and independence of the proposed purchaser and the 
viability of the ESP Divestment Business or, if applicable, the Alternative 
Divestment Business after the sale and as to whether the ESP Divestment 
Business is so ld in a manner consistent with the conditions and obligations 
attached to the Decision, in particular, if relevant, whether the sale of the ESP 
Divestment Business without one or more Assets or none, or not all, of the 
Personnel (to the extent required und er paragraph 9) affects the viability of the 
 
15 
 ESP Divestment Business or, if applicable, the Alternative Divestment Business 
after the sale, taking account of the proposed purchaser; and  
(ix) assume the other functions  assigned to the Monitoring Trustee under the 
conditions and obligations attached to the Decision.  
43. If the Monitoring and Divestiture Trustee are not the same legal or natural persons, the 
Monitoring Trustee and the Divestiture Trustee shall cooperate close ly with each other 
during and for the purpose of the preparation of the Trustee Divestiture Period in order 
to facilitate each other's tasks.  
Duties and obligations of the Divestiture Trustee  
44. Within the Trustee Divestiture Period, the Divestiture Trustee s hall sell at no minimum 
price the Alternative Divestment Business to a purchaser, provided that the Commission 
has approved both the purchaser and the final binding sale and purchase agreement 
(and ancillary agreements) as in line with the Commission's Dec ision and the Additional 
Commitments in accordance with paragraphs 21 and 22 of these Additional 
Commitments.  The Divestiture Trustee shall include in the sale and p urchase 
agreement (as well as in any ancillary agreements) such terms and conditions as it 
considers appropriate for an expedient sale in the Trustee Divestiture Period.  In 
particular, the Divestiture Trustee may include in the sale and purchase agreement  such 
customary representations and warranties and indemnities as are reasonably required 
to effect the sale.  The Divestiture Trustee shall protect the legitimate financial interests 
of Elanco, subject to Elanco ’s unconditional obligation to divest at no minimum price in 
the Trustee Divestiture Period.  
45. In the Trustee Divestiture Period (or otherwise at the Commission ’s request), the 
Divestiture Trustee shall provide the Commission with a comprehensive monthly report 
written in English on the progress of th e divestiture process.  Such reports shall be 
submitted within 15 days after the end of every month with a simultaneous copy to be 
sent to the Monitoring Trustee and a non -confidential copy to be sent to Elanco.  
III. Duties and obligations of the Parties  
46. The Parties shall provide and shall cause their advisors to provide the Trustee with all 
such co -operation, assistance and information as the Trustee may reasonably require to 
perform its tasks.  The Trustee shall have full and complete access to any of the  Parties ’ 
or the ESP Divestment Business ’ or, if applicable, the Alternative Divestment Business ’ 
books, records, documents, management or other personnel, facilities, sites and 
technical information necessary for fulfilling its duties under the Additional  Commitments 
and the Parties and the ESP Divestment Business ’ or, if applicable, the Alternative 
Divestment Business ’ shall provide the Trustee upon request with copies of any 
document.  The Parties and the ESP Divestment Business or, if applicable, the 
Alternative Divestment Business ’ shall make available to the Trustee one or more 
offices on their premises and shall be available for meetings in order to provide the 
Trustee with all information necessary for the performance of its tasks.  
47. The Parties shall provide the Monitoring Trustee with all managerial and administrative 
support that it may reasonably request on behalf of the management of the ESP 
Divestment Business or, if applicable, the Alternative Divestment Business. This shall 
include all administr ative support functions relating to the ESP Divestment Business or, 
if applicable, the Alternative Divestment Business which are currently carried out at 
headquarters level.  Elanco shall provide and shall cause its advisors to provide the 
Monitoring Trust ee, on request, with the information submitted to potential purchasers, 
and in particular give the Monitoring Trustee access to the data room documentation 
and all other information granted to potential purchasers in the due diligence procedure.  
Elanco sh all inform the Monitoring Trustee on possible purchasers, submit lists of 
 
16 
 potential purchasers at each stage of the selection process, including the offers made 
by potential purchasers at those stages, and keep the Monitoring Trustee informed of all 
develo pments in the divestiture process.  
48. The Parties shall grant or procure Affiliated Undertakings to grant comprehensive 
powers of attorney, duly executed, to the Divestiture Trustee to effect the sale (including 
ancillary agreements), the Closing and all acti ons and declarations which the Divestiture 
Trustee considers necessary or appropriate to achieve the sale and the Closing, 
including the appointment of advisors to assist with the sale process.  Upon request of 
the Divestiture Trustee, the Parties shall ca use the documents required for effecting the 
sale and the Closing to be duly executed.  
49. Elanco shall indemnify the Trustee and its employees and agents (each an “Indemnified 
Party ”) and hold each Indemnified Party harmless against, and hereby agrees that an  
Indemnified Party shall have no liability to Elanco for, any liabilities arising out of the 
performance of the Trustee ’s duties under the Additional Commitments, except to the 
extent that such liabilities result from the wilful default, recklessness, gros s negligence 
or bad faith of an Indemnified Party.  
50. At the expense of Elanco, the Trustee may appoint advisors (in particular for corporate 
finance or legal advice), subject to Elanco ’s approval (such approval not to be 
unreasonably withheld or delayed) if the Trustee considers the appointment of such 
advisors necessary or appropriate for the performance of its duties and obligations 
under the mandate, provided that any fees and other expenses incurred by the Trustee 
are reasonable.  Should Elanco refuse to approve the advisors proposed by the Trustee 
the Commission may approve the appointment of such advisors instead, after having 
heard Elanco.  Only the Trustee shall be entitled to issue instructions to the advisors.  
Paragraph  50 of these Additional Commitments shall apply mutatis mutandis .  In the 
Trustee Divestiture Period, the Divestiture Trustee may use advisors who served Elanco 
during the Divestiture Period if the Divestiture Trustee considers this in the be st interest 
of an expedient sale.  
51. The Parties agree that the Commission may share Confidential Information proprietary 
to the Parties with the Trustee.  The Trustee shall not disclose such information and the 
principles contained in Article 17 (1) and (2) of the Merger Regulation apply mutatis 
mutandis . 
52. Elanco agrees that the contact details of the Monitoring Trustee are published on the 
website of the Commission's Directorate -General for Competition and they shall inform 
interested third parties, in partic ular any potential purchasers, of the identity and the 
tasks of the Monitoring Trustee.  
53. For a period of 10 years from the Effective Date the Commission may request all 
information from the Parties that is reasonably necessary to monitor the effective 
imple mentation of these Additional Commitments.  
IV. Replacement, discharge and reappointment of the Trustee  
54. If the Trustee ceases to perform its functions under the Additional Commitments or for 
any other good cause, including the exposure of the Trustee to a C onflict of Interest:  
(i) the Commission may, after hearing the Trustee and Elanco, require Elanco to 
replace the Trustee; or  
(ii) Elanco may, with the prior approval of the Commission, replace the Trustee.  
55. If the Trustee is removed according to paragraph 44 of these Additional Commitments, 
the Trustee may be required to continue in its function until a new Trustee is in place to 
whom the Trustee has effected a full hand over of all relevant information. The new 
 
17 
 Trustee shall be appointed  in accordance with the procedure referred to in paragraphs 
21 to 28 of these Additional Commitments.  
56. Unless removed according to paragraph 44 of these A dditional Commitments, the 
Trustee shall cease to act as Trustee only after the Commission has discharged it from 
its duties after all the Additional Commitments with which the Trustee has been 
entrusted have been implemented.  However, the Commission may at any time require 
the reappointment of the Monitoring Trustee if it subsequently appears that the relevant 
remedies might not have been fully and properly implemented.  
SECTION G.  DISPUTE RESOLUTION  
57. In the event that Elanco divests the Alternative Divestm ent Business, the Purchaser 
may avail itself of the Fast -Track Dispute Resolution Procedure described in Annex 2.7 
if it believes that Elanco is failing to comply with these Additional Commitments in 
relation to the development of the Elanco Pipeline Produ cts.   
SECTION H.  THE REVIEW CLAUSE  
58. The Commission may extend the time periods foreseen in the Additional Commitments 
in response to a request from Elanco or, in appropriate cases, on its own initiative.  
Where Elanco requests an extension of a time period , it shall submit a reasoned 
request to the Commission no later than one month before the expiry of th at period, 
showing good cause. This request shall be accompanied by a report from the 
Monitoring Trustee, who shall, at the same time, send a non -confiden tial copy of the 
report to Elanco. Only in exceptional circumstances shall Elanco be entitled to request 
an extension within the last month of any period.  
59. The Commission may further, in response to a reasoned request from Elanco showing 
good cause, waive, modify or substitute, in exceptional circumstances, one or more of 
the undertakings in these Additional Commitments.  This request shall be accompanied 
by a report from the Monitoring Trustee, who shall, at the same time, send a non -
confidentia l copy of th e report to Elanco.  The request shall not have the effect of 
suspending the application of the undertaking and, in particular, of suspending the 
expiry of any time period in which the undertaking has to be complied with.  
SECTION I.  ENTRY INTO FORCE  
60. The Add itional Commitments shall take effect upon the date of adoption of the Decision.  
(Signed)  
 
duly authorised for and on behalf of  
Elanco Animal Health Inc.  
 
duly authorised for and on behalf of  
Bayer AG  
 
18 
 SCHEDULE 1: The ESP Divestment Business  
1. The ESP Dive stment Business consists of:  
(i) The worldwide rights, obligations, title and interest that Elanco will acquire from 
Bayer under the licence agreement dated […] between BAH and […]. (the 
“Licensor ” and the “Licensor Agreement ”), subject to the Licensor not exe rcising 
its termination rights under the Licensor Agreement, which relate to the 
following pipeline products based on the […] compound, being developed by 
BAH pursuant to the Licensor Agreement (the “Early Stage Pipeline Products ”): 
(a) […]; 
(b) […] 
(c) […]. 
[…]. 
2. The ESP Divestment Business as operated to date is not a stand -alone business, rather 
it is integrated into a wider operational and commercial organisation; it will therefore be 
separated from BAH ’s current operations.  As regards its legal and functional stru cture:  
(i) The ESP Divestment Business forms part of BAH ’s companion animal 
therapeutics business segment and part of BAH ’s R&D function.   
(ii) The Early Stage Pipeline Products ’ clinical trials are […].  
3. In accordance with Section B of these Additional Commitment s, subject to third party 
consent where relevant and to the extent in Elanco ’s or BAH ’s ownership, control or 
possession at Closing, the ESP Divestment Business includes, but is not limited to, the 
following on a worldwide basis:  
(i) All rights , title and inte rests in the Early Stage Pipeline Products (including the 
right to conduct the ongoing clinical trials (listed inter alia  in Annex 1.1) and to 
develop, improve, manufacture and commercialise) for use in the Field.  
(ii) All Contracts exclusively or primarily re lated to the Early Stage Pipeline 
Products, and the benefit of the portion of Contracts which are material or 
necessary to, but not exclusively or primarily used in, the ESP Divestment 
Business or the manufacture of the Early Stage  Pipeline Products, inclu ding, 
but not limited to, the Contracts listed in Annex 1.2.  The Parties undertake to 
use Best Efforts to obtain all necessary third -party consents where applicable. 
To the extent any such third -party consent could not be obtained, or any 
contract could n ot be otherwise transferred, the Parties will, as appropriate, 
either: (i) assist the Purchaser and the relevant third party to put in place 
arrangements to transfer any work product and work in progress, and support 
the Purchaser to put in place alternati ve arrangements; or (ii) enter into back -to-
back agreements with the Purchaser under the same terms and conditions as 
 
19 
 the relevant contract for a transitional period of at least […] and up to the 
duration of the existing relevant contract (if longer than […]). 
(iii) All inventory of (to the extent that it has not been sold to a third party), including, 
but not limited to, the inventory listed at Annex 1.3:  
a) Early Stage  Pipeline Products in finished form (together with any 
product packaging materials and any sample s) labelled and held for use 
by the ESP Divestment Business; and  
b) bulk API, work -in-progress, excipients, labelling materials and 
packaging materials used or held for use exclusively or primarily in the 
manufacture of Early Stage  Pipeline Products for use b y the ESP 
Divestment Business.  
(iv) All licences, permits, authorisations and registrations (“Regulatory Approvals ”) 
for the Early Stage Pipeline Products, and all other product registrations or 
regulatory approvals to the extent exclusively or primarily relati ng to the Early 
Stage Pipeline Products for use in the Field . 
(v) All documentation comprising any Regulatory Approvals, and to the extent 
exclusively or primarily related to the Early Stage Pipeline Products for use in 
the Field:  
a) correspondence and reports su bmitted to or received from relevant 
regulatory authorities relating to the research, development, 
manufacture, testing, storage, import, export, use, labelling, distribution, 
sale, offer for sale, commercialisation, licensing, advertising, marketing 
and p romotion (“exploitation ”) of the Early Stage Pipeline Products;  
b) other dossiers or compilations necessary to obtain or maintain any of 
the product registrations and Regulatory Approvals ; 
c) literature safety reports and documents relating to good manufacturing  
practices or issues, animal clinical trials, animal research, including 
laboratory and target animal research and all veterinary master files 
contained or referenced to in the product registrations and Regulatory 
Approvals;  
d) environmental and safety docume ntation; and  
e) data that resulted from any of BAH ’s research or development activities 
related to the Early Stage Pipeline Products , or data referenced in any 
documentation and materials referred to above , 
but in all cases except where explicitly excluded a nd excluding all intellectual 
property rights of any third party unless they are necessary for the functioning of 
 
20 
 the ESP Divestment Business (in which instance, Elanco shall use reasonable 
best efforts to work with the Purchaser to reach an agreement with  the entity 
that is able to grant a licence).    
(vi) All relevant reports, databases and analysis (including all technical, clinical and 
marketing files, protocols, clinical data and studies, reports, plans, books and 
records) relating exclusively or primarily to the ESP Divestment Business in 
such form as maintained by BAH (except where explicitly excluded).  
(vii) All existing marketing materials, plans and forecasts which are specific to the  
Early Stage Pipeline Products in such form as maintained by BAH to the ex tent 
they are exclusively or primarily used or held for exclusive or primary use in the 
ESP Divestment Business (except where explicitly excluded).  
(viii) All intellectual property rights to the extent exclusively or primarily relating to the 
Early Stage Pipeline  Products for use in the Field, including, but not limited to, 
the intellectual property rights listed at Annex 1.4 which, broadly, comprise:  
a) […], which BAH licenses from […] this under the Licensor Agreement;  
b) the patent families relating exclusively or pr imarily to the development 
of the Early Stage Pipeline Products for their use in the Field which 
include ( inter alia ): 
(I) […];  
(II) […]; 
(III) […] 
(IV) […]. 
c) product -specific know -how that is identified or identifiable in tangible 
form that is or has been used for or held fo r use by or on behalf of BAH 
exclusively or primarily for or exclusively or primarily in connection with 
the development, improvement, manufacturing and commercialisation 
of the Early Stage  Pipeline Products for use in the Field;  
d) any copyrights or know -how owned by BAH that comprise or are 
contained or embodied in any of the marketing materials, plans and 
forecasts being transferred; and  
 
e) an exclusive, perpetual, irrevocable, royalty -free sub -licensable and 
transferable licence with respect to  necessary unr egistered intellectual 
property and know -how used or held for use by or on behalf of BAH for 
or in connection with the conduct of the ESP Divestment Business or 
 
21 
 the development, improvement, manufacture or commercialisation of 
the Early Stage  Pipeline Prod ucts. 
(ix) The Key Personnel listed at Annex 1.5.  
(x) The benefit of transitional arrangements to ensure the smooth transfer of the 
ESP Divestment Business and to enable the continuity of the clinical trials , 
including an R&D and regulatory transitional service agr eement, transitional 
manufacturing and supply services, and a technology transfer (including know -
how) to the Purchaser, to ensure the viability and competitiveness of the ESP 
Divestment Business for a transitional period of […] following Closing, […]. 
4. All the Assets, which are necessary to, but not exclusively or primarily related to, the 
viability and competitiveness of the ESP Divestment Business and also relate to 
products/businesses retained by the Parties, shall also be transferred to the Purchaser 
but only to the extent they relate to the ESP Divestment Business (and at the 
Purchaser ’s option). In the event that materials to be transferred to the Purchaser 
pursuant to the Additional Commitments contain information that is confidential to the 
Elanco/BA H’s retained businesses and not relevant to the ESP Divestment Business, 
the information shall be redacted as appropriate.   
5. In the event that materials to be transferred contain information that is confidential to the 
Parties ’ retained businesses and not relevant to the ESP Divestment Business, the 
information shall be redacted as appropriate.  
6. The ESP Divestment Business shall not include any right, title or interest in or to any of 
the assets of the Parties or their Affiliated Undertakings other than thos e specified in 
paragraph 6 of the Additional Commitments and paragraph 3 of this Schedule and, for 
the avoidance of doubt, will not include, ( inter alia ): 
(i) Any right to develop, manufacture, market or sell any other product of the 
Parties other than the Early Stage Pipeline Products for use in the Field.  
(ii) Any asset that is not an Asset, and any asset that does not relate to the 
development, manufacture, marketing and sale of the Early Stage Pipeline 
Products.  
(iii) The Parties ’ names (specifically, Elanco, Bayer or Bayer Animal Health), or any 
trading name of the Parties, together with all variations thereof and all 
trademarks, service marks, domain names, trade names, corporate names, 
logos and other identifiers of source containing, incorporating or associated with 
any of the foregoing.  
(iv) Subject to the Additional Commitments with regard to Personnel and Key 
Personnel in paragraphs 6 and 9, employees, real property and tangible 
personal property of the Parties.  
(v) Any shared Contracts retained by the Parties.  
(vi) Trade Secrets unrelated to the ESP Divestment Business.  
 
22 
 (vii) Human resources and any other emp loyee books and records (subject to 
paragraphs 6 and 9 of these Additional Commitments).  
(viii) Items to the extent applicable law prohibit their transfer.  
7. If there is any ass et or personnel which is not covered by paragraph 3 of this Schedule 
but which is both used (exclusively or not) in the ESP Divestment Business and 
necessary for the continued viability and competitiveness of the  ESP Divestment 
Business, that asset or an adequate substitute will be offered to the Purchaser.  
 
23 
 INDEX OF ANNEXES TO SCHEDULE 1  
1.1 List of Scientific Studies  
1.2 List of Contracts  
1.3 List of Inventory  
1.4 List of IPR  
1.5 List of Key Personnel  
 
 
 
24 
 Annex 1 .1  
List of Scientific Studies  
[…] 
 
Annex 1.2  
List of Contracts  
[…] 
 
Annex 1.3  
List of Inventory  
[…] 
 
Annex 1.4  
List of IPR  
[…] 
 
Annex 1.5  
List of Key Personnel  
[…] 
 
25 
 SCHEDULE 2: The Alternative Divestment Business  
1. The Alternative Divestment Bus iness consists of:  
(i) the EEA/UK -wide rights, title and interests in (including the right to develop, 
improve, manufacture and commercialise in the EEA/UK) Elanco ’s lotilaner  oral 
ectoparasiticide (“Credelio ”), lotilaner being an ectoparasiticide in the 
isoxazoline chemical class; and  
(ii) a licence for the EEA/UK rights to improve, manufacture and market the 
following Elanco […] pipeline products upon completion of clinical development, 
which will continue to be developed by Elanco until completion of clinical 
development (together with […] as set out in paragraph 3.1.3.a)  below, the  
“Elanco  Pipeline Products ”): 
a) […]; 
b) […]; 
c) […]; and  
d) […].  
(iii) a licence for the EEA/UK rights to improve, manufacture and market the 
following Ela nco […] pipeline product:  
a) […]. 
2. The clinical development of the Elanco Pipeline Products will be conducted and 
completed under the supervision of the Purchaser and the Monitoring Trustee (to the 
extent necessary for the exploitation of Elanco Pipeline Prod ucts in the Field under the 
license in the EEA/UK) in the following manner:  
(i) Elanco will devote commercially reasonable efforts (including sufficient 
resources), in particular in terms of budget and personnel, to conclude the 
clinical development of the El anco Pipeline Products without unnecessary 
delays;  
(ii) Purchaser will, acting reasonably and in consultation with Elanco, have the final 
say on all decisions related to the clinical development of the Elanco Pipeline 
Products which  could materially influence t he development and/or market entry 
of the Elanco Pipeline Products in the EEA/UK; and  
(iii) Any disputes between Elanco and Purchaser in relation to the development of 
the Elanco Pipeline Products shall be handled in accordance with the Fast -
Track Dispute Resolu tion Procedure as set out in Annex 2.7.  
3. The Alternative Divestment Business as operated to date is not a stand -alone business, 
rather it is integrated into a wider operation al and commercial organisation;  it will 
 
26 
 therefore be separated from Elanco ’s curren t operations.  As regards its legal and 
functional structure:  
(i) The Alternative Divestment Business forms part of Elanco ’s companion animal 
disease prevention segment which encompasses parasiticides and vaccine 
products for canines and felines, with the Elan co Pipeline Products forming part 
of Elanco ’s R&D function. Please refer to the structure chart provided as Annex 
2.1 for further detail in relation to Credelio.  
(ii) Credelio has been marketed in the EEA since 2018 and has an established 
production process.  The Elanco Pipeline Products ’ clinical trials (listed inter alia  
in Annex 2.2) are conducted.  
(iii) The EEA/UK (a) sales, technical and marketing and (b) manufacturing and 
quality Personnel for the Alternative Divestment Business are located in […].   
4. In accorda nce with Section B, paragraph 6 of these Additional Commitments, subject to 
third party consent where relevant, and to the extent in Elanco ’s ownership, control or 
possession at Closing, the Alternative Divestmen t Business includes, but is not limited 
to, the following on an EEA/UK -wide basis:  
(i) All rights, title and interest in Credelio (including the right to develop, improve, 
manufacture and commercialise) for use in the Field on an EEA/UK wide basis, 
and a perpe tual, irrevocable, royalty -free exclusive licence for the Purchaser to 
improve, market and manufacture the Elanco Pipeline Products (including the 
right to sub -license third parties) in the EEA/UK for use in the Field upon 
completion of clinical developmen t. 
(ii) All Contracts exclusively or primarily related to Credelio and, upon completion of 
clinical development, the Elanco Pipeline Products, and the benefit of the 
portion of Contracts which are material or necessary to, but not exclusively or 
primarily used in, the Alternative Divestment Business, including, but not limited 
to, the Contracts listed in Annex 2.3.  Elanco undertakes to use Best Efforts to 
obtain all necessary third -party consents where applicable. To the extent any 
such third -party consent coul d not be obtained, or any contract could not be 
otherwise transferred, Elanco will, as appropriate, either: (i) assist the 
Purchaser and the relevant third party to put in place arrangements to transfer 
any work product and work in progress, and support th e Purchaser to put in 
place alternative arrangements; or (ii) enter into back -to-back agreements with 
the Purchaser under the same terms and conditions as the relevant contract for 
a transitional period of up to […] and up to the duration of the existing r elevant 
contract ([…]).  
(iii) Inventory (to the extent that it has not been sold to a third party) including but 
not limited to the inventory listed in Annex 2.4 of:  
 
27 
 a) Credelio in finished form (together with any product packaging materials 
and any samples) labell ed and held for use by the Alternative 
Divestment Business; and  
b) bulk API, work -in-progress, excipients, labelling materials and 
packaging materials used or held for use exclusively or primarily in the 
manufacture of Credelio for use by the Alternative Dive stment 
Business.  
(iv) All licences, permits, authorisations and registrations (“Regulatory Approvals ”) 
for Credelio and, upon completion of clinical development, the Elanco Pipeline 
Products  (including but not limited to the ones listed at Annex 5), and all ot her 
product registrations or regulatory approvals to the extent exclusively or 
primarily relating to Credelio for use in the Field or, upon completion of clinical 
development, the Elanco Pipeline Products (as far as is necessary or useful for 
the improveme nt, manufacture and marketing of the Elanco Pipeline Products in 
the Field).  
(v) All documentation comprising the Regulatory Approvals (including but limited to 
the ones identified in Annex 2.5) , and to the extent exclusively or primarily 
related to Credelio f or use in the Field and, upon completion of clinical 
development, the Elanco Pipeline Products (as far as is necessary or useful for 
the improvement, manufacture and marketing of the Elanco Pipeline Products in 
the Field):  
a) correspondence and reports submit ted to or received from relevant 
regulatory authorities relating to the research, development, 
manufacture, testing, storage, import, export, use, labelling, distribution, 
sale, offer for sale, commercialisation, licensing, advertising, marketing 
and promo tion (“exploitation ”) of Credelio or the Elanco Pipeline 
Products;  
b) other dossiers or compilations necessary to obtain or maintain any of 
the product registrations and regulatory approvals in Annex 2.5;  
c) literature safety reports and documents relating to go od manufacturing 
practices or issues, animal clinical trials, animal research, including 
laboratory and target animal research and all veterinary master files 
contained or referenced to in the product registrations and regulatory 
approvals in Annex 2.5;  
d) environmental and safety documentation; and  
e) data that resulted from any of Elanco ’s research or development 
activities related to Credelio or the  Elanco  Pipeline Products , or data 
referenced in any documentation and materials referred to above , 
but in all c ases except where explicitly excluded and excluding all intellectual 
property rights of any third party  unless they are necessary for the functioning of 
 
28 
 the Alternative Divestment Business (in which instance, Elanco shall use 
reasonable best efforts to wor h with the Purchaser to reach an agreement with 
the entity that is able to grant a licence).    
(vi) All relevant reports, databases and analysis (including all technical, clinical and 
marketing files, protocols, clinical data and studies, reports, plans, books and 
records) relating exclusively or primarily to Credelio in such form as maintained 
by Elanco (except where explicitly excluded) and, upon completion of clinical 
development, the Elanco Pipeline Products (as far as is necessary or useful for 
the improvem ent, manufacture and marketing of the Elanco Pipeline Products in 
the Field).  
(vii) All existing marketing materials, plans and forecasts which are specific to 
Credelio and, upon completion of clinical development, the Elanco Pipeline 
Products (as far as is nec essary or useful for the improvement, manufacture 
and marketing of the Elanco Pipeline Products in the Field) in such form as 
maintained by Elanco to the extent they are exclusively or primarily used or held 
for exclusive or primary use in the Alternative Divestment Business (except 
where explicitly excluded).  
(viii) All intellectual property rights exclusively or primarily relating to Credelio and the 
Elanco Pipeline Products for use in the Field (including but not limited to the 
intellectual property rights list ed at Annex 2.6) which, broadly, comprise:  
a) patents or pending patent applications;  
b) domain names;  
c) trademarks;  
d) product -specific know -how that is identified or identifiable in tangible 
form that is or has been used for or held for use by or on behalf of 
Elanc o exclusively for or exclusively in connection with the 
improvement, manufacturing and commercialisation of Credelio for use 
in the Field or, upon completion of clinical development, the Elanco 
Pipeline Products (as far as is necessary or useful for the im provement, 
manufacture and marketing of the Elanco Pipeline Products in the 
Field);  
e) any copyrights or know -how owned by Elanco that comprise or are 
contained or embodied in any of the marketing materials, plans and 
forecasts being transferred; and  
f) an exclu sive, perpetual, irrevocable, royalty -free sub -licensable and 
transferable licence with respect to necessary unregistered intellectual 
property and know -how used or held for use by or on behalf of Elanco 
for or in connection with the conduct of the Divestm ent Business or the 
 
29 
 development, improvement, manufacture or commercialisation of  
Credelio or, upon completion of clinical development, the Elanco 
Pipeline Products (as far as is necessary or useful for the improvement, 
manufacture and marketing of the El anco Pipeline Products in the Field) 
as applicable).   
(ix) the benefit of transitional arrangements to ensure the smooth transfer of the 
Alternative Divestment Business and to enable the continuity of the clinical 
trials , including an R&D and regulatory transi tional service agreement, 
transitional manufacturing and supply services, and a technology transfer 
(including know -how), a transitional agreement for the manufacture and supply 
of finished products to the Purchaser, to ensure the viability and 
competitive ness of the Alternative Divestment Business for a transitional period 
of […] following Closing […]. 
5. All the Assets, which are necessary to, but not exclusively or primarily related to, the 
viability and competitiveness of the Alternative Divestment Busines s and also relate to 
products/businesses retained by the Elanco, shall also be transferred to the Purchaser 
but only to the extent they relate to the Alternative Divestment Business (at the 
Purchaser ’s option). In the event that materials to be transferred  to the Purchaser 
pursuant to the Additional Commitments contain information that is confidential to the 
Elanco/BAH ’s retained businesses and not relevant to the Alternative Divestment 
Business, the information shall be redacted as appropriate.   
6. In the ev ent that materials to be transferred contain information that is confidential to the 
Parties ’ retained businesses and not relevant to the Alternative Divestment Business, 
the information shall be redacted as appropriate.  
7. The Alternative Divestment Business  shall not include any right, title or interest in or to 
any of the assets of the Parties or their Affiliated Undertakings other than those 
specified at paragraph 14 of the Additional Commitments and in paragraph  3 of this 
Schedule and, for the avoidance of doubt, will not include ( inter alia ): 
(i) Any right to develop, manufacture, market or sell (as applicable) any other 
product of the Parties other than Credelio or the Elanco Pipeline Products for 
use in the Field in the EEA/UK.  
(ii) Any asset that is not an Asset, and any asset that does not relate to the 
development, manufacture, marketing and sale of Credelio or the Elanco 
Pipeline Products . 
(iii) The Parties ’ names (specifically,  Elanco, Bayer or Bayer Animal Health), or any 
trading name of the Parties, together with all variations thereof and all 
trademarks, service marks, domain names, trade names, corporate names, 
logos and other identifiers of source containing, incorporating or associated with 
any of the foregoing.  
(iv) Subject to the Additional Commitments with regard to Personnel (to the extent 
required under paragraph 18 of these Additional Commitments), employees, 
real property and ta ngible personal property of Elanco.  
 
30 
 (v) Any shared Contracts retained by Elanco.  
(vi) Trade secrets unrelated to the Alternative Divestment Business.  
(vii) Human resources and any other employee books and records (subject to 
paragraph 18 of these Additional Commitments).  
(viii) Items to the extent applicable law prohibits their transfer.  
8. If there is any asset or personnel which is not covered by paragraph 3 of this Schedule 
but which is both  used (exclusively or not) in the Alternative Divestment Business and 
necessary for the continued viability and competitiveness of the Alternative Divestment 
Business, that asset or an adequate substitute will be offered to the Purchaser.  
 
31 
 INDEX OF ANNEXES  TO SCHEDULE 2  
2.1 Structure Chart for Credelio   
2.2 List of Scientific Studies  
2.3 List of Contracts  
2.4 List of Inventory  
2.5 List of Regulatory Approvals  
2.6 List of IPR  
2.7 Fast-Track Dispute Resolution Procedure  
 
 
32 
 Annex 2.1  
Structure Chart fo r Credelio  
[…] 
 
Annex 2.2  
List of Scientific Studies  
[…] 
 
Annex 2.3  
List of Contracts  
[…] 
 
Annex 2.4  
List of Inventory  
[…] 
 
Annex 2.5  
List of Regulatory Approvals  
[…] 
 
Annex 2.6  
List of IPR  
[…] 
 
 
 Annex 2.7  
Fast-Track Dispute Resolution Procedure  
 
1. Should th e Purchaser wish to avail itself of the fast track dispute resolution procedure, it 
shall inform Elanco and the Monitoring Trustee in writing, setting out in detail the reasons 
leading it to believe that Elanco is failing to comply with the requirements of  the 
Commitments (the “ Request ”). Elanco and the Purchaser will use their Best Efforts to 
resolve all differences of opinion and to settle all disputes that may arise through 
cooperation and consultation within a reasonable period of time not exceeding fif teen 
working days (such period being extendable by mutual consent of Elanco and the 
Purchaser) after receipt of the Request (the “ Consultation Phase ”).  
 
2. Following receipt of the Request, the Monitoring Trustee shall present its own proposal (the 
“Trustee Proposal ”) for resolving the dispute within eight working days, specifying in 
writing the action, if any, to be taken by Elanco in order to ensure compliance with the 
Commitments and be prepared, if requested, to facilitate the settlement of the dispute.  
 
3. Should Elanco and the Purchaser fail to resolve their differences of opinion in the 
Consultation Phase, the Purchaser may serve a notice (the “ Notice ”), in the sense of a 
request for arbitration, to the International Chamber of Commerce (the “ Arbitral 
Institution ”), with a copy of such Notice and request for arbitration to Elanco and to the 
Monitoring Trustee.  
 
4. The Notice shall set out in detail the dispute, difference or claim (the “Dispute ”) and shall 
contain, inter alia , all issues of both fact and law , including any suggestions as to the 
procedure, and all documents relied upon shall be attached (e.g. documents, agreements, 
expert reports and witness statements). The Notice shall also contain a detailed description 
of the suggested action to be underta ken by Elanco and the Trustee Proposal, including a 
comment as to its appropriateness.  
 
5. Elanco shall, within ten working days from receipt of the Notice, submit its answer (the 
“Answer ”), which shall provide detailed reasons for its conduct and set out, inter alia , all 
issues of both fact and law, including any suggestions as to the procedure, and all 
documents relied upon (e.g. documents, agreements, expert reports and witness 
statements). The Answer shall, if appropriate, also contain a detailed descript ion of the 
action Elanco proposed to take and the Trustee Proposal (if not already submitted), 
including a comment as to its appropriateness.  
 
Appointment of the Arbitrators  
 
6. The Arbitral Tribunal shall consist of three persons. The Purchaser and Elanco (the 
“Parties ”) shall each nominate an arbitrator in the Notice and the Answer respectively. The 
arbitrators nominated by the Parties shall, within five working days of the nomination of the 
arbitrator in the Answer, nominate the chairman arbitrator, makin g such nomination known 
to the Parties and the Arbitral Institution which shall forthwith confirm the appointment of all 
three arbitrators.  
 
7. Should a Party fail to nominate an arbitrator, or if the two arbitrators fail to agree on the 
chairman arbitrator,  the default appointment(s) shall be made by the Arbitral Institution.  
 
34 
  
8. The three -person arbitral tribunal are herein referred to as the “ Arbitral Tribunal ”.  
 
Arbitration Procedure  
 
9. The Dispute shall be finally resolved by arbitration under the ICC Rule s of Arbitration, with 
such modifications or adaptions as foreseen herein or necessary under the circumstances 
(the “Rules”). The arbitration shall be conducted in London (United Kingdom) in the English 
language.  
 
10. The procedure shall be a fast -track proced ure. For this purpose, the Arbitral Tribunal shall 
shorten all applicable procedural time limits under the Rules as far as admissible and 
appropriate in the circumstances. The Parties shall consent to the use of e -mail for the 
exchange of documents.  
 
11. The A rbitral Tribunal shall, as soon as practical after the confirmation of the Arbitral 
Tribunal, hold an organisational conference to discuss any procedural issues with the 
Parties. Terms of reference shall be drawn up and signed by the Parties and the Arbitr al 
Tribunal at the organisational meeting or immediately thereafter and a procedural timetable 
shall be established by the Arbitral Tribunal. An oral hearing shall, as a rule, be established 
within a month of the confirmation of the Arbitral Tribunal.  
 
12. In order to enable the Arbitral Tribunal to reach a decision, it shall be entitled to request 
any relevant information from the Parties, to appoint experts and to examine them at the 
hearing, and to establish facts by all appropriate means. The Arbitral Tribu nal is also 
entitled to ask for assistance by the Monitoring Trustee in all stages of the procedure if the 
Parties agree.  
 
13. The Arbitral Tribunal shall not disclose confidential information and shall apply the 
standards attributable to confidential informat ion under the Merger Regulation. The Arbitral 
Tribunal may take the measures necessary for protecting confidential information in 
particular by restricting access to confidential information to the Arbitral Tribunal, the 
Monitoring Trustee, and outside cou nsel and experts of the Parties.  
 
14. Each Party shall have the burden of proving the facts relied on to support its claim or 
defence.  
 
Involvement of the Commission  
 
15. The Commission shall be allowed and enabled to participate in all stages of the procedure 
by: 
 
i. Receiving all written submissions made by the Parties;  
ii. Receiving all orders and other documents exchanged by the Arbitral Tribunal 
with the Parties (including Terms of Reference and procedural timetable);  
iii. Giving the Commission the opportunity to file ami cus curiae briefs; and  
iv. Being present at the hearing(s) and being allowed to ask questions to the 
Parties, witnesses and experts.  
 
16. The Arbitral Tribunal shall forward, or order the Parties to the Arbitration to forward, the 
documents mentioned to the Commis sion without delay.  
 
 
35 
 17. In the event of disagreement between the Parties regarding the interpretation of the 
Commitments, the Arbitral Tribunal may seek the Commission’s interpretation of the 
Commitment before finding in favour of either Party and shall be bo und by the 
interpretation.  
 
Decisions of the Arbitral Tribunal  
 
18. The Arbitral Tribunal shall decide the Dispute on the basis of the Commitments and the 
Decision. Issues not covered by the Commitments and the Decision shall be decided (in 
the order as stated ) by reference to the Merger Regulation, EU law and general principles 
of law common to the legal orders of the Member States without a requirement to apply a 
particular national system. The Arbitral Tribunal shall take all decisions by majority vote.  
 
19. Upon request of either Party, the Arbitral Tribunal may make a preliminary ruling on the 
Dispute. The preliminary ruling shall be rendered within one month after confirmation of the 
Arbitral Tribunal, shall be applicable immediately and, as a rule, remain in force until a final 
decision is rendered.  
 
20. The Arbitral Tribunal shall, in the preliminary ruling as well as in the final decision, specify 
the action, if any, to be taken by Elanco or an Affiliated Undertaking in order to comply with 
the Commitments. The final decision shall be final and binding on the Parties and shall 
resolve the Dispute submitted to the Arbitral Tribunal. The final decision shall also 
determine the reimbursement of the costs of the successful Party and the allocation of the 
arbitration costs.  
 
21. The final decision shall, as a rule, be rendered within three months after the confirmation of 
the Arbitral Tribunal. The timeframe shall, in any case, be extended by the time the 
Commission takes to submit an interpretation of the Commitments if a sked by the Arbitral 
Tribunal.  
 
22. The Parties shall propose a non -confidential version of the final decision, without business 
secrets. The Commission may publish the non -confidential version of the decision.  
 
23. Nothing in the arbitration procedure shall affec t the power of the Commission to take 
decisions in relation to the Commitments in accordance with its powers under the Merger 
Regulation.