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, 17.08.2020  
C(2020 ) 5738 final  
PUBLIC VERSION  
 
To the notifying party  
Subject : Case M.9711 – Alliance Healthcare Deutschland AG  / GEHE Pharma 
Handel GmbH  
Commission decision pursuant to Article 6 (1)(b) of Council Regulation 
No 139/20041 and Article 57 of the Agreement on the European Economic 
Area2 
Dear Sir or Madam,  
(1) On 10 July 2020 , the European Commission received notification of a proposed 
concentration pursuant to Article 4 of the Merger Regulation by which  Alliance 
Healthcare Deutschland AG (“Alliance” , Germany ) acquires sole control of Gehe 
Pharma Handel GmbH, Gehe Immobilien GmbH & Co. KG and Gehe Immobilien 
Verwaltungs -GmbH (together “Gehe” or the “Target” , Germany ) (the 
“Transaction”) .3 (Alliance  is designated hereinafter as the ' Notifying Party' and 
together with Gehe as the 'Parties '.) 
                                                 
1  OJ L 24, 29.1.2004, p. 1 (the “Merger Regulation ”). With effect from 1 December 2009,  the Treaty on the 
Functioning of the European Union ( “TFEU ”) has introduced certain changes, such as the replacement of  
“Community ” by “Union ” and “common market ” by “internal market ”. The terminology of the TFEU will 
be used throughout this decision.  
2  OJ L 1, 3.1.1994, p. 3 (the “EEA Agreement”).  
3  Publication in the Official Journal of the European Union No C 235 , 17.7.2020 , p. 6. 
In the published version of this decision, 
some information has been omitted 
pursuant to Article 17(2) of Council 
Regulation (EC) No 139/2004 concerning 
non-disclosure of business secrets and other  
confidential information. The omissions are 
shown thus […] . Where possible the 
information omitted has been replaced by 
ranges of figures or a general description.  
 
 
2 1. THE PARTIES  
(2) Alliance is a full -line pharmaceutical wholesaler in Germany, distributing the full 
range of prescription pharmaceuticals (“Rx”), over -the-counter medicines (“OTC”) 
and other products to retail pharmacies in the whole of Germany. To that end, 
Alliance operates 24 wholesale depot s across the country. Alliance is solely 
controlled by the US pharma retail and wholesale company Walgreens Boots 
Alliance Inc. (“ WBA ”). To a minor exten t, Alliance is engaged in activities related 
to pharma -wholesaling, namely (i) the sale of own label products to pharmacies,4 (ii) 
the provision of logistics services to pharmaceutical manufacturers, and (iii) the 
provision of data services to manufacturers, wholesalers, pharmacies and other 
players in the pharmaceutical industry.  
(3) Gehe is a full -line pharmaceutical wholesaler in Germany, distributing the full range 
of Rx, OTC and other products to retail pharmacies in the whole of Germany.5 It 
                                                 
4 The Commission notes that both Parties sell to a limited extent own label products. With respect to 
Alliance, these include diagnostic pro ducts like blood pressure monitors, pregnancy tests or thermometers, 
orthopaedic bandages, incontinence products and well -being products such as earplugs. Concerning Gehe, 
these own -label products include nutrition preparations like vitamins, diagnostic pr oducts like pregnancy 
tests, blood pressure monitors or thermometers, skin care products incontinence products, sun protection 
products as well as products such as masks or gloves. These sales will not be further considered in this 
decision, for the follow ing reasons:  
1. The relevance of the own -label business is negligible in the context of the Transaction. Own label 
products accounted for [0 -5]% of Alliance’s total revenue in 2019, and for [0 -5]% of Gehe’s total 
revenue in 2019. Moreover, products as sold b y the Parties are generally not only available in 
pharmacies, but also in drugstores and supermarkets.  
2. Horizontal overlaps, to the extent that they arise in the different product categories  remain modest, 
with combined market share below 5 % in the German  market for the vast majority of products sold 
to pharmacies and below 10 % for urine tests (incl. ovulation and pregnancy tests)  sold to pharmacies 
in Germany. Regarding the latter it has to be pointed out that these products are also sold in drug 
stores and supermarkets. Therefore, market shares can be expected to be lower (See Form CO para 
6.76).  
3. No vertical effects regarding the  own-label business occur due to the Transaction. At the upstream 
level, combined market shares remain below 30%. Thus, input foreclosure can be excluded. Likewise, 
customer foreclosure concerns appear unlikely given that the Parties’ combined market share  in 
pharmaceutical wholesaling remains below 30% at national level and only surpasses 30% on certain 
regional markets.    
4. No concerns were raised during the market investigation concerning own -label products. None of the 
responding pharma -wholesaling compa nies considered the Transaction to have an effect in the 
context of the Parties’ sale of own -label products. One competitor stated, inter alia  with respect to the 
sale of own label products: “Since those markets do not have any particular relevance, the 
concentration will not have a particular relevance [on these markets].” (original: “Da diese Märkte 
keine besondere Bedeutung haben, kann der Zusammenschluss auch keine besonderen Auswirkungen 
haben.”)  
 
5 Gehe has limited export sales of pharmaceutical produ cts to wholesalers in Norway and the UK, where WBA 
is active as a wholesaler. The Parties characterize these sales as merely driven [CONFIDENTIAL] . These 
activities are to be distinguished from pharmaceutical wholesaling in Germany, where Gehe operates var ious 
local depots and supplies pharmacies typically three times a day. In 2019 Gehe had a market share of [0-5]% 
with a generated turnover of EUR […] in a national pharmaceutical market in Norway, and a market share of 
[0-5]% with a turnover of EUR […] million in a national pharmaceutical market in the UK (of which only 
EUR […] million was generated with sales to external wholesalers, as the remainder of this turnover was 
mostly generated with sales for clinical studies). Sinc e these activities  are very limited and since no 
 
 
 
3 operates 18 wholesale depot s across the country. Gehe is currently solely controlled 
by the US pharma wholesale company McKesson Corporation (“McKesson”). To a 
minor exten t, Gehe also sells own label products to pharmacies , as further explained 
in footnote 4 . 
2. THE OPERATION  
(4) On 11 December 2019, Alliance entered into an agreement with McKesson Europe 
AG, a subsidiary of McKesson, according to which all shares of Gehe will be 
acquired by Alliance in exchange for a non -controlling m inority stake of 30% of the 
equity in Alliance. Alliance therefore acquires sole control over Gehe. Consequently, 
the Transaction give s rise to a concentration within the meaning of Article 3(1)(b) of 
the Merger Regulation.  
3. EU DIMENSION  
(5) The undertakings co ncerned have a combined aggregate world -wide turnover of 
more than EUR 5 000 million6 (WBA  EUR 115 890 million and Gehe EUR […] 
million) . Each of them has an EU -wide turnover in excess of EUR 250 million  
(WBA  EUR […] million, Gehe EUR […] million) , but the y do not  each achieve 
more than two -thirds of their aggregate EU -wide turnover within one and the same 
Member State.7 The notified operation therefore has an EU dimension  within the 
meaning of Article 1(2) of the Merger Regulation .  
4. COMPETITIVE ASSESSMEN T 
4.1. Market definitions  
4.1.1.  Product market definition: Wholesale of pharmaceutical products  
(6) Pharmaceutical wholesaling comprises  the delivery of pharmaceutical products to 
customers such as pharmacies, and potentially hospitals or doctors, but not to end -
customers. Therefore, pharmaceutical wholesalers constitute the link between the 
manufacturer of pharmaceutical products and profe ssional customers who further 
sell or use these products. Typically, pharmaceutical wholesalers operate one or a 
network of depot s from where they deliver to customers.  
4.1.1.1.  Past decisional practice  
(7) In previous decisions, the Commission has concluded that phar maceutical 
wholesaling by full -liners would form a separate product market from 
pharmaceutical wholesaling by short -liners.8 Full-line wholesalers aim  at supplying 
customers with the full complement of pharmaceutical products, whereas short -line 
                                                                                                                                                      
competition concerns can reasonably be expected, these markets will not be further considered in this decision.  
See Form CO, para 6.61 et seqq.  
6  Turnover calculated in accordance with Article 5 of the Merg er Regulation . 
7  See Form C O, para.  4.6. 
8  M.7935 - McKesson Deutschland / Belmedis / Cophana / Espafarmed / Alphar Partners / Sofiadis, para. 
16. 
 
 
4 wholesaler s only offer part of the product range. Specifically with respect to 
Germany, the Commission has concluded on two occasions that pharmaceutical full -
line wholesaling was a distinct product market from pharmaceutical short -line 
wholesaling.9 In other cases concerning countries other than Germany, however, the 
Commission considered full-liners and short -liners to be potential segments of 
pharmaceutical wholesaling, and left the exact product market definition open.10 
(8) In some cases, the Commission has specifica lly discussed whether  direct deliveries 
by manufacturers of pharmaceutical products11 may belong to the same product 
market as pharmaceutical wholesal ing. In M.2573 – A&C / Grossfarma , the 
Commission noted that full -line wholesaling “ can be distinguished fr om the direct 
distribution of products by manufacturers to pharmacists ”, but did not conclude on a 
product market definition .12 In M.6044 – Alliance Boots / Andrae -Noris Zahn , and 
with respect to Germany, however, the Commission concluded  that activities of full -
line wholesalers “are to be distinguished from the direct distribution of products by 
manufacturers to pharmacists ”.13 In other decisions, the Commission did not 
specifically discuss direct deliveries, but referred consistently to a  product market of 
pharmaceutical wholesaling14 or full -line wholesaling.15  
(9) Furthermore, the Commission has considered a further sub -segmentation of 
pharmaceutical wholesaling according to different product groups. Specifically, the 
Commission considered po ssible segmentation between prescription medicine 
(“Rx”) and over -the-counter products (“OTC”); originator, generic and parallel 
import medicine; and  whether the medicine may be sold in retail pharmacies under 
the supervision of a pharmacist only, or also in other outlets such as supermarkets.16 
Ultimately, the product market definition was left open regarding  all potential 
segments according to product groups as mentioned above.  
(10) Finally, the Commission has considered a potential segmentation of pharmaceuti cal 
wholesaling accor ding to customer groups, namely between (i) retail pharmacies, (ii) 
doctors and (iii) hospitals.17 Ultimately, also the product market definition was left 
open regarding all potential segments according to customer groups.18 
                                                 
9  M.5433 - Sanacorp / V.D. Linde, para. 8; M.6044 – Alliance Boots / Andrae -Noris Zahn, para.14.  
10  M.7494  – Brocacef / Mediq Netherlands, para. 15; M.7818 - McKesson / UDG Healthcare, paras.15 et 
seqq; M.4301 Alliance Boots / Cardinal Health, para. 14.  
11  Direct deliveries typically concern only specific products of the respective manufacturer, and therefore  not 
the whole product range of pharmaceutical products.  
12  M.2573 – A&C / Grossfarma, para.12  
13  M.6044 – Alliance Boots / Andrae -Noris Zahn, para.14.  
14  M.7818 - McKesson / UDG Healthcare.  
15  M.7935 - McKesson Deutschland / Belmedis / Cophana / Espafarme d / Alphar Partners / Sofiadis, para 
16; M.5433 - Sanacorp / V.D. Linde, para. 8. 
16  M.7818 - McKesson / UDG Healthcare, para. 15; M.7494 – Brocacef / Mediq Netherlands, para. 15; 
M.4301 – Alliance Boots / Cardinal Health, para. 15.  
17  M.7818 - McKesson / UDG Healthcare, para. 15; M.7494 – Brocacef / Mediq Netherlands, para. 15; 
M.4301 – Alliance Boots / Cardinal Health, para. 16.  
18  Specifically with respect to the Netherlands, the Commission has pointed at a possible segmentation of th e 
pharmaceutical wholesaling market according to the categories of wholesalers, products and customers, as 
discussed in paragraphs 7 to 10 of this Decision, but left the product market definition open; see M.7494 – 
Brocacef / Mediq Netherlands, para. 15.  
 
 
5 4.1.1.2.  The Notifyin g Party’s view  
(11) The Notifying Party submits that direct sales from pharmaceutical manufacturers to 
retail pharma cies should be considered to for m part of the same relevant product 
market  as the market for pharmaceutical wholesaling , as pharmacies would use 
direct deliveries as an alternative source of supply. Even though the depth of 
assortment an d frequency of delivery would differ between deliveries by wholesalers 
and manufacturers, both would compete for orders of pharmacies.19  
(12) The Notifying Party does not argue that short -liners should form part of the same 
product marked as full -line pharmaceutical wholesalers .20 The Notifying Party 
further states that the market should not be further delineated by product groups such 
as Rx, OTC and others, as the condi tions of competition would not differ between 
these groups.21 Finally, the Notifying Party argues that no segmentation according to 
customer groups was needed, as deliveries to hospitals would only account for less 
than [CONFIDENTIAL]  of the total turnover of the Parties.22 
4.1.1.3.  The Commission’s assessment  
(13) The Commission notes t hat in past decisional practice , and specifically  regarding 
Germany, it has defined  a product market for full-line pharmaceutical wholesaling 
separate from direct deliveries by manufacturer s and deliveries by short -liners , as 
discussed under Section 4.1 .1.1.  
(14) The Commission notes that, in the market investigation, competitors indeed tended 
to consider direct deliveries to be part of the same product market as pharmaceutical 
wholesalers.23 Indeed, the Notifying Party provides that direct deliveries account for 
around 17% in terms of value of all deliveries of pharmaceutical products to 
pharmacies.24 This figure was broadly confirmed in the market investigation.25 
(15) However, f rom the perspective of the customer, there are clear reasons why direct 
deliveries do not form part of the same product market as pharmaceutical 
wholesaling. In the market investigation, around 80% of all pharmacies stated that 
they would receive  three or more deliveries per da y by their main pharmaceutical 
wholesaler.26 The rationale behind this high number of daily deliveries is that, under 
German law, pharmacies may not substitute Rx medicines with a product with the 
same active ingredient.27 Therefore, pharmacies rely on havin g short -term access to 
the full product range of Rx products. However, pharmacies can only store around 
5,000 different pharmaceuticals at a time, while wholesalers store around 40,000 Rx 
products in their depot s.28 Therefore, a pharmacy relies on a pharmac eutical 
wholesaler in order to be in a position to provide a customer reliably and on short 
                                                 
19  See Form CO, para.  6.9. 
20  See Form CO, para. 6.3.  
21  See Form CO, para. 6.10.  
22  See Form CO, para. 6.11.  
23   See response to Questionnaire Q1, question 8.  
24  See Form CO, para.  6.5.  
25  See responses to Quetionnaires Q2 – Q43, question 8.  
26  See responses to Questionnaires Q2 – Q43, question 4.  
27  See Form CO, para. 6.4.    
28  See Form CO, para.  6.4. 
 
 
6 notice with the medicine as prescribed by the doctor. As one pharmacists explained: 
“It is logistically not feasible to receive the needed pharmaceutical products w ithin 
a sufficiently short timeframe from manufacturers”. Furthermore,  “having a large 
number of pharmaceutical products in stock is not reasonable, as the prescribed 
medicines change”.29 In general, pharmacies pointed to limited storage space, 
additional a dministrative effort s, for instance due to increasing accounting efforts , 
longer times of delivery and the existence of minimum order volumes that would 
limit the scope for pharmacies to order directly from manufacturers.30 Consequently, 
pharmacies predomin antly stated that they would not be in a position to source a 
higher share of products directly from manufacturers.31  
(16) For similar reasons as stated above in the context of direct deliveries by 
manufacturers, the Commission considers that there is no reason to deviate from past 
decisional practice to regard pharmaceutical full -line wholesaling as separate from 
pharmaceutic al short -line wholesaling. A majority of competitors argued that short -
liners would be part of the same product market as full -liners , as they would 
generally both compete for orders by pharmacies.32 However, with regard to 
customers, similar arguments appl y as laid out in paragraph (1 5) in the context of 
direct deliveries. Because of regulatory requirements, pharmacies depend on having 
short -term access to the whole product range, which is a service only a full-line 
pharmaceutical wholesaler can reliably pr ovide. This was confirmed in the market 
investigation, as reliability and the number of products available where named by 
pharmacies as very important criteria when choosing a pharmaceutical wholesaler.33 
Therefore, the Commission see s no reason to deviate from past decisional practice 
with respect to Germany in the present case.   
(17) With respect to a potential segmentation  according to product groups , the 
Commission has no reason to further segment the market for example into the 
deliveries of Rx, OTC and othe r products. In the market investigation, a majority of 
competitors stated that they would generally deliver all types of products to all 
customers. The remaining competitors submitted that it would be rare that a 
customer would not source all three types o f products.34 The Notifying Party has 
submitted market shares also separated for Rx, OTC and other pharmaceutical 
products.35 The Commission notes that market shares of the Parties would not 
change materially if the market for pharmaceutical wholesaling was further 
segmented into these product groups.  
(18) Similarly, the Commission has no reason to further segment the market according to 
customer groups like pharmacies, hospitals or doctors.  In the market investigation, 
one competitor stated that doctors usually would not source from pharmaceutical 
wholesalers due to national regulation.36 In general, feedback from competitors 
suggest s that customer groups other than pharmacies account only fo r a negligible 
                                                 
29  See response to Questionnaire Q4, question 8.1.1.  
30  See responses to Q uestionnaires Q2 – Q43, question 8.1.1.  
31  See responses to Questionnaires Q2 – Q43, question 8.1.  
32  See response to Questionnaire Q1, question 7.  
33  See response to Questionnaires Q2 - Q43, question 11.  
34  See response to Questionnaire  Q1, question  
35  Form CO, Annex 3.2  
36  See response to Q1, question  9.1.  
 
 
7 part of the turnover of pharmaceutical wholesalers.37 This is in line with the 
Notifying Party’s statement that Alliance and Gehe would o nly generate less than 
[CONFIDENTIAL]  of their turnover  from sales to hospitals. Consequently, the 
Commis sion notes that a segmentation between customer groups would not change 
the competitive assessment, as competition between the Parties and their competitors 
basically only concerns deliveries to pharmacies.   
(19) In light of the foregoing, the Commission consid ers full -line pharmaceutical 
wholesaling excluding direct deliveries from manufactures as the relevant product 
market for the assessment of the competitive impact of the Transaction.   
4.1.2.  Geographic market definition  
4.1.2.1.  Past decisional practice  
(20) The Commission has  consistently considered pharma ceutical wholesaling to be 
national or regional in scope, but ultimately left the definition open between a 
national or regional geographic market.38 In M.7935 – McKesson Deutschland / 
Belmedis / Cophana / Espafarmed / Alphar Partners / Sofiadis , the Commission 
noted that the geographic market for full -line pharmaceutical wholesaling “ might be 
subnational due to the emphasis placed by customers on the frequency and speed of 
delivery, and the resulting need for wholesalers to co mpete on a sub -national basis 
and to have depots at regional level”.39  
(21) With respect to Germany, the Commission left the geographic market definition 
open between a national or sub -national scope.40 In M.5433 – Sanacorp / V.D. Linde , 
the Commission further s pecified that a potential regional market for Germany may 
be defined according to federal states or following the approach by the German 
Federal Cartel office, considering a catchment area around each depot of 2 hours and 
14 minutes driving time (which is calculated as 2.5 hours of driving time minus eight 
to ten stops at pharmacies of two minutes each).41 The exact geographic market 
definition was left open.  
(22) Regarding the Netherlands, the Commission has previously pointed at past practice 
of defining a nat ional or sub -national market for pharmaceutical wholesaling, but left 
the market definition open.42 
4.1.2.2.  The Notifying Party’s view  
(23) The Notifying Party does not take a specific view as to whether the market should be 
defined to be national or sub -national.43  
                                                 
37  See response to  Q1, question 9 ; assessment based on non -confidential information provided by four 
competitors.  
38  M.7935 - McKesson Deutschland / Belmedis / Cophana / Espafarmed / Alphar Partners / Sofiadis , para 
18; M.7818 - McKesson / UDG Healthcare, para. 24; M.7494 – Brocacef / Mediq Netherlands, para. 18.  
39  M.7935 - McKesson Deutschland / Belmedis / Cophana / Espafarmed / Alphar Partners / Sofiadis , para 
18. 
40  M.6044 – Alliance Boots / Andrae -Noris Zahn, para.15 , 16. 
41  M.5433 - Sanacorp / V.D. Linde, para. 9. 
42  M.7494 – Brocacef / Mediq Netherlands, para. 18.  
 
 
8 4.1.2.3.  The Commission’s assessment  
(24) The Commission notes that the competitive situation may differ significantly 
between Member States, due to  geography an d the impact of the respective national 
legislation .44 With respect to Germany, the market investigation  suggests  that the 
market for pharmaceutical wholesaling is sub -national in scope. As described  above 
in more detail , the clear majority of pharmacies receive three or more daily 
deliveries from their main wholesaler.45 It is apparent that providing three or more 
deliveries per day requires a local presenc e by the respective wholesaler, given the 
size of Germany that excludes multiple daily deliveries from only one central 
location of the wholesaler. In fact, the Parties and their main competitors each 
operate a netw ork of depot s across Germany to address exactly this need of a local 
presence.46 Therefore, the  Commission considers that there are strong arguments for 
assessing competition between pharma ceutical  wholesalers on sub -national level.  
(25) Regarding the scope of sub-national markets, the Commission does not consider that 
a segmentation by federal states would accurately reflect competition between 
pharmaceutical wholesalers. In fact, the 16 German federal states differ greatly both 
in geographic size and in population.47 Moreover, the Commission is not aware of 
any regulatory requirements that would prevent pharma ceutical  wholesalers to sell 
across federal states.48 The Commission therefore considers that a geographic 
segmentation according to German federal st ates would not allow to accurately 
asses s the actual competitive strengths of the Parties in pharmaceutical pharma 
wholesaling in Germany.  
(26) The m arket investigation rather suggest s that the approach of defining the 
geographic market of a catchment area of 2 hours 14 minutes driving time around 
each depot, as applied by the German Federal Cartel Office in past decisions, is the 
more appropriate approach to assess competition in German pharmaceutical 
wholesaling. First, pharmacies confirmed that they would ge nerally receive at least 
three deliveries per day from their main wholesalers.49 The driving time of 2 hours 
14 minutes from a depot to a pharmacy was calculated exactly to address this 
practice .50 Second, although the Commission notes that a fixed driving t ime can only 
be a proxy for the actual market, data provided by the Parties show that 2 hours 14 
                                                                                                                                                      
43  See Form CO, para. 6.31.  
44  As described in paragraph 18 of this Decision  regarding Germany.  
45  See responses to Questionnaires Q2 – Q43, question 4.  
46  Alliance operates 24 depot s across Germany , while Gehe has 18 depots ; see Form CO, sections 1.4. a nd 
1.5.  
47  The federal state of Bavaria, for instance, is of a size of 70 000 square kilometres, while the smallest state, 
Bremen, only is of the size of 4 20 square kilometres.  
48  In fact, those sales are common practice. Alliance, for example operates a depot in Itzehoe, which is 
located in the federal state of Schleswig -Holstein. However, [CONFIDENTIAL] of customers that receive 
deliveries from that depot are located in the city of Hamburg, belonging to the federal state of Hamburg. 
Alliance’s depot in the federal state of Bremen, in turn, supplies a customer base of which 
[CONFIDENTIAL] are located outside of  Bremen; see list of customer contact details of  Alliance and 
Gehe, supplied by the Notifying Party on 21 April 2020.  
49  See Form CO, para 6.4; reply to question 11 of Questionnaire Q1.  
50  The Federal Cartel office considered that 2.5 hours of driving time was the maximum to provide 
pharmacies with three deliveries per day. If a route comprises stops at eight pharmacies, and each stop 
would take 2 minutes, this would result in a catchment area of 2 hours 14 minutes of driving time; see 
Form CO, section 6.30.  
 
 
9 minutes driving time reflects the competitive reality well. Gehe, for instance, 
provided data for customer pharmacies located furthest away from each of their 18 
depot s. For [CONFIDENTIAL]  depot s, the maximum driving time was shorter than 
2 hours 14 minutes, while for all others, it was longer51, which suggest that a driving 
time of 2 hours 14 minutes may indeed be close to the average practise in German 
pharmace utical wholesaling.   
(27) From the above, t he Commission considers that applying a geographic scope of 2 
hours 14 minutes of drivi ng time, in line with the practice  of the German Federal 
Cartel  Office , around the depots of pharmaceutical wholesalers  to be  the most 
appropriate approach  for Germany . Therefore, this market definition is considered as 
the relevant geographical market relating to Germany in this decision .  
(28) The Commission notes that in other Member States, a different geographic market 
definitio n may be appropriate due to different national regulatory requirements  and 
geography . In line with past decisional practice, as discussed in paragraph s (20) to 
(22) of this Decision , the Commission therefore considers the geographic scope of 
pharmaceutical  wholesaling for the Netherlands  to be national or sub -national , but 
leaves the ultimate geographic market definition open, as no competition concerns 
arise under any plausible geographic market definition.  
4.2. Competitive assessment  
4.2.1.  Affected markets  
(29) The Transaction gives rise to the following horizontally -affected markets:  
(a) Regional markets for full-line pharmaceutical wholesaling in Germany: 
According to the regional market definition of catchment areas around each 
depot of the Parties of 2 hours and 14 m inutes driving time the following 
horizontally -affected markets were identified:  
Regional markets around the depots of Gehe  in Germany : 
Berlin , Bonn, Delmenhorst, Dresden, Duisburg, Günzburg, Halle, Hamburg, 
Kaiserslautern, Kassel, Landshut, Magdeburg, Nürnberg, Porta Westfalica, 
Rostock, Stuttgart, Unna and Weiterstadt ; 
Regional markets around the depots of Al liance :  
Allgäu, Bayreuth, Berlin, Bochum, Bremen, Dresden, Frankfurt, Freiburg, 
Harsum, Itzehoe, Kassel, Köln, Leipzig, Ludwigshafen, Meerane, München, 
Nürnberg, Osnabrück, Regensburg, Rostock, Saarbrücken, Singen, Stuttgart 
and Würzburg ; 
(b) Pharmaceutical wholesaling in the Netherlands .52 
                                                 
51  See Form CO, Annex 13.  
52   For the purp ose of this decision there is no need to assess the competitive effects on a narrower market 
definition, as explained under section 4.2.2.2(B)  of this decision and i n footnote 147.  
 
 
10 4.2.2.  Horizontal effects  
(30) Article 2 of the Merger Regulation requires the Commission to examine whether 
notified concentrations are compatible with the internal market, by assessing whether 
they would significantly impede effective competition in the internal market  or in a 
substantial part of it, in particular through the creation or strengthening of a 
dominant position.  
(31) The Commission Guidelines on the assessment of horizontal mergers under the 
Merger Regulation (the "Horizontal Merger Guidelines") distinguish bet ween two 
main ways in which mergers between actual or potential competitors on the same 
relevant market may significantly impede effective competition, namely non -
coordinated effects and coordinated effects.   
(32) Non-coordinated effects may significantly impe de effective competition by 
eliminating the competitive constraint imposed by each merging party on the other, 
as a result of which the merged entity would have increased market power without 
resorting to coordinated behaviour.  
(33) The Horizontal Merger Guidel ines list a number of factors53 which may influence 
whether or not significant non -coordinated effects are likely to result from a merger, 
such as the large market shares of the merging firms, the fact that the merging firms 
are close competitors, the limit ed possibilities for customers to switch suppliers, or 
the fact that the merger would eliminate an important competitive force. Not all of 
these factors need to be present for significant non -coordinated effects to be likely. 
The list of factors, each of w hich is not necessarily decisive in its own right, i s also 
not an exhaustive list.  
(34) According to the Horizontal Merger Guidelines, in some markets the structure may 
be such that firms would consider it possible, economically rational, and hence 
preferable,  to adopt on a sustainable basis a course of action on the market aimed at 
selling at increased prices. A merger in a concentrated market may significantly 
impede effective competition, through the creation or the strengthening of a 
collective dominant pos ition, because it increases the likelihood that firms are able to 
coordinate their behaviour in this way and raise prices, even without entering into an 
agreement or resorting to a concerted practice within the meaning of Article 101  
TFEU . A merger may al so make coordination easier, more stable or more effective 
for firms, that were already coordinating before the merger, either by making the 
coordination more robust or by permitting firms to coordinate on even higher 
prices.54  
(35) However, the Commission considers that coordinated effects seem unlikely in the 
present case for the following reasons and are thus not be further addressed in this 
Decision. In particular, wholesalers will unlikely reach a common understanding, 
given their need to  reach high capacity utilization. They also have no ability to 
monitor compliance or punish deviations across the various catchment areas in 
which they supply pharmacies and which cover the whole of Germany with its 
approximately 19 ,000 retail pharmacies. Moreover, post -Transaction there will be 
five full -line wholesalers active in each German region, with different structures and 
                                                 
53 Horizontal Merger Guidelines, paras 24 et seqq.  
54 Horizontal Merger Guidelines, paras 39 et seqq.  
 
 
11 business models that create diverse competitive incentives. The Transaction does not 
increase the level of concentration to a po int where coordination is likely to occur. 
Wholesalers also negotiate rebates in confidential bilateral discussions with their 
individual customers leading to a large variety of net wholesale pharmaceutical 
prices.55 Furthermore, if full -line wholesalers tr ied to raise net prices, pharmacies 
could make use of other wholesalers, in particular because of the widespread practice 
of multi -sourcing among pharmacies.  
4.2.2.1.  Full-line p harmaceutical wholesaling in catchment areas in Germany  
(A) Market characteristics  
(36) Full-line pharmaceutical wholesaling across Germany is mainly provided by the 
Parties and five competitors : Phoenix, Noweda, Sanacorp, Pharma Privat and AEP.56 
Like the Parties, Phoenix, Noweda and Sanacorp have a distribution network of 
depots across the country.  Phoenix and Noweda have 20 distribution facilities each, 
Sanacorp 17.57 On a national level , the Parties would have a combined market share 
of [20-30]% with a n increment of [10-20]% by Gehe.58 This is comparable to 
Phoenix ’ market position  with a market sha re of [20-30]% , closely followed by 
Noveda with a market share of  [20-30]%  and Sanacorp still with a sizeable position 
of [10-20]% , as displayed in Table 1  below .59 Pharma Privat  is a network of eight 
owner -managed full -line pharmaceutical wholesalers in Germany operating under 
the Pharma Privat brand that operate nationwide from twelve different locations. In 
contrast to these competitors, AEP does not offer multiple deliveries p er day to 
pharmacies. Instead, it limits its services to a single overnight delivery per day from 
a central depot  in Alzenau, near Frankfurt am Main.  With these limitations in mind, 
AEP nevertheless is an alternative supplier  as it supplies the full range of products of 
a full -line pharmaceutical wholesaler .60 In addition to full -line wholesalers that cover 
the entire German territory, there are several regional players, such a  Max Jenne 
Arzneimittel -Großhandlung KG and Hageda -Stumpf GmbH & Co. KG.  
  
                                                 
55 See Form CO, para 7.4.  
56 See Form CO, para 7.3.  
57 See Form CO, para 7.3 2, 7.34 and 7.38 . 
58 Here and in the following market shares are estimated by value . 
59 See Form CO, para 7.16. Market shares are based on a Germany -wide market for p harmaceutical 
wholesaling  excluding direct sa les by manufacturers  in 2019.  
60 According to the Parties ` estimates AEP has a market share of [0 -5] %. This is  not mentioned in Table 1, 
since this estimate is not based on the data provided by IQVIA, formerly known as IMS Health, which 
provided the data f or the other market participants, but not for AEP. See Form CO, para 6.45.  

 
 
13 account for over 80% of their turnover.67 Since 2012, the regulatory margin has been 
set at EUR 0.70 per package plus 3.15% on the manufacturer’s sales price for Rx 
products. However, the latter margin is c apped at EUR 37.80 per box of 
pharmaceuticals. Pharmaceuticals priced above EUR 1,200 therefore do not earn 
higher margins for the wholesalers.68 Achieving a high utilization rate of their depots 
and delivery infrastructure is a way to recoup fixed costs.69 Therefore, tools like 
granted rebates can be important to attract new customers and thus increase 
profitability as stated by the Notifying Party .70 
(B) The Notifying Party’s position  
(40) According to the Notifying Party, the Transaction will not significantly impede 
effective competition in Germany or any regional market as a result of horizontal 
non-coordinated  effects for the following reasons.71  
(41) First, the Notifying Party submits that t he full-line pharmaceutical whole saling 
market in Germany is highly regulated with legally capped margins. These capped 
margins together with high fixed costs have led to intense competition between 
wholesalers to reach effective capacity utilization of depots and delivery 
infrastructure.72 
(42) Furthermore, the Notifying Party argue s that the combined entity will have modest 
combined market shares at national and regional level.73 Depending on the market 
definition , the Parties’ combined market share will be between around [20-30]% 
(including di rect sales) or [20-30]%  (excluding direct sales) on a national level. 
Combined shares at regional level under the 2h 14 min catchment area range from 
[10-20]% to [30-40]% (including direct sales) and just over [20-30]% to just over 
[40-50]% (excluding dir ect sales).74 However, the Parties submit that t hese market 
shares overstate the real impact of the Transaction , as post -Transaction the Parties’ 
common customers will shift at least some volumes to other suppliers in order to 
maintain dual -sourcing.75 The Parties also note that higher market shares are not 
indicative of higher market power [CONFIDENTIAL ].76  
(43) The Notifying Party  also point s out that the combined entity will face several strong 
competitors post -Transaction  to whom customers can switch supp liers easily and 
quickly . According to the Notifying Party, there will remain five players able to offer 
full line  wholesale services across Germany: the merged entity plus Noweda, 
Phoenix, Sanacorp, and the Pharma Privat network.77 The combined entity will  face 
additional competitive pressure from direct sales by manufacturers as well as from 
                                                 
67 See Form CO, para 7.8 . 
68 See Form CO, para 7.9. EUR 37.80 are the result of 3.15% of EUR 1,200. Thus margins are not higher, 
even if the products are priced above EUR 1,200.    
69 See Form CO, para 7.13.  
70 See For m CO, para 7.13 et seq.; reply to question 18.1 of Questionnaire Q1.  
71 See Form CO, para 7.2 of section 7. I  
72 See Form CO, para 7.1 of section 7. I; para 7.5 et seq.  
73 See Form CO, para 7.3  of section 7. I ; para 7.15 et seq.  
74 See Form CO, para 7.3 and para 7.19 et seq.  
75 See Form CO, para 7.3  
76 See Form CO, para 7.3 and para 7.26 et seq.  
77 See Form CO, para 7.30 et seq.  
 
 
14 the wholesaler AEP that serves pharmacies in Germany using overnight delivery 
from a central depot .78 
(44) Concerning their customer relationship, the Notifying Party explai ns, that customers 
are largely individual pharmacies and pharmacy buying groups and that in both of 
these groups customers have significant buyer power.  Individual pharmacies in 
Germany would be price -sensitive and can negotiate significant rebates from 
wholesalers because they can quickly and without additional cost shift purchasing 
volumes . This is because (1) they dual -source from full-liners  and (2) buy some 
products directly from manufacturers.79 Moreover, pharmacies would be often 
supported by speciali zed pharmacy consultants, like ABAKUS (www.aba -kus.com), 
ApoSanitas KG (www.aposanitas.de), and Vitaplus AG ( www.vitaplus -ag.de ), that 
have a good insight into the market and are aware of the best conditions available.80 
Additionally, pharmacy buying groups acquire buyer power by pooling large 
purchasing volumes into annual agreements for which wholesalers are willing to 
offer even higher discounts.81 
(45) Moreover , the Notifying Party indicate s that the Parties are not particularly close 
competitors. They point out, that from the customer perspective, full -line 
wholesalers provide largely interchangeable products, even if they try to differentiate 
their service offerings. Nothing in their offering or geographic cover age makes the 
Parties particularly close competitors. When the Parties lose business, their 
customers  switch to [CONFIDENTIAL] .82 
(C) The Commission’s assessment  
(46) The market investigation particularly involved questionnaires sent to competitors 
with a national a nd regional focus and questionnaires sent to pharmacies as 
customers of the Parties in their respective 2 hours 14 minutes driving distance 
around the regional depots of the P arties. The questionnaire for the pharmacies 
focused on the regional impact of th e Transaction, whereas the questionnaire for 
competitors also took a wider view on the Transaction into consideration, that also 
sheds light on the consequences for the various regional markets. Therefore, in the 
following, general outcomes of the market i nvestigation that are of importance for all 
of the various regional markets are presented first. In a second step, outcomes for 
individual regional markets are presented  in more detail .     
(47) During the market investigation , competitors to the Parties acknow ledged that the 
Transaction will lead to increased market power of the Parties , which is in line with 
the fact that the merged entity would become one of the leading full -line wholesalers 
at national level . However, the effects of this change in the market structure were 
generally regarded as neutral, at times even positive for competition.83  
(48) In fact, several competitors viewed the Transaction as an opportunity to attract 
additional customers and increase their market presence, as those pharmac ies who 
                                                 
78 See Form CO, para 7.3; para 7.46; para 7.50 et seq.  
79 See Form CO, para 7.3;  para 7.54 et seq.  
80 See Form  CO, para 7.3 . 
81 See Form CO, para 7.3 . 
82 See Form CO, para 7.3 and para 7.72 . 
83 See reply to question 27 and 27.1 of Questionnaire Q1 . 
 
 
15 currently source from both Parties, would look for alternative suppliers post -
Transaction in line with the general market feature of multi -sourcing amongst 
pharmacies.84  
(49) As regards the degree of closeness of competition between the Parties, feedbac k 
from competitors was somewhat mixed.  A minority  of competitors regard the Parties 
as close competitors, and an equal number  of competitors regard the Parties not as 
close competitors or answered that they do not know.85 Moreover, the majority of 
pharmacie s stated that switching suppliers is always possible with either no 
significant efforts or with limited efforts .86 
(50) As regards pharmacies’ possibilities to switch suppliers, competitors generally take 
the view that there are only low barriers to switching a supplier. This is explained by 
the fact that there are standardized order systems in place that make switching 
easy.87 However, the Commission notes that pharmacies rarely switch between 
wholesalers . According to the market investigation among pharmacies , the 
overwhelming majority switched their wholesaler only once or not at all  in the last 5 
years. However, as the market investigation among pharmacies also revealed, they 
typically multi -source from two wholesalers and can thus switch orders.88 
(51) The overwhelming majority of competitors is of the opinion that wholesalers face 
substantial buyer power , thereby supporting the view expressed by the Notifying 
Party . The overwhelming majority  of competitors are also of the opinion that 
pharmacies have high o r rather high bargaining power regarding supply conditions 
like frequency of deliveries or rebates granted. Only one competitor is of the opinion 
that pharmacies have low bargaining power.89 Another competitor states that full -
line pharmaceutical wholesaler s need a high capacity utilization in order to recoup 
their costs, given the low margins in the market , which would put pharmacies in a 
favourable bargaining position .90  
(52) Moreover, the market investigation revealed that b arriers to enter the market for full -
line wholesaling of pharmaceuticals are regarded as high, both  for new entrants to 
the market and for existing market participants that want to expand their  physical  
infrastructure  (i.e. deploy a new depot  at a location where they are not yet present ).91 
Nonetheless, expanding their current business in all regions of Germany without 
setting up new depot s is possible for the majority of competitors.  
(53) Barriers to enter the market for potential competitors  currently not active as 
wholesaler in the German mark et are regarded as very high or rather high by the 
majority of  respondents . As explanation competitors state that pharmaceutical 
wholesaling is very capital intensive combined with low margins. Only one 
competitor is of the opinion that barriers are neithe r high nor low.92 Furthermore, 
                                                 
84 See minutes of calls with competitors, DocID 2020/046436.  
85 See reply to question 21  of Questionnaire Q1.  
86 See reply to question 10  of Questionnaire s Q2 to Q43.  
87 See reply to question 18.1  of Questionnaire Q1.  
88 See reply to question 2 of Questionnaires Q2 to Q43.  
89 See reply to question 18  of Questionnaire Q1.  
90 See reply to que stion 18.1 of Questionnaire Q1.  
91 See reply to question 14 to 15 of Questionnaire Q1.  
92 See reply to question 14 of Questionnaire Q1.  
 
 
16 respondents to the market investigation pointed to high regulatory burden s that have 
to be born by full -line wholesalers .93 These concern the licen ce to offer 
pharmaceutical wholesaling services in Germany and special licen ces for dealing 
with particular substances, like narcotics.94 One competitor also explains that entry 
barriers are due to network effects imposed by the logistics of the business.  
(54) The picture is similar for existing competitors. Asked about the ease for active  
wholesalers of expanding services into a new region, for examp le with setting up a 
new depot , the ov erwhelming majority of competitors is of the opinion that this 
would entail very high or high efforts. Only one competi tor regards the efforts of  
expanding  into a new region as rather low.95 Again, competitors explain their view 
with the business’ high capital intensity and high investments. The one competitor 
who expects the efforts to be rather low, explains that a new depot  would not 
necessarily be required for expansion.96 This is consistent with the competitors ’ 
answer to the question whether they have enough capacity or could require enough 
capacity to supply additional customers with three deliveries per day.  Some 
competi tors state  that this is possible in all regions in Germany, to varying degrees.97   
(55) The responding competitors regard themselves as competing with direct deliveries 
by pharmaceutical manufacturers and the ov erwhelming majority expects their share 
to rise in  the future.98 The competitors mention that manufacturers compete 
explicitly for products with high margins, which leaves them supplying  low-margin 
products. This in turn impacts their business model that is based on a mixed 
calculation of high - and low -margin products and leads to an increase in competition 
among the full -line wholesalers to compensate the foregone turnover. While the 
Commission does not consider that direct deliveries by pharmaceutical 
manufacturers fall in the relevant market of full -line pharmaceutical wholesaling, it 
acknowledged that those direct deliveries may constitute to some extent out -of-
market constraints.  
(56) An assessment of competitors’ expectations for individual competition parameters 
revealed no substantial competition concerns. No competitor expects prices  to rise as 
a result of the Transaction . To the contrary, the majority  of competitors expect s 
prices  to fall, or discounts  to increase as a result of the Transaction . One competitor 
expects constant prices because of t he already high level of discounts  granted to 
pharmacies for supplied products .99  
(57) Concerning the service level for customers , the majority of replying competitors  
expect a lessening of the service level, while a minority  expects a constant service 
level.100 With respect to supply reliability, all respondents replying to that question  
expect no change.101 Regarding the frequency of deliveries, two respondents expect a 
                                                 
93 See reply to question 14.1 of Questionnaire Q1.  
94 See reply to question 14.1 of Questionnaire Q1.  
95 See reply to question 15 of Questionnaire Q1 . 
96 See r eply to question 15 .1 of Questionnaire Q1.  
97 See reply to question 16 .1 of Questionnaire Q1.   
98 See reply to question 24 and 24.1  of Questionnaire Q1.  
99 See reply to question 27.1 of Questionnaire Q1.  
100 See reply to question 27.1 of Questionnaire Q1 . 
101 See reply to question 27.1 of Questionnaire Q1 . One competitor does not provide an answer.  
 
 
17 declining frequency, while one expects no change.102 When asked about the 
availability of produc ts, all replying competitors expect no change to the current 
situation.103  
(58) When asked about the expected effects of the Transaction on the respondents’ own 
companies, the investigation also revealed no substantiated concerns.  One 
competitor stated t o expect  negative effects, one neutral effects and one did not 
know. However, the negative respondent  argued, that negative effects will result 
from higher discounts  granted by wholesalers to pharmacies as a result of the 
Transaction .104 Thus, the Commission conside rs that these claimed negative effects 
are rather positive for competition.   
(59) With respect to regional competition in Germany, the majority  of the Parties’ 
competitors is of the opinion that they face similar competition across regions in 
Germany.105 One competitor was of the opinion that there are regional differences, 
but mainly attributed them to population density, the rural situation o f some regions 
and regional capacities.106 Accordingly, wholesalers are not of the opinion that 
margins differ across regions.107 
(C.i) Local markets with a market share exceeding 35%  
(60) The Commission considers that t he various affected regional markets can be 
subdivided according to competitive effects of the Transaction. The Commission 
considers that the Transaction does not rais e serious doubts as to its compatibility 
with the internal market in relation to any of the regional markets mentioned 
under (29)(a) , due to horizontal  non-coordinated effects, as explained in more detail 
below.  
(61) However, the markets of Hamburg/Itzehoe, Rostock and Berlin exhibit higher 
combined market shares of the Parties than the other regional markets. Combined 
market sh ares exceed 35 % in these marke ts and thus come relatively near to [30-
40]%. In the past, the Commission has considered mergers resulting in firms holding 
market shares between 40% and 50%, and in some cases below 40 %, to lead to the 
creation or the strengthening of a dominant position.  The Commission’s assessment 
of the respective markets will therefore be presented separately, and in more detail 
below. Regional market shares as presented in the below analysis are based on full -
line pharmaceutical wholesaling excluding direct sales by m anufacturers. With 
respect to the market definition as discussed above this approach can be regarded as 
the narrowest plausible market . 
                                                 
102 See reply to question 27.1 of Questionnaire Q1. One  competitor  does not provide an answer.  
103 See reply to question 27.1 of Questionnaire Q1. One competitor  does not p rovide an answer.  
104 See reply to question 28  of Questionnaire Q1.  
105 See reply to question 19 of Questionnaire Q1.  
106 See reply to question 19 and 19.1  of Questionnaire Q1.  
107 See reply to question 20 and 20.1  of Questionnaire Q1.  
 
 
18 (C.i.a)  Hamburg / Itzehoe  
(62) The Transaction would give rise to affected markets for pharmaceutical wholesaling 
in the Hamburg  and Itzehoe region s,108 where Alliance has a depot in Itzehoe and 
Gehe in Hamburg. In the Hamburg region of 2 hours 14 minutes around the depot of 
Gehe, the Parties have a combined market share of [30-40]% in 2019. The increment 
stemming from Gehe is [20-30]%. In the Itzehoe region of 2 hours 14 minutes 
around the depot of Alliance, the Parties have a combined market share of [40-50]% 
in 2019. The increment stemming from Gehe is [20-30]%.109   
(63) In the region of Itzehoe p ost-Transaction, the merged entity would continue to face 
competition from Phoenix with a market share of [10-20]%, Noweda with [5-10]%, 
Sanacorp with [20-30]% and Pharma Privat with [10-20]% . In the region of 
Hamburg post -transaction the merged entity will fac e competition from Phoenix 
with [20-30]%  market share, Noweda with [10-20]% , Sanacorp wit h [10-20]%  and 
Pharma Privat with [5-10]% .110 
(64) The presence of competing suppliers is also reflected in the responses to the market 
investigation. Pharmacies located in t he catchment areas around Hamburg and 
Itzehoe indicated that a number of alternative suppliers will be available to them. On 
average pharmacies in the Hamburg region consider 3.4 competitors of the Parties to 
be available for supplying them with pharmaceut icals under usual market 
conditions.111 In the Itzehoe region, the respective number is 3.3.112 The market 
investigation also revealed that among the respondents’ suppliers , all national 
wholesalers except for AEP are listed, and thus in particular the strong competitors 
Noweda, Sanacorp and Phoenix.113 Moreover , these three competitors have their 
own depots in Hamburg each . Sanacorp even  has two depots in the region, one  in 
Hamburg and  one in Bad Segeberg, which is approximately 1 hour driving time from 
Hamburg.  Taking into account that some competitors acknowledged to be in a 
position to expand their customer base  also in the Hamburg/Itzehoe region, as 
explained above in para. (52), pharmacies seem to have strong alternatives at their 
disposal.  
(65) Asked for the expected impact of the transaction, the majority of responding 
pharmacies in the Hamburg and the Itzehoe  regions expect a negative or rather 
negative impact.114 The Commission notes that while some pharmacies expressed 
concern that the Transaction will lead to less choice of suppliers which generally 
could lead to a declining service level, higher prices and a  deterioration of supply 
quality, when asked explicitly about the expected effects for the frequency of 
deliveries and their costs, only half of the respondents in the Itzehoe region expect 
negative consequences for frequency of deliveries, whereas only a minority of the 
                                                 
108 For the purposes of this d ecision,  the catchment areas are anal yzed separately with respect to the market 
shares. However, some of the arguments put forward in the market investigation are valid for both Parties ’ 
catchment areas, and thus are discussed for both areas together.  
109 See Form CO, para 7.20. The market share is calculated on the basis of January to Oct. 2019.   
110 See Form CO, Annex 15 Regional Assessment, para 3.2: Annex RFI 1 Q3.1. Source: Parties’ estimates on 
the basis of January to Oct. 2019.  
111 See reply to  question  12 of Questionnaire Q33 . 
112 See reply to question 12 of Questionnaire Q11 . 
113 reply to question 3 of Questionnaire Q11 and Questionnaire Q33.  
114 See reply to question 13 of Questionnaire Q11;  reply to question 13 of Questionnaire Q33 . 
 
 
19 respondents in the Hamburg region expects negative consequences in that respect. 
Concerning consequences for their costs, also only a minority of respondents in the 
Itzehoe and Hamburg regions expect a negative impact.115  
(66) As discussed above,  pharmacies also source from pharmaceutical manufacturers 
directly. Although the Commission does not consider such direct deliveries as being 
part of the relevant product market, such deliveries can pose an alternative source 
with respect to certain produc ts, as also stated by the Parties and their competitors.116 
The Commission’s market investigation therefore also enquired whether and to what 
extent pharmacies source their products directly from manufacturers. The market 
investigation revealed that , compare d to the German -wide average , a significant 
number of pharmacies in the Hamburg  and Itzehoe region s source a substantial share 
of their products directly from manufacturers and state that they are in a position to 
increase the share directly sourced even f urther. This holds true for customers of 
both Parties.117 Therefore, there is competitive pressure from direct deliveries that 
can to some extent provide an alternative source for pharmacies.   
(67) Moreover , the Commission notes a number of pro -competitive marke t characteristics 
as explained  in paragraphs 46 to 59 and 62 to 66 . First, for pharmacies, barriers to 
switching wholesalers are generally low. Moreover, pharmacies already have 
existing business activities with different wholesalers, as multi -sourcing is common 
practice in the market. Second, pharmacies exercise a certain degree of buyer power 
towards wholesalers, as competition between pharma wholesalers is generally high. 
Third, parties are not described as particularly close competitors, and services 
provided by wholesalers active in the market are generally comparable. Fourth, even 
though direct deliveries do not form part of the same product market as 
pharmaceutical wholesaling, deliveries by manufacturers to pharmacies exercise a 
certain competitive c onstraint on pharma wholesalers.  
(68) Based on the considerations above, taking into account the view of pharmacies and 
competitors, and in particular the sufficient number of remaining competitors in the 
two regions , the Commission considers that the Transact ion does not raise serious 
doubts as to its compatibility with the internal market in relation to full -line 
pharmaceutical wholesaling excluding direct sales by manufacturers in the Hamburg 
/ Itzehoe regions.   
(C.i.b)  Rostock  
(69) The Transaction would give rise to aff ected markets for pharmaceutical wholesaling 
in the area of Rostock, where both Parties have depots. In the catchment area of 2 
hours 14 minutes around the depot of Gehe, the Parties have a combined market 
share of [30-40]% in 2019. The increment provided by the Gehe is [20-30]%. In the 
catchment area of 2 hours 14 minutes around the depot of Alliance, the Parties have 
a combined market share of [30-40]% in 2019. The increment provided by Gehe is 
[20-30]%.118   
                                                 
115 See reply to question  14 of Questionnaire Q11  and Q33 . 
116 See above para (55). 
117 See reply to question 8 of Questionnaire Q33; reply to question 8 .1 of Questionnaire Q33 ; reply to  question 
8 of Questionnaire Q11; reply to q uestion 8.1 of Questionnaire Q11.  
118 See Form CO, para 7.20. The market share is calculated on the basis of January to Oct. 2019.  
 
 
20 (70) Post-transaction, the merged entity would contin ue to face competition from Phoenix 
with a market share of [20-30]%  in the catchment area  around Gehe`s depot in this 
region, [10-20]% of Noweda, [10-20]%  of Sanacorp  and [5-10]% of Pharma Privat . 
In the catchment area around Alliance`s depot the market shares are almost equally 
distributed with Sanacorp having only [10-20]% .119 
(71) This is reflected in feedback from pharmacies, as well as from remaining 
wholesalers , when asked for the availability of w holesalers in these regions . On 
average customer pharmacies of Alliance in the Rostock region consider 
approximately 2.2 competitors of the Parties available for supplying them with 
pharmaceuticals to usual market conditions.120 For customers of Gehe in the Rostock 
region the respective number is 1.8.121 When compared to the nationwide average of 
the market investigation of 2.9,122 these numbers look weaker for the Rostock 
region. However, when explicitly asked for their ability to deliver to the Rostock 
region, and their ability to expand their offer in that area to address potential 
demand, four additional competitors  currently active in the German pharmaceutical 
wholesaling market  confirmed that they also currently deliver to customers in the 
Rostock region, an d would be in a position to serve more customers or increase the 
number of daily deliveries in case of increasing demand.123 Moreover, it has to be 
pointed out, that Sanacorp has its own depot in this region and is regarded as being 
available to usual market  conditions by the overwhelming majority of the Parties` 
customers in that region. Therefore, a number of competitors are either already 
present in the markets of the Rostock region or are willing to expand into these 
markets.  
(72) The Commission considers tha t it is against this background that somewhat more 
negative views, which pharmacies in the Rostock region expressed in the course of 
the market investigation have to be assessed. Asked for the expected impact of the 
Transaction across the Parties’ two catc hment areas, the majority of the responding 
pharmacies took a negative view on the Transaction.124 However, when asked 
explicitly about the expected effects on the frequency of deliveries and their costs, 
only a minority of respondents of the Parties’ custom ers expect negative 
consequences of the Transaction with regard to the frequency of deliveries or their 
costs.125  
(73) As discussed above pharmacies also source from pharmaceutical manufacturers 
directly. Although the Commission does not consider such direct deliveries as being 
part of the relevant product market, such deliveries can pose an alternative source 
with respect to certain products, as also stated by the Parties and their competitors.126 
The Commission’s market investigation therefore also enquired wh ether and to what 
                                                 
119 See Form CO, Annex 15 Regional Assessment, para 4.2: Annex RFI 1 Q3.1. Source: P arties’ estimates on 
the basis of January to Oct. 2019.  
120 See reply  to question 12 of Questionnaire  Q21.  
121 See reply  to question 12 of Questionnaire  Q40.  For Gehe customers in the Rostock region it has to be 
mentioned, that only five pharmacies replied to the market investigation. From Alliance customers in the 
Rostock region 57 the Commission received 57 replies.  
122 See replies  to question 12 of Questionnaire s Q2 to Q43.  
123 See replies to email questionnaires to competitors of 24 July 2020.  
124 See reply to q uestion 13  of Questionnaire Q21 and Q40.  
125 See reply to question 14 of Questionnaire Q2 1 and Q40 . 
126 See above para (55). 
 
 
21 extent pharmacies source their products directly from manufacturers. The market 
investigation revealed that compared to the German -wide average a significant 
number of pharmacies source a substantial share of their products directly from 
manufacturers and state that they are in a position to increase the share directly 
sourced even further. This holds true for customers of both Parties.127 Therefore, 
there is competitive pressure from direct deliveries, that can to some extent pose an 
altern ative source for pharmacies.   
(74) Moreover , the Commission notes a number of pro -competitive market characteristics 
as explained in paragraphs 46 to 59 and 69 to 73 . First, for pharmacies, barriers to 
switching wholesalers are generally low. Moreover, pharmac ies already have 
existing business activities with different wholesalers, as multi -sourcing is common 
practice in the market. Second, pharmacies exercise a certain degree of buyer power 
towards wholesalers, as competition between pharma wholesalers is gene rally high. 
Third, parties are not described as particularly close competitors, and services 
provided by wholesalers active in the market are generally comparable. Fourth, even 
though direct deliveries do not form part of the same product market as 
pharmac eutical wholesaling, deliveries by manufacturers to pharmacies exercise a 
certain competitive constraint on pharma wholesalers.  
(75) Based on the considerations above, taking into account the view of pharmacies and 
competitors, and in particular the sufficient  number of remaining competitors in the 
two regions, the Commission considers that the Transaction does not raise serious 
doubts as to its compatibility with the internal market in relation to full -line 
pharmaceutical wholesaling excluding direct sales by manufacturers in the Rostock 
region.  
(C.i.c)  Berlin  
(76) The Transaction would give rise to affected markets for pharmaceutical wholesaling 
in the area of Berlin, where both Parties have depots. In the catchment area of 2 
hours 14 minutes around the depot of Gehe, the Parties have a combined market 
share of [30-40]%  in 2019. The increment provided by Gehe is [10-20]%. In the 
catchment area of 2 hours 14 minutes around the depot of A lliance  the Parties have a 
combined market share of [30-40]%  in 2019. The increment provided by the Gehe is 
[10-20]%.128   
(77) Post-transaction, the merged entity would continue to face competition from Phoenix 
with a market share of [20-30]% in the Berlin region, Noweda with [20-30]%, 
Sanacorp with [10-20]% and Pharma P rivat with [5-10]% in both catchment areas 
around the depots of Gehe and Alliance .129 
(78) The presence of a sufficient number of credible alternative suppliers is also reflected 
in the feedback of pharmacies. On average, customer pharmacies of Alliance in the 
Berlin region consider 3.4 competitors of the Parties available for supplying them 
                                                 
127 See reply to question 8 of Questionnaire Q40; reply to question 8 .1 of Questionnaire Q40; reply to  question 
8 of Questionnaire Q21; reply to q uestion 8.1 of Questionnaire Q21 . 
128 See Form CO , para 7.20. The market share is calculated on the basis of January to Oct. 2019.  
129 See Form CO, Annex 15 Regional Assessment, para 5.2 Source: Parties’ estimates on the basis of January 
to Oct. 2019.  
 
 
22 with pharmaceuticals to usual market conditions.130 For customers of Gehe in the 
Berlin region the respective number is 3.1.131 The market investigation also revealed 
that among t he respondents’ suppliers, all of the nationally active wholesalers but 
AEP remain, including the strong competitors Noweda, Sanacorp and Phoenix. 
Moreover, these three competitors each have their own depots in the Berlin region. 
Taking into account, that some competitors also acknowledged to be in a position to 
expand their customer base in that region, as explained above in para. (52), 
pharmacies seem  to have strong alternatives at their disposal.  
(79) Asked for the expected impact of the Transaction, several of responding pharmacies 
expect negative or rather negative effects.132 When asked explicitly about the 
expected effects on the frequency of deliveries and their costs, roughly half of the 
respondents expect negative consequences of the Transaction for the Berlin 
region.133   
(80) As discussed above pharmacies also source from pharmaceutical manufacturers 
directly. Although the Commission does not consider such direct deliveries as being 
part of the relevant product market, such deliveries can pose an alternative source 
with respect to certain products, as also stated by the Parties and their competitors.134  
The Commission’s market investigation therefore also enq uired whether and to what 
extent pharmacies source their products directly from manufacturers. The market 
investigation revealed that compared to the German -wide average a significant 
number of pharmacies source a substantial share of their products direct ly from 
manufacturers and state that they are in a position to increase the share directly 
sourced even further. This holds true for customers of both Parties.135 Therefore, 
there is competitive pressure from direct deliveries, that can to some extent pose a n 
alternative source for pharmacies.   
(81) Moreover , the Commission notes a number of pro -competitive market characteristics 
as explained in paragraphs 46 to 59 and 76 to 80 . First, for pharmacies, barriers to 
switching wholesalers are generally low. Moreover,  pharmacies already have 
existing business activities with different wholesalers, as multi -sourcing is common 
practice in the market. Second, pharmacies exercise a certain degree of buyer power 
towards wholesalers, as competition between pharma wholesalers  is generally high. 
Third, parties are not described as particularly close competitors, and services 
provided by wholesalers active in the market are generally comparable. Fourth, even 
though direct deliveries do not form part of the same product market as  
pharmaceutical wholesaling, deliveries by manufacturers to pharmacies exercise a 
certain competitive constraint on pharma wholesalers.     
(82) Based on the considerations above, taking into account the view of pharmacies and 
competitors, and in particular the  sufficient number of remaining competitors in the 
Berlin region, the Commission considers that the Transaction does not raise serious 
                                                 
130 See reply  to question 12 of Questionnaire  Q4. 
131 See reply to question 12 of Questionnaire  Q26.   
132 See reply to question 13 of Questionnaire Q4; reply to question 13  of Questionnaire Q26.  
133 See reply to question 14 of Questionnaires Q4 and Q26.  
134 See above para (55). 
135 See reply to question 8  of Questionnaire Q26 ; reply to question 8 .1 of Questionnaire Q26 ; reply to question 
8 of Questionnaire Q4 ; reply to question 8 .1 of Questionnaire Q4.  
 
 
23 doubts as to its compatibility with the internal market in relation to full -line 
pharmaceutical wholesaling excluding dir ect sales by manufacturers in the Berlin 
region.  
(C.ii)  Local markets with a combined market share below 35%  
(83) As explained in para (60) the Transaction leads to additional affected regional 
markets in Germany with combined market shares below [30-40]%. The tables 
below present the Parties market shares in these markets.  
Table 2: The Parties' market shares in the 2h 14 min catchment  
areas around AHD's depots excluding direct sales by manufacturers  
(Jan - Oct 2019)  
  Alliance Gehe  Combined  
  Sales in 
million 
EURO  Market 
Share  Sales 
in 
million 
EURO  Market 
Share  Sales in 
million 
EURO  Market Share  
Bremen  […] [10-20]%  […] [20-30]%  […] [30-40]%  
Harsum  […] [10-20]%  […] [20-30]%  […] [30-40]%  
Regensburg  […] [10-20]%  […] [10-20]%  […] [30-40]%  
Bayreuth  […] [10-20]%  […] [10-20]%  […] [30-40]%  
Meerane  […] [10-20]%  […] [10-20]%  […] [30-40]%  
Dresden  […] [10-20]%  […] [10-20]%  […] [20-30]%  
München  […] [10-20]%  […] [10-20]%  […] [20-30]%  
Leipzig  […] [10-20]%  […] [10-20]%  […] [20-30]%  
Singen  […] [10-20]%  […] [5-10]%  […] [20-30]%  
Nürnberg  […] [10-20]%  […] [10-20]%  […] [20-30]%  
Freiburg  […] [10-20]%  […] [5-10]%  […] [20-30]%  
Würzburg  […] [10-20]%  […] [10-20]%  […] [20-30]%  
Stuttgart  […] [10-20]%  […] [10-20]%  […] [20-30]%  
Allgäu  […] [10-20]%  […] [10-20]%  […] [20-30]%  
Osnabrück  […] [5-10]%  […] [10-20]%  […] [20-30]%  
Ludwigshafen  […] [10-20]%  […] [10-20]%  […] [20-30]%  
Frankfurt  […] [10-20]%  […] [10-20]%  […] [20-30]%  
Kassel  […] [10-20]%  […] [10-20]%  […] [20-30]%  
Saarbrücken  […] [10-20]%  […] [10-20]%  […] [20-30]%  
Bochum  […] [5-10]%  […] [10-20]%  […] [20-30]%  
Köln  […] [5-10]%  […] [10-20]%  […] [20-30]%  
Source: Parties’ estimates  
 
  
 
 
24 Table 3: The Parties' market shares in the 2h 14 min catchment  
areas around Gehe's depots excluding direct sales by manufacturers  
(Jan - Oct 2019)  
  Alliance  Gehe  Combined  
  Sales 
in 
million 
EURO  Market 
Share  Sales in 
million 
EURO  Market 
Share  Sales in 
million 
EURO  Market 
Share  
Delmenhorst  […] [10-20]%  […] [20-30]%  […] [30-40]%  
Landshut  […] [10-20]%  […] [10-20]%  […] [30-40]%  
Dresden  […] [10-20]%  […] [10-20]%  […] [20-30]%  
Halle  […] [10-20]%  […] [10-20]%  […] [20-30]%  
Nürnberg  […] [10-20]%  […] [10-20]%  […] [20-30]%  
Magdeburg  […] [10-20]%  […] [10-20]%  […] [20-30]%  
Stuttgart  […] [10-20]%  […] [10-20]%  […] [20-30]%  
Günzburg  […] [10-20]%  […] [10-20]%  […] [20-30]%  
Porta Westfalica  […] [5-10]%  […] [10-20]%  […] [20-30]%  
Weiterstadt  […] [10-20]%  […] [10-20]%  […] [20-30]%  
Kaiserslautern  […] [10-20]%  […] [10-20]%  […] [20-30]%  
Kassel  […] [10-20]%  […] [10-20]%  […] [20-30]%  
Unna  […] [5-10]%  […] [10-20]%  […] [20-30]%  
Bonn  […] [5-10]%  […] [10-20]%  […] [20-30]%  
Duisburg  […] [5-10]%  […] [10-20]%  […] [20-30]%  
Source: Parties’ estimates  
(84) In a large number of these markets, the combined market shares of the Parties post -
Transaction remain even below 25%, the level under which concentrations are 
presumed to not impede effective competition.136 For regional markets around 
Alliance’s depots, these are the markets of, Osnabrück, Ludwigshafen, Frankfurt, 
Kassel, Saarbrücken, Bochum and Köln137. For regional markets aro und Gehe’s 
depots, these are Weiterstadt, Kaiserslautern, Kassel, Unna, Bonn and Duisburg. For 
a large number of other markets, market shares exceed [20-30]%, but remain on a 
moderate level below [30-40]%. Also for these regions, the structure of the marke t 
indicates that no competition concerns arise as a result of  the Transaction. This 
assessment is further substantiated by the results of the market investigation.  
(85) First, the Commission notes that in all areas  mentioned in Tables 2 and 3 , the three 
main competitors Noweda, Sanacorp and Phoenix have a significant presence. 
Phoenix  has market shares138 in excess of 20% in all but two139 local markets listed 
                                                 
136  See Guidelin es on the assessment of horizontal mergers under the Council Regulation on the control of 
concentrations between undertakings, OJ C 031, of 05/02/2004 (the “Horizontal Merger Guidelines”), 
para. 18.  
137 In the market investigation no pharmacy from the K öln a rea replied to the Commission ’s questionnaire. 
Therefore, if not explicitly stated, the K öln region is not part of the further assessment.    
138 All market shares in this paragraph are for 2019.  
139 In the catchment area around Alliance’s depots in Stuttgart and Würzburg, Phoenix’ market shares are [10 -
20]% and [10 -20]% respectively.  
 
 
25 in Table 2 and 3 . In the majority of these  areas, Phoenix’  market shares are even 
above 25%. In all but one140 of the markets listed in Table s 2 and 3, Noweda  has 
market shares exceeding 10 %. In the majority of the areas , Noweda’s  market shares 
are even above 20%. Sanacorp  has market shares in excess of 10% in all markets as 
listed in Table s 2 and 3 . In most of the markets, Sanacorp’s market shares are even  
above 15%. Therefore, in all local markets, the merged entity faces significant 
competition from at least three full -line wholesalers. In addition, Pharma Privat  is 
active on most of these regional markets, with market shares ranging between [0-
5]% and [10-20]%.141 
(86) Second, with respect to the market investigation, the Commission notes that 
pharmacies indeed see the Transaction with scepticism even in markets where t he 
merged entity would have moderate market shares. For the regions around the Gehe 
depots concerns in Kassel, Landshut, Magdeburg, Nürnberg and Stuttgart, a majority 
of respondents stated the Transaction would have a rather negative or negative 
effect. Th e same statement was made by a majority of respondents around Alliance’s 
depots in Allgäu, Bayreuth, Bochum, Dresden, Frankfurt, Ludwigshafen, 
Regensburg and Saarbrücken.142 However , the market investigation confirmed the 
presence of signification competitio n to the merged entity  in all areas as listed  in 
Table s 2 and 3 , as already suggested by the market shares . In the market 
investigation, pharmacies where asked about the number of pharmaceutical 
wholesalers other than the Parties that would be available to  supply to usual market 
conditions. For all but two markets143, the average number of available alternative 
wholesalers indicated by pharmacies is above 2.5 , which means that customers 
consider on average to have more than two alternatives to choose from.144  
(87) Finally, the Commission notes a number of pro -competitive market characteristics 
explained in section 4.2.3.1 (A) of this Decision that also apply to the regional 
markets as listed in Table s 2 and 3. First, for pharmacies, barriers to switching 
wholesalers are gen erally low. Moreover, pharmacies already h ave existing business 
activities with different wholesalers, as multi -sourcing is common practice in the 
market. Second, pharmacies exercise a certain degree  of buyer power towards 
wholesalers , as competition between pharma wholesalers is generally high . Third, 
parties are not described as particularly close competitors, and services provided by 
wholesalers active in the market are generally comparable. Fourth, even though 
direct deliveries do not form part of the same product market as pharma ceutical 
whole saling, deliveries by manufacturers to pharmacies exercise a certain 
competitive constraint on pharma wholesalers.  
(88) Based on the considerations above the Commission considers that the Transaction 
does not raise serious doubts as to its compatibility with t he internal market in 
relation to full -line pharmaceutical wholesaling excluding direct sales by 
manufacturers in the regions as presented in Table 2 and Table 3. 
                                                 
140 In the catchment area around Alliance’s depot in Singen, Noweda’s market share is [5 -10]%.  
141 See Annex RFI1 Q. 3.1.  
142 See reply to question 13 of Questionnaire Q2, Q3, Q5 – Q10, Q12 – Q20, Q22 – Q25, Q27 – Q32, Q34 – 
Q39, Q41 – Q43.  
143 For Kaiserslautern and Porta Westfalica, the figure was below 2,5, but still well above 2 alternative 
wholesalers.  
144 See reply to question 12 of Q2, Q3, Q5 – Q10, Q12 – Q20, Q22 – Q25, Q27 – Q32, Q34 – Q39, Q41 – 
Q43.  
 
 
26 4.2.2.2.  Pharmaceutical wholesaling in the  Netherlands  
(89) In the N etherlands , WBA is active as a full -line wholesaler and generate d turnover 
of EUR  […] million  in 2019  with retail pharmacies . Gehe  is also active in the 
Netherlands, generat ing a  turnover of EUR […] million  in 2019  with wholesale 
pharmaceutical supplies, but has a very special business model. In fact, Gehe 
[NUMBER AND BUSINESS MODEL OF CUSTOMERS].  
(A) The Notifying Party ’s view  
(90) The Notifying Party  is of the opinion that the Transaction will not have any 
appreciable impa ct on competition in the Netherlands and that it should not lead to 
any truly affected markets in the Netherlands.145 To support this argument, the  
Notifying Party  mainly put s forward that Gehe is only supplying  [NUMBER AND 
BUSINESS MODEL OF CUSTOMERS]  in th e Netherlands, [BUSINESS MODEL 
OF CUSTOMERS; SHARE OF PRODUCTS SOLD OUTSIDE OF THE 
NETHERLANDS].146 Taking this into account, the Parties argue that Gehe is not a 
significant competitor on the national pharmaceutical wholesaling market in the 
Netherlands.   
(B) The Commission’s assessment  
(91) The Parties’ combined market share on a national pharmaceutical wholesale market 
in the Netherlands lies between [10-20]% and [20-30]%, depending on whether 
Gehe’s sales to  its customers that are sold to end -customers in Germany are taken 
into account.147 If these are not regarded as being part of the relevant market, the 
combined market share only amounts to [10-20]% . The following table presents the 
respective market shares on the national level.   
  
                                                 
145 See Form CO, para 6.52 . 
146 See Form CO, para 6.55.  
147 It has to be noted, that the market shares cited here do not distinguish between full -line and short -line 
wholesaling. The Parties explain, that there are no data available for a short -line wholesaling market. The 
Parties also explain that to their knowledge, there is no separate market for short -line wh olesaling in the 
Netherlands and that here are no s pecialist short -line wholesalers in the Dutch market.  See Form CO para 
6.58. The Commission notes, that  for these reasons, the market figures presented in table 4 are the closest 
estimate  of full -line pharmaceutical wholesaling in the Netherlands.  

 
 
28 5. CONCLUSION  
(96) For the above reasons, the European Commission has decided not to oppose the 
notified operation an d to declare it compatible with the internal market and with the 
EEA Agreement. This decision is adopted in application of Article 6(1)(b) of the 
Merger Regulation and Article 57 of the EEA Agreement.   
For the Commission  
 
 
(Signed)  
Margrethe VESTAGER  
Executive Vice-President