(.PICT.) |COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 3.8.2010 SG-Greffe(2010) D/11960 C(2010) 5514

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 Where possible the information omitted has been replaced by ranges of figures or a general description. PUBLIC VERSION

MERGER PROCEDURE ARTICLE 6(1)(b) DECISION in combination with ARTICLE 6(2)

To the Notifying Party:

Dear Sir/Madam,

Subject: Case No COMP/M.5865 – TEVA/ RATIOPHARM Notification of 14 June 2010 pursuant to Article 4 of Council Regulation No 139/2004 [1]

1. On 14 June 2010, the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004 (the "EU Merger Regulation" or "EUMR") by which the undertaking Teva Pharmaceutical Industries Limited ("Teva", Israel) acquires within the meaning of Article 3(1)(b) of the EUMR control of the whole of the undertakings Merckle GmbH, CT Arzneimittel GmbH and AbZ-Pharma GmbH (collectively the "Merckle/Ratiopharm group" or "Ratiopharm", Germany) by way of purchase of shares.

I. THE PARTIES

2. Teva is an international pharmaceutical company headquartered in Israel which is involved in the development, production and marketing of generic and proprietary pharmaceutical products as well as biopharmaceuticals and active pharmaceutical ingredients (APIs).

3. Ratiopharm is an international pharmaceutical company headquartered in Germany which is involved in the development, production and marketing of generic pharmaceutical products and biopharmaceuticals. Unlike Teva, it does not develop and market any innovative pharmaceuticals nor is it involved in the sale of APIs on the free market, although it does produce them for its own use.

II. CONCENTRATION

4. The Parties have entered into a Share Purchase Agreement by virtue of which Teva, through its subsidiary Teva Health GmbH will acquire the entire shares of Merckle GmbH ("Merckle"), CT Arzneimittel GmbH ("CT") and AbZ-Pharma GmbH ("AbZ") which indirectly or indirectly control all the operational entities of Ratiopharm.

5. The transaction therefore constitutes an acquisition of sole control of Ratiopharm by Teva and constitutes a concentration in the sense of Article 3(1)(b) of the EUMR.

III. EU DIMENSION

6. The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 billion [2] (Teva EUR 9 965 million, Ratiopharm EUR 1 663 million). Each of them has a EU-wide turnover in excess of EUR 250 million (Teva: EUR […] million; Ratiopharm: EUR […] million), but they do not achieve more than two-thirds of their aggregate EU-wide turnover within one and the same Member State. The notified operation therefore has an EU dimension within the meaning of Article 1(2) of the Regulation.

IV. RELEVANT MARKETS AND COMPETITIVE ASSESSMENT

IV.1. OVERALL CONTEXT OF THE CONCENTRATION

7. The notified transaction will result in a generic player in finished pharmaceuticals which will be the largest such player in the EEA, with about [10-20]% of total generic sales, in an overall generic landscape which remains relatively fragmented. The combined firm will also be the leading player in a number of Member States, although some of these markets have to date relatively limited overall generic penetration. The overall picture in the most affected member states according to material developed by the Parties is as follows (by overall value of generic sales in the country in question):

|Teva |Ratio |Market position post-merger |

Netherlands The source for the Dutch figures is Stichting Farmaceutische Kentallen (SFK), "Grote Verschuivingen in Generiek", 11 March 2010, see http://www.sfk.nl/publicaties/farmacie_in_cijfers/2010/2010-10.html. For all other countries, the source is internal information prepared by the Parties. The source for the Dutch figures is Stichting Farmaceutische Kentallen (SFK), "Grote Verschuivingen in Generiek", 11 March 2010, see http://www.sfk.nl/publicaties/farmacie_in_cijfers/2010/2010-10.html. For all other countries, the source is internal information prepared by the Parties. |Approx. 29% |Approx. 11% |#1 with 40% |

Germany |[0-5]% |[10-20]% |#2 after Novartis ([20-30]%) |

France |[10-20]% |[5-10]% |#3 after Mylan ([30-40]%) and Biogaran ([20-30]%) |

Italy |[20-30]% |[10-20]% |#1 (Teva already #1 pre-merger) |

Spain |[10-20]% |[10-20]% |#1 (from Teva #2 behind Cinfa, 20%) |

Portugal |[5-10]% |[10-20]% |#1 with [10-20]% |

Finland |[0-5]% |[20-30]% |#2 with [20-30]% |

Austria |- |[20-30]% |#1 |

8. The transaction will most significantly increase the overall strength of the Parties in the Netherlands, where Teva, which was already the largest provider of generics pre-merger, acquires the third-largest player, resulting in an overall share of generic turnover estimated by third-party sources at around 40-45% (see further below).

9. In addition to the analysis of individual product markets below, the market investigation therefore focused on the overall impact of the concentration on generic competition in the various affected countries, with particular attention to issues such as distribution power, range discounts and the value of the corporate brand, as well as the specificities of how generic products are prescribed, dispensed and reimbursed in the various countries concerned.

IV.2. FINISHED DOSE PHARMACEUTICALS

IV.2.1. INTRODUCTORY REMARKS ON MARKET DEFINITION

IV.2.1.1. Analysis based on ATC classification

10. In previous cases the Commission has taken as a starting point for market definition purposes the Anatomical Therapeutic Chemical ("ATC") division of medicines by therapeutic use devised by the European Pharmaceutical Marketing Research Association ("EphMRA") and maintained by EphMRA and Intercontinental Medical Statistics ("IMS"). [4]

11. This classification has the advantage of being developed and maintained for commercial use and providing ready access to statistics. It is based on finished dose pharmaceutical products and their approved indications in the various countries, which may in some cases vary from one country to another.

12. The EphMRA classification consists of four levels and is regularly updated. In older cases involving originator pharmaceutical companies, the third level, referred to as ATC3, which allows medicines to be grouped in most cases according to their therapeutic indications, i.e. their intended use, has generally been taken as the starting point for market definition in the Commission's analyses. However, in recent cases involving generic companies the Commission, based on its market investigation, has tended to identify competition issues – where such issues arose – more often at the molecule level, at the ATC4 level, [5] or on the basis of a group of molecules. [6] This is because generic pharmaceutical companies typically produce copies of originator drugs which therefore can normally be viewed as the closest substitute to those drugs. [7] As set out in the Commission's horizontal merger guidelines, the higher the degree of substitutability between the merging firms' products, the more likely it is that the merging firms will raise prices significantly. [8]

13. For all those products which were specifically investigated in the market investigation, the ATC3 level rarely appeared to be the correct range of products for analyzing competition. In the genericised pharmaceutical markets concerned by the notified transaction, the Parties achieved significant market shares, in a large majority of cases, only when such markets were looked at at the molecule level. In most cases, responses to the market investigation, whether from competitors, customers, insurers or national authorities, indicated that demand for medicinal products based on established and well-known pharmaceutical molecules is specific to the molecule in question (and its galenic form, see below), at least for prescription products and products for hospital use. The Parties compete, principally, for sales of products based on the originator molecule (i.e. the product which was first to market and benefited from patent protection which has now expired, as well as an originator brand name), and only to a limited extent against products based on other molecules.

14. In a a certain number of cases, however, a group of molecules can be considered interchangeable for a wide range of applications and the relevant market in this case should be defined on the basis of all molecules which are so interchangeable. Such a definition may in principle coincide with the ATC3 or even a higher level, but more commonly it is not wider than ATC4 and may be confined to a subset of molecules within the ATC4 class.

15. Independently of the market definition, the present decision is nonetheless organized by ATC3 class where possible, for ease of reference and comparison with earlier decisions.

IV.2.1.2. Galenic form

16. As already noted in Sanofi-Aventis/Zentiva, medicines are differentiated not only by their active ingredient(s), but also, in particular, as recognized by the European regulatory framework for medicines for human use, by their dosage, pharmaceutical form and route of administration and this may limit their substitutability [9] . This combination of features is loosely referred to for the purposes of the present decision as "galenic form". For the purposes of this decision, the Commission has looked at "galenic form" with reference to the first letter of the typology of form codes (the so-called "New Form Code" or NFC) used by IMS/EphMRA [10] . In general, the first letter differentiates between forms for systemic and topical effect, site of application, and also between long-acting and ordinary forms.

17. Although numerous variations in the form of medicines exist, and therefore the notion of "galenic form" is not without ambiguity, the market investigation in the present case has shown that, for the products considered in this case, different routes of administration of a medicine are, in general, designed to serve the needs of different patient groups and are therefore not interchangeable. This may also be the case of the dosage and of the pharmaceutical form, especially in pediatrics, although some forms, especially those which may distinguish OTC medicines (such as orally dissolving tablets, effervescent forms etc), frequently present purely convenience rather than medical benefits, and may therefore be competitively related.

18. On the supply side, the market investigation has shown that the development of a new galenic form of an existing generic medicine typically takes a significant amount of time, estimated at two to three years or even more in some cases [11] . This consideration suggests that different galenic forms of a medicine cannot be considered to lie within the same relevant market purely on the basis of supply-side substitutability, since such substitutability is only taken into account when defining markets in those situations where its effects are equivalent to those of demand substitution in terms if effectiveness and immediacy [12] . For the distinctions considered in the present Decision, supply-side substitution can therefore be excluded [13] .

19. Although it is possible that in the OTC market there is a degree of substitutability between different preparations, certain common galenic forms were seen in the context of this case to be, in general, not substitutable. In the present case, the most relevant distinctions of this type to be drawn are between oral syrups (commonly used for patients who are unable to swallow tablets, in particular pediatric patients), rectal forms (also known as suppositories, also often used for pediatric patients but also for patients at risk of vomiting and in instances where the pharmacokinetic profile of the medicine is improved by bypassing the stomach), and injectable or parenteral forms [14] . Although this needs to be confirmed for individual products on a case-by-case basis, it was generally found that these forms are not substitutable either on the demand or the supply side.

20. It follows that the correct market definition needs to consider possible distinctions on the basis of pharmaceutical form, dosage and route of administration and is likely more often than not to draw such a distinction at least in the broad instances mentioned above.

21. The route of administration and pharmaceutical form is sometimes, but not always, reflected in the ATC product categorization in addition to being identified by the NFC. For a single galenic form (or possibly a small group of closely related galenic forms), the market definition has been approached in the present case by the Commission normally on the basis of looking first at the active ingredient and only then at the galenic form, since affected markets typically arose on the basis of a possible molecule market definition. There is nonetheless no reason in principle to exclude that the correct market definition may consider a single galenic form, but refer to a group of molecules where it can be established that they are freely interchangeable for a substantial part of their use. This has been looked at by the Commission systematically on the basis of ATC3 and ATC4 categories, and additionally using other groupings on a case-by-case basis, as described below.

IV.2.1.3. Prescription pharmaceuticals and over-the-counter pharmaceuticals

22. In numerous cases in the past, the Commission has defined separate relevant product markets for pharmaceuticals available without prescription (over-the-counter, "OTC") and pharmaceuticals available only on prescription, because medical indications (including possible side-effects), the legal framework, marketing, distribution and rules on reimbursement all tend to differ between the two categories of medicines, even when the active ingredients are identical [15] . Doctors do not directly play a role in the purchase of OTC pharmaceuticals, whereas pharmacists can suggest other (substitutable) products, and in most cases consumers bear the full cost. Prescription pharmaceuticals are prescribed by a doctor and part of the patient's purchase price is reimbursed or directly paid by health insurers. Marketing of prescription pharmaceuticals, if it takes place, is targeted at the prescribers and not the patients. Moreover, it may happen in certain markets that some variants of a drug with the same active ingredient or brand name are classified as OTC, whilst others are classified as prescription-only, depending on the package size, dosage or galenic form [16] .

23. In certain instances in previous decisions, it has nonetheless been observed that prescription and OTC markets may be more closely related, in particular due to the added inconvenience for a patient to visit a doctor in order to obtain a prescription for drugs which are available OTC and which treat more routine conditions [17] . In this case, the price of the OTC medicine may be a factor determining whether or not the patient simply purchases this medicine at his or her own expense or visits a doctor in order to obtain a prescription for a reimbursable alternative.

24. In the present case such a relationship between OTC and prescription markets has been looked at in the market investigation wherever it was alleged by the Parties. However, it has not been found to lead to a single market in any product across the two segments. In the remainder of this decision, they are therefore treated as separate product markets. Such a conclusion is limited to the circumstances of the case at hand.

IV.2.1.4. Originator pharmaceuticals and generic pharmaceuticals

25. Generics are in general less expensive versions of originator drugs. In regulatory approval procedures, a generic drug manufacturer has to demonstrate that the generic version of the originator drug has identical quality and purity and is bioequivalent to the originator drug.

26. In previous cases, the market investigation has often suggested that there may be differences in the demand for originator versus generic drugs, even when they are bioequivalent. However, it has not suggested that this phenomenon was so extensive as to place the two types of drugs in separate markets. Indeed, generic versions of originator medicines are specifically designed to compete with those medicines and normally represent the closest substitute to them [18] .

27. As the present case involves a merger between two primarily generic companies, affected markets arise, particularly at the molecule level, only in instances where generic medicines overall, and more specifically those of the Parties, have succeeded in capturing a significant share of demand from the originator. For this reason, it may thus be taken as a starting point that competition takes place between originator and generic providers, even if brand loyalty to the originator medicine (and/or in some cases to a branded generic) may play a role in limiting switching in certain instances. In certain instances, Teva also has originator medicines for which Ratiopharm is a generic competitor, and this will be noted where relevant in the assessment below.

IV.2.1.5. Biosimilars vs small molecule traditional generics

28. Biological medicinal products are medicines whose active substance is made by or derived from living organisms (e.g. immunological products and medicines derived from human blood and plasma). Biosimilars aim to mimic the original patented biopharmaceutical molecule with an identical therapeutic mechanism and clinical attributes and can be described as "generic" versions of originator biopharmaceuticals, but, unlike for small molecule generics, they are not exact copies of the originator drug. Making an exact copy is impossible as biopharmaceuticals are based on either mammalian or microbial cell cultures and the active ingredient is never exactly the same as the biological originator product. This is a fundamental difference between biosimilars and small molecule generics, which are also referred to as synthetic generics since they can be synthesized by chemical processes.

29. The development of biosimilars requires considerably longer lead times than synthetic generics (it may take six to eight years from development to marketing) and high up-front investments (significantly more than those required for the development of generic pharmaceuticals). There is a higher risk of failure of research and development (R&D). [19] The development and manufacturing of biosimilars also requires specific biotech know-how and facilities. The R&D process is more similar to the R&D of originator than of synthetic generic drugs. For example, as opposed to non-biotech generics, it requires clinical trials.

30. The biosimilar segment of pharmaceutical markets is relatively new. The first biosimilars – growth hormones – were launched in Europe in 2006 following the adoption of regulatory guidance on the approval of biosimilar products at the EU level [20] .

31. The Commission has previously considered biosimilars in the Lonza / Teva / JV Decision [21] . The focus of that case, however, was the upstream contract manufacturing market and the market definition was not concluded for any downstream market.

32. Both parties are active in the development, manufacturing and commercalisation of biosimilars. Due to the fact that the biosimilar market is very new, however, the existing overlap between the parties is limited to one product, filgrastim.

IV.2.1.6. Discontinued products

33. In the present case, a number of instances arose, several of which were signalled late in the procedure, of products […] which Ratiopharm had decided to discontinue […] already before the decision to merge their actvities.

34. In certain cases the marketing authorization for the relevant product had been withdrawn at the initiative of the relevant Party but in many cases it was still valid.

35. Insofar as the decision to exit those product markets can be said to be reversible, and stocks may continue to suffice for a number of months or even in some cases several years, the Commission has asked the Parties to provide documentary evidence of the decision to exit and to explain the business grounds on which it was taken. In the event that such business grounds appeared uncertain or open to change in the relevant counterfactual, that is absent the merger, on a conservative basis the Commission has taken the view that sales of the product might have continued or been resumed – in particular in the event of a price rise – and therefore that it needed to assess on a case-by-case basis whether or not the merger led to the elimination of a competitive constraint [22] . In other cases, where the Parties have provided solid justification of the decision to exit the relevant market based for example, on the lack of profitability of a product relative to the size of the market, the Commission has taken the discontinuation of these products as the relevant counterfactual.

36. A particularly important instance of product discontinuation in the present case results from the decision of Ratiopharm in February 2009 (made public on 6 April 2009) to close its production facility at Zaandam and to supply the Dutch market from other facilities. The Parties have explained that, following this decision, Ratiopharm performed an analysis on all products manufactured at Zaandam, and based on factors such as […], determined a list of products to be withdrawn from the Dutch market, which was later approved by the management board. Ratiopharm stopped manufacturing these products at Zaandam in December 2009, and the manufacturing facility was closed. Its sales in the Netherlands since then consist only of product that is already in inventory. [23] […] ‬‪ ‬‪

37. This situation concerned a number of products for which the Commission services raised during the procedure the likelihood of serious doubts, received remedies and went on to market-test these remedies, namely capsicum, hydroxytoluic acid, imipramine, cortisone, methyldopa and riboflavin in the Netherlands [24] .

38. As regards products manufactured at Ratiopharm’s Zaandam facility, the Commission has accepted the view put forward by the Parties that the discontinuation of such products was an autonomous and definitive business decision by Ratiopharm and that manufacturing was unlikely to resume, whether from Ratiopharm's own remaining facilities or by having recourse to a third party contract manufacturer, even in the event of any plausible increase in the price, […] As a result, Ratiopharm's decision to exit the relevant markets constitutes the relevant counterfactual, and overlaps in these markets do not arise. For other products which were not manufactured at Zaandam where the Parties argued that products had been discontinued, this has been analyzed on a case-by-case basis (see footnote 22).

IV.2.1.7. Data provided by the Parties and possible market definition considered

39. In addition to any views expressed by the Parties as to the appropriate relevant market definition, the Commission asked the Parties to provide data and systematically considered all possible market definitions based on ATC3 and ATC4 levels, and, within the ATC4 level, on individual active ingredients (molecule level [25] ), taking into consideration the pharmaceutical form and route of administration where relevant.

40. This approach may, however, also group together different forms of a given medicine, which, as discussed above (see section IV.2.1.2), are generally not interchangeable. In many cases, this is not a problem either because the ATC product classification itself operates a distinction based on galenic form, or because only one galenic form of a medicine is available. The market investigation nonetheless revealed a number of instances in which this approach resulted in inappropriately grouping together different galenic forms, sometimes with the effect of misstating the Parties' market shares in the relevant market substantially.

41. In such instances, where the Commission could conclude that different galenic forms were unlikely to be substitutable to a significant degree, it has considered each of these possible market definitions based equally on a primary distinction between galenic forms using the NFC (see recital 16 above). Where the Parties' activities, even if they result in an overlap at ATC3, ATC4 or molecule level, do not overlap at the level of the NFC, and the NFC relates to galenic forms of the kind which can in general be presumed not to be substitutable, the Commission has been able to conclude that no horizontal overlap arises. Instances of this kind are, however, individually discussed in the market definition section of the decision.

42. The Commission has also systematically considered all market definitions discussed and not excluded in earlier cases and asked the Parties to provide data on this basis also.

43. In previous cases, the Commission has focused the market investigation for finished pharmaceuticals by looking in more detail in the first instance at markets where the Parties achieved a combined share of over 35% and the increment in the share was of over 1%. Such markets are referred to as "Group 1 markets". In the context of this Decision, the Commission has systematically considered all possible Group 1 markets on any alternative market definition in order to verify whether or not this threshold might be met and, if it was, whether serious doubts arose.

44. In the sections below dealing with the definition of the relevant product markets, a number of Group 1 markets are not individually described for the reason that, on full examination of those markets, no concerns arise regardless of any of these alternative market definitions. The reasons for this are set out at recital 386 below where these markets are also listed. In all of these cases, as well as for all non-Group 1 markets, the analysis is the same regardless of the exact product market definition and it can be left open.

45. It should also be noted that the analysis which is included in the individual market definition sections below relates exclusively, unless otherwise stated, to those national markets in which Group 1 markets potentially arose in this case based on some possible market definition. The national markets concerned are those which figure in the assessment section following each market definition, as well as those listed at recital 386.

46. In previous Decisions, finished pharmaceutical markets with a combined share of over 35% but an increment of 1% or less have been referred to as "Group 2" markets, and markets with a combined share in the range of 15% to 35% as "Group 3" markets. Unless specific issues in such markets were raised during the market investigation, markets which fell within these categories for all possible market definitions have not been considered in detail individually and they fall within the general conclusions of no serious doubts set out at recital 391 below.

47. As a result of sometimes quite significant differences between countries as to the structure of individual pharmaceutical markets, the definition of the relevant product market may sometimes vary from one country to another. Where this is the case for the countries considered in the present decision and this difference is relevant to the analysis, it is noted below.

IV.2.2. INTRODUCTORY REMARKS ON ASSESSMENT CRITERIA AND METHODOLOGY AND ON GENERAL CONCLUSIONS OF THE MARKET INVESTIGATION

IV.2.2.1. Conduct of the market investigation

48. As has been its practice in previous cases such as Sanofi-Aventis/Zentiva and Teva/Barr, the Commission in the current case sent extensive questionnaires to the vast majority of the Parties' competitors for all potential Group 1 markets, covering both general and product-specific issues [26] . It further consulted a large selection of wholesalers and hospital clients as well as all significant health insurance bodies and authorities in the Group 1 affected countries (i.e. those countries with at least one Group 1 affected market). Individual questions were followed up with respondents where necessary. The Commission's conclusions in the present case therefore rest on a wide consultation of all of the relevant market actors.

IV.2.2.2. Calculation and interpretation of market shares

49. In previous cases, the Commission has primarily relied on the value of sales recorded by IMS as a measure of market share. Calculating market shares on the basis of value has the advantage of allowing easy aggregation of products which may be based on different active ingredients, different quantities of which may be required to achieve the same therapeutic outcome.

50. However, as noted in previous decisions, calculating market shares based on value may have certain limitations in genericised pharmaceuticals markets, because generic producers often charge prices which may be significantly lower than those of originators [27] . Branded generics may also be able to command a price premium relative to non-branded ones, in particular where generic substitution of the brand does not systematically apply in pharmacies and prescriptions are not necessarily based on the international non-proprietary name (INN) of the active ingredient(s) concerned. In such cases, shares based on value may sometimes differ significantly from market shares based on volume. For molecule markets, volume shares can easily be assessed based on weight of active ingredient. For markets consisting of a number of molecules, a volume market share would need to be calculated normalized to some measure of therapeutic value such as days of treatment. The Parties have pointed, nonetheless, to certain, in their view, inadequacies of the latter measure. Although in previous cases the Commission has sometimes cited data based on days of treatment [28] or so-called "international units" [29] , the fact that the vast majority of potentially affected markets in the present case arise at the molecule level means that it has not been necessary to take a view on volume measures for multi-molecule markets in the context of this case, and such measures are in general not cited in the assessment below, although where available and potentially relevant to the assessment the Commission has considered them.

51. In the context of the present case, the Commission has systematically requested data based on weight of active ingredient for molecule markets, as well as on standard units, but waived the requirement systematically to provide days of treatment data. In the assessment below, market shares for molecule markets are provided where possible on both a value and volume basis. For an initial screening of possible wider-than-molecule markets, the Commission has nonetheless generally relied on the value of sales.

52. It should be further noted that the indication of market shares by volume may only make sense when markets are looked at on the basis of dosage and/or galenic form. Although, as discussed, distinctions of this type are often relevant also for market definition purposes and have been considered in the assessment, their relevance is not necessarily systematically the case and where it is not, neither measure taken alone is fully satisfactory.

53. The Commission cites market shares according to IMS data, corrected where necessary, and for the year 2009 unless otherwise stated; however, it has considered data for the three years from 2007-2009 in its analysis and, in certain cases, also more recent data. Where this leads to a modification to the assessment it has been cited in the relevant sections below.

IV.2.2.3. Market Entry

54. The market investigation in the present case also paid particular attention to the circumstances under which potential entry in a particular product by a rival generic company might constitute a constraint on the competitive behaviour of the Parties [30] .

55. In its earlier Sanofi-Aventis/Zentiva decision, the Commission discussed barriers to entry for generic pharmaceutical products to be developed ex novo, and concluded that in such an instance, barriers to entry could be high owing to the degree of investment required and the time it would take before bringing such a new product to market. This has been confirmed also in the circumstances of the present case as regards the introduction of products based on a different form or route of administration to an existing product (see section IV.2.1.2).

56. Competitors consulted during the market investigation in the present case nonetheless overwhelmingly confirmed that, under certain conditions, entry was feasible within a short period of time, typically within a year. More specifically, entry could be considered practicable in most cases within a short period if all of the following criteria were met: (i) the competitor already had the same pharmaceutical form and dosage of the target product in another market within the EEA, and especially in neighboring markets to the target market; (ii) the competitor already had a significant base of generic operations with a number of products in the target market, belonging to the same or closely related therapeutic areas; and (iii) the competitor had no specific economic disincentive to introduce the product, such as a risk of cannibalizing existing sales of another product. Although these conditions may seem restrictive, they were seen in the circumstances of the present case to occur quite often and therefore to be relevant for the competitive analysis.

57. Competitors further indicated that whether entry actually would occur also depended, of course, on whether it would be profitable. As was already confirmed in Sanofi-Aventis/Zentiva and Teva/Barr [31] , entry was therefore less likely in small markets which naturally could support only a limited number of players, in declining and legacy markets, in markets where the Parties had an existing cost advantage (or would acquire a cost advantage as a result of the transaction) which competitors could not match, and in markets where pricing regulations imposed additional pricing discounts on later generic entrants. This type of consideration was frequently cited by competitors in certain markets as a reason why they would be unlikely to enter with the product in question.

IV.2.2.4. Economies of scope

58. Replies to the market investigation, particularly from competitors, underlined the importance – already noted in Sanofi-Aventis/Zentiva – for many generic companies to achieve a wide portfolio of medicines in order to benefit from economies of scope [32] . To a varying extent in function of various criteria such as overall generic penetration, the position of the company concerned, and any legal restrictions, economies of scope may also make it possible to apply a strategy of range discounts which, all other things being equal, tends to favour the larger players on the market. Many market respondents anticipated that this was a factor favouring consolidation in the sector.

59. Factors cited in support of the importance of economies of scope on the supply side were efficiencies in the use of marketing and sales resources and in logistics, whilst on the demand side it was said to result from administrative efficiencies in the ordering process of wholesalers and of other purchasing collectives, in inventory management (since smaller amounts needed to be held in inventory from a supplier with which orders were frequent), and in the desire to leverage countervailing buyer power.

60. The provision of a given product across a range of geographies also gives rise to economies of scale. However, for the vast majority of products considered, a number of providers of the product exist at EEA level and the Parties do not achieve, as a result of the transaction, a significant increment at EEA level. Indeed, there were very few markets which were affected in more than one or two Member States, indicating that, with a few exceptions, overall generic consolidation in the EEA remains limited, even at the level of individual products.

61. As regards specifically the Netherlands, the inability of smaller competitors to match the range of products of the Parties and therefore achieve similar economies of scope was considered a barrier to entry by a significant number of competitors, even though the minimum scope required was not clear and the possibility of profitably occupying a niche position on the market appeared to remain open in a number of cases. The specific position of the Parties on the Dutch market has been discussed in more detail below(recitals 70-76).

IV.2.2.5. Price competition and pricing regulations

62. As similarly noted in previous decisions [33] , for the purposes of assessing competition in pharmaceutical markets it is also necessary to bear in mind that such markets may display certain rigidities as regards both pricing and entry.

63. In the market investigation, the Commission specifically asked about the ability of the Parties to determine prices of existing products post-merger in the light of pricing and reimbursement regulations. At a general level, there was a good deal of consensus on the part of all market participants that this ability was in many cases subject to a number of constraints.

64. As regards OTC products, it was generally considered that the Parties could freely determine prices to wholesalers, which in turn might lead to a variation in the retail price, although the maximum retail price of some OTC medicines is regulated in certain countries.

65. For prescription medicines, quite a number of factors were cited in support of the view that prices in all the affected countries for many medicines in mature generic markets were upwardly inflexible or could only be increased with difficulty. Reference pricing systems, relatively long-term contracts, and negotiations on the price with one or a few powerful players all supported this view. In such mature markets, there are frequently a number of generic entrants or potential generic entrants and discounts from the originator price are expected and even sometimes prescribed, and in any case a condition for commercial success.

66. For hospital drugs, but also for prescription drugs generally in certain countries, the use of tendering by public authorities and/or insurers ("bidding markets") was another factor cited in support of the view that generic firms would not easily be able to raise prices, although the conclusion in this respect was less unanimous, with some respondents claiming that three or four competitors were required to achieve competitive prices.

67. It follows that, at moderate concentration levels, the existence of pricing constraints is one factor allowing the Commission to conclude that smaller competitors may act as a sufficient constraining influence [34] . Such a consideration supports the conclusion of no serious doubts in a number of places in this Decision, and in particular in the cases dealt with at recital 386 below.

68. Nonetheless, at very high concentration levels for a particular product and/or in the presence of additional features of the market structure, the relevance of pricing regulations and tendering as a sufficient competitive constraint cannot, on the basis of the market investigation, be concluded with confidence. Thus, many respondents to the market investigation, when they did believe that price increases for prescription medicines were possible, specifically cited the eventuality of very high market shares at product level in support of this possibility. It should also be noted that, if authorities or insurers are unable to constrain prices, at doctor and patient level there is likely, for all but more routine medications, to be an absence of price sensitivity due in particular to the fact that patients do not directly bear the costs.

69. Finally, it should in any case be borne in mind that the existence of a price ceiling does not exclude that the relevant counterfactual in the absence of the merger would have been continuing price decreases. Many national markets have, indeed, shown very significant decreases in the prices of common generic medicines over recent years, a trend which relies on sufficient competition in the market. The Commission in its assessment has therefore relied also on the basic economics of generic competition, namely, for unbranded generics, the fact that the goods involved are non-differentiated (and therefore competitors compete on price).

IV.2.2.6. Specific situation in the Netherlands

70. The Dutch pharmaceutical market may be considered to show a high degree of generic penetration. Generic pharmaceuticals represented 57% of all prescriptions in 2009, and during the same year the average price of generic medicines decreased by 22% [35] .

71. As indicated in the table at recital 7 above, third party figures for the second half of 2009 estimate the share of generic sales by value of the Parties at around 40%. Teva's share of around 29% has declined from around 33% in first half of 2007. Ratiopharm's share peaked at around 18% in second half of 2008 but over the following twelve months has declined significantly [36] . As no clear trend can be determined, an estimate of shares in the range of 40-45% for generics seems to be justified.

72. Sandoz (Novartis' generic subsidiary) has, over this period, consistently occupied the second position. On the latest figures for second half of 2009, it would appear that both Actavis and Apothecon/Mylan have overtaken Ratiopharm and that therefore it would have recently slipped from third to fifth place [37] . This notwithstanding, Teva's existing position as market leader will be considerably reinforced as a result of the notified transaction.

73. The overall market structure post-transaction on a view limited to the generic segment and using the SFK figures for second half of 2009 would look approximately as follows:

Teva/Ratiopharm |40% |

Sandoz (Novartis) |20% |

Mylan/Apothecon |14% |

Actavis |12% |

Centrafarm (Stada) |4% |

Others |12% |

74. Specific concerns as to the overall strength of the combined firm (leaving aside comments on biosimilars, see below, and for individual products) were raised by a few customers in the Netherlands. Some respondents drew the Commission's attention to the competitive advantage for a generic company to offer a wide range of products and the effect of range discounts on the behaviour of distributors and pharmacies (see further section IV.2.2.4 above). In the longer run, respondents both in the Netherlands and in some other countries expected further consolidation of the generic industry due to these economic features of the industry.

75. A minority also pointed out, however, that preference policies of insurers in the Netherlands (essentially, choosing the cheapest price for a given drug independently of range discounts) allowed, at present, some niche players to maintain a market position which might otherwise be more difficult [38] . This preference policy applies to a range of the most common generic medicines, but not to all medicines [39] .

76. Although overall concerns as a result of the merger do not arise (see section IV.7 below), as will be seen below the market investigation has nonetheless found competition concerns in a number of individual product markets in the Netherlands which, in a number of instances, result from or are reinforced by considerations of the economies of scope in-country and of scale in production available to the Parties post-merger. Such instances are indicated in the discussion of the relevant markets in the next section. The Parties have submitted remedies for these markets and, as will be seen in the remedy section of this Decision, the combined strength of the two firms in the Netherlands has needed to be given due weight in the design of these remedies.

IV.2.2.7. Structure of the Decision

77. For many markets and geographies, the parties' joint market shares do not exceed 35% on any of the alternative market definitions considered, and/or the increment is below 1% on any of these alternative market definitions (non-Group 1 markets, see recital 43 above). As in previous Commission decisions, these markets are dealt with "en bloc" unless particular situations were identified which required a more detailed discussion. For these markets reference is therefore made to recital 391 below.

78. In the context of the present case, involving a merger of two largely generic companies providing unbranded generic pharmaceuticals and with, generally speaking, sufficient generic competitors remaining on the market, the Commission is also able, in the vast majority of cases, as a result of the market investigation to exclude serious doubts for those products where at least three generic competitors would remain on the national market in question, each of them with at least 5% market share and with an existing substantial presence in the country concerned in terms of a portfolio of products in the same or related therapeutic areas. In such instances, there are good reasons to conclude that the Parties would be unlikely to be in a position, post-merger, to increase prices over the long term without one or more of these competitors responding by increasing output (except in certain instances as a possible result of the increased economies of scope and scale from which the Parties would benefit in the Netherlands). Third parties have not raised substantiated concerns in respect of any of these markets. All of these product markets have been individually assessed but the results are summarised together at recital 386 below due to the common reasoning which applies in all such cases.

79. It is important to note that the approach followed by the Commission for presenting its conclusions in relation to such markets represents simply a shorthand for describing, ex-post, the assessment of a large number of markets (over one hundred molecule/country combinations) where the same reasoning and conclusions apply.

80. In the relevant assessment sections below, the Commission provides a detailed and individual assessment of: (1) all those Group 1 product markets and geographies in which possible competition concerns were identified during the market investigation and where such concerns could not be eliminated based on general features of the market and the competitive environment, but where additional factors needed to be considered; and (2) all markets where serious doubts arise.

81. For the avoidance of doubt, it should be noted that Group 1 markets may arise, for a given product market, in certain geographies which fall within the scope of the general conclusion of the absence of serious doubts covered by recital 386 as well as in other geographies which require a more extended discussion. In such instances the situation in the latter countries is discussed individually, while for the remaining countries the conclusions of recital 386 apply.

82. In other cases, a certain number of product markets require a discussion from the standpoint of market definition in order to establish certain features of the relevant product market but, once this has been done, the relevant conclusions as to the absence of serious doubts presented at recitals 386 or 391 apply. In such instances, an assessment of individual geographies is not presented in the text.

IV.2.3. RELEVANT GEOGRAPHIC MARKETS

83. In previous decisions, the Commission has held that the relevant geographic markets for finished pharmaceutical products were national [40] . The market investigation in the present case supports the view that competition for such products essentially takes place at a national level, due in particular to national approval procedures and reimbursement schemes. Differences in national clinical guidelines and medical views and preferences may also play a role in certain instances.

IV.2.4. RELEVANT PRODUCT MARKETS

A5A – Choleretics and cholekinetics – OTC

Market definition

84. The A5A category contains drugs for bile therapy and lipotropics in combination. Both Parties are active in the ATC 4 class A5A1. The A5A class includes products indicated as choleretics and cholekinetics.

85. The Commission has previously assessed this market at the ATC 4 level, [41] at which level the Parties achieve a [50-60]% market share by value in Hungary. There is only one other competitor at this level, Rowa Wagner, which accounts for the remaining [40-50]%.

86. However, the Parties argue that this level is not appropriate for the assessment of pharmaceuticals in this class in Hungary because the products belonging to the same ATC 4 class are not fully substitutable.

87. Teva is present in this class in Hungary with Cholagol, a product containing a number of active ingredients of vegetable origin such as: curcuma longa, frangula alnus, menthol, and salicylic acid. Most of the ingredients have a stimulating effect on production and secretion of bile. In addition Cholagol moderates spasms of the smooth muscles of the biliary tracts and has an anti-inflammatory effect and a slightly laxative effect. The product is used as adjuvant therapy in case of cholelithiasis, chronic cholecystitis, conditions after surgery on biliary tract with symptoms of dyspepsia, dyspeptic troubles during chronic hepatopathies.

88. The product of Ratiopharm belonging to the same ATC 4 class in Hungary is called Bilobene and it consists of different ingredients than Cholagol, i.e. fumaria officinalis. The product is used to regulate bile and, according to the Parties, has a distinct medical use compared to Cholagol. Bilobene is used for treatment of spasms of the gallbladder and of the biliary tract and in general it is used for shorter treatment than Cholagol.

89. Therefore the Parties products are based on different ingredients. What is more, these products exist in different galenic forms on the market: while Cholagol is present on the market in oral liquid ordinary form (drops), Bilibene exists in oral solid ordinary (tablets).

90. The responses to the market investigation indicate that the products of the Parties are used for different purposes and could be substitutable, if at all, only to a very limited degree. [42] The market investigation indicated also that Cholagol, contrary to Bilobene is, reimbursed at a 100% rate for socially disadvantaged persons, whereas Bilobene is not reimbursable. The product of Rowa Wagner, Rowachol, is partly substitutable to Cholagol but not to Bilobene as it is indicated for treatment of liver complaints and conditions such as cholecystics and gall stones.

91. It follows that the Parties' products belong to separate relevant product markets and, accordingly, no overlap arises.

A11D – Vitamin B1 and combinations

Market definition

92. The A11D class contains vitamin B1 pharmaceuticals and their combinations with other vitamins (e.g. plain vitamin B1, vitamin B1 combinations with vitamin B6 and / or vitamin B12). The Parties argued that the market should be defined based on the ATC3 level. The Commission has previously analysed the market at the ATC3 level [43] but in Teva/Barr also took into consideration in its analysis the molecule level, although it found no indications that this should be the relevant market definition.

93. The A11D class is further subdivided into ATC 4 classes. The Parties overlap in the following classes: A11D3 and A11D4. The Parties manufacture and sell thiamine (vitamin B1) and pyridoxine thiamine (vitamin B1 in combination with vitamin B6) belonging to this class. These molecules can be used to treat deficiency of vitamin B1 (or vitamine B1 and vitamin B6 respectively) or, in the OTC segment, as a general food supplement and for self-medication.

94. Thiamine (vitamin B1) is a medicinal product which could be used to treat or mitigate a specific condition of deficiency of vitamin B1 which could subsequently lead to serious diseases, such as beri-beri.

95. Pyridoxine thiamine is a combination of thiamine with vitamin B6.

96. The Parties argue that in most instances plain thiamine is likely to be prescribed in very similar conditions as the combination of thiamine with pyridoxine (vitamin B6), especially in the OTC segment. The market investigation also indicates that pyridoxine thiamine and thiamine are used for the same conditions/deficiencies.

97. Serious doubts arise irrespective of the market definition in the Netherlands; whereas in Germany, under all alternative market definitions serious doubts can be excluded. Therefore there is no need to decide on the exact market definition in this case.

Germany

98. In Germany the Parties overlap at the OTC segment of the A11D class. The Parties have market shares of [10-20]% in this class (increment of [0-5]% due to Teva). At the ATC 4 levels, the combined market shares are also below 35%. [44] High market shares for Germany arise only at molecule level, namely for pyridoxine thiamine ([30-40]%, increment [0-5]% due to Teva) and thiamine ([50-60]%, increment [0-5]% due to Teva). However, competitors exist for these molecules in Germany; for pyridoxine thiamine: Abbott ([20-30]%, Sanofi – Aventis [5-10]% and Stada [5-10]%) and for thiamine: Merck KGAA [20-30]%, Hevert [5-10]% and Pascoe [5-10]%.

99. The increment due to the transaction is very low and in each class there exist a number of competitors. What is more, the market investigation indicated that the molecule level is not the appropriate level for the assessment of pharmaceuticals belonging to this group in Germany, and that it therefore it is more likely that the market is wider than the molecule. The Parties' market shares are below 35% for both ATC 4 and ATC 3 classes.

100. The Commission therefore concludes that no serious doubts arise with respect to this market in Germany.

The Netherlands

101. In the Netherlands the Parties are both present in this class with the molecule thiamine. The Parties have combined 100% market shares at ATC3, ATC4 and molecule level for pharmaceuticals sold OTC (with [10-20]% increment due to Ratiopharm).

102. If one considers the overall market of pharmaceuticals OTC (over-the-counter) and Rx (prescription) in the A11D class, the Parties will obtain a combined market share of [90-100]% post-transaction with 2 small competitors remaining for the products belonging to another ATC4 class, A11D4. [45] These competitors are Medcor ([0-5]%) and Merck KGAA ([5-10]%) with Cyanocabalamin Pyriodoxine Thiamine sold Rx in different galenic form to the Parties' products. The competitors' products are in the form of parenteral ordinary while the Parties overlap only at the OTC level, where they are both active in oral solid ordinary form.

103. Therefore, the transaction results in a merger to monopoly irrespective of the level at which the market would be assessed in the A11D class in the Netherlands.

104. It results from the above that the transaction will lead to serious doubts irrespective of the market definition.

A11G – Ascorbic acid (Vitamin C)

Market definition

105. The A11G class contains vitamin C including combinations with minerals. The A11G class is subdivided into two ATC 4 categories: A11G1 which consists of plain vitamin C, including vitamin C salts and A11G2 where vitamin C combinations belong. The Parties submitted that all the products belonging to the A11G class have the same therapeutic properties and that the relevant market should be defined with reference to the ATC 3 class A11G.

106. However, the exact market definition in relation to A11G can be left open since the transaction leads to serious doubts irrespective of the market definition in this class in the Netherlands.

Netherlands

107. Post transaction, in the A11G class in the Netherlands, the Parties will achieve a combined market share in the OTC segment of [70-80]% (increment [30-40]% due to Teva) with only one other important competitor of [20-30]% (Stada) [46] and another minor competitor Will Pharma (with a product in oral long lasting form and a market share of [0-5]%). [47] [48] […]

108. All products sold in the Netherlands in this class belong to the ATC4 class A11G1 (plain vitamin C) and are based on the same molecule (ascorbic acid). The Parties' combined market shares at ATC4 and molecule level are the same as at the ATC3 level.

109. The market investigation confirmed that, in addition to the very high combined market position of the Parties on the vitamin C OTC market, both Parties and their main competitor offer products in the same galenic form - oral solid ordinary. Post-transaction, Teva and Ratiopharm combined would be the only player for 500 mg tablets and Stada would be the only significant remaining competitor.

110. It results from the above that the transaction will lead to serious doubts irrespective of the market definition.

A11X – Other vitamins

Market definition

111. The A11X class consists of the vitamins not belonging to any other class (it should be noted that the ATC3 classes ending in "X" are a residual class of miscellaneous molecules and therefore this is not a likely market definition).

112. The A11X class is subdivided into four categories. The A11X2 category consists of plain vitamin B6, also known as pyridoxine. The A11X9 contains of other vitamins not belonging to any other class and includes molecules such as panthotenic acid, ryboflavine, para-aminobenzoic acid etc.

113. The Parties overlap in the Netherlands in two molecules, namely: riboflavin (which is sold only OTC) and pyridoxine (both Rx and OTC). In the Teva/Barr decision the Commission found that these molecules, although belonging to the same ATC 3 class, are not substitutable and therefore constituted separate product markets.

114. Pyridoxine is a plain molecule B6 and is used as a food supplement as well as in cases of deficiencies of this molecule. Riboflavin – i.e. vitamin B2 - is also used as a food supplement and in case of vitamin B2 deficiencies, e.g. severe depletion of vitamin B2 that can escalate to a disease known as ariboflavinosis.

115. In the Teva/Barr decision, the Commission concluded that drugs based on riboflavin and pyridoxine constituted separate relevant product markets. The market investigation in the present case confirmed that products based on these different molecules, i.e. pyridoxine and riboflavin are used for different purposes and cannot be considered substitutes. More particularly the market investigation confirmed lack of substitutability of riboflavin with other molecules belonging to the same ATC3 class.

Pyridoxine, Netherlands

116. In the A11X2 class the Parties achieve a combined market share of [90-100]% due to their presence in this class with the molecule pyridoxine (in the Netherlands all the products belonging to A11X2 class are pyridoxine-based).

117. However, the Parties overlap only on the Rx segment of pyrodixine and not on the OTC segment. The Rx segment of pyridoxine constitutes only 9% of the overall pyridoxine market in the Netherlands. The Parties would achieve a combined market share of [80-90]% on this market (with one competitor remaining, i.e. Stada at [10-20]%). However, the Parties' products are in different galenic form.

118. Ratiopharm's product is in oral solid ordinary form (tablets) whereas Teva's product is in parenteral form (injections). Their unit price also differs significantly: while the price per unit for parenteral ordinary (Teva) is 1,38 EUR, for oral solid ordinary form (Ratiopharm) it is 0,02 EUR. Due to the different routes of administration of these products and the large difference in price, the substitutability of these two forms can be excluded.

119. Taking into account the small part of the overall molecule market where the Parties' overlap as well as different galenic forms in which these products exist on the market and the existence of one competitor, the transaction will not lead to serious doubts with regard to the market of pyridoxine in the Netherlands.

Riboflavin, Netherlands

120. With respect to pharmaceuticals based on riboflavin, the Parties' combined market shares post transaction would amount to [90-100]% based on the A11X9 ATC4 class and more particularly on the molecule level, riboflavin ([90-100]%, increment of [20-30]% due to Ratiopharm). [49]

121. However, during the market investigation, the Parties claimed that Ratiopharm has discontinued its riboflavin-based products (Riboflavine-RAT). Ratiopharm stopped producing riboflavin in December 2009 […]. In light of this, and consistent with the general approach to this issue as outlined above, it is concluded that the transaction does not raise serious doubts.

B3X – Anti-anaemic products, including folic acid

Market definition

122. The class B3X includes prescription folic and folinic acid preparations for treatment of anaemia when it is based on a folic acid insufficiency, as well as OTC folic acid used for self-medication and as a nutritional supplement. It also includes prescription products based on calcium folinate which are specifically indicated in anaemia induced by chemotherapy. A Group 1 market arises only in the Netherlands.

123. The market investigation has confirmed that, for the Netherlands, the OTC and prescription markets should be treated separately, and that products based on calcium folinate within the prescription segment should be excluded from the relevant prescription market due to their different use.

124. Folinic acid products are also classified, when they have additional indications, in class V3D which covers detoxifying agents for anti-neoplastic treatment. This market was looked at in Teva/Barr, where the Commission concluded that calcium folinate constituted a separate relevant market within the class [50] .

125. It follows that relevant product markets arise in the Netherlands for OTC folic acid and prescription folic acid. The inclusion or otherwise of folinic acid in the relevant market definition can be left open, as there is no significant competitor on the market with this molecule.

126. For the OTC segment, serious doubts do not arise since the conclusions starting at recital 386 below apply to this segment.

Folic acid – prescription segment – Netherlands

127. The Parties achieve a combined share of [60-70]% by value and [60-70]% by volume in the prescription segment of folic acid. There is only one other competitor (Actavis with [30-40]%), and the Ratiopharm increment at [10-20]% is significant.

128. In view of the degree of market concentration as a result of the merger and the elimination of an important competitor, as well as in view of the Parties' overall strength in the Netherlands post-merger, serious doubts arise in the folic acid (B3X) prescription market in the Netherlands.

129. The Parties have offered to divest Ratiopharm's product.

C2A – Anti-hypertensives, plain

Market definition

130. The C2A class includes a group of substances used primarily for the treatment of hypertension. It comprises plain antihypertensives and combinations other than those with diuretics. Products which are mainly centrally-acting are included in the ATC4 class C2A1, while products which are mainly peripherally-acting are included in the ATC4 class C2A2.

131. In view of high combined market shares for these molecules, the market investigation looked more closely at the cases of methyldopa, prazosin and terazosin.

Methyldopa

132. Methyldopa is an anti-hypertensive belonging to the group of centrally-acting antihypertensives (C2A1) with specific indications in pregnancy-induced hypertension and for which the Parties achieved high pro forma market shares in the Netherlands. The molecule is available in the Netherlands only in oral solid form.

133. Although a certain number of indications pointed in the direction of the molecule as the relevant market in view of the specificity of its applications, the market definition can nonetheless be left open for this molecule, as serious doubts do not arise.

Prazosin

134. Prasozin contains a piperazinyl quinazoline nucleus and is a potent and selective alpha-1 receptor antagonist. It is used to reduce blood pressure by blocking alpha-1 receptors in the arterioles and veins. One of the main indications for this molecule is benign prostatic hypertrophy (BPH).

135. The market investigation in Germany confirms the Parties' view that the molecule is not the relevant market for the assessment of this transaction, as at least a number of molecules belonging to the same ATC4 class (for example doxazosin and terazosin) are substitutable for prazosin by virtue of their indication for BPH, mode of action and side effects, and switching would be anticipated in the event that prices were to rise. Moreover some respondents to the market investigation suggested that prazosin-based products may also be substitutable to some products classified in a different ATC3 class, G4C, which are also indicated for BPH.

136. On the basis of the results of the market investigation, the market definition based on molecule level can therefore be excluded for the purpose of this decision. It can, however, be left open whether the ATC3, ATC4 or only the two or three molecules taken together (prazosin and doxazosin and/or terazosin) would constitute a relevant product market as the transaction would not lead to serious doubts under any of these market definitions.

Terazosin

137. The Parties stated that terazosin is a selective alpha 1 antagonist, which may be used for the symptomatic relief of BPH. The Parties argue that a number of other alpha 1 blockers are available on the UK market, which would otherwise be a Group 1 market if defined at the level of the molecule. Alternatives, in the Parties' view, would include alfuzosin, doxazosin, indoramin, prazosin, tamsulosin and terazosin) and therefore they argued that the market should be defined at a level wider than the molecule.

138. As mentioned above for prazosin, the market investigation confirms the Parties' view that the molecule is not the relevant market for the assessment of this transaction, as at least a number of molecules belonging to the same ATC4 class (for example doxazosin and prazosin) are substitutable for terazosin by virtue of their indication for BPH, mode of action and side effects, and switching would be anticipated in the event that prices were to rise. Moreover some respondents to the market investigation suggested that terazosin-based products may be substitutable to some products classified in a different ATC3 class, G4C, which are indicated for BPH.

Assessment

C2A1 – methyldopa – Netherlands

139. The Parties would achieve a combined market share of [40-50]% in the C2A1 class and [60-70]% in the molecule methyldopa (increment of [10-20]% due to Ratiopharm). There would remain post-merger two other generic providers, Novartis ([10-20]%) and Stada ([20-30]%). These are both significant competitors in the Netherlands.

140. However, it has been established that Ratiopharm had already decided to exit this market before the merger in the context described in recital 36 above. As a result, pursuant to the approach described there and although the Parties initially offered a remedy for this market, serious doubts can be excluded on the basis of there being no overlap on the relevant counterfactual.

C2A2 - prazosin - Germany

141. In Germany the Parties achieve a combined market share of less than 15% in the C2A class, [20-30]% in the C2A1 class, [20-30]% based on the combination of the molecules prazosin and doxazosin, and [20-30]% based on the combination of the three molecules. A number of credible competitors will remain in Germany for both molecules, such as Dexxon and Eurimpharm for prazosin and Novartis, Mylan, Pfizer and Stada for doxazosin.

142. It can therefore be concluded that serious doubts do not arise as regards the relevant market including prazosin in Germany, regardless of the exact definition of this market.

C2A2 - terazosin - UK

143. In the UK the Parties achieve a combined market share of [10-20]% in the C2A class, [10-20]% in the C2A2 class, whereas no affected market arise based on the combination of the molecules terazosin, prazosin and doxazosin.

144. It can therefore be concluded that serious doubts do not arise as regards the relevant market which includes terazosin in the UK, regardless of the exact definition of this market.

C3A – Diuretics

Market definition

145. The C3A class consists of diuretics, which are medicines that elevate the rate of urination and are prescribed to treat hypertension as well as more severe conditions such as heart failure, cirrhosis of the liver and certain kidney disorders.

146. The market investigation considered more specifically the case of hydrochlorothiazide (HCT), which is a first line diuretic drug of the thiazide (C3A3) class that acts by inhibiting the kidneys' ability to retain water.

147. The market investigation showed that the thiazide diuretics have specific indications which make them not substitutable in terms of demand with other diuretics from the C3A class and in particular with loop diuretics (C3A2).

148. Group C3A5 consists of thiazide diuretics in combination with potassium-sparing agents. Potassium-sparing diuretics are generally used in combination with other diuretic drugs that would otherwise tend to lower potassium levels in the body to potentially dangerously low levels. The market investigation did not allow the Commission to form a firm view as to whether or not the combination products should be included in the relevant market for thiazide diuretics. Potassium-sparing diuretics are also available on a standalone basis in the Netherlands and are then classified in C3A1.

149. In any case, a clear majority of competitors including all of those present in the affected market viewed competition to take place at the level of the molecule HCT.

150. Accordingly, a relevant market arises in the Netherlands which is no wider in scope than the ATC4 classes C3A3 and C3A5 taken together, but likely to be limited to HCT.

151. It can nonetheless be left open whether HCT constitutes a separate relevant market as, independently of this, serious doubts arise also on the alternative market definitions in the absence of a remedy for HCT and are addressed by the remedy outlined below.

Thiazide diuretics (C3A3) – hydrochlorothiazide – Netherlands

152. The Parties have a combined market share of [70-80]% by value and [60-70]% by volume in HCT and of [70-80]% by value at ATC4 level, i.e. for all plain thiazide diuretics. Considering classes C3A3 and C3A5 together, the combined market share by value would be [60-70]%. C3A3 products in the Netherlands are available only in oral solid form.

153. By value, competitors in HCT are Novartis ([10-20]%), Actavis ([5-10]%), Mylan ([0-5]%) and Stada ([0-5]%).

154. The bulk of the Parties' shares in either C3A3 or C3A3+C3A5 are constituted by HCT, respectively [80-90]% and [70-80]%. Within the C3A3 class, the Parties also overlap in chlortalidone, spironolactone and indapamide. Within C3A5, they overlap in hydrochlorothiazide in combination with the potassium-sparing diuretic amiloride, but with a minimum increment due to Ratiopharm and there are several other competitors with this combination.

155. It follows that the Parties are close competitors on any of the alternative market definitions and that the merger would eliminate an important competitive constraint in particular for monotherapy HCT. Therefore, in combination with the specific position of the Parties on the Dutch market post-merger discussed at recital 61 above, serious doubts arise on the Dutch market for thiazide diuretics, whether or not as combination therapy or limited to HCT.

156. The Parties have offered to divest Ratiopharm's HCT product, thereby eliminating the entire overlap in monotherapy HCT. At ATC4 level, the remaining increment due to Ratiopharm would be only [0-5]% and on the basis of the two ATC4 classes in combination it would be [0-5]%.

H2A – Systemic corticosteroids

Market definition

157. The market investigation showed that oral (H2A2) and injectable (H2A1) corticosteroids serve distinct patient groups and fall within separate product markets. The Parties overlap in oral formulations only, i.e. H2A2.

158. Within the overall group of oral corticosteroids, the Parties' combined market shares were indicative of potential concerns only in relation to cortisone, hydrocortisone and dexamethasone. Accordingly, it is only necessary to consider the correct market definition in relation to these three molecules.

159. As regards the molecule level, the market investigation indicated that oral cortisone has a reduced range of applications and for all of these is substitutable with certain other molecules from the same ATC4 class, in particular with hydrocortisone. Accordingly, it may be that the molecule level definition is not the correct market definition for this molecule. This can nonetheless be left open as serious doubts for cortisone do not arise.

160. […], at a late stage of the proceedings, significant overlaps in oral dexamethasone and oral hydrocortisone in the Netherlands [were identified]. Accordingly, the substitutability of these molecules with other molecules has not been able to be market tested.

161. Nonetheless the Parties have noted, and publicly available sources have confirmed, that these corticosteroids have very different glucocorticoid potency profiles, as well as durations of action. The Parties note that the potency of dexamethasone is approximately 5-7 times that of prednisolone, 20-30 times that of naturally-occurring hydrocortisone, and 25-35 times that of cortisone. Dexamethasone is thus, in their view, only prescribed for short-term treatments, as it is unsafe for long-term use.

162. For this reason, the Parties acknowledge that dexamethasone and hydrocortisone may not be considered as fully interchangeable with each other or with other corticosteroids, and would therefore belong to separate product markets.

163. Whilst the Commission has not been able to establish possible substitutability between cortisone and hydrocortisone, it notes that cortisone, although significantly less expensive (EUR […] versus EUR [..] per standard unit), is in uncommon use. In any case, this can be left open as regardless of whether ordinary cortisone were part of the same market, serious doubts would arise.

164. There are therefore sufficient grounds to consider that dexamethasone and hydrocortisone (or hydrocortisone together with cortisone) constitute distinct relevant markets. The Commission is not able to conclude this with certainty, however, since the Parties' views have not been contrasted with third Parties and the characteristics of the remaining products in the market have not been investigated. Under such circumstances, in its earlier Pfizer/Wyeth Decision the Commission considered that the relevant market could nonetheless be defined on the basis of the available objective elements even if there remained some doubts due to the inability to carry out a full consultation of the market for the product in question [51] .

165. The assessment is therefore carried out on the basis of separate relevant markets for oral dexamethasone and oral hydrocortisone in the Netherlands.

Oral corticosteroids (H2A2) – cortisone, hydrocortisone and dexamethasone – Netherlands

166. The transaction involves a merger to monopoly at the molecule level for oral cortisone and high combined market shares for oral dexamethasone ([90-100]%) and oral hydrocortisone ([60-70]%), as well as significant overlaps in oral prednisolone ([60-70]%) and oral prednisone ([50-60]%). At the overall ATC4 level, the Parties achieve a combined market share of [60-70]%.

167. The Parties have indicated at a late stage in the proceedings that Ratiopharm had in fact withdrawn its oral cortisone product prior to the merger being announced. Pursuant to the approach described in recital 36 above, on the basis of the relevant counterfactual, no overlap occurs in respect of oral cortisone.

168. For both oral dexamethasone and oral hydrocortisone, the only remaining competitor is Stada ([5-10]% and [30-40]% respectively). For dexamethasone, the Parties are each others' closest competitors whilst for hydrocortisone the increment is also significant, at [10-20]% (Ratiopharm). Considering also the overall strength of the Parties in the Netherlands post-merger, it follows that serious doubts arise for oral dexamethasone. Similarly, regardless of whether or not oral cortisone is included in the relevant market, serious doubts arise for oral hydrocortisone.

169. For the oral forms of prednisolone, which is by far the most prescribed molecule in the class, and prednisone, and for the ATC4 class as a whole, serious doubts do not arise for the reasons set out at recital 386 below.

170. Teva has offered to divest Ratiopharm's oral dexamethasone and hydrocortisone products, thereby removing the overlap in these molecules.

H3B – Anti Thyroid Preparations

Market definition

171. An affected market would arise in the Netherlands in the event that the market were defined with reference to the single molecule propylthiouracil.

172. The market investigation suggested that propylthiouracil may be substitutable with a certain number of other molecules, to which switching would be anticipated in the event that prices were to rise, and in particular with methylthiouracil and benzylthiouracil. However, neither of these closely related molecules appears to be available in the Netherlands.

173. The only product in the H3B class in the Netherlands sold by a company other than the Parties is thiamizole (also known as methimazole). According to the Parties, thiamizole is generally considered as a first-line therapy, whilst propylthiouracil is generally considered as second-line drug therapy, except in patients who are allergic to or intolerant of thiamizole. This is because propylthiouracil and thiamizole do not have the same safety profile. Consequently, the Parties accept that propylthiouracil and thiamizole cannot be considered as fully interchangeable and would therefore belong to separate product markets.

174. The market investigation produced no further evidence on the substitutability or otherwise of propylthiouracil and thiamizole, but the view of the Parties is nonetheless fully consistent with the medical literature available to the Commission. According to such literature, severe liver injury and acute liver failure, in some cases fatal, have been reported in patients treated with propylthiouracil and therefore it is recommended that propylthiouracil should be reserved for patients who can not tolerate thiamizole.

175. Because of the risk of fetal abnormalities associated with thiamizole, propylthiouracil may, on the other hand, be the treatment of choice when an antithyroid drug is indicated during or just prior to the first trimester of pregnancy.

176. It follows that thiamizole and propylthiouracil belong to separate relevant product markets, at least in the Netherlands.

Propylthiouracil - Netherlands

177. As indicated, the transaction results in a merger to monopoly for the molecule (Teva [50-60]%, Ratiopharm [40-50]%). In view of the limited turnover within the market and the combined position of the Parties on the Dutch market post-merger, new entry can also be considered unlikely to be very attractive.

178. Accordingly, serious doubts arise on the Dutch market for propylthiouracil.

179. The Parties have offered to divest Ratiopharm's product.

J1F – Macrolides and similar types

Market definition

180. Macrolides are systemic antibacterials within the overall J1 class. According to the Parties, all J1 drugs can be used to treat a wide variety of infections and many infections can be treated by a wide variety of J1 products. Certain J1 products require dedicated production facilities, in particular J1C penicillin, J1D, J1H penicillin and J1P, but others do not. For the purposes of the present decision it is unnecessary to conclude on the overall market definition and the substitutability of these various products. Topical antibiotic creams (D6A) and gynaecological antibacterials (G1C) are excluded from this category in IMS.

181. Due to the degree of overlaps, the market investigation in the present case looked in more detail at two systemic antibacterial agents, erythromycin in Hungary and azithromycin in a number of countries.

Erythromycin

182. Erythromycin is a macrolide antibiotic that has an antimicrobial spectrum similar to or slightly wider than that of penicillin. The market investigation has shown that this molecule only has residual uses in Hungary, and has largely been replaced by other macrolide antibiotics, all of which are derivates of erythromycin. The replacement of erythromycin is explained by its sensitivity to acid in the stomach, which makes its oral administration inefficient.

183. The market investigation has suggested that erythromycin is normally substitutable by other macrolide antibiotics, which have similar efficacy (although the precise scope of action varies from one molecule to another). Such substitution would be likely if its price were to rise. Accordingly, it might be incorrect to define a relevant market at the level of the molecule.

184. Nonetheless, this issue can be left open since the Parties do not overlap, but are rather complementary, in terms of galenic form. Teva's product is an oral liquid destined for use in pediatrics, whilst Ratiopharm's is an oral solid form. The market investigation has confirmed that these formulations serve clearly distinct patient groups and therefore are distinct in terms of demand and it follows that no affected market arises.

Azithromycin

185. Azithromycin is derived from erythromycin and is one of the world's best-selling antibiotics. Azithromycin is used to treat or prevent certain bacterial infections, most often those causing middle ear infections, tonsillitis, throat infections, laryngitis, bronchitis, pneumonia, Typhoid, and sinusitis. In recent years, it has primarily been used to prevent bacterial infections in infants and those with weaker immune systems. It is also effective against certain urinary tract infections and venereal diseases, such as non-gonococcal urethritis, chlamydia, gonorrhea and cervicitis. Teva markets the originator drug, Sumamed, in the Member States in Central and Eastern Europe, the rights to which it acquired from Pliva as part of the Barr acquisition cleared by the Commission in 2008.

186. A certain number of arguments were raised in the market investigation in favour of the molecule (in combination with the galenic form) as a relevant market definition, although this cannot be concluded with certainty as a degree of substitution with other macrolides (with the exception of oral erythromycin), and possibly with other systemic antobacterials, would appear to exist. It was, however, noted that clinical guidelines often specify in individual countries which systemic antibacterials are to be preferred for which infections in order to manage issues of the emergence of resistant bacterial strains. The market definition can, however, be left open since in any case serious doubts do not arise.

Assessment [52]

Azithromycin – ordinary solid form – Hungary

187. In Hungary, the Parties achieve a combined market share of [60-70]% by value and [40-50]% by volume but the increment due to Ratiopharm is limited – less than [0-5]% on either measure - and has been declining while Sandoz and Krka have been gaining market share (respectively [20-30]% and [5-10]%, from [10-20]% and [0-5]% in 2007). Formal barriers to entry for some qualified companies established on the Hungarian market may also be considered to be low, such that entry by these players would not be unduly difficult if the price were to rise as a result of the transaction.

188. As a result, the competitive constraint exercised on the Teva originator product by the Ratiopharm generic alternative may be considered to be limited and serious doubts do not arise.

Azithromycin – ordinary solid form – Denmark

189. In Denmark, Pfizer was historically the market leader with the originator product (licensed by Pliva under the terms of an agreement which has now lapsed), but its share has declined significantly due to generic entry and is now only [10-20]%. The Parties' combined market share is [40-50]%, whilst Sandoz (Novartis) is the market leader with [40-50]%. There are no other significant competitors.

190. The market investigation has nonetheless confirmed that competition concerns in relation to this product do not arise. Of particular relevance are the low barriers to entry for generic companies established on the local market and which have this product in their portfolio elsewhere. Such companies could complete a product registration in Denmark quite quickly and thus constitute credible potential entrants.

J4A – Tuberculosis

Market definition

191. The ATC3 category J4A comprises all specific tubercular preparations as well as streptomycin and dihydrostreptomycin. This category is used for the treatment of tuberculosis in combination with other anti-tuberculosis treatment. The three main objectives of essential tuberculosis drugs are: bactericidal activities, sterilisation activities and the prevention of resistance to treatment. Existing drugs are prescribed in combination with other drugs in order to optimise the achievement of these three objectives.

192. The Commission considered this market in Sanofi-Aventis/Zentiva and noted that it contains a group of largely complementary products, rather than competitive ones. This is because strict protocols require the use of a combination or chemotherapy of two or more products in the treatment of tuberculosis. One product used alone would not be sufficient to cure the disease and would create a high risk of resistance to treatments and, consequently, to the loss of any opportunity to prevent the progression of the disease [53] .

193. The Parties overlap in the single molecule isoniazid administered on a standalone basis. Isoniazid is one of four drugs used in combination during the first two months of therapy to treat tuberculosis. Following this initial phase, a further four months of treatment is given in combination with rifampicin. Because resistance would otherwise quickly develop, isoniazid is never used on its own.

194. The Parties overlap in standalone isoniazid. There is also a product containing isoniazid in combination with rifampicin provided by Sanofi-Aventis in the Netherlands which, for the reasons given above would seem to be equivalent and hence part of the same market. This can, however, be left open since it does not affect the conclusion of serious doubts.

195. The market investigation has therefore confirmed that a relevant market arises in the Netherlands for products containing isoniazid, whether or not in combination with other antitubercular drugs.

Isoniazid (and combinations) – Netherlands

196. The Parties would achieve a combined market share of [90-100]% in the Netherlands in isoniazid administered in isolation. Including combination therapies and based on quantity of the active ingredient isoniazid administered, the Parties would achieve a combined market share of [80-90]%. Moreover, given the small size of the relevant market, it is unlikely that new entry would be attractive.

197. It was suggested during the market investigation that the public health nature of the concern related to tuberculosis needs to be taken into account in considering the pricing and availability of such products and that the State would be able to act, if necessary, to obtain supplies on a cross-border basis. This idea, however, remains speculative and unproven and the Parties have not been able to substantiate it to the necessary standard of proof.

198. Accordingly, serious doubts arise for products based on isoniazid in the Netherlands, whether or not in combination with other antitubercular drugs.

199. The Parties have offered to divest Ratiopharm's product.

L1X - All other anti-neoplastics

Market definition

200. The ATC3 category L1X combines all other antineoplastics. The ATC4 category L1X2 - Platinum compounds includes drugs based on carboplatin, oxaliplatin and cisplatin.

201. Platinum compounds are chemotherapy drugs used in the treatment of a number of different cancers. Their usefulness derives from the property of platinum to inhibit cell division thereby inhibiting the growth of tumours. The first platinum based drug to be developed for the treatment of cancer is cisplatin. Carboplatin is a second generation platinum compound and oxaliplatin is third generation. The therapeutic indications of platinum based products have been extended over time in view of new clinical trials and additional indications may still be added. Cisplatin and carboplatin are more mature products than oxaliplatin. They are currently indicated for the treatment of a greater number of cancers than oxaliplatin [54] , which is indicated mainly for colon cancer.

202. The Commission previously examined oncology drugs, including drugs in the L1X category and found the ATC3 level market definition not to be appropriate. [55] While the market investigation in the present case also did not indicate the ATC3 category to be appropriate, this question does not have to be decided given that the transaction does not give rise to affected markets under this definition.

203. The Commission has also previously investigated platinum compounds, and, in particular carboplatin and cisplatin in Teva/Barr. [56] In that decision the relevant market definition for carboplatin and cisplatin was considered to be the molecule. This was based on the finding that indications for carboplatin and cisplatin were only partially overlapping. Furthermore, there was a general indication from hospitals (the main customers for these drugs) that in the case of drugs used in the treatment of serious illnesses, switching between molecules would be limited. [57]

204. In other cases involving oncology drugs [58] , the Commission considered the possibility of defining the market based on the type and stage of cancer. Those cases, however, involved originator drugs, where generic competition and molecular overlaps were less relevant. Furthermore, platinum compounds are used in a number of different cancers and they are not differentiated according to the type and stage of cancer they are used in (e.g. in terms of packaging, dosage, formulation or galenic form).

205. The parties concur with the molecule-level market definition followed in Teva/Barr.

206. The market investigation did not give a clear indication on whether platinum compounds can frequently and effectively substitute for each other. Whether the correct product market definition is the molecule or the ATC4 level can in any event be left open as the transaction does not raise serious doubts on either of these levels. The market investigation did not indicate frequent and effective substitution of platinum compounds with any other products than other platinum compounds. An alternative market definition, for example based on the type and stage of cancer, will therefore not be considered in the present case.

207. All platinum compounds in the markets concerned are administered in parenteral form. Oxaliplatin is available in both ready-to-use form and in powder form (which needs some preparation before use). Whether this particular distinction is relevant for market definition purposes can be left open as the parties do not overlap to this effect (Teva has a ready-to-use product, while Ratiopharm has a powder-based product).

208. All platinum compounds are prescription only.

209. For the purposes of the present case the market definition can be left open insofar as the distinction between the molecular, ATC4 and ATC3 level is concerned. The market investigation did not indicate the need to consider any other alternative product markets.

Platinum compounds (L1X2) – oxaliplatin - Hungary

210. The transaction would lead to one Group 1 market in Hungary at the ATC4 level (L1X2, all platinum compounds).

211. In Hungary the parties would have a combined market share of [30-40]% (Teva [20-30]%, Ratiopharm [5-10]%) if all platinum compounds were to be considered to belong to the same relevant product market (equivalent to the ATC4 category of L1X2). Ratiopharm only sells oxaliplatin, while Teva sells all three platinum compounds. Competitors include the originator of oxaliplatin, Sanofi-Aventis ([20-30]%) and a number of generics: Hospira ([20-30]%), Novartis (including Ebewe) and a tail end of smaller competitors including Gedeon Richter (a significant regional competitor), Merck KGA and Medac. These smaller competitors all entered in the course of 2009 with their oxaliplatin products.

212. In terms of closeness of competition, the molecular overlap between the parties is limited to oxaliplatin. All competitors sell oxaliplatin and the transaction does not give rise to a Group 1 market at the molecule level. Sanofi, Hospira and Fresenius Kabi have the same ready-to-use oxaliplatin product as Teva, while others have the powder-based product of Ratiopharm. The parties are not therefore the closest competitors in this respect. Furthermore, based on market presence, Hospira and Novartis seem to be a closer competitor to Teva than Ratiopharm.

213. The Parties' competitors were confirmed by the market investigation to be credible competitors that would constrain the merged entity. In addition, Fresenius Kabi and Egis in particular have also been mentioned as credible alternatives for oxaliplatin as well. The market investigation indicated expansion to be possible and likely to occur in case of an attempted price increase by the merged entity. The market investigation did not indicate either Teva or Ratiopharm to have any products to be of significantly better quality or significantly more efficient than other products.

214. Based on the i) relatively modest combined market shares of the parties ii) the presence of several credible competitors and possibilities of expansion; and iii) the fact that the parties are not the closest competitors the transaction is unlikely to lead to competition concerns for the possible market of both platinum compounds and of oxaliplatin in Hungary.

L2B – Cytostatic hormone antagonists

Market definition

215. The L2B ATC3 class contains hormone-related drugs used mainly in the treatment of cancers. These drugs are mainly indicated for the treatment of cancers that have a link to the hormonal system, for example breast and prostate cancer. This is because certain organs that are often the primary sites of tumour growth are dependent upon hormones for their growth, function etc. Carcinomas arising from these organs often retain some of the hormonal responsiveness of their normal counterparts for varying periods of time.

216. The ATC3 class is divided into four ATC4 categories. The relevant ATC4 categories for the present case are L2B1 (Cytostatic anti-oeastrogens) and L2B2 (cytostatic antri-androgens).

217. In the present case significant combined market shares and overlaps (Group 1 markets) arise in L2B1 and L2B2 at the ATC4 level and in bicalutamide (L2B2), flutamide (L2B2) and tamoxifen (L2B1) at the molecule level.

218. Although the use of these products is of course determined by a number of factors, as a general rule, anti-androgens and other hormone inhibitors (L2B1) are used for the treatment of prostate cancer, while anti-oestrogens and hormone inhibitors (L2B2) are used for the treatment of breast cancer.

219. More specifically, tamoxifen-based (L2B1) products are indicated for the treatment of breast cancer (and treatment of ovulatory infertility in women) while antiandrogenic bicalutamide and flutamide based products (L2B2) are indicated for the treatment of prostate cancer. Due to this fundamental difference in indications and the fact that they target different hormones, substitution between these ATC4 categories is unlikely.

220. The Commission has previously examined one drug in the ATC3 class, tamoxifen (L2B1) [59] . The Commission considered the molecule level to be the appropriate market definition due to the same reasons as in the case of carboplatin and cisplatin (see analysis in recital 203). The Commission did not consider market definition for other products in the wider ATC4 and ATC3 class.

221. The Parties concur with the molecular market definition adopted in Teva/Barr for tamoxifen and propose the same approach for the other L2B products due to their highly specialised nature.

222. All L2B drugs are prescription only. Furthermore, bicalutamide, tamoxifen and flutamide are sold in oral solid ordinary form only and this is also the case for L2B1 drugs and for the most part of L2B2 as well. A distinction based on prescription status and on galenic forms will therefore not be considered further.

223. Based on the market investigation it is not possible to draw conclusions on the substitutability of each of tamoxifen, bicalutamide and flutamide with each other and/or with other products. However, as the transaction does not raise competition concerns either at the ATC4 or the molecule level, the market definition can be left open.

224. The competitive assessment for all possible L3A markets falls within the overall framework set out at recital 386 below.

L3A - Immunostimulating agents excluding interferons

225. The ATC3 class L3A comprises immunostimulating agents excluding interferons. It is sub-divided into two ATC4 categories. The ATC4 category L3A1 includes colony-stimulating factors. Colony-stimulating factors are used to stimulate the formation of blood cells, in particolar white blood cells. They have a mode of action specific to this group of products. L3A9 includes all other immunostimulating agents in this ATC3 class.

226. The parties sell only two products in this ATC3 class. Both parties sell filgrastim, a biosimilar drug. Filgrastim is classified in the ATC4 category L3A1. The Parties do not overlap in the L3A9 segment, but Teva has an originator product in this segment used for the treatment of multiple sclerosis (MS). The brand name of the drug is Copaxone and the active ingredient is glatiramer acetate.

227. Notwithstanding that all L3A products have an action on the immune system, the Parties submit that filgrastim and glatiramer acetate have compeletely different indications and do not therefore belong to the same relevant market. The market investigation confirmed this. Consequently, the ATC3 level is not considered relevant for market definition purposes. Possible alternative markets relevant for the parties' L3A products are therefore considered below.

Multiple Sclerosis

228. In Novartis/Chiron the Commission examined markets relating to the treatment of multiple sclerosis [60] . Disease-modifying agents adressing the immunological causes of MS were considered to belong to a separate product market than produ