2000/291/EC: Commission Decision of 28 July 1999 imposing fines for having supplied incorrect information in a notification submitted pursuant to Article 4 of Council Regulation (EEC) No 4064/89 (Case No IV/M.1543 - Sanofi/Synthélabo) (notified under document number C(1999) 2290) (Text with EEA relevance) (Only the French text is authentic)
Date: 1999-07-28
Institutions: European Commission
Subjects: economic concentration, fine, infringement of EU law, national implementing measure, public limited company

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 28 July 1999

imposing fines for having supplied incorrect information in a notification submitted pursuant to
Article 4 of Council Regulation (EEC) No 4064/89

(Case No IV/M.1543 — Sanofi/Synthélabo)

(notified under document number C(1999) 2290)

(Only the French text is authentic)

(Text with EEA relevance)

(2000/291/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(2)

Having regard to the Treaty establishing the European
Community,

Having regard to the Agreement on the European Economic
Area, and in particular Article 57 thereof,

Having regard to Council Regulation (EEC) No 4064/89 of 21
December 1989 on the control of concentrations between
undertakings (1), as amended by Regulation (EC) No 1310/
97 (2) and in particular Article 14(1)(b) thereof,

(3)

Having given the undertakings concerned the opportunity to
make known their views on the objections raised by the
Commission,

Having regard to the opinion of the Advisory Committee on
Concentrations,

Whereas:

(1)

Sanofi is a public limited liability company governed by
French law, 53,61 % of whose shares are held directly or
indirectly by Elf-Aquitaine, the remainder being held by
private investors. Sanofi is active in three sectors: health
products, i.e. mainly pharmaceutical products, but also
diagnostic and animal health products, chemicals, and
and markets
beauty products, where
perfumes and cosmetics.

it produces

(1) OJ L 395, 30.12.1989, p. 1; corrigendum OJ L 257, 21.9.1990,

p. 13.

(2) OJ L 180, 9.7.1997, p. 1; corrigendum OJ L 40, 13.2.1998, p. 17.

a public

limited liability company
Synthélabo is
governed by French law, 56,64 % of whose shares are
held by L'Oreal, the remainder being held by private
investors. Synthélabo is active in two sectors: health
products,
including pharmaceuticals and biomedical
products, and chemicals.

On 18 January 1999, Sanofi and Synthélabo notified
their proposed concentration pursuant to Article 4 of
Council Regulation (EEC) No 4064/89 (the Merger Regu-
lation). The notification was declared to be incomplete
on 3 February 1999, since the replies to the question-
naires sent by the Commission to competitors and
customers pursuant to Article 11 had shown that infor-
mation on one of the affected markets (platelet inhibi-
tors) had not been provided. The parties then supplied
the additional
information requested by the Commis-
sion, the notification took effect on 12 February 1999,
and the merger was authorised by an Article 6(1)(b)
decision on 15 March 1999 (the authorisation decision
of 15 March 1999).

(4)

Since the initial notification had indicated that there was
no overlap or vertical
links between the parties as
regards active principles, the inquiry among competitors
and customers did not deal with the impact of the
merger on the markets for morphine and its derivatives
and the decision of 15 March 1999 did not include any
analysis of the impact of the merger in that area. The
Commission subsequently received five complaints from

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third parties dated 15 and 17 March and 6 April 1999
relating to the competitive impact of combining the
activities of Sanofi and Synthélabo, through their respec-
tive subsidiaries Francopia and Sochibo, in the field of
narcotic active principles (morphine and derived active
principles).

On 21 April 1999, the Commission therefore decided to
revoke the authorisation decision of 15 March 1999,
which was based on incorrect information.

The parties confirmed that they had not mentioned in
their notification of 12 February 1999 the fact that they
each had a monopoly in narcotic active principles, and
they provided the information required by Form CO,
which forms an integral part of Commission Regulation
(EC) No 447/98 (3) containing provisions for the imple-
mentation of the Merger Regulation as regards those
products on 20 April 1999. On 17 May 1999, the
Commission adopted a compatibility decision based on
commitments given. The parties gave a commitment to
the Commission that they dispose of Synthélabo's activi-
ties involving narcotic active principles, thus eliminating
any overlap resulting from the merger in that area.

I. INFRINGEMENT OF THE MERGER REGULATION

During the procedure that culminated in the adoption of
the authorisation decision of 15 March 1999, Sanofi and
Synthélabo provided incorrect information relating to
narcotic active substances.

The production and marketing of narcotic active princi-
ples are covered by rules within the framework of the
United Nations Convention on Narcotic Drugs of 21
March 1961. Pursuant to the Public Health Code in
France, the public authorities granted Sanofi (Francopia)
the monopoly for the production and marketing of tech-
nical morphine
raw material produced from
poppies and opium) and its derived active principles,
morphine
and
codeine. They similarly granted Synthélabo (Sochibo) the
monopoly for the production and marketing of pholco-
dine (an active principle also derived from technical
morphine).

sulphate, morphine

hydrochloride

(the

Those active principles are used in the manufacture of
pharmaceutical products belonging to three ATC 3
classes: major analgesics (N2A), analgesics (N2B) and
anti-tussives (R5D). Pholcodine and codeine are both
used in the manufacture of anti-tussive medicinal prod-
ucts (R5D). Because of regulatory provisions, and by way
the geographic
of exception to the principle that

(5)

(6)

(7)

(8)

(9)

(3) OJ L 61, 2.3.1998, p. 1; corrigendum OJ L 66, 6.3.1998, p. 25.

(10)

(11)

(12)

(13)

markets in active principles have at least a Community
dimension, the relevant geographic markets for narcotic
active principles are national.

Vertical
links existed between the parties before the
merger. Francopia, a subsidiary of Sanofi, was the
exclusive supplier of technical morphine to Sochibo, a
subsidiary of Synthélabo; furthermore, Sanofi purchased
pholcodine from Sochibo for the manufacture of anti-
tussive medicinal products. Lastly, Sanofi's anti-tussive
products, based on pholcodine, are in downstream
competition with anti-tussive products based on
codeine, an active substance which Sanofi itself supplies
on an exclusive basis to its own competitors on the
market in anti-tussive medicinal products.

The Notification of 12 February 1999 did not contain
any information or present any competition analysis of
the relevant markets in narcotic active principles. It also
indicated that there was no overlap or vertical
links
between the parties as regards those products and hence
no market affected by the merger.

Thus, by failing to supply the relevant information to
the Commission and by making statements which were
manifestly incorrect, the parties infringed the provisions
of Sections 6, 7 and 8 of Form CO.

The Merger Regulation does not provide for any de
minimis exemption from its scope of application, and
consequently the fact that the turnover achieved on a
given relevant market may be low could not justify
omission of those activities from the notification form.
Consequently, Sanofi and Synthélabo should have identi-
fied the
the aforementioned affected
markets in accordance with Regulation (EC) No 447/98
and have completed Sections 6, 7 and 8 of Form CO.

existence of

II. IMPOSITION OF FINES

(14) Under Article 14(1)(b) of the Merger Regulation, the
Commission may, by decision, impose on the persons
referred to in Article 3(1)(b), on undertakings or on
associations of undertakings fines of EUR 1 000 to
intentionally or negligently, they
EUR 50 000 where,
supply incorrect or misleading information in a noti-
fication pursuant to Article 4.

(15) Under Article 14(3) of the Merger Regulation, in setting
the amount of
the Commission is to take
account of the nature and gravity of the infringement.
The Commission also takes account of any aggravating
or mitigating circumstances.

the fine,

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Nature of the infringement

tence of
completed Sections 6, 7 and 8 of Form CO.

the aforementioned affected markets and

(16)

The infringement committed by Sanofi and Synthélabo
took the form of the failure to provide information on
the active substances and markets described above and
in the supply of
information which was manifestly
incorrect as regards the identification of the affected
markets.

Consequently, the information provided by Sanofi and
Synthélabo in the notification submitted on 12 February
1999 is incorrect within the meaning of Article 14(1)(b)
of the Merger Regulation. The supply of this incorrect
information constitutes, at the very least, gross negli-
gence.

Gravity of the infringement

(17)

that,

the parties submit

In their comments on the Commission's statement of
objections,
in assessing the
gravity of the infringement committed, account should
be taken of the marginal nature of Synthélabo's products
in the field of narcotic active principles (generating a
turnover of some [...] (*)and the specific nature of the
activities in question, which are subject to very strict
confidentiality instructions within the companies them-
selves.

(18) As regards the marginal nature of the products affected
by the merger, the Commission refers to the comments
made in point 13. Furthermore, the active substances
markets affected by the merger, and the Commission's
analysis thereof in assessing the compatibility of the
merger with the common market are not limited to
pholcodine, but
active
substances (pholcodine, codeine and morphine), which
account for a total turnover of approximately [...] (*). In
addition, the effects of the merger in this area also
related to the downstream market in anti-tussives based
on narcotic active substances, accounting for a turnover
of approximately FRF 64 million.

included all

relevant

the

(19) As regards the argument relating to the specific nature
of the activities in question, which are governed by very
strict confidentiality instructions,
it should be noted,
first, that the parties could not have been unaware of the
existence of the monopolies which they each held and,
secondly, that the narcotic active principles of Sanofi
and Synthélabo are not ‘off market’ products but, on the
contrary,
substances which are also sold to other
companies and traded between the parties. Conse-
quently, in accordance with Regulation (EC) No 447/98,
Sanofi and Synthélabo should have identified the exis-

(*) Parts of this text have been edited to ensure that confidential infor-
mation is not disclosed; those parts are enclosed in square brackets
and marked with an asterisk.

(20)

(21)

(22)

(23)

Furthermore, the infringement of the Merger Regulation
committed by Sanofi and by Synthélabo (the supply of
incorrect information) may be regarded as a very serious
infringement for the following reasons:

In assessing the respective conduct of Sanofi and Synthé-
labo,
it must be borne in mind that both are large
European companies with significant business in Europe.
The Merger Regulation applies to mergers entered into
by companies above a certain size, which are deemed to
be directly aware of
existence of European
the
competition legislation or to be able to obtain appro-
priate assistance. Sanofi and Synthélabo each have
detailed knowledge of the activities which they carry on,
as evidenced by the notification submitted, the annexes
to which list the active substances produced by Fran-
copia and Sochibo, but omit any description or analysis
by reference to the position held by those companies on
the corresponding markets.

It is thus beyond dispute that the parties were aware of
the provisions infringed and were in a position to apply
them to the active substances described above.

The Commission declared the notification incomplete on
3 February 1999, since the replies to the questionnaires
sent by the Commission to competitors and customers
pursuant to Article 11 had shown that information on
one of the affected markets had not been supplied. Once
the appropriate information was supplied by the compa-
nies, the notification took effect, on 12 February 1999.
The parties thus had an additional period of eight days
to ensure that
their notification complied with the
requirements of Regulation (EC) No 447/98. The fact
that
the initial notification was declared incomplete
should clearly have drawn the attention of the parties
and their representatives to the shortcomings in their
preparatory work.

The respective activities of Sanofi and Synthélabo in
relation to the abovementioned active substances are
covered by a monopoly granted by the French State.
Merging two monopolies is liable, a priori, to create an,
anticompetitive situation where, as in the case in point,
there are horizontal and vertical links between the two
monopolies, on the one hand, and between the two
monopolies and downstream markets, on the other. The
parties could not have been unaware of this situation,
nor could they have been unaware of the fact that the
merger of
their monopolies was liable to create or
strengthen a dominant position, given the horizontal
and vertical links between them by failing to point out
circumstances involving an exceptional market structure,
the parties were seriously at fault.

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(24) As soon as the market in the active substances in ques-
tion had been identified, the parties promptly supplied
the relevant information under Form CO and did not
dispute the existence of the affected markets.

(30)

(25)

In their comments on the Commission's statement of
objections, the parties submitted that account should
also be taken, by way of mitigating circumstances, of the
the relevant
wholly specific and marginal nature of
product
to Synthélabo, which explained
that the failure to supply information and the supply of
incorrect information were not ‘intentional’.

(pholcodine)

(26)

For the reasons already set out in points 14 and 15, this
does not constitute a mitigating circumstance.

(27)

The information supplied by the parties prompted the
Commission to adopt the authorisation decision of 15
March 1999. It was only as a result of additional infor-
mation, provided by the complainants, that the Commis-
sion came to the conclusion that
the merger raised
serious doubts as to its compatibility with the common
market, in that it would have created or strengthened a
dominant position on the affected market(s). However,
as regards the merger of two monopolies, the parties
could not have been unaware of the reality of the situa-
tion,
in the same way as they could not have been
unaware that knowledge of this information could have
prompted the Commission to conclude that the transac-
tion was not compatible, since this information should
be supplied by the parties at the time of their noti-
fication and not by subsequent complaints from inter-
ested third parties. That finding resulted in the revoca-
tion of the authorisation decision of 15 March 1999 and
the adoption of a decision finding that the transaction
was compatible on the basis of commitmets given, on
17 May 1999.

Conclusion

(28)

In proceedings initiated pursuant to the Merger Regula-
it is very important, particularly in view of the
tion,
to which the Commission is
time-limit constraints
subject so as not to impede business processes, that the
parties to the merger supply full information at the time
of the notification. Those constraints mean that under-
takings must be particularly careful when submitting
details of their merger. In this particular instance, the
parties
supplied information which was manifestly
incorrect and were guilty, at the very least, of gross
negligence.

The Commission considers it appropriate to impose a
fine on each of the undertakings involved in the merger.
Where incorrect information is supplied, each of the
firms is responsible for the information it provides,
notwithstanding the appointment of a sole repres-
entative. In the case in point, both firms operate on the
abovementioned affected markets which they failed to
specify. Each of them must therefore be held responsible
for not having supplied the
information
concerning it.

relevant

(31)

It is the Commission's duty to uphold the basic principle
underlying the exercise of its task of control of concen-
trations having a Community dimension, namely that
parties notifying a merger must supply full and correct
information.

Consequently, the Commission considers it necessary to
impose fines on Sanofi and on Synthélabo, pursuant to
Article 14(1)(b) of the Merger Regulation.

III. AMOUNT OF THE FINES

(32) On the basis of the foregoing and taking into account
the circumstances of the case, the Commission considers
it appropriate to impose a fine of EUR 50 000 on each
of the undertakings that committed the infringement,
pursuant to Article 14(1)(b) of the Merger Regulation,
giving a total fine of EUR 100 000,

HAS ADOPTED THIS DECISION:

Article 1

1.
A fine of EUR 50 000 is hereby imposed on Sanofi
pursuant to Article 14(1)(b) of Regulation (EEC) No 4064/89
for having supplied incorrect information in the notification
submitted to the Commission under that Regulation on 18
January 1999.

A fine of EUR 50 000 is hereby imposed on Synthélabo
2.
pursuant to Article 14(1)(b) of Regulation (EEC) No 4064/89
for having supplied incorrect information in the notification
submitted to the Commission under that Regulation on 18
January 1999.

Article 2

(29)

The facts set out above demonstrate that Sanofi and
Synthélabo provided the Commission with incorrect
information in the notification submitted on 19
February 1999.

The fines referred to in Article 1 shall be paid to the Commis-
sion within three months of the date of notification of this
Decision to the European Commission's account number 310-
0933000-43 at the Banque Bruxelles-Lambert, Agence Europe-
enne, Rond Point Schuman 5, B-1040 Brussels.

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Upon expiry of that period, interest shall automatically be payable on the fines at the rate charged by the
European Central Bank to its repo operations on the first working day of the month in which this Decision
is adopted, plus 3,5 percentage points.

Article 3

This Decision is addressed to:

Sanofi
174 avenue de France
F-75013 Paris

Synthélabo
22 avenue de Galilée, BP 82
F-92355 Le Plessis Robinson.

Done at Brussels, 28 July 1999.

For the Commission

Karel VAN MIERT

Member of the Commission