2003/777/EC: Commission Decision of 30 April 2003 declaring a merger to be compatible with the common market and the EEA Agreement (Case COMP/M.2861 — Siemens/ Drägerwerk/ JV) (Text with EEA relevance.) (notified under document number C(2003) 1385)
Date: 2003-04-30
Institutions: European Commission
Subjects: automation, communications industry, economic concentration, energy supply, exchange of information, lighting, medical device, merger control

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 30 April 2003

declaring a merger to be compatible with the common market and the EEA Agreement

(Case COMP/M.2861 — Siemens/ Drägerwerk/ JV)

(notified under document number C(2003) 1385)

(Only the German text is authentic)

(Text with EEA relevance)

(2003/777/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Com-
munity,

Having regard to the Agreement on the European Economic
Area (hereinafter referred to as the EEA Agreement), 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 last amended by Regulation (EC) No
1310/97 (2), and in particular Article 8(2) thereof,

Having regard to the Commission’s decision on 21 January
2003 to initiate proceedings in this case,

Having regard to the opinion of the Advisory Committee on
Concentrations (3),

Whereas:

of Council Regulation (EEC) No 4064/89 (the Merger
Regulation). The proposed concentration consists of
the following: the German undertakings Siemens AG
(Siemens) and Drägerwerk AG (Dräger) are to acquire,
within the meaning of Article 3(1)(b) of the Merger
Regulation, joint control of Dräger Medical AG & Co.
KGaA, Germany (JV), currently controlled by Dräger
alone, through the acquisition of equity interests.

(2) On 21 January 2003, having examined the notification,
the Commission found that the notified operation fell
within the scope of the Merger Regulation and raised
serious doubts as to its compatibility with the common
market. The Commission accordingly initiated proceed-
ings pursuant to Article 6(1)(c) of the Merger Regulation.

(1) On 6 December 2002, the Commission received notifi-
cation of a proposed concentration pursuant to Article 4

(3)

(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.
(3) OJ C 269, 8.11.2003.

Following an in-depth investigation of the case, the
Commission takes the view that, although the notified
proposal is liable in itself to lead to dominant positions
as a result of which effective competition would be
significantly impeded in a substantial part of the com-
mon market, the commitments given by the parties
allow the doubts as to the compatibility of the concen-
tration to be removed.

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(4)

(5)

(6)

(7)

the

that

serious doubts

This Decision is adopted pursuant to Article 10(2) of the
Merger Regulation. That provision requires decisions
taken pursuant to Article 8(2) to be taken as soon as it
appears
referred to in
Article 6(1)(c) have been removed. This applies in
particular where the parties have offered commitments.
When the commitments were submitted, the Com-
mission’s investigations in this case had been only
partially completed. The investigations had confirmed
the competition doubts raised by the initial market
investigation as regards the markets for ventilators,
anaesthesia equipment and patient monitors in numer-
ous national markets. In all these cases, however, the
commitments offered by the parties remove the serious
doubts as to the compatibility of the concentration with
the common market, so that a conditional Decision
pursuant to Article 8(2) and Article 10(2) clearing the
concentration may be adopted.

undertakings on the relevant markets. In particular, the
JV will have its own management and sufficient financial
and staffing resources and assets to cover its activities.
The distribution of the products developed and manufac-
tured by the JV will basically be carried out by its own
distribution and servicing organisation. The JV will,
however, also be able to make use of the distribution
systems of Siemens and Dräger. Cooperation with the
JV’s parent companies will allow it to supply integrated
medical and technological solutions to customers. This
means that, in addition to the JV’s products and services,
Siemens’s IT solutions (hospital IT systems, function-
supporting IT) are also to be supplied. In addition, the
JV will in certain instances act as an agent for Siemens,
supplying certain medical products outside its own
range.

I. THE PARTIES

(9)

The proposed transaction is a concentration within the
conjunction with
of Article 3(2)
meaning
Article 3(1)(b) of the Merger Regulation.

in

Siemens supplies products and services throughout the
world, mainly in information and communications,
automation and control, power supply, transportation,
medical technology, lighting, financial services and real
estate. Its ‘Medical Solutions’ division covers a wide
range of products, services and integrated solutions for
clinics and medical practices.

Dräger operates worldwide in the fields of medical
technology, safety technology and aerospace. The JV
covers the area of medical technology within the Dräger
Group. Complete system solutions for hospitals and
health care are developed, produced and marketed
throughout the world. The main focus is on critical
patient care, particularly anaesthesia and ventilation
equipment and accessories.

II. THE PROPOSED TRANSACTION

Siemens and Dräger want to set up a full-function joint
venture in the field of ‘critical care’. Siemens is to transfer
its ‘Electromedical systems’ division, covering essentially
the product divisions ‘Life-support systems’ and ‘Patient
monitoring’ together with the associated marketing,
logistics, distribution, servicing and quality departments
to the JV and will in return acquire 35 % of the JV’s share
capital.

III. CONCENTRATION

IV. COMMUNITY DIMENSION

(10) The undertakings concerned have a combined aggregate
worldwide turnover of more than EUR 5 billion (4)
(Siemens: EUR 87 000 million in the financial year
from 1 October 2000 to 30 September 2001; Dräger:
EUR 1 257 million in the financial year 2001). Siemens
and Dräger each have an aggregate Community-wide
turnover of more than EUR 250 million (Siemens: EUR
[...]* (*) million in the financial year 2000/2001; Dräger:
EUR 733 million in the financial year 2001). Neither
undertaking achieves more than two thirds of its aggre-
gate Community-wide turnover within one and the same
Member State. The notified concentration therefore has
a Community dimension.

V. COMPETITION ASSESSMENT OF THE PROPOSED
MERGER IN THE FORM IN WHICH IT WAS NOTIFIED

(11) The proposed concentration relates to the field of
medical technology, the main market segments being
imaging systems, hospital IT and critical care.

(8)

Siemens will acquire voting rights in the JV that go
beyond the usual legal protection for minority share-
holders and will thus acquire control of the JV jointly
with Dräger. The JV will perform all the functions
which are similarly performed by other independent

(*) Parts of the text have been omitted to ensure that no confidential
information is published; they are indicated by square brackets
and an asterisk.

(4) Turnover calculated in accordance with Article 5(1) of the Merger
Regulation and with the Commission notice on calculation of
turnover (OJ C 66, 2.3.1998, p. 25).

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A. THE RELEVANT PRODUCT MARKETS

(12)

In the field of critical care the parties include, in a non-
exhaustive list (5), supplies, liquid management (infusion
pumps, etc.), patient monitors, anaesthesia equipment,
ventilation equipment, data-management systems (IT)
and cardiology. Critical care does not include products
falling within the fields of ‘home care’ and primary care/
transportation.

(13) The parties’ activities overlap only in the field of critical
care of patients in hospitals, so that the fields of ‘home
care’ and primary care/transportation can be left to one
side here. The following areas are listed as possible
relevant markets affected by the concentration:

— ventilation equipment,

— anaesthesia equipment,

— patient monitors,

— ventilation equipment accessories,

— anaesthesia equipment accessories.

(17) However, individual models of ventilation equipment
are such highly differentiated products, designed and
configured individually to meet customers’ wishes, that,
depending on the type of use and the requirement placed
by a hospital on the appliances for certain patient
groups, there would be clear overlaps in the models of
ventilation equipment if they were divided into further
product groups. This would also apply if one attempted
to divide the equipment primarily designed for children,
newborn babies and prematurely born babies into
separate product groups.

(18) Moreover, each of the parties, like their main competi-
tors on the national markets, offers a broad range of
different models for the different capacities and uses of
ventilation equipment required, with the result that, on
the basis of an overall assessment of this information
drawn from the market investigation, the Commission
concludes that, in the case to be decided on here, a more
detailed definition of the product market need not be
undertaken. Any further product differentiation on the
basis of different product models would not alter the
competition assessment.

(19) The Commission’s investigations confirm the market
definition for ventilation equipment for critical care
proposed by the parties as the relevant product market.

(14) The market investigation has shown that there do not
appear to be any larger product markets than the market
definition proposed by the parties.

2. ANAESTHESIA EQUIPMENT

1. VENTILATION EQUIPMENT

(15) Ventilation equipment (also referred to below as critical
care ventilation equipment) supports or replaces the
breathing activity of the patient.
It consists of the
following main components: ventilators, oxygen supply
equipment, ventilation monitoring and functional
accessories.

(16) Some market participants considered it appropriate to
have a further subdivision on the basis of uses and/or
performance of ventilation equipment.
It would be
possible to group products by performance capacity
and use, grouping appliances produced by different
into high-performance, medium-per-
manufacturers
formance and low-performance. In their replies to the
Commission’s request for information of 27 January
2003, the parties drew up lists of models of ventilation
equipment (broken down by country) which, from their
point of view, were in close competition with one
another. It is evident from this that, on the basis of
their performance, certain models in particular are in
competition with one another.

(5) Form CO notification, p. 20.

(20) Anaesthesia equipment is used to deliver anaesthetic
gases to patients during operations, to supply them
with oxygen during the operation, to provide artificial
respiration if necessary and to monitor the patient
during the entire period of narcosis.

(21) As in the case of ventilation equipment, different
performance capacities can be distinguished here and
products may be subdivided into groups on the basis of
performance. However, the market investigation has
shown that the products are highly differentiated prod-
ucts which, like ventilation equipment, are not manufac-
tured for stock, but are configured in accordance with
specific customer wishes. Customers determine for
themselves what specifications the equipment must meet
for their own specific types of patients. In the case of
anaesthesia equipment
too, any further subdivision
would therefore lead to considerable overlaps if models
were grouped by performance. This also applies if
equipment primarily designed for children, newborn
babies and premature babies is included.

(22)

In assessing this information drawn from the market
investigation, the Commission concludes that anaes-
thesia equipment as a whole constitutes a relevant
product market.

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3.

PATIENT MONITORS

(23) Patient monitors measure patients’ vital functions (blood
pressure, heartbeat, breathing, etc.), which are displayed
on the screen. They are used in various clinical depart-
ments such as OP, cardiology, intensive care units and
paediatrics. Whenever anaesthesia equipment or critical-
care ventilation equipment is used, patient monitoring
is also required. The transaction covers critical-care
patient monitors, which involve a broad spectrum of
parameters.

(24) Ventilation equipment and anaesthesia equipment (joint-
ly referred to as therapy equipment) may be connected
up with patient monitors via interfaces so as to allow
data flow from the therapy equipment to the monitor.
The data from the therapy equipment and the patient
data can then be displayed on the monitor. So as to
allow connection between the therapy equipment and
the monitor, the communication protocol of the therapy
equipment must be known to the monitor manufacturer
and the communication protocol of the monitor must be
known to the supplier of hospital IT (data-management
systems) or to the manufacturer of third-party equip-
ment. Customers increasingly wish to have the possi-
bility of
transferring data to other equipment and
data-management systems in the hospital. If system
compatibility is assured, following successful completion
of tests, a certificate is issued by the relevant manufac-
turers. In addition to this electronic compatibility, the
mechanical compatibility of the connection between the
monitor and the therapy equipment must also be
assured. For reasons of liability (e.g. as regards resistance
to tilting/stability of the monitor design), customers
demand that the mechanical compatibility be tested and
similarly certified.

(25) Anaesthesia and ventilation equipment on the one
hand and patient monitors on the other are thus
complementary products. In so far as the appliances are
connected for data transfer purposes, it can also be said
that there is a vertical link, though this distinction is
of only subsidiary importance for the competition
assessment.

(26) Patient monitors have, on average, a shorter life than
therapy equipment. Customers stated that they replace
their monitors in the critical care sphere every eight to
10 years or so, while therapy equipment has an average
life of 10 to 15 years. Despite these differences in
lifespan, therapy equipment is often put up for tender
and purchased at the same time as patient monitors.

(27) The parties start from the assumption of an overall
product market for patient monitors. Some market
participants think it necessary to have a further subdiv-
ision into further product markets on the basis of
performance, type of use and/or underlying technology.

(28) The parties’ activities do not overlap at production level
in the case of patient monitors. Only Siemens produces
patient monitors. Dräger used to sell GE/Marquette
patient monitors together with its own therapy equip-
ment to its own customers solely on the basis of a
distribution agreement concluded with General Electrics
(GE). [...]*. Furthermore, Dräger manufactures only inte-
grated monitors which are a component part of the
anaesthesia and ventilation equipment. Dräger has no
other activities in this area. For the purposes of the
competition assessment of the transaction, therefore,
only the complementary and vertical connection of the
patient monitors with the therapy equipment is relevant.

(29) The market investigation had not yet been completed as
regards the precise product market definition for patient
monitors at
the time when the commitments were
submitted (see recital 4). However, the question of the
precise product market definition can be left open, since,
even if a product market comprising all patient monitors,
as suggested by the parties, were applied, the notified
concentration raises serious doubts as to its compati-
bility with the common market.

4. ACCESSORIES FOR VENTILATION EQUIPMENT AND

ACCESSORIES FOR ANAESTHESIA EQUIPMENT

(30) Accessories are, on the one hand, parts that are necessary
for the operation of the therapy equipment and, on the
other, parts which may be used in the application of the
main equipment. Accessories include one-off parts and
reusable parts.

(31) The accessory parts supplied by the parties are distrib-
uted as by-products of the therapy equipment business
proper, though for the most part they are not manufac-
tured by the parties themselves, but procured from other
suppliers. Accessories for therapy equipment distributed
by the parties are functionally related to the sale of such
equipment.

(32) As is the case with other manufacturers of therapy
equipment, accessories are supplied as original equip-
ment as part of ready-to-operate therapy equipment and
may also be supplied at a subsequent stage at the
customer’s request. The Commission’s market investi-
gation showed that the parties are not perceived as
independent suppliers of accessories for equipment of
third-party manufacturers, but operate as suppliers of
accessories in connection with the acquisition of new
therapy equipment. The parties understand this as a kind
of necessary service related to their main business.

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(33)

It follows from this that a separate competition analysis
of the respective activities of the parties on the markets
for accessories for ventilation and anaesthesia equipment
can be dispensed with. The position of the parties on the
markets for accessories is linked to their competitive
position in respect of therapy equipment.

15]* % in Greece and [15 to 25]* to [15 to 25]* % in
Ireland, Portugal and Norway on the other. If the parties’
market shares in ventilation equipment are combined,
the picture varies widely from high market shares of
almost [85 to 95]* % in some Member States to barely
[25 to 35]* % in others.

5.

SUMMARY OF THE DEFINITION OF THE PRODUCT
MARKET

(34) The market investigation confirmed the view taken by
the parties on the definition of the product market for
anaesthesia equipment and ventilation equipment. The
Commission therefore starts from the assumption that
there is one relevant product market for ventilation
equipment and another relevant product market for
anaesthesia equipment. In the case of patient monitors,
the precise market definition can be left open. The
distribution of accessories for ventilation equipment on
the one hand and anaesthesia equipment on the other is
linked here to the distribution of the main equipment,
and the competition assessment is therefore dependent
on the competitive position of the parties as regards the
for
main equipment. The definition of
accessories for ventilation equipment and for accessories
for anaesthesia equipment can therefore be left open.

the market

B. THE RELEVANT GEOGRAPHIC MARKETS

(35) The parties take the view that the geographic markets
for ventilation equipment, anaesthesia equipment and
patient monitors are at least EEA-wide. However, the
Commission’s market investigation has shown that the
markets for anaesthesia and ventilation equipment are
national. The definition of the geographic market for
patient monitors can be left open. It is EEA-wide at
most, with some indicators suggesting national markets.

1. THERAPY EQUIPMENT

Market shares of therapy equipment manufacturers
and their presence in the individual EEA Member
States

(36)

In the case of ventilation equipment, according to their
own figures, the parties’ market penetration differs very
widely from one Member State to another. For example,
Siemens has very high market shares in Portugal [55 to
65]* %, Ireland [55 to 65]* %, Sweden [45 to 55]* %
and Italy [35 to 45]* %, while in other Member States it
has relatively low market shares, for example France [5
to 15]* %, Germany [5 to 15]* %, Austria [5 to 15]* %
and the United Kingdom [5 to 15]* %. Dräger’s market
shares vary in the individual Member States, according
to its own figures, between [65 to 75]* % in Austria, [35
to 45]* % in Belgium, [35 to 45]* % in Denmark and
[35 to 45]* % in Germany on the one hand and [5 to

(37)

Furthermore, the parties face different competitors in
ventilation equipment
in individual Member States.
Although the competitors Tyco/Puritan Benett, Viasys
and Hamilton are broadly represented throughout the
EEA (though with widely different market presence in
individual Member States), all the other competitors,
such as Stephan, Respironics, Taema, Kontron, Siare and
Datex Ohmeda, operate in only one or a few Member
States (6).

(38) The market structure is also very heterogeneous in the
case of anaesthesia equipment. According to the parties’
own figures, Siemens’ market shares in the individual
Member States range from [45 to 55]* % in Sweden and
[25 to 35]* % in Portugal to [0 to 5]* % in the United
Kingdom, [0 to 5]* % in Spain and [0 to 5]* % in
Germany. Dräger’s market shares in individual Member
States vary from [55 to 65]* % in Germany, [25 to
35]* % in Belgium and [25 to 35]* % in Austria to [0 to
5]* % in Ireland and [5 to 15]* % in Sweden. If the
parties’ market shares are combined, national market
shares within the EEA range from [5 to 15]* % to [55 to
65]* %.

(39) The only competitor operating throughout the EEA as a
supplier of anaesthesia equipment is Datex Ohmeda. All
the other manufacturers are for the most part present in
only one or two countries (7).

(40) The fact that the market presence of ventilation and
anaesthesia equipment manufacturers is not homo-
geneous and, in most cases, not EEA-wide, is due to the
market structures and mechanisms analysed below,
which taken as a whole point to the conclusion that the
relevant geographic markets must be assumed to be
national.

Distribution and servicing structure for therapy equip-
ment

(41) The parties submit that, although the main market
participants have their own distribution channels in all
the EEA countries, this does not preclude the assumption
of a single European market. Indeed, the main suppliers
distribute their equipment throughout the world.

(42) The Commission’s market investigation showed that
therapy
the successful distribution and servicing of
equipment depends quite decisively on the distribution
and servicing staff of the therapy equipment manufac-
turers being available to hospitals, immediately access-

(6) Siemens’s reply to the Commission’s request for information of

18 February 2003.
(7) Footnote 7, loc. cit.

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ible and ready to provide assistance. Ongoing, local
customer and maintenance services are provided by the
manufacturers and are usually agreed on as part of the
purchase of the equipment. A particular relationship of
trust thus develops between the therapy equipment
manufacturer’s distribution and servicing staff and the
hospital staff.

(43) When it comes to purchasing decisions in hospitals and
decisions on tender specifications, the familiarity and
reputation of the therapy equipment manufacturer are
of primary importance to decision-makers within a
hospital (8). The purchase decision is taken in most
Member States by the hospital administration’s commer-
cial department in coordination with the critical-care
medical staff
familiar with the equipment. Doctors’
specifications, needs and application priorities are crucial
and ultimately the key factor in purchase decisions (9).
This is why manufacturers present their therapy equip-
ment at fairs and medical congresses and pursue cus-
tomer contacts with doctors. Dräger states that it is usual
market practice to involve doctors in the therapy
equipment development process as
specialists and
advisors (10). Siemens states that new products are
presented to hospital evaluation teams. These are usually
composed of critical-care medical staff, nurses, tech-
nicians and purchasing managers and have a significant
influence on a hospital’s purchasing decisions (11). [...]*

(44) The results of

the investigation correspond to the
information provided by the parties (12), namely that
customers are requiring ever-more expert knowledge on
the part of distribution and servicing staff and that the
shift from mechanical to software-based solutions is
making considerable demands both on the manufac-
turers and on hospital staff, which require additional
outside training. The parties confirm in this connection
that the manufacturers’ distribution costs have risen.

(45) A look at the parties’ turnover in the servicing area
shows that, alongside sales of therapy equipment, after-
sales service represents a major item. Siemens estimates
its worldwide turnover in ‘after-sales service’
in the
critical-care area (Electromedical Systems) for 2001 at
EUR [...]*, which is considerable in relation to the
turnover of EUR [...]* in ventilation equipment and

(8) Information from the market investigation and Siemens’s reply
to the Commission’s request for information of 13 February
2003.

(9) Information from the Commission’s market investigation, and
information from T for G Market Report 2000: Monitors and
Ventilators, section 3.2.

(10) Reply to the Commission’s request for information of 20 Febru-

EUR [...]* in anaesthesia equipment (13). Dräger had a
worldwide turnover in 2001 in the ‘service’ area of EUR
[...]* compared with EUR [...]* in anaesthesia equipment
and EUR [...]* in ventilation equipment. [...]*also shows
that a large part [...]* of the relevant unit costs is
accounted for by, on the one hand, research and
development and, on the other, distribution and servi-
cing.

(46) Dräger’s description of the distribution organisations in
the individual Member States shows that a clearly
structured presence throughout the country is necessary
for the distribution and servicing of therapy equipment.
A separate distribution and servicing structure exists
within each Member State. Within highly differentiated
hierarchies, managers, account managers, engineers,
technicians, sales representatives and distributors look
after a specific geographical area or a specific number of
hospitals within the country. Dräger’s distribution and
servicing structure differs from country to country,
depending on the size or specific national features of the
Member State, with differing degrees of organisational
subdivision and specialisation. In most of the Member
States, the servicing and maintenance contracts, mostly
for one year, agreed on when new equipment is pur-
chased, account for the bulk of servicing work. In other
countries, however, such as Sweden, servicing contracts
are not customary. In most countries, the distribution
and servicing staff belongs to Dräger, and in only a few
is distribution also
instances,
handled by third-party distributors (14).

for example in Italy,

(47) All in all, the Commission’s investigations into the role
of the distribution and servicing structure have shown
that a local network with skilled staff on the spot
working for the therapy equipment manufacturer is an
essential aspect of market presence in a Member State,
both prior to the purchase decision and in terms of
support, training and servicing after the equipment has
been purchased.

Tendering market, EEA-wide standards and low trans-
port costs

(48) The parties submit that some 75 to 80 % of the
ventilation equipment sold by them is procured through
invitations to tender and that demand behaviour is
geared to Europe-wide supply. They also submit that
price comparability is increased for customers by the
fact that the results of tenders are frequently published.
The equipment has to meet uniform EEA-wide standards,
and any small adjustment requirements, such as the
software for operation in the national language, do not
impose any major conversion costs. Transport costs, the
parties argue, are irrelevant since the equipment
is
relatively expensive, and barriers to international trade
are non-existent.

ary 2003.

(13) Siemens’s reply to the Commission’s request for information of

(11) Siemens’s reply to the Commission’s request for information of

27 January 2003, Annex 1.

20 February 2003.

(12) Notification, Form CO, p. 27.

(14) Dräger’s reply to the Commission’s request for information of

20 February 2003.

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(49) The market investigation has confirmed that the bulk of
the therapy equipment is procured by hospitals in the
EEA through invitations to tender. Since, as explained at
recital 43, the doctors who work with the therapy
equipment play a quite fundamental role in determining
the invitations to tender, the doctors’ preferences are a
major factor in the ultimate purchase decision. Doctors
mostly prefer equipment which they know and are
familiar with when procuring new appliances. They do
so in order to minimise the re-adjustment resulting
from the fact that therapy equipment from different
manufacturers has to be operated differently and hence
involves a greater risk of operating errors by hospital
staff. Since the therapy equipment being examined here
is used in spheres in which safety is an extremely
critical factor (literally a matter of life and death), user
preferences play a key role in choosing the equipment,
and willingness to use equipment which is not familiar
is extremely limited. In fact, doctors are very unwilling
to accept therapy equipment that they have had no
experience with and whose manufacturer is not known
to them at least in some adjacent clinical sphere. It was
also reported to the Commission that what people
regard as the ‘correct’ way therapy equipment should
function is in the nature of a doctrinal question or
‘question of faith’ (or just a matter of established habits),
partly reflecting different medical doctrines.

(50) Where nevertheless, perhaps in response to a low-priced
offer, other equipment is acquired than that with which
staff have hitherto been familiar, adequate training must
(as described at recitals 43 and 44) be provided at all
events and appropriate servicing must be available from
a local representative of the manufacturer.

(51) Lastly, the publication of the results of the tender, legally
required in some EEA countries and cited by the parties,
is in principle likely to create more transparency for
customers, but
it quite clearly cannot significantly
influence the purchasing decision criteria of hospitals
described here. Consequently, according to the infor-
mation supplied by the parties themselves, the published
tender data are not compiled and evaluated either in
Siemens’s distribution or in that of Dräger (15). The
results of tenders are thus, from the manufacturers’ point
of view as well, not significant for the purchase decisions
of customers and accordingly do not play any role in
the distribution strategy of therapy equipment manufac-
turers.

(52) The assumption of national markets is not called into
question by the fact that transport costs and national
medical or technical standards do not pose any major
inter-
obstacles
nationally from one or more central production sites, as
Siemens and Dräger do. Dräger has production sites in
the United States of
Lübeck, Germany,

to supplying therapy

in Telford,

equipment

America, and in Shanghai, China. Siemens produces its
therapy equipment in Solna, Sweden, and its patient
monitors in Danvers, the United States of America. Nor
are there any significant barriers to international trade.

(53) The overall conclusion which emerges from the above is
that the bulk of invitations to tender and purchase
decisions relate to equipment which represents a familiar
application philosophy for the doctors who will use it
and which enjoys a good reputation and is well-known
on the market in relation to that application philosophy.

Price differences in individual Member States

(54) The parties submit that price levels in the European
Community are relatively uniform and that uniform
euro price lists are used throughout the EEA for Dräger
and Siemens ventilation equipment. Any price differ-
ences, they argue, are attributable to customer product
specifications and differences in order volumes. Siemens
acknowledges, however, that the final customer prices
are determined on the spot by its regional companies or
its sales staff (16).

(55) The Commission’s market investigation showed that
therapy equipment is indeed produced to individual
customer specifications and wishes and that price lists
consequently play only a subordinate role overall.

(56) However, some of the competitors surveyed stated that,
in so far as they operate in several countries, price
differences exist in respect of their products. Some stated
that, with the introduction of the euro, there was a
perceptible tendency towards more uniform prices.

(57) Most of the hospitals surveyed had no knowledge of
prices in other countries and purchase equipment
through their national distribution organisation. Some
Dutch hospitals stated that
they knew that prices
for therapy equipment were appreciably cheaper in
Germany than in the Netherlands. There were also
indications that, in larger countries as a whole, prices
were lower. It was also reported that hospitals were asked
to make their purchases through the manufacturers’
national branches and not abroad.

(58)

It is clear from the results of the survey that customers
purchase ventilation and anaesthesia equipment locally
or through a branch established in their country. Even
the uniform euro price lists, which have to some extent
been introduced within the EEA, do not result in buyers
purchasing internationally.

(15) Parties’ replies to the Commission’s request for information of

(16) Siemens’s reply to the Commission’s request for information of

27 January 2003.

20 March 2003.

L 291/8

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Official Journal of the European Union

8.11.2003

Differing customer preferences

(59) The parties submit that the supply of the relevant
products by the main market participants is comparable
in terms of type and characteristics at least throughout
the EEA.

(60) The market investigation has shown, however, that there
are differing customer preferences and differing national
approaches in anaesthesia and ventilation and that there
is a demand for therapy equipment designed to meet
these preferences and approaches.

(61) Narcosis can in principle be carried out using a rebreath-
ing system or a non-rebreathing system. In a rebreathing
system, the expired air is fed back to the patient, without
carbon dioxide and with added fresh oxygen. In non-
rebreathing systems, the expired air is eliminated, and
fresh gas must be used to prolong the narcosis. In the
latter method, gas consumption is considerably higher
than in the case of rebreathing systems.

(62) The market investigation showed, and this was con-
firmed by the information provided by the parties (17),
that national preferences still exist for one or other of
the systems. Use of
the non-rebreathing system is
insignificant in France, the United Kingdom and the
Netherlands.

(63)

In the case of ventilation too, preferences as to venti-
lation modes differ between countries, though venti-
lation equipment has in recent years increasingly become
convertible for use with differing ventilation modes.

(64) According to the information provided by the parties,
volume-controlled ventilation is preferred in Spain,
Portugal,
Ireland and Greece, whereas pressure-con-
trolled ventilation is preferred in Belgium, Denmark,
Germany, Italy, Austria and Sweden. Volume-controlled
ventilation with support of spontaneous breathing also
has its adherents with some overlaps in individual
Member States.

(65) The overall conclusion, therefore, is that, because of its
technical design and application philosophy, therapy
equipment cannot automatically be distributed success-
fully in one Member State by suppliers operating in
another Member State.

2.

PATIENT MONITORS

(66) The parties start from the assumption that the geo-
graphic market for patient monitors is EEA-wide. In the
case of monitors too, however, Siemens’ market shares

(17) Replies to the Commission’s request for information of 27 Janu-

ary 2003.

vary considerably between EEA members. The parties
put their market share EEA-wide at [15 to 25]* %. In
individual EEA members, according to its own figures,
Siemens has market shares of up to [35 to 45]* %.

(67) The market

furthermore,

investigation showed,

that
prices for patient monitors differ in the individual
Member States and that the distribution and servicing
structure is comparable with the distribution and ser-
vicing structure for therapy equipment described at
recitals 41 to 47 above. This also applies to the launch
of products and to the role of doctors in purchasing
decisions. There is clear evidence from the market
investigation that smaller, i.e. national geographic mar-
kets apply.

(68)

In this instance, the precise definition of the geographic
market for patient monitors can be left open, since the
competition assessment leads to the same conclusion
both for an EEA-wide market and for national markets.

3.

SUMMARY OF THE DEFINITION OF THE RELEVANT
GEOGRAPHIC MARKETS

(69) The Commission’s market investigation showed that
the geographic markets for ventilation equipment and
anaesthesia equipment are national. Key arguments
supporting this view are the fact that the parties have
very different market shares in the individual EEA
countries and that they have different competitors in
them. Most of the competitors in therapy equipment
operate in only one or two member countries. The
investigations showed that a local distribution and
servicing structure is of crucial importance to market
success. Therapy equipment
is distributed predomi-
nantly through invitations to tender, with customer
preferences playing an important role. Critical-care
medical staff working with therapy equipment mostly
opt for equipment that is known to them and uses the
application philosophy with which they are familiar.
The trend towards the introduction of uniform euro
price lists and the publication of the results of invitations
to tender, like the existing EEA standards and the low
transport costs for therapy equipment, do not have
any significant influence on the demand behaviour of
customers. Rather, the conservative nature of customer
preferences
reinforced by the specific national
approaches that continue to exist as regards the preferred
ventilation modes in the case of ventilation equipment
and the way in which narcotic gases are delivered in the
case of anaesthesia equipment.

is

(70)

In the case of patient monitors, the precise market
definition can be left open. It is EEA-wide at most, with
some indicators suggesting that here too the markets are
national.

8.11.2003

EN

Official Journal of the European Union

L 291/9

C. COMPATIBILITY OF THE CONCENTRATION WITH THE
COMMON MARKET

(73) Capacity restrictions are, on the other hand, of only
minor importance to suppliers’ decisions on prices and
volumes.

C1. HORIZONTAL EFFECTS

(71) The concentration leads to significant additions of
market shares in most national markets for ventilation
equipment and in those for anaesthesia equipment.

(72) The items of critical care equipment affected by the
merger are highly differentiated products. Customers
have as a rule a preference for a specific item of
equipment and would consider switching to a competing
product only in the event of a fairly hefty price increase
(compared with the competition). The relative ‘closeness’
of the various products on the market as regards their
substitutability from the customer’s point of view is
therefore an essential
factor of competition in the
relevant markets and basically determines each supplier’s
market strength. This is also the case where hospitals
meet their critical care equipment needs through calls
for tenders, because here, too, product preferences are
expressed via detailed technical specifications and thus
restrict the range of the products in question according
to customer preferences. The Commission’s enquiries
have established that, in general, owing to the extremely
critical role played by apparatus from a safety point of
view, anaesthetists and critical care specialists play a key
role in choosing a clinic’s therapy equipment.

(74) Market shares provide a starting point from which to
determine the relative market positions of the various
competitors from the customer’s point of view.

(75) Siemens/Dräger assert that there are no ‘official statistics’
on the relevant markets. They claim to base their market
share calculations on ‘analytical databanks, business
reports,
information on the Internet and their own
research and estimates’ (18). For EU markets, external
market studies by Frost & Sullivan (F & S) and T for G
are taken as a basis. Other sources mentioned by the
parties are three reports by IHS on various United States
markets, The World Medical Market Fact File 1997 by
MDIS, Respiratory Devices: The world markets (1998)
by Clinica Reports and a study by the United States
investment bank Bear Stearns on Viasys (February 2002).

1. Ventilation equipment

Market shares

(76) According to the information provided by the parties on
in the case of ventilation equipment the
in the following market

Form CO,
concentration would result
shares:

Ventilation equipment: parties’ data on Form CO

2001

EEA

B

DK

D

FI

F

GR

UK

IRL

I

NL

A

P

E

S

N

(%)

Siemens

Dräger

[15-25]* [15-25]* [35-45]*

[5-15]*

[5-15]*

[5-15]*

[15-25]* [15-25]* [55-65]* [35-45]* [25-35]*

[5-15]*

[55-65]* [15-25]* [45-55]* [25-35]*

[25-35]* [35-45]* [35-45]* [35-45]* [15-25]* [25-35]*

[5-15]*

[25-35]* [15-25]* [25-35]* [15-25]* [65-75]* [15-25]* [15-25]* [15-25]* [15-25]*

Combined

[45-55]* [65-75]* [75-85]* [45-55]* [35-45]* [35-45]* [25-35]* [45-55]* [65-75]* [65-75]* [45-55]* [85-95]* [75-85]* [35-45]* [65-75]* [45-55]*

Tyco/Puritan Bennett

[5-15]*

[0-5]*

[0-5]*

[15-25]* [15-25]*

[5-15]*

[15-25]* [15-25]*

[0-5]*

[5-15]*

[5-15]*

[0-5]*

[5-15]*

[15-25]*

[5-15]*

[15-25]*

Viasys

Hamilton

Others

Residual

[5-15]*

[5-15]*

[0-5]*

[5-15]*

[15-25]*

[5-15]*

[5-15]*

[5-15]*

[0-5]*

[0-5]*

[5-15]*

[0-5]*

[5-15]*

[5-15]*

[0-5]*

[0-5]*

[5-15]*

[5-15]*

[5-15]*

[5-15]*

[15-25]*

[5-15]*

[15-25]*

[5-15]*

[5-15]*

[5-15]*

[5-15]*

[0-5]*

[0-5]*

[5-15]*

[5-15]*

[5-15]*

[5-15]*

[25-35]*

[15-25]*

[15-25]*

[0-5]*

[0-5]*

[15-25]*

[5-15]*

[15-25]*

[5-15]*

[25-35]*

[5-15]*

[25-35]*

[0-5]*

[5-15]*

[0-5]*

[15-25]*

[0-5]*

[0-5]*

[25-35]* [15-25]* [25-35]*

(18) Form CO, p. 57.

L 291/10

EN

Official Journal of the European Union

8.11.2003

Siemens/Dräger thus estimate their combined EEA mar-
ket share in 2001 at [45 to 55]* %, after [45 to 55]* %
in 2000 and [45 to 55]* % in 1999, with no competitor
being identified for a substantial part of the market [15
to 25]* %. In the individual Member States, market
shares are, according to these data, in some instances
significantly higher, although in the smaller EEA
countries market shares (but not the identity of the main
competitors) fluctuate considerably from year to year.

(77)

In the course of the in-depth market investigation the
parties were asked, in respect of the as yet unattributed
market shares, to name the corresponding competitors
or to explain how the residual value was arrived at.
Dräger stated in answer to the question on the subject
that ‘the residual value is obtained by trying to portray

competitors’ turnovers in the individual Member States.
The estimated market volume often turns out to be
smaller (sic) than competitors’ combined turnovers.’ It
would therefore appear to be in fact an unaccounted for
residual value.

(78) The competitors listed, but not further quantified, by
Siemens (Pulmonetic Systems, Bunell, Chirana-Prema,
Cardiopulmonary Corp., Sechrist Industries, VersaMed,
Takaoka, Tim Göttingen, e-vent, MÜFA AG and Medec)
were, however, identified in the course of the market
investigation neither by any customer nor by any
competitor as operators on the relevant market, the
market
for critical care ventilation equipment. The
following table therefore indicates the market shares
presented by the parties, less any unidentified market
shares.

Ventilation equipment: parties’ data, as adjusted

2001

EEA

B

DK

D

FI

F

GR

UK

IRL

I

NL

A

P

E

S

N

(%)

Siemens

Dräger

[15-25]* [15-25]* [35-45]*

[5-15]*

[15-25]*

[5-15]*

[15-25]* [15-25]* [65-75]* [35-45]* [25-35]*

[5-15]*

[55-65]* [15-25]* [55-65]* [35-45]*

[35-45]* [35-45]* [45-55]* [35-45]* [25-35]* [25-35]* [15-25]* [25-35]* [15-25]* [25-35]* [25-35]* [65-75]* [15-25]* [25-35]* [25-35]* [15-25]*

Combined

[55-65]* [65-75]* [85-95]* [45-55]* [45-55]* [35-45]* [35-45]* [45-55]* [75-85]* [65-75]* [55-65]* [85-95]* [75-85]* [45-55]* [75-85]* [55-65]*

Tyco/Puritan Bennett

[15-25]*

[0-5]*

[0-5]*

[15-25]* [15-25]*

[5-15]*

[25-35]* [15-25]*

[5-15]*

[5-15]*

[5-15]*

[0-5]*

[5-15]*

[25-35]*

[5-15]*

[15-25]*

Viasys

Hamilton

Others

[5-15]*

[15-25]*

[0-5]*

[5-15]*

[15-25]*

[5-15]*

[5-15]*

[5-15]*

[0-5]*

[0-5]*

[5-15]*

[0-5]*

[5-15]*

[5-15]*

[5-15]*

[0-5]*

[5-15]*

[5-15]*

[5-15]*

[5-15]*

[5-15]*

[5-15]*

[15-25]*

[5-15]*

[5-15]*

[5-15]*

[5-15]*

[0-5]*

[0-5]*

[5-15]*

[5-15]*

[5-15]*

[0-5]*

[0-5]*

[0-5]*

[15-25]*

[0-5]*

[25-35]*

[0-5]*

[15-25]*

[0-5]*

[15-25]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

(79) Of the external studies cited by the parties, F & S (19)
estimate the combined Europe-wide market share of
Siemens/Dräger at 54 % (2000). The parties claim,
however, that the F & S figures are based on a market
definition that is not comparable, as ventilation com-
ponents of anaesthesia equipment were included in the
market for ventilation equipment. F & S do admittedly
list Datex-Ohmeda (Instrumentarium) as a competitor in
relation to ventilation equipment, despite the fact that,

although the firm does manufacture anaesthesia equip-
ment, it does not engage to any appreciable extent in
the manufacture of critical care ventilation equipment.

(80) T for G (20) estimate the parties’ combined Europe-wide
market share for ventilation equipment at 70 %. The
next largest competitor is in their view Tyco/Puritan
Bennett with 13 %. T for G have also produced market
share data for the following national markets:

(19) European Anaesthesia and Respiratory Equipment Markets

(20) T for G market report: Monitors and Ventilators (Decemb-

Report, 2001.

er 2000); [...]*.

8.11.2003

EN

Official Journal of the European Union

L 291/11

Ventilation equipment for critical care units: T for G

Siemens

Dräger

Combined

Tyco/ Puritan Bennett

Taema

Viasys

Hamilton

Europe

33

37

70

17

6

2

2

D

33

37

70

17

6

2

2

F

14

39

53

17

21

7

—

UK

8

41

49

42

< 1

< 1

9

I

54

22

76

15

7

1

< 1

E

52

41

93

5

—

—

2

(%)

NL

69

31

100

(81) Siemens’s Electromedical Systems division estimates in

its own internal documents: [...]*

(82) The parties’ market share estimates on Form CO there-
fore portray their own market position as being signifi-
cantly weaker than the position portrayed by the authors
of external studies on the European market known to
the Commission and identified by the parties as being
authoritative. [...]*

(83) As a result, the Commission has done its own market
share calculations based on the turnover data of leading
competitors. The table below relies on figures communi-
cated by Siemens, Dräger, Tyco, Viasys, Hamilton,
Respironics, Taema, Penlon and Stephan concerning
their own turnover. The market shares of Kontron,
Newport and Siare are based on the parties’ estimates on
Form CO.

The following picture emerges:

Ventilation equipment: Commission’s findings (a)

(%)

2001

EEA

B

DK

D

FI

F

GR

UK

IRL

I

NL

A

P

E

S

N

[15-25]* [25-35]* [35-45]* [15-25]*

[5-15]*

[5-15]* [25-35]* [15-25]* [35-45]* [35-45]* [35-45]*

[15-25]*

[55-65]* [25-35]* [55-65]* [35-45]*

[35-45]* [55-65]* [45-55]* [55-65]* [25-35]* [35-45]* [15-25]* [35-45]*

[5-15]* [25-35]* [25-35]*

[75-85]*

[15-25]* [35-45]* [25-35]* [25-35]*

Combined

[65-75]* [85-95]* [85-95]* [65-75]* [35-45]* [45-55]* [45-55]* [45-55]* [45-55]* [55-65]* [65-75]*

[95-100]* [75-85]* [65-75]* [85-95]* [65-75]*

Siemens

Dräger

Tyco/Puritan Bennett

Viasys (b)

Hamilton

Respironics

Taema

Penlon

Stephan

L 291/12

EN

Official Journal of the European Union

8.11.2003

2001

EEA

B

DK

D

FI

F

GR

UK

IRL

I

NL

A

P

E

S

N

(%)

Kontron

Newport

Siare

[0-5]*

[0-5]*

[0-5]*

[5-15]*

[5-15]*

[15-25]*

(a) The turnover figures for competitors obtained in the course of the market investigation are business secrets of the undertakings concerned.
(b) Contains, according to the undertaking, a ‘small’ proportion of accessories.

(84) The JV would bring together the largest and second-
largest suppliers of ventilation equipment in the EEA.
The combined market share would be much higher than
that of any of the next
largest competitors in the
respective national markets. Tyco would then be the
only competitor with a broad portfolio of medical
technology products, although the main focus of its
business is on technically less sophisticated and capital-
intensive products
(e.g. accessories and supplies).
According to information provided by market partici-
pants, after it was taken over by Tyco, Puritan Bennett
lost a number of key staff, adversely affecting its
innovative capacity in ventilation equipment. This is
also reflected in its, according to the parties’ estimate,
declining market share (EEA, 2001: [5 to 15]* %, 2000:
[15 to 25]* %, 1999: [15 to 25]* %). Siemens likewise
states in the Business Plan 2001 of its Electromedical
Systems division: [...]* Hamilton, Viasys and Taema are
active in several national markets, but they have small
market shares.

(85) There are, in addition, a number of local fringe competi-
tors, but these achieve market shares in only one or two
Member States and they are virtually unknown in other
national markets. They include the family firm Stephan
(Germany), Respironics (Germany), Kontron (France)
Newport (United Kingdom) and Siare (Italy). Some of
these competitors occupy market niches with equipment
which does not represent a direct substitute for the
parties’ equipment. These include Stephan (neonatal
ventilators) and Kontron (sleep therapy). In the parties’
in-house market analyses concerning critical care venti-
lation equipment, these fringe competitors are simply
ignored.

(86)

leading competitors were to reflect

If, therefore, the market shares of Siemens/Dräger and
those of
their
relative market positions and substitutability from the
customer’s point of view, there would result from the
market shares alone a strong presumption of a dominant
position on the markets for ventilation equipment
the
in Belgium, Denmark, Germany,
Italy,
Netherlands, Austria, Portugal, Spain, Sweden,
the
United Kingdom and Norway.

Ireland,

(87) The market investigation has shown, moreover, that
from the customer’s point of view Dräger and Siemens

produce the closest substitutes as regards product qual-
ity, market positioning and corporate reputation on
the market for ventilation equipment, a factor which
increases the parties’ market strength even further. The
market investigation relied on the following: (i) a survey
of customers and competitors; (ii) internal documents of
the parties; and (iii) tender documents submitted by the
parties.

(i)

S u r v e y o f c u s t o m e r s a n d c o m p e t i -
t o r s

(88) Customers and competitors were asked in the course of
the market investigation to name three substitutes (1st/
2nd/3rd alternative) for Dräger, Siemens and Tyco/
Puritan Bennett ventilation equipment. Customers were
asked to take as a basis the models then in use, while
competitors were shown a list of the parties’ main items
of equipment (Dräger: Evita XL, Evita 4, Evita 2 dura,
Savina; Siemens: Servo 300, Servo 300A, Servo 900c,
Servo-i Basic, Servo-i Universal). Most customers in all
national markets and almost all customers in the
German-speaking area and in Denmark, Sweden and
Portugal judged Dräger to be the best alternative to each
particular Siemens product and vice versa. Similarly,
Dräger and Siemens were named as the best substitute
for Tyco (models PB 840 and PB 760). The question on
the subject was, however, not answered by the majority
of customers canvassed, possibly because they were
unfamiliar with Tyco equipment. In the opinion of the
customers covered by the market investigation, the
parties’ equipment therefore represents the closest sub-
stitute in every case in each market segment.

(89) Customers were asked further what sort of price increase
would induce them to switch to an alternative item of
equipment. Numerous customers either did not reply or
else stated that price was only a minor consideration
(compared with, say, quality and customer service) when
it came to choosing products. Otherwise the figure lay
somewhere between 10 and 30 %. One Austrian hospital
indicated that only a 50 % price increase would induce
it to change supplier.

8.11.2003

EN

Official Journal of the European Union

L 291/13

(90) No clear pattern emerges from competitors’ answers to
the substitution question. Some competitors are of the
same opinion as customers (Dräger/Siemens as closest
substitute), whereas others regard their own products as
the closest substitutes for the parties’, while in other
answers still, the competitors’ own products are not
even listed among the three best alternatives.

(ii)

I n t e r n a l d o c u m e n t s o f t h e p a r t i e s

(91) Both parties analyse in their business plans and in the
analyses produced in the run-up to the transaction the
market positioning of the various items of ventilation
equipment marketed by Siemens, Dräger and their
competitors. The general feeling that emerges from these
documents is that the parties’ equipment should be
classified in the upper price/performance segment, while
competitors’ covers mainly the lower market segments.

(98) With respect to ventilation equipment, Siemens submit-
ted with the notification [...]* tender procedures in which
it had participated and in relation to which competitors
taking part in the bidding process were identified. Dräger
was a competitor in [...]* of these tender procedures. Of
the [...]* procedures in which Dräger did not participate,
in [...]* there was no competition. The other tenderers
whose names occur most often are Tyco/Puritan Bennett
([...]* times), Hamilton ([...]*), Taema ([...]*) and Viasys/
Bird ([...]*).

(99)

In the case of [...]* tender procedures, both the successful
tenderer and the previous successful tenderer are ident-
ified. In [...]* cases, either the new contract was awarded
once more to the previous supplier or a newly built
hospital was involved. Of the [...]* tender procedures in
which a (partial or complete) change of supplier
occurred, the customer switched most often ([...]* times)
from Siemens to Dräger or vice versa.

(92) Siemens [...]*

(93) Dräger [...]*

(iii) T e n d e r d o c u m e n t s

(94) At

the Commission’s request, Siemens and Dräger
each submitted with the notification a list of tender
procedures in the area of ventilation equipment in which
in this
they had taken part. The parties point out
connection that
they have no day-to-day reporting
mechanism by which the data requested by the Com-
mission are gathered on a regular basis and, if necessary,
fed into a database. Instead, they say, the data submitted
have had to be reconstituted for each tender procedure
by the sales staff concerned and hence may be incom-
plete, giving a distorted picture of
the competitive
situation (to their detriment, so they claim).

(95) The requested lists contain, among other things, infor-
mation about the customer, the number of items, the
order size, the names of competitors, and the names of
the successful tenderers and, where known, of previous
successful tenderers.

(100) In the tender procedures submitted by Siemens, Siemens
was thus more often than not in competition with
Dräger, and where the customer changed suppliers, in
[...]* of cases the switch was between Siemens and
Dräger. Bearing in mind that a tenderer will be more
inclined to take part in a tender procedure if he thinks
he has a realistic chance of success, both observations
support the conclusion already drawn from the customer
survey and the internal documents that Siemens and
Dräger represent the closest substitutes in the market for
ventilation equipment.

(101) The same analysis as for Siemens was carried out in
respect of the tender procedures submitted by Dräger.
Dräger submitted [...]* tender procedures for ventilation
equipment in the different EEA countries where competi-
tors are identified. Siemens was a competitor in [...]* of
these.
In three instances, there was no competition.
Chief among the remaining competitors were Hamilton
([...]* occurrences), Tyco/Puritan Bennett ([...]*), Taema
([...]*) and Viasys/Bird ([...]*).

(96)

In the course of the in-depth market investigation, the
parties were asked to submit further tender documents
so as to increase the proportion of tender procedures
covered. The data submitted in response to this request
were, however, largely unusable as no competitors were
identified. The analysis that follows accordingly relates
to the data submitted with the notification.

(97) The analysis below relates to EEA-wide data. Because of
the smallness of the sample and the possibility that the
selection may be unrepresentative, a separate analysis
has not been carried out for each Member State.

(102) Both the new and the previous successful tenderer are
identified in [...]* of the tender procedures submitted by
Dräger. In [...]* instances, the previous supplier was
reappointed or else a new clinic was involved ([...]*
tender procedures). Of the [...]* tender procedures in
which a (partial or complete) change of supplier
occurred, the customer switched most often ([...]* times)
from Siemens to Dräger or vice versa. Analysis of the
Dräger data therefore produces the same result as
above, i.e. the information concerning tender procedures
supports the finding that the items of ventilation equip-
ment marketed by Siemens and Dräger represent the
closest substitutes for each other.

L 291/14

EN

Official Journal of the European Union

8.11.2003

Conclusion

(103) The customer survey, the parties’ internal documents
and the data on tender procedures confirm the view
formed on the basis of market shares that Siemens
and Dräger produce the closest substitutes from the
customer’s point of view. The merging of the two
product ranges within the joint venture would enable
the parties to charge higher prices inasmuch as a large
part of the customers lost as a result of a price increase
by one of the parties would switch to products made by
the other party. The elimination, due to the concen-
tration, of by far the most important competitor would
thus enable Siemens/Dräger to behave, when setting
prices, to a considerable extent independently of cus-
tomers and competitors.

(104) Market entry barriers are deemed by market participants
to be high inasmuch as customers have a strong
preference for products and manufacturers that have
stood the test of time. According to the Commission’s
information, a well-developed distribution and servicing
network is also a prerequisite for successful market
entry. An installed base, in neighbouring clinical fields
at least, likewise makes for substantially easier market
entry. Market entry requires considerable sunk costs in
the form of R & D expenditure and expenditure on
setting up a distribution and customer service network.

improve the positioning of its products from the cus-
tomer’s point of view as well as its distribution and
servicing network dramatically in order to attain this
end. Over the one- to two-year time horizon relevant
for the competition assessment, this is not likely to
occur, at least not on the basis of market developments
so far. On the contrary, Tyco’s market position has been
eroded in recent years. Several of the remaining fringe
competitors fear that their market position will deterio-
rate in the years ahead owing to the JV’s broad product
range, given in particular its presence in the vertically
adjacent market for patient monitors. The JV would
consequently lead to higher, rather than lower, barriers
to expansion by fringe competitors.

(106) In view of the very high combined market share of
for ventilation
Dräger and Siemens in the market
equipment
in Austria, Belgium, Denmark, France,
Germany, Ireland, Italy, the Netherlands, Portugal, Spain,
Sweden, the United Kingdom and Norway, the absence
of comparable competitors and the fact that the parties
to the concentration produce the closest substitutes from
the customer’s point of view, the market investigation
confirms the serious concerns that the concentration
would lead to the creation of a dominant position on
the part of the JV in these national markets.

2. Anaesthesia equipment

Market shares

(105) A repositioning of existing competitors into a market
position comparable to that of
the JV is likewise
unrealistic. The next largest competitor after Siemens/
Dräger, Tyco, currently achieves only a fraction of the
parties’ combined market share and would have to

(107) According to the information provided by the parties on
in the case of anaesthesia equipment the
in the following market

Form CO,
concentration would result
shares:

Anaesthesia equipment: parties’ data on Form CO

2001

EEA

B

DK

D

FI

F

GR

UK

IRL

I

NL

A

P

E

S

N

(%)

[5-15]*

[5-15]*

[0-5]*

[0-5]*

[0-5]*

[5-15]*

[0-5]*

[0-5]*

[5-15]*

[15-25]*

[0-5]*

[5-15]*

[25-35]* [15-25]* [45-55]*

[0-5]*

[25-35]* [25-35]* [25-35]* [55-65]* [35-45]* [25-35]* [15-25]*

[5-15]*

[0-5]*

[15-25]* [15-25]* [25-35]* [15-25]* [25-35]*

[5-15]*

[25-35]*

Combined

[35-45]* [35-45]* [25-35]* [55-65]* [35-45]* [35-45]* [25-35]*

[5-15]*

[5-15]*

[35-45]* [25-35]* [35-45]* [45-55]* [25-35]* [55-65]* [25-35]*

Siemens

Dräger

Datex-Ohmeda

[35-45]* [35-45]* [35-45]* [25-35]* [55-65]* [25-35]* [45-55]* [45-55]* [45-55]* [35-45]* [45-55]* [25-35]* [35-45]* [35-45]* [15-25]* [45-55]*

Others

Residual

[5-15]*

[5-15]*

[0-5]*

[5-15]*

[5-15]*

[15-25]* [25-35]* [15-25]*

[5-15]*

[5-15]*

[5-15]*

[15-25]* [15-25]*

[5-15]*

[15-25]*

[5-15]*

[5-15]*

[5-15]*

[5-15]*

[25-35]* [15-25]* [15-25]*

[5-15]*

[15-25]* [25-35]*

[0-5]*

[15-25]*

[0-5]*

[5-15]*

8.11.2003

EN

Official Journal of the European Union

L 291/15

Siemens/Dräger thus estimate their combined EEA mar-
ket share at [35 to 45]* %, virtually on a par with Datex
Ohmeda.

(108) Dräger, Siemens and Datex Ohmeda are the only
suppliers with significant EEA-wide activities. The parties
have also identified a number of suppliers (Others)
which have market shares in only one Member State or
in adjacent Member States (e.g. United Kingdom/Ireland,
Spain/Portugal). These niche suppliers include Dameca
and Anmedic (Scandinavia), Taema (France), AMS (Gree-
ce), Penlon and Blease (United Kingdom/Ireland), Siare
(Italy, Austria), Medec (Belgium, the Netherlands) and
Hersill and Temel (Spain, Portugal). According to an
estimate by Frost & Sullivan (F & S), at European level
the largest of these niche suppliers have market shares
of 3 % or less. The parties do not identify any competitors
in connection with the ‘residual’ market share, which
differs in size from country to country.

(109) In the course of the in-depth market investigation the
parties were asked, in respect of the as yet unattributed
market shares, to name the corresponding competitors
or to explain how the residual value was arrived at.
Dräger stated in answer to the question on the subject
that ‘the residual value is obtained by trying to portray
competitors’ turnovers in the individual Member States.
The estimated market volume often turns out to be
smaller (sic) than competitors’ combined turnovers.’ It
would therefore appear to be in fact an unaccounted for
residual value.

(110) Siemens, on the other hand, identifies the following
competitors which, according to its estimates, achieve

in the Member States, indicated in brackets, market
shares of 1 to 2 %: Heyer (Austria, Germany), Heinen &
Löwenstein (Austria, Germany), EKU (Austria, Germany),
Stephan (Germany), Smith Industries (Ireland, United
Kingdom), Samed (Italy) and Normeca (Norway). Some
of these firms at least were mentioned by customers in
their contacts with the Commission as being market
participants, albeit as qualitatively much less highly
positioned, and hence not direct, competitors of the
parties. According to a T for G study, equipment made
by these, newly adduced, firms is used, not in the
operating theatre itself, but in the recovery room. When
the commitments were submitted, the examination of
the question whether competitors newly adduced in
evidence may be assigned to the relevant product market
had not yet been completed. In the absence of definitive
proof to the contrary, the newly adduced suppliers will
be taken into consideration for the purposes of this
Decision (see recital 4).

(111) In the following table, as in the one above concerning
ventilation equipment, the parties’ market share figures
are accordingly adjusted only for any unattributed
residual turnover. Additional competitors listed, but not
further quantified, by Siemens (Acoma, Kontron, B.
Braun, Chenwei, Chirana-Prema, Megamed, Royal Medi-
cal and Tacoma) were identified in the course of the
market investigation neither by any customer nor by any
competitor as operators on the market for anaesthesia
equipment and are not
included in the table. The
following table therefore indicates the market shares
presented by the parties, less any unidentified market
shares.

Anaesthesia equipment: parties’ data, as adjusted

2001

EEA

B

DK

D

FI

F

GR

UK

IRL

I

NL

A

P

E

S

N

(%)

Siemens

Dräger

[5-15]*

[5-15]*

[0-5]*

[0-5]*

[0-5]*

[5-15]*

[5-15]*

[0-5]*

[5-15]*

[15-25]*

[5-15]*

[5-15]*

[25-35]*

[0-5]*

[45-55]*

[0-5]*

[25-35]* [35-45]* [25-35]* [55-65]* [35-45]* [35-45]* [25-35]*

[5-15]*

[0-5]*

[15-25]* [25-35]* [25-35]* [15-25]* [25-35]*

[5-15]*

[25-35]*

Combined

[35-45]* [45-55]* [35-45]* [55-65]* [35-45]* [45-55]* [25-35]* [15-25]*

[5-15]*

[35-45]* [25-35]* [45-55]* [45-55]* [25-35]* [65-75]* [25-35]*

Datex-Ohmeda

[35-45]* [45-55]* [45-55]* [25-35]* [55-65]* [35-45]* [45-55]* [55-65]* [55-65]* [35-45]* [55-65]* [35-45]* [35-45]* [45-55]* [15-25]* [55-65]*

Penlon

Siare

Taema

Blease

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[5-15]*

[15-25]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[15-25]*

[0-5]*

[5-15]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[5-15]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[5-15]*

[5-15]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

Others (< 1 % EEA)

[5-15]*

[5-15]*

[15-25]*

[5-15]*

[0-5]*

[0-5]*

[5-15]*

[0-5]*

[0-5]*

[0-5]*

[5-15]*

[5-15]*

[5-15]*

[15-25]* [15-25]*

[5-15]*

L 291/16

EN

Official Journal of the European Union

8.11.2003

(112) Of the external studies cited by the parties, F & S (21)
estimate, however, the parties’ combined Europe-wide
market share (2000) at 49 % (Dräger 39 %, Siemens
10 %), while Datex Ohmeda’s market share is put at only
38 %. The parties’ objection that the F & S figures are
not based on a comparable market definition in that
ventilation components of anaesthesia equipment are
for critical care ventilation
assigned to the market
equipment should, on the face of it, not affect the market
share calculations for anaesthesia equipment as the
distortion in this market has a proportional
impact
(Anaesthesia equipment consists
on all competitors.

basically of a ventilator and a gas mixer, although the
ventilator is not directly comparable to an item of critical
care ventilation equipment).

(113) The abovementioned T for G report is also a source of
market share figures for anaesthesia equipment. T for G
put the parties’ combined Europe-wide market share for
anaesthesia equipment at 65 % (Dräger 56 %, Siemens
9 %). According to the report, Datex Ohmeda achieves a
22 % market share. T for G estimate the various market
shares as follows:

Anaesthesia equipment: T for G

Europe

9

56

65

22

5

3

3

2

D

9

56

65

22

5

3

3

2

NL

32

30

62

32

F

17

38

55

23

15

UK

4

12

16

48

21

15

I

E

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

7

< 1

N/A

N/A

6

Combined

Siemens

Dräger

Datex-Ohmeda

Taema

Blease

Penlon

Others

(114) Siemens’s Electromedical Systems division estimates
in its own internal documents [...]* the parties’ and
competitors’ market shares as follows: [...]*.

of external studies known to the Commission and
identified by the parties as being authoritative. [...]*

(115) The parties’ market share estimates on Form CO there-
fore portray their own market position as being signifi-
cantly weaker than the position portrayed by the authors

(21) European Anaesthesia and Respiratory Equipment Markets

Report, 2001.

(116) As a result, the Commission has done its own market
share calculations based on the turnover data of leading
competitors. The table below relies on figures communi-
cated by Siemens, Dräger, Datex-Ohmeda, Taema, Ste-
phan and Penlon concerning their own turnover. The
market shares of the remaining competitors are based
on the market share data communicated by the parties
in the course of the in-depth market
investigation;
at the time when the commitments were submitted,
it was not yet possible to check these figures (see
recital 4).

8.11.2003

EN

Official Journal of the European Union

L 291/17

Anaesthesia equipment: Commission’s findings (a)

(%)

2001

EEA

B

DK

D

FI

F

GR

UK

IRL

I

NL

A

P

E

S

N

Siemens

Dräger

Datex-Ohmeda

Taema

Stephan

Penlon

Medec

Heyer

H&L

EKU

AMS

Blease

Dameca

Anmedic

Siare

Hersill

Smith Industries

Samed

Temel

Normeca

[5-15]*

[5-15]*

[15-25]*

[0-5]*

[0-5]*

[15-25]*

[5-15]*

[0-5]*

[5-15]*

[25-35]*

[5-15]*

[5-15]*

[35-45]*

[0-5]*

[35-45]*

[0-5]*

[45-55]* [35-45]* [55-65]* [75-85]* [65-75]* [45-55]* [35-45]* [15-25]*

[0-5]*

[25-35]* [45-55]* [25-35]* [25-35]* [35-45]*

[5-15]*

[75-85]*

Combined

[55-65]* [45-55]* [75-85]* [75-85]* [65-75]* [65-75]* [45-55]* [15-25]*

[5-15]*

[45-55]* [45-55]* [35-45]* [55-65]* [35-45]* [45-55]* [75-85]*

[0-5]*

[5-15]*

[5-15]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[5-15]*

[5-15]*

[5-15]*

[5-15]*

[0-5]*

[5-15]*

[5-15]*

[0-5]*

[5-15]*

[5-15]*

[5-15]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[15-25]*

[5-15]*

[5-15]*

[5-15]*

[0-5]*

[0-5]*

[0-5]*

[5-15]*

[5-15]*

[0-5]*

(a) The turnover figures for competitors obtained in the course of the market investigation are business secrets of the undertakings concerned.

L 291/18

EN

Official Journal of the European Union

8.11.2003

(117) In most national markets Dräger and Datex-Ohmeda are
the two leading suppliers of anaesthesia equipment.
According to the Commission’s calculations and to
F & S, T for G and Siemens EM, Europe-wide Dräger is
the larger of the two suppliers. Both firms have signifi-
cant market shares in all national markets except Ireland
and Sweden, where Dräger achieves only small market
shares.

(118) Europe-wide, Siemens is the third-largest supplier, albeit
far behind the two market leaders, although its market
position varies considerably from country to country. In
Sweden, where the headquarters of Siemens Electromedi-
cal Systems are situated, the undertaking is the market
leader. Siemens entered the anaesthesia equipment mar-
ket only in 1997, with the Kion model. This is an
integrated workstation with a built-in patient monitor.
This innovative design was, according to market partici-
pants [...]*, beset with considerable technical problems
during the first few years. Among other things,
it
was initially considered cumbersome and complex to
operate. Problems subsequently arose with technical
reliability. These have, so the Commission has been told,
now been resolved, but the equipment’s reputation with
many customers has reportedly never recovered and,
[...]*, the equipment has not been a success financially.
T for G confirms this when it states with regard to
therapy equipment
‘Siemens is perceived very
differently in different countries and different depart-
ments. [...]* Dräger has a high image all over Europe’ (22).

that

(119) In contrast to the niche suppliers, Siemens has a well-
developed distribution network throughout Europe and,
technology
its broad range of medical
because of
products, enjoys a strong reputation in neighbouring
clinical areas, two factors which enable it to place new
anaesthesia products on the market. In the five years
since it entered the market, Siemens has already estab-
lished itself in most EEA countries as a significant, and
in Sweden as even the leading, supplier of anaesthesia
equipment.

leader (Dräger or,

(120) The notified JV would therefore combine in several
national markets the market
in
Sweden, Siemens) with the third-largest competitor
(Siemens or, in Sweden, Dräger). In Belgium, Denmark,
France, Germany, Italy and the Netherlands, the high
combined market shares and the horizontal overlaps
alone lead to a presumption of a dominant market
position.

(121) As in the case of ventilation equipment,

it will be
considered below to what extent Dräger’s anaesthesia
equipment is a close substitute for Siemens’s equipment
and hence restricts the price-setting freedom of Siemens
in particular. As above, the analysis is based on: (i) a
survey of customers and competitors; (ii) internal docu-
ments of the parties; and (iii) tender documents submit-
ted by the parties.

(122) Owing to its currently smaller market share, Siemens
may also have a stronger financial incentive than Dräger
and Datex-Ohmeda to pursue as an independent supplier
an aggressive, market-share-winning strategy in order to
achieve economies of scale and build up an installed
base. The notified JV would thus potentially eliminate a
particularly aggressive competitor. This theory will be
examined in the light of Siemens’s business plans and
strategy papers.

(i)

S u r v e y o f c u s t o m e r s a n d c o m p e t i -
t o r s

(123) As with ventilation equipment, customers and competi-
tors were asked in the context of the market investigation
to name three substitutes (first, second and third alterna-
tive) to Dräger, Siemens and Datex-Ohmeda anaesthesia
equipment. Customers were asked to take the currently
used models as a basis, while competitors were supplied
with a list of the parties’ main equipment (Dräger:
Cicero, Cato, Primus; Siemens: Kion). A clear majority
of the customers surveyed, particularly in Germany,
Denmark, Belgium, France, Italy and the Netherlands,
but also, for example, in Austria and Sweden, regarded
Dräger products as being the best alternative to the
Siemens Kion, although it should be pointed out that
Siemens’s product range for anaesthesia equipment is
limited to this one model. The answers to the question
concerning substitutes for Dräger are less clear-cut in
this respect. Both Datex-Ohmeda and Siemens are
named as the best alternatives. In the opinion of the
customers participating in the market
investigation,
therefore, Dräger’s product range is the nearest substitute
for Siemens customers, but this is not entirely the case
the other way round.

(124) The results of

the market

investigation show that
customers generally rank the equipment of the niche
suppliers as being of lower quality than that of the three
market leaders. Several hospitals indicated that their
equipment manufactured by niche suppliers tended to
be technically antiquated and used, for example, as back-
up or replacement equipment.

(125) Customers were also asked what price increases would
lead them to change to the alternative equipment in
question. Many of them either did not reply or indicated
that price played only a minor role (compared, for
example, with quality and customer service) in their
selection of products. Otherwise, the answers given
ranged between 10 % and 30 %. One Austrian hospital
stated that there would have to be a 50 % increase before
it would change its supplier. There were therefore no
significant differences between ventilation and anaes-
thesia equipment as far as this question was concerned.

(22) T for G market report: Monitors and Ventilators, December 2000,

p. 28.

(126) Only a few competitors gave detailed answers to the
question concerning substitutes for anaesthesia equip-
ment. Their answers do not indicate any clear pattern.

8.11.2003

EN

Official Journal of the European Union

L 291/19

(ii)

I n t e r n a l d o c u m e n t s o f t h e p a r t i e s

(127) In their business plans and the analyses conducted prior
to the transaction, both parties analyse the market
positioning of the different ventilation equipment mar-
keted by Siemens, Dräger and their competitors. In this
the Siemens Kion model was unanimously
respect,
classified together with several Dräger products in the
upper price/performance segment. Datex-Ohmeda also
covers a broad product range.

(128) Siemens [...]*.

(129) Dräger [...]*.

(130) In its business plans for 1999 to 2002, Siemens also
its Electromedical

discusses the business strategy of
System Division [...]*.

(131) [...]* The JV thus eliminates a relatively aggressive
challenger to Dräger (and the second largest supplier
Datex-Ohmeda).

(iii) T e n d e r d o c u m e n t s

(132) With their notification, Siemens and Dräger also submit-
ted, at the Commission’s request, a list of the tender
procedures for anaesthesia equipment in which they had
taken part. Here too, the parties point out that they do
not operate an ongoing reporting system covering the
data requested whereby such data are entered into a
databank. The data submitted had had to be reconstruct-
ed by the sales personnel responsible for each tender
and might
therefore be incomplete and provide a
distorted view of the competitive situation (in the parties’
view, to Siemens’ and Dräger’s detriment).

(133) The requested lists contain information on the customer,
the number of units, the contract volume, the name of
competitors, the name of the company winning the
contract and, if available, the previous winner.

(134) In the context of the detailed market investigation, the
parties were asked to submit further tender documents
in order to increase the number of tender procedures
covered. However,
the data submitted were largely
unusable because no competitors were identified. The
following evaluation is thus based on the data submitted
with the notification.

(135) The data in question are for the EEA as a whole. Because
of the small and possibly unrepresentative sample, no
separate evaluation by Member State was carried out.

(136) With its notification, Siemens submitted documents for
[...]* tender procedures in which it had participated and
for which the competitors also taking part are identified.
In [...]* of them, Dräger was a competitor. Of the [...]*
procedures not involving Dräger, there were [...]* in
which there was no competitor at all. In [...]* cases, only
Datex-Ohmeda submitted a tender (in P, IRL [...]*, GR
in [...]* only Taema (in F) and in [...]* only
and E),
Iberdata (in P). More than [...]*, Datex-Ohmeda [...]*,
Dameca ([...]*, exclusively in Sweden), Taema/Air Liquide
([...]*, [...]*) and Themel ([...]* in Spain) took part in
addition to Dräger. Dräger and Datex are thus by far
the most important rivals to Siemens for anaesthesia
equipment.

(137) In [...]* cases, both the successful bidder and the
previously successful bidder are identified. In [...]* of
them, the new contract was awarded to the previous
supplier. On the [...]* tender procedures in which there
was a (partial or complete) change of supplier, the
customer most frequently ([...]* times) changed from
Dräger to Datex-Ohmeda, or vice versa. [...]* changes
occurred between Siemens and Datex-Ohmeda and [...]*
between Dräger and Siemens (NB: some contracts were
awarded to several suppliers). These changes roughly
reflect the market position of the different manufac-
turers, although the small (and possibly unrepresent-
ative) sample restricts the reliability of the data.

(138) The same analysis as for Siemens was carried out on
the tender documents submitted by Dräger. Dräger
submitted documents for [...]* tenders for anaesthesia
in the various EEA countries for which
equipment
competitors are identified. In [...]* cases, there was no
competitor at all. In those cases in which there were
competitors, Datex-Ohmeda [...]* and Siemens [...]*
submitted the most bids. There is a pronounced geo-
graphic segmentation between the remaining competi-
tors: Penlon [...]*, Taema [...]* and Anmedic [...]*. All
other bidders submitted fewer than [...]* bids.

(139) In [...]* of the cases submitted by Dräger, both the
successful bidder and the previously successful bidder
are identified. In [...]* cases, the previous supplier was
again successful or the case involved a new hospital (one
case). On the [...]* tender procedures in which there was
a (partial or complete) change of supplier, the customer
most frequently ([...]* times) changed from Dräger to
Datex-Ohmeda, or vice versa. [...]* changes occurred
between Siemens and Datex-Ohmeda and [...]* between
Dräger and Siemens (NB: some contracts were awarded
to several suppliers). These changes roughly reflect the
market position of the different manufacturers, although
the small (and possibly unrepresentative) sample restricts
the reliability of the data.

L 291/20

EN

Official Journal of the European Union

8.11.2003

(140) The tender data submitted by Siemens and Dräger
confirm that Dräger, Datex-Ohmeda and Siemens are by
far the most important suppliers in their respective
market segment. The niche suppliers identified by the
parties in the course of the procedure for the purposes
of calculating market shares are thus not effective
competitors in practice.

Conclusion

(141) The customer survey, the parties’ internal documents
and the tender data thus confirm the assumption made
on the basis of market shares that, from the customer’s
point of view, Siemens and Dräger manufacture close
substitutes in the market for technically sophisticated
anaesthesia equipment. In this respect, Siemens covers,
with its Kion model, only part of the customer segment
covered by Dräger’s broader product range. In particular
for a large proportion of Siemens’ existing customers,
Dräger would thus be the main alternative if,
for
example, Siemens tried to impose higher prices on the
market. The merger of both product ranges within the
JV would thus put the parties in a position to impose
higher prices, particularly on those customers for which
Dräger and Siemens are the first and second choice for
procurement purposes, since many of the customers lost
as a result of the price increase of one or other of the
parties would change to products of the other party.

(142) As is apparent from the business plans, the JV would
also eliminate a competitor (Siemens) which, on the
basis of
its currently smaller market share, has an
incentive to pursue a relatively aggressive strategy target-
ed at winning market shares. The elimination of Siemens
as an independent competitor on the market in anaes-
thesia equipment which would result from the merger
would place the JV in a position to set prices largely
independently of its customers and competitors.

(143) According to the findings of the market investigation,
market entry barriers for anaesthesia equipment are
regarded as high by market participants since customers
have a strong preference for proven products and
manufacturers. Moreover, as the Commission has found,
a well-developed distribution and service network is a
prerequisite for successful market entry. An installed
base, at least in adjacent clinical segments, also makes
market entry much easier. Market entry requires con-
siderable sunk costs in R & D and the development of
a marketing and customer-service network. Siemens’
significant position, from the customer viewpoint, as
an effective competitor in anaesthesia equipment is,

according to the market investigation, largely based on
its strong presence in other areas of medical technology,
including ventilation equipment and patient monitors,
and probably contributed to the relative ease of
its
market entry.

(144) It also seems unrealistic to believe that existing competi-
tors can establish a market position comparable to
Siemens, Dräger or Datex-Ohmeda. Each of the next
largest competitors is active in only one, small geo-
graphical area. An expansion into new markets would
require the establishment of a marketing and service
network and the gradual development of a reputation
among customers, and would therefore be equivalent in
practical terms to a new market entry. This is unlikely
to occur in the timeframe of one to two years relevant
to the competitive assessment, at least on the basis of
current market developments. Several of
the fringe
competitors fear that their market position is more likely
to worsen in coming years given the JV’s broad product
range, particularly since it would be present on the
vertical market in patient monitors. The JV would thus
lead to higher rather than lower barriers to expansion
for fringe competitors.

in anaesthesia equipment

(145) Given Drager’s and Siemens’ high combined market
share on the market
in
Italy and the
Belgium, Denmark, Germany, France,
Netherlands, the fact that the parties offer two close
substitutes, and the fact that Siemens has a considerably
greater incentive than Dräger and Datex-Ohmeda to
pursue an aggressive strategy aimed at gaining market
share, the market investigation thus confirms the serious
concerns that
the concentration would lead to the
emergence of a dominant position on the part of the JV
on those national markets.

(146) At the time when the commitments were offered, the
market investigation had not yet been completed for the
other national markets (see recital 4). However, the
commitments offered would eliminate any dominant
position which might be created by the JV on those
markets too.

C2. VERTICAL/CONGLOMERATE EFFECTS

3. Patient monitors

Market shares

(147) According to the information they themselves have
the parties have the following combined

provided,
market shares for patient monitors:

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Official Journal of the European Union

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Patient monitors: Information provided by the parties in Form CO

2001

EEA

B

DK

D

FI

F

GR

UK

IRL

I

NL

A

P

E

S

N

(%)

Siemens

[15-25]* [35-45]* [35-45]* [15-25]*

[0-5]*

[5-15]*

[5-15]*

[5-15]*

[25-35]* [15-25]* [15-25]* [25-35]* [15-25]* [15-25]* [15-25]*

[0-5]*

Dräger (via GE)

[5-15]*

[5-15]*

[5-15]*

[5-15]*

[0-5]*

[0-5]* —

[5-15]*

[0-5]*

[0-5]*

[0-5]*

[5-15]* —

[5-15]* —

—

Combined

[25-35]* [45-55]* [35-45]* [35-45]*

[0-5]*

[5-15]*

[5-15]*

[5-15]*

[25-35]* [15-25]* [15-25]* [45-55]* [15-25]* [25-35]* [15-25]*

[0-5]*

Philips/Agilent

[15-25]* [15-25]*

[5-15]*

[15-25]* [15-25]* [25-35]* [25-35]* [15-25]* [25-35]* [15-25]* [25-35]* [15-25]* [15-25]* [25-35]* [15-25]* [25-35]*

GE/Marquette

[5-15]*

[5-15]*

[0-5]*

[5-15]*

[15-25]* [15-25]* [15-25]*

[5-15]*

[5-15]*

[5-15]*

[5-15]*

[0-5]*

[5-15]*

[5-15]*

[15-25]* [15-25]*

GE incl. Dräger?

[15-25]* [15-25]*

[5-15]*

[15-25]* [15-25]* [15-25]* [15-25]* [15-25]*

[5-15]*

[5-15]*

[5-15]*

[15-25]*

[5-15]*

[15-25]*

[5-15]*

[15-25]*

Datex-Ohmeda/Spacelabs

[15-25]* [15-25]* [15-25]* [15-25]* [35-45]* [15-25]* [25-35]* [25-35]* [15-25]* [15-25]* [25-35]* [25-35]* [15-25]* [15-25]* [15-25]* [15-25]*

Nihon Kohden

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[5-15]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

[0-5]*

Residual

[15-25]*

[0-5]*

[15-25]*

[5-15]*

[15-25]* [15-25]* [15-25]* [15-25]* [15-25]* [25-35]*

[5-15]*

[0-5]*

[25-35]*

[5-15]*

[15-25]* [25-35]*

(148) According to information they have themselves pro-
vided, the parties achieve an average market share of [25
to 35]* % in the EEA. They are market leaders in several
Member States, with in some cases considerably higher
market shares. A significant portion of the market ([15
to 25]* % at the level of the EEA, and more than [15 to
25]* % in several countries)
is not assigned to any
competitor. Nevertheless, there are three competitors in
each Member State with significant market shares and a
extensive presence in the area of medical technology:
Philips, General Electric (GE) and Datex-Ohmeda. Dräger
does not
itself manufacture monitors but, under a
cooperation agreement, procures equipment mainly
manufactured by GE, which is then combined to form
integrated anaesthesia and ventilation work stations.
[...]* It is to be assumed that the JV would then use
mainly Siemens products instead of GE equipment. The
number of effective competitors on the market for
patient monitors would not, however, change as a result,
since Dräger is at present not active at production level
on the market for patient monitors. From a horizontal
point of view, the JV would thus not, according to the
Commission’s investigations,
lead to the creation or
reinforcement of a dominant position on the market for
patient monitors.

(149) Apart from the horizontal effects described at recitals 71
to 146, the JV would significantly broaden the product
range which Siemens can supply as integrated solutions
for hospitals. In addition to the anaesthesia equipment,
ventilation equipment and patient monitors included in
the notified JV, Siemens is also active on other medical-
technology markets, in particular capital-intensive imag-

systems

(ultrasound,

computed tomography,
ing
radiography, magnetic resonance, etc.) and IT systems
for hospitals. GE and Philips in particular seem to be
pursuing a similar strategy, but Siemens together with
the JV would have access to the broadest product
portfolio of all competitors on the market and would
thus be in a position to offer the most comprehensive
‘one-stop-shop’ solutions. In view of the parties’ strong
market positions and the close complementarity of
their equipment, vertical aspects in particular between
anaesthesia equipment and ventilation equipment on
the one hand and patient monitors on the other are of
relevance to the competitive assessment of the notified
joint venture.

(150) Technical cooperation between manufacturers is essen-
tial to the necessary process of integrating anaesthesia
and ventilation equipment on the one hand and patient
monitors on the other so that the data streams generated
by the equipment and the corresponding patient data
can be displayed on the monitor and/or can be stored in
the hospital’s IT system. This is because, on the one
hand, according to market participants, the interfaces
are not standardised and consequently require cooper-
ation and information exchange between the relevant
manufacturers if efficient interface solutions are to be
developed. Moreover, competitors point out that the
innovation cycle for monitors is shorter than for anaes-
thesia and ventilation equipment, so that a flexible
exchange of individual components should remain poss-
ible in order to produce in all cases the best equipment
combinations available on the market (best-in-class).

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Official Journal of the European Union

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(151) While closer integration of various equipment com-
ponents is thus welcomed by many customers,
the
dominant positions in the case of anaesthesia and
ventilation equipment resulting from the horizontal
effects described at recitals 71 to 146 would enable the
JV to prevent competing manufacturers of patient
monitors from having effective access to anaesthesia and
for example by
ventilation equipment
making access to interfaces more difficult or by designing
anaesthesia and ventilation equipment in such a way
that it can be combined only with Siemens monitors.
Hospitals would then no longer be able (or only with
greater difficulty) to combine the best components of
different manufacturers available on the market with
one another for the relevant area of application.

(foreclosure),

(152) Even though the market investigation had not been
terminated at the time when the commitments were
entered into, there are still serious concerns, as expressed
when the proceedings were initiated, that, as a result of
the abovementioned market-foreclosure effect, the JV
would achieve a dominant position for patient monitors
both at EEA level and, more particularly,
in those
member countries in which the JV would achieve
a dominant position for anaesthesia or ventilation
equipment. Moreover,
that
the dominant position for anaesthesia and ventilation
equipment arising as a result of the creation of the JV
would be strengthened by its market position for patient
monitors.

it cannot be ruled out

(153) The commitments entered into by the parties, as
described in detail at recitals 154, 155 and 156, eliminate
the horizontal overlaps for ventilation and anaesthesia
equipment. Only the Dräger therapy equipment
is
included in the JV. However, Dräger alone achieves
market shares in several Member States which already in
themselves give grounds for serious doubts as to the
possibility of a dominant position emerging. In the case
of ventilation equipment, this is particularly true for
Belgium (market share of [55 to 65]* %), Denmark ([45
to 55]* %), Germany ([55 to 65]* %) and Austria ([75
to 85]* %). For anaesthesia equipment, the countries
concerned are Denmark ([55 to 65]* %), Germany ([75
to 85]* %), Finland ([65 to 75]* %), France ([45 to
55]* %), the Netherlands ([45 to 55]* %) and Norway
([75 to 85]* %). The serious doubts as to compatibility
with the common market are thus not entirely removed
by the elimination of horizontal effects.

VI. COMMITMENTS

(155) The commitments are essentially as follows: the parties
undertake to ensure that Siemens sells its entire Life
Support Systems (LSS) Division, i.e. all of its activities
worldwide in the area of ventilation and anaesthesia
equipment for hospitals and clinics, to a buyer which is
independent of
the parties. These activities include
R & D, production, marketing, distribution and mainten-
ance/servicing in respect of ventilation and anaesthesia
equipment. These business activities are at present
pursued at Siemens Elema AB at Solna in Sweden and
within several regional companies belonging to Siemens
and are to be sold as a going concern, i.e. including all
tangible and intangible assets existing at the time the
commitment was entered into and the entire workforce.
Siemens undertakes to maintain fully the viability and
competitiveness of the business to be sold. The parties
further undertake to operate the business separately up
to the time at which it is sold.

(156) In order to dispel the Commission’s doubts concerning
the vertical aspects of the concentration, i.e. the interop-
erability between anaesthesia and ventilation equipment
on the one hand and patient monitors on the other, and
their interoperability with data-management systems in
hospitals, the parties have, in addition to the abovemen-
tioned sale, also offered to enter into commitments
concerning the continued interoperability of their equip-
ment. These commitments include an undertaking to
maintain and make available all existing and future
interfaces and communications protocols of all existing
and future equipment for the patient monitors of third-
party suppliers in the area of critical care and for
connecting them to the data-management systems of
third-party suppliers in hospitals. All information con-
cerning interfaces and communications protocols will
be made available on request and,
in the event of
modifications, automatically to third parties. In either
case, this will occur without delay, on a non-discriminat-
ory basis and free of charge (or with a charge to
cover documentation costs). Any reasonable technical
explanations regarding this information will, on request,
be provided without delay. Moreover, the parties will
cooperate regarding certification of the mechanical and
electrical interoperability of their equipment with the
patient monitors (and data-management systems) of
third-party suppliers at the request of such suppliers or
a customer.

VII. COMPETITION ASSESSMENT OF THE NOTIFIED
CONCENTRATION TAKING ACCOUNT OF THE COM-
MITMENTS ENTERED INTO

(154) By letter of 6 March 2003, the notifying parties submit-
ted commitments pursuant to Article 8(2) of the Merger
Regulation with a view to removing the Commission’s
abovementioned competition-related doubts. The com-
mitments were slightly amended by letter of 14 March
2003.

(157) The commitments were presented to customers and
competitors in the context of a market survey. Of these
commitments, the sale of Siemens LSS Division was
consistently seen as an effective means of preventing
Dräger’s market position from being strengthened as a
result of the JV. Customers and competitors also ident-
ified interoperability as being an essential element of the

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Official Journal of the European Union

L 291/23

commitments and confirmed that the availability of
information on interfaces and communications proto-
cols and cooperation regarding certification of equip-
ment combinations or systems would be an appropriate
means of maintaining interoperability. However, one
competitor also expressed the doubt that the commit-
ments might continue to give the JV a competitive edge
in the development of patient monitors and their
conformity with the new interfaces, particularly since
the JV might not make information available early
enough.

(158) The commitments entered into require the parties to
provide information on interfaces and communications
in the
protocols without delay either on request or,
event of modifications, automatically before this infor-
mation is made available to the market. Particularly in
view of the relatively long product cycles of therapy
equipment and patient monitors and the duration of
tender procedures, the Commission has, after examining
the continuing doubts concerning the early availability
of information on interfaces, come to the conclusion
that the commitments give adequate guarantees that
competitors will receive such information in good time.

(159) The commitments described at recitals 154, 155 and
156 are sufficient in the Commission’s view to dispel in
an appropriate fashion the competition-related doubts
concerning the market in ventilation and anaesthesia
equipment and the competition-related doubts concern-
ing the vertical aspects of the case. In particular, the
commitments concerning the sale prevent the JV from
resulting in additions of market shares on the markets
in ventilation and anaesthesia equipment. The commit-
ments concerning interoperability ensure that it will
continue to be possible in future to connect the patient
monitors of third-party manufacturers without problems
to the JV’s ventilation and anaesthesia equipment. The
same applies to the connection of equipment and
monitors to hospitals’ data-management systems.

VIII. CONDITIONS AND OBLIGATIONS

(160) Under the first sentence of the second paragraph of
Article 8(2) of the Merger Regulation, the Commission
may attach to its decision conditions and obligations
intended to ensure that the undertakings concerned
comply with the commitments they have entered into
vis-à-vis the Commission with a view to rendering the
concentration compatible with the common market.

declaring the merger to be compatible with the common
market is void. Where the parties commit a breach of an
obligation, the Commission may revoke the clearance
decision in accordance with Article 8(5)(b) of the Merger
Regulation; the parties may also be subject to fines and
periodic penalty payments under Articles 14(2)(a) and
15(2)(a) of the Merger Regulation.

(162) In accordance with the basic distinction described at
recitals 160 and 161, the Commission makes its decision
subject to the condition of full compliance with the
following commitments:

(a)

(b)

(c)

(d)

(e)

(f)

the commitment concerning the sale as a going
concern within the extended time limit laid down
in paragraph 1 of the Annex;

the commitment entered into by Siemens to the
effect that it will sell its entire Life Support Systems
(LSS) Division, i.e. all of the activities in the area of
ventilation and anaesthesia in hospitals and clinics
described in paragraph 4 of the Annex, to a suitable
buyer;

the commitments to preserve the viability, competi-
tiveness and marketability of the business in accord-
ance with paragraph 5 of the Annex, to continue
operating the business separately, and to ensure a
flow of
information in accordance with para-
graphs 6, 7 and 8 of the Annex;

the commitment concerning non-solicitation of
key personnel in accordance with paragraph 9 of
the Annex;

the commitment concerning a suitable buyer in
accordance with paragraphs 13, 14 and 15 of the
Annex;

the commitment
to implement any measures
imposed by the monitoring trustee which are
deemed necessary by the latter to ensure com-
pliance with the above commitments in accordance
with paragraph 23(c) of the Annex;

(g)

the commitments concerning the maintenance of
interoperability in accordance with paragraphs 35,
36, 37, 38 and 39 of the Annex.

(161) Measures that give rise to a structural change of the
market must be made subject to conditions, while the
implementing steps which are necessary to achieve this
result constitute obligations on the parties. Where a
fulfilled, the Commission decision
condition is not

(163) By contrast, all of the remaining commitments,

in
particular the commitment to maintain temporarily and
administer separately the business that is to be sold, and
the details regarding the trustee to be appointed by the
parties, should constitute obligations, since they serve
merely to support the implementation of the above
conditions.

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IX. CONCLUSION

Article 2

(164) For the abovementioned reasons, it can be assumed,
provided that the commitments entered into by the
parties are complied with in full, that the planned
concentration will not create or strengthen a dominant
position as a result of which effective competition would
be significantly impeded in the common market or in a
substantial part of it. Provided that the commitments set
out in Annex II are complied with in full, the concen-
tration should thus be declared compatible with the
common market and the EEA Agreement pursuant to
Article 2(2) and Article 8(2) of the Merger Regulation
and Article 57 of the EEA Agreement,

HAS ADOPTED THE FOLLOWING DECISION:

Article 1

The notified concentration by which Siemens AG and Drä-
gerwerk AG are to acquire joint control of Dräger Medical AG
& Co. KgaA (the joint venture) within the meaning of
Article 3(1)(b) of the Merger Regulation is hereby declared
compatible with the common market and with the EEA
Agreement.

Article 1 shall apply on condition that the commitments
offered by Siemens AG and Drägerwerk AG and set out in
paragraphs 1, 4, 5 to 9, 13, 14, 15, 23(c) and 35 to 39 of
Annex II are complied with in full.

Article 3

This Decision is issued subject to the obligation on Siemens AG
and Drägerwerk AG to comply in full with the commitments
entered into in paragraphs 2, 3, 10, 11, 12, 16 to 22, 23(a),
23(b), 23(d) to (f), 24 to 34 and 40 to 43 of Annex II.

Article 4

This Decision is addressed to:

Siemens AG
CFL
Wittelsbacherplatz 2
D-80333 Munich

Drägerwerk AG
Moislinger Allee 53-55
D-23542 Lübeck

Done at Brussels, 30 April 2003.

For the Commission

Mario MONTI

Member of the Commission

ANNEX

The original text of the conditions and obligations under Articles 2 and 3 can be consulted on the following
Commission website:
http://europa.eu.int/comm/competition/index–en.html