2004/238/EC: Commission Decision of 23 July 2003 declaring a concentration to be compatible with the common market and the EEA Agreement (Case COMP/M.2972 — DSM/Roche Vitamins) (Text with EEA relevance) (notified under document number C(2003) 2648)
Date: 2003-07-23
Institutions: European Commission
Subjects: economic concentration, enzyme, exchange of information, food technology, merger control

19.3.2004

EN

Official Journal of the European Union

L 82/73

COMMISSION DECISION

of 23 July 2003

declaring a concentration to be compatible with the common market and the EEA Agreement
(Case COMP/M.2972 — DSM/Roche Vitamins)
(notified under document number C(2003) 2648)

(Only the English text is authentic)

(Text with EEA relevance)

(2004/238/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, 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 of 19 May 2003
to initiate proceedings in this case,

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

Having regard to the final report of the Hearing Officer in this
case (4),

Whereas:

I. INTRODUCTION

(1)

(2)

On 31 March 2003, the Commission received a notifi-
cation pursuant
to Article 4 of Regulation (EEC)
No 4064/89 (‘the Merger Regulation’) of a proposed
concentration by which the undertaking DSM NV
(‘DSM’) would acquire control within the meaning of
Article 3 of the Merger Regulation of the whole of the
undertaking Roche Vitamins and Fine Chemicals Divi-
sion (‘RV & FC’) by way of purchase of shares and
assets.

After examination of
the notification and a set of
undertakings submitted by DSM on 25 April 2003 as
amended on 13 May 2003, the Commission concluded,
on 19 May 2003, that the notified operation fell within
the scope of the Merger Regulation and that it raised
serious doubts as to its compatibility with the common

(1) OJ L 395, 30.12.1989, p. 1 (corrected version OJ L 257, 21.9.1990,

p. 13).

(2) OJ L 180, 9.7.1997, p. 1.
(3) OJ C 69, 19.3.2004.
(4) OJ C 69, 19.3.2004.

(3)

(4)

(5)

(6)

(7)

(8)

market and the EEA Agreement. The Commission there-
fore decided to initiate proceedings in accordance with
Article 6(1)(c) of the Merger Regulation.

On 27 June 2003 a new set of undertakings was
submitted by DSM.

On 9 July 2003 a final
submitted by DSM.

set of undertakings was

The Advisory Committee discussed the draft of
Decision on 18 July 2003.

this

the

that

doubts

serious

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
to in
appears
in
Article 6(1)(c) have been removed. This applies
particular where the parties have offered commitments.
The revised commitments offered by the parties remove
the
the serious doubts as
so that a
concentration with the common market,
and
conditional Decision pursuant
Article 10(2) clearing the concentration may be adopted.

to the compatibility of

to Article 8(2)

referred

II. THE PARTIES

DSM is incorporated in the Netherlands as a public
in
limited liability company with its corporate seat
Heerlen. DSM has subsidiaries in Europe,
the United
States and elsewhere in the world and is active in the
development and production of a broad range of
including feed
chemical
enzymes, performance materials
and
industrial chemicals.

science products

and polymers

and life

Roche Holding is the ultimate parent of
the Roche
group, which consists of three divisions: pharmaceuti-
cals, diagnostics and vitamins and fine chemicals. It is
the latter division (RV & FC) which is the subject of the
notified transaction.

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Official Journal of the European Union

19.3.2004

(9)

It

RV & FC is principally active in the production and sale
of vitamins and carotenoids.
is also active in the
production and supply of citric acid, premixes, cosmetic
ingredients and polyunsaturated fatty acids (‘PUFAs’). In
each of these areas RV & FC is engaged in research and
development activities. RV & FC also distributes but
does not produce feed enzymes (where it also has
research and development activities) and certain vitamins
and amino acids.

(14)

III. THE OPERATION

(10)

The transaction concerns the acquisition by DSM of sole
control of RV & FC pursuant
to a Share and Asset
Purchase Agreement signed on 10 February 2003.

IV. CONCENTRATION

(11)

The proposed operation therefore constitutes a concen-
tration within the meaning of Article 3(1)(b) of
the
Merger Regulation.

(15)

(12)

(13)

V. COMMUNITY DIMENSION

The undertakings concerned have a combined aggregate
worldwide turnover of more than EUR 5 billion (5)
(DSM: EUR 5 606 million; RV & FC EUR […]* (*)).
They each have an aggregate Community-wide turnover
of more than EUR 250 million, (DSM: EUR […]*; RV &
FC EUR […]*) but they do not achieve more than two-
thirds of
turnover
their aggregate Community-wide
within one and the same Member State. The notified
operation therefore has a Community dimension within
the meaning of Article 1(2) of the Merger Regulation.

VI. THE RELEVANT MARKETS

The notifying party, DSM, is active in a broad range of
product areas. However,
the proposed operation only
creates overlaps in additives used for the manufacture of
animal
feed and some additives used in products for
human consumption. Among these products, there are
only two affected markets, both related to feed enzymes:
phytase
degrading
enzymes (‘NSP-degrading enzymes’).

polysaccharide

non-starch

and

Phytase

Relevant product market

in the feed is essential

Phosphorus is a vital mineral element
in animal nu-
trition. It plays a major metabolic role and has impor-
functions. An adequate supply of
tant physiological
phosphorus
to health and
optimal production of
livestock. Animals obtain the
phosphorus
they need from cereals, oilseeds, other
vegetal material and inorganic phosphates. More than
two-thirds of
the total phosphorus present in vegetal
raw materials occurs in the form of phytate-bound
phosphorus. Monogastric animals, such as poultry and
lack the necessary enzymes to release the phos-
pigs,
the
phorus from the phytate. As a result, most of
phosphorus is excreted unused in the faeces and these
animals need additional
inputs of phosphorus in their
vegetable and cereal-based diets in order to maintain a
proper phosphorus balance.

There are two ways in which the amount of digestible
phosphorus in animal feed can be increased, by adding
Inorganic
inorganic phosphate or by adding phytase.
phosphates are minerals which are used as both ferti-
lisers and feed additives. Phytase is an enzyme capable
of degrading phytate and thereby liberating the phos-
phorus. It is available in liquid and dry (granulated or
powder) form.

(16)

The notifying party estimates that phytase could replace
up to 50 % of inorganic phosphate in animal feeds, but
that it can never entirely replace inorganic phosphate. It
submits that all forms of phytase and inorganic phos-
phate constitute part of
the same relevant product
market, on the basis that phytase can replace a signifi-
cant proportion of inorganic phosphate, and prices are
similar.

(17) However

the Commission's market

investigation does
not support this claim. It appears that a vast majority
of customers do not consider the products to be inter-
In
changeable. There are two main reasons for this.
the use of
comparison with inorganic phosphates,
phytase results in cost savings and reduces environ-
mental pollution.

Inorganic phosphate reduction

(*) Parts of

this text have been edited to ensure that confidential
information is not disclosed; those parts are enclosed in square
brackets and marked with an asterisk.

(5) Turnover calculated in accordance with Article 5(1) of the Merger
Regulation and the Commission Notice on the calculation of turn-
over (OJ C 66, 2.3.1998, p. 25). To the extent that figures include
turnover for the period before 1 January 1999, they are calculated
on the basis of average ECU exchange rates and translated into EUR
on a one-for-one basis.

(18)

The use of phytase in feed can have a number of
advantages. The first main advantage is to enable phos-
phorus in feed to be better digested and thereby reduce
the quantity of
inorganic phosphate required. Phytase
also releases amino acids and other nutrients in the
phytate molecule.

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Official Journal of the European Union

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(19)

The Commission's market investigation confirmed that
the use of phytase results in a significant reduction in
the amount of inorganic phosphate used in feed. One
feed compounder estimated that 150 grams of
liquid
phytase can substitute for approximately 7,5 kg of
inorganic phosphate per tonne of feed.

it were to increase in price by 25 to 50 %.
only if
Several
they would stop purchasing
responded that
phytase if it were to increase in price by 100 to 300 %.

Improvement of the nutritional value

Cost savings

(20)

The Commission's investigation suggested that the cost
of phytase is not the deciding factor but rather the cost
savings
that may be achieved by the inclusion of
phytase in animal feed which, in turn, depends on the
In
relative costs of phytase and mineral phosphate.
terms of
the overall cost savings in feed production,
the addition of phytase is highly significant. One feed-
compounder estimated the saving from using phytase at
one mill to be EUR 0,36 for each tonne (6).

(24) A major benefit of using phytase in feed is that by
reducing the quantity of materials which must be added
it
to vegetal raw materials to get an appropriate diet,
increases the quantity of vegetal raw material
included
in the feed and thereby increases its nutritional value.
Using the example given at recital 19) above the ad-
dition of 150 grams of liquid phytase per tonne of feed
can substitute for approximately 7,5 kg of
inorganic
phosphate. This would mean that 7,35 kg of additional
vegetal material may be added to the feed to increase
nutritional value. Improving the nutritional value of feed
also contributes to cost savings.

(21)

Prices of DCP are driven by the demand for fertilisers
and not the demand for feed, whereas the demand for
phytase is driven only by demand for feed.

Handling

(22)

Prices of phytase have been falling over the last 10 years.
According to price development data submitted by the
notifying party,
the price of Natuphos 5000 (the
phytase product of the DSM/BASF alliance) was approxi-
mately EUR […]* per kg in 1994. The price dropped
steadily from its 1994 level to approximately EUR […]*
in 2001 (7). On the other hand, the prices of inorganic
phosphate have been steady or have increased slightly.
The Commission's market investigation indicated there
was little correlation between the prices of DCP and
phytase.

(25)

The Commission's market investigation also confirmed
that phytase and inorganic phosphate differ significantly
in terms of volume, weight and handling. Phytase is
generally sold in smaller quantities, for example, sacks
or drums of 25 kg, and must be dispensed in small
quantities that is to say, in terms of grams per tonne of
feed. Inorganic phosphate is delivered in tonnes, stored
in silos and is dispensed in large quantities using
machinery. Easy handling of phytase also contributes to
cost savings.

(23)

Further evidence that phytase and inorganic phosphate
constitute separate relevant product markets is provided
by the fact that the overwhelming majority of customers
responded that they would not stop purchasing phytase
and substitute it by inorganic phosphates in response to
a price increase of 5 to 10 %. Many customers
they would stop purchasing phytase
responded that

(6) The total raw material cost of the feed per tonne in this estimate is
EUR 159,38. It should be noted that raw material feed components
represent 90 % of the weight and the majority of the cost. Nearly no
saving may be achieved on the cost of raw materials since they are
commodity products. Therefore, any saving achieved on the residual
costs is of primary importance for an industry which operates with
high volumes and very low margins (typically 3 to 4 %).

(7) Prices provided by notifying party of phytase in the European
market calculated back to the standard product (Natuphos 5000)
containing 5 000 units per gram. Form CO p. 70-71.

Environmental benefits/legislation governing phosphates on
land

(26) Another important benefit of using phytase in feed is
the reduction of excretion of phosphate in animal
manure. Although the microbial activity in the soil
releases phosphate which can have a beneficial fertilising
effect,
if present in excess, this can cause pollution of
land and ground water. The use of phytase reduces the
from
harmful
animal manure in areas with intensive livestock pro-
duction. According to the Commission's market investi-
gation, studies have found that optimising phosphate
intake and digestion with phytase reduces the excretion
of phosphorus by approximately 30 %.

impact of phosphate

environmental

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Official Journal of the European Union

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(27)

(28)

(29)

States

The serious environmental concerns posed by the threat
of high phosphate levels in manure has led a number of
Member
France, Netherlands,
example,
Belgium and Germany) and regions to enact legislation
limiting the level of phosphates to be applied to the
land (8). These are the geographic areas in which live-
stock is most intensively farmed in Europe.

(for

the Commission's investigation indicated
In addition,
that the regulatory constraints on the levels of phos-
phates in feed,
the EEA such as
Germany, mean that
the only alternative to using
phytase in feed to reduce phosphorus is to decrease
animal density.

in some areas of

Liquid and dry

The Commission also considered whether the market
should be further segmented into separate markets for
liquid and dry phytase. The market investigation indi-
cated that customers considered liquid and dry phytase
as functionally substitutable. There is full supply-side
substitutability between the dry and liquid form of
phytase, the dry form being produced out of the liquid
form. Although liquid phytase is more generally used
when the pelleting process is undertaken at a higher
temperature (> 70 degrees centigrade), the Commission's
investigation indicated that, with some adjustments by
the feed manufacturer, the products could be used for
different
investigation also
feed. The market
indicated that liquid and dry phytase is similar in terms
of price on the basis of equivalent active ingredient. On
is not
this basis

the Commission considers

types of

that

it

necessary to draw a distinction between liquid and dry
phytase.

Conclusion

(30)

The market investigation has demonstrated that phytase
is not a substitute for
the
following reasons:

inorganic phosphate for

(a) phytase lowers costs, as it reduces the additional
quantities of
inorganic phosphate that must be
added to the feed, improves the nutritional value of
feed and is easier to handle;

(b) the use of phytase instead of

inorganic phosphate
limits the excretion of phosphorus on the soil and
thereby allows environmentally constrained farmers
to maintain or increase animal density;

(c) a clear majority of customers stated that they would
it were to

not stop purchasing phytase even if
double or triple in price.

(31) On the basis of

concludes
market for phytase.

that

the

the Commission
there is a separate relevant product

foregoing,

(8) France: Circulaire du 23 janvier 1996 relative à l'utilisation de
nouvelles références de rejet des élevages de porcs; Arrêté du
les règles techniques auxquelles doivent
29 février 1992 fixant
satisfaire les élevages de vaches laitières et (ou) mixtes soumis à
autorisation au titre de la protection de l'environnement (modifié
par les arrêtés du 29 mars 1995 et du 1er juillet 1999); Arrêté du
13 juin 1994 fixant les règles techniques auxquelles doivent satis-
faire les élevages de volailles et (ou) de gibiers à plumes soumis à
autorisation au titre de la protection de l'environnement (modifié
par arrêté du 1er juillet 1999) (JO du 23 décembre 1994); Loi no 76-
663 du 19 juillet 1976 relative aux installations classées pour la
protection de l'environnement; Décret no 77-1133 du 21 septembre
1977 — Décret pris pour l'application de la loi no 76-663 du
19 juillet 1976 relative aux installations classées pour la protection
de l'environnement;
Belgium: Convenant betreffende de vaststelling van maximumge-
halten aan totaal
in volledige voeders voor varkens en
kippen die aangeduid zijn als ‘laag-fosfor-voeder’; Ondertekenaars
van het convenant ‘laag-fosfor-voeder’ voor varkens;
Germany: Verordnung zur Umsetzung der Richtlinie 80/68/EWG
des Rates vom 17. Dezember 1979 über den Schutz des Grund-
wassers gegen Verschmutzung durch bestimmte gefährliche Stoffe
(18. März 1997); Düngemittelgesetz (15. November 1977); Verord-
nung über die Grundsätze der guten fachlichen Praxis beim
Düngen (26.
Januar 1996); Gesetz zur Förderung der Kreislauf-
wirtschaft und Sicherung der umweltverträglichen Beseitigung von
Abfällen (27. September 1994);
The Netherlands: Wet Milieubeheer; Besluit milieueffecten-rappor-
Inrichtingen- en vergunningsbe-
tage; Besluit milieuverslaglegging;
sluit milieubeheer

fosfor

Relevant geographic market

(32)

The notifying party suggests the relevant geographic
product market for phytase is at least EEA-wide on the
basis that its phytase production is based at two facili-
ties: one in Seclin, France and another (outsourced) in
Kingstree (USA). Phytase is sold from these two plants
in more
than 70 countries via BASF's worldwide
network. The notifying party also notes that the pro-
duction of Novozymes is based at Kalundborg, Denmark
and Franklington, South Carolina (USA) whilst
the
marketing is handled by, inter alia, RV & FC worldwide.
In addition, the parties submit there are no substantial
differences in the prices of phytase sold by BASF and
RV & FC respectively across the EEA. The notifying
party submits there are no significant barriers to trade
and transport costs constitute a small proportion of
sales cost. Based on the example of Natuphos 5000G,
the western European 2003 price ranged from EUR
[…]* per kg in Austria to EUR […]* per kg in Greece,
but the price in the majority of Member States varied
insignificantly between EUR […]* and EUR […]* per kg
(particularly in those countries along the north-west
European sea border).

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(33)

to the Commission's market

The overwhelming majority of customer and competitor
responses
investigation
indicated that the market for phytase is EEA-wide. The
market investigation indicated that the vast majority of
feed enzymes (that
is to say, NSP-degrading enzymes
and phytase) are sold along the north-western sea
border of Europe where the livestock density is highest.
The Commission's market
investigation indicated that
there is a high level of cross-border trade within the
EEA, but that customers do not purchase phytase from
outside the EEA. Some respondents explained they
would not purchase phytase from a distributor outside
the EEA because the regulatory regime outside the EEA
is different. On the other hand, at the production level,
a part of the phytase produced by Fermpro, the US toll
manufacturing company that produces phytase for DSM,
is transported by DSM to Germany for granulation. On
this basis, for the time being, the Commission considers
the relevant geographic market is at least EEA-wide at
the production level and that the relevant geographic
market is EEA-wide at the distribution level.

(36)

(37)

NSP-degrading enzymes

Relevant product market definition

(34) NSPs are important components of all plant material.
in the cell walls and are
They are naturally present
integrity of the cells. When
required for the structural
an animal consumes the plant material (such as cereals
and vegetable protein sources) used in compound
animal feeds, they will consume NSP. Poultry and pigs
lack the endogenous enzymes necessary in their diges-
to degrade NSP. The addition of NSP-
tive tracts
degrading enzymes to poultry and pig feeds results in
an increase in the availability and digestibility of nutri-
ents in the feed which means improvements in feed
performance:
the animals utilise more effectively the
nutrients already present in the feed. To a lesser extent
NSP-degrading enzymes can contribute to a reduction in
environmental pollution (for
excretion of
nitrogen).

example,

blending enzymes produced by different micro-organ-
isms. The notifying party considers there is no reason to
differentiate between mono and multi-components or by
production method. Customers are only concerned with
the enzyme profile and the cost of the finished product.
them do not know how the NSP-degrading
Many of
enzymes they purchase are produced.

that no distinction
The notifying party also argues
should be made between the liquid and dry form of
the NSP-degrading enzymes since most of the existing
NSP-degrading enzymes are produced in the two forms.
Customers make their choice according to their feed
production process and equipment.

enzyme

the most appropriate

The notifying party argues that no distinction should be
made between the type of cereals with which NSP-
degrading enzymes are associated or the animal species
fed by these additives. To support this view they indicate
that since most of the monogastric animals cereal diets
are based on wheat, NSP-degrading enzymes mainly
include xylanase,
to
supplement wheat. Some diets associate barley with
wheat, but less than 10 % of cereal diets contain more
than 30 % barley (10). In these diets, it is recommended
to add beta-glucanase to xylanase to optimise efficacy.
However, some customers prefer to remain with wheat
supplementation and not
to switch to a wheat and
barley combination. Therefore, xylanase enzymes are
the predominant supplementary enzymes. They can be
used for all cereals based diets. Xylanase faces compe-
tition from other enzymes for some specific types of
diet. The notifying party submits that this is not suffi-
cient
It
the NSP-degrading
further argues that since most of
enzymes are not species-specific,
it is inappropriate to
distinguish according to animal species.

reason to define separate product markets.

(38) On this basis, the notifying party submits that all NSP-
degrading enzymes constitute a single relevant product
market.

Different types of diets

(35)

There are several types of NSP-degrading enzymes, the
main ones being xylanase and beta-glucanase. The other
NSP-degrading enzymes are essentially marginal. Each of
these enzymes is active on a particular substrate (9). The
NSP-degrading enzymes products contain either one
(mono-component) or
(multi-components) of
several
these active substances. Multi-components products can
be produced either with a single micro-organism or by

(39) Diet composition varies according to the relative prices
the time this
of wheat and barley. While most of
comparison is in favour of wheat and therefore diets
are only made of wheat, sometimes and in some regions
barley prices are attractive enough to add barley to
wheat. In 90 % of the diets, the level of inclusion of
barley is below 30 %.

(9) A substrate is a polysaccharide present

in cereals. Each NSP-
degrading enzyme degrades one of these substrates, for example
xylanase degrades arabinoxylans.

(10) According to the notifying party, under certain market conditions,
nutritionists can choose to add barley to wheat-based diets. These
conditions depend mainly on the relative cost positions of both
cereals and occur only occasionally.

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(40)

investigation indicated that

The customer responses to the Commission's first phase
market investigation were unanimous in the view that it
is necessary to distinguish enzymes according to the
type of cereal with which they are associated. The
market
the response of
different cereals varies according to enzyme, since xyla-
nase has little effect on barley and beta-glucanase has
the suppliers of NSP-
little effect on wheat. Most of
degrading enzymes indicated that
their products were
targeting one type of cereal or particular combinations
‘wheat
and
of
barley’ (11). Therefore
the product
market definition proposed by the notifying party could
fail to take into account this product differentiation.

‘barley’, or
appeared that

cereals, namely ‘wheat’,

it

(44)

(41) However,

the second phase market

investigation has
revealed that customers follow different strategies when
purchasing NSP-degrading enzymes. Whereas some of
them are looking for products that can be efficiently
added to all diets, that is to say, combining xylanase and
beta-glucanase, others would prefer to use mainly pure
xylanase products
and add beta-glucanase products
when the level of barley or similar cereals in diets
becomes significant. While the main advantages associ-
ated with the first strategy is that it is easy to handle
and requires low levels of stocking, the second strategy
appears to be more cost-effective, but requires more
nutrition know-how and more handling and stocking
equipment. However, neither
significant
strategy has
advantages over
the other and the two are equally
represented among customers.

(42)

(43)

The second phase market
investigation has also indi-
cated that producers and distributors are following
different types of strategies with respect to their port-
folio of NSP-degrading enzymes. Some focus on a single
product that can be used for all diets, others develop
only pure products specific to each kind of substrate
and a third category follows an ‘in between’ strategy by
proposing several combinations of enzymes in order to
match several levels of inclusion of barley in diets.

Therefore, when a
selects NSP-degrading
customer
enzymes, he will decide on a procurement strategy
based on the price and efficacy of a spectrum of
products, ranging from pure xylanase products to pure
beta-glucanase products and including combinations of
the two enzymes. No clear distinction can be drawn
between the products within this spectrum and no
predominant purchasing strategy can be identified.
In
addition, there is a high level of correlation between the
the different products (12) currently on the
prices of
market, except
that had been
for certain products
phased out. It is therefore concluded that NSP-degrading
enzymes should not be distinguished according to the
type of diets with which they are associated.

(11) Pure barley diets do not exist. Barley products are intended to be

added to wheat enzymes in wheat and barley diets.

(12) Price correlation was run on price and sales value series over the

last five years.

Different types of animal species

be

could

enzymes

indicated

‘poultry’,

The first phase market investigation also indicated that
NSP-degrading
differentiated
according to the animal species for which they are
The market
intended.
for
investigation
example,
that poultry and swine-based wheat diets
respond more positively to xylanase but that the dose
required for the best economic response differs between
species. The major supplier of NSP-degrading enzymes,
Danisco Animal Nutrition (Danisco), has three product
‘swine’ and ‘swine and poultry’. In ad-
lines,
dition, some products are registered for certain species
only. For example, the DSM/BASF product, ‘Natuphos’ is
only registered for broilers,
layers and turkeys. Even if
most products can be used for all monogastric animals
and therefore could not be classified in a given animal
species category, the product market definition proposed
by the notifying party fails to take into account this
product differentiation. Consequently, alternative product
market definitions based on animal species could be
considered.

(45) However,

the second phase market

investigation indi-
cated that, even if there are differences in the efficacy of
NSP-degrading enzymes on different animal
species,
there is a high level of homogeneity of the products
the major
available for each species and most of
products are registered for all animal species, in similar
or slightly adapted forms. On this basis, it is concluded
that NSP-degrading enzymes should not be distinguished
according to animal species.

Other characteristics

(46) A large number of replies to the Commission's first
phase market investigation indicated that the distinction
between mono and multi-components should be con-
sidered,
investigation
component NSP-
confirmed that mono and multi
degrading enzymes compete with each other and that
they cannot be separated into distinct relevant product
markets.

however

second

phase

the

(47)

There is a full supply-side substitution between the dry
and liquid form of NSP-degrading enzymes,
the dry
form being produced out of the liquid form. No cost
advantage is attached to either of the two forms and
customer choice is driven by the way the customer
processes feed and its equipment. Therefore,
the dry
and liquid forms of NSP-degrading enzymes should be
seen as belonging to the same product market.

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(48)

Finally, heat stability has been repeatedly mentioned as
an important characteristic of NSP-degrading enzymes.
However, most of the products currently on the market
have the same level of heat stability and therefore
should not be distinguished according to this character-
istic.

the arrangements permit

party, the final decision on pricing is taken by BASF.
However,
the parties to the
agreements to inspect each other's accounts and to
discuss detailed annual plans including matters such as
pricing, costs and production volumes with respect to
the alliance.

(49)

It
is concluded from the foregoing that all NSP-
degrading enzymes should be considered as belonging
to one single product market.

(53)

Geographic market definition

The cooperation agreement stipulates that
the results
stemming from the research work shall become the
exclusive property of
the party which performs the
research. The performing party is required to grant a
royalty-free licence to use, produce and sell such results
at the request of the other party. These agreements have
been concluded for a duration of 15 years and will
come to an end in 2009.

(50)

(51)

that

the scope of

The notifying party submits
the
geographic market for NSP-degrading enzymes is at least
the EEA on the basis that all the major suppliers of
NSP-degrading enzymes operate their respective enzyme
businesses out of a few plants from which they dis-
tribute their products throughout the EEA. The notifying
party observes that the EEA and the US markets are not
is
homogenous. The use of NSP-degrading enzymes
linked to the utilisation of certain types of raw ma-
terials. In Europe animal diets are often based on wheat,
while in the United States they are mostly based on
maize, which may require other types of NSP-degrading
enzymes. The market investigation confirmed the view
of the notifying party. Therefore, for the time being, the
Commission considers the geographic market for NSP-
the
degrading enzymes is likely to be EEA-wide at
the
least EEA-wide at
distribution level, and is at
production level.

VII. COMPETITIVE ASSESSMENT

Agreements

DSM and BASF Cooperation Agreement

In 1994, DSM entered into exclusive worldwide agree-
ments with BASF for
the development, production,
marketing, sales and distribution of feed enzymes (NSP-
degrading enzymes and phytase). The main agreement is
a cooperation agreement and a joint development agree-
ment. Under
the agreements, DSM carries out pro-
duction and the major part of research and develop-
ment, while sales and distribution are done by BASF. All
costs and profits are shared on a 50:50 basis and the
activities of the parties concerning the objectives of the
agreements
steering
committee consisting of
two persons, one from each
party.

coordinated jointly by

are

a

(52)

The agreements are exclusive insofar as DSM is obliged
to supply the feed enzymes covered by the agreements
exclusively to BASF and BASF is obliged to purchase the
feed enzymes from DSM. According to the notifying

(54)

In conclusion, BASF depends on DSM for
enzyme activities.

its

feed

RV & FC and Novozymes alliance agreement

(55)

a producer of

In 1996, RV & FC entered into a non-exclusive agree-
ment with Novozymes,
industrial
enzymes, for the distribution of existing enzymes and
for the development of new feed enzymes. This agree-
ment was complemented by a new agreement entered
into in 2001 under which Novozymes is primarily
responsible for process research, product development
and production. RV & FC is responsible for new product
application (essentially how the product is used), regis-
tration, marketing and sales.

(56)

Pursuant to the Novozymes/RV & FC agreements, costs
and profits are shared on a […]* basis, RV & FC having
the […]*. Prices are determined by RV & FC and
Novozymes does not have any influence on pricing
decisions. These agreements will come to an end in
[…]*.

(57) Novozymes

is heavily dependent on RV & FC for
marketing, sales and distribution of
its feed enzymes,
but also for animal nutrition know-how, market under-
standing and customer relations.

(58) As far as distribution is concerned,

these agreements
grant RV & FC […]* rights to distribute Novozymes'
feed enzyme products outside the EEA, but not within
the EEA. […]* Lohmann Animal Health (Lohmann) also
distributes Novozymes' products under its own brand
name in the EEA. Lohmann's sales territory is limited to
France, Austria, Germany, Portugal and Spain. Its sales
are only a quarter of those of RV & FC in the EEA and
it does not sell any Novozymes products outside the
EEA. In addition, the Novozymes/Lohmann agreement is
merely a distribution agreement and therefore, does not
cover any research and development.

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(59)

It should be noted that the DSM/BASF and Novozymes/
RV & FC agreements cover both phytase and NSP-
degrading enzymes. These two agreements make Novo-
zymes and BASF heavily dependent on their counter-
parts for their feed enzyme activities.
In addition, the
profit sharing and research mechanisms provide for a
high level of economic integration.

(60) As a result of the concentration between DSM and RV
& FC a structural link will be created between the DSM/
BASF and the RV & FC/Novozymes alliances leading to
overlaps at both the levels of production and the
distribution.

Phytase

(61) Historically, competition in the market for phytase has
taken place between the RV & FC/Novozymes and the
DSM/BASF alliances. According to the notifying party, at
the production level, Novozymes and DSM have market
shares of [30 to 40]* % and [60 to 70]* % respect-
ively (13). The only other producer of phytase currently
active in the EEA is AB Enzymes, which had a share of
only [0 to 10]* % of the total EEA production in 2002.

(62) At the distribution level, BASF, DSM's exclusive distri-
butor, represented [60 to 70]* % of the sales recorded
in the EEA in 2002, while RV & FC represented [20 to
30]* % of the market. This market share is lower than
share of production because Lohmann
Novozymes'
distributes Novozymes' phytase in some countries and
represented [0 to 10]* % of the market. AB Enzymes
had [0 to 10]* % of the distribution market, the same
as its share of production. As a result of the creation of
a structural link between the DSM/BASF and RV & FC/
Novozymes alliances the proposed operation will give
rise to a combined market share of the two alliances,
post-operation, of [90 to 100]* % of
the production
and [80 to 90]* % of the sales of phytase in the EEA,
based on 2002 figures.

(63)

The positions held by DSM, Novozymes, BASF and
Roche are unlikely to be contested by AB Enzymes (14).
The market
the AB
is perceived by customers
Enzymes phytase product

investigation has

revealed that

(13) All the market shares mentioned at the production level are EEA-
wide market shares. Market shares on a wider relevant geographic
market would not be significantly different.

(14) AB Enzymes received regulatory approval and launched its phytase

product, Phyzyme, in the EEA in July 2001.

level of heat

stability and has

In par-
and competitors as a lower quality product.
the AB Enzymes product does not offer a
ticular,
received
sufficient
Community regulatory approval
for only a limited
number of species (15). Even if AB Enzymes were to
extend its sales to other species, which would only be
possible once it has obtained Community approval (for
which no deadline is foreseen),
it is unlikely that its
overall proportion of sales would significantly impact
on the competitive position of DSM, Novozymes, BASF
and RV & FC.

(64)

from new entrants. Danisco has

In addition to AB Enzymes, competition could theoreti-
cally come
just
obtained approval from the Federal Drug Administration
for a new phytase product,
of
the United States
this product will not obtain
Phyzyme XP. However
Community
therefore
before 2005 and
approval
Danisco will not enter the EEA market with Phyzyme
XP for at least two years. The market investigation also
disclosed that certain companies are developing phytase
by expression in plants. In particular, one company is
currently engaged in the research and development of
new enzymes and their production in plants. This
company's plans to make phytase in green plants are
currently theoretical and a product launch is not fore-
seen in the Community before 2006. The development
of such plants depends on both technical advances and
a Community regulatory climate that allows genetically-
modified plants to be grown. The necessary technology
will not reach a commercial stage for at least three to
five years. Additionally the economics of production in

(15) All enzymes intended for use as feed additives follow a procedure
of pre-market authorisation in the Community. Since 1970 there
has been a Community-wide system of authorisation based on the
concept of the positive list, that is to say, only the additives on the
list may be used. Council Directive 70/524/EEC of 23 November
1970 concerning additives in feedingstuffs (OJ L 270, 14.12.1970,
p. 1), as last amended by Regulation (EC) No 1756/2002 (OJ
L 265, 3.10.2002, p. 1) contains the positive list including vitamins
for use as feed additives. No additive may be placed on the market
if it is not approved by the Commission and Member States. The
assessment is carried out by the Scientific Committee for Animal
Nutrition (SCAN) and Member State experts. After first evaluation
by a rapporteur Member State, a dossier is submitted to the
Commission and to the other Member States for a centralised pan-
European approval. Council Directive 87/153/EEC of 16 February
1987 fixing guidelines for the assessment of additives in animal
nutrition (OJ L 208, 11.8.1994, p. 5), as last amended by Com-
mission Directive 2001/79/EC of 17 September 2001 amending
Council Directive 87/153/EEC fixing guidelines for the assessment
of additives in animal nutrition (OJ L 267, 6.10.2001, p. 1) sets out
the applicable guidelines for the assessment of additives in animal
nutrition. Registration is required for the pipeline strain, the species
for which it is intended, and any variations on the strain. The
production plants intended for production of the phytase product
also require approval. At present, the regulatory approval process
takes at least 24 to 36 months. The scientific safety assessment
carried out by SCAN will from mid-2003 be carried out by the
European Food Safety Authority (EFSA), a new independent
Community body taking over
the functions of a number of
scientific committees previously established by the Commission. In
the medium term the scientific assessment is expected to be more
efficient with EFSA but for the dossiers at present in the pipeline it
is difficult to forecast the impact of the transition to the new body.

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Official Journal of the European Union

L 82/81

to the manufacture of

green plants remain to be determined. Another impedi-
ment
feed enzymes in green
plants for Europe is the de facto moratorium on geneti-
cally-modified crops in the Community. Therefore, the
Commission considers that new market entry does not
appear likely for at least two to five years.

operation raises serious concerns as to the creation or
strengthening of a dominant position on the market for
phytase. Therefore the Commission has serious doubts
as to the compatibility of the proposed transaction with
the common market.

(65)

The Commission notes that
the proposed transaction
has the effect of putting DSM in a unique position
through its involvement
in both alliances. The Com-
mission considers that post-operation, DSM will have
the ability and the incentives to bring about an increase
in phytase prices and reduce innovation and research
and development of both alliances.

(69)

(66) Given that DSM is at the centre of both alliances, it will
be in a position post transaction to weaken either or
both of its partners, Novozymes and BASF. For example,
DSM would have the ability to pursue the two following
strategies. In the RV & FC/Novozymes alliance, RV & FC
determines the prices. DSM, via its link with RV & FC,
would have access to the prices of
the RV & FC/
Novozymes alliance. DSM would therefore be in a
position to increase the price of the RV & FC/Novo-
to promote the DSM/BASF
zymes' product
cooperation to the disadvantage of the RV & FC/Novo-
zymes. On the other hand, DSM may influence but not
determine the prices of
the DSM/BASF alliance and
perform research and development. DSM's incentives to
innovate for RV & FC's competitor post-concentration,
BASF, would be reduced following the operation if DSM
decides it wishes to concentrate its efforts on the RV &
FC/Novozymes alliance.

in order

(67) As noted at recital 22 above, phytase prices have been
declining since 1994. Competition has historically taken
place between the RV & FC/Novozymes and DSM/BASF
alliance. The notified operation therefore, removes the
competition that has previously taken place between
these two alliances and which has been responsible for
the decline in price. The Commission considers that the
the two alliances leads to very high
combination of
market shares at the levels of production and of sales,
and would enable DSM or
the two alliances post-
concentration to be in a position to engage in any of
the above strategies which could lead to a reduction in
innovation and/or increase in prices to the detriment of
consumers.

NSP-degrading enzymes

for

For

its NSP-degrading enzyme

In addition to NSP-degrading enzymes of Novozymes,
RV & FC distributes another NSP-degrading enzyme
produced by Iogen of Canada. The main competitors of
the production of NSP-
DSM and Novozymes
degrading enzymes
in the EEA are Danisco and
Genencor. Danisco holds 42,7 % of Genencor's shares
and distributes NSP-degrading enzymes produced by
Genencor.
activities,
Danisco relies partly on Genencor. Conversely, Genencor
is highly dependent on Danisco for the distribution of
its NSP-degrading enzymes, since more than 75 % of its
sales are achieved through Danisco. The Commission
considers the large shareholding of Danisco in Genencor
is likely to lead to an alignment of
their economic
interests.
the two companies are largely
interdependent in this sector. Therefore, the Commission
regards the market shares of Genecor and Danisco as
cumulative at the production level for the purpose of
this decision.

In addition,

(70) Genencor NSP-degrading enzymes are also sold by
Adisseo with whom Genencor has certain agreements
that will tend to align their economic incentives. As a
consequence,
it seems that Adisseo should be seen as
being part of the Danisco/Genencor grouping in relation
to their NSP-degrading enzymes.

(71) Under the market definition proposed by the notifying
party, at
the production level, DSM and Novozymes
have market shares of [0 to 10]* % and [20 to 30]* %
respectively. Their main competitor is Danisco, which
produces [40 to 50]* %,
[0 to 10]* % itself and a
further [30 to 40]* % through Genencor. These two
groups face the competition from smaller producers
with market shares below [0 to 5]* %.

Conclusion as to competitive assessment of phytase market

(68)

The strong positions held by DSM, Novozymes, BASF
and Roche, the high degree of interdependence between
the parties to the alliances, and the absence of a credible
competitive counterweight in the short to medium term
the proposed
lead the Commission to consider

that

(72) As far as the distribution of NSP-degrading enzymes is
concerned, Danisco holds [30 to 40]* % of the NSP-
degrading enzymes distribution market in the EEA in
2002, Adisseo [0 to 10]* % and BASF [0 to 10]* % of
the market. Novozymes products are distributed by
Lohmann and RV & FC, which have respectively [0 to
10]* % and [20 to 30]* % of
the
distribution level,
the parties would have a [30 to
40]* % market share (DSM/BASF [0 to 10]* % and
Novozymes/RV & FC [20 to 30]* %) to be compared
to the [40 to 50]* % held by Danisco and Adisseo.

the market. At

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(73)

The Commission considers that single dominance issues
in NSP-degrading enzymes are unlikely to arise because
Danisco and the companies associated with it will have
a stronger position at both the production and the
distribution level than the group made of DSM/BASF/
RV & FC/Novozymes.

implies that one product of a given producer/distributor
cannot generally be directly compared with one product
of another producer/distributor but rather with several
products whose performances are close, but not ident-
ical,
the Com-
in its present
mission considers that
form, does not give rise to concerns as to the creation
of a collective dominant position on the market
for
NSP-degrading enzymes.

to the product mentioned. Therefore,

the transaction,

(74)

Since the two market leaders will have market shares of,
respectively, [40 to 50]* % and around [30 to 40]* %,
while the third largest competitor with [0 to 10]* %
market share will be eliminated, the question of collec-
tive dominance has been examined.

(77) On the basis of

the foregoing, the proposed concen-
tration would not give rise to competitive concerns on
the NSP-degrading markets.

VIII. COMMITMENTS PROPOSED BY THE NOTIFYING

PARTY

(75)

(76)

that

is not

such a scenario is
The notifying party claims
transparent and NSP-
unlikely as the market
degrading enzyme products
are not homogeneous.
According to the notifying party, prices are privately
negotiated with a large number of customers. Although
there are only a few premixers in the EEA, there are
more than 500 feed compounders and integrators who
purchase feed enzymes. As a consequence, distributors
do not know the prices of their competitors and there-
fore monitoring is practically impossible. The notifying
party also points to the existence of
levels of excess
production and distribution capacity that would jeopard-
ise attempts at coordination.

investigation has

The Commission's market
largely
confirmed that monitoring prices and quantities on the
is extremely difficult.
NSP-degrading enzymes market
Prices are privately negotiated once or twice a year on
average and therefore only general but no precise price
information can be derived from the tender nego-
tiations. One distributor of NSP-degrading enzymes indi-
cated that ‘the only way to get detailed market price
information is to ask customers, who will mostly only
give an indication or are not always truthful, since they
are trying to negotiate a better price’. The demand is
fragmented both horizontally given the high number of
feed compounders in the EEA, and vertically since NSP-
degrading
feed
compounders and integrators. Therefore gathering rel-
evant information on quantities sold is very difficult, if
not impossible. A tacit customer or geographic sharing
of the market is not possible either, since the customer
base is heterogeneous and operates on several
levels
(pre-mixers, compounders and integrators). Some of
these customers sell
levels
over a large geographic area. Finally, product ranges
vary widely across producers and distributors which

feed enzymes at different

premixers,

enzymes

sold

are

to

(78) On 9 July 2003 the notifying party submitted a revised
set of undertakings (hereinafter referred to as ‘under-
takings’
accordance with
Article 8(2) of the Merger Regulation, for the purpose
of
concentration. The
commitments are set out in the Annex to this Decision
and form an integral part of it.

‘commitments’)

clearance of

achieving

the

or

in

(79)

The Commission is of the view that the commitments
submitted on 9 July 2003 address and resolve in a
satisfactory manner the competition concerns raised by
the concentration.

Summary of the Commitments offered by the noti-
fying party

(80)

the

(namely,

The notifying party has proposed a termination of the
DSM/BASF alliance in feed enzymes and the divestment
of DSM's feed enzymes business under the DSM/BASF
alliance
feed enzymes phytase, NSP-
degrading enzymes and α-amylase) and has undertaken
to suspend the implementation of
the concentration
between DSM and RV & FC unless and until they have
entered into a final agreement
terminating the DSM/
BASF alliance and final sale and licence agreements for
the sale of the divested business and the Commission
has approved the terms of
the agreements and the
purchaser.

Transfer and licence of technology and intellectual property

(81)

The notifying party commits to the transfer and licence
of all feed enzymes technology and intellectual property.

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(82)

First, DSM commits to transfer to the purchaser the
ownership of any form of
intellectual property rights
related to the production or development of phytase,
NSP-degrading enzymes and α-amylase including, but
not limited to, patents, know how and trademarks. This
transfer is subject to the rights of Novozymes under its
respective licence agreements with DSM and a licence
back to DSM to the extent necessary to develop, make,
have made, use and sell products outside the field of
feed enzymes.

(83)

Furthermore, DSM commits to grant the purchaser an
irrevocable, exclusive royalty-free licence under the back-
ground technology (16) to develop, make, have made, use
and sell phytase, NSP-degrading enzymes and α-amylase.
This licence will be non-exclusive to develop, make,
have made, use and sell other feed enzymes.

(87)

In addition, DSM commits to sell to the purchaser, at its
request, or to a third party designated by the purchaser
[…]*.

(88) DSM/RV & FC also undertakes that for a period of […]*
from the closing date of the divested business or for a
period of […]* from the date of the termination of the
RV & FC/Novozymes alliance, whichever is shorter, to
abstain from activities in the field of development and
production of phytase, NSP-degrading enzymes and α-
amylase other than on basis of the existing RV & FC/
Novozymes alliance.

(84)

Finally, DSM undertakes to divest biological materials
such a strains and markers which are used in the
development and production of phytase, NSP-degrading
enzymes and α-amylase.

(89)

Transfer or completion of R & D projects

the commitments put

Finally,
in place several hold-
separate obligations including the instalment of firewalls
to prevent the flow of information between the DSM
employees responsible for phytase toll manufacturing
and R & D and the DSM key employees previously
involved in the divested business and the RV & FC
employees who are involved in the sale of
these
products for
the transitional period.
The commitment also foresees the appointment of a
a monitoring
hold-separate manager
trustee.
and
Furthermore, DSM will offer
incentives to DSM key
employees involved in the production and R & D of
feed enzymes for the purchaser and will offer incentives
to DSM key employees to accept employment with the
purchaser when offered.

the duration of

(85) As

the

regards

existing research and development
projects for feed enzymes, DSM commits to transfer
the purchaser's request
these to the purchaser or, at
and upon the Commission's prior approval, to complete
one specific R & D project on behalf of the purchaser.
The purchaser will have the ownership of the results of
the R & D projects.

Transfer of production

(90)

(86) DSM undertakes to provide the purchaser during a
period of up to […]* with all necessary technical
assistance in order to enable the purchaser to set up its
own production of feed enzymes. To ensure that the
purchaser has a secure source of supply, DSM will
supply the purchaser, upon its request, under a cost-
plus-toll manufacturing arrangement
for a transitional
period of up to […]*. Upon request of the purchaser,
and upon prior approval of the Commission, such toll
manufacturing agreement may be extended beyond a
transitional period.

(16) The background technology is shared between all enzyme appli-
cations (feed and others) and consists in the expression of enzymes
in micro-organisms

Assessment of

the Commitments offered by the

notifying party

The remedy proposed by the notifying party will
terminate the DSM/BASF alliance and divest DSM's feed
enzymes business to a suitable purchaser in order to
ensure that DSM's current activities in feed enzymes
(phytase, NSP-degrading enzymes and α-amylase) cease
entirely and to create an independent, viable and effec-
tive competitor. This creation of an independent, viable
and effective competitor is critical as the only other
supplier, Novozymes/RV & FC (and DSM post-trans-
action), on the market would, in the event of the failure
of the purchaser to provide effective competition, be left
without any significant competition and competition
would hence not be restored. In view of the fact that
the development, production, sales and distribution of
phytase have been until now intrinsically linked to that
the other existing feed enzymes, NSP-degrading
of
enzymes and α-amylase,
(see paragraphs 49 to 58
above), any remedy addressing competition concerns on
for phytase cannot be limited to phytase
the market
alone but should also include these other feed enzymes.

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(91)

(92)

(93)

enzymes

and α-amylase

The remedies as proposed contain all elements necessary
for a suitable purchaser to establish itself as an indepen-
dent, viable and effective competitor in feed enzymes
investigation of
including phytase. The market
the
Commission has indicated that
the inaccessibility of
intellectual property rights has been the major barrier
to successful entry into the phytase market. Under the
proposed commitments the purchaser would acquire all
related to phytase, NSP-
intellectual property rights
(α-amylase was
degrading
included, by DSM, in the package to be divested on the
basis of industrial and commercial considerations) and
would receive an exclusive licence to use background
technology to develop, make, have made, use and sell
these and would hence have access to all necessary
intellectual property to produce and sell phytase, NSP-
degrading enzymes and α-amylase. The latter point has
been supported by the Commission's market test of the
proposed commitments. The Commission's market test
has also largely confirmed that feed enzymes technology
can be transferred successfully and has been successfully
transferred in the past.

transfer,

involved

in technology

Research and development is also important in the field
of feed enzymes and all existing feed enzymes R & D
projects will be transferred to the purchaser. The market
test has indicated that, although there are inevitably
suitable
risks
a
purchaser would be able to complete this
transfer
successfully and that there have been successful transfers
of R & D projects in the field of feed enzymes in the
past. The market test also indicated that any completion
of an ongoing R & D project by DSM would be
undesirable and that an outright
transfer would be
preferable. Therefore,
the Commission considers that
the ability to complete this R & D project independently
from DSM is of great importance to become a viable
and competitive force.

access

In order to allow the purchaser to start its own pro-
duction,
the commitments provide for assistance by
DSM in establishing this production and provides for
the possibility of toll manufacturing for a transitional
period if requested by the purchaser. Furthermore,
if
requested by the purchaser, DSM commits […]*. The
commitments do not
include the divestment of any
(feed) enzyme fermentation production assets and there-
fore
to independent production capacity is
important for the purchaser to become an independent,
viable and competitive force. This has been confirmed
by the market test. In addition the market test indicated
that any continued toll manufacturing by DSM beyond a
the
transitional
purchaser has sufficient access to independent
(feed)
enzyme production capacity, the Commission considers
that toll manufacturing by DSM for parts of the pur-
chaser's requirements beyond a transitional period is
unlikely to create competition problems. Any such toll
manufacturing after a transitional period would be
subject to the Commission's prior approval. The market
test have identified several
investigation and market
potential or actual (feed) enzyme producers. The market

period would

undesirable.

be

If

test has further confirmed that there has been successful
transfer of feed enzyme production in the past.

(94) As the transferability and viability of the divested busi-
ness and hence the restoration of effective competition
on the market depend to a large extent on the identity
of the purchaser, the notifying party has undertaken to
suspend the
concentration
between DSM and RV & FC unless and until they have
entered into a final agreement
terminating the DSM/
BASF alliance and final sale and licence agreements for
the sale of the divested business and the Commission
has approved the terms of
the agreements and the
purchaser.

implementation of

the

(95)

(96)

It must have the financial

The Commission considers that, in order to ensure the
immediate restoration of effective competition and to be
approved by the Commission, the purchaser must be
viable and independent of and unconnected to DSM/RV
& FC.
resources, proven
expertise and incentive to maintain and develop the
divested business as a viable and competitive force in
competition with DSM/RV & FC and other competitors.
It must not be likely to create,
the
information available to the Commission, prima facie
competition concerns nor give rise to a risk that the
implementation of the Commitments will be delayed. In
its assessment of
the purchaser the Commission will
take into account the market characteristics and struc-
ture.

in the light of

IX. CONCLUSION

It must accordingly be concluded that the commitments
as proposed by the notifying party modify the notified
concentration to such an extent that the serious doubts
of
that
the Commission as to the compatibility of
concentration with the common market are removed.
The concentration should, therefore, be declared com-
patible with
to
Article 8(2) of the Merger Regulation and with the EEA
Agreement pursuant
to
compliance with the commitments set out in the Annex,

to Article 57 thereof, subject

common market

pursuant

the

HAS ADOPTED THIS DECISION:

Article 1

The notified operation whereby DSM NV acquires sole control
of Roche Vitamins and Fine Chemicals Division within the
meaning of Article 3(1)(b) of Regulation (EEC) No 4064/89 is
declared compatible with the common market and with the
EEA Agreement.

19.3.2004

EN

Official Journal of the European Union

L 82/85

Article 2

Article 1 is subject to compliance with the conditions set out
in sections B, C (except paragraphs 23 and 24), D and E of the
Annex.

This Decision is addressed to:

Article 4

DSM NV
Het Overloon 1
6401 JH Heerlen
The Netherlands

Article 3

Done at Brussels, 23 July 2003.

Article 1 is subject to compliance with the obligations set out
in paragraphs 23 and 24 of section C, and sections F (moni-
toring trustee) and G (the review clause) of the Annex.

For the Commission

Mario MONTI

Member of the Commission

ANNEX

The full original text of the conditions and obligations referred to in Articles 2 and 3 may be consulted on the
following Commission website:

http://europa.eu.int/comm/competition/index_en.html