Summary of Commission Decision of 30 March 2015 declaring a concentration compatible with the internal market and the functioning of the EEA Agreement (Case M.7265 — Zimmer / Biomet) (notified under document C(2015) 2111) (Text with EEA relevance)
Date: 2015-03-30
Institutions: European Commission
Subjects: dominant position, economic concentration, medical device, merger control








C_2016074EN.01001401.xml










26.2.2016   


EN


Official Journal of the European Union


C 74/14





Summary of Commission Decision
of 30 March 2015
declaring a concentration compatible with the internal market and the functioning of the EEA Agreement
(Case M.7265 — Zimmer / Biomet)
(notified under document C(2015) 2111)
(Only the English version is authentic)
(Text with EEA relevance)
(2016/C 74/08)

On 30 March 2015 the Commission adopted a Decision in a merger case under Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings
 (1), and in particular Article 8(2) of that Regulation. A non-confidential version of the full Decision, can be found in the authentic language of the case on the website of the Directorate-General for Competition, at the following address: http://ec.europa.eu/comm/competition/index_en.html

1.   INTRODUCTION









(1)


On 3 June 2014 the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004 (the ‘Merger Regulation’) by which the undertaking Zimmer Holdings, Inc. (‘Zimmer’ or the ‘Notifying Party’, United States) acquires within the meaning of Article 3(1)(b) of the Merger Regulation sole control of the whole of Biomet, Inc. (‘Biomet’, United States) by way of purchase of shares. Zimmer and Biomet are hereinafter referred to as the ‘Parties’.












(2)


On 11 June 2014, the Commission declared the notification of 3 June 2014 incomplete by means of an Article 5(2) decision. The Notifying Party submitted a revised draft notification on 4 July 2014. On 15 August, 18 August and 29 August 2014, the Notifying Party submitted complementary information, following a request for information dated 14 July 2014. The notification was deemed effective as of 29 August 2014.




2.   PROCEDURE









(3)


Having examined the notification and following a first phase market investigation, the Commission concluded that the operation falls within the scope of the Merger Regulation and raised serious doubts as to its compatibility with the internal market and the EEA Agreement. The Notifying Party did not submit commitments during the first phase investigation. The Commission adopted a decision to initiate proceedings pursuant to Article 6(1)(c) of the Merger Regulation on 3 October 2014 (the ‘Article 6(1)(c) Decision’).












(4)


On 22 October 2014, the Notifying Party submitted its written comments to the Article 6(1)(c) Decision (the ‘Response to the Article 6(1)(c) Decision’).












(5)


The second phase review period was extended by 15 working days on 9 October 2014 and by a further 5 working days on 17 November 2014, pursuant to Article 10(3), second subparagraph of the Merger Regulation, first and third sentence respectively. On 18 November 2014, the Commission sent a request for information to the Notifying Party (‘RFI Q34’) pursuant to Article 11(2) of the Merger Regulation. The deadline fixed by the Commission to supply the information was 24 November 2014. This deadline was extended by the Commission upon request of the Notifying Party till 1 December 2014. On 3 December the Commission issued a decision pursuant to Article 11(3), which resulted in the suspension of the second phase proceedings as from 2 December 2014. Proceedings resumed on 10 February 2015 following the submission by the Notifying Party of the requested information.












(6)


The Notifying Party submitted a first set of commitments on 3 December 2014. The Commission carried out a market test of these commitments on 5 December. The results of the market test were discussed with the Parties in a State of Play meeting held on 18 December 2014. The Notifying Party submitted an informal revised version of a second commitments package on 24 January 2015, in relation to which market participants were further consulted. On this basis, the Notifying Party submitted formally revised remedies on 9 February 2015.




3.   PRODUCT MARKET DEFINITION









(7)


The proposed merger has an impact on a number of markets of the orthopaedic devices industry and more precisely on (a) joint reconstructive implants: knee, elbow, hip and shoulder implants, which are used to replace damaged joints with prosthetic components, and (b) other products: bone cement, which is used to aid the fixation of reconstructive implants, bone cement accessories, used as an aid in the application of bone cement, pulsed lavage, which is a high-pressure wound irrigation system used in orthopaedic surgery, spinal devices, which are used to correct various conditions of the spine, trauma devices, which are used to treat bone fractures, and dental implants, which are a form of dental prosthetics.





Knee implants









(8)


In past decisions (2), the Commission considered three possible ways to segment the market for knee implants: (i) by type of intervention for which they are used (primary versus revision interventions); (ii) by fixation method (cemented vs cementless implants); and (iii) by bearing type (fixed versus mobile bearings). Ultimately, in the Smith&Nephew/Centerpulse decision, the Commission carried out its assessment based on a single product market for knee implants (3).












(9)


The Notifying Party argues that the relevant product market is an overall market for all knee implants because the market features both demand side and supply side substitution.












(10)


For the purposes of this decision, the Commission concludes that patello-femoral knee implants (which are used to replace the back of the patella) and unicondylar knee implants (which are used to replace only replaces only a part of the joint, namely a femoral condyle) constitute two separate product markets, distinct from total knee implants.












(11)


As regards total knee implants (used surgery which affect the entire joint), the Commission also concludes that demand and supply side considerations do not support the finding of a single overall market for total knee implants encompassing primary and revision implants. Therefore, the competitive assessment assesses the merger in relation to separate product markets for primary knee implants and revision knee implants.












(12)


As regards extreme orthopaedic implants (which replace most of the limb), the Commission concludes that these implants do not form part of the market for revision knee implants. The exact scope of this product market is however left open for the purposes of this decision because the merger will not significantly impede competition under the narrowest market definition, that is, in relation to two separate markets for hinged knee implants and limb salvage implants.





Elbow implants









(13)


Total elbow replacement is a surgical procedure by which the elbow joint is replaced by a prosthetic implant. There are two types of elbow implants: unconstrained and semi-constrained implants. With unconstrained implants there is no physical connection holding the parts of the implant together. Semi-constrained implants have a more limited range of motion, however, require less resection of bone stock for implantation and as a result are indicated for a wide variety of patients.












(14)


The Notifying Party submits that there is a single relevant product market for all total elbow implants and that further segmentation based on pathology or fixation method (unconstrained and semi-constrained) is not relevant.












(15)


The Commission concludes for the purposes of this decision, that the exact product market definition can be left open since the proposed merger does not significantly impede effective competition under any of the plausible alternative product market definitions relevant to this case (that is, in relation to (i) an overall market comprising semi-constrained and unconstrained elbow implants; and (ii) a market comprising semi-constrained elbow implants only). In any event, the commitments submitted by the Notifying Party remedy the concerns both in the overall elbow market and in a potential narrower market for semi-constrained implants. Therefore, it is not necessary to reach a definitive conclusion in this regard.





Hip implants









(16)


In past decisions (4), the Commission considered the following segmentations of the market for hip implants: (i) by surgical design philosophy; (ii) by pathology (fractures and degenerative conditions); (iii) by fixation method (cemented and cementless); and (iv) by type of intervention (primary, revision, partial, total and resurfacing). However, the Commission ultimately defined a single product market for hip implants.












(17)


The Notifying Party believes there are no grounds for departing from the approach followed by the Commission in past decisions, namely, that there is a single relevant product market encompassing all hip implants.












(18)


The Commission considers that the common mix and matching between components of the same supplier depending on the type (primary, revision) and level (total, partial) of intervention suggests demand and also supply side substitutability, insofar as all players have hip implants systems allowing such modularity.












(19)


For the purposes of this decision the Commission concludes that the relevant product market is the overall market for hip implants.





Shoulder implants









(20)


In the past (5), the Commission has left open the question of whether the relevant product market should be considered as an overall shoulder implants market or whether that market should be spilt into three categories on the basis of three corresponding pathologies. The Commission carried out its assessment on the basis of an overall market for shoulder implants as well as on the basis of narrower markets for each of the three pathologies: (i) fracture shoulder replacement, (ii) degenerative shoulder replacement, and (iii) reverse shoulder replacement. The Commission, however, concluded that further sub-segmentation according to the level of intervention (total, partial, stemless, resurfacing or revision) inside each of the three pathology categories was not plausible.












(21)


The Commission considers that for the purposes of the present decision the exact product market definition can be left open since the proposed merger does not significantly impede competition under any of the plausible alternative product market definitions, namely i) the overall market for shoulder replacement, ii) the market for fracture shoulder replacement; iii) the market for degenerative shoulder replacement and iv) the market for reverse shoulder replacement.





Other products


Bone cement









(22)


Bone cement is used to aid the fixation of large joint (hip and knee) and small joint (shoulder, elbow and ankle) reconstructive implants.












(23)


The characteristics of bone cement may vary according to the following factors:






(a)


Antibiotic mix. Bone cement may or may not be mixed with antibiotics.










(b)


Viscosity. Cement may be of a higher or lower viscosity. Low viscosity cement has a longer waiting phase than high viscosity cement.
















(24)


For the purpose of the present decision, the Commission carried out its competitive assessment based on an overall market for bone cement. The assessment would not significantly differ if the market was further segmented taking into account whether the bone cement is or not mixed with antibiotics and whether the bone cement is high, medium or low viscosity given that high viscosity bone cement with antibiotics represents more than 90 % of the market.





Bone cement accessories









(25)


Bone cement accessories are used as an aid in the application of bone cement in cemented joint replacement and other procedures such as vertebroplasty.












(26)


According to the Notifying Party there is a single relevant product market for all bone cements accessories since (i) different bone cement accessories are all used in conjunction with each other when applying bone cement during surgery and (ii) all bone cement accessories are available from third-party manufacturers.





Surgical tools (Pulsed lavage)









(27)


Pulsed lavage, or pulsatile jet lavage, is a high-pressure wound irrigation system commonly used in orthopaedic surgery and in wound treatment.












(28)


The Notifying Party claims that the relevant product market is at least as broad as pulsed lavage, or even broader, meaning that pulsed lavage belongs to a market for surgical accessories or wound cleaning systems.












(29)


The Commission considers that for the purposes of the present decision the exact product market definition and in particular the question whether pulsed lavage belongs to a broader market encompassing surgical accessories or other wound cleaning system can be left open since the proposed merger does not significantly impede competition under any of the plausible alternative product market definitions.












(30)


Based on the above, in the present decision the Commission assesses the market for pulsed lavage which is considered the narrowest possible plausible segmentation.





Spine devices









(31)


Spine devices are used in surgical procedures to repair vertebrae and intervertebral discs in the spinal column.












(32)


In J&J/Synthes, the Commission left the market definition for spine devices open. The Commission identified three broad segments of spine implant products (i) fusion devices, (ii) non-fusion (or motion) devices and (iii) Vertebral Compression Fractures (‘VCF’) systems. The Commission identified further segmentations within these three broad product categories.












(33)


The Commission considers that for the purposes of the present decision the exact product market definition can be left open since the proposed merger does not significantly impede competition under any of the plausible alternative product market definitions.





Trauma devices









(34)


Trauma devices are used to treat bone fractures throughout the appendicular skeleton, that is, the upper extremities (including hand and wrist), the lower extremities (including foot and ankle), the shoulder girdle and the pelvic girdle.












(35)


The Commission considers that for the purposes of the present decision the exact product market definition can be left open since the proposed merger does not significantly impede competition under any of the plausible alternative product market definitions.





Dental devices









(36)


Dental implants are a form of prosthetic (artificial replacement) dentistry.












(37)


The Commission considers that for the purposes of the present decision the exact product market definition can be left open since the proposed merger does not significantly impede competition under any of the plausible alternative product market definitions.




4.   GEOGRAPHIC MARKET DEFINITION









(38)


In previous cases concerning orthopaedic medical devices the Commission has considered the markets for orthopaedic medical devices as national (6).












(39)


The market investigation provided evidence that the markets for medical devices are national in scope, notably due to different market structures (for example, public reimbursement systems, hospitals’ purchasing behaviour) from country to country and to the importance of a local/national sales force (7).












(40)


Furthermore, similar to other medical sectors, the presence of public reimbursement systems in a large number of Member States has partitioned the markets at national level.












(41)


In view of the above, the product markets considered in this decision are analysed on a national level.




5.   COMPETITIVE ASSESSMENT


Adoption of a filtering system









(42)


In line with recent medical and orthopaedic medical devices cases, for the purposes of the assessment, the affected markets were grouped in three categories (8):
—   Group 1 national markets: the Parties’ combined market share exceeds 35 % and the increment exceeds 1 %;
—   Group 2 national markets: the Parties’ combined market share exceeds 35 % but the increment is less than 1 %; and
—   Group 3 national markets: the Parties’ combined market share is between 20 % and 35 %.












(43)


In relation to Group 2 and Group 3 national markets, the Commission considers that the merger does not give rise to serious doubts as to the compatibility of the merger with the common market and the EEA Agreement. This is due, among other things, to insignificant increments and the presence of significant competitors. Also, the market investigation has not revealed any indications pointing at possible competition concerns in Group 2 or 3 national markets.












(44)


Therefore, for the purposes of this decision, the competitive assessment focuses on the Group 1 national markets for joint reconstructive implants (hip, knee, elbow and shoulder implants) as well as for bone cement, bone cement accessories, pulsed lavage, spine devices, trauma devices, and dental implants.





Horizontal assessment









(45)


Under Article 2(2) and (3) of the Merger Regulation, the Commission must assess whether a proposed concentration would significantly impede effective competition in the internal market or in a substantial part of it, in particular through the creation or strengthening of a dominant position.












(46)


The second phase investigation focused on the joint implants markets and the markets for bone cement, bone cement accessories and pulsed lavage. The Commission concluded that these markets have different characteristics and that the Parties’ and their competitors’ positions in each of these markets also differ.












(47)


More precisely, in terms of size, the overall hip and knee implants markets are large with total sales exceeding one billion euros.












(48)


In terms of market maturity, the market for hip implants is the most mature, followed by the knee implants market (with the exception of some segments thereof) and by shoulder and elbows implants. The markets for shoulder and elbow implants are newer, faster growing markets. Bone cement and bone cement accessories are also considered mature markets. The hip implants market is the most populated one with a large number of competitors present. Indeed, its size and level of maturity result in lower entry barriers than in the remaining markets for joint implants. Barriers to entry are higher in the remaining joint implants market which are less mature and more innovative, particularly in those markets which are smaller in size, as evidenced by the limited number of competitors present, namely the elbow and unicondylar knee implant markets.












(49)


As regards the Parties’ position in the different joint implants markets, the market investigation provided indications that Zimmer and Biomet are not particularly close competitors in the hip and shoulder implants markets. However Zimmer and Biomet are close competitors in the knees and elbow implants markets, particularly in some segments of the overall knee implants market and in some geographic markets.












(50)


In relation to partial knee implants, the Commission concluded on the basis of its market investigation that the Parties are two leading players and close competitors. There is limited switching to other competitors and high barriers to entry.












(51)


In relation to elbow implants, the merger will combine the two main competitors, resulting in market shares of over [60-70] %, which in some countries are as high as [90-100] %. There are very few residual competitors and these are not considered sufficient to replace the competitive constraint that the Parties currently exercise on each other.












(52)


In relation to total knee implants, the Commission notes that the merger will combine two leading competitors who compete closely with each other. In Denmark (in relation to the total knee implants market and both the potential primary and revision knee markets), the merged entity will hold a market share of over [50-60] % and the number of competitors will reduce from three to two. Similarly, the merger will create a market leader in Sweden, eliminating a close competitor in relation to the total knee implants market and the potential primary knee market.












(53)


Following its in depth market investigation, the Commission concludes that the proposed merger would significantly impede effective competition through the creation or strengthening of a dominant position in the following markets:






(a)


the markets for partial knee implants in Austria, Belgium (including Luxembourg), Czech Republic, Denmark, Finland, France, Germany, Greece, Italy, Netherlands, Norway, Poland, Portugal, Slovenia, Spain, Sweden and United Kingdom;










(b)


the markets for elbow implants in Austria, Belgium (including Luxembourg), Czech Republic, Denmark, France, Germany, Italy, Norway, Portugal, Spain, Sweden and United Kingdom; and










(c)


the markets for total knee implants in Denmark and Sweden.








6.   COMMITMENTS









(54)


On 3 December 2014 the Notifying Party formally submitted commitments pursuant to Article 8(2) of the Merger Regulation, purporting to address the Commission’s concerns regarding the proposed merger (‘the Commitments of 3 December 2014’) in relation to the national partial knee, elbow and total (primary and revision) knee implant markets. The Commission subjected these commitments to a market test. The market test indicated that the commitments were insufficient to entirely eliminate the concerns raised by the proposed merger. The Commission communicated the results of the market test to the Notifying Party on 18 December 2014.












(55)


In order to address the issues raised in the market test, the Notifying Party informally submitted revised commitments on 24 January 2015. The Commission consulted various market participants on a number of aspects of these informal revisions.












(56)


Subsequently, the Notifying Party formally submitted a revised second set of commitments on 9 February 2015 (‘the Final Commitments’).





Substance of the proposal









(57)


The Divestment Businesses consist of:






(a)


the divestiture of the ZUK Divestment Business (as described in Schedule 1 to the Final Commitments) in the EEA;










(b)


the divestiture of the Discovery Elbow Divestment Business (as described in Schedule 2 to the Final Commitments) in the EEA; and










(c)


the divestiture of the Vanguard Knee Divestment Business (as described in Schedule 3 to the Commitments) in Denmark and Sweden and, in order to ensure the viability of the Vanguard Knee Divestment Business in Denmark and Sweden, an EEA-wide licence to the rights and know-how which are currently used and are needed for the manufacturing of an exact copy of the Vanguard Knee Product Line, under a different brand name, for the EEA and for the development of the pipeline projects as defined at the time of Closing (the ‘Vanguard Knee EEA Licence’).
















(58)


The ZUK, Discovery Elbow and Vanguard Knee Divestment Businesses include in particular the following key tangible and intangible assets:






(a)


tangible assets relating to the Divestment Businesses for use exclusively in the geographic boundaries described in the preceding recital. These tangible assets include implant and instrumentation inventory, copies of design history files, demonstration models, testing and clinical evaluation reports and marketing-related materials and supporting materials for training purposes) (9);










(b)


intangible assets for use exclusively in the geographic boundaries described in the preceding recital. These intangible assets include: (i) the transfer of intellectual property rights used exclusively for the products of the Divestment Businesses; (ii) fully paid-up non-exclusive licences to other intellectual property rights that are used and needed for the manufacturing, marketing or sale of the products of the Divestment Businesses as at the time of closing; (iii) the transfer of technical and manufacturing know-how, trade secrets and designs; (iv) as regards the Vanguard Divestment Business in Denmark and Sweden, a fully paid-up and royalty-free, non-exclusive licence to the IP and know-how necessary for the manufacturing and marketing or sale of ARCOM polyethylene (including any rights/assistance required to manufacture ARCOM as well as reasonable assistance to access raw materials); (v) as regards the ZUK Divestment Business, a fully paid-up and royalty-free, non-exclusive licence to the IP and know-how necessary for the manufacturing and marketing or sale of the PMMA pre-coat process; and (vi) as regards the Discovery Divestment Business, a fully paid-up and royalty-free, non-exclusive licence to the IP and know-how necessary for the manufacturing and marketing or sale of ARCOM polyethylene (including any rights/assistance required to manufacture ARCOM as well as reasonable assistance to access raw materials);










(c)


transfer of, or if not legally possible, access to all licences, permits and authorisations issued by any governmental organisation needed to develop, manufacture and market the products of the Divestment Businesses (including CE marks);










(d)


licence of rights under sub-contracting agreements and supply agreements or, where not possible, transitional back-to-back supply agreements for the devices and input materials relevant to the Divestment Businesses, as well as rights under consultancy or development agreements with key opinion leaders (‘KOLs’);










(e)


customer contracts, commitments and customer orders of the Divestment Businesses or, if not legally possible, the continued supply of the products by Zimmer while ensuring a commission on those sales for the purchaser(s) (10);










(f)


customer lists, customer credit and other customer records of the Divestment Businesses, as well as other business records; and










(g)


Key Personnel.
















(59)


The Notifying Party has described the intangible assets in the Annexes to the Final Commitments. Annex 3 to the Final Commitments lists patents and patent applications that are used exclusively for the Divestment Business, whereas Annex 6 lists patents and patent applications that are not exclusive to the Divestment Business but which are necessary for the manufacturing of the products (the former will be transferred to the purchaser and the latter will be provided under a non-exclusive licence). Annex 4 to the Final Commitments lists three Community trademarks that are being used in connection with the Vanguard Knee Divestment Business, but that are not exclusive to the Vanguard Knee Divestment Business.












(60)


The Notifying Party submits that the full list of the tangible and intangible assets relating to the Divestment Businesses is provided with the Final Commitments. Therefore, the Final Commitments are comprehensive of all tangible and intangible assets required to enable the purchaser(s) to manufacture and market the products of the Divestment Businesses, as applicable, and as at the time of Closing.












(61)


Zimmer has also offered the following additional arrangements with regard to the ZUK, Discovery Elbow and Vanguard Knee Divestment Businesses (on a reasonable cost-plus basis) (11):






(a)


to provide transitory, non-exclusive supply or manufacturing arrangements for the products of the Divestment Businesses and relevant technologies, for a transitional period of up to 24 months from Closing, with the possibility of an additional extension of 12 months if the Monitoring Trustee deems necessary;










(b)


to provide reasonable technical assistance for a transitional period of up to 24 months from closing, in order to enable the purchaser(s) to assume responsibility for the manufacture, marketing and sale of the products of the Divestment Businesses and the relevant technologies, with the possibility of an additional extension of 12 months if the Monitoring Trustee deems necessary (12);










(c)


to provide training on the products of the Divestment Business and the relevant technologies on a reasonable cost-plus basis as well as technical training; and










(d)


to provide a transitional supply or manufacturing arrangement for certain common platform technologies for up to 2 years, commencing once the purchaser has started manufacturing the relevant product line of each Divestment Business, on a reasonable cost plus basis, to allow the purchaser continued access to the relevant common technologies. This period may be extended by the Monitoring Trustee for a further period of 12 months if the Monitoring Trustee deems it necessary.
















(62)


The Vanguard Knee EEA Licence provisions of the Commitments include in particular: (i) tangible assets for use exclusively in the EEA, including copies of design history files and copies of publicly available testing and clinical data and market research reports as at the time of Closing; and (ii) intangible assets, such as a non-exclusive licence to intellectual property rights applicable (exclusively and not exclusively) to the Vanguard product line in the EEA and which are necessary for the manufacturing, marketing or sale of the copy product subject to the Vanguard EEA licence in the EEA, a non-exclusive licence to all technical and manufacturing know-how, trade secrets and designs which are used exclusively for the Vanguard product line in the EEA, a non-exclusive licence to the intellectual property rights which are necessary for the manufacturing, marketing or sale of ARCOM polyethylene, for copies of the Vanguard product line in the EEA and a non-exclusive licence to the intellectual property rights and know-how necessary for the manufacturing, marketing or sale of instruments that are used in connection with, but are not exclusive to, the copy of the Vanguard product line in the EEA.












(63)


The Vanguard Knee EEA Licence provisions also include the following transitional supply arrangements: an up to 2 year transitional supply or manufacturing agreement, once the purchaser has started manufacturing the Vanguard copy for the EEA, on a reasonable at cost plus basis, to allow the purchaser continued access to the ARCOM polyethylene, the Regenerex Porous Titanium Construct and the E1, in relation to the production of copies of the Vanguard product line in the EEA.





The Commission’s Assessment









(64)


The Commission has assessed the suitability of the Final Commitments to fully eliminate the concerns identified in relation to the relevant markets where the Commission has identified a significant impediment to effective competition.












(65)


In relation to the ZUK Divestment Business, the Final Commitments ensure that the purchaser will acquire the position that Zimmer currently holds in the partial knee implants market. Similarly, in relation to the Discovery Elbow Divestment Business, the Final Commitments ensure that the purchaser will acquire the position that Biomet currently holds in the elbow implants market. Finally, the Vanguard Knee is Biomet’s best-selling knee implant in Denmark and Sweden, with more than […] units sold, representing [60-70] % of its sales in Denmark and [90-100] % of its sales in Sweden (13). Thus, the proposed remedy will substantially reduce Zimmer’s post-merger market share in this market in these two countries, transferring the largest part of Biomet’s share to a competitor, thereby remedying any competition concerns in these two countries (14).












(66)


The Commission finds that the remedies for the ZUK and Discovery Elbow are not only directed towards Group 1 national markets but are EEA-wide in scope. The Commission notes that the divestments are permanent, and that the package includes everything that could be required to effectively transfer the Divestment Businesses to the purchaser(s) and to ensure that the purchaser(s) can swiftly and effectively step into the shoes of Zimmer/Biomet (such as a transitional supply or manufacturing arrangements, technical assistance, training and assistance on the divested product, and even Key Personnel related to the products of the Divestment Businesses).












(67)


In addition, the Commission considers that the transitional arrangements, in combination with the additional purchaser criteria will ensure that the purchaser will be able to enter the relevant markets swiftly and compete effectively with the merged entity. On the basis of the above, the Commission concludes that the Final Commitments are suitable to remove the significant impediment to effective competition. The Commission considers that the Final Commitments are viable, comprehensive and effective and Commitments are capable of being implemented effectively within a short period of time. The Commission also considers that the upfront buyer clause contained in the Final Commitments enables the Commission to be able to conclude with the requisite degree of certainty that the Final Commitments will be fully implemented and that effective competition will be maintained on the relevant markets. Moreover, the Commission considers that the strict purchaser criteria in the Final Commitments are appropriate to ensure the suitability of the proposed purchasers.




7.   CONCLUSION AND PROPOSAL

The Commission therefore proposes to declare the concentration as modified by the commitments of 9 February 2015 as compatible with the internal market and the EEA Agreement, in accordance with Articles 2(2) and Article 8(2) of the Merger Regulation and Article 57 of the EEA Agreement.


(1)  OJ L 24, 29.1.2004, p. 1.

(2)  Commission decision of 28 October 1998 in Case M.1286 — Johnson&Johnson/DePuy, paragraphs 10 and following; and Commission decision of 27 May 2003 in Case M.3146 — Smith&Nephew/Centerpulse, paragraphs 13-14.

(3)  Commission decision of 27 May 2003 in Case M.3146 — Smith&Nephew/Centerpulse, paragraphs 13-14.

(4)  Commission decision of 28 October 1998 in Case M.1286 — Johnson & Johnson / DePuy, paragraphs 12-13 and Commission decision of 27 May 2003 in Case M.3146 — Smith&Nephew / Centerpulse, paragraphs 11-12.

(5)  Commission decision of 18 April 2012 in Case M.6266 — Johnson&Johnson/Synthes, paragraphs 89-96.

(6)  Commission decision of 18 April 2012 in Case M.6266 — Johnson&Johnson/Synthes, paragraph 118; Commission decision of 28 October 1998 in case no M.1286 — Johnson & Johnson/DePuy, paragraphs 16-20 and Commission decision of 27 May 2003 in Case M.3146 — Smith&Nephew/Centerpulse, paragraph 16.

(7)  Responses to Questionnaire Q1 to competitors, question 91, and Responses to Questionnaire Q2 to customers, question 21.

(8)  This approach has also been applied in other cases in the area of orthopaedic medical devices and pharmaceutical products. See Commission decision of 22 July 2013 in Case M.6851 — Baxter International/Gambro, paragraph 117; Commission decision of 18 August 2011 in Case M.6293 — Thermo Fisher/Phadia, paragraphs 26-27; and Commission decision of 18 April 2012 in case M.6266 — Johnson&Johnson/Synthes, paragraphs 139-140.

(9)  In case of a global divestiture, certain tooling and fixtures for the ZUK and the Discovery will also be offered. No such tooling and fixtures are offered for the Vanguard Knee as Zimmer will continue manufacturing the product.

(10)  Where consent by third parties may be required, Zimmer will take all reasonable efforts to obtain such consent.

(11)  The said transitional arrangements will be offered on a reasonable cost-plus basis.

(12)  Such assistance may include assisting the purchaser to establish manufacturing processes, inventory management, warehousing and distribution, billing and collections, supplier management and regulatory support.

(13)  The remainder of Biomet’s share in Denmark and Sweden relates to the AGC Knee[…].

(14)  Notifying Party, Form RM, 9 February 2015.