Summary of Commission Decision of 3 May 2021 imposing fines under Article 14(1) of Council Regulation (EC) No 139/2004 (Case M.8181 – MERCK/SIGMA-ALDRICH (ART. 14.1)) (notified under document number C(2021)2400) (only the English version is authentic) 2022/C 134/05 On 03 May 2021 the Commission adopted a Decision under Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the ‘Merger Regulation’) (OJ L 24, 29.01.2004, page 1.), and in particular Article 14(1) 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/competition/elojade/isef/index.cfm?clear=1&policy_area_id=2
Date: 2021-05-03
Institutions: Directorate-General for Competition, European Commission
Subjects: chemical industry, economic concentration, measuring equipment, merger control, pharmaceutical industry, sanction (EU)








C_2022134EN.01002201.xml










25.3.2022   


EN


Official Journal of the European Union


C 134/22






SUMMARY OF COMMISSION DECISION
of 3 May 2021
imposing fines under Article 14(1) of Council Regulation (EC) No 139/2004
(Case M.8181 – MERCK/SIGMA-ALDRICH (ART. 14.1))


(notified under document number C(2021)2400)


(only the English version is authentic)
(2022/C 134/05)


On 03 May 2021 the Commission adopted a Decision under Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the ‘Merger Regulation’) (1)
, and in particular Article 14(1) 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/competition/elojade/isef/index.cfm?clear=1&policy_area_id=2


I.   FACTUAL BACKGROUND

A.   The undertakings concerned









(1)


Sigma-Aldrich Corporation (‘Sigma-Adlrich’, USA) is active in the development, production, and supply of life science tools and services as well as chemicals, analytical reagents, and lab-ware. Following completion of the Transaction on 18 November 2015, Sigma-Aldrich became a subsidiary of Merck.












(2)


Merck KGaA (‘Merck’, Germany) is a global pharmaceutical and chemicals company. Among other products and services, at the time of the acquisition of Sigma-Aldrich, Merck developed and marketed laboratory chemicals, including solvents and inorganics.




B.   The Commission’s merger control review









(3)


On 22 September 2014, Merck and Sigma-Aldrich (together, the ‘Parties’) signed a share purchase agreement regarding the Transaction, whereby Merck would acquire, within the meaning of Article 3(1)(b) of the Merger Regulation, control of the whole of Sigma-Aldrich by way of purchase of securities (the ‘Transaction’).












(4)


On 21 April 2015, the Transaction was formally notified to the Commission with the submission of a Form CO pursuant to Article 4 of the Merger Regulation (2). On the same day, the Commission launched a Phase I market investigation pursuant to Article 6(1) of the Merger Regulation.












(5)


On 13 May 2015, the Commission informed the Parties that following the Phase I market investigation and based on the information submitted by the Parties, the Transaction was likely to give rise to serious doubts regarding its compatibility with the internal market in relation to laboratory chemicals, and in particular in relation to solvents and inorganics in the EEA (3).












(6)


On 22 May 2015, to alleviate the serious doubts in relation to solvents and inorganics in the EEA, Merck and Sigma-Aldrich formally submitted initial commitments, together with an initial Form RM. The initial commitments consisted in the divestiture of most of Sigma-Aldrich’s solvents and inorganics business in the EEA (the ‘Divestment Business’). On the same day, the Commission launched a market test of the initial commitments.












(7)


On 29 May 2015, the Commission sent a request for information (‘RFI’) to the Parties pursuant to Article 11(2) of the Merger Regulation (‘RFI I-3’) including questions on the content of the Initial Form RM. On 2 June 2015, the Parties replied to most questions of RFI I-3.












(8)


On 2 June 2015, the Commission sent another RFI to the Parties pursuant to Article 11(2) of the Merger Regulation (‘RFI I-4’) asking specific questions on research and development (‘R&D’) agreements and personnel related to Sigma-Aldrich’s solvents and inorganics business in the EEA. On 8 June 2015, the Parties replied to RFI I-4.












(9)


In light of the feedback received during the market test and the Commission’s comments, the Parties refined and amended the initial commitments. On 11 June 2015, the final commitments were submitted to the Commission. On 12 June 2015, the Parties submitted the final version of the Form RM.












(10)


On 15 June 2015, the Commission adopted a decision pursuant to Articles 6(1)(b) and 6(2) of the Merger Regulation declaring the Transaction compatible with the internal market, subject to conditions and obligations set out in the final commitments (the ‘Clearance Decision’).




C.   Events post-Clearance Decision









(11)


The closing of the agreement between Merck and Sigma-Aldrich was conditional on the signing of an agreement for the sale of the Divestment Business with a suitable purchaser approved by the Commission.












(12)


On 19 and 20 October 2015, Merck and Sigma-Aldrich signed an agreement with Honeywell International Inc. (‘Honeywell’) for the sale of the Divestment Business. On 10 November 2015, the Commission approved Honeywell as a suitable purchaser of the Divestment Business and on 18 November 2015, Merck completed the acquisition of Sigma-Aldrich. On 15 December 2015, Honeywell completed the acquisition of the Divestment Business.












(13)


In February 2016, in the context of the divestment process, the Commission was made aware that a R&D project that Sigma-Aldrich was developing together with Metrohm AG (‘Metrohm’, Germany) should have been part of the Divestment Business. This R&D project was iCap. According to the information received, iCap was of the utmost importance for the viability of the Divestment Business and had been inappropriately excluded from its scope.




II.   INFRINGEMENT PROCEEDINGS









(14)


On 29 July 2016, the Commission sent a letter to the Parties to inform them that an investigation was ongoing with a view to a possible revocation of the Clearance Decision pursuant to Article 6(3)(a) of the Merger Regulation and a possible imposition of fines pursuant to Article 14(1) of the Merger Regulation (4).












(15)


On 7 July 2017, the Commission addressed a Statement of Objections (‘SO’) to Merck and Sigma-Aldrich communicating its preliminary view that both Merck and Sigma-Aldrich had infringed Article 14(1) of the Merger Regulation by intentionally (Sigma-Aldrich) or at least negligently (Merck) providing incorrect and/or misleading information to the Commission.












(16)


Merck and Sigma-Aldrich replied to the SO on 30 April 2018. In the SO response, the Parties requested the opportunity to develop their arguments at an oral hearing. This took place on 11 September 2018.












(17)


On 30 June 2020, the Commission adopted a supplementary statement of objections (‘SSO’) against Sigma-Aldrich. The SSO fully replaced the SO and did not maintain the allegations in the SO concerning Merck.












(18)


On 15 September 2020, Sigma-Aldrich replied to the SSO. In the SSO response, Sigma-Aldrich requested the opportunity to develop its arguments at an oral hearing. This took place during on 13 November 2020.












(19)


The Member States were consulted on the draft Decision during the Advisory Committee on Concentrations on 30 April 2021, which provided a favourable opinion. The Hearing Officer provided a favourable opinion on the proceedings in his report, which was submitted on 30 April 2021.




III.   SUMMARY









(20)


Under the Merger Regulation, the Commission may impose fines on undertakings which, intentionally or negligently, infringe the procedural obligations enshrined in the Merger Regulation.












(21)


In particular, Article 14(1) of the Merger Regulation provides that the Commission may by decision impose on undertakings fines not exceeding 1 % of the aggregate turnover of the undertakings concerned ‘where, intentionally or negligently: (a) they supply incorrect or misleading information in a submission [...]; (b) they supply incorrect or misleading information in response to a request made pursuant to Article 11(2)’.












(22)


Based on the overall body of evidence collected during the proceedings, the Decision declares that Sigma-Aldrich infringed Article 14(1) of the Merger Regulation in the context of its acquisition by Merck. As a result, the Decision imposes a fine on Sigma-Aldrich pursuant to Articles 14(1)(a) and 14(1)(b) of the Merger Regulation.




IV.   SIGMA-ALDRICH’S INFRINGEMENTS

A.   iCap









(23)


iCap is an intelligent bottle cap technology developed by Sigma-Aldrich in cooperation Metrohm, a laboratory instrument manufacturer. iCap seals a liquid chemical bottle and connects the chemical to the instrument. As a result, iCap ensures limited contamination risk and allows for the exchange of data between the instrument and the bottle.












(24)


Based on the Commission’s investigation, Sigma-Aldrich (i) planned to use iCap with its solvents and inorganics bottles and (ii) foresaw that iCap would meaningfully increase the company’s sales and market shares in the relevant markets.




B.   Infringement of Article 14(1)(a) regarding the Form RM









(25)


Sigma-Aldrich (together with Merck) submitted a Form RM to the Commission accompanying its final commitments.












(26)


Section 5.3 of the Form RM explicitly requires a list and a description of ‘any innovations or new products or services planned’ in relation to the divestment business. In this Section, all innovations or new products planned in relation to the business to be divested must be disclosed.












(27)


Sigma-Aldrich should have disclosed iCap in reply to Section 5.3 of the Form RM. iCap used in combination with solvents and inorganics constituted a ‘new product planned’. iCap was also an innovation project. Moreover, iCap was specifically developed for volumetric titration solutions, Karl Fischer titration solutions and HPLC solvents which (i) were all part of the Divestment Business and (ii) accounted for the vast majority of the EEA sales of products that could be combined with iCap.












(28)


Sigma-Aldrich did not disclose iCap in reply to Section 5.3 of the Form RM. Instead, Sigma-Aldrich noted that ‘there are no new products or innovations imminently planned with regard to’ the Divestment Business.












(29)


The Commission concludes that by not disclosing iCap and by stating that there are no new products or innovations imminently planned, Sigma-Aldrich provided incorrect and/or misleading information in Section 5.3 of the Form RM, infringing Article 14(1)(a) of the Merger Regulation.




C.   Infringement of Article 14(1)(b) regarding the RFI I-3









(30)


The Commission sent an RFI to the Parties on 29 May 2015, the RFI I-3. Question 6 of RFI I-3 asked the Parties to describe all differences between the Divestment Business and Sigma-Aldrich’s business for solvents and inorganics in the EEA.












(31)


iCap should have been disclosed in reply to question 6 of RFI I-3. iCap was developed for volumetric titration solutions, Karl Fischer titration solutions and HPLC solvents and thus, was part of Sigma-Aldrich’s business for solvents and inorganics in the EEA. Yet, iCap was excluded from the Divestment Business. Thus, it constituted a difference between the Divestment Business and Sigma-Aldrich’s business for solvents and inorganics in the EEA.












(32)


Sigma-Aldrich did not disclose iCap in reply to question 6 of RFI I-3. Instead, Sigma-Aldrich explicitly identified other assets as being excluded from the scope of the Divestment Business (e.g., Dried Anhydrous Solvents). This reply was ultimately integrated into Section 5.12 of the Form RM.












(33)


The Commission concludes that by not disclosing iCap and by listing other assets as excluded from the scope of the Divestment Business, Sigma-Aldrich provided incorrect and/or misleading information in reply to question 6 of RFI I-3, infringing Article 14(1)(b) of the Merger Regulation.




D.   Infringement of Article 14(1)(b) regarding the RFI I-4









(34)


The Commission sent an RFI to the Parties on 2 June 2015, the RFI I-4. Questions 12, 13, and 16 of RFI I-4 asked the Parties to elaborate on the R&D activities or functions related to Sigma-Aldrich’s solvents and inorganics business in the EEA (including the existence of R&D agreements and personnel).












(35)


iCap should have been disclosed in reply to questions 12, 13, and 16 of RFI I-4. Sigma-Aldrich’s R&D agreement with Metrohm regarding iCap concerned solvents and inorganics in the EEA. Eleven Sigma-Aldrich employees were working on iCap and were thus responsible for R&D on solvents and inorganics.












(36)


Sigma-Aldrich did not disclose iCap in reply to questions 12, 13, and 16 of RFI I-4. Instead, Sigma-Aldrich noted that it ‘does not have any formal R&D agreements with respect to its current solvent and inorganics products in the EEA’ and that ‘it does not have any dedicated R&D resources assigned to any solvents and inorganics except in a limited [quality control] testing role’. This reply was ultimately integrated into Section 5.4 of the Form RM.












(37)


The Commission concludes that by not disclosing iCap and by stating that there are no R&D agreements and practically no dedicated R&D resources for solvents and inorganics in the EEA, Sigma-Aldrich provided incorrect and/or misleading information in reply to questions 12, 13, and 16 of RFI I-4, infringing Article 14(1)(b) of the Merger Regulation.




E.   Sigma-Aldrich’s Liability









(38)


Based on the overall body of evidence collected during the proceedings (including contemporaneous Sigma-Aldrich documents), the Commission concludes that:






a)


Sigma-Aldrich was aware (or could not have been unaware) of the fact that the information required (in RFI I-3, RFI I-4, and in the Form RM) was necessary and material for the Commission’s assessment of the Transaction; and










b)


Sigma-Aldrich was aware (or could not have been unaware) that the information provided to the Commission was incorrect and/or misleading.
















(39)


The above is sufficient to demonstrate that Sigma-Aldrich could not have been unaware of the nature of its conduct and thus committed an infringement intentionally or at least negligently.












(40)


Moreover, while not necessary for establishing liability for an infringement under Article 14(1) of the Merger Regulation, the evidence in the Commission’s file suggests that the provision of incorrect and/or misleading information was part of a strategy implemented by Sigma-Aldrich to avoid the transfer of iCap to the purchaser of the Divestment Business.




V.   THE FINE









(41)


The Commission considers that one fine should be imposed for the three infringements of Sigma-Aldrich, which were identified in Section IV above. Each of these infringements concerns a different RFI question or Section of the Form RM but all the information was provided in the context of the assessment of the proposed commitments.












(42)


In setting the amount of the fine, the Commission has taken into account the following considerations:






a)


Sigma-Aldrich’s infringements are serious in nature because they prevent the Commission from accessing information necessary to assess a concentration (and its modifications in case of commitments);










b)


Sigma-Aldrich’s infringements are particularly grave because Sigma-Aldrich acted intentionally or at least negligently; the incorrect and/or misleading information related to an R&D project (and the Commission has no other way to obtain information about R&D projects); and iCap was relevant for the Divestment Business;










c)


Sigma-Aldrich’s infringements are instantaneous; and










d)


There are no aggravating or mitigating circumstances in this case.
















(43)


On this basis, the Commission concluded that it is appropriate, proportionate and deterrent to impose a fine of EUR 7 500 000 for Sigma-Aldrich’s infringements of Articles 14(1)(a) and 14(1)(b) of the Merger Regulation.




VI.   CONCLUSION

For the reasons mentioned above, the Decision concludes that a fine should be imposed on Sigma-Aldrich for the infringements of Articles 14(1)(a) and 14(1)(b) of the Merger Regulation.


(1)  OJ L 24, 29.01.2004, page 1.

(2)  The Transaction was reviewed by the Commission in Case M.7435 – Merck/Sigma-Aldrich.

(3)  Any references made to the EEA in this Decision also include the United Kingdom (‘UK’). Although the UK withdrew from the EU as of 1 February 2020, according to Article 92 of the Withdrawal Agreement (OJ L 29, 31.1.2020, p. 7), the Commission continues to be competent to apply Union law as regards the UK for administrative procedures initiated before the end of the transition period.

(4)  On 24 October 2016, Sigma-Aldrich and Metrohm granted a licence to iCap in favour of Honeywell, which was amended on 5 December 2016 based on discussions with Honeywell.