CELEX: 32021M10133
Language: en
Date: 2021-04-22 00:00:00
Title: Commission Decision of 22/04/2021 declaring a concentration to be compatible with the common market (Case No COMP/M.10133 - ASTORG / NORDIC CAPITAL / NOVO / BIOCLINICA) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                               Brussels, 22.04.2021
                                                               C(2021) 2985 final
                                                                                 PUBLIC VERSION
                                                                 In the published version of this decision,
                                                                 some information has been omitted
                                                                 pursuant to Article 17(2) of Council
                                                                 Regulation (EC) No 139/2004 concerning
                                                                 non-disclosure of business secrets and other
                                                                 confidential information. The omissions are
                                                                 shown thus […]. Where possible the
                                                                 information omitted has been replaced by
                                                                 ranges of figures or a general description.
                                                               Astorg Asset Management S.a.r.l.
                                                               2 rue Albert Borschette
                                                               L-1246 Luxembourg
                                                               Grand Duchy of Luxembourg
                                                               Nordic Capital IX Limited
                                                               26 Esplanade, St Helier
                                                               JE2 3QA Jersey
                                                               Channel Islands
                                                               Novo Holdings A/S
                                                               Tuborg Havnevej 19
                                                               2900 Hellerup
                                                               Denmark
Subject:             Case M.10133 – Astorg/Nordic Capital/Novo/Bioclinica
                     Commission decision pursuant to Article 6(1)(b) of Council Regulation
                     No 139/20041 and Article 57 of the Agreement on the European Economic
                     Area2
1     OJ L 24, 29.1.2004, p. 1 (the “Merger Regulation”). With effect from 1 December 2009, the Treaty on the
      Functioning of the European Union (“TFEU”) has introduced certain changes, such as the replacement of
      “Community” by “Union” and “common market” by “internal market”. The terminology of the TFEU will
      be used throughout this decision.
2     OJ L 1, 3.1.1994, p. 3 (the “EEA Agreement”).
Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE
Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË
Tel: +32 229-91111. Fax: +32 229-64301. E-mail: COMP-MERGER-REGISTRY@ec.europa.eu.
 ---pagebreak--- Dear Sir or Madam,
(1)     On 16 March 2021, the European Commission received notification of a proposed
        concentration pursuant to Article 4 of the Merger Regulation by which
        eResearchTechnology, Inc. (“ERT”, US), jointly controlled by Astorg VII SLP (a
        fund managed by Astorg Asset Management S.à r.l (“Astorg”, Luxembourg)), by
        affiliates of Nordic Capital IX Limited (“Nordic Capital”, Jersey, Channel Islands),
        and by an affiliate of Novo Holdings A/S (“Novo”, Denmark), acquires within the
        meaning of Article 3(1)(b) of the Merger Regulation control of Bioclinica Holding I
        LP (“Bioclinica”, US) (the “Transaction”). Astorg, Nordic Capital, and Novo are
        referred to as the “Notifying Parties” and, together with Bioclinica, the “Parties”.
1.      THE PARTIES AND THE OPERATION
(2)     Astorg is a European private equity firm with activities focusing on Western Europe
        and North America.
(3)     Nordic Capital is a European private equity firm with activities focusing on
        healthcare, technology & payments, financial services, and selectively, industrial &
        business services in Europe and globally.
(4)     Novo is responsible for managing the assets of the Novo Nordisk Foundation
        through strategic investments in the life sciences and related areas.
(5)     ERT is a provider of software-enabled clinical research solutions (“e-Clinical trial
        solutions”).
(6)     Bioclinica is a provider of e-Clinical trial solutions. Bioclinica is solely controlled by
        Cinven,3 UK.
(7)     On 7 December 2020, Astorg, Nordic Capital, Novo, ERT, and Bioclinica entered
        into an agreement pursuant to which ERT will acquire all of the issued and
        outstanding equity interests of Bioclinica.
(8)     Currently, ERT is jointly controlled by Astorg, Nordic Capital and Novo. 4 Cinven
        will receive (cash and) ~[…]% of the share capital in the combined entity. 5 Cinven
        will also have the right to […].6 Post-Transaction, each of Astorg and Nordic Capital
        will own ~[…]% of ERT. Novo will own ~[…]% of ERT. The rest of ERT’s capital
        (~[…]%) will be owned by ERT’s management. 7 Post-Transaction, Cinven will not
        (solely or jointly) control the combined entity. The combined entity’s Board will
        consist of eleven members, of which, [Information about shareholder’s rights to
        appoint certain board directors].8 Each of Astorg, Nordic Capital and Novo will
        continue to have veto rights over several matters, including changes in the combined
3   Cinven means, depending on the context, any of or collectively, Cinven Partnership LLP, Cinven
    Holdings Guernsey Limited, Cinven (Luxco 1) S.A. and their respective "associates" (as defined in the
    Companies Act 2006) and/or funds managed and/or advised by any of the foregoing.
4   See Case COMP/ M.9633 – Astorg/Nordic Capital/Novo/ERT, decision of 20 March 2020, paragraph 1.
5   Form CO, paragraph 44.
6   Form CO, paragraph 44.
7   Form CO, paragraph 45 and table following.
8   Form CO, paragraph 49.
                                                      2
 ---pagebreak---          entity’s strategy, business plan and annual budget. 9 On the contrary, Cinven will not
         obtain any veto rights over strategic commercial decisions of the combined entity.
         Cinven’s veto rights will be limited, aiming only to protect its minority
         shareholding.10 Against this background, the combined entity will continue to be
         jointly controlled by Astorg, Nordic Capital, and Novo.
2.       EU DIMENSION
(9)      The undertakings concerned11,12 have a combined aggregate world-wide turnover of
         more than EUR 5 000 million13 . Each of them has an EU-wide turnover in excess of
         EUR 250 million, but they do not achieve more than two-thirds of their aggregate
         EU-wide turnover within one and the same Member State. The Transaction therefore
         has an EU dimension.
3.       RELEVANT MARKETS
(10)     Both ERT and Bioclinica are active in the provision of e-Clinical trial solutions.
         e-Clinical trial solutions are software solutions used in clinical trials to collect and
         organise data, and evaluate the trial’s results. These solutions gather data on patients
         before, during and after a clinical trial, allowing researchers to monitor patients’
         biometric data and overall health. e-Clinical trial solutions facilitate overall clinical
         trial management by increasing the efficacy and accuracy of data collection, as well
         as enabling quick evaluation, analysis and reporting of collected data and trial
         outcomes.
(11)     There are two types of e-Clinical trial solutions where the activities of ERT and
         Bioclinica overlap:
         (a)      Cardiac safety services. These services monitor the patients’ cardiac
                  parameters in the course of a clinical trial. They aim to assess the risk that the
                  new treatment may have negative (side-)effects on the heart. Cardiac safety is
                  monitored in approximately 70% of all clinical trials; and
         (b)      Medical imaging solutions. These solutions analyse medical images captured
                  in clinical sites to assess drug safety and efficacy. Medical imaging is used in
                  approximately one third of all clinical trials.
(12)     Customers, typically pharmaceutical companies or contract research organisations
         (“CROs”) carrying out clinical trials, often purchase e-Clinical trial solutions from
         third parties (like ERT or Bioclinica) but they may also organise the same data
9   Form CO, paragraph 49.
10  Form CO, paragraph 49.
11  Astorg, Nordic Capital, and Novo are considered as undertakings concerned by this Transaction given
    their “significant involvement […] in the initiation, organisation and financing of the operation ” (see
    Consolidated Jurisdictional Notice, OJ 2008/C 95/01, paragraph 147 and in line with Case T-380/17,
    HeidelbergCement and Schwenk Zement, ECLI:EU:T:2020:471, paragraphs 97ff). Bioclinica (the target)
    is also an undertaking concerned by the Transaction.
12 The remainder of this decision focuses on ERT’s and Bioclinica’s activities. The activities of Astorg,
    Nordic Capital, and Novo do not give rise to any horizontal or vertic al links with the activities of
    Bioclinica.
13 Turnover calculated in accordance with Article 5 of the Merger Regulation.
                                                         3
 ---pagebreak---           management processes in-house. When sourced from third parties, e-Clinical trial
          solutions are called “centralised”. When sourced in-house, e-Clinical trial solutions
          are called “decentralised”.
3.1.      Market definition for e-Clinical trial solutions
3.1.1. Product market definition for e-Clinical trial solutions
3.1.1.1. The Commission’s precedents
(13)      The Commission has not considered in the past the product market definition for
          e-Clinical trial solutions.
3.1.1.2. The Notifying Parties’ view
(14)      The Notifying Parties suggest that there is one broad market including all e-Clinical
          trial solutions, in view of the strong supply-side substitutability between cardiac
          safety solutions, medical imaging services, and other business lines. 14 The Notifying
          Parties add that plausible markets for e-Clinical trial solutions or (more narrowly) for
          cardiac safety and medical imaging should include both centralised and decentralised
          services.15 Yet, the Notifying Parties submit that the precise product market
          definition in this case can be left open. 16
3.1.1.3. The Commission’s assessment and conclusion
(15)      The Commission’s investigation provided indications that separate relevant markets
          exist for (i) cardiac safety services and (ii) medical imaging solutions within the
          broader space of e-Clinical trial solutions. In more detail:
          (a)      Third-party market reports analyse separately the competitive landscape in
                   cardiac safety services17 and in medical imaging solutions;18
          (b)      ERT internal documents report on ERT’s and Bioclinica’s activities
                   separately for cardiac safety services and medical imaging solutions;19
          (c)      With the exception of ERT, Bioclinica, and BioTelemetry, different players
                   are active in cardiac safety services and in medical imaging solutions; 20 and
          (d)      The vast majority of respondents to the market investigation suggested that
                   cardiac safety services do not compete in the same relevant product market as
                   medical imaging solutions.
14   Form CO, paragraph 102.
15   Form CO, paragraph 114.
16   Form CO, paragraph 123.
17   E.g., reports by Orion Market Research, MarketsandMarkets, Transparency Market Research,
     Fiormarkets, and Reports And Data (see Form CO, paragraph 92).
18   E.g., Grand View Research, MarketsandMarkets, The Insight Partners, MarketWatch, and Data Bridge
     Market Research (see Form CO, paragraph 92).
19   Form CO, Annex 14-10, “[…]”, 5 June 2020 and Form CO, Annex 14-13, “[…]”, 5 June 2020.
20   See Tables 1 and 2.
                                                       4
 ---pagebreak--- (16)    The Commission’s investigation also provided indications that separate relevant
        markets exist including only centralised solutions for each of (i) cardiac safety
        services and (ii) medical imaging solutions. In more detail:
        (a)      [Internal documents]21 ,22 ,23 and
        (b)      During the market investigation, competitors submitted that only some (not
                 all) customers can source decentralised services in-house.24
(17)    In any event, for the purpose of assessing the Transaction, the exact scope of the
        product market definition can be left open since none of the above-mentioned
        plausible alternative product market definitions (namely, e-Clinical trial solutions
        (including centralised and decentralised solutions); e-Clinical trial solutions
        (including only centralised solutions); cardiac safety services (including centralised
        and decentralised solutions); cardiac safety services (including only centralised
        solutions); medical imaging solutions (including centralised and decentralised
        solutions); and medical imaging solutions (including only centralised solutions))
        affects the outcome of the competitive assessment of the Transaction.
3.1.2. Geographic market definition
3.1.2.1. The Commission’s precedents
(18)    The Commission has not considered in the past the relevant geographic market for
        e-Clinical trial solutions or any of its sub-segments.
3.1.2.2. The Notifying Parties’ view
(19)    The Notifying Parties take the view that the market for e-Clinical trial solutions (and
        its sub-segmentations) are EEA-wide in scope.25 The Notifying Parties recall that
        these solutions are often offered as part of the offering of a CRO and in the past, the
        Commission defined the market for CRO services as EEA-wide.26 Yet, the Notifying
        Parties also acknowledge that the internal documents of ERT and Bioclinica often
        consider the relevant markets on a global basis. 27 In any event, the Notifying Parties
        submit that the precise geographic market definition in this case can be left open. 28
3.1.2.3. The Commission’s assessment and conclusion
(20)    The Commission’s market investigation provided indications that the market for
        e-Clinical trial solutions and all its plausible sub-segmentations (listed in paragraph
        (17) above) are worldwide in scope. As a competitor of ERT and Bioclinica put it for
        cardiac safety services, “competition [...] takes place at worldwide level. [Our
        company], as one of the smallest players in the field, still offers cardiac safety
21  Form CO, Annex 14-7, “[…]”, 5 October 2020, page 19.
22  Form CO, Annex 14-7, “[…]”, 5 October 2020, page 21.
23  Form CO, Annex 14-13, “[…]”, 5 June 2020, page 2.
24  Minutes of conference call with competitor, 30 March 2021, paragraph 5; minutes of conference call with
    competitor, 25 March 2021, paragraph 7.
25  Form CO, paragraph 124.
26  Form CO, paragraph 126.
27  Form CO, paragraph 134.
28  Form CO, paragraph 133.
                                                       5
 ---pagebreak---          solutions to customers around the world [...]”.29 Competitors in medical imaging
         solutions also indicated that competition takes place on a worldwide level. 30
(21)     In any event, for the purpose of assessing the Transaction, the exact scope of the
         geographic market definition can be left open since under all above-mentioned
         plausible alternative geographic market definitions (namely, EEA-wide or
         worldwide), since these plausible alternative market definitions do not affect the
         outcome of the competitive assessment of the Transaction.
4.       COMPETITIVE ASSESSMENT
(22)     Both ERT and Bioclinica offer e-Clinical trial solutions, including cardiac safety
         solutions and medical imaging solutions. 31 The Transaction results in the following
         horizontally affected markets:32
         (a)     Worldwide market for cardiac safety services (including both centralised and
                 decentralised services);
         (b)     (Worldwide or EEA-wide) market for cardiac safety services (including only
                 centralised services);
         (c)     Worldwide market for medical imaging solutions (including both centralised
                 and decentralised services); and
         (d)     (Worldwide or EEA-wide) market for medical imaging solutions (including
                 only centralised services).
29  Minutes of conference call with competitor, 25 March 2021, paragraph 8.
30  Minutes of conference call with competitor, 25 March 2021, paragraphs 3, 6, and 7; minutes of conference
    call with competitor, 26 March 2021, paragraphs 13-14.
31 The plausible relevant market for e-Clinical trial solutions (including both decentralised and centralised
    services) would not be affected worldwide or in the EEA as the combined market share of ERT and
    Bioclinica would be in both cases below 20% (see Form CO, paragraphs 136 and 209). The plausible
    relevant market for e-Clinical trial solutions (including only centralised services) would not be affected
    worldwide or in the EEA as the combined market share of ERT and Bioclinica would be in both cases
    below 20% (see Form CO, footnote 64). In addition, the potential EEA-wide market for cardiac safety
    services (including both centralised and decentralised services) would not be affected as the combined
    market share of ERT and Bioclinica would be below 20%. The potential EEA-wide market for medical
    imaging solutions (including both centralised and decentralised services) would not be affected as the
    combined market share of ERT and Bioclinica would be below 20%.
32 ERT is jointly controlled (among others) by Novo, which also controls pharmaceutical companies Novo
    Nordisk, Stargazer, and Spruce Bio. Each of these companies purchased centralised e -Clinical trial
    solutions (including cardiac safety services and medical imaging solutions). However, thes e purchases do
    not give rise to a meaningful vertical relationship between Novo and Bioclinica because e -Clinical trial
    solutions (including cardiac safety services and medical imaging solutions) do not constitute an
    “important input” for the markets of finished pharmaceutical products where Novo’s portfolio entities are
    active within the meaning of paragraph 34 of the Commission’s Guidelines on the assessment of non -
    horizontal mergers under the Council Regulation on the control of concentrations between un dertakings
    (“Non-Horizontal Merger Guidelines”), OJ C 265, 18.10.2008. This is because (i) e-Clinical trial solutions
    do not represent a significant cost factor related to the price of the development of a pharmaceutical
    product ([…]% according to Novo Nordisk’s estimates); (ii) they are not a critical component to perform
    and complete the clinical trial (or for the market success of the finished pharmaceutical product); (iii) they
    do not represent a significant source of differentiation for finished pharma ceutical products; and (iv)
    customers can switch to alternative providers in the context of subsequent tenders.
                                                            6
 ---pagebreak--- 4.1.     Legal framework for the Commission’s assessment of horizontal non-
         coordinated effects
(23)     Article 2 of the Merger Regulation requires the Commission to examine whether
         notified concentrations are compatible with the internal market, by assessing whether
         they would significantly impede effective competition in the internal market or in a
         substantial part of it.
(24)     The Commission Guidelines on the assessment of horizontal mergers under the
         Merger Regulation (the "Horizontal Merger Guidelines")33 distinguish between two
         main ways in which mergers between actual or potential competitors on the same
         relevant market may significantly impede effective competition, namely non-
         coordinated effects and coordinated effects.
(25)     Non-coordinated effects may significantly impede effective competition by
         eliminating the competitive constraint imposed by each merging party on the other,
         as a result of which the merged entity would have increased market power without
         resorting to coordinated behaviour. According to recital (25) of the Merger
         Regulation, a significant impediment to effective competition can result from the
         anticompetitive effects of a concentration even if the merged entity would not have a
         dominant position on the market concerned. In this regard, the Horizontal Merger
         Guidelines consider not only the direct loss of competition between the merging
         firms, but also the reduction in competitive pressure on non-merging firms in the
         same market that could be brought about by the merger. 34
(26)     The Horizontal Merger Guidelines list a number of factors which may influence
         whether or not significant non-coordinated effects are likely to result from a merger,
         such as the large market shares of the merging firms, the fact that the merging firms
         are close competitors, the limited possibilities for customers to switch suppliers, or
         the fact that the merger would eliminate an important competitive force. Not all of
         these factors need to be present for significant non-coordinated effects to be likely.
         The list of factors, each of which is not necessarily decisive in its own right, is also
         not an exhaustive list.35
33   OJ C 31, 05.02.2004, p. 5.
34   Horizontal Merger Guidelines, paragraphs 24 and 25.
35 Horizontal Merger Guidelines, paragraphs 26-38.
                                                         7
 ---pagebreak---  ---pagebreak---          customers, there are only […] customers in common;41 and that (v) ERT’s database
         of opportunities for customers in the EEA for the years 2016-2020 shows that the
         competitors that ERT lost most often to in cardiac safety were […], while Bioclinica
         is only placed […].42
4.2.2. The Commission’s assessment
4.2.2.1. Cardiac safety services (including centralised and decentralised services)
(29)     In the potential worldwide market for cardiac safety services (including both
         centralised and decentralised services), the combined share of ERT and Bioclinica
         would be [20-30]% (with a share increment of [0-5]% contributed by Bioclinica). As
         such, the Transaction will only bring a negligible increment to ERT’s already
         modest market share, and the HHI delta would remain well below 150. 43 As a result,
         the Transaction does not raise serious doubts as to its compatibility with the internal
         market in relation to the potential worldwide market for cardiac safety services
         (including both centralised and decentralised services).
4.2.2.2. Cardiac safety services (including only centralised services)
(30)     In the potential worldwide and EEA-wide markets for cardiac safety services
         (including only centralised services), the Transaction does not raise serious doubts as
         to its compatibility with the internal market for the following reasons:
(31)     First, while the combined market share of ERT and Bioclinica would be significant
         at a worldwide level ([40-50]%), the share increment contributed by Bioclinica is
         limited at [0-5]%.44 As a result, the HHI increment would be equal to [200-300]
         (below [200-300] without rounding in the market shares), in a market where the
         post-merger HHI would be ~[2000-3000]. This suggests that the Transaction would
         not change meaningfully the competitive landscape in this market. As a customer put
         it, the Transaction would give rise to “very little overlap” between the activities of
41  Form CO, paragraph 173.
42  Form CO, paragraph 173.
43 Based on the Horizontal Merger Guidelines (paragraph 20), the Commission is unlikely to identify
    horizontal competition concerns in a merger concerning relevant markets wit h an HHI delta below 150
    (subject to certain caveat factors). In the markets that are relevant to this decision, none of these caveat
    factors apply.
44 The Commission sought to confirm that the market share estimates provided by the Notifying Parties were
    reliable. The Notifying Parties submitted that ERT’s and Bioclinica’s market shares have been estimated
    by using (i) ERT’s and Bioclinica’s actual sales in 2019 and (ii) a total market size based on a model of
    the total sales of cardiac safety services created by LEK Consulting (Form CO, Annex 15.b, “[…]”). The
    Notifying Parties submitted that ERT has commissioned this report since […] and uses it in the ordinary
    course of business (see email of outside counsel of the Notifying Parties to the case team dat ed 1 April
    2021). On the basis of this report, the Notifying Parties estimated that the total size of a plausible
    worldwide market for cardiac safety services (including only centralised services) in 2019 is USD [200-
    300] million (approximately EUR [200-300] million). This is in line with ERT internal documents (see
    Form CO, Annex 14-3, “[…]”, 2020, page 4). In the market investigation, several competitors estimated
    the total size of a plausible worldwide market for cardiac safety services (including only c entralised
    services) at USD 450 million (approximately EUR 378 million) or more (see minutes of conference call
    with competitor, 30 March 2021, paragraph 13; minutes of conference call with competitor, 26 March
    2021, paragraph 12; minutes of conference call with competitor, 8 April 2021, paragraph 15). This
    suggests that if anything, the market share data provided for the Parties in Table 1 above underestimate the
    total size of a plausible worldwide market for cardiac safety services (including only centralised services).
    Thus, the Commission can rely to the market share estimates provided by the Notifying Parties in the
    competitive assessment of the Transaction in cardiac safety services (including only centralised services).
                                                           9
 ---pagebreak---        ERT and Bioclinica in cardiac safety services.45 This is even more the case in the
       possible market for centralised only cardiac safety services in the EEA, where the
       combined market share of ERT and Bioclinica is lower ([20-30]%), and Bioclinica
       holds only a negligible market share ([0-5]%). In this market, the Transaction would
       result in an HHI delta below 150.
(32)   Second, post-Transaction, the combined entity will continue facing competitive
       constraints by several players who each hold a share higher than the increment
       brought by Bioclinica. These include IQVIA ([20-30]% share globally and [10-20]%
       in the EEA); BioTelemetry ([10-20]% globally and [0-5]% in the EEA); Banook ([5-
       10]% globally and [10-20]% in the EEA); Nabios ([0-5]% globally and [0-5]% in the
       EEA); and Richmonds ([0-5]% globally and [0-5]% in the EEA). During the market
       investigation, a competitor estimated that there are 5-10 players in the worldwide
       market for cardiac safety services (including only centralised services).46
(33)   Third, ERT and Bioclinica are not the closest competitors in this market (worldwide
       and in the EEA). An internal document of ERT dated 5 June 2020 states that “ERT is
       seen as the top provider for cardiac safety monitoring solutions, followed closely by
       […]”. The same document identifies […] as the closest competitor to ERT in terms
       of reputation and […] as the closest competitor to ERT in terms of product offering
       strength.47 In 2016-2020, Bioclinica won only […] out of the […] cardiac safety
       opportunities that ERT lost in the EEA to other providers of centralised solutions.
(34)   Fourth, even if they are not part of a plausible market for cardiac safety services
       including only centralised solutions, decentralised cardiac safety services also exert
       competitive constraints on the combined entity. Both in the EEA and worldwide,
       between 2016 and 2020, when ERT lost in a tender, in most cases […].48 There are
       several examples of a clinical trial sponsor switching from a centralised to a
       decentralised solution for cardiac safety services even in the context of one and the
       same clinical trial (i.e., from one phase to the next). These examples cover
       pharmaceutical companies of all sizes, including […].49
(35)   Fifth, during the market investigation, all customer respondents agreed that the
       Transaction does not raise competition concerns in the plausible worldwide or EEA-
       wide markets for cardiac safety services (including only centralised services).50 One
       customer recognised that the Transaction could also result in an increased choice of
       products and lower prices.51
(36)   By contrast, several competitors submitted that the Transaction does raise
       competition concerns in these plausible markets. 52 In particular, competitors argued
       that the Transaction would reinforce ERT’s already strong position in the worldwide
       or EEA-wide markets for centralised cardiac safety services, giving to the combined
45  Response of a customer of the Parties to question 3 of Q1 – Questions to customers.
46  Minutes of conference call with competitor, 25 March 2021, paragraph 9.
47  Form CO, Annex 14-10, “[…]”, 5 June 2020, pages 4 and 6.
48  Form CO, paragraphs 167 and 211 and RFI 3 reply, question 3, paragraph 5.
49  Form CO, paragraph 170.
50  Responses to questions 1.c and 1.d of Q1 – Questions to customers.
51  Response of a customer of the Parties to question 4 of Q1 – Questions to customers.
52  Responses to questions 1.c and 1.d of Q2 – Questions to competitors.
                                                          10
 ---pagebreak---           entity pricing power and the ability to impose its scientific methodology for cardiac
          safety services on customers.53
(37)      However, these claims are not sufficiently cogent and substantiated to outweigh the
          body of evidence illustrated above and to cast doubt as to the Transaction’s
          compatibility with the internal market in cardiac safety services. This is so for the
          following reasons:
          (a)     In the market investigation, some of the competitors referred to ERT’s
                  already strong position in the worldwide and EEA-wide markets for
                  centralised cardiac safety solutions but without substantiating merger-specific
                  concerns. The Commission notes that Bioclinica’s position in cardiac safety
                  services remains limited (with a share of [0-5]% or less in 2019). One
                  competitor raising concerns acknowledged that “Bioclinica alone currently
                  [does not] represent[] an important competitive force in the provision of
                  cardiac safety solutions”.54 Another competitor raising concerns regarding
                  the prevalence of ERT’s scientific methodology indicated that “it does not
                  have proof [...] that there is anything special in Bioclinica’s scientific
                  approach”.55
          (b)     Despite its significant market share in the worldwide and EEA-wide markets
                  for centralised cardiac safety services, the combined entity would likely face
                  competitive pressure post-Transaction from its customers.56 Each of ERT and
                  Bioclinica sell to a concentrated group of customers. ERT’s 15 largest
                  customers represent […]% of its revenues in the worldwide market for
                  cardiac safety services. Bioclinica’s 15 largest customers represent […]% of
                  its revenues in the worldwide market for cardiac safety services. The
                  customers of cardiac safety services are typically repeat customers and they
                  purchase services through tenders where several rivals can be invited to bid.
                  The fact that no customer raised concerns regarding the Transaction also
                  suggests that the combined entity faces competitive constraints from
                  customers in cardiac safety services.
(38)      In light of the above, the Commission concludes that the Transaction does not raise
          serious doubts as to its compatibility with the internal market in relation to the
          market for cardiac safety services (including only centralised services) worldwide or
          in the EEA.
4.3.      Medical imaging solutions
(39)      Both ERT and Bioclinica are active in the provision of medical imaging solutions.
          Set forth below are the market shares of ERT, Bioclinica, and their competitors in
53   Minutes of conference call with competitor, 25 March 2021, paragraphs 12ff and minutes of conference
     call with competitor, 26 March 2021, paragraphs 9ff.
54 Minutes of conference call with competitor, 30 March 2021, paragraph 12.
55 Minutes of conference call with competitor, 25 March 2021, paragraph 13.
56 See Horizontal Merger Guidelines, paragraph 64, which reads: “[e]ven firms with very high market shares
     may not be in a position, post-merger, to significantly impede effective competition, in particular by acting
     to an appreciable extent independently of their customers, if the latter possess countervailing buyer
     power”.
                                                           11
 ---pagebreak---  ---pagebreak---          ERT and Bioclinica have different focuses in medical imaging, with Bioclinica –
         along with its other major competitors – focusing particularly on oncology studies
         (which is the largest therapeutic area requiring medical imaging services), while
         ERT generates most of its medical imaging revenue from […], with less than […] %
         of its medical imaging revenues coming from oncology. 64
4.3.2. The Commission’s assessment
4.3.2.1. Medical imaging solutions (including centralised and decentralised services)
(41)     In the potential worldwide market for medical imaging solutions (including both
         centralised and decentralised services), the combined share of ERT and Bioclinica
         would be [20-30]% (with a share increment of [0-5]% contributed by ERT). As such,
         the Transaction will only bring a small increment to Bioclinica’s already modest
         market share, and the HHI delta would remain well below 150. As a result, the
         Transaction does not raise serious doubts as to its compatibility with the internal
         market in relation to the potential worldwide market for medical imaging solutions
         (including both centralised and decentralised services).
4.3.2.2. Medical imaging solutions (including only centralised services)
(42)     In the potential worldwide and EEA-wide markets for medical imaging solutions
         (including only centralised services), the Transaction does not raise serious doubts as
         to its compatibility with the internal market for the following reasons:
(43)     First, while the combined market share of ERT and Bioclinica would be moderate at
         a worldwide level ([30-40]%), the share increment contributed by ERT is limited at
         [0-5]%.65 As a result, the HHI increment would be [200-300], where the post-merger
         HHI would be ~[2000-3000] which is above, but not far from, [2000-3000] (<2500).
         This suggests that the Transaction would not change meaningfully the competitive
         landscape in this market. The same holds in the market for medical imaging
         solutions including only centralised services in the EEA, where the combined market
         share of ERT and Bioclinica is even lower ([20-30]%). As a result, the Transaction
         would bring about an HHI delta of 168 in a market where the post-Transaction HHI
         would be below [2000-3000].66 During the market investigation, a competitor stated
64  Form CO, paragraphs 200-203.
65  The Commission sought to confirm that the market share estimates provided by the Notifying Parties were
    reliable. The Notifying Parties submitted that ERT’s and Bioclinica’s market share have been estimated
    by using (i) ERT’s and Bioclinica’s actual sales in 2019 and (ii) a total market size based on a model of
    the total sales of cardiac safety services created by LEK Consulting (Form CO, Annex 15.b, “ […]”). The
    Notifying Parties submitted that ERT has commissioned th is report since […] and uses it in the ordinary
    course of business (see email of outside counsel of the Notifying Parties to the case team dated 1 April
    2021). On the basis of this report, the Notifying Parties estimated that the total size of a plausible
    worldwide market for medical imaging solutions (including only centralised services) is USD [500-600]
    million (approximately EUR [400-500] million). In the market investigation, several competitors
    estimated the total size of a plausible worldwide market for medical imaging solutions (including only
    centralised services) at USD 480-550 million or more (approximately EUR 404-463 million or more) (see
    minutes of conference call with competitor, 30 March 2021, paragraph 15, minutes of conference call with
    competitor, 8 April 2021, paragraph 11). This suggests that the market share data provided for the Parties
    in Table 2 above are generally reliable.
66 Based on the Horizontal Merger Guidelines (paragraph 20), the Commission is unlikely to identify
    horizontal competition concerns in a merger with a post-merger HHI between 1 000 and 2 000 and a delta
    below 250 (subject to certain caveat factors). In the EEA-wide market for medical imaging solutions
    (including only centralised services), none of these caveat factors apply.
                                                           13
 ---pagebreak---         that it “does not view ERT as a significant player in the [medical imaging] market.
        Thus, the Transaction would only marginally affect the competitive dynamics in the
        market”.67 A customer added that the Transaction would give rise to “very little
        overlap” between the activities of ERT and Bioclinica in medical imaging
        solutions.68
(44)    Second, post-Transaction, the combined entity will continue facing competitive
        constraints by several players who each hold a share higher than the increment
        brought by ERT. These include Parexel ([20-30]% share globally and [20-30]% in
        the EEA), ICON ([10-20]% globally and 17% in the EEA), and BioTelemetry ([5-
        10]% globally and [5-10]% in the EEA).
(45)    Third, Bioclinica and ERT are not close competitors in these markets. According to
        the Notifying Parties, between 2017 and 2020, Bioclinica participated globally in
        around […] times as many medical imaging opportunities as ERT, which implies
        that, even if every ERT opportunity was also bid for by Bioclinica, ERT would be a
        competitor in at most […] of Bioclinica’s opportunities.69 There is also limited
        overlap among the top customers of Bioclinica and ERT for medical imaging
        solutions worldwide. There are only […] overlapping customers among the top 15
        medical imaging customers of Bioclinica and the top 15 medical imaging customers
        of ERT.70
(46)    The market investigation confirmed that ERT and Bioclinica do not compete closely
        in medical imaging solutions. Rather, Bioclinica competes most closely with […].
        An internal document […] for Astorg and Nordic Capital identifies Bioclinica and
        […] as the two Tier 1 players in this market while ERT features as a “[…]”.71 The
        same document explains: “[…]”.72 In the same vein, an internal document of ERT
        dated […] refers to […] as closer competitors to Bioclinica ([…]) both in terms of
        reputation and strength of product offering. 73
(47)    Fourth, during the market investigation, all customer respondents agreed that the
        Transaction does not raise competition concerns in the plausible worldwide or EEA-
        wide markets for medical imaging solutions (including only centralised services).74
(48)    By contrast, several competitors submitted that the Transaction does raise
        competition concerns in these plausible markets. Specifically, competitors argued
        that post-Transaction, the combined entity would be able to compete aggressively on
        price until it forces rivals out of the market.75 , 76
67  Minutes of conference call with competitor, 26 March 2021, paragraph 14.
68  Response of a customer of the Parties to question 3 of Q1 – Questions to customers.
69  Form CO, paragraph 205.
70  Namely, […]. See Form CO, paragraph 201.
71  Form CO, Annex 14-6, “Project Bright”, page 5.
72  Form CO, Annex 14-6, “Project Bright”, page 8.
73  Form CO, Annex 14-13, “[…]”, 5 June 2020, page 6.
74  Responses to questions 1.a and 1.b of Q1 – Questions to customers.
75  Responses to questions 1.a and 1.b of Q2 – Questions to competitors.
76  In the market investigation, one competitor respondent also claimed that post-Transaction, ERT and
    Bioclinica would be able to combine their respective offerings in cardiac safety services and medical
    imaging solutions and thus obtain “preferred provider” status from customers. According to this
    competitor, this would reduce the opportunities in medical imaging solutions for which rivals of the
    combined entity can bid (minutes of conference call with competitor, 9 April 2021, paragraphs 12ff).
                                                          14
 ---pagebreak--- (49)    However, these claims are not sufficiently cogent and substantiated to outweigh the
        body of evidence illustrated above and to cast doubt as to the Transaction’s
        compatibility with the internal market in medical imaging solutions. This is so for
        the following reasons:
        (a)       Some of the competitors referred to Bioclinica’s already strong position in
                  the worldwide and EEA-wide markets for centralised medical imaging
                  solutions but without substantiating any merger-specific concerns. None of
                  the competitor respondents raising concerns identified ERT as a significant
                  competitive constraint to Bioclinica in medical imaging solutions. In any
                  event, the Transaction does not materially change the incentives of the
                  combined entity to adopt a hypothetical strategy of aggressively reducing
                  prices to exclude competitors. If Bioclinica considered such a strategy to be
                  profitable and viable, it is likely that it would have already implemented it
                  irrespective of the Transaction. None of the competitor respondents provided
                  evidence to that effect. Rather, an internal document […] for Astorg and
                  Nordic Capital states for medical imaging solutions: “[…]”.77
        (b)       Despite its meaningful market share in the worldwide and EEA-wide markets
                  for medical imaging solutions, the combined entity would likely face
                  competitive pressure post-Transaction from its customers. Both ERT and
                  Bioclinica sell to a concentrated group of customers. ERT’s 15 largest
                  customers represent […]% of its revenues in the worldwide market for
                  medical imaging solutions. Bioclinica’s 15 largest customers represent […]%
                  of its revenues in the worldwide market for medical imaging solutions. The
                  customers of medical imaging solutions are typically repeat customers and
                  they purchase services through tenders where several rivals can be invited to
                  bid. An internal document […] for Astorg and Nordic Capital confirms this:
                  “[…]”.78 The fact that no customer raised concerns regarding the Transaction
                  also suggests that the combined entity faces competitive constraints from
                  customers in medical imaging solutions.
(50)    In light of the above, the Commission concludes that the Transaction does not raise
        serious doubts as to its compatibility with the internal market in relation to the
        market for medical imaging solutions (including only centralised services)
        worldwide or in the EEA.
    These claims are however not sufficiently substantiated to raise serious doubts as to the Transaction’s
    compatibility with the internal market in medical imaging solutions. The Commission considers that post -
    Transaction, rivals will be able to continue competing against the combined entity for the vast majority of
    opportunities involving medical imaging solutions. This is for the following reasons. First, the competitor
    respondent raising concerns acknowledged that a customer can grant “ preferred provider” status for one
    type of service only (e.g., medical imaging solutions) an d not always for a combination of services.
    Second, the same competitor recognised that even after granting “preferred provider” status the customer
    can still source some of the services required from third parties e.g., if the preferred provider is unable to
    offer them. Third, the same competitor submitted that it sometimes bids itself “together with other
    companies offering its specialized services as part of a combined proposal in selection processes for
    preferred providers” (minutes of conference call with competitor, 9 April 2021, paragraphs 13ff).
77 Form CO, Annex 14-6, “Project Bright”, page 29.
78 Form CO, Annex 14-6, “Project Bright”, page 104.
                                                          15
 ---pagebreak--- 5.   CONCLUSION
(51) For the above reasons, the European Commission has decided not to oppose the
     notified operation and to declare it compatible with the internal market and with the
     EEA Agreement. This decision is adopted in application of Article 6(1)(b) of the
     Merger Regulation and Article 57 of the EEA Agreement.
                                                  For the Commission
                                                  (Signed)
                                                  Margrethe VESTAGER
                                                  Executive Vice-President
                                             16