CELEX: 31991M0101
Language: en
Date: 1991-06-28 00:00:00
Title: COMMISSION DECISION of 28.06.1991 declaring a concentration to be compatible with the common market (Case No IV/M.101 - DRÄGER / IBM / HMP) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31991M0101

COMMISSION DECISION of 28.06.1991 declaring a concentration to be compatible with the common market (Case No IV/M.101 - DRÄGER / IBM / HMP) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 236 , 11/09/1991 P. 0000

 COMMISSION DECISION of 28.06.1991 declaring a concentration to be compatible with the common market  (Case No IV/M.101 - DRAEGER / IBM / HMP) according to Council Regulation (EEC) No 4064/89  (Only the English text is authentic)  The paper version of the decision is available through the sales offices of the Office of Official Publications of  the European Communities. PUBLIC VERSION MERGER PROCEDURE ARTICLE 6(1)(b) DECISION Registered with advice of delivery To the notifying party Dear Sirs, Subject:<ind> Case No. IV/M101 - DRAEGER/IBM/HMP <ind> <ind> <ind> Your notification of 27.5.1991 pursuant to Article 4 of Council Regulation No. 4064/89  1.<tab> Draegerwerk AG ("Draeger"), Compagnie IBM France SA ("IBM") and Human Microprocessing Inc.  ("HMP") intend to set up a new joint venture, Hospitronics S.a.r.l. ("Hospitronics"), in which each will take a  one-third shareholding.  2.<tab> After examination of the notification, the Commission has concluded that the notified operation falls  within the scope of Council Regulation No. 4064/89 (the Merger Regulation) and does not raise any serious  doubts as to its compatibility with the common market.  I.<ind> COMMUNITY DIMENSION  3.<tab> The aggregate worldwide turnover of all the undertakings concerned was about 54,760 MECU in 1990,  and Draeger and IBM each achieved a Community-wide turnover of more than 250 MECU.  The parties did not  achieve two-thirds or more of their Community-wide turnover in one and the same Member State.  Thus, the  operation has a Community dimension within the meaning of Article 1(2) of the Merger Regulation.  II. CONCENTRATION  4.<tab> According to the joint venture agreement, Draeger, IBM and HMP will each take a one-third equity  interest in Hospitronics and have one-third of the voting rights in the shareholders meeting.  Hospitronics will be  run by three joint managers, of which the parties will each appoint one, who will report to a six-member  supervisory board to which each of the parties will appoint two persons.  The joint managers will be responsible  for the daily management of Hospitronics.  An "operating plan" will be worked out annually, containing detailed  plans concerning projected volumes, revenues and profits, development and general administrative matters, etc.   Certain actions can be taken only with the approval of either the supervisory board or the shareholders' meeting.   Such actions include the changing of the objectives of Hospitronics, major capital investments or disposal of  assets, etc.  The "operating plan" must also be approved, and can be revised, by the shareholders' meeting.  None  of these actions can be approved unless all three parties agree.  It can therefore be concluded that the joint  venture will be jointly controlled by them.  5.<tab> Hospitronics is a full function joint venture the object of which is to develop and market computerised  intensive health care and patient data management solutions for public and private hospitals.  These solutions  enable medical equipment to be linked and data to be centralised at integrated medical workstations.  In  particular, the solutions are designed to be used by anaesthetists during surgical procedures and by physicians  and nurses in intensive care units.  The principal aim of Hospitronics is to develop and market software which is  compatible with or can be adapted to fit existing equipment (both medical and computer equipment) irrespective  of manufacturer in the hospitals.  It will therefore have to overcome the difficulties involved in interfacing within  a single data system a number of different pieces of medical equipment.  Although the solutions to be marketed  by Hospitronics will mainly consist of software, they may include computer hardware.  6.<tab> All three parent companies of Hospitronics have in the past been active in the area of patient data  management solutions.  They will, however, no longer develop or sell intensive health care and patient data  management solutions after the new company has been established.  7.<tab> HMP, which is a small software house with sales of less than 1 MECU, has developed the programs on  which Hospitronics will base its solutions.  It will transfer its activities to the joint venture, in particular its  intellectual property rights and some personnel, which are related to patient data management.  8.<tab> Draeger will transfer to the joint venture the software products it has developed for patient data  management, related intellectual property rights and some personnel. Draeger is a manufacturer of hospital  equipment, including devices for the management of gases and blood in operating theatres and intensive care  units and the monitoring of patients in hospitals.  The company has recently acquired a software house which is  developing data management solutions of the type the proposed joint venture will market.  Draeger intends to  terminate this subsidiary's operation and transfer its personnel and assets, insofar as it is possible, to  Hospitronics.  It will then have completely withdrawn from the area of activities of the joint venture.   9.<tab> In 1984 the IBM group of companies withdrew from manufacturing and marketing biomedical systems.   This leading information systems manufacturer sells at present only software based solutions to handle general  information systems within hospitals.  Software houses in which the IBM group of companies holds an interest,  mostly minority stakes, provide information systems for obtaining the most up-to-date application methods,  administrative solutions for private clinics or computerised patient records and files.  The IBM group of  companies does not sell solutions of the type the proposed joint venture will offer, either itself or through  software houses with which it is linked.   IBM will transfer some personnel to Hospitronics.  10.<tab> It is unlikely that the three parent companies will re-enter the area of activity of their joint venture.   IBM, in particular, may possess the technical, organisational and financial means to develop and sell its own  computerised intensive health care and patient data management solutions.  However, the company has not re- entered this field since it took the business decision seven years ago to completely withdraw from manufacturing  and marketing biomedical systems.  To re-enter the area of patient data management systems and in addition to  the proposed joint venture with HMP and Draeger, would not in objective terms represent a commercially  reasonable course.  The substantial costs and risks in view of the nature of the service and the estimated size of  the market make a market entry by IBM highly unlikely.  The parties estimate that approximately [deleted]  intensive care beds, induction rooms, operating theatres and recovery rooms in Western Europe will be equipped  with patient data management programs.  Since the price of the software product including its installation is  expected to be about [deleted] ECU for each bed, the total market volume of the West European market amounts  to approximately [deleted] MECU.  These estimates demonstrate that in any event the market potential is  relatively small having regard to the expected costs for developing IBM's own software product, its introduction  and marketing as a customised solution would be substantial.  Taking also into account that IBM can only be a  late entrant because of its non-competition obligation (see below), the company cannot be certain that any  additional independent entry will be a commercial success on a market of this relatively small size.  The same  applies to Draeger and HMP, being much smaller companies with less resources than IBM and which have  transferred all their relevant assets necessary for market entry to Hospitronics.  11.<tab> The three parent companies will therefore not be actual or realistic potential competitors in the area of  activity of Hospitronics after the proposed transaction has been completed.  Furthermore, IBM, as an information  systems manufacturer, and Draeger, as a producer of hospital equipment, are not competitors on any upstream,  downstream or neighbouring market to data management solutions.  The envisaged joint venture will thus not  have as its object or effect the co-ordination of competitive behaviour of undertakings which remain  independent.  It will bring about a lasting change in the structure of the undertakings.  The notified operation  consequently  constitutes a concentration within the meaning of Article 3 of the Merger Regulation and falls  within the scope of application of the Regulation.  12.<tab> The parent companies of the joint venture have agreed that they will not compete with Hospitronics in  patient data management solutions for a period of 18 months after all governmental filings and approvals  for  setting up the company have been made or obtained.  It expresses the commitment of the parent companies to  their joint venture and constitutes an integral part of the concentration (see point 20 below).  III. COMPATIBILITY WITH THE COMMON MARKET  Relevant market  13.<tab> The proposed joint venture will provide computerised intensive health care and patient data  management solutions for public and private hospitals. The solutions will perform the following functions:  <ind> -<ind> automatic data acquisition from medical apparatus such as monitors, anaesthesia machines, etc.;  <ind> -<ind> presentation of all data relevant to anaesthesia and intensive care units, as well as patient records,  which today are prepared manually, on a computer screen or on print;  <ind> -<ind> storage of such data for (later) review; and  <ind> -<ind> communication between the various different departments and computer systems throughout the  hospital, e.g. its administration, laboratory and pharmacy.  14.<tab> The parties submit that these patient data management solutions can be distinguished from existing  software programs or information systems provided to hospitals and will ultimately create a market of its own.  15.<tab> The software based solutions the joint venture will provide are clearly differentiated from purely  administrative programs for hospitals on the one side and from medical data processing programs used for  hospital equipment, such as anaesthesia machines on the other side.  The patient data management solutions of  Hospitronics address the needs of intensive care units and operating theatres and therefore also appear to be  different from software used in other areas of medical activity, such as computer tomography and nuclear  magnetic resonance.  However, whether it can be further distinguished from other patient data management  solutions developed for intensive care units and operating theatres can be left open and need not be decided for  the purposes of this decision.  16.<tab> The same applies for the exact delimitation of the geographical reference market.  It is intended that  the joint venture will provide its services first within the Community, starting in some of the larger Member  States, and later on worldwide.  The Commission does not consider it necessary to decide whether there is a  Community-wide market or whether there are several regional or national markets for patient data management  solutions, since the proposed concentration will not create or strengthen a dominant position, not even on the  basis of the narrowest product market or geographical reference market.  Dominance  17.<tab> There are approximately 20 firms developing or marketing computerised patient data management  solutions.  Among these are software houses, producers of medical devices and information systems  manufacturers.  They are competing mainly with regard to technology and their ability to offer customised  solutions.   18.<tab> Hospitronics will be a new entrant into this market.  Although the company combines the assets and  resources of HMP and Draeger with regard to patient data management solutions, it will not have a measurable  market share because these firms have hardly begun to market their solutions.  The joint venture will have good  access to hospitals especially through its link with Draeger.  Furthermore, it will profit from the technical,  organisational and financial know-how of its parent companies.  Competitors, however, match the new entrant  in these respects.  Among those are  manufacturers of medical devices like PPG Hellige, producers of  information systems like Hewlett Packard or of both like Siemens, or software houses like Spacelabs.  It is  therefore unlikely that the proposed joint venture will dominate the market for patient data management  solutions.  On the basis of information available, it does not appear that this will be the case, even if the software  based solution of Hospitronics leads to the evolution of a new market.  The companies currently active on this  market would still be at least potential competitors of the proposed joint venture.  19.<tab> It is, furthermore, reasonable to conclude that a dominant position on any information systems market  will not be created or strengthened through the proposed joint venture.  The patient data management solutions  the company will provide may include the sale of computer hardware manufactured by IBM.  Any of these sales  of mainly personal computers and workstations will not be on a scale such as to reinforce under prevailing  market conditions the market positions of the IBM group of companies to an extent that a dominant position will  be created or strengthened.    The Commission therefore has come to the conclusion that the proposed concentration does not raise serious  doubts as to its compatibility with the common market.  Ancillary restrictions  20.<tab> The non-competition clause mentioned in point 12 is directly related and necessary to the  implementation of the concentration.  It is therefore covered by the present decision.  For the above reasons, the Commission has decided not to oppose the notified concentration and to declare it  compatible with the common market.  This decision is adopted in application of Article 6(1)(b) of the Merger  Regulation.  For the Commission,