CELEX: 32021M10304
Language: en
Date: 2021-12-07 00:00:00
Title: Commission Decision of 07/12/2021 declaring a concentration to be compatible with the common market (Case No COMP/M.10304 - THERMO FISHER / PPD) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                               Brussels, 07.12.2021
                                                               C(2021) 9267 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                                                                  information omitted has been replaced by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.
                                                               Thermo Fisher
                                                               168 Third Avenue
                                                               Waltham, MA 02451
                                                               United States of America
Subject:             Case M.10304 – THERMO FISHER / PPD
                     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
Dear Sir or Madam,
(1)       On 29 October 2021, the European Commission received notification of a proposed
          concentration pursuant to Article 4 of the Merger Regulation by which the
          undertaking Thermo Fisher Scientific Inc. (“Thermo Fisher” or the “Notifying Party”,
          United States) acquires within the meaning of Article 3(1)(b) of the Merger
          Regulation control of the undertaking PPD, Inc. (“PPD” or the “Target”, United
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---         States) by the way of purchase of shares (the “Transaction”).3 Thermo Fisher and PPD
        are designed hereinafter as the “Parties”.
1.      THE PARTIES
(2)     Thermo Fisher, a company listed on the New York Stock Exchange and
        headquartered in Waltham, Massachusetts, USA, is a global manufacturer and
        supplier of a broad range of analytical, research and bioprocessing products, and
        pharmaceutical contract development and manufacturing services. Thermo Fisher
        serves customers such as pharmaceutical and biotech companies, hospitals and
        clinical diagnostic laboratories, universities, research institutions and government
        agencies, as well as customers in the areas of environmental, industrial quality and
        process control.
(3)     PPD, a company listed on the NASDAQ Global Select Market (“NASDAQ”) and
        headquartered in Wilmington, North Carolina, USA, is a contract research
        organisation (“CRO”) that supports pharmaceutical and biotech companies (also
        referred to as sponsors) in the organisation and evaluation of clinical trials. CROs
        offer customised strategies, covering certain aspects of clinical trials such as
        biostatistics, clinical data management, clinical trial monitoring, clinical trial project
        management, global clinical supplies, regulatory affairs, pharmacovigilance,
        consulting and medical writing. Sponsors outsource these activities to CROs while
        remaining ultimately responsible for the (bio-)pharmaceutical products under
        development. In addition, PPD operates a small number of laboratories where it offers
        a range of testing services, including bioanalytical, biomarker, central laboratory,
        good manufacturing practice (“GMP”), and vaccine science services.
2.      THE CONCENTRATION
(4)     The Transaction involves the proposed acquisition by Thermo Fisher of sole control
        of PPD within the meaning of Article 3(1)(b) of the Merger Regulation. The
        Transaction will be carried out as a so-called reverse triangular merger under the laws
        of Delaware, United States. Upon closing, Powder Acquisition Corp., a special-
        purpose subsidiary of Thermo Fisher, will be merged with and into PPD, with the
        latter being the surviving entity. As a result, PPD will be a wholly owned subsidiary
        of Thermo Fisher.
3.      EU DIMENSION
(5)     The undertakings concerned have a combined aggregate worldwide turnover of more
        than EUR 5 000 million (Thermo Fisher: EUR 28 249 million; PPD: EUR 4 104
        million). Each of them has an EU-wide turnover in excess of EUR 250 million,
        (Thermo Fisher: EUR […]; PPD: EUR […]), and neither achieves more than two-
        thirds of its aggregate EU-wide turnover within one and the same Member State. The
        notified Transaction therefore has an EU dimension.
3   Publication in the Official Journal of the European Union No C 451, 8.11.2021, p. 8.
                                                           2
 ---pagebreak--- 4.   INTRODUCTION TO THE PARTIES ’ ACTIVITIES
(6)  PPD is active as a laboratory service provider and a CRO service provider.
(7)  PPD’s laboratory services represent […] of PPD’s worldwide revenues. PPD operates
     eight laboratories worldwide, of which two in the EEA (Brussels, Belgium and
     Athlone, Ireland). Internally, PPD distinguishes between the following types of
     laboratory services:
     (a)      Bioanalytical laboratory services: analysis of drug and metabolite
              concentrations in biological samples to provide a quantitative measure of the
              active drug and/or its metabolites.
     (b)      Biomarker laboratory services: measurement of changes in biological function
              or the concentration of desired biomarker molecule(s) to assess how a drug is
              working or measure disease progression.
     (c)      Central laboratory services: laboratory testing on human clinical trial samples,
              as well as provision of laboratory kits to clinical sites that are operating
              clinical trials.
     (d)      Good manufacturing practice (“GMP”) laboratory services: analytical testing
              of pharmaceutical products and their inputs during the pharmaceutical product
              development and manufacturing process.
     (e)      Vaccine science services: testing services dedicated to vaccine development,
              with the goals of helping customers to determine how well a vaccine works
              and the type of immune response that a vaccine generates over time.
(8)  The main customers for PPD’s laboratory services are pharmaceutical companies
     developing new products as well as other CRO service providers working on their
     behalf (or, in the case of GMP laboratory services, contract development and
     manufacturing organisation (“CDMO”) service providers).
(9)  CRO services represent […] of PPD’s worldwide revenue. With its CRO services,
     PPD support pharmaceutical and biotechnology companies, called sponsors, with
     running clinical trials to obtain regulatory approval for new medicine products.
     Sponsors can either outsource specific services to PPD or outsource the entire clinical
     trial. PPD supports early clinical development (Phase I) as well as Phase II-Phase IV
     clinical trials. It also provides services such as consulting, patient recruitment, peri-
     and post-approval services and medical communications.
(10) CRO service providers provide a broad set of services over the course of a clinical
     trial, including, inter alia, protocol design, project management, site selection, patient
     recruitment, provision of medical supplies, data capture and management.
(11) Depending on the preferences of the sponsor, a CRO such as PPD can either use its
     own laboratories for testing in the course of a clinical trial, or use third party
                                                  3
 ---pagebreak---           laboratories. Some CRO service providers do not operate laboratories and outsource
          all testing to third party laboratories.4
(12)      Thermo Fisher manufactures and supplies a broad range of supplies for laboratories,
          such as instruments, consumables, reagents and plastics. Thermo Fisher also has a
          distribution business, which distributes its own and third party products.
(13)      PPD, as a laboratory service provider, sources a broad range of products from Thermo
          Fisher. By combining Thermo Fisher and PPD, the Transaction gives rise to a wide
          range of vertical links between Thermo Fisher’s products upstream, and PPD’s
          laboratory services downstream.5 ,6
5.        RELEVANT MARKETS
(14)      This section will set out the relevant product and geographic market definitions for the
          assessment of the Transaction. It will first cover the downstream markets, in which
          PPD is active, followed by the relevant upstream markets, in which Thermo Fisher is
          active.
5.1.      Downstream markets (PPD)
(15)      As set out in Section 4, PPD is active in two areas: (i) CRO services and (ii)
          laboratory services.
5.1.1. Clinical research organisation (“CRO”) services
(16)      CRO services consist in assisting pharmaceutical or biotech companies in conducting
          and evaluating clinical trials. This mainly involves organising the interaction between
          patients and doctors at clinical trial sites. CROs typically offer customised strategies,
          covering certain aspects of clinical testing such as biostatistics, clinical data
          management, clinical trial monitoring, clinical trial project management, global
          clinical supplies, regulatory affairs, pharmacovigilance, consulting and medical
          writing. Sponsors outsource these services to CROs while remaining ultimately
          responsible for the product under development.
4    For example, Rho Inc. and Pharm-Olam only provide CRO services and not laboratory services.
5    The Transaction also gives rise to very limited horizontal overlaps, of which two lead to technically
     affected markets: (i) comparator sourcing (combined market share worldwide and EEA -wide of [20-30]%
     including in-house sourcing and [30-40]% excluding in-house sourcing, increment brought by PPD of less
     than [0-5]%), and (ii) clinical trial packaging (combined market share worldwide and EEA -wide of [10-
     20]% including in-house sourcing and [20-30]% excluding in-house sourcing, increment brought by PPD of
     less than [0-5]%). The Commission’s market investigation confirmed that thes e may constitute separate
     product markets. The combined market shares for the horizontal overlaps are modest, and the increments
     brought by PPD negligible. As such, these horizontal overlaps are extremely unlikely to lead to competitive
     concerns The Commission’s market investigation did not surface concerns for these horizontal overlaps .
     Therefore, these will not be further assessed in the present Decision.
6    The Transaction gives rise to one vertical link that is not related to PPD’s laboratory services d ownstream,
     but rather to its CRO services, which are vertically related to Thermo Fisher’s upstream clinical trial
     support services. However, the Parties’ market shares are significantly below 30% both up - and
     downstream, so this vertical link is not affected by the Transaction and is not further discussed in the
     present Decision.
                                                              4
 ---pagebreak--- 5.1.1.1.         Relevant product market definition
            (A)       Previous Commission decisions
(17)    In the past, the Commission defined an overall market for CRO services, as the
        market definition did not suggest a further segmentation based on specific services
        provided by CROs.7
            (B)       Notifying Party’s view
(18)    The Notifying Party submits that CRO services consist of services provided for
        several types of products, customers or types of trials in different stages of a product’s
        lifecycle. However, the Notifying Party considers, in line with past practice, that such
        segmentation is not appropriate and that there is a single relevant market for CRO
        services, as CRO service providers would typically offer a similar range of services
        and customers would expect CRO service providers to do so. The Notifying Party
        submits that the market definition can be left open in any event, as PPD’s market
        shares would not exceed 30% under any plausible market definition.8
            (C)       The Commission’s assessment
(19)    The Commission notes that CRO services and laboratory services are related in the
        sense that both services are required in the context of clinical trials, and
        pharmaceutical and biotech companies frequently outsource both services to third-
        party providers. Some competitors, including PPD, offer both services to customers,
        while others act only as either CRO or laboratory service provider. In any event, the
        market investigation clearly indicated that CRO services and laboratory services are
        two separate product markets. From a demand-side perspective, sponsors consider
        these services separately and do not generally source both services in combination. 9
        From a supply-side perspective, the Commission considers that both services require
        very different expertise and infrastructure, and are therefore not substitutable.
(20)    The Commission also notes that the business activities of Thermo Fisher are
        predominantly upstream to the provision of laboratory services, but not to CRO
        services. One exception may be products that form part of testing kits to be sent to
        patients participating in the clinical trial. One customer who provides both CRO and
        laboratory services explained: “Thermo Fisher supplies all sorts of laboratory
        products, as well as contents of kits required for medical trials, e.g. reagents, gloves,
        band aids. However, [customer name] considers Thermo Fisher primarily a supplier
        of laboratory equipment, consumables and reagents, more than a supplier of kit
        contents.”10 The Commission further notes that all products discussed in the context
        of this decision11 , i.e. products for which the Transaction would lead to affected
        markets, are products used in laboratories, such as machines and their consumables, as
        well as storage equipment and equipment for cell growth.
7   Case M.8061 – IMS Health / Quintiles – paragraph 39 et seq.
8   Form CO, paragraph 217 et seq.
9   Response to questionnaire Q3 to pharmaceutical companies, question 5.
10 Minutes of a call with a customer, 8 September 2021, paragraph 18.
11 With the exception discussed in footnote 6.
                                                         5
 ---pagebreak--- (21)    Based on the above, and in line with the Commission’s past practice, CRO services
        and laboratory services will be considered as two separate markets for the purpose of
        this Decision. The Commission notes that, in any event, vertically affected links only
        arise between products that are upstream to laboratory services and the latter.
5.1.1.2.         Relevant geographic market definition
              (A)      Previous Commission decisions
(22)    In the past, the Commission has considered the market for CRO services to be EEA-
        wide in scope.12
              (B)      Notifying Party’s view
(23)    The Notifying Party appear to consider the market for CRO services as EEA-wide or
        global, as it provides market shares for both geographic market definitions.
              (C)      The Commission’s assessment
(24)    In the market investigation, the large majority of responding customers (i.e.
        pharmaceutical companies) of CRO services indicated that the geographic market for
        CRO services is global.13
(25)    For the purpose of this Decision, it can be left open whether the geographic market for
        CRO services is EEA-wide or global, as the Transaction does not raise concerns under
        either market definition.
5.1.2. Laboratory services
(26)    PPD is active in the provision of laboratory testing services, primarily to
        pharmaceutical and biotechnology companies, but also to other CROs as well as
        CDMOs. As set out in paragraph (7), PPD internally segments its laboratory services
        into (i) bioanalytical, (ii) biomarker, (iii) central laboratories, (iv) GMP, (v) vaccine.
5.1.2.1. Relevant product market definition
              (A)      Previous Commission decisions
(27)    The Commission has not previously assessed laboratory testing services.
              (B)      Notifying Party’s view
(28)    The Notifying Party submits that laboratory services for diagnostic purposes are
        distinct from laboratory services related to clinical development. PPD is not active in
        laboratory services for diagnostic purposes. The Notifying Party submits the
        following arguments for this distinction:14
12  Case M.8061 – IMS Health / Quintiles – paragraph 39 et seq.
13  Response to questionnaire Q3 to pharmaceutical companies, question 7.
14 Form CO, paragraphs 213-214.
                                                        6
 ---pagebreak---        (a)      The customers for laboratory services for diagnostic purposes are primarily
                hospitals and clinics, whereas customers for laboratory services related to
                clinical development are pharmaceutical and biotechnology companies;
       (b)      A different footprint is required for both activities; a far more localised
                footprint is needed to provide laboratory services for diagnostic purposes to
                ensure geographic coverage and access to patients. In contrast, PPD only has
                eight laboratories globally;
       (c)      Pricing is different, as laboratory services for diagnostic purposes are priced,
                sold and regulated in accordance with the different healthcare systems and
                government imposed standards, whereas laboratory services related to clinical
                development are bespoke and negotiated on a case-by-case basis; and
       (d)      While laboratory services for diagnostic purposes are mainly driven by an
                effort to “industrialise” services (large volumes, automated and standardised
                testing) to drive costs down, laboratory services related to clinical
                development contain more of an individualised and case-by-case approach to
                tailor for the specific needs of each clinical trial.
(29)   The Notifying Party submits that there is no universally accepted segmentation of
       laboratory testing services for clinical development. While PPD internally segments
       its laboratory services into (i) bioanalytical, (ii) biomarker, (iii) central laboratories,
       (iv) GMP, (v) vaccine, and considers that each service meets different customer
       demands, it considers that there is significant supply-side substitutability between
       these segments.15
(30)   For the purpose of the present Transaction, the Notifying Party submits that the
       relevant product market with respect to laboratory services for clinical development
       can be left open, as no competition concerns exist under any plausible product market
       definition.16
                (C)        The Commission’s assessment
(31)   The Commission’s market investigation confirmed that laboratory services for
       diagnostic purposes constitute a separate market from laboratory services related to
       clinical development. A majority of laboratory and CRO service providers that replied
       to the Commission’s market investigation indicated to consider them separate
       markets.17
(32)   Respondents pointed out that the customers for the two services are different, as for
       laboratory services for clinical development the customers are pharmaceutical
       companies, biotechnology companies, or CRO service providers, while for laboratory
       services for diagnostic purposes the customers are physicians or hospitals. The
       required footprint is different as well – laboratory service providers for clinical
       development typically have few laboratories globally (PPD has eight), while for
15  Form CO, paragraph 169.
16  Form CO, paragraph 167.
17 Replies to question 4 of questionnaire Q1 to CRO and laboratory service providers.
                                                         7
 ---pagebreak---         diagnostic purposes a more regional presence is required. Respondents also pointed
        out that different accreditations and standards apply, and that instruments are more
        easily substitutable in diagnostics laboratories as there is not the same criticality
        associated with consistency of testing results and patient data. 18
(33)    Therefore, while they may employ some of the same testing methods, the
        Commission considers that laboratory services for diagnostic purposes and laboratory
        services for clinical development (i.e. laboratory services in the context of clinical
        trials and compliance with pharmaceutical GMP) constitute separate product markets.
(34)    Within the area of laboratory services related to clinical development, it can be left
        open whether any further segmentation is required, as PPD’s market share is well
        under 30% for the overall market as well as for any plausible segmentation.
        Therefore, the Transaction does not give rise to affected vertical links by virtue of
        PPD’s downstream market position. As mentioned previously, PPD is not active in
        laboratory services for diagnostic purposes.
5.1.2.2.         Relevant geographic market definition
                 (A)        Notifying Party’s view
(35)    The Notifying Party submits that the relevant geographic scope for laboratory testing
        services related to clinical development is global or at least EEA-wide due to the
        following factors:19
        (a)      Laboratories typically locate their laboratory testing facilities in a small
                 number of locations, from which their services are provided to many countries;
        (b)      There are no country-specific technical standards or regulatory differences
                 within the EEA, and laboratories typically comply with regulatory and
                 certification requirements in all major jurisdictions;
        (c)      There are numerous             competitors   that    offer    analytical testing services
                 worldwide; and
        (d)      Price is negotiated on an individual customer basis or based on a standard
                 price list, but price dynamics are the same globally.
                 (B)        The Commission’s assessment
(36)    For the purpose of the present Decision, the relevant geographic scope of laboratory
        services related to clinical development can be left open between EEA-wide and
        worldwide, as PPD’s market share is well under 30% for either geographic scope.
        Therefore, the Transaction does not give rise to affected vertical links by virtue of
        PPD’s downstream market position.
18  Replies to question 4.1 of questionnaire Q1 to CRO and laboratory service providers.
19  Form CO, paragraph 173.
                                                         8
 ---pagebreak--- 5.2.     Upstream markets (Thermo Fisher)
(37)     Thermo Fisher is active in numerous markets that are upstream to laboratory services.
         This section sets out the markets that are affected as a result of the Transaction.
5.2.1. High-resolution (Sanger) capillary electrophoresis instruments and consumables
(38)     Electrophoresis is the differential movement of charged molecules in an electric field,
         used to separate molecules (e.g. DNA, RNA and proteins) based on size, density and
         charge. There are two major types of electrophoresis: gel electrophoresis and capillary
         electrophoresis. Gel electrophoresis will be discussed in Section 5.2.5 of this
         Decision. Capillary electrophoresis employs a narrow capillary tube filled with a gel
         through which the molecules pass.
(39)     High-resolution (Sanger) capillary electrophoresis is used for DNA sequencing
         purposes, i.e. determining the order of base pairs in a given strand of DNA.
         Fluorescently labelled nucleotides are attached to the DNA fragment to be sequenced.
         When passed through the capillary, the fluorescent nucleotides are excited by a laser
         and the emitted light is detected. The type of base (adenine (A), cytosine (C), guanine
         (G), and thymine (T)) can then be detected based on the colour of light emitted.
5.2.1.1. Relevant product market definition
                  (A)      Previous Commission decisions
(40)     The Commission has not previously assessed high-resolution (Sanger) capillary
         electrophoresis. In one decision, it has briefly addressed capillary electrophoresis in
         the context of analytical separation instruments. However, the market definition was
         ultimately left open.20
                  (B)      The Notifying Party’s view
(41)     The Notifying Party considers that capillary electrophoresis could be segmented into
         high-resolution (1 base pair) and lower resolution (3-5+ base pairs) instruments, on
         the basis of the lack of demand- and supply-side substitutability between the two
         types of instruments.21
(42)     Lower resolution capillary electrophoresis instruments have a significantly lower cost
         and are used for different purposes (e.g. quality control for DNA or RNA, certain
         plant biology applications, understanding protein-ligand interactions). High-resolution
         capillary electrophoresis instruments are used where it is necessary to identify smaller
         fragments of DNA (e.g. genotyping, mutation analysis, microsatellites variability,
         amplicon screening, splicing variants, loci mapping, genomic fingerprinting etc.).22
20   Case M.6175 – Danaher / Beckman Coulter, paragraph 31.
21   Form CO, paragraph 646.
22 Form CO, paragraphs 647-648.
                                                       9
 ---pagebreak--- (43)   From a supply-side perspective, it would be costly and difficult for a supplier of a
       standard capillary electrophoresis instrument to develop an instrument with a
       resolution of 1 base pair.23
(44)   Therefore, the Notifying Party submits that the relevant product market consists of the
       market for high-resolution (Sanger) capillary electrophoresis instruments, regardless
       of whether they are low, medium or high throughput.24
(45)   Concerning consumables, the Notifying Party considers these constitute a separate
       market. Consumables can either be sold separately as stand-alone items; or as pre-
       packaged consumables for use in one specific instrument. Whether stand-alone or pre-
       packaged, there is no substitutability between consumables for high-resolution
       (Sanger) capillary electrophoresis instruments and lower-resolution capillary
       electrophoresis instruments.
(46)   The Notifying Party submits that there is no need to distinguish between different
       types of consumables that are used for high-resolution (Sanger) capillary
       electrophoresis instruments because competitive conditions for these different
       consumables are largely similar and customers need several or the entire range of
       these consumables in the testing workflow.
                (C)      The Commission’s assessment
(47)   For the purpose of the current Decision, it can be left open whether the appropriate
       product market definition for capillary electrophoresis instruments is (i) all capillary
       electrophoresis instruments, (ii) high-resolution capillary electrophoresis instruments,
       or (iii) high-resolution capillary electrophoresis instruments further segmented by
       their throughput.
(48)   Thermo Fisher is not active in lower-resolution capillary electrophoresis instruments..
       Therefore, for the purpose of this Decision, the Commission will assess the market on
       the basis of high-resolution capillary electrophoresis instruments. As the Transaction
       does not give rise on serious doubts on this narrow market definition, it also does not
       give rise to serious doubt when including lower-resolution instruments in the product
       market definition – an area in which Thermo Fisher is not active.
(49)   In the past, when the Commission has found that the markets for consumables and
       instruments was closed, meaning that Thermo Fisher instruments only worked with
       Thermo Fisher consumables, the Commission has defined a single “systems”
       market.25 As Thermo Fisher’s high-resolution capillary electrophoresis instruments
       constitute an open system, meaning that third party manufacturers can supply
       consumables for use with Thermo Fisher devices, the Commission will assess the
       market for high-resolution capillary electrophoresis consumables separately from the
       one for high-resolution capillary electrophoresis instruments. Furthermore,
23  Form CO, paragraph 649.
24  Form CO, paragraph 650.
25 Case M.6175 – Danaher / Beckman Coulter, paragraph 20.
                                                    10
 ---pagebreak---          consumables for high-resolution capillary electrophoresis are not substitutable with
         consumables for lower resolution capillary electrophoresis. 26
(50)     Finally, the Commission notes that high-resolution (Sanger) capillary electrophoresis
         instruments form a separate product market from next generation sequencing
         (“NGS”). NGS is a more recent development that allows massively parallel
         sequencing of DNA, and therefore has a cost per analysed base pair that is
         significantly lower (a difference that exceeds an order of magnitude) than high-
         resolution (Sanger) capillary electrophoresis instruments. The devices therefore serve
         different purposes and the supplier landscape is different. NGS is not affected as a
         result of the Transaction.27
5.2.1.2. Relevant geographic market definition
                  (A)        The Notifying Party’s view
(51)     The Notifying Party submits that the relevant geographic market for the high-
         resolution (Sanger) capillary electrophoresis instruments and consumables is global or
         at least EEA-wide in scope because high-resolution (Sanger) capillary electrophoresis
         instruments and consumables are identical wherever customers are located.28
                  (B)        The Commission’s assessment
(52)     For the purpose of the current Decision, it can be left open whether the appropriate
         geographic scope of the markets for high-resolution capillary electrophoresis
         instruments and consumables is global or EEA-wide, as this does not affect the
         outcome of the competitive assessment.
5.2.2. Laboratory in vitro diagnostic allergy and autoimmune disease systems
(53)     In vitro diagnostics (“IVD”) systems comprise analysers (instruments), tests (called
         reagents or assays) and accessories for the purpose of testing blood, urine or other
         samples outside the human or animal body. This section concerns IVD systems
         specifically for the testing of allergies and autoimmune diseases.
5.2.2.1. Relevant product market definition
                  (A)        Previous Commission decisions
(54)     In case M.7982 – Abbott / Alere, the Commission found a market for laboratory IVD
         systems separate from point-of-care (POC) IVD systems, used by healthcare
         professionals in a medical environment. The Commission further discussed whether
         analysers and reagents would be considered separate markets, or would belong to a
         combined market for IVD systems. The Commission concluded that the latter was the
26  From CO, paragraph 653.
27  Thermo Fisher is active in NGS with its Ion Torrent platform. However, its market share is low (around
    [10-20]%), and the market leader in NGS with by far the largest market share is Illumina. NGS is therefore
    not affected as a result of the Transaction and not further discussed in the present Decision, except in the
    context of companion diagnostics (see Section 6.5.2).
28 Form CO, paragraphs 655-656.
                                                          11
 ---pagebreak---         case for POC IVD analysers and              reagents, as they are typically supplied in closed
        systems so that customers need              to purchase both from the same supplier. The
        Commission left open whether               laboratory IVD analysers and reagents would
        constitute separate product markets        or a combined systems market.
(55)    With respect to laboratory IVD products, the Commission considered that a
        distinction can be made between six main categories, namely clinical chemistry,
        immune-chemistry, haematology / haemostasis / immunohaematology / histology /
        cytology, microbiology culture, infectious diseases and genetic testing. It further
        considered a segmentation by test panels or specific tests. 29
(56)    This approach is in line with previous decisions by the Commission, specifically
        M.6293 – Thermo Fisher / Phadia and M.4865 – Siemens / Dade Behring. In both
        decisions, a potential further segmentation by test panels 30 or specific tests was
        considered based on the classification of IVD tests used by the European Diagnostics
        Manufacturers’ Association31 (“EDMA”).32
                 (B)       The Notifying Party’s view
(57)    The Notifying Party submits that Thermo Fisher’s IVD products are closed systems,
        meaning that Thermo Fisher analysers have to be used with Thermo Fisher reagents
        and accessories, and Thermo Fisher reagents and accessories cannot be used with
        third-party instruments. It would therefore not be meaningful to look into analysers,
        reagents and accessories separately, and in any event, market shares would not differ
        significantly from market shares for overall systems markets.
(58)    The Notifying Party further submits that IVD products for which affected markets
        were identified, namely allergy and autoimmune disease tests, would all be classified
        under the category of immunochemistry. The Notifying Party further submits that no
        additional affected markets would arise if a further distinction would be made
        between specific test panels or specific tests.
(59)    Therefore, the Notifying Party submits that the exact product market definition can be
        left open in the present case.33
                 (C)       The Commission’s assessment
(60)    First of all, the Commission notes that the Transaction concerns laboratory IVD
        systems, but not POC IVD systems, as PPD is only active in the former.34
29  Case M.7982 – Abbott / Alere, paragraph 19 et seq.
30  Test panels refer to thematic panels of tests (for example for cardiac, cancer, allergy or fertility testing).
    Within each thematic panel, a number of different assay tests can be conducted; M.4865 – Siemens / Dade
    Behring, paragraphs 20 et seq.
31  Since 2012 MedTech Europe.
32  Case M.6293 – Thermo Fisher / Phadia, paragraphs 8 et seq., and M.4865 – Siemens / Dade Behring,
    paragraphs 7 et seq.
33  Form CO, paragraph 603 et seq.
34  The Notifying Party further provides that it estimates its market shares for POC IVD systems globally and
    at EEA level to be lower than [0-5]%.
                                                          12
 ---pagebreak--- (61)    Secondly, results of the market investigation indicate the existence of a market for
        IVD systems also for laboratories, including both instruments and reagents. From a
        demand-side perspective, a small majority of respondents confirmed that the market
        would indeed include both instruments and reagents. 35 One customer explained that
        “immunological testing for allergy and autoimmune disease are performed using only
        vendor-approved reagents for that instrument.” 36 From a supply-side perspective, this
        view was supported by the large majority of competitors to Thermo Fisher, i.e.
        manufacturers of such products, that responded to the Commission’s market
        investigation.37 The Commission further notes that IVD products by Thermo Fisher
        are closed systems in the sense that instruments and reagents, as well as key
        accessories like calibrators and conjugate, have to be used in conjunction with each
        other, and cannot be used with third-party products.38 Therefore, the Commission
        considers it appropriate to assess the IVD laboratory products at system level for the
        purpose of this Decision.
(62)    Thirdly, the Commission notes that both IVD allergy testing as well as IVD
        autoimmune disease testing can be performed on the same device. In the market
        investigation, the Commission received feedback that instruments for both IVD
        autoimmune and allergy testing are part of the same product market.39 The
        Commission still considers that IVD autoimmune disease systems on the one hand
        and IVD allergy testing systems on the other hand form two separate product markets.
        From the demand-side point of view, the Commission notes that Thermo Fisher’s
        instruments may be substitutes for both applications, but not the tests, which are sold
        under two different brands.40 From a supply-side point of view, the Commission notes
        that manufacturers of IVD autoimmune disease testing system are not necessary able
        to provide a similarly competitive IVD allergy testing system. This is indicated by the
        very different market structure for both products, which was confirmed in the market
        investigation. One competitor explained that for both tests there are “same customers
        but different application and market, different competitive landscape. In Allergy
        Thermo has a strong Monopoly, in Al there are many more major players”.41
(63)    For the purpose of this Decision, the Commission will therefore conduct the
        assessment for the market for IVD allergy testing systems, and notes that no
        competition concerns will arise in a market for IVD autoimmune disease testing
        systems.
(64)    Fourthly, the Commission notes that a further segmentation by test panels or specific
        tests would not change the outcome of the competitive assessment.42
35  Replies to question 22 of questionnaire Q1 to CRO and laboratory service providers.
36  Reply to question 22.1 of questionnaire Q1 to CRO and laboratory service providers.
37  Replies to question 17 of questionnaire Q2 to Thermo Fisher competitors .
38  Form CO, footnote 396.
39  Replies to question 20 of questionnaire Q1 to CRO and laboratory service providers; replies to question 15
    to Thermo Fisher competitors.
40  ImmunoCAP Allergy Tests and EliA Autoimmune Disease Tests; Form CO, paragraph 599.
41  Replies to question 15.1 of questionnaire Q2 to Thermo Fisher competitors.
42  Form CO, footnote 400.
                                                         13
 ---pagebreak--- (65)    Fifthly, the Commission has indication that, for IVD laboratory instruments, a further
        segmentation by customer type may be appropriate. From a supply-side point of view,
        the Commission notes indication that purchasing patterns of laboratory service
        providers for clinical development differ from those of diagnostics laboratories. As
        explained in Section 5.1.2 above, clinical development laboratories generally have
        fewer, centralised laboratories compared to diagnostics laboratory service providers.
        The Commission notes that the majority of PPD’s competitors do not operate any IVD
        allergy testing systems at all in the EEA. 43 In the view of the Commission, this may
        explain why clinical development laboratories are willing to source IVD allergy
        testing systems over longer distances, and do no place the same value on sourcing
        locally as diagnostics laboratory providers did in previous cases. 44
(66)    It has to be noted that PPD is only active in the provision of clinical development
        laboratory services. The Commission therefore considers appropriate to assess the
        narrower market of sales to such customer group for the purpose of this Decision.
(67)    Based on the above, the Commission will assess the markets for IVD allergy systems
        to clinical development laboratory service providers. It can be left open whether a
        further segmentation by test panels or specific tests is appropriate, as it does not
        change the competitive assessment of this case.
5.2.2.2. Relevant geographic market definition
                 (A)        Previous Commission decisions
(68)    In the past, the Commission has considered markets for IVD products to be national in
        geographic scope. In M.4865 – Siemens / Dade Behring, the Commission found that
        most respondents to the market investigation consider markets to be national in scope,
        due to price differences, national reimbursement schemes and the preference for local
        service.45 In M.6293 – Thermo Fisher / Phadia, it found that customers tend to source
        within the country, while some competitors pointed at an EEA-wide market from a
        supply-side of view. The geographic market definition was ultimately left open. In
        case M.7982 – Abbott / Alere, the Commission concluded that geographic markets for
        IVD products are national. The reason was that customers would predominantly use
        national sales to source those products, as well as to a lesser degree national
        regulation and price differences. The Commission acknowledged, however, that
        “some elements of the market investigation point towards an increasingly broader
        than national scope of the IVD market as the most important IVD suppliers are active
        on a worldwide basis.”46
                 (B)        Notifying Party’s view
(69)    The Notifying Party submits that the geographic markets for laboratory IVD allergy
        testing today is EEA-wide because the main competitors for IVD test systems supply
        the same equipment and reagents in identical form across the EEA and operate EEA-
43  Replies to question 25 of questionnaire Q1 to CRO and laboratory service providers.
44  The Commission notes that this assessment would also apply for IVD autoimmune disease systems.
45 Case M.4865 – Siemens / Dade Behring, paragraphs 36 et seq.
46 Case M.7982 – Abbott / Alere, paragraph 62 et seq.
                                                        14
 ---pagebreak---          wide sales and distribution networks. Thermo Fisher supplies allergy tests to all
         customers [Thermo Fisher’s product distribution].
(70)     The Notifying Party further argues that in M.7982 – Abbott / Alere, the Commission
         would have looked at a different customer group, including blood banks and hospitals.
         The purchasing behaviour of companies as PPD, which offers laboratory services in
         the context of clinical trials, was not even mentioned in that decision. The Notifying
         Party is of the view that local sourcing is not relevant for PPD and its competitors, and
         that price differences as a result of national reimbursement regimes would not play a
         role as those would not apply in the context of clinical trials.47
                  (C)         The Commission’s assessment
(71)     The results of the market investigation strongly suggest that the market for IVD
         allergy systems to laboratory service providers for clinical development is wider than
         national, i.e. EEA-wide or global.48 All such customers responding to the market
         investigation indicated that they would source IVD allergy and autoimmune
         instruments and reagents at global level. 49 Similarly, all but one manufacturer or
         distributor of such products indicated that markets were global or EEA-wide in
         geographic scope.50 The Commission further notes that all competitors of Thermo
         Fisher responding to the market investigation supply IVD allergy and autoimmune
         instruments and reagents in all EEA countries. 51
(72)     Differently from the previous cases above mentioned, in the present case customers
         responding to the market investigation were laboratories providing services in the
         context of clinical trials (but not diagnostics customers such as doctors or hospitals).
         As discussed in the competitive assessment in Section 6.4.2 in more detail, IVD
         allergy testing instruments and reagents are not very frequently used in the context of
         clinical trials.52 The majority of customers (i.e. PPD’s competitors in the provision of
         laboratory services in the context of clinical trials) responding to the market
         investigation do not operate any IVD allergy and autoimmune disease testing
         instrument within the EEA,53 and those who do operate them only in a limited number
         of countries. Similarly, [PPD’s operations].54
(73)     In light of the indication that laboratories use IVD allergy systems only infrequently,
         and operate them only in few geographic areas, and many of them outside the EEA,
         criteria such as national price differences, national reimbursement schemes and
47  Form CO, paragraph 608 et seq.
48  This assessment would also apply for IVD autoimmune disease systems.
49  Reply to question 24 of questionnaire Q1 to CRO and laboratory service providers.
50  Replies to question 19 of questionnaire Q2 to Thermo Fisher competitors .
51  Replies to question 20 of questionnaire Q2 to Thermo Fisher competitors .
52  The Notifying Party provides that of […] clinical trials in 2020 that PPD’s clinical trial services business
    was involved in. PPD estimates that […] required allergy testing and […] of those used PPD’s laboratories
    for the allergy testing; Form CO, paragraph 621.
53  Replies to question 25 of questionnaire Q1 to CRO and laboratory service providers.
54  Form CO, paragraph 601.
                                                          15
 ---pagebreak---          national services55 may be less important compared to customers active in the field of
         diagnostics.
(74)     The Commission further notes that already in previous cases, competitors appeared to
         have pointed to a broader than national geographic market definition from a supply-
         side point of view,56 which is in line with findings in this case.
(75)     In light of the above, the Commission considers appropriate to define the geographic
         market for IVD allergy and autoimmune disease testing instruments and reagents
         specifically for clinical trial laboratories as EEA-wide or global for the purpose of this
         Decision.57
5.2.3. CO2 incubators
(76)     CO2 incubators are basic metal containers that maintain a controlled environment
         above ambient temperature but below temperatures of laboratory ovens. CO2
         incubators are used to propagate or expand cell cultures.
5.2.3.1. Relevant product market definition
                  (A)         Previous Commission decisions
(77)     The Commission has not defined a product market for CO2 incubators in the past. In
         M.4242 – Thermo Electron / Fisher Scientific, the Commission named CO2
         incubators as a product in the broader area of laboratory equipment and consumables,
         but did not investigate this product specifically and therefore did not define a separate
         market for CO2 incubators.58
                  (B)         The Notifying Party’s view
(78)     The Notifying Party submits that CO2 incubators belong to a broader category of
         general laboratory equipment that also includes other cell growth, protection and
         separation equipment instruments. This is because customers would often purchase a
         variety of combinations of such products when outfitting or expanding a cell culture
         laboratory. Furthermore, there would be significant supply-side substitutability
         regarding these products, as key suppliers would be active across the broader segment
         of cell growths, protection and separation equipment instruments. For the purpose of
         the case, however, the exact product market definition can be left open, as no
         concerns arise under any plausible product market definition. 59
55  The Commission notes that IVD allergy and autoimmune testing instruments need periodical maintenance
    services; see replies to question 26 of questionnaire Q1 to CRO and laboratory service providers.
56  Case M.6293 – Thermo Fisher / Phadia, paragraph 22; Case M.7982 – Abbott / Alere, paragraph 62.
57  The Commission notes further that in its market investigation, it has asked customers and competitors about
    potential concerns at national level and about relevant country -specific information. No such concerns or
    information were brought to the Commission’s attention.
58  Case M.4242 – Thermo Electron / Fisher Scientific, paragraph 11 et seq.
59  Form CO, paragraph 252 et seq.
                                                            16
 ---pagebreak---                  (C)        The Commission’s assessment
(79)    The Commission notes that the majority of customers responding to the market
        investigation indicate that CO2 incubators belong to the same product market as
        biological safety cabinets, and may form a market for cell growth, protection and
        separation equipment.60 The Commission nevertheless considers this market
        definition as likely too broad in the light of the different product features, and doubts
        that all products that may fall into such market would be indeed substitutable from a
        demand-side point of view. This assessment is supported by competitors of Thermo
        Fisher responding to the market investigation, of which a majority submit that
        biological safety cabinets and CO2 incubators belong to different product markets. 61
        For the purpose of this case, this question can be left open in any event, as an affected
        market would only arise for the plausible narrower market of CO2 incubators, for
        which the Commission has carried out an assessment.
(80)    Further, all customers expressing an opinion in the market investigation consider all
        CO2 incubators part of the same product market. 62 Responses from competitors, in
        turn, are mixed in this regard. One competitor points at the existence of “specialty
        incubators that are not readily substituted for other types”.63 Other than that, the
        Commission received no indication of plausible sub-segments of the CO2 incubator
        product market. Specifically, customers and competitors did not raise concerns related
        to specific types of CO2 incubators in the market investigation, which further supports
        the conclusion of a CO2 incubator product market without further segmentation.
(81)    In light of the above, the Commission considers appropriate to define the product
        market as CO2 incubators for the purpose of this Decision.
5.2.3.2. Relevant geographic market definition
                 (A)        Previous Commission decisions
(82)    The Commission has not defined a geographic market for CO2 incubators in the past.
        In M.4242 – Thermo Electron / Fisher Scientific, the Commission assumed generally
        EEA-wide markets for the products covered by that decision, which includes
        laboratory equipment in general, but noted “it cannot be excluded that at least for
        some products affected by the transaction […], the relevant geographic market should
        be defined at national instead of EEA-wide level.” The geographic market definition
        for all products was ultimately left open.64 The Commission did not discuss a
        geographic market for the production of CO2 incubators specifically, nor did it
        suggest that CO2 incubators would be among the products for which the geographic
        market would be narrower than EEA-wide.65
60  Reply to question 38 of questionnaire Q1 to CRO and laboratory service providers.
61  Reply to question 29 of questionnaire Q2 to Thermo Fisher competitors.
62  Reply to question 39 of questionnaire Q1 to CRO and laboratory service providers.
63  Replies to question 30 of questionnaire Q2 to Thermo Fisher competitors .
64  Case M.4242 – Thermo Electron / Fisher Scientific, paragraph 35 et seq.
65  The decision lists market shares for the production of CO2 incubators at national level to discuss a potential
    input foreclosure of downstream laboratory equipment distributors, for which the Commission considered
    the geographic market to be national.
                                                           17
 ---pagebreak---                  (B)       The Notifying Party’s view
(83)    The Notifying Party submits that the market for the production of CO2 incubators,
        and more generally cell growths, protection and separation equipment instruments
        should be considered at least EEA-wide, because (i) suppliers typically locate their
        manufacturing facilities in a small number of locations, from which the products are
        shipped worldwide. Thermo Fisher typically manufactures these products at a small
        number or sites and ships globally; (ii) there are no country-specific technical
        standards or regulatory differences within the EEA; (iii) numerous competitors to a
        global customer base; (iv) price dynamics would be the same globally.66
                 (C)       The Commission’s assessment
(84)    The Commission notes that all customers expressing an opinion in the market
        investigation submit that they source CO2 incubators at either EEA or global level. 67
        Similarly, competitors predominantly point at a global or EEA wide geographic
        market for CO2 incubators, and no competitor submitted that the market should be
        narrower than EEA-wide.68
(85)    In light of the above, the Commission considers that the market for CO2 incubators is
        EEA-wide or global in geographic scope.
5.2.4. Chromatography instruments and columns
(86)    Chromatography is a separation technique based on the different distribution of the
        constituents of a mixture between two phases, one of which moves relative to the
        other. The moving phase is referred to as the mobile phase, while the other is referred
        to as the stationary phase. This technique is therefore used to separate a mixture of
        compounds in analytical chemistry and biochemistry so as to identify, quantify or
        purify the individual components of the mixture.
(87)    The chromatography process requires the use of instruments in combination with
        consumables. Key consumables used in chromatography are chromatography
        columns, which are containers holding the resin and/or silica (which is the stationary
        phase) in which the chromatography process takes place when plugged into the
        instrument. The resin can be of different material, depending on the nature of the
        separation.
5.2.4.1. Relevant product market definition
                 (A)       Previous Commission decisions
(88)    Concerning chromatography instruments, in previous decisions the Commission
        found that liquid chromatography instruments are to be assessed separately from gas
        chromatography instruments. Within liquid chromatography instruments, the
        Commission found that ion chromatography instruments form a separate product
        market. Furthermore, the Commission found that liquid chromatography could be
66  Form CO, paragraph 260 et seq.
67  Replies to question
68 Replies to question 31 of questionnaire Q2 to Thermo Fisher competitors .
                                                        18
 ---pagebreak---         further segmented in the following segments, but left the exact market definition
        open:69
        (a)      High pressure liquid chromatography (“HPLC”), with possible sub-segments:
                 –      Analytical HPLC;
                 –      Nano-LC;
                 –      Ultra-HPLC;
                 –      Preparation HPLC;
                 –      Gel permeation / size exclusion chromatography; and
                 –      Amino acid analyser systems.
        (b)      Low pressure liquid chromatography (“LPLC”);
        (c)      Supercritical fluid chromatography; and
        (d)      Flash chromatography.
(89)    The Commission found that chromatography consumables constitute a separate
        market from chromatography instruments, which include (i) columns, (ii) vials and
        (iii) reagents and consumables.70 Within columns, the Commission found that there
        are separate markets for pre-filled columns and non-pre-filled columns. Pre-filled
        columns are sold pre-filled with resins, while non-pre-filled columns are sold without
        resin and can be filled with resin by the customer.71 Thermo Fisher is only active in
        pre-filled columns. Within resins, the Commission found that there are separate
        markets for (i) protein A resins, (ii) other affinity resins, (iii) ion-exchange resins and
        (iv) mixed mode resins.72 In the case of columns pre-filled with resin, which are
        columns pre-filled with a specific resin, this distinction can be applied to the pre-filled
        columns.
                 (B)       The Notifying Party’s view
(90)    The Notifying Party follows the Commission’s previous decisional practice
        concerning chromatography instruments and columns, and submits that the exact
        scope of the relevant product markets can be left open. 73
                 (C)       The Commission’s assessment
(91)    The Commission’s market investigation did not give reason to depart from the
        Commission’s previous decisional practice with regard to the product market
69  Case M.6126 – Thermo Fisher / Dionex Corporation, paragraphs 10-19.
70  Case M.6126 – Thermo Fisher / Dionex Corporation, paragraphs 32-34.
71 Case M.9331 – Danaher / GE Healthcare Life Sciences Biopharma, paragraph 370.
72 Case M.9331 – Danaher / GE Healthcare Life Sciences Biopharma, paragraph 374.
73 Form CO, paragraphs 454, 470 and 500.
                                                      19
 ---pagebreak---         definition for chromatography instruments and columns. Applying these product
        market definitions, the Transaction gives rise to vertically affected markets for (i) ion
        chromatography instruments and (ii) pre-filled ion chromatography columns, i.e.
        chromatography columns pre-filled with ion exchange resin.
5.2.4.2. Relevant geographic market definition
                 (A)        Previous Commission decisions
(92)    In its previous decisions, the Commission found that the relevant geographic market
        for liquid chromatography instruments (which includes ion chromatography
        instruments) and chromatography consumables (which includes pre-filled ion
        chromatography columns) are EEA-wide or worldwide in scope. It left the exact
        market definition open.74
                 (B)        The Notifying Party’s view
(93)    The Notifying Party submits that the relevant geographic market for chromatography
        instruments and consumables and any of its relevant segments is at least EEA-wide
        because: 75
        (a)      Suppliers typically locate their manufacturing facilities in a small number of
                 locations, from which the products are shipped worldwide;
        (b)      There are no country-specific technical standards or regulatory differences
                 within the EEA;
        (c)      There are numerous competitors that offer chromatography consumables to a
                 global customer base and supply different types of chromatography
                 consumables worldwide and within the EEA in competition with Thermo
                 Fisher;
        (d)      Price is negotiated on an individual customer basis or based on a standard
                 price list, but price dynamics are the same globally.
(94)    The Notifying Party further submits that the exact scope of the relevant geographic
        market can be left open between EEA-wide and worldwide, because the Transaction
        does not give rise to competitive concerns under either geographic scope.76
                 (C)        The Commission’s assessment
(95)    For the purpose of the present Decision, and in line with the Commission’s previous
        decisional practice, the relevant geographic product market can be left open between
        EEA-wide and worldwide for ion chromatography instruments and pre-filled ion
        chromatography columns, as this distinction does not affect the outcome of the
        competitive assessment.
74  Case M.6126 – Thermo Fisher / Dionex Corporation, paragraph 48 and case M.9331 – Danaher / GE
    Healthcare Life Sciences Biopharma, paragraph 381.
75 Form CO, paragraphs 456-457, 471 and 501-502.
76 Form CO, paragraph 457, 472 and 503.
                                                       20
 ---pagebreak--- 5.2.5. Electrophoresis gels
(96)    Electrophoresis as a technique is a nucleic acid purification technique, which aims to
        separate molecules, such as DNA, RNA or proteins based on their size, density, and
        charge through the differential movement of charged molecules in an electric field. It
        is used for purification, quality control or analytical purposes within different
        applications. There are two major types of electrophoresis: gel electrophoresis and
        capillary electrophoresis. In gel electrophoresis, samples are loaded into wells at one
        end of a gel slab, and by applying an electric field, molecules separate across the gel.
        Gel electrophoresis can be sub-divided into horizontal and vertical gel electrophoresis.
        While horizontal gel electrophoresis is typically used for DNA and RNA, vertical gel
        electrophoresis is typically used for proteins. Gels can either be purchased precast by
        the supplier, or in self-pourable form, called DIY gels.
(97)    Supporting this process are molecular weight standards (also referred to as molecular
        weight size ladders or markers) which are used to identify the approximate size of a
        molecule (e.g. DNA or RNA) run on a gel during electrophoresis.
5.2.5.1. Relevant product market definition
                 (A)      Previous Commission decisions
(98)    Among nucleic acid purification techniques, of which gel electrophoresis is an
        example, the Commission previously identified separate markets for (i) liquid-based
        instruments, (ii) column-based instruments, (iii) magnetic bead-based instruments,
        and (iv) electrophoresis gel boxes. Within gel electrophoresis consumables, the same
        case identified a separate market for molecular weight standards (DNA ladders). 77 The
        Commission has not reviewed the other main gel electrophoresis consumable,
        electrophoresis gels, in detail in the past.
                 (B)      The Notifying Party’s view
(99)    The Notifying Party submits that a distinction can be made between agarose gels,
        which are the most used type of horizontal electrophoresis gels, and acrylamide gels,
        which are the most used type of gel for vertical gel electrophoresis. Both types can be
        sub-segmented in pre-cast gels and do it yourself (“DIY”) gels. 78
(100) Despite the above differences, the Notifying Party argues that there is significant
        supply-side substitutability, as most manufacturers supply consumables for both
        horizontal and vertical gel electrophoresis. Ultimately, the Notifying Party considers
        that the exact market definition can be left open as the Transaction does not give rise
        to competitive concerns under any product market definition.
                 (C)      The Commission’s assessment
(101) The market investigation gave no reason to depart from the Commission’s previous
        decisional practice concerning a separate market for molecular weight standards
        within gel electrophoresis consumables.
77  Case M.6944 – Thermo Fisher / Life Technologies, paragraphs 178-183.
78  Form CO, paragraphs 556-557.
                                                       21
 ---pagebreak--- (102) Concerning a distinction between gels and molecular weight ladders for horizontal
        and vertical gel electrophoresis, the product market definition can be left open, as this
        distinction does not affect the outcome of the competitive assessment. The same
        applies for a potential distinction between pre-cast and DIY gels.
(103) For the purpose of the present Decision, the Commission will perform its assessment
        on the basis of the narrowest product markets in which Thermo Fisher is primarily
        active, i.e. (i) precast protein gels for vertical gel electrophoresis and (ii)
        molecular weight standards for vertical gel electrophoresis. The Transaction does
        not give rise to any affected markets for horizontal gel electrophoresis or DIY gels
        and it can be left open whether the appropriate product market would be broader (i.e.
        including precast and DIY gels, or including horizontal and vertical gels / molecular
        weight standards) as this distinction does not affect the outcome of the competitive
        assessment.
5.2.5.2. Relevant geographic market definition
                 (A)      Previous Commission decisions
(104) In its previous decisional practice, the Commission considered that the appropriate
        geographic scope for DNA ladders and markers is at least EEA-wide.79
                 (B)      The Notifying Party’s view
(105) The Parties submit that any relevant product markets for gel electrophoresis
        consumables are global or at least EEA-wide in scope but considers that the exact
        geographic scope can be left open as the Transaction does not give rise to competitive
        concerns under either geographic scope. 80
                 (C)      The Commission’s assessment
(106) For the purpose of the current decision and in line with its previous decisional
        practice, the exact geographic scope for precast protein gels for vertical gel
        electrophoresis and molecular weight standards for vertical gel electrophoresis can be
        left open between EEA-wide and worldwide, as this distinction does not affect the
        outcome of the competitive assessment.
5.2.6. Cell culture sera
(107) Cell culture sera are liquid blood-based animal products that are used to grow cells in
        both research and bio-production applications.
79  Case M.5263 – Invitrogen / Applied Biosystems, paragraph 68 and case M.6944 – Thermo Fisher / Life
    Technologies, paragraphs 184-186.
80 Form CO, paragraphs 560-563.
                                                     22
 ---pagebreak--- 5.2.6.1. Relevant product market definition
                  (A)      Previous Commission decisions
(108) In M.6944 – Thermo Fisher Scientific / Life Technologies, the Commission found a
        likely segmentation of the sera market on the basis of three criteria. First, on the basis
        of the customer groups to which the product is supplied, sera can be divided into sera
        sold to bio-production customers and sera sold to the research sector, as differences
        exist in terms of purchasing patterns, pricing and expected quality. Second, a
        segmentation can be made on the basis of animal type, i.e. FSB (foetal bovine serum),
        calf sera, bovine adult sera and other species, as those sera would fulfil different
        needs.
(109) Third, sera can be segmented on the basis of their geographic origin, into (i) a
        potential product market encompassing sera from Australia, (ii) a potential product
        market encompassing sera from New Zealand, (iii) a potential product market
        encompassing sera from Australia and New Zealand, (iv) a potential product market
        encompassing sera from the US, (v) a potential product market encompassing sera
        from Canada, (vi) a potential product market encompassing sera from the US and
        Canada, and (vii) a potential product market encompassing sera from South American
        countries (EU approved).81
                  (B)      The Notifying Party’s view
(110) The Notifying Party submits that customers in the area of research would have, in
        many circumstances, the flexibility to substitute among sera from different
        geographies. However, it ultimately considers that the exact product market definition
        can be left open, as no concerns arise under any plausible market definition. 82
                  (C)      The Commission’s assessment
(111) The market investigation gave no reason to depart from the Commission’s previous
        decisional practice. The Commission notes that, for the assessment of this case, only
        sera for research purposes are relevant, as PPD uses sera exclusively for research
        purposes.83 For the purpose of this decision, the Commission will further consider a
        segmentation of sera based on animal type and based on geographic origin, as detailed
        in paragraphs (108) and (109).
81  Case M.6944 – Thermo Fisher Scientific / Life Technologies, paragraphs 45 et seq. Based on this market
    definition, the Commission looked at cell culture sera and media in Case M.8541 - Thermo Fisher Scientific
    / Patheon, paragraphs 12 et seq., where the exact market definition was left open.
82 Form CO, paragraphs 298 et seq.
83 Form CO, paragraph 297.
                                                           23
 ---pagebreak--- 5.2.6.2. Relevant geographic market definition
                 (A)       Previous Commission decisions
(112) In M.6944 – Thermo Fisher Scientific / Life Technologies, the Commission
        considered EEA-wide or global markets for sera, but ultimately left the exact market
        definition open.84
                 (B)       The Notifying Party’s view
(113) The Notifying Party appears to consider sera markets to be either EEA-wide or global
        in scope, but submits that the exact market definition can be left open, as no concerns
        would arise under any plausible market definition. 85
                 (C)       The Commission’s assessment
(114) In the market investigation, manufacturers and distributors confirmed that the
        geographic market for sera is global or at least EEA-wide in scope.86 Further, the
        market investigation did not give reason to depart from the Commission’s previous
        decisional practice. For the purpose of this decision, the geographic market for sera
        will therefore be defined as global or EEA-wide.
5.2.7. Cell culture media
(115) Cell culture media are water-based liquids that are used to facilitate the growth of
        cells. It can be provided in liquid or in dry powder format.
5.2.7.1. Relevant product market definition
                 (A)       Previous Commission decisions
(116) In M.6944 – Thermo Fisher Scientific / Life Technologies, the Commission found a
        likely segmentation of the cell culture media market on the basis of four criteria. First,
        on the basis of the customer groups to which the product is supplied, media can be
        divided into media sold to bio-production customers and media sold to the research
        sector, as differences exist in terms of purchasing patterns, pricing and expected
        quality. Second, a segmentation can be made between liquid and dry media, as there
        would be significant differences between those two forms in terms of pricing,
        performance, suitability, purchasing patterns and equipment required for their
        production.
(117) Third, media can be divided into a potential product market encompassing standard
        basal media, a potential market for custom media, and a potential market for
        proprietary media. Fourth, media can be divided into chemically defined and non-
        chemically defined media. Finally, the Commission found that process liquids appear
84  Case M.6944 – Thermo Fisher Scientific / Life Technologies, paragraph 52 et seq.
85  Form CO, paragraphs 300 and 301.
86 Replies to question 70 of questionnaire Q2 to Thermo Fisher competitors .
                                                        24
 ---pagebreak---         to form a product market distinct from media for cell culture. The exact product
        market definition was ultimately left open.87
                 (B)        The Notifying Party’s view
(118) The Notifying Party follow the Commission’s past practice and submit that the exact
        scope of the relevant product market can be left open. 88
                 (C)        The Commission’s assessment
(119) The market investigation provided indications that media for bio-production and
        media for research may be substitutable at least for some purposes, as submitted by a
        majority of customers.89 The Commission notes that business activities of respondents
        to this market investigation focus on research. As one customer pointed out that media
        for bio-production may need to fulfil higher quality standards 90 , it may be that media
        for research purposes can be substituted by media for bio-production, but not vice
        versa.
(120) The Commission notes that PPD uses media for research purposes, 91 and that an
        assessment of media for bio-production is therefore not relevant. For the purpose of
        this Decision, and in line with past practice, the Commission will assess a separate
        market for research media, and a potential segmentation by liquid and dry media as
        well as by standard basal media, custom media, proprietary media, as well as
        chemically defined and non-chemically defined media. It will further assess a distinct
        product market for process liquids. In any event, the exact product market definition
        can be left open, as this does not affect the outcome of the competitive assessment.
5.2.7.2. Relevant geographic market decisions
                 (A)        Previous Commission decisions
(121) In M.6944 – Thermo Fisher Scientific / Life Technologies, the Commission
        considered EEA-wide or global markets for media, but ultimately left the exact
        market definition open.92
                 (B)        The Notifying Party’s view
(122) The Notifying Party submits that the relevant geographic market for cell culture
        media was considered in Thermo Fisher Scientific / Life Technologies and it was left
        open. The market investigation showed that manufacturers processed the relevant
        products at centralised sites, and products were subsequently shipped from sites to
        regional distribution hubs around the world, and EEA and non-EEA customers had
        the same preferences and technical/commercial needs, thus, supporting a view that the
        market for media products is global or, in any event, at least EEA-wide. Since the
87  Case M.6944 – Thermo Fisher Scientific / Life Technologies, paragraph 20 et seq.
88  Form CO, paragraph 321 et seq.
89  Replies to question 89 of questionnaire Q1 to CRO and laboratory service providers.
90  Replies to question 89.1 of questionnaire Q1 to CRO and laboratory service providers .
91  Form CO, paragraph 317.
92  Case M.6944 – Thermo Fisher Scientific / Life Technologies, paragraph 31 et seq.
                                                         25
 ---pagebreak---         Transaction does not raise competitive concerns under any plausible geographic
        delineation, the Parties submit that the exact scope of the relevant geographic market
        can be left open.93
                 (C)        The Commission’s assessment
(123) In the market investigation, manufacturers and distributors confirmed that the
        geographic market for media is global or at least EEA-wide in scope.94 Further, the
        market investigation did not give reason to depart from the Commission’s previous
        decisional practice. For the purpose of this Decision, the geographic market for media
        will therefore be left open between global and EEA-wide.
5.2.8. Plastics for magnetic bead-based instruments
(124) As discussed in paragraph (98), magnetic bead-based instruments are a technique for
        nucleic acid purification. In magnetic bead-based purification, a liquid sample is
        combined with magnetic beads. The separation solution causes the desired particle to
        bind to the beads. The beads are then separated from the liquids by magnetic force.
        The beads containing the bound particles are then washed and the desired particles are
        released from the beads. Finally, the magnetic beads are removed and discarded.
(125) Magnetic bead-based instruments require consumables, primarily reagents and plastic
        consumables. The primary plastic consumables used with magnetic bead-based
        instruments are microplates and tip combs. Plastic microplates are interoperable with
        magnetic bead-based instruments of different manufacturers as well as other
        laboratory instruments.
5.2.8.1. Relevant product market definition
                 (A)        Previous Commission decisions
(126) As set out in paragraph (98), the Commission has previously found a separate market
        for magnetic bead-based instruments.95 The Commission has never specifically
        assessed the area of plastics for magnetic bead-based instruments. However, in a
        previous decision it concluded that there was a product market for microplates,96
        without distinguishing the type of instrument the microplates could be used with.97
                 (B)        The Notifying Party’s view
(127) The Notifying Party submits that the definition of the relevant product market for
        plastic for magnetic bead-based instruments can be left open.98
93  Form CO, paragraph 324 et seq.
94  Replies to question 70 of questionnaire Q2 to Thermo Fisher competitors .
95  Case M.6944 – Thermo Fisher / Life Technologies, paragraphs 178-180.
96  Microplates and tip combs are plastic trays that hold samples.
97  Case M.4242 – Thermo Electron / Fisher Scientific, paragraph 23.
98  Form CO, paragraph 408.
                                                           26
 ---pagebreak---                  (C)      The Commission’s assessment
(128) For the purpose of the current Decision, the exact product market definition for
        plastics for magnetic bead-based instruments can be left open, as the Transaction does
        not give rise to competitive concerns with respect to this market for any plausible
        product market definition. For the purpose of the current Decision, the Commission
        will analyse the narrower market of plastics for magnetic bead-based instruments.
        A broader product market for all consumables for magnetic bead-based instruments
        would not be affected.
5.2.8.2. Relevant geographic market definition
                 (A)      Previous Commission decisions
(129) In the Thermo Electron / Fisher Scientific decision, the Commission left open the
        relevant geographic market definition for microplates and tip combs. 99 In a more
        recent decision, the Commission concluded that the appropriate geographic scope for
        the relevant markets related to nucleic acid purification are at least EEA-wide, but left
        the exact market definition open.100
                 (B)      The Notifying Party’s view
(130) The Notifying Party further submits that the appropriate geographic market definition
        is most likely global as (i) prices for plastics for magnetic bead-based instruments do
        not differ substantially by region, (ii) transport costs are low, and (iii) customers in the
        EEA often source plastics for magnetic bead-based instruments from other
        geographies. However, as it considers that the Transaction does not raise competitive
        concerns under any plausible geographic delineation, the Notifying Party submits that
        the exact scope of the relevant geographic market can be left open.101
                 (C)      The Commission’s assessment
(131) For the purpose of the current Decision and in line with its previous decisional
        practice, the exact geographic scope for plastics for magnetic bead-based instruments
        can be left open between EEA-wide and worldwide, as this distinction does not affect
        the outcome of the competitive assessment.
5.2.9. Mass spectrometers
(132) Mass spectrometry products are used to separate compounds into their separate
        component parts and to detect the separated components. Mass spectrometers can be
        used in conjunction with methods that separate the constituent molecules of a sample
        before they are introduced in the mass spectrometer, including liquid chromatography
        and gas chromatography instruments.102 High-resolution accurate mass (“HRAM”)
        spectrometers are used primarily for qualitative research characterising complex
99  Case M.4242 – Thermo Electron / Fisher Scientific, paragraph 40.
100 Case M.5264 – Invitrogen / Applied Biosystems, paragraphs 67-68.
101 Form CO, paragraphs 409-413.
102 Form CO, paragraphs 521 et seq.
                                                         27
 ---pagebreak---         molecules or identifying proteins, for example in the discovery of new drug targets,
        because of their high resolution.103
5.2.9.1. Relevant product market definition
                 (A)        Previous Commission decisions
(133) In M.5611 – Agilent / Varian, the Commission found that within the mass-
        spectrometry (“MS”) field, a segmentation can be made based on the respective
        analytical technic used, i.e. gas chromatography (“GC”) and liquid chromatography
        (“LC”), and has considered combined GC-MS and LC-MS markets.104 In M.6126 –
        Thermo Fisher / Dionex Corporations, the Commission found appropriate to assess
        chromatography and spectrometry instruments separately, but noted again that mass
        spectrometry instruments used with liquid chromatography are not substitutable with
        those used in gas chromatography.105 In M.8541 - Thermo Fisher Scientific / Patheon,
        the Commission left the market definition open in this regard. 106 In none of the
        decisions cited in this paragraph, the Commission discussed a separate market for
        HRAM spectrometers.
                 (B)        The Notifying Party’s view
(134) The Notifying Party indicates that there may be a separate market for HRAM
        spectrometers.107 It further submits that HRAM spectrometers used with liquid
        chromatography would generally not be interchangeable with HRAM spectrometers
        used with gas chromatography, and that both devices would be technically different.
        On this basis, it may be possible to define separate product markets for HRAM LC
        and HRAM GC spectrometers.108 The Notifying Party submits that the precise market
        definition for mass spectrometry instruments can ultimately be left open.109
                 (C)        The Commission’s assessment
(135) Qualitative feedback from the market investigation substantiates the Notifying Party’s
        claim that within the market for all mass spectrometers, there may be a distinct market
        for HRAM spectrometers, as the level of analytical capability of such device may play
        an important role in their suitability to laboratories. 110
(136) Further, the market investigation did not provide reason to deviate from past practice
        to define separate product markets for LC and GC mass spectrometers. In the view of
        the Commission, this differentiation may also apply to HRAM spectrometers, which
        is confirmed by the Notifying Party.
103 Form CO, paragraph 525.
104 Case M.5611 – Agilent/Varian, paragraphs 10 et seq.
105 Case M.6126 – Thermo Fisher/Dionex Corporation, paragraphs 22 et seq.
106 Case M.8541 – Thermo Fisher Scientific / Patheon, paragraph 29.
107 Form CO, paragraph 533.
108 Response to RFI 13, paragraph 1.
109 Form CO, paragraph 533.
110 Replies to question 56.1 of questionnaire Q1 to CRO and laboratory service providers .
                                                         28
 ---pagebreak--- (137) Based on the above, the Commission considers that mass spectrometry instruments
        for LC and GC form different product markets, and considers a likely existence of a
        separate HRAM market for both products for the purpose of this Decision. The
        Commission notes that affected markets would only arise for LC HRAM
        spectrometers111 , but not for LC or GC mass spectrometers, and not on an overall
        market for mass spectrometry instruments.
5.2.9.2. Relevant geographic market definition
                 (A)        Previous Commission decisions
(138) In M.5611 – Agilent / Varian, the Commission concluded that markets for mass
        spectrometry instruments are EEA-wide in geographic scope.112 In Thermo
        Fisher/Dionex and M.8541 - Thermo Fisher Scientific / Patheon, the Commission left
        the precise geographic market open, but considered markets to be at least EEA-wide.
        113
                 (B)        The Notifying Party’s view
(139) The Notifying Party submits that the exact scope of the relevant geographic market
        can be left open since no competitive concerns arise under any plausible geographic
        definition.114
                 (C)        The Commission’s assessment
(140) In the market investigation, a majority of customers and competitors indicated that the
        geographic market definition for mass spectrometers is global, and all other
        respondents considered markets to be EEA-wide.115 For the purpose of this Decision,
        the geographic market definition can be left open between global and EEA-wide.
5.2.10. Cryogenic storage tubes
(141) Storage tubes are a piece of consumable laboratory equipment that are used to store or
        keep samples. Cryogenic storage tubes (also freezers storage tubes) are small, capped
        tubes designed to withstand ultra-low temperatures.
5.2.10.1. Relevant product market definition
                 (A)        Previous Commission decisions
(142) The Commission has not defined a product market for cryogenic storage tubes, or
        storage tubes in general, in the past. In M.4242 – Thermo Electron / Fisher Scientific,
        the Commission made reference to “cryogenic storage” as a product in the broader
111 PPD [PPD’s operations], response to RFI 13, paragraph 4.
112 Case M.5611 – Agilent/Varian, paragraphs 51 et seq.
113 Case M.6126 – Thermo Fisher/Dionex Corporation, paragraph 42; Case M.8541 – Thermo Fisher Scientific
    / Patheon, paragraph 34.
114 Form CO, paragraph 535.
115 Replies to question 52 of questionnaire Q1 to CRO and laboratory service providers; Replies to question 41
    of questionnaire Q2 to Thermo Fisher competitors .
                                                        29
 ---pagebreak---         area of laboratory equipment and consumables, but did not consider this product any
        further.116
                  (B)       The Notifying Party’s view
(143) The Notifying Party submits storage tubes could be differentiated according to various
        characteristics, such as size, durability and ability to withstand ultra-low
        temperatures.117 There would be, however, a significant degree of supply and
        demand-side substitutability between different storage tubes. In the Notifying Parties
        view, the primary feature on which storage tubes can be meaningfully distinguished is
        the tubes’ ability to withstand ultra-low temperatures. Therefore, a potential
        segmentation may be made between cryogenic storage tubes and transport tubes.
        However, for the present case, the exact market definition can be left open, as neither
        a potential segment for transport tubes, nor a potential wider market including
        cryogenic storage tubes and other types of tubes, would be affected.
                  (C)       The Commission’s assessment
(144) The market investigation confirmed that cryogenic storage tubes are a product market
        separate from other storage tubes because they cannot be substituted with other tubes
        due to their product specifies, i.e. their ability to withstand ultra-low temperatures.
        Market feedback did not suggest a further segmentation of cryogenic storage tubes to
        be appropriate. All customers responding to the market investigation agree that
        cryogenic storage tubes form a separate product market from other storage tubes
        without further segmentation.118 All but one manufacturer or distributor of such tubes
        confirm that view.119 Based on the above, the Commission considers a separate
        market for cryogenic storage tubes without further segmentation for the purpose of
        this Decision.
5.2.10.2. Relevant geographic market decisions
                  (A)       Previous Commission decisions
(145) The Commission has not defined a product market for cryogenic storage tubes, or
        storage tubes in general, in the past.
                  (B)       The Notifying Party’s view
(146) The Notifying Party submits that the relevant market for cryogenic storage tubes is
        global, or at least EEA-wide in scope because cryogenic storage tubes are identical
        wherever customers are located. There are no country-specific or region-specific
        products and there is no regional branding or packaging.120
116 Case M.4242 – Thermo Electron / Fisher Scientific, paragraph 11.
117 Form CO, paragraph 709 et seq.
118 Replies to question 104 of questionnaire Q1 to CRO and laboratory service providers.
119 Replies to question 83 of questionnaire Q2 to Thermo Fisher competitors; one respondent point at a
    potentially narrower product market definition, without suggesting a clear further segmentation.
120 Form CO, paragraph 713 et seq.
                                                          30
 ---pagebreak---                  (C)        The Commission’s assessment
(147) The market investigation indicated that the market for cryogenic storage tubes is
        global or at least EEA-wide in geographic scope. A majority of customers consider
        global market for such tubes, and all other customers responding to the market
        investigation submit geographic markets to be EEA-wide.121 This view is confirmed
        by all manufacturers or distributors responding to the market investigation who
        formed an opinion about this question. 122 Therefore, the Commission concludes that
        the geographic market for cryogenic storage tubes is global or EEA-wide, and leaves
        the exact market definition open between the two.
5.2.11. General purpose benchtop centrifuges
(148) A laboratory centrifuge is a piece of laboratory equipment, driven by a motor, which
        spins liquid samples at high speeds, to separate substances of greater and lesser
        density. Centrifuges may differ with respect to parameters such as size, sample
        capacity or speed.
5.2.11.1. Relevant product market definition
                 (A)        Previous Commission decisions
(149) The Commission did not define markets for laboratory centrifuges in the past.
                 (B)        The Notifying Party’s view
(150) The Notifying Party submits that laboratory centrifuges can be differentiated
        according to various characteristics, such as size, speed or space requirements. It
        considers that three main centrifuges can be distinguished, namely benchtop, floor and
        large scale continuous flow centrifuges, for which there would be limited demand-
        side substitutability, but a significant degree of supply-side substitutability.
(151) The Notifying Party considers that benchtop centrifuges are an established category of
        laboratory equipment and well understood by market participants. In any event, the
        exact product market definition can be left open, as no affected market would arise in
        a potential broader market comprising all laboratory centrifuges.123
                 (C)        The Commission’s assessment
(152) The market investigation confirmed that general purpose benchtop centrifuges form a
        product market separate from other centrifuges such as floor centrifuges or large scale
        continuous flow centrifuges, as these would typically not be substituted with each
121 Replies to question 105 of questionnaire Q1 to CRO and laboratory service providers.
122 Replies to question 84 of questionnaire Q2 to Thermo Fisher competitors.
123 For completeness, the Notifying Party notes that Thermo Fisher manufactures other types of centrifuges for
    which market shares exceed 30% on global and/or EEA wide level, but remain in any case below 50%
    market share, namely large capacity centrifuges, super speed centrifuges, which are all floor centrifuges,
    and industrial centrifuges, which are ultra-speed centrifuges with a higher capacity. The Notifying Party
    provides that PPD [PPD’s operations]. In any event, during the market investigation, the Commission asked
    customers or competitors for their view on any other type of centrifuges, and no market participant raised
    any concern. In the light of the above, those products will not be further discussed in the present Decision.
                                                           31
 ---pagebreak---         other. All customers responding to the market investigation agree to this product
        market definition, and do not suggest that the market for general purpose benchtop
        centrifuges should be further segmented. 124 All but one manufacturer or distributor of
        such centrifuges confirm that view. One competitor suggests that the market may be
        further segmented by capacity and/or intended use, for example blood sample
        centrifuges, cell culture or mini-spin centrifuges.125
(153) Based on market feedback on balance, the Commission considers a separate market
        for general purpose benchtop centrifuges without further segmentation. This
        conclusion is further supported by the fact that customers or competitors did not raise
        concerns related to a specific type of general purpose benchtop centrifuges.
5.2.11.2. Relevant geographic market definition
                 (A)        Previous Commission decisions
(154) The Commission did not define geographic markets for general purpose benchtop
        centrifuges in the past.
                 (B)        The Notifying Party’s view
(155) The Notifying Party submits that the relevant market for general purpose centrifuges,
        and in general, all laboratory centrifuges, is global, or at least EEA-wide in scope.126
        General purpose centrifuges are identical wherever customers are located and similar
        models of general purpose centrifuges are being marketed globally.127
                 (C)        The Commission’s assessment
(156) The market investigation indicated that the market for general purpose benchtop
        centrifuges is EEA-wide or even global in geographic scope. A small majority of
        customers consider an EEA-wide market for such centrifuges, and all other but one
        customers responding to the market investigation submit geographic markets to be
        global.128 A majority of responding manufacturers or distributors responding to the
        market investigation who formed an opinion about this question propose global
        markets for such centrifuges, and all other respondents point at EEA-wide markets.129
        Therefore, the Commission concludes that the geographic market for general purpose
        benchtop centrifuges is EEA-wide or even global, and leaves the exact market
        definition open between the two.
5.2.12. Thermal cyclers
(157) Thermal cyclers are used in a process called nucleic acid amplification, which refers
        to the technologies designed for amplifying (copying) targeted DNA or RNA
124 Replies to question 99 of questionnaire Q1 to CRO and laboratory service providers.
125 Replies to question 78 of questionnaire Q2 to Thermo Fisher competitors.
126 Form CO, paragraph 693.
127 Form CO, paragraphs 694 et seq.
128 Replies to question 100 of questionnaire Q1 to CRO and laboratory service providers; the other customer
    did not provide clear indication for an alternative geographic market definition.
129 Replies to question 79 of questionnaire Q2 to Thermo Fisher competitors.
                                                            32
 ---pagebreak---         sequences to allow further analysis. Nucleic acid amplification is most commonly
        achieved by a technique called polymerase chain reaction (“PCR”).
(158) There are various types of PCR including conventional (or end-point) PCR (“ePCR”),
        quantitative PCR (“qPCR”) and digital PCR (“dPCR”).130
(159) A thermal cycler (also known as an ePCR instrument) comprises a heating block with
        holes into which tubes holding the reagents can be placed. The cycler increases and
        lowers the temperature of the block in discrete, pre-programmed steps, each of which
        aligns with a cycle of the reaction. The cycle is the repeated multiple times to create
        the required sample size.131
5.2.12.1.        Relevant product market definition
                 (A)       Previous Commission decisions
(160) In a previous decision, the Commission defined separate markets for nucleic acid
        amplification for research and diagnostic applications. 132 Furthermore, the
        Commission found that there are separate markets for PCR reagents and instruments,
        and that within instruments, there are separate markets for thermal cyclers (ePCR
        instruments) and qPCR instruments.133
                 (B)       The Notifying Party’s view
(161) For the purposes of the Transaction, the Notifying Party agrees with the
        Commission’s previous decisional practice as concerns thermal cyclers. 134
                 (C)       The Commission’s assessment
(162) The Commission’s market investigation did not give any reasons to depart from the
        Commission’s previous decisional practice with respect to the product market
        definition for PCR instruments. Applying this product market definition, the
        Transaction gives rise to an affected market for thermal cyclers (ePCR
        instruments).
5.2.12.2.        Relevant geographic market definition
                 (A)       Previous Commission decisions
(163) In its previous decisions, the Commission considered that the appropriate geographic
        scope for thermal cyclers is at least EEA-wide, but left the exact market definition
        open.135
130 qPCR, also called real-time or quantitative PCR, monitors the amplification of a targeted DNA molecule
    during the reaction and not at its end, as in conventional PCR (ePCR). Digital PCR or dPCR digitally
    measures the number of individual target molecules.
131 Form CO, paragraph 747 et seq.
132 Case M.5264 – Invitrogen / Applied Biosystems, paragraph 51.
133 Case M.5264 – Invitrogen / Applied Biosystems, paragraph 51 and case M.6944 – Thermo Fisher / Life
    Technologies, paragraph 125.
134 Form CO, paragraph 754.
                                                        33
 ---pagebreak---                 (B)        The Notifying Party’s view
(164) The Notifying Party submits that the relevant market for thermal cyclers is global, or
        at least EEA-wide in scope. As they are identical around the world, there is no
        regional branding or packaging, they are not generally subject to national regulatory
        requirements and most manufacturers are able to supply globally. 136
                (C)        The Commission’s assessment
(165) For the purpose of the current decision and in line with its previous decisional
        practice, the exact geographic scope for plastics for thermal cyclers can be left open
        between EEA-wide and worldwide, as this distinction does not affect the outcome of
        the competitive assessment.
5.2.13. Infrared spectrometers
(166) Spectrometers are used for recording and measuring spectra as a method of analysis.
        There are broadly three types of spectrometers, namely (i) mass spectroscopy, (ii)
        molecular spectroscopy, and (iii) atomic spectroscopy. One technology within
        molecular spectroscopy is infrared spectroscopy (“IR”). In IR spectrometry, a beam of
        infrared radiation intersects with and is absorbed by an unknown sample. The
        absorption rates are unique to the properties of the chemical group being analysed,
        and the results can be compared to a library of known IR spectra. FT-IR (also Fourier
        Transform IR) are a type of IR spectrometers with a high degree of efficiency.137
5.2.13.1. Relevant product market definition
                (A)        Previous Commission decisions
(167) In M.5611 – Agilent / Varian, the Commission identified nine sectors within the
        analytical and life science instrumentation field, one of them being molecular
        spectroscopy, without further discussing this product area. 138 In M.6175 – Danaher /
        Beckman Coulter, the Commission noted that molecular spectroscopy can be further
        segmented into visible and ultraviolet-visible (Vis and UV-Vis), near-infrared (NIR),
        infrared (IR) fluorescence & luminescence, colour measurement, nuclear magnetic
        resonance (NMR), raman, polarimetry & refractometry, and ellipsometry. 139
                (B)        The Notifying Party’s view
(168) The Notifying Party submits that the market for IR spectrometers should not be
        further segmented. It further notes, however, that FT-IR spectrometers are the
        dominant form in the IR spectrometers field, and that market shares of Thermo Fisher
135 Case M.5264 – Invitrogen / Applied Biosystems, paragraph 68 and case M.6944 – Thermo Fisher / Life
    Technologies, paragraph 140.
136 Form CO, paragraphs 756-758.
137 Form CO, paragraphs 726 et seq.
138 Case M.5611 – Agilent / Varian, paragraphs 9 et seq.
139 Case M.6175 – Danaher / Beckman Coulter, paragraph 25.
                                                         34
 ---pagebreak---         would be higher specifically for FT-IR spectrometers compared to an overall IR
        spectrometer market.140
                  (C)       The Commission’s assessment
(169) The market investigation did not produce arguments that contradict the Commission’s
        past practice to define a market for molecular spectroscopy, and within it, a market for
        IR spectroscopy. Market feedback further did not suggest that that the product market
        would be narrower than IR spectrometers. Therefore, the Commission considers in
        line with past findings, that a product market definition at the level of IR
        spectrometers as appropriate. For the purpose of this Decision, it can be left open
        whether FT-IR spectrometers would form a separate product market, as this would not
        change the competitive assessment.
5.2.13.2. Relevant geographic market definition
                  (A)       Previous Commission decisions
(170) In previous decisions, the Commission considered markets for analytical and life
        science instruments EEA-wide or global in geographic scope. 141
                  (B)       The Notifying Party’s view
(171) The Notifying Party submits that the relevant market for IR spectrometers is global, or
        at least EEA-wide in scope.142
                  (C)       The Commission’s assessment
(172) In the market investigation, the Commission received limited responses from
        customers as to the appropriate geographic market for IR spectrometers, and those
        customers that did provide a view indicated markets would be either EEA-wide or
        global.143 A majority of responding manufacturers and distributors indicated for IR
        spectrometers would be global in geographic scope, and all other respondents active
        in this product area indicated EEA-wide markets.144 Based on past practice and
        market feedback, the Commission considers geographic markets for IR spectrometers
        to be either EEA-wide or global in scope, and leaves the exact market definition open
        between the two.
140 Form CO, paragraphs 732 et seq.
141 M.5611 – Agilent / Varian, paragraphs 51 et seq. ; M.6126 - Thermo Fisher/Dionex Corporation, paragraphs
    42 et seq. ; M.6175 – Danaher / Beckman Coulter, paragraph 32.
142 Form CO, paragraphs 735 et seq.
143 Replies to question 52 of questionnaire Q1 to CRO and laboratory service providers.
144 Replies to question 41 of questionnaire Q2 to Thermo Fisher competitors.
                                                          35
 ---pagebreak--- 6.      COMPETITIVE ASSESSMENT
6.1.    Analytical framework
(173) 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, in particular as a result of the creation or strengthening of a
        dominant position.
(174) In the assessment of non-horizontal mergers, the Commission distinguishes between
        two broad types of such mergers: vertical mergers and conglomerate mergers.
(175) Vertical mergers involve companies operating at different levels of the supply chain.
        For example, when a manufacturer of a certain product (the “upstream firm”) merges
        with one of its distributors (the “downstream firm”), this is called a vertical merger. 145
(176) Conglomerate mergers are mergers between firms that are in a relationship that is
        neither horizontal (as competitors in the same relevant market) nor vertical (as
        suppliers or customers). In practice, the Commission focusses on mergers between
        companies that are active in closely related markets (e.g. mergers involving suppliers
        of complementary products or products that belong to the same product range). 146 The
        Transaction does not lead to markets where a conglomerate effects assessment is
        warranted.
(177) In assessing potential vertical effects of a merger, the Commission analyses whether a
        merger results in foreclosure so that actual or potential rivals' access to supplies or
        markets is hampered or eliminated as a result of the merger, thereby reducing these
        companies' ability and/or incentive to compete. Such foreclosure may discourage
        entry or expansion of rivals or encourage their exit. Foreclosure thus can be found
        even if the foreclosed rivals are not forced to exit the market: it is sufficient that the
        rivals are disadvantaged and consequently led to compete less effectively. Such
        foreclosure is regarded as anti-competitive where the merging companies — and,
        possibly, some of its competitors as well — are as a result able to profitably increase
        the price charged to consumers.147
(178) Two forms of foreclosure can be distinguished. The first              is where the merger is likely
        to raise the costs of downstream rivals by restricting their        access to an important input
        (input foreclosure). The second is where the merger is              likely to foreclose upstream
        rivals by restricting their access to a sufficient                   customer base (customer
        foreclosure).148
(179) In assessing both types of foreclosure, the Commission applies the ability, incentive,
        effects framework. This implies the assessment of whether (i) the merged entity
        would have the ability to engage in foreclosure, (ii) it would have the incentive to do
145 OJ C 265, 18.10.2008, p. 6-25 (the ’Non-horizontal Merger Guidelines’), paragraph 4.
146 Non-horizontal Merger Guidelines, paragraph 91.
147 Non-horizontal Merger Guidelines, paragraph 29.
148 Non-horizontal Merger Guidelines, paragraph 30.
                                                        36
 ---pagebreak---  ---pagebreak---  ---pagebreak---  ---pagebreak--- (181) All vertical relationships are affected by virtue of Thermo Fisher’s market position in
        the upstream market.
(182) PPD’s market share in the downstream market is always well under 30%. As set out
        in the Commission’s Non-Horizontal Merger Guidelines, the Commission is unlikely
        to find concern in non-horizontal mergers where the market share post-Transaction is
        below this level.152 Therefore, the Transaction does not give rise to any customer
        foreclosure concerns.
(183) The Commission’s assessment will focus on the possibility of an input foreclosure
        scenario.
6.3.     Market investigation feedback by pharmaceutical companies (clinical trial
        sponsors)
(184) In its market investigation, the Commission sent requests for information to CRO and
        laboratory service providers competing with PPD as well as laboratory equipment
        suppliers competing with Thermo Fisher on each of the product markets identified
        above; this is discussed in the below sections. In addition, the Commission sent
        requests for information to pharmaceutical companies, who ultimately are the sponsor
        of clinical trials and the primary customer of PPD’s CRO and laboratory services, to
        obtain their views on the Transaction.
(185) The large majority of pharmaceutical companies that responded to the Commission’s
        market investigation did not consider that access to Thermo Fisher products is
        essential for CRO or laboratory service providers to provide services to them.153 The
        large majority did not consider that Thermo Fisher would have the ability or incentive
        to engage in input foreclosure vis-à-vis PPD’s competitors post-Transaction, and did
        not consider that such strategy would have a major impact.154
(186) Concerning a potential input foreclosure strategy, pharmaceutical companies also
        point out the broad reputational harm on Thermo Fisher this would entail, explaining:
        “It would be unlikely that this would happen as the pharmaceutical companies
        represent much more market share than the clinical labs/CROs, and this would not be
        tolerated by the industry” and “This sounds unlikely. Since the services and products
        that Thermo Fisher offers for the most part have competition, sponsors of the services
        and products have alternatives. While PPD may be able to leverage some additional
        business by a unique offering they would likely do this without aggressive action by
        services/product withdrawal to Thermo Fisher’s client base. If they were to take this
        approach, they would also have to consider the adverse effect on any industry
        relationships in terms of good business practices & relationships.”155
(187) The majority of pharmaceutical companies that responded to the Commission’s
        market investigation also indicated that in the event of such foreclosure, they would
        employ their buying power vis-à-vis Thermo Fisher, either by themselves procuring
152 Non-horizontal Merger Guidelines, paragraph 25.
153 Replies to questions 9 and 10 of questionnaire Q3 to pharmaceutical companies.
154 Replies to questions 13, 14 and 15 of questionnaire Q3 to pharmaceutical companies.
155 Replies to question 14.1 of questionnaire Q3 to pharmaceutical companies.
                                                          40
 ---pagebreak---  ---pagebreak---  ---pagebreak---         (e)      CROs or clinical trial sponsors can outsource high-resolution (Sanger)
                 capillary electrophoresis to third party laboratories, as is often done today.
(194) The Notifying Party submits that the merged entity would not have the incentive to
        engage in input foreclosure for the following reasons:160
        (a)      High-resolution (Sanger) capillary electrophoresis has very limited relevance
                 for CROs such as PPD; Thermo Fisher’s sales of high-resolution (Sanger)
                 capillary electrophoresis instruments and consumables made up less than [a
                 very small percentage] of product sales to PPD and competitors and less than
                 [a very small percentage] of PPD’s clinical trials involve the testing method;
        (b)      High-resolution (Sanger) capillary electrophoresis is primarily relevant in
                 areas where PPD does not compete, such as diagnostic testing. As Thermo
                 Fisher cannot discriminate between use cases for the device, it would have to
                 foreclose all these customers and incur significant losses. Furthermore, these
                 laboratories procure a broad range of other products from Thermo Fisher,
                 which they could shift to other suppliers in retaliation;
        (c)      The losses described above could not be recouped downstream; the Notifying
                 Party estimates that this would require PPD’s profit and revenues for services
                 using high-resolution (Sanger) capillary electrophoresis to grow by a factor of
                 […] for the instruments and a factor […] for the consumables – excluding any
                 broader retaliation; and
        (d)      Given the limited relevance of high-resolution (Sanger) capillary
                 electrophoresis to CRO service providers, being foreclosed would not affect
                 their ability to compete.
6.4.1.3. The Commission’s assessment
(195) For high-resolution (Sanger) capillary electrophoresis instruments and consumables,
        the Commission’s market investigation will separately assess the scenarios of (i) total
        foreclosure, i.e. foreclosing all Thermo Fisher customers (including customers such as
        diagnostic laboratories, pharmaceutical companies and research laboratories), and (ii)
        targeted foreclosure, i.e. foreclosing only PPD’s direct competitors in laboratory
        services for clinical development.
(196) Concerning total foreclosure, the Commission considers it is likely that Thermo
        Fisher would have the ability to implement such a strategy. Considering its market
        share of essentially [90-100]% for high-resolution (Sanger) capillary electrophoresis
        instruments globally and in the EEA, customers would have limited alternatives to
        turn to. While the Notifying Party argues the devices have a long life span (15-20
        years), a majority of respondents to the Commission’s market investigation indicated
        that the instruments require regular maintenance by Thermo Fisher. 161 For the
        consumables, contrary to the Notifying Party’s arguments, a majority of respondents
        to the Commission’s market investigation did not consider that they could use third
160 Form CO, paragraph 670 et seq.
161 Replies to question 10 of questionnaire Q1 to CRO and laboratory service providers.
                                                        43
 ---pagebreak---         party consumables with Thermo Fisher’s devices. 162 Outsourcing of high-resolution
        (Sanger) sequencing would also no longer be an option in case Thermo Fisher would
        foreclose its entire customer base, as there would be […]. Finally, while the majority
        of respondents to the Commission’s market investigation did confirm that they can
        use NGS devices instead for their applications, this was not seen as equivalent, as it
        would be more expensive and labour intensive. 163
(197) However, even if Thermo Fisher has the ability to engage in total input foreclosure in
        the areas of high-resolution (Sanger) capillary electrophoresis instruments and
        consumables, it would not have the incentive to do so. Considering the very limited
        relevance of the technique in the context of clinical trials (PPD only used it in […] out
        of […] trials since 2018, and in […] of those cases it outsourced the technique to a
        third party laboratory), Thermo Fisher would not be able to recoup its losses upstream
        with any potential gains downstream. Thermo Fisher’s revenues for high-resolution
        (Sanger) capillary electrophoresis instruments and consumables in 2020 amounted to
        EUR […] in 2020 with a margin of […] for the instruments and […] for the
        consumables. By contrast, PPD’s revenues in services for which it used the technique
        only amounted to EUR […].
(198) Furthermore, Thermo Fisher can expect broader retaliation on other product groups if
        it were to engage in such strategy, both by CRO / laboratory providers and their
        sponsors (pharmaceutical companies), leading to further upstream losses. The
        majority of pharmaceutical companies that replied to the Commission’s market
        investigation indicate that in the event of their CRO or laboratory service providers
        being foreclosed, they would consider to use their buyer power in response, for
        example by moving business for other products away from the merged entity. 164 In
        line with the above, respondents to the Commission’s market investigation did not
        indicate that they consider Thermo Fisher’s incentive to foreclose to increase as a
        result of the Transaction.165
(199) Considering a targeted foreclosure strategy, which specifically targets PPD
        competitors in the area of clinical development, Thermo Fisher would not have the
        ability to engage in such strategy. It would have to foreclose both PPD’s direct
        competitors, as well as distributors that make up […] of EEA instrument sales and
        […] of consumables sales in 2020. However, the majority of respondents to the
        Commission’s market investigation indicated that they can outsource their needs for
        high-resolution (Sanger) capillary electrophoresis.166 PPD itself also outsources the
        activity […] (out of the […] times it was required since 2018, it outsourced […]
        times). Therefore, to implement an input foreclosure strategy successfully, Thermo
        Fisher would have to implement it broader, which, as discussed above, it does not
        have the incentive to do.
(200) Even if the merged entity were to implement a total or targeted input foreclosure
        strategy, such strategy would likely have a limited impact on PPD’s competitors in
162 Replies to question 8 of questionnaire Q1 to CRO and laboratory service providers.
163 Replies to question 7 of questionnaire Q1 to CRO and laboratory service providers.
164 Replies to question 12 of questionnaire Q3 to pharmaceutical companies.
165 Replies to question 16 of questionnaire Q1 to CRO and laboratory service providers.
166 Replies to question 15 of questionnaire Q1 to CRO and laboratory service providers.
                                                         44
 ---pagebreak---  ---pagebreak---  ---pagebreak---          source IVD autoimmune disease systems from other suppliers, which is confirmed by
         the market investigation, as explained below in this section. Therefore, the
         Commission will conduct the competitive assessment on the narrower market for IVD
         allergy systems, where Thermo Fisher has a significantly stronger market position.
6.4.2.2. The Notifying Party’s view
(208) The Notifying Party submits that the merged entity would not have the ability to
         engage in input foreclosure, because customers of laboratory IVD allergy systems
         could turn to another manufacturer. Furthermore, allergy testing is not an essential
         input for the activity of a company like PPD, and it is not critical to have in-house
         testing capabilities. If competitors to PPD did not have access to testing products,
         testing can be outsourced to large laboratory companies, which is already an everyday
         practice. 174
(209) The Notifying Party submits that the merged entity would not have the incentive to
         engage in input foreclosure. Most sales in the EEA and globally in the area of allergy
         testing would be generated by providers of diagnostic testing. Given that allergy
         testing accounts for only a small part of testing undertaken in clinical trials, PPD
         could not gain additional revenues that would compensate for the sales that the
         Notifying Party would lose if they wold stop selling to PPD’s competitors.175
6.4.2.3. The Commission’s assessment
(210) Market shares of Thermo Fisher exceed 30% significantly in a potential global or
         EEA-wide market for IVD allergy systems to clinical development laboratories, as
         well as for specific tests. A potential concern arising from these market share levels is
         therefore input foreclosure of IVD allergy systems. However, it is unlikely that
         Thermo Fisher would have the ability to foreclose PPD’s competitors of IVD allergy
         systems (targeted foreclosure), but it would need to foreclose a significant part of
         other market participants as well, e.g. laboratories active in the field of diagnostics. It
         is unlikely that Thermo Fisher would have the incentive to pursue such broad market
         foreclosure strategy. Further, it is unlikely that input foreclosure of IVD allergy
         systems would have a significant impact on the downstream market of laboratory
         services for clinical development, as it is questionable whether such products are
         important inputs for downstream competitors.
(211) Firstly, Thermo Fisher has a very strong position in the market for IVD allergy testing
         systems with very high market shares of [80-90]% at global level and [70-80]% in the
         EEA, which may be at a similar or, in instances even higher, level for specific tests, as
         well as to clinical development laboratories, and which is indicative of dominance.
         Customers176 rate other manufacturers of IVD allergy testing systems, such as Micro
         Array, Siemens and Hycor, as being clearly less competitive than Thermo Fisher,
         which is in line with the market structure.177 The Commission received mixed
174 Form CO, paragraph 617 et seq.
175 Form CO, paragraph 619 et seq.
176 The Commission notes that customers responding to the market investigation are laboratories active in the
    field of clinical development, in line with the market definition.
177 Replies to question 28 of questionnaire Q1 to CRO and laboratory service providers.
                                                            47
 ---pagebreak---          responses by customers as regards the ability to switch suppliers of IVD allergy
         testing systems in a scenario in which Thermo Fisher increases prices or restrict
         access to those products. In any event, three downstream customers indicated they
         would not be able to switch suppliers.178 The Commission understands from
         qualitative feedback that switching is especially difficult once a clinical trial has
         started.179 Further, Thermo Fisher’s IVD allergy testing devices require regular
         maintenance by Thermo Fisher.180 Therefore, it is likely that Thermo Fisher has the
         ability to foreclose inputs to PPD’s competitors at least by way of a broad market
         foreclosure, which would also apply for specific tests.
(212) However, it is unlikely that Thermo Fisher would have the ability to target such
         foreclosure strategy specifically to PPD’s customers. The Commission takes note of
         the fact that a majority of responding customers consider IVD allergy testing systems
         as essential inputs for laboratory services in the context of clinical trials, and that they
         would use such products often in the context of clinical trials. 181 However, when
         quantifying the use of IVD allergy testing systems, those customers who provided a
         response indicate that they would use such products only in a small number of
         instances (i.e. below 1% of the total number of trials), or described the number of
         trials where IVD allergy testing systems are used as “several globally”.182 The
         Commission further takes note of the Notifying Party’s submission that, according to
         PPD’s estimation, […] of all allergy testing takes place during respiratory and
         dermatology trials, which represent less than […] of the clinical trials space, and that
         allergy testing would be expected to feature in approximately […] of these types of
         trials. Of the […] clinical trials in 2020 that PPD’s clinical trial services business was
         involved in, PPD estimates that […] required allergy testing. Out of the […] clinical
         trials in 2020 for which tests were carried out in PPD’s laboratories globally, allergy
         testing was required in […] studies.183 These numbers would be equal or even smaller
         if a further segmentation by specific tests was made. The Commission finally notes
         that some significant competitors to PPD in laboratory services in clinical trials, and
         in fact the majority of customers responding to this question in the market
         investigation, do not operate any IVD allergy testing devices within the EEA.184
         Similarly, PPD owns […] Thermo Fisher allergy (and autoimmune testing) device
         located in the US, [PPD’s operations].185
(213) Against this background, the Commission takes note of the fact that a majority of
         responding competitors of PPD, though not all, indicate that they would be able to
         outsource IVD allergy testing to third-party laboratories if these services were
178 Replies to question 30 of questionnaire Q1 to CRO and laboratory service providers. The Commission notes
    that this number appears to be higher for autoimmune disease testing systems, where customers have the
    ability to source from other suppliers.
179 Replies to question 30.1 of questionnaire Q1 to CRO and laboratory service providers. The Commission
    notes that this barrier likely also exist for IVD autoimmune testing products.
180 Replies to question 26 of questionnaire Q1 to CRO and laboratory service providers.
181 Replies to question 31 and 32 of questionnaire Q1 to CRO and laboratory service providers.
182 Replies to question 31.1 of questionnaire Q1 to CRO and laboratory service providers.
183 Form CO, paragraph 621.
184 Replies to question 25 of questionnaire Q1 to CRO and laboratory service providers.
185 Form CO, paragraph 601.
                                                             48
 ---pagebreak---         required in the context of a clinical trial. 186 The Commission notes that in 2020, PPD
        outsourced […] of the allergy testing, and performed such services in-house in […] of
        the […] clinical trials for which it carried out tests in its laboratories and of the […]
        trials its clinical trial service business was involved in. 187 Consequently, Thermo
        Fisher would not have the ability to target a potential foreclosure strategy to
        customers of PPD, which still could outsource IVD allergy testing to third-party
        laboratories, but would need to foreclose a broad spectrum of the market to prevent
        PPD’s competitors from accessing such services.
(214) In the market investigation, the Commission received concerns by customers
        specifically also for IVD autoimmune diseases testing systems, 188 and notes that
        Thermo Fisher supplies a device that can be used for both IVD allergy and IVD
        autoimmune disease testing. As for IVD autoimmune testing systems, however, the
        Commission notes that customers rate at least one other supplier (Bio-Rad) as very
        suitable for the demand of their company, and other competitors as generally suitable,
        even though to a significantly lesser degree then Thermo Fisher. The Commission
        further notes that a majority of customers indicate they would be able to switch to
        other suppliers for autoimmune testing systems in case of a foreclosure strategy by
        Thermo Fisher.189 This is in line with the market shares as presented in Table 5. One
        customer explained: “The auto immune panel can be moved to BioPlex 200 from
        Biorad. For allergy, Thermo Fisher is the leader, trusted by clients and
        physicians”.190 Responses to the market investigation did not suggest that such
        assessment would change for any specific test. Against this background, and in light
        of Thermo Fisher’s moderate market shares for autoimmune disease testing systems,
        it is unlikely that Thermo Fisher would have the ability to foreclose downstream
        competitors of this product.
(215) Secondly, the Commission takes note of the Notifying Party’s submission regarding
        the loss of upstream revenue it would need to recoup by winning additional
        downstream business for PPD. In 2020, Thermo Fisher generated a turnover of
        approximately EUR […] with sales to CROs and laboratories in the area of clinical
        development and diagnostics, the latter to which PPD’s customers could potentially
        outsource allergy testing services.191 As Thermo Fisher’s upstream margin for allergy
        testing systems was […], those sales equal a profit of approximately EUR […] that
        Thermo Fisher would lose upstream in the event of such foreclosure. Further, the
        Notifying Party notes that the total revenues for clinical trials that used IVD allergy
        systems and in which PPD was involved in 2020 amount to approximately EUR […].
        As PPD’s downstream margin for clinical trial and laboratory services is
        approximately […], the corresponding profit was approximately EUR […] in 2020.
        Therefore, PPD would need to increase its business from clinical trials using IVD
186 Replies to question 33 of questionnaire Q1 to CRO and laboratory service providers; this assessment also
    applies to IVD autoimmune disease testing.
187 Form CO, paragraphs 621 and 623.
188 Replies to question 36 of questionnaire Q1 to CRO and laboratory service providers.
189 Replies to question 27 and 30 of questionnaire Q1 to CRO and laboratory service providers.
190 Replies to question 30.1 of questionnaire Q1 to CRO and laboratory service providers.
191 The figure does not include sales to, for example, hospitals, to which PPD’s competitors would likely not
    outsource allergy testing services.
                                                          49
 ---pagebreak---          allergy testing by approximately […] times to make up for its upstream losses.192 In
         the view of the Commission, it appears unlikely that the merged entity would be able
         to recoup upstream losses by additional downstream business in the event of input
         foreclosure to CRO’s and laboratories in the area of clinical development and
         diagnostics. Therefore, the merged entity will likely not have the incentive for such
         strategy.
(216) Thirdly, it is questionable whether input foreclosure of IVD allergy testing products
         would indeed have an impact on the laboratory service market for clinical
         development. Three customers raised concerns in relation to allergy testing systems in
         the context of the market investigation. One customer (i.e. competitor of PPD)
         substantiates these concerns with the access to information PPD may obtain via
         Thermo Fisher as regards the business of a competitor. The concern of information
         sharing is further discussion in Section 6.5.1 of this Decision. A second customer
         submitted that switching suppliers would entail additional costs, but also explains that
         “there are alternatives to Thermo Fisher” and that it would therefore be “not
         particularly concerned”. A third customer explained its concerns inter alia with a
         potential impact of input foreclosure on ongoing trials. However, the customer also
         provides that Thermo Fisher’s incentive to sell IVD allergy disease testing products to
         its company would likely remain the same, unless there were issues in the supply
         chain or manufacturing of such products, in which case Thermo Fisher may grant
         PPD preferential treatment.193 The Commission considers that, on balance, these
         concerns, while considered carefully in the assessment of the Transaction, may not
         suggest a strong and direct impact on the laboratory service market in the context of
         clinical development linked to the supply of IVD allergy systems.
(217) Further, the Commission notes the fact that IVD allergy systems, for which Thermo
         Fisher has high market shares, are not frequently used in the context of clinical
         development, as explained in paragraph (212). The number of use cases would be
         equal or even lower for specific tests. Therefore, input foreclosure may have an
         impact on competition between laboratory service providers for few specific clinical
         trials. However, it is questionable whether not having access to such products would
         in fact drive costs of downstream rivals upwards and thereby harm competition in an
         overall laboratory service market for clinical development.
(218) Furthermore, as set out Section 6.3 of this Decision, sponsors of clinical trials, i.e.
         pharmaceutical companies, indicated that that they do not consider Thermo Fisher
         products as essential for laboratory service providers to provide services for them.
         Neither would, in their view, Thermo Fisher have the incentive to engage in input
         foreclosure, nor would such strategy have an impact on the downstream market.
         Pharmaceutical companies pointed at potential reputational harm Thermo Fisher
192 Form CO, paragraphs 619 et seq. The Notifying Party notes that this calculation does not include potential
    retaliation by PPD’s competitors or other market participants (e.g. sponsors of clinical trials), which would
    make an input foreclosure strategy even less profitable.
193 Replies to question 36, 36.1 and 37 of questionnaire Q1 to CRO and laboratory service providers. The
    Commission notes that no customer and no competitor has experienced any significant shortages in IVD
    allergy or IVD autoimmune testing devices in the past three years, and only one customer, forming a clear
    minority, and no competitor, has experienced shortages in IVD allergy and autoimmune testing reagents;
    replies to question 29 of questionnaire Q1 to CRO and laboratory service providers, and to question 23 of
    questionnaire Q2 to Thermo Fisher competitors.
                                                           50
 ---pagebreak---         would suffer if it would foreclose PPD’s downstream competitions, and indicate that
        they would consider taking counter-measures in such event.
(219) Lastly, the Commission notes that, during the market investigation, three upstream
        competitors of Thermo Fisher, forming the minority of all such respondents, raised
        concerns with regard to IVD allergy and autoimmune testing instruments, and two of
        them also on the respective reagents.194 All three companies substantiated their
        concerns with potential customer foreclosure, i.e. PPD not sourcing IVD allergy and
        autoimmune testing products from third parties. While the potential loss of a
        theoretical or actual customer may be a commercial concern, the Commission
        considers it highly unlikely that the merged entity will have the ability to impede
        effective competition by engaging in customer foreclosure. This is because PPD’s
        market shares in the market for laboratory services for clinical development are small
        at both global ([5-10]%) and EEA-wide ([0-5]%) level. It has to be noted that IVD
        allergy and autoimmune testing products are not only used for clinical development,
        but also in other areas of laboratory services, where PPD is not active, such as
        diagnostics, and that, as explained above, PPD [PPD’s operations] only accounts for a
        negligible share of the overall demand for such products.
6.4.2.4. Conclusion
(220) For the reasons set out above, the Transaction does not give rise to serious doubts as
        to its compatibility with the internal market or a substantial part thereof in relation to
        vertical effects for IVD allergy testing systems195 , or any specific tests, in an EEA-
        wide or global market.
6.4.3. CO2 incubators
6.4.3.1. Market structure
(221) The table below shows the Notifying Party’s market share estimates for CO2
        incubators.
194 Replies to question 27 and 27.1 of questionnaire Q2 to Thermo Fisher competitors.
195 The Commission notes that, as explained in this section, no such concerns would arise neither for IVD
    autoimmune diseases testing systems under any plausible market definition.
                                                          51
 ---pagebreak---  ---pagebreak--- (225) Firstly, Thermo Fisher holds a very strong position in the market for CO2 incubators
        both at global and EEA-wide level with market shares of [60-70]% and [50-60]%
        respectively, as shown in Table 6 above, which is indicative of dominance. Even
        though two significant competitors (Panasonic and Eppendorf) would remain
        available to downstream customers, the market power of Thermo Fisher suggests that
        it may have the ability for input foreclosure.
(226) On the other hand, downstream customers responding to the market investigation
        submit that they would not depend on the supply of CO2 incubators by Thermo
        Fisher. Apart from Thermo Fisher, customers rate a number of other manufacturers as
        equally suitable supplier to their company, namely Eppendorf, Esco, NuAire and
        Binder.199 In line with this, all customers providing an opinion on this question
        indicate that they would be able to switch suppliers if Thermo Fisher were to increase
        prices or restrict access to CO2 incubators post-Transaction. One reason for this view
        may be that CO2 incubators appear to be easier to exchange compared to other
        products, as they may not have a potential impact on the testing results in clinical
        trials. One customer explained: “CO2 incubators are part of sample processing and
        do not generate patient results. As long as the specifications are the same, and they
        are suitable qualified they can be substituted.” 200 All upstream competitors active in
        the supply of CO2 incubators responding to the market investigation indicate that they
        would be able to significantly increase supply of CO2 incubators in case of increased
        demand, but submit at the same time that entry into the market for CO2 incubators
        would be difficult or very difficult.201
(227) On balance, the Commission considers that the market structure indicates that Thermo
        Fisher may have the ability for input foreclosure. However, in the light of the clear
        market feedback, it appears questionable if Thermo Fisher would, in practice, be able
        to use its market power upstream for such a strategy, and more likely that downstream
        customers would be able to switch away to other suppliers, who would be able to take
        market shares from Thermo Fisher.
(228) Secondly, the Commission takes note of the Notifying Party’s submission that […] of
        Thermo Fisher’s sales of CO2 incubators would be made through third-party
        distributors.202 In the light of this, Thermo Fisher would not have the ability for a
        targeted foreclosure of PPD’s competitors, as it does not control to what end customer
        its products are supplied to, but would need to foreclose independent distributors as
        well, which would result in a loss of sales to other end-customers for CO2 incubators,
        for example laboratories active in areas other than clinical development. However, it
        is unlikely that Thermo Fisher would have the incentive for such broad foreclosure. In
        such scenario, Thermo Fisher would lose upstream profit of approximately EUR […].
        PPD’s downstream profit associated with clinical trial services using CO2 incubators
        was EUR […] approximately. The Notifying Party submits that this calculation was
        highly conservative, as CO2 incubators would only be an incremental input to such
        services.203 Even in such scenario, PPD would have to grow its profit connected to
199 Replies to questions 41 of questionnaire Q1 to CRO and laboratory service providers.
200 Replies to questions 44 and 44.1 of questionnaire Q1 to CRO and laboratory service providers.
201 Replies to questions 32 and 34 of questionnaire Q2 to Thermo Fisher competitors.
202 Form CO, paragraph 269.
203 Form CO, paragraphs 275 et seq.
                                                          53
 ---pagebreak---  ---pagebreak---  ---pagebreak---                  chromatography instruments need to grow by a factor of […] and pre-filled ion
                 chromatography columns by a factor of […] to recoup upstream cost; and
        (c)      PPD competitors and their pharmaceutical and biotechnology clients source a
                 wide variety of products from Thermo Fisher, and could retaliate in response
                 to any attempt at input foreclosure.
6.4.4.3. The Commission’s assessment
(235) The Commission notes that in the markets for ion chromatography instruments and
        consumables, Thermo Fisher faces one competitor with a similar market share,
        Metrohm, as well as several smaller competitors.
(236) CRO and laboratory service providers that responded to the Commission’s market
        investigation rated these alternative competitors as suitable options to supply their
        company.210 Furthermore, respondents indicated that they are able to switch suppliers
        for ion chromatographs and pre-filled ion chromatography columns.211
(237) Considering the pre-filled ion chromatography columns specifically, a significant
        number of Thermo Fisher competitors that responded to the Commission’s market
        investigation indicated to be able to supply pre-filled ion chromatography columns
        that are compatible with Thermo Fisher’s instruments. 212 Furthermore, the majority of
        Thermo Fisher competitors active in ion chromatography that responded to the
        Commission’s market investigation indicated that they are able to significantly
        increase supply in case of surging demand. 213
(238) Based on the above, it is unlikely that the merged entity will have the ability to engage
        in input foreclosure with respect to ion chromatography instruments and pre-filled ion
        chromatography columns post-Transaction. Even if Thermo Fisher did have the
        ability to do so, it likely would not have the incentive, and impact of such foreclosure
        would be limited. Ion chromatography only enjoys limited use in the context of
        clinical trials. PPD estimates that it used ion chromatography in less than [a very
        small percentage] of its laboratory activities by revenue, and that ion chromatography
        makes up less than [a very small percentage] of annual procurement cost.214 Several
        CRO and laboratory service providers that responded to the Commission’s market
        investigation indicated that while they do use chromatography in their business, they
        do not frequently use ion chromatography. One explains: “Our labs typically use
        HPLC and UPLC analytical columns but rarely have applications that need ion
        chromatography.”215           Furthermore,       respondents      indicate      that    some ion
        chromatography analyses can also be performed on high pressure liquid
        chromatographs.216
210 Replies to questions 57 and 58 of questionnaire Q1 to CRO and laboratory service providers.
211 Replies to question 56 of questionnaire Q1 to CRO and laboratory service providers.
212 Replies to question 40 of questionnaire Q2 to Thermo Fisher competitors.
213 Replies to question 42 of questionnaire Q2 to Thermo Fisher competitors.
214 Form CO, paragraph 517.
215 Replies to question 49 of questionnaire Q1 to CRO and laboratory service providers.
216 Replies to question 51 of questionnaire Q1 to CRO and laboratory service providers.
                                                          56
 ---pagebreak--- (239) Consistent with the above, the large majority of respondents to the Commission
        market investigation indicate that they do not expect Thermo Fisher’s incentive to
        engage in input foreclosure with respect to ion chromatography instruments and
        consumables to change post-Transaction.217 Furthermore, the large majority of
        respondents did not express any concerns for these markets in response to the
        Commission’s market investigation.218 A minority of Thermo Fisher competitors
        indicated concern about losing PPD as a customer for ion chromatography
        instruments and pre-filled ion chromatography columns. However, in view of PPD’s
        limited market share on the downstream market and its limited purchases of ion
        chromatography instruments (EUR […] globally and EUR […] in the EEA) and pre-
        filled ion chromatography columns (EUR […] globally and EUR […] in the EEA)
        customer foreclosure concerns cannot arise.
(240) Furthermore, as set out Section 6.3 of this Decision, sponsors of clinical trials, i.e.
        pharmaceutical companies, indicated that that they do not consider Thermo Fisher
        products as essential for laboratory service providers to provide services for them.
        Neither would, in their view, Thermo Fisher have the incentive to engage in input
        foreclosure, nor would such strategy have an impact on the downstream market.
        Pharmaceutical companies pointed at potential reputational harm Thermo Fisher
        would suffer if it would foreclose PPD’s downstream competitions, and indicated that
        they would consider taking counter-measures in such event.
6.4.4.4. Conclusion
(241) For the reasons set out above, the Transaction does not give rise to serious doubts as
        to its compatibility with the internal market or a substantial part thereof in relation to
        vertical effects for (i) ion chromatography instruments and (ii) prefilled ion
        chromatography columns globally and in the EEA.
6.4.5. Electrophoresis gels
6.4.5.1. Market structure
(242) Below tables show the Notifying Party’s market share estimates for precast
        electrophoresis gels for vertical gel electrophoresis and molecular weight standards
        for vertical gel electrophoresis.
217 Replies to question 61 of questionnaire Q1 to CRO and laboratory service providers and question 46 of
    questionnaire Q2 to Thermo Fisher competitors.
218 Replies to question 62 of questionnaire Q1 to CRO and laboratory service providers and question 47 of
    questionnaire Q2 to Thermo Fisher competitors.
                                                      57
 ---pagebreak---  ---pagebreak---         (d)      Thermo Fisher’s precast protein gels for vertical gel electrophoresis are not a
                 critical input to any downstream service offered by a PPD competitor; and
        (e)      PPD’s competitors could switch to an alternative supplier of vertical gel
                 electrophoresis instruments, which also provide all consumables.
(245) The Notifying Party submits that the merged entity would not have the incentive to
        engage in input foreclosure for the following reasons:222
        (a)      Lost sales upstream would far outweigh any potential gains downstream.
                 Stopping to supply PPD competitors would not lead to increased sales
                 downstream as they have other options for vertical gel electrophoresis
                 consumables; and
        (b)      PPD competitors and their pharmaceutical and biotechnology clients source a
                 wide variety of products from Thermo Fisher, and could retaliate in response
                 to any attempt at input foreclosure.
6.4.5.3. The Commission’s assessment
(246) The Commission notes that Thermo Fisher faces a strong competitor, Bio-Rad, in the
        areas of precast protein gels for vertical gel electrophoresis and molecular weight
        standards for vertical gel electrophoresis. Bio-Rad is the market leader on global basis
        in terms of market share. This reduces Thermo Fisher’s ability to successfully engage
        in input foreclosure for these products.
(247) CRO and laboratory services providers that responded to the Commission’s market
        investigation rated Bio-Rad, as well as other suppliers such as Lonza and Merck
        Millipore Sigma, as strong suppliers. 223 Additionally, they indicated that they would
        be able to switch away to alternative suppliers if Thermo Fisher were to increase
        prices or restrict access to these products. 224
(248) Even if Thermo Fisher would have the ability to foreclose access to precast protein
        gels for vertical gel electrophoresis and molecular weight standards for vertical gel
        electrophoresis, it would likely not have incentive to do so and impact on the
        downstream markets would remain limited. PPD […], showing that they do not play a
        significant role in the downstream markets. Thermo Fisher’s total sales of the
        upstream product amounted to EUR […] for precast protein gels for vertical gel
        electrophoresis and EUR […] for molecular weight standards for vertical gel
        electrophoresis. Consistent with this, respondents to the Commission’s market
        investigation did not anticipate that Thermo Fisher’s incentive to engage in input
        foreclosure would change as a result of the Transaction. 225
(249) In line with the above, the vast majority of respondents to the Commission’s market
        investigation did not express any concerns with respect to precast protein gels for
222 Form CO, paragraph 572 et seq.
223 Replies to question 69 of questionnaire Q1 to CRO and laboratory service providers.
224 Replies to question 73 of questionnaire Q1 to CRO and laboratory service providers.
225 Replies to question 74 of questionnaire Q1 to CRO and laboratory service providers and question 57 of
    questionnaire Q2 to Thermo Fisher competitors .
                                                        59
 ---pagebreak---  ---pagebreak---  ---pagebreak---          pharmaceutical and biotech clients have various possibilities to punish or pressure
         Thermo Fisher if they were dissatisfied with Thermo Fisher’s sera supply policy to
         PPD competitors.233
6.4.6.3. The Commission’s assessment
(255) Market shares of Thermo Fisher exceed 30% in a market for all cell culture sera, and
         in ten potential segments of sera at worldwide level, and in three of such segments at
         EEA-level. A potential concern arising from these market share levels is therefore
         input foreclosure of cell culture sera overall and some types of sera. However,
         Thermo Fisher would likely not have the ability or incentive to engage in such a
         strategy, and such strategy would likely not have an impact on competition.
(256) Firstly, the Commission notes that Thermo Fisher’s upstream market shares for all
         types of sera combined [amount to 40-50%] at global level, and [amount to 30-40%]
         in an EEA-wide market. There are at least two other significant competitors in the
         market (Merck Millipore Sigma and Danaher-Cytiva), while other non-negligible
         competitors remain present. For some types of sera, Thermo Fisher’s market shares
         [amount to 40-50%]. In the view of the Commission, such market structure as
         presented in Tables 11 and 12 above indicates significant market power by Thermo
         Fisher in some segments of the sera market, but also the presence of credible
         competitors.
(257) In the market investigation, customers of Thermo Fisher indicated Merck Millipore
         Sigma and VWR as a more suitable supplier for sera to their company than Thermo
         Fisher, and attributed a still favourable rating to Corning. 234 All customers that formed
         an opinion in the market investigation responded that they would be able to switch to
         other suppliers if Thermo Fisher would restrict access to cell culture sera. 235 The
         Commission notes, however, that there are some barriers to switching a sera provider,
         as new products may need to be tested as to their suitability. 236 All but one customer
         expressing an opinion in the market investigation further submit to be able to source
         Thermo Fisher cell culture sera via third-parties, e.g. distributors or sponsors of the
         respective clinical trial.237 Based on the above, and especially on market feedback,
         Thermo Fisher would likely not have the ability to foreclose downstream competitors
         of cell culture sera, despite considerable market shares especially for some segments
         of this market.
233 In the Form CO, the Notifying Party provided equivalent and/or similar arguments for South American FBS
    sera for which Thermo Fisher holds [50-60]% market share, paragraph 312 et seq.
234 The Commission received mixed reviews for Danaher-Cytiva based on only two responses for this
    particular competitor.
235 Replies to questions 94 of questionnaire Q1 to CRO and laboratory service providers. The Commission
    notes that one customer who indicated to not know whether the company could switch or not, provided in
    response to a different question concerning sera that, to the best if its knowledge, it would only be able to
    obtain cell culture sera from Thermo Fisher, and would not be able to source sera from a third party or
    sponsors of a clinical trial. The Commission notes that this particular respondent did not indicate to have
    concerns as regards the Transaction in relation to cell culture media, and that its view forms, in any event, a
    clear minority opinion among all customers responding to the market investigation.
236 Replies to question 94.1 of questionnaire Q1 to CRO and laboratory service providers.
237 Replies to question 92 of questionnaire Q1 to CRO and laboratory service providers.
                                                          62
 ---pagebreak--- (258) Secondly, because downstream competitors would have alternatives available to
        source cell culture sera from, as explained in paragraphs (256) and (257) above, the
        merged entity would likely not be able to recoup upstream losses by additional gains
        downstream, and therefore would likely not have the incentive for input foreclosure.
(259) Particularly with respect to South American FBS, for which Thermo Fisher’s market
        shares reach [50-60]% in an EEA-wide market, the Commission takes note of the
        Notifying Party’s submission that PPD’s profit associated with laboratory services
        that use South American FBS sera was approximately EUR […] globally, while
        Thermo Fisher’s upstream profit from sales to PPD’s competitors amounted to EUR
        […]. Consequently, PPD would approximately need to […] its profit associated with
        the use of South American FBS to recoup upstream losses by Thermo Fisher. 238 The
        Commission acknowledges that this scenario appears unlikely, given the fact that
        other suppliers are available for PPD’s competitors.
(260) Thirdly, the Transaction is unlikely to have an impact on the competitiveness on
        downstream companies competing with PPD or potential entrants into the
        downstream market with regard to the supply of cell culture sera or any particular
        type thereof. In the market investigation, no responding customers expressed concerns
        with regard to cell culture sera or any potential market segment.239 Similarly, the
        majority of upstream competitors to Thermo Fisher indicated to have no concerns as
        regards to any type of sera.240
(261) The Commission notes that potential concerns based on customer foreclosure are
        likely not substantiated because of PPD’s small downstream market shares in the
        market for laboratory services for clinical development both at global ([5-10]%) and
        EEA-wide ([0-5]%) level. Furthermore, cell culture sera may not only be used for
        clinical development, but also in other areas of laboratory services, where PPD is not
        active.
(262) Furthermore, as set out Section 6.3 of this Decision, sponsors of clinical trials, i.e.
        pharmaceutical companies, indicated that that they do not consider Thermo Fisher
        products as essential for laboratory service providers to provide services for them.
        Neither would, in their view, Thermo Fisher have the incentive to engage in input
        foreclosure, nor would such strategy have an impact on the downstream market.
        Pharmaceutical companies pointed at potential reputational harm Thermo Fisher
        would suffer if it would foreclose PPD’s downstream competitions, and indicated that
        they would consider taking counter-measures in such event.
6.4.6.4. Conclusion
(263) For the reasons set out above, the Transaction does not give rise to serious doubts as
        to its compatibility with the internal market or a substantial part thereof in relation to
238 Form CO, paragraph 312.
239 Replies to questions 97 of questionnaire Q1 to CRO and laboratory service providers.
240 Replies to questions 76 of questionnaire Q2 to Thermo Fisher competitors. One upstream competitor
    submitted that Thermo Fisher may raise prices for downstream competitors, while acknowledging that this
    may provide other suppliers with the opportunity to win business. For the reasons set out in this section,
    however, such input foreclosure is an unlikely scenario.
                                                          63
 ---pagebreak---  ---pagebreak---  ---pagebreak--- 6.4.7.3. The Commission’s assessment
(267) Market shares of Thermo Fisher exceed 30% in a market for all cell culture media,
        and in seven potential markets of media both at global and EEA level. A potential
        concern arising from these market share levels is therefore input foreclosure of cell
        culture media overall and some types of such media. However, Thermo Fisher would
        likely not have the ability or incentive to engage in this foreclosure strategy, and such
        strategy would likely not have an impact on competition.
(268) Firstly, the Commission notes that Thermo Fisher’s upstream market shares for all
        types of cell culture media combined [amount to 40-50%] at global level, and [amount
        to 30-40%] in an EEA-wide market. However, Thermo Fisher is [based on market
        shares the market leader] in the market for cell culture media, with […] the sales
        volume of the next biggest competitor. Still, the Commission notes that a number of
        competitors with non-negligible market shares are active in the market. For some
        types of media, Thermo Fisher’s market shares are well above 40%, but do not exceed
        50%. Such market structure indicates significant market power by Thermo Fisher in
        some segments of the cell culture media market as well as the overall market for such
        media, but also the presence of available alternative suppliers.
(269) In the market investigation, customers of Thermo Fisher indicated, somewhat contrary
        to what market shares suggest, Merck Millipore Sigma to be a more suitable supplier
        for media to their company than Thermo Fisher. 247 All customers that expressed an
        opinion in the market investigation responded that they would be able to switch to
        other suppliers if Thermo Fisher would restrict access to cell culture media.248 The
        Commission notes, however, that there are some barriers to switching a media
        provider, as new products may need to be tested as to their suitability. 249 Further, there
        appear to be occurrences of shortages in the supply of media in the past three years,
        which may make switching more difficult. 250 On the other hand, all but one customer
        expressing an opinion in the market investigation further submit to be able to source
        Thermo Fisher cell culture media via third-parties, e.g. distributors or sponsors of the
        respective clinical trial.251 Based on the above, and especially on market feedback,
        Thermo Fisher would likely not have the ability to foreclose downstream competitors
        of cell culture media, despite having considerable market shares especially for some
        segments of this market.
(270) Secondly, because downstream competitors would have alternatives available to
        source cell culture media from, as explained in paragraph (269) above, the merged
        entity would likely not be able to recoup upstream losses by additional gains
        downstream, and therefore would likely not have the incentive for input foreclosure.
247 Replies to questions 90 of questionnaire Q1 to CRO and laboratory service providers.
248 Replies to questions 94 of questionnaire Q1 to CRO and laboratory service providers. As explained in
    footnote 235 in more detail, the Commission received mixed feedback from one respondent in this regard.
    The respondent did not indicate concerns with respect to cell culture media, and its explanation on potential
    to switch would in any event form a minority opinion among respondents.
249 Replies to question 94.1 of questionnaire Q1 to CRO and laboratory service providers.
250 Replies to question 93 of questionnaire Q1 to CRO and laboratory service providers.
251 Replies to question 92 of questionnaire Q1 to CRO and laboratory service providers.
                                                         66
 ---pagebreak--- (271) Particularly with respect to standard basal media, for which Thermo Fisher’s market
        shares reach [50-60]% in an global market, but not at EEA-level, the Commission
        takes note of the Notifying Party’s submission that PPD’s profit associated with
        laboratory services that make use of this product was approximately EUR […]
        globally, while Thermo Fisher’s upstream profit from sales to PPD’s competitors
        amounted to EUR […]. Consequently, PPD would need to win significant additional
        business downstream to recoup upstream losses by Thermo Fisher. 252 The
        Commission acknowledges that this scenario appears rather unlikely, given the fact
        that customers consider that they could switch away from Thermo Fisher. As for
        process liquids, where market shares reach equally [50-60]% at global level, [PPD
        purchase data].253
(272) Thirdly, the Transaction is unlikely to have an impact on the competitiveness of
        downstream companies competing with PPD or potential entrants into the
        downstream market with regard to the supply of cell culture media or any particular
        potential segment of the market. In the market investigation, no responding customers
        expressed concerns with regard to cell culture media or any type of media.254
        Similarly, the large majority of upstream competitors to Thermo Fisher indicated to
        have no concerns as regards to any type of media.255
(273) Furthermore, as set out Section 6.3 of this Decision, sponsors of clinical trials, i.e.
        pharmaceutical companies, indicated that that they do not consider Thermo Fisher
        products as essential for laboratory service providers to provide services for them.
        Neither would, in their view, Thermo Fisher have the incentive to engage in input
        foreclosure, nor would such strategy have an impact on the downstream market.
        Pharmaceutical companies pointed at potential reputational harm Thermo Fisher
        would suffer if it would foreclose PPD’s downstream competitions, and indicated that
        they would consider taking counter-measures in such event.
(274) The Commission notes that potential concerns based on customer foreclosure, which
        were indicated by a small minority in the market investigation, 256 are likely not
        substantiated because of PPD’s small downstream market shares in the market for
        laboratory services for clinical development both at global ([5-10]%) and EEA-wide
        ([0-5]%) level. Furthermore, cell culture media may not only be used for clinical
        development, but also in other areas of laboratory services, where PPD is not active.
6.4.7.4. Conclusion
(275) For the reasons set out above, the Transaction does not give rise to serious doubts as
        to its compatibility with the internal market or a substantial part thereof in relation to
        vertical effects for cell culture media or any potential segment of this market in an
        EEA-wide or global market.
252 Form CO, paragraph 336.
253 Form CO, paragraph 335.
254 Replies to questions 97 of questionnaire Q1 to CRO and laboratory service providers.
255 Replies to questions 76 of questionnaire Q2 to Thermo Fisher competitors.
256 Replies to question 76.1 of questionnaire Q2 to Thermo Fisher competitors.
                                                         67
 ---pagebreak---  ---pagebreak---                   instruments and plastics. Furthermore, many of the uses of these plastics relate
                  to activities that PPD does not compete in; and
        (b)       PPD competitors and their pharmaceutical and biotechnology clients source a
                  wide variety of products from Thermo Fisher, and could retaliate in response
                  to any attempt at input foreclosure.
6.4.8.3. The Commission’s assessment
(280) The Commission notes that Thermo Fisher has a meaningful market share in the area
        of plastics for magnetic-bead based instruments in 2020, but that the market would
        not be affected on the basis of its market share in 2018 and 2019. Thermo Fisher faces
        competitors with significant market shares, such as Greiner and Corning.
(281) The Notifying Party’s position that third party suppliers are a competitive alternative
        for magnetic bead-based plastics usable with Thermo Fisher’s KingFisher instruments
        is not consistent with the information on its website. On Thermo Fisher’s website, it
        claims: “Use of KingFisher plastics ensures proper KingFisher instrument function
        and application performance and avoids costly repairs that may be caused by using
        third-party plastics, even if marketed as ‘KingFisher compatible.’ Use of third-party
        plastics may void instrument service contracts.”260 In the frequently asked questions
        section about the product, it answers the question “Can I use plates from other
        manufacturers with the KingFisher Flex Magnetic Particle Processor?” with “No, we
        strongly recommend that you use the MagMAX plates or KingFisher plates since they
        were specifically designed to be used with KingFisher Flex tip combs to attain
        maximal performance. Plates from other manufacturers may not be compatible with
        the KingFisher Flex heating blocks. They may also cause unexpected problems, such
        as cross-contamination, due to the divergent well volume and bottom height of the
        plate.”261
(282) CRO and laboratory service providers that responded to the Commission’s market
        investigation gave inconclusive responses on whether they were able to use third party
        plastics with Thermo Fisher’s devices, with some saying they can and others saying
        they cannot.262 However, a significant amount of Thermo Fisher competitors indicates
        that they are able to supply plastics compatible with Thermo Fisher’s magnetic bead-
        based devices.263 […].264
(283) A large majority of CRO and laboratory service providers that replied to the
        Commission’s market investigation indicated that they would be able to switch away
260 Thermo     Fisher’s website, https://www.thermofisher.com/lu/en/home/life-science/dna-rna-purification-
    analysis/automated-purification-extraction/kingfisher-systems/accessories.html. Accessed on 17 November
    2021.
261 Thermo Fisher’s website, https://www.thermofisher.com/search/results?query=5400610&persona=Doc
    Support&type=Product+FAQs. Accessed on 17 November 2021.
262 Replies to question 68 of questionnaire Q1 to CRO and laboratory service providers.
263 Replies to question 52 of questionnaire Q2 to Thermo Fisher competitors .
264 Form CO, paragraph 401.
                                                           69
 ---pagebreak---         from Thermo Fisher for both magnetic-bead based instruments as well as plastics for
        magnetic-bead based instruments,265 showing that there are competitive alternatives.
(284) Therefore, Thermo Fisher is unlikely to have the ability to engage in input foreclosure
        for plastics for magnetic bead-based instruments. Even if it were to do so, its incentive
        and the impact of such strategy would be very limited. PPD only purchased EUR […]
        worth of these plastics globally in 2020 (none in the EEA), of which approximately
        EUR […] from Thermo Fisher. They therefore clearly only make up a very small part
        of the cost base of CRO and laboratory service providers. Consistent with this,
        respondents to the Commission’s market investigation do not expect Thermo Fisher’s
        incentive to engage in foreclosure to change post-Transaction.266
(285) In line with the above, the vast majority of respondents to the Commission’s market
        investigation did not express any concerns with respect to plastics for magnetic bead-
        based instruments.267
(286) Furthermore, as set out in Section 6.3 of this Decision, sponsors of clinical trials, i.e.
        pharmaceutical companies, indicated that that they do not consider Thermo Fisher
        products as essential for laboratory service providers to provide services for them.
        Neither would, in their view, Thermo Fisher have the incentive to engage in input
        foreclosure, nor would such strategy have an impact on the downstream market.
        Pharmaceutical companies pointed at potential reputational harm Thermo Fisher
        would suffer if it would foreclose PPD’s downstream competitions, and indicated that
        they would consider to take counter-measures in such event.
6.4.8.4. Conclusion
(287) For the reasons set out above, the Transaction does not give rise to serious doubts as
        to its compatibility with the internal market or a substantial part thereof in relation to
        vertical effects for plastics for magnetic bead-based instruments globally and in the
        EEA.
6.4.9. High-resolution accurate mass spectrometers
6.4.9.1. Market structure
(288) Below table shows the Notifying Party’s market share estimates for high-resolution
        accurate mass (‘HRAM’) spectrometers for the use with LC.
265 Replies to question 70 of questionnaire Q1 to CRO and laboratory service providers.
266 Replies to question 74 of questionnaire Q1 to CRO and laboratory service providers and question 57 of
    questionnaire Q2 to Thermo Fisher competitors .
267 Replies to question 76 of questionnaire Q1 to CRO and laboratory service providers and question 58 of
    questionnaire Q2 to Thermo Fisher competitors .
                                                        70
 ---pagebreak---  ---pagebreak--- 6.4.9.3. The Commission’s assessment
(292) Market shares of Thermo Fisher exceed 30% on the upstream market for LC HRAM
        and overall HRAM spectrometers both at global and EEA-wide level. A potential
        concern due to the Transaction is therefore input foreclosure of such spectrometers by
        Thermo Fisher. However, it is unlikely that Thermo Fisher would have the ability and
        the incentive to engage in input foreclosure, and such strategy would likely not have
        an impact on competition.
(293) Firstly, Thermo Fisher would likely not have the ability to foreclose PPD’s
        competitors of HRAM and LC HRAM spectrometers. Even though market shares are
        high, [30-40]% under any plausible geographic market definition, as shown in Table
        16 above, alternatives with a significant market presence, namely at least Bruker,
        Waters and Sciex, are present in the market.272 In the market investigation, responding
        customers confirm that products of those three manufacturers would be comparably
        suitable as Thermo Fisher HRAM spectrometers for the use of the company, with
        Shimadzu as a fifth supplier considered generally suitable. 273 The Commission notes
        that two customers submit that they would not be able to switch HRAM spectrometers
        in case Thermo Fisher were to increase prices or restrict access. The Commission
        understands, however, that one respondent is concerned for a particular assay, not the
        device. In any event, market feedback is inconclusive in this regard, as two other
        customers submit that they would be able to switch to other suppliers. 274 One
        customer explained for products including HRAM mass spectrometry: “There are
        multiple vendors for products that we currently source from Thermo Fisher such that
        any change in what Thermo Fisher sell or don’t sell us has no material impact to our
        business.”275 The Commission acknowledges that switching suppliers of HRAM
        products may entail significant costs, and may have an impact on ongoing clinical
        trials. On balance, however, based on the market shares level and the confirmation by
        other customers that other suppliers would be suitable alternatives, the Commission
        considers that Thermo Fisher would likely not have the ability to foreclose
        downstream competitors of HRAM mass spectrometers, including LC HRAM
        spectrometers, as customers would generally be able to source from other suppliers.
(294) Secondly, because downstream competitors would have alternatives available to
        source HRAM mass spectrometers, including LC HRAM spectrometers from, as
        explained in paragraph (293) above, the merged entity would likely not be able to
        recoup upstream losses by additional gains downstream, and therefore would likely
        not have the incentive for input foreclosure. The Commission further notes that
        Thermo Fisher’s gross margin on LC HRAM spectrometers upstream is […], and
        therefore significantly higher than PPD’s downstream margin of […].276 The merged
        entity would therefore need to win significant business downstream to make up for
        upstream sales losses, which appears unlikely given that other suppliers are available
        in the market.
272 Replies to question 57 of questionnaire Q1 to CRO and laboratory service providers.
273 Replies to question 59 of questionnaire Q1 to CRO and laboratory service providers.
274 Replies to questions 56 and 56.1 of questionnaire Q1 to CRO and laboratory service providers.
275 Reply to question 61.1 of questionnaire Q1 to CRO and laboratory service providers.
276 Reply to RFI 14, paragraph 5.
                                                          72
 ---pagebreak--- (295) Thirdly, the Transaction is unlikely to have an impact on the competitiveness on
        downstream companies competing with PPD or potential entrants into the
        downstream market with regard to the supply of HRAM mass spectrometers and LC
        HRAM spectrometers. In the market investigation, the majority of responding
        customers did not raise concerns regarding HRAM spectrometers and did not indicate
        that their view would be different for LC HRAM spectrometers.277 The Commission
        notes that two customers, however, showed concerns regarding the Transaction
        forming, however, the minority of respondents. Similarly, the clear majority of
        upstream competitors to Thermo Fisher did not raise concerns with regard to HRAM
        spectrometers, and no indication was made that concerns specifically for LC HRAM
        spectrometers would exist.278
(296) Furthermore, as set out Section 6.3 of this Decision, sponsors of clinical trials, i.e.
        pharmaceutical companies, indicated that that they do not consider Thermo Fisher
        products as essential for laboratory service providers to provide services for them.
        Neither would, in their view, Thermo Fisher have the incentive to engage in input
        foreclosure, nor would such strategy have an impact on the downstream market.
        Pharmaceutical companies pointed at potential reputational harm Thermo Fisher
        would suffer if it would foreclose PPD’s downstream competitions, and indicated that
        they would consider taking counter-measures in such event.
(297) The Commission notes that two competitors of Thermo Fisher raised concerns with
        regard to HRAM spectrometers in relation to potential customer foreclosure.279 The
        Commission considers it highly unlikely that the merged entity will have the ability to
        impede effective competition by foreclosing upstream competitors from a significant
        part of its customer base. This is because PPD’s market shares in the market for
        laboratory services for clinical development are small at both global ([5-10]%) and
        EEA-wide ([0-5]%) level. Further, HRAM spectrometers may not only used for
        clinical development, but also in other areas of laboratory services, where PPD is not
        active.
6.4.9.4. Conclusion
(298) For the reasons set out above, the Transaction does not give rise to serious doubts as
        to its compatibility with the internal market or a substantial part thereof in relation to
        vertical effects for HRAM spectrometers and specifically LC HRAM spectrometers in
        an EEA-wide or global market.
6.4.10. Cryogenic storage tubes
6.4.10.1. Market structure
(299) The below table shows the Notifying Party’s market share estimates for cryogenic
        storage tubes.
277 Replies to questions 63 and 64 of questionnaire Q1 to CRO and laboratory service providers.
278 Replies to questions 47, 47.1 and 48 of questionnaire Q2 to Thermo Fisher competitors.
279 Replies to question 47 and 47.1 of questionnaire Q2 to Thermo Fisher competitors.
                                                           73
 ---pagebreak---  ---pagebreak--- (303) Firstly, Thermo Fisher would likely not have the ability to foreclose PPD’s
        competitors of cryogenic storage tubes. As presented in Table 17, market shares
        exceed 30%, but remain still moderate at [30-40]% at global level. Four significant
        competitors (FluidX / Brooks, Corning, Micronic and Greiner) would remain present
        in the market post-Transaction. All but one customer that expressed an opinion in the
        market investigation confirmed that they would be able to switch to alternative
        suppliers if Thermo Fisher were to increase prices or restrict access to cryogenic
        storage tubes.283 Two companies noted that switching of storage tubes may have an
        impact of ongoing clinical trials, as it would require some time and would entail
        certain costs, as the replacing products would need to be assessed first as to their
        suitability.284 The Commission notes that, these concerns mainly concern ongoing
        clinical trials, but not the companies’ ability to compete for new business. Further, a
        majority of respondents did not raise such concerns. Lastly, the Commission notes
        that the merged entity would unlikely benefit directly from a foreclosure of ongoing
        clinical trials, as sponsors would not likely replace the existing CRO or laboratory
        service provider with PPD, which would likely constitute a more severe interruption
        of the ongoing trial than only replacing the type of storage tube used.
(304) Secondly, because downstream competitors would have alternatives available to
        source cryogenic storage tubes from, as explained in paragraph (303) above, the
        merged entity would likely not be able to recoup upstream losses by additional gains
        downstream, especially by winning new clinical trials, and therefore would likely not
        have the incentive for input foreclosure.
(305) Thirdly, the Transaction is unlikely to have an impact on the competitiveness on
        downstream companies competing with PPD or potential entrants into the
        downstream market with regard to the supply of cryogenic storage tubes. In the
        market investigation, all but one285 responding customers expressed no concerns with
        regard to cryogenic storage tubes or any other form of storage tubes.286 Similarly, no
        upstream competitors to Thermo Fisher raised concerns with regard to cryogenic
        storage tubes or any other form of storage tubes.287
(306) Furthermore, as set out Section 6.3 of this Decision, sponsors of clinical trials, i.e.
        pharmaceutical companies, indicated that they do not consider Thermo Fisher
        products as essential for laboratory service providers to provide services for them.
        Neither would, in their view, Thermo Fisher have the incentive to engage in input
        foreclosure, nor would such strategy have an impact on the downstream market.
        Pharmaceutical companies pointed at potential reputational harm Thermo Fisher
        would suffer if it would foreclose PPD’s downstream competitions, and indicated that
        they would consider to take counter-measures in such event.
283 Replies to questions 106 of questionnaire Q1 to CRO and laboratory service providers.
284 Replies to question 106.1 of questionnaire Q1 to CRO and laboratory service providers.
285 One respondent reiterated its concerns as discussed in paragraph (303) of this Decision.
286 Replies to questions 107 and 108 of questionnaire Q1 to CRO and laboratory service providers.
287 Replies to questions 86 and 87 of questionnaire Q2 to Thermo Fisher competitors.
                                                           75
 ---pagebreak---  ---pagebreak---         various possibilities to punish or pressure Thermo Fisher to supply general purpose
        benchtop centrifuges to PPD competitors. 290
6.4.11.3. The Commission’s assessment
(311) Market shares of Thermo Fisher exceed 30% in a potential global upstream market for
        general purpose benchtop centrifuges, but not in a potential EEA-wide upstream
        market. A potential concern arising from these market share levels is therefore input
        foreclosure of such centrifuges by Thermo Fisher. However, it is unlikely that Thermo
        Fisher would have the ability and the incentive to engage in input foreclosure, and
        such strategy would likely not have an impact on competition.
(312) Firstly, Thermo Fisher would likely not have the ability to foreclose PPD’s
        competitors of general purpose benchtop centrifuges. As presented in Table 18,
        market shares of Thermo Fisher [amount to 30-40%] at global level. At least two
        strong competitors (Hettich and Eppendorf) would remain present in the market post-
        Transaction, as well as a number of other competitors with non-negligible market
        shares. All but one customers responding to the market investigation confirmed that
        they would be able to switch to alternative suppliers if Thermo Fisher were to increase
        prices or restrict access to general purpose benchtop centrifuges. 291
(313) Secondly, because downstream competitors would have alternatives available to
        source general purpose benchtop centrifuges from, as explained in paragraph (312)
        above, the merged entity would likely not be able to recoup upstream losses by
        additional gains downstream, and therefore would likely not have the incentive for
        input foreclosure.
(314) Thirdly, the Transaction is unlikely to have an impact on the competitiveness on
        downstream companies competing with PPD or potential entrants into the
        downstream market with regard to the supply of general purpose benchtop
        centrifuges. In the market investigation, no responding customers expressed concerns
        with regard to general purpose benchtop centrifuges or any other type of centrifuge.292
        Similarly no upstream competitor to Thermo Fisher raised concerns with regard to
        general purpose benchtop centrifuges or any other type of centrifuge.293
(315) Furthermore, as set out Section 6.3 of this Decision, sponsors of clinical trials, i.e.
        pharmaceutical companies, indicated that they do not consider Thermo Fisher
        products as essential for laboratory service providers to provide services for them.
        Neither would, in their view, Thermo Fisher have the incentive to engage in input
        foreclosure, nor would such strategy have an impact on the downstream market.
        Pharmaceutical companies pointed at potential reputational harm Thermo Fisher
        would suffer if it would foreclose PPD’s downstream competitions, and indicated that
        they would consider to take counter-measures in such event.
290 Form CO, paragraph 702 et seq.
291 Replies to questions 101 of questionnaire Q1 to CRO and laboratory service providers.
292 Replies to questions 102 and 103 of questionnaire Q1 to CRO and laboratory service providers.
293 Replies to questions 81 and 82 of questionnaire Q2 to Thermo Fisher competitors.
                                                          77
 ---pagebreak---  ---pagebreak--- 6.4.12.3. The Commission’s assessment
(320) The Commission notes that in the market for thermal cyclers, Thermo Fisher’s market
        share is […] above 30% globally, and under 30% in the EEA. Furthermore, Thermo
        Fisher faces competitors with significant market shares, such as Bio-Rad, which has a
        similar market share to Thermo Fisher, and Eppendorf. In view of this market
        structure, it is unlikely that Thermo Fisher has the ability to engage in input
        foreclosure.
(321) Respondents to the Commission’s market investigation indicated that they are able to
        switch away from Thermo Fisher in case it were to increase prices or restrict access to
        thermal cyclers post-Transaction.297 Furthermore, respondents rated Bio-Rad and
        Eppendorf as strong competitors in the area of thermal cyclers. 298 The majority of
        Thermo Fisher’s competitors that responded to the Commission’s market
        investigation indicated that they are able to increase supply significantly in case of
        increased demand.299
(322) In line with the above, respondents to the Commission’s market investigation
        considered that Thermo Fisher’s incentive to foreclose its customers in the market for
        thermal cyclers would not change as a result of the Transaction, and did not voice any
        concerns about the Transaction for the market for thermal cyclers. 300
(323) Furthermore, as set out Section 6.3 of this Decision, sponsors of clinical trials, i.e.
        pharmaceutical companies, indicated that they do not consider Thermo Fisher
        products as essential for laboratory service providers to provide services for them.
        Neither would, in their view, Thermo Fisher have the incentive to engage in input
        foreclosure, nor would such strategy have an impact on the downstream market.
        Pharmaceutical companies pointed at potential reputational harm Thermo Fisher
        would suffer if it would foreclose PPD’s downstream competitions, and indicated that
        they would consider to take counter-measures in such event.
6.4.12.4. Conclusion
(324) For the reasons set out above, the Transaction does not give rise to serious doubts as
        to its compatibility with the internal market or a substantial part thereof in relation to
        vertical effects for thermal cyclers globally and in the EEA.
6.4.13. Infrared spectrometers
6.4.13.1. Market structure
(325) The below table shows the Notifying Party’s market share estimates for FT-IR
        spectrometers. As explained in the market definition Section 5.2.13, the Commission
        considers FT-IR spectrometers as a plausible segment of the IR spectrometer market.
        The Notifying Party submits market shares for FT-IR spectrometers, and notes that
297 Replies to question 82 of questionnaire Q1 to CRO and laboratory service providers .
298 Replies to question 83 of questionnaire Q1 to CRO and laboratory service providers .
299 Replies to question 62 of questionnaire Q2 to Thermo Fisher competitors.
300 Replies to questions 85 and 86 of questionnaire Q1 to CRO and laboratory service providers and questions
    66 and 67 of questionnaire Q2 to Thermo Fisher competitors.
                                                         79
 ---pagebreak---  ---pagebreak--- (329) Firstly, Thermo Fisher would likely not have the ability to foreclose PPD’s
        competitors of FT-IR and IR spectrometers. As presented in Table 20 above, market
        shares of Thermo Fisher do not exceed [30-40]% in the upstream market under any
        plausible market definition. At least two strong competitors (Bruker and
        PerkinElmer), as well as a number of other competitors with non-negligible market
        shares, would remain available to downstream competitors. While receiving limited
        feedback from customers with respect to the competitive strengths of alternative IR
        spectrometers providers, the Commission did not receive indication that any of those
        suppliers would not be a suitable provider of IR or FT-IR spectrometers.306 Lastly, it
        is at least questionable to what extent IR and FT-IR spectrometers are important
        inputs for PPD’s downstream business in the sense that it is a significant cost-factor, a
        critical component of a source for differentiation, in the light of the Notifying Party’s
        submission that PPD bought […] FT-IR instrument in the last […] years, and […] for
        operations in the EEA in the last […] years.307
(330) Secondly, because downstream competitors would have alternatives available to
        source IR and FT-IR spectrometers from, as explained in paragraph (329) above, the
        merged entity would likely not be able to recoup upstream losses by additional gains
        downstream, and therefore would likely not have the incentive for input foreclosure.
(331) Thirdly, the Transaction is unlikely to have an impact on the competitiveness on
        downstream companies competing with PPD or potential entrants into the
        downstream market with regard to the supply of IR or FT-IR spectrometers. In the
        market investigation, no responding customers expressed concerns with regard to IR
        spectrometers, and did not indicate that their view would differ for FT-IR
        spectrometers.308 Similarly, the majority of upstream competitors to Thermo Fisher
        did not raise concerns with regard to IR-spectrometers, and did not indicate that their
        view would differ for FT-IR spectrometers.309
(332) Furthermore, as set out Section 6.3 of this Decision, sponsors of clinical trials, i.e.
        pharmaceutical companies, indicated that that they do not consider Thermo Fisher
        products as essential for laboratory service providers to provide services for them.
        Neither would, in their view, Thermo Fisher have the incentive to engage in input
        foreclosure, nor would such strategy have an impact on the downstream market.
        Pharmaceutical companies pointed at potential reputational harm Thermo Fisher
        would suffer if it would foreclose PPD’s downstream competitions, and indicated that
        they would consider to take counter-measures in such event.
(333) The Commission notes that, during the market investigation, two competitors of
        Thermo Fisher raised concerns with regard to IR spectrometers. Both companies
        substantiated their concerns with the claim that post-Transaction, PPD may stop
        buying instruments by manufacturers other than Thermo Fisher, and thereby limiting
        the customer base for competitors.310 While the potential loss of a theoretical or actual
        customer may be a commercial concern, the Commission considers it highly unlikely
306 Replies to question 57 of questionnaire Q1 to CRO and laboratory service providers .
307 Form CO, paragraph 731.
308 Replies to questions 63 and 63.1 of questionnaire Q1 to CRO and laboratory service providers.
309 Replies to questions 47 and 47.1 of questionnaire Q2 to Thermo Fisher competitors.
310 Replies to question 47 and 47.1 of questionnaire Q2 to Thermo Fisher competitors.
                                                          81
 ---pagebreak---         that the merged entity will have the ability to impede effective competition by
        engaging in customer foreclosure. This is because PPD’s market shares in the market
        for laboratory services for clinical development are small at both global ([5-10]%) and
        EEA-wide ([0-5]%) level. It has to be noted that IR spectrometers may not only be
        used for clinical development, but also in other areas of laboratory services, where
        PPD is not active. The Notifying Party submits that in the past five years, PPD has
        only purchased [PPD purchase data].
(334) The Commission therefore concludes that PPD has no significant market power in the
        downstream market, and is not an important customer for IR spectrometers.
        Therefore, the Transaction is unlikely to lead to an impediment of effective
        competition due to customer foreclosure.
6.4.13.4. Conclusion
(335) For the reasons set out above, the Transaction does not give rise to serious doubts as
        to its compatibility with the internal market or a substantial part thereof in relation to
        vertical effects for IR or FT-IR spectrometers in an EEA-wide or global market.
6.5.    Observations on the Transaction not related to specific markets
(336) This section covers additional feedback the Commission received in the course of its
        market investigation not related to specific product markets.
6.5.1. Concerns relating to information exchange
(337) A few CRO and laboratory service providers that responded to the Commission’s
        market investigation voiced the concern that the Thermo Fisher obtains competitively
        sensitive information, such as purchasing volumes, about their business through its
        supplier relationship. Post-Transaction, this information could constitute a
        competitive advantage for the merged entity when bidding for clinical trials, as it may
        have a view on the input cost of competitors.
(338) Based on available information, the Commission does not consider that such eventual
        information exchange concern poses a competitive concern. The information that
        Thermo Fisher might obtain about PPD competitors as a supplier is limited and would
        likely not be a major competitive advantage. First, many of Thermo Fisher’s products
        have a variety of use cases, and it is not visible to Thermo Fisher for what purpose a
        product is purchased. Second, for most products competitive alternatives to Thermo
        Fisher are available, which CRO and / or laboratory service providers will typically
        use for at least part of their products. Therefore, any information Thermo Fisher might
        receive would be incomplete. Third, the ultimately quoted price of clinical trial
        services is dependent on many factors, of which input cost are only a minor one. PPD
        submits that the largest elements of its cost base are employee costs and investigator
        grants (i.e. payments to third party clinical trial sites and physicians involved in the
        trial) and that inputs in which Thermo Fisher is active constitute less than […] of the
        total price.311
311 Reply to request for information 12, question 2.
                                                     82
 ---pagebreak--- 6.5.2. Concerns relating to companion diagnostics
(339) A small minority of CRO and laboratory service providers voiced concerns relating to
        companion diagnostics (“CDx”). CDx are tests developed for a specific drug, to test
        whether the drug will work for a patient and / or whether a patient is likely to suffer
        side effects from a pharmaceutical. Thermo Fisher is active in the development of
        CDx in collaboration with pharmaceutical companies, and today has one approved
        CDx product. PPD’s activities in CDx are minimal: in the past […], it was involved in
        the development of […] CDx product as a CRO and laboratory service provider.
(340) PPD’s competitors that expressed some level of concern in the Commission’s market
        investigation indicated that post-Transaction, the merged entity may (i) reduce other
        CROs’ / labs’ ability to bid competitively on companion diagnostic work for tests
        developed by Thermo Fisher and (ii) create the incentive to restrict selling certain
        products required for CDx development.
(341) Based on available information, the Commission considers that the Transaction is
        unlikely to result in competitive concerns relation to CDx.
(342) Regarding the concern that the Transaction may reduce other CRO or laboratory
        service providers’ ability to bid competitively on companion diagnostic work for tests
        developed by Thermo Fisher, the Commission notes that Thermo Fisher only has one
        approved CDx product, and that the impact of such scenario would therefore be
        limited. Furthermore, there are various competitors active in CDx, such as Illumina,
        Roche, Myriad, Guardant health and others. Furthermore, it is unlikely that
        pharmaceutical companies for which CDx are developed would tolerate such
        restrictions on CDx testing.
(343) Regarding the concern that the Transaction may create the incentive to restrict selling
        certain products required for CDx development, the Commission notes that it has
        investigated the products affected by the Transaction (see the sections above),
        including those that are used in CDx development (e.g. DNA sequencing instruments
        and consumables), and did not identify such foreclosure risk.
(344) Furthermore, one of the main technologies used for CDx is next generation
        sequencing (“NGS”). Thermo Fisher’s sole marketed CDx, the Oncomine Dx Target
        Test, is an NGS-based CDx. However, Thermo Fisher’s market shares for NGS are
        low, an estimated [10-20]% in the EEA and [5-10]% globally. Illumina is the clear
        market leader within NGS. The large majority CRO and laboratory service providers
        that responded to the Commission’s market investigation indicated that they are able
        to use Illumina’s NGS devices instead of Thermo Fisher’s devices for their
        purposes.312 Therefore, input foreclosure with respect to NGS systems, either globally
        or in the EEA, cannot arise as a result of the Transaction.
7.      CONCLUSION
(345) 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
312 Replies to question 11 of questionnaire Q1 to CRO and laboratory service providers.
                                                        83
 ---pagebreak--- 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
                                         84