CELEX: 32007M4569
Language: en
Date: 2007-04-24 00:00:00
Title: Commission Decision of 24/04/2007 declaring a concentration to be compatible with the common market (Case No COMP/M.4569 - GE / ABBOTT DIAGNOSTICS DIVISION) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EN
                                        Case No COMPIM.4569 -
                                        GE             I           ABBOTT
                                        DIAGNOSTICS
                                        DIVISION
                                 Only the English text is available and authentic.
                          REGULATION (EC) No 139/2004
                                       MERGER PROCEDURE
                           Article 6(1)(b) NON-OPPOSITION
                                                      Date: 24/04/2007
In electronic form on the EUR-Lex website under document
                                               number 32007M4569
Office for Official Publications   of     the    European         Communities
L-2985 Luxembourg
 ---pagebreak---                         COMMISSION OF THE EUROPEAN COMMUNITIES
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                                                                 Brussels, 24/04/2007
                                                                 SG-Greffe(2007) D/202467
   In the published version of this decision, some                       PUBLIC VERSION
   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   omitted has been replaced by ranges of figures or a                MERGER PROCEDURE
   general description.                                             ARTI CLE 6(1 )(b) DECISION
 To the notifying party:
Dear Sir/Madam,
Subiect:       Case No COMP/M.4569 - GE/ Abbott Diagnostics
               Notification of 15.03.2007 pursuant to Article 4 of Council Regulation
               No 139/2004 1
1. On 15.03.2007, the Commission received a notification of a proposed concentration
    pursuant to Article 4 of Council Regulation (EC) No 139/2004 (the "Merger
    Regulation") by which the undertaking General Electric ("GE", USA) acquires within
    the meaning of Article 3(1)(b) of the Merger Regulation control over Abbott
    Laboratories' ("Abbott", USA) laboratory in vitro diagnostics business and point-of-care
    in vitro diagnostics business ("Abbott Diagnostics") by way of purchase of assets.
2. The Commission has concluded that the notified operation falls within the scope of the
    Merger Regulation and does not raise serious doubts as to its compatibility with the
    common market and with the EEA Agreement.
I.    THE PARTIES
3. GE is a diversified industrial corporation which is active in numerous fields, including
    manufacturing, technology and services. GE is active in health-related products through
    its division GE Healthcare ("GEHC"). Other GE businesses are GE Infrastructure
        OJ L 24, 29.1.2004, p. 1.
Commission europeenne, B-1049 Bruxelles/ Europese Commissie, B-1049 Brussel- Belgium. Telephone: (32-2) 2991111.
 ---pagebreak---      (aviation, energy etc.), GE Industrial (appliances, lighting etc.) GE Commercial Finance
     (insurance, loans, etc.), GE Money (credit services) and NBC Universal (media).
4. Abbott Diagnostics develops, manufactures and sells in vitro diagnostic ("IVD") systems
    and products for use in hospitals, medical laboratories and physicians' offices including
    portable and handheld IVD products for blood analysis at the point of patient care.
II.    THE OPERATION
5. On 18 January 2007, GE and Abbott concluded an asset purchase agreement under the
    terms of which GE will acquire sole control of substantially all the assets and liabilities
    of Abbott Diagnostics. The transaction will be carried out by way of an acquisition of
    the relevant global assets by legal entities owned by GE, either existing or to be set up.
III. CONCENTRATION
6. Following the transaction, GE will acquire sole control over Abbott Diagnostics. The
    operation therefore constitutes a concentration within the meaning of Article 3(1 )(b) of
    the Merger Regulation.
IV. COMMUNITY DIMENSION
7. The undertakings concerned have a combined aggregate world-wide turnover of more than
    € 5 billion (GE: € 130 billion in 2006; Abbott Diagnostics: [ ... ]). Each of them has a
    Community-wide turnover in excess of€ 250 million (GE: [ ... ];Abbott Diagnostics:[ ... ])
    but they do not achieve more than two-thirds of their aggregate Community-wide turnover
    within one and the same Member State. The notified operation therefore has a Community
    dimension.
V.    COMPETITIVE ASSESSMENT
8. The proposed transaction concerns the manufacture and sale of IVD reagents, instruments
    and accessory products, collectively referred to as "IVD systems "2 . In contrast to Abbott
    Diagnostics, GE is not active in the manufacture and sale of IVD systems. As a result, the
    proposed transaction does not lead to any horizontal overlap. However, GE supplies life
    sciences products to the IVD sector where Abbott Diagnostics is active. Therefore the
    merger gives rise to vertical relationships. In addition, GE offers in vivo 3 products such as
    diagnostic imaging equipment and diagnostic pharmaceuticals, and possible conglomerate
    effects are thus examined.
2   Reagents (or "tests") are solutions of highly specific biological or chemical substances that are able to
    react with target substances in samples (for example blood, tissue or urine) to produce a product that can
    be measured or seen. The analytical instruments (or "equipment") bring samples and reagents together and
    measure the result. Accessory products (or "accessories") such as software programmes are used to run the
    instrumentation, control reagents and calibrators and ensure the smooth functioning of the entire system.
3   Abbott Diagnostics' in vitro diagnostic testing involves tests for disease outside the body using blood and
    urine samples. By contrast, GE's diagnostic pharmaceuticals are injected into the body and then its
    diagnostic imaging systems are used to capture the image of the interaction of the injected substances and
    the body (in vivo).
                                                           2
 ---pagebreak---   Vertical Relationships
          Upstream markets
 9. GE sales of life sciences products to the IVD industry comprise chromatography
      equipment and media, bulk nucleotides and oligonucleotide synthesis chemistry and
      hardware.
          Relevant product markets
 10. Chromatography is used to separate and purify proteins according to, inter alia, their
      physical properties such as size, electrical charge, biological function etc. Two broad
      technologies of chromatography exist, gas and liquid. GE is only active in liquid
      chromatography ..
 11. In the IVD sector, liquid chromatographyt is one of a number of processes that are used
     in the development and manufacture of IVD reagents. More particularly, it is used to
     purify biomolecules 5 that are subsequently used in the production of two of the basic
     components of an IVD reagent kit: (i) a coated solid phase that provide binding surfaces
     for reagents and (ii) a conjugate, which detects molecules to identify and then signal the
     presence or absence of disease. IVD manufacturers predominantly use liquid
     chromatography techniques because of the soluble water-based nature of IVD reagents.
     However, it should also be noted that not all biomolecules used in IVD reagents require
     the use of chromatography processes to achieve the desired level of purity for the IVD
     reagent6 .
12. Liquid chromatography encompasses a number of different techniques such as affinity
     chromatography, gel filtration, ion exchange chromatography and hydrophobic
     interaction chromatography. The degree of substitutability among the different
    techniques appears limited. From a demand-side consideration, the notifying party
     submits that in the early development phase of an IVD test, researchers will experiment
    with different techniques before the optimum technique or techniques is/are identified
     for the product and hence they will often purchases different sets and combinations of
    various techniques. However, changes between techniques are not common once a
    product reaches the manufacturing stage as explained below as the most efficient
    technique is selected from an economic and technical point of view. On the other hand,
    the market investigation indicated that, from a supply-side perspective, most liquid
    chromatography suppliers are active in more than one technique but with various degree
    of success: the fact that GE's market position varies a great deal from one liquid
    chromatography technique to another (see below in the competitive assessment) suggests
    that the supply-side substitutability could be limited. However it is not necessary to
4   Gas chromatography is not used in the IVD sector.
5   A biomolecule is predominantly a protein (i.e., antigens and antibodies)
6   For example, some biomolecules can be purified by other methods such as differential solubilisation - a
    process in which different solvents are used to dissolve and isolate materials based on their solubilities in
    these solvents.
                                                           3
 ---pagebreak---      decide whether each liquid chromatography technique constitutes a relevant product
    market or whether the relevant market should encompass all liquid chromatography
    techniques as the proposed transaction does not raise competition concerns under any
    product market definition.
13. Bulk nucleotides are the building blocks of DNA7 and are used in a number of different
    laboratory techniques. GE does not itself manufacture bulk nucleotides but purchases
    them from a third party supplier for resale to customers for applications including
    oligonucleotide synthesis (see below), polymerase chain reaction8 ("PCR") and DNA
    sequencing9.
14. Oligonucleotides 10 are short sequences of nucleotides, typically with 20 or fewer bases
    i.e. units of DNA. Oligonucleotide synthesizers are fluid-handling devices that are used
    to simplify the chemical process of replicating oligonucleotides and multiplying bases.
    In the IVD sector, sales of bulk nucleotides, oligonucleotides and oligonucleotide
    synthesizers take place only occasionally for general research and development
    applications. For the purposes of the present investigation, it is however not necessary to
    determine the precise scope of these product markets as no competition concerns would
    arise under any alternative definition.
Relevant geographic markets
15. The supply of chromatography equipment and media, bulk nucleotides and
    oligonucleotide synthesis chemistry and hardware, to the 'pharmaceutical and
    biotechnology industries, academia and the IVD sector is conducted on a global basis.
    Suppliers are generally active globally with centralised production facilities. GE and its
    rivals offer their products globally under similar brand names and with similar
    packaging. Moreover, transport costs are not significant, generally accounting for a very
    low proportion of the price of these products. Furthermore; many customers are
    sophisticated and are themselves active in the IVD sector on a global basis. The markets
    for these products appear therefore to be EEA-wide and the market investigation did not
    bring any elements that would speak for the definition of narrower geographic markets 11 .
    However, in the absence of any significant vertical concerns arising from the proposed
    transaction, it is not necessary to define the precise scope of the relevant geographic
    markets.
7   Bulk nucleotides are the constituent molecules (adenine, guanine, thymine and cystosine) used in the
    synthesis of DNA (Deoxyribonucleic acid).
8   PCR using nucleotides and oligonucleotides is a generic research tool employed in the amplification of
    DNA. PCR is a biochemistry and molecular biology technique used in the pharmaceutical, biotechnology,
    academic and IVD fields.
9   DNA sequencing is the process of determining the order of nucleotide bases in a DNA oligonucleotide.
10  GE manufactures and markets oligonucleotides.
11  It should however be noted that this discussion of the rele~ant geographic markets is specific to this case.
    Indeed, it cannot be excluded that the markets for liquid chromatography would have to be defined as
    national if the set of customers considered (e.g. laboratories) were different.
                                                            4
 ---pagebreak---            Downstream markets - in vitro diagnostics
 16. Abbott Diagnostics is active in the manufacture and sale of IVD systems. The IVD sector
      has been the subject of a number of previous cases examined by the Commission 12•
 17. In the most recent of these cases (M. 4321 - Siemens/Bayer Diagnostics), the
      Commission referred to the European Diagnostic Manufacturers Association's
      ("EDMA") classification of IVD reagents for the purposes of defining the relevant
      product market. The EDMA currently classifies IVD reagents into six main categories:
      (i) clinical chemistry, (ii) immunochemistry, (iii) haematology, (iv) microbiology
      culture, (v) infectious immunology and (vi) genetic testing. Abbott Diagnostics is active
      in four of the six categories: clinical chemistry 13 , immunochemistry 14 , haematology 15
      and infectious immunology 16 • Within each of the six categories, the EDMA proposes a
      second level of classification based on thematic 'panels' of tests. As an example, in the
      infectious immunology category where Abbott Diagnostics is the market leader in the
      EEA, 10 so called second level classifications exist including bacteriology, hepatitis
      viruses, retroviruses and other virology.
 18. It is to be noted that the EDMA does not make any distinction between regular
      instruments and point-of-care devices in its classification with both considered to form
     part of the broad category of IVD instruments and reagents. However, the notifying party
      submits in the absence of any significant competition concerns arising from the proposed
     concentration that the precise scope of the relevant market may be left open.
19. In previous cases concerning the IVD industry, the Commission has considered whether
     a further segmentation of the relevant product markets should be made between reagents
     and instruments 17 • However, it has normally found this further segmentation to be
     unnecessary in the sense that IVD instruments are often proprietary or "technically
     closed", i.e., the reagents of one manufacturer cannot be used with equipment of any
     other manufacturer and vice versa. Even those remaining "technically open" systems
     available in the IVD business are closed de facto because the reliability of test results is
     often guaranteed only when using proprietary equipment and reagents. The Commission
     has also considered in these cases whether the second level or thematic panels of the
12   Case IV/M.457 Roche/Syntex: Case IV/M.950 Hoffman - La Roche/Boehringer Mannheim: Case
     IV/M.954 Bain/Hoechst-Dade Behring: Case IV/M.1325 Bayer/Chiron Diagnostics: Case COMP/M.4321
     Siemens/Bayer Diagnostics
13  Clinical chemistry diagnostics systems operate biochemical tests that measure the presence of certain
    substances (e.g. enzymes, lipids, proteins, cholesterol, drugs) in body fluids.
14  Immunochemistry involves the use of targeted antibodies to identify and quantify levels of hormones,
     proteins, drugs and other biological substances found in relatively low concentrations in blood and urine.
15  Haematology encompasses those IVD that test the blood itself, especially its cellular elements.
l6   Infectious Immunology includes test performed in connection with diseases caused by bacterial or viral
     infection
l7  The Commission has left open the question of whether there exists a separate market for accessories such
    as laboratory software specially designed to provide support for the registration and evaluation of test
    results. See, Case IV/M.1325 Bayer/Chiron Diagnostics, paragraph 11.
                                                            5
 ---pagebreak---     EDMA classification or even specific IVD tests could constitute separate markets or
    whether some of them could be grouped together without taking a final position.
20. The market investigation in the present case demonstrated there to be a widespread
    acceptance amongst IVD producers of the EDMA classification as a reasonable basis on
    which to categorise IVD reagents. However, responses to the question whether it is
    appropriate to consider point-of-care tests as part of the overall IVD market gave a more
    mixed picture with half of the respondents indicating from a supply-side perspective that
    such tests require specific production knowledge that not all IVD producers possess. In
    addition, whilst immunochemistry and infectious immunology were viewed by most
    respondents to be distinct categories, there was a general acknowledgement that
    immunoassays and infectious immunoassays are performed on the same equipment.
    However, in the absence of horizontal overlaps in the present case and any specific
    competition concerns, it is not necessary to reach a definitive conclusion on the precise
    scope of the product markets.
        Relevant geographic markets
21. The Commission has considered the relevant geographic markets in previous cases
    involving the IVD sector to be national 18 , citing , inter alia, (i) the national organisation
    of suppliers' distribution networks, (ii) the fact that customers tend to buy their reagents
    and instruments in their home country due to their need for rapid and reliable service to
    ensure continuous availability of these products and (iii) the considerable price
    differences existing between Member States that reflect the divergences in national
    health policies, social security regulations and the technology used in laboratories. At the
    same time, the Commission has recognised that the relevant geographic market may be
    increasingly EEA-wide in scope as all major providers of IVD systems are active
    worldwide and supply the same equipment and reagents in identical form and with
    identical designs and labelling throughout the EEA. However, the notifying party
    submits that for the purposes of the present case it is not necessary to reach a definitive
    conclusion on the precise scope of the relevant geographic markets as the proposed
    concentration does not give rise to any competition concerns.
22. While there was an acknowledgement from some respondents that the scope of the IVD
    market was increasingly broader than national as the most important IVD suppliers are
    active on a worldwide basis and the nature of products, due to regulatory requirements 19 ,
    does not differ within the EEA, the market investigation has to a large extent
    reconfirmed many of the findings in previous cases concerning the IVD sector. In
    particular, it was found that suppliers maintain national sales forces in many markets to
    respond to the needs of customers in those markets. In markets where they do not have
    their own sales force, suppliers commonly use independent distributors to supply
18  Case IV/M.457 Roche/Syntex, paragraphs 29-33; Case IV/M.950 Hoffman - La Roche/Boehringer
    Mannheim, paragraphs 48-56; Case IV/M.954 Bain/Hoechst - Dade Behring, paragraphs 28-31; Case
    IV/M.1325 Bayer/Chiron Diagnostics, paragraphs 25-26; Case COMP/M.4321 Siemens/Bayer
    Diagnostics, paragraphs 28-30.
19  Directive 98/79 of the European Parliament and of the Council of 27 October 1998 on in vitro medical
    devices, ("the IVD Directive"), (OJ L 331, 7.12.1998, p.1) sets out the regulatory requirements that such
    devices must meet before they can be put on the market in the EU, regardless of whether they are
    manufactured in the EU or elsewhere.
                                                        6
 ---pagebreak---       customers in those markets with the result that the cross-border servicing of customers
      or the existence of trans-national customers is rare. At the same time, a majority of
      respondents confirmed the continued existence of price differences between national
      markets reflecting inter alia different social security and insurance systems and thereby
      reimbursement levels.
 23. Thus, in line with the decision M.4321 Siemens/Bayer Diagnostics, the relevant
      geographic markets can be considered as national. However, as the potential for
      foreclosure could only occur on an EEA-wide if not worldwide basis, the market
      investigation for the purposes of this decision was conducted on an BEA/worldwide
      basis.
          Competitive assessment
 24. GE is active in the supply of bulk nucleotides, oligonucleotide synthesis chemistry and
     hardware, and chromatography equipment and media to the IVD industry. The notifying
     party estimates its worldwide market share for liquid chromatography to all purchasers
     to be in the order of [30-40%]. It submits that it is difficult to provide precise market
     shares at the level of individual chromatography techniques but estimates the following
     ranges for those techniques where it is active: (i) [<50%] in affinity chromatography; (ii)
     [>50%] in gel filtration; (iii) [<50%] in ion exchange chromatography; (iv), [<40%] in
     hydrophobic interaction chromatography; and (v) [<10%] in reversed phase
     chromatography. The markets for liquid chromatography and IVD tests are therefore
     affected by the proposed transaction. The notifying party submits that its market share
     for oligonucleotide synthesis chemistry and hardware is less than [20-30%]. However,
     this market is also technically affected by the proposed transaction as Abbott
     Diagnostics has a market share in excess of 25% ([ 40-50%]) in the downstream market
     at the first level of the EDMA classification for infectious immunology20 .
25. The Commission's investigation therefore focused on whether the merged entity would
     have the ability and the incentive to engage in (i) input foreclosure and (ii) customer
     foreclosure.
         Input foreclosure
26. With regard to liquid chromatography, the Commission's investigation focused on
     whether the merged entity could have the ability or incentive to engage in input
    foreclosure having acquired one of the main players in the IVD sector. GE's sales of
    liquid chromatography equipment and media to all customers in the EEA, whether or not
    in the IVD sector, totalled [€400-500 million] in 2006. GE does not record liquid
    chromatography sales in the IVD sector in the ordinary course of business as (i) liquid
    chromatography is widely used in the pharmaceutical and biotechnology industries and
    academia for non-IVD applications and (ii) many of its customers (such as [ ... ]) are
    diversified companies meaning that it is not possible to determine with any degree of
    certainty how the product is ultimately used. However, for the purposes of the present
    notification, the notifying party estimates its sales of liquid chromatography in the IVD
    sector account for only [0-5%] of its overall chromatography sales.
20  Market share at the EEA level
                                                    7
 ---pagebreak---  27. GE submits that the liquid chromatography products sold to the IVD sector are identical
     to those sold to the pharmaceutical and biotechnology industries and academia.
      Consequently, any attempt by the merged entity to refuse to supply its IVD rivals could
     be countered by minimal output expansion by GE's life science rivals which are active
     on the market for liquid chromatography including Bio-Rad ([5-10%]), Millipore ([5-
      10%]), Tosoh ([0-5%]), Waters ([0-5%]), Pall ([0-5%]) and Merck ([0-5%]) 21 • In this
     regard, GE submits that chromatography products are typically "proprietarily open" i.e.
     products supplied by different manufacturers are capable of being utilised together and
     that the technology is mature and not subject to a high degree of patent protection. It is
     also submitted that liquid chromatography purchases account for less than [0-5%] of the
     costs of producing the average IVD reagent and as such are not a significant cost factor.
28. GE's sales contracts for liquid chromatography, similar to many of its competitors, are
     non-exclusive. Many are one-off contracts or for short durations of a year or less. The
     fact that customers do not require contracts of longer duration suggests, in its opinion,
     that switching to other suppliers·can occur with relative ease should it be necessary.
29. In terms of incentive to foreclose, GE argues that a large proportion of the IVD
     purchasers of the different types of liquid chromatography products (approximately [30-
     40%] of GE's chromatography revenues from IVD companies) are large diversified
     multinational companies that purchase these products for their non-IVD businesses as
     well. Therefore, GE would have to withhold sales or increase prices across all the
     purchases of customers. GE submits that this would not be a rational commercial
     strategy as it would stand to lose significant sales in non-IVD segments, thereby
     rendering the costs of a hypothetical attempt to foreclose its IVD rivals unaffordable.
30. The results of the market investigation revealed that customers purchasing liquid
     chromatography products from GE do so primarily because of the company's reputation
     and broad product offering. Although the significance of liquid chromatography in cost
     terms in the manufacture of IVD tests was generally estimated by respondents to be less
     than 10%, its importance as a key element in the overall production process was
     highlighted by a number of customers. Due, in large measure, to the regulatory
     environment surrounding the approval and marketing of IVD medical devices in the
     EEA, it would according to these respondents in the investigation be difficult to switch
     to another supplier without significant time and expense should the post-merger entity
     hypothetically increase prices and /or reduce supplies. At the same time, other IVD
     producers pointed to the existence of alternative suppliers and indicated that switching
     would not pose undue difficulties for them.
31. The regulatory I approval process for the sale of in vitro diagnostic products in the EEA
     is set out in Directive 98/79/EC of 27 October 1998 (the "IVD Directive"). The IVD
     Directive requires all IVD products (as defined therein) to carry the CE Mark before they
     can be placed on the market in the EEA. The CE marking symbolises the conformity of
    the IVD product with the applicable requirements of the IVD Directive imposed on the
     IVD manufacturers.
32. The majority of IVD products are low risk and therefore self-certified. For these
    products the conformity assessment procedures can generally be carried out under the
21   GE's estimates of rivals' market share of liquid chromatography sales to all purchasers.
                                                            8
 ---pagebreak---        sole responsibility of the manufacturers. Conversely, certain specific IVD products bear
       a greater risk because their performance is essential to medical practice and their failure
       can cause a serious risk to health22 . These products are subject to a higher level of
       review and assessment requiring the intervention of an independent third-party
       reviewing entity, known as a "Notifying Body".
 33. As described above, different regulatory requirements apply to different IVD products
       depending on the risk category into which a product falls. Because of the sensitivity of
       IVD test results and the therapeutic measures adopted on their basis, the IVD regulatory
       approval not only assesses the conformity of the final product (i.e., the design) but, for
       certain products, also their manufacturing process (i.e., the quality system).
 34. As a change in the manufacturing process might also affect the specifications (i.e., the
      design) of the end product, an IVD manufacturer would also have to revalidate internally
      the effects of any change in the manufacturing process caused by the change to a new
      chromatography technique/supplier. Depending on this internal assessment the IVD
      manufacturer might then have to make a new EC Declaration of Conformity or re-apply
      for design approval as the case may be.
35. The notifying party estimates that switching from one chromatography technique /
      supplier to another for the purposes of manufacturing a hepatitis or a retrovirus assay,
      which are Annex II, List A products and therefore subject to the strictest requirements,
      could be accomplished at a cost of less than [€100,000-300,000] within approximately
       12 months. Although one respondent in the market investigation who commented on the
      switching issue indicated that it would be more costly and take longer than 12 months,
      the majority did not consider switching costs a significant issue.
36. The fact that GE's sales of liquid chromatography to IVD customers are a small
      percentage of its overall chromatography sales, and by extension an even smaller
      percentage of its total healthcare sales, does not totally exclude that the merged entity
      could have the ability or incentive to foreclose its competitors in the IVD industry. In
      this regard, while liquid chromatography is a relatively unimportant input in cost terms
      in the manufacture of IVD products, its significance may be amplified by switching costs
      and the validation and approval process required by the IVD Directive. On the other
      hand, such a foreclosing strategy would, in any event, be confined to those IVD
22    The IVD Directive distinguishes between four classes of IVD products based on the level of risk:
(i) Annex II, List A - high risk (this includes reagents for determining the blood groups ABO systems, rhesus,
      anti-Kell, and for the detection of HIV, HTLV I and II, and Hepatitis B, C and D viruses);
(ii) Annex II, List B - high to medium risk (this includes reagents for determining the blood groups anti-Duff
      and anti-Kidd, and for determining infectious and diseases such as rubella, and toxoplasmosis);
(iii) Self Test - medium risk (this includes self-testing devices except those for blood glucose measurement);
(iv) General Category - low risk (this includes all other IVD reagents).
                                                              9
 ---pagebreak---     competitors who are not significant purchasers of liquid chromatography products for a
    range of non-IVD purposes23.
37. Furthermore, it should be recalled that a number of IVD producers indicated that if the
    need arose to find an alternative supplier this is possible. The market investigation
    demonstrated there to be a number of credible, alternative suppliers ·of liquid
    chromatography products active on the market. Although not all suppliers offer an
    equivalent range of chromatography techniques to that offered by GE, respondents in the
    market investigation did not indicate that the supply of all techniques is a vital aspect to
    IVD customers. The alternative suppliers are not constrained in terms of capacity and
    would be able to respond to a surge in demand if required.
38. In conclusion, any hypothetical attempt by the merged entity to foreclose its IVD rivals
    by increasing the price and/or reducing the supply of liquid chromatography products
    would not result in input foreclosure for the reasons outlined above. Consequently, the
    proposed transaction is not expected to result in any significant impediment to effective
    competition in the market for IVD systems.
         Customer foreclosure
39. According to the notifying party, customer foreclosure with respect to liquid
    chromatography can be ruled out on the grounds that, even within each technique in
    which GE is active, Abbott Diagnostics' total chromatography purchases represent an
    insignificant proportion of total sales of that technique. As such, any effect on GE's
    rivals' shares of a hypothetical switch of Abbott Diagnostics' chromatography purchases
    to GE would be minimal and they would continue to have more than sufficient
    alternative outlets for their products to remain competitive. This was confirmed by
    respondents in the market investigation.
         Bulk nucleotides and oligonucleotide synthesis
40. With regard to bulk nucleotides, it is recalled that GE does not manufacture these itself
    but purchases them from a third party for resale. In addition, Abbott Diagnostics had no
    or de minimis purchases of these products from either GE or its rivals. The same is true
    for oligonucleotide chemistry synthesis and hardware. Therefore, the proposed
    concentration does not give rise to foreclosure concerns from either an input or customer
    perspective.
         Conglomerate issues
41. Although the proposed transaction does not give rise to horizontal overlaps, both Abbott
    Diagnostics and GE are active in the medical diagnostics business: Abbott Diagnostics
    through in vitro diagnostics and GE through in-vivo 24 diagnostic products such as
23  It could also be argued that even for these competitors, a foreclosing strategy based on price discrimination
    between IVD mono-producer customers and multi-application customers could be defeated by subsequent
    arbitrage.
24  In contrast to in vitro diagnostics which occur outside the body (literally 'in glass'), in vivo diagnostics take
    place in the body. GE's diagnostics pharmaceuticals are injected into the body and then its diagnostic
    imaging systems are used to capture the "image" of the interaction of the injected substances and the body.
    The DI products are Computed Tomography imaging equipment, Magnetic Resonance imaging
                                                           10
 ---pagebreak---       diagnostic imaging (DI) equipment and related services as well as diagnostic
      pharmaceuticals (DP) 25 . As can be seen from the decision M.3304 - GE/Amersham
      (which is confirmed by GE's submission in this case), GE makes significant sales of
      some of these products in a number of member states. 26
 42. However, the proposed transaction is not likely to give rise to conglomerate effects
      through commercial bundling27 • As submitted by the notifying party and confirmed by
      the market investigation, there are indeed numerous obstacles to bundling the products
      in questions such as the fact that, with the exception of hospitals, the products are
      typically purchased by different customers.
 43. In the specific case of hospitals, some respondents indicated that although users of the
      products are different (i.e. different hospital departments), the customer is the same (i.e.
      the hospital to which the departments belong) thereby suggesting that a bundling strategy
      could be possible. However, the market investigation also indicated that within the
      hospital sector, distinct tenders are organised for the procurement of in vitro diagnostic
     products and GE's existing healthcare products. Procurement cycles, processes and
     budgets also differ for in vitro and in vivo products. Furthermore, as noted by the
     Commission in GE/Amersham, while hospitals can value in the short term lower prices
     achieved through bundling, price is not necessarily their key selection criterion and
     technology plays a great role in their purchasing process. As a result, hospitals can be
     expected to continue to purchase the products best fitted to their demand and refuse the
     incentives resulting from bundled offers if the latter could result in a decrease of quality.
44. As a result, the prospect of the merged entity being able to engage in a successful
     bundling strategy appears limited in the short term. For these reasons, it is concluded
     that the proposed transaction is unlikely to give rise to anticompetitive conglomerate
     concerns.
    equipment, Ultrasound Imaging equipment, and Nuclear Imaging equipment (Positron Emission
    Tomography (PET) and SPECT Gamma cameras).
25  GE also manufactures and supplies patient monitoring solutions, anaesthesia delivery systems, healthcare
     information technology and life science products.
26  However, the notifying party considers that GE lacks market power in any in vivo diagnostics (and patient
    monitors products).                                                    ·
27  No risk of technical tying was brought to the attention of the Commission in the course of the market
     investigation.
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 ---pagebreak--- VI. CONCLUSION
45. For the above reasons, the Commission has decided not to oppose the notified operation
    and to declare it compatible with the common market and with the EEA Agreement.
    This decision is adopted in application of Article 6( 1)(b) of Council Regulation (EC) No
    139/2004.
                                                      For the Commission
                                                       signed
                                                      Neelie KROES
                                                      Member of the Commission
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