The European Commission (EC) has cleared the proposed acquisition of Life Technologies by Thermo Fisher Scientific conditioned on Thermo Fisher Scientific’s divestments of three business lines, including media and sera for cell culture. The EC determined that in these areas, the merger, as initially notified, would have significantly reduced competition.
"The remedies preserve competition and innovation in the life sciences industry. The Commission's investigation of these complex markets was conducted in close cooperation with a significant number of competition authorities worldwide, such as the US FTC and the Australian ACCC, making this global case a good example of international cooperation," said Joaquín Almunia, commission vice president in charge of competition policy, in a statement.
Thermo Fisher said in a press statement that the company has committed to divest of its cell culture (sera and media), gene modulation and magnetic beads businesses, which combined, had 2012 revenue of approximately $225 million. The affected product lines include HyClone media and sera for cell culture; single-use technologies, where the parties' activities do not overlap, is excluded from the divestiture.
Other product lines in the divestiture include the Dharmacon and Open Biosystems brands, a license regarding the Tuschl patents, and the polymer-based magnetic beads business (including the Sera-Mag brand and all other relevant IPRs, customer contracts, personnel, and the necessary production equipment).
The transaction's value is approximately $13 billion. The EC investigation showed that the transaction, as initially notified, risked to significantly reduce competition in the European Economic Area.
For cell culture media markets, these concerns were based on the large combined market shares of the merged entity and the presence of important barriers to entry, namely the significant time and investments needed to establish the necessary track record and reliability as a supplier.
For cell culture sera markets, the EC reports that the investigation revealed that the merged entity would occupy a too strong position as compared to its competitors, especially for the supply of sera from the safest and therefore most expensive origins.
The commitments to divest address the competition concerns identified during the investigation, the EC reports. The commission concluded that the transaction, as modified by these commitments, would not raise competition concerns. The decision is conditional upon full compliance with the commitments.