Anticipated acquisition by Chiral Technologies Europe SAS of Chromtech Limited

Affected market: Chromatographic equipment

No. ME/3787/08

Please note that the full text of the decision can be downloaded by using the link on the right. What follows are extracts regarding the parties, the transaction, jurisdiction, third party views, assessment and decision.

The OFT's decision on reference under section 33(1) given on 24 September 2008. Full text of decision published 1 October 2008.

Please note that square brackets indicate figures or text which have been deleted or replaced at the request of the parties for reasons of commercial confidentiality.

PARTIES

Chiral Technologies Europe SAS (CTE), a French subsidiary of the global chemicals business Daicel Chemical Industries Limited, is a manufacturer and supplier of chromatography products.

Chromtech Limited (Chromtech), run by its two shareholders, Professor Hermansson and his wife, is a UK limited company based in Congleton, Cheshire. Chromtech is also active in the manufacture and supply of chromatography products. In 2007, its UK turnover amounted to around £80,000 and its worldwide turnover was around £[<5 million].

TRANSACTION

CTE proposes to acquire the entire share capital of Chromtech. The parties having notified the anticipated transaction on 1 August 2008, the administrative target date for the OFT's decision on reference is 29 September 2008.

JURISDICTION

As a result of this transaction, CTE and Chromtech will cease to be distinct. The parties' combined share of the supply in the UK of a specific category of chromatography product, chiral columns, amounts to over 90 per cent. Consequently the share of supply test in section 23 of the Enterprise Act 2002 (the Act) is met. The OFT therefore believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation.

THIRD PARTY VIEWS

The OFT received responses from several competitors, some of which are also UK distributors of certain of the parties' products. One competitor was concerned about the potential strengthening of CTE's existing position.

One customer noted that there are not many companies competing in the chiral market, but was not particularly familiar with Chromtech's products. Three other customers had no concerns on the basis that they did not consider the parties to compete closely against each other - and did not think that the merger would affect them at all.

ASSESSMENT

The parties overlap in the manufacture and supply of chiral columns: a specific type of equipment used in the chromatographic separation of chemical compounds.

Their combined shares of the supply of this product in the UK are very high at over 90 per cent (an increment of six per cent). However, evidence from the parties and from third parties indicates that, as a result of the relevant patents having reached maturity, the shares of supply that play out within the current market structure are now being contested by new entrants such as Knauer, Eka, Macherey Nagel, Regis and Phenomenex.

Furthermore, despite these very high shares of supply, any prospect of the merger leading to a substantial lessening of competition in the supply of chiral columns is, in the OFT's view, unrealistic in light of evidence from the parties and from third parties pointing to significant differentiation in the parties' respective offerings and consequently a lack of reciprocal competitive constraint posed between them prior to the merger.

Consequently, the OFT does not believe that it is or may be the case that the merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.

In any case, the OFT considers that, given the unique attributes and circumstances of the case, the size of market is such that the costs involved in a reference to the Competition Commission would have been disproportionate to any benefits, and this would have exempted the OFT from the duty to refer this particular merger.

DECISION

This merger will therefore not be referred to the Competition Commission under section 33(1) of the Act.

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