The completed acquisition between Coloplast A/S and SSL International plc

No. ME/00270

A report under section 125(4) of the Fair Trading Act 1973 on the advice of the Director General of Fair Trading, given on 1 August 2002, to the Secretary of State for Trade and Industry under section 88(2) of the Act

In this submission I report under section 88(2) of the Fair Trading Act 1973 (the Act) on the outcome of the negotiations with Coloplast A/S and Coloplast Ltd (collectively referred to as Coloplast) on the terms of the undertakings you requested that I seek following the publication of the above report on 14 June.

BACKGROUND

The background details of the reference to the Competition Commission (CC) and its subsequent findings were contained in the Office's advice of 30 May 2002. Melanie Johnson announced on 14 June that she had accepted the conclusions of the CC, supported by the OFT, that the merger was against the public interest, and that Coloplast should be required at least to divest the Clear Advantage silicon sheath brand by amending the exclusive distribution agreement with Mentor Corporation, the owner of this brand.

Your officials then wrote to the OFT on 14 June requesting, on your behalf, that we seek undertakings from Coloplast requiring it to negotiate with Mentor Corporation to achieve the necessary changes to the exclusive distribution agreement, within six months of the publication of the CC report, so that it would no longer distribute Clear Advantage silicon sheaths in the UK. For the avoidance of doubt, the undertakings make clear that Coloplast can continue to retail Clear Advantage branded sheaths through the DAC (dispensing appliance contractor) licences it holds, by dispensing these products to meet patient requirements on prescription. Such supply is at the retail, rather than distribution, level in the Community sector, an area where the CC made no adverse finding.

The terms of any new agreement are to be approved by the OFT.

If Coloplast and Mentor Corporation are unable to reach a satisfactory agreement within the time specified I will need to advise you further on other appropriate action or remedies including the use of your order-making powers.

THE UNDERTAKINGS

Coloplast and 4C Health Ltd (a company in which Coloplast has a 40 per cent shareholding and which operates as a DAC in the Community sector) have agreed to give undertakings in the form requested.

CONCLUSION

I believe that the undertakings attached will ensure that the remedy identified in the CC's report will be achieved. Coloplast and 4C Health Ltd have indicated that they accept the terms of the undertakings and have signed them in advance. This does not in any way prejudge your decision as to whether or not the undertakings are satisfactory, but will allow prompt publication should you decide to accept them. I therefore recommend that you accept the attached undertakings and that they be published in accordance with section 88(2A) of the Act in due course.

Acquisition by Coloplast A/S of the continence care business of SSL International Plc  (pdf 59 kb)

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