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Ivax acquisition of 3M’s distribution business for certain asthma products to be referred unless undertakings are given

PN 132/03     20 October 2003

The completed acquisition by Ivax International GmbH of 3M Company's distribution business for certain asthma products will be referred to the Competition Commission unless Ivax gives suitable undertakings, to address competition concerns, says the OFT.

This is the first time the OFT has required a company to give undertakings in lieu of a reference since the merger provisions of the Enterprise Act came into force on 20 June 2003. Previously, decisions on references or undertakings were made by the Secretary of State for Trade and Industry after considering OFT advice.

The OFT believes that the deal may be expected to result in a substantial lessening of competition in the UK market for the supply of salbutamol (hydrofluoroalkane (HFA) propelled) breath actuated inhalers. This is a type of inhaler used to relieve the symptoms of asthma.

The OFT is concerned that as a result of the transaction, Ivax is now the only supplier of salbutamol (HFA) breath actuated inhalers in the UK and considers that the acquisition could lead to increased prices for these devices.

Ivax has indicated that it is willing to offer an undertaking not to increase the price of these inhalers until a new supplier enters this sector. 

Penny Boys, OFT Executive Director, said:

'Prior to the merger, the parties were the only suppliers of salbutamol (HFA) breath actuated inhalers and we have been unable to conclude that suppliers of other inhalers would act as an effective constraint on prices. The competition concern relates to the ability of the merged company to increase the price of these products. Given the particular structure of this sector, the proposed undertaking would address that concern'.

The OFT will shortly begin a consultation process in respect of the proposed undertakings. This will be announced in a further press notice.

NOTES

1. The Enterprise Act 2002 empowers the OFT to refer to the CC completed or anticipated mergers for investigation and report which create or enhance a 25 per cent share of supply in the UK (or a substantial part thereof) or where the UK turnover associated with the enterprise being acquired is over £70m, and where the OFT believes that it is or may be the case that the merger has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the UK.

2.  The OFT may, instead of making a reference to the Competition Commission, accept undertakings from an appropriate party to take such action as it considers appropriate to remedy, mitigate or prevent the substantial lessening of competition or any adverse effect which has or may have resulted from it (or may be expected to result from it).

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