Tag Archives: DoJ HSR Comments Second Request Bayer Behringer Merial Intervet Pfizer Wyeth Animal Health FTC Hart Scott Divestitures Overlap Sanofi ECC Antitrust Reverse Merger August 20 2009

Highly-Concentrated EU Vet Med Markets: Multi-Species Rabies Vaccines, Among Others

This is part two of a series of posts, on what to write about, when you get ready to write the European Competition Commission.

You only have seven days left to respond — now that Sanofi-Aventis is acquiring the second half of Merck’s Merial animal health venture, and is also being granted the right to buy all of Intervet, post the Schering-Merck merger. [Here is the earlier part one.]

Back in the Fall of 2007, as a part of Schering-Plough’s original acquisition of Organon (and Intervet), the ECC required divestitures of a slew of animal health product lines. While it is exceedingly difficult to track which concerns bought which product lines, post 2007 (out of the Organon/Intervet acquisition required divestitures), what is clear is that if Merial and Intervet are combined, even in a 50-50 joint venture between Sanofi-Aventis and “New Merck” — there will be significant, and increased, concentration in many animal health markets in Europe.

[Recall again that Sanofi-Aventis is buying Merial, from Merck, and then receiving a “call” option — to buy all of Intervet, post the Schering-Plough/Merck merger.] With me so far? Good.

We know both Merial and Intervet have substantial market positions in the multi-species rabies vaccines markets in the United Kingdom, Greece and Finland. We also know that Merial and Intervet have substantial market positions in the clostridia vaccines for ruminants markets the United Kingdom, Italy and Greece.

More specifically, by using the parties’ own 2007 ECC filing data, we may infer that the following is highly-likely still true, at least to the nearest 5 to 10 percentage points of market share: These figures were derived by assuming Schering-Plough divested these lines, on Pages 37, 42 and 46 of this ECC October 2007 Filing — and then totaling Merial and Intervet’s combined positions, as being the likely final outcome of the 2009-2010 proposed transactions:

. . . .Schering-Plough sells its monovalent rabies vaccine under the brands Rabdomun and Quantum. Intervet’s product is marketed under the brand Nobivac. . . . At the EEA level, there are four significant competitors. The market leader is by far Merial, with a market share of [40-50]%. The other significant competitors are Intervet ([20-30]%), Virbac ([10-20]%) and Pfizer ([5-10]%). . . .

Based on data provided by the parties, the affected markets where Merial and Intervet would have a combined market share of at least 25% in the EEA at the national level are Finland, Greece and the United Kingdom:

Competitors United Kingdom Greece Finland
Intervet [50-60]% [40-50]% [30-40]%
Merial/Sanofi [30-40]% [40-50]% [30-40]%
M/I COMBO [95-100]% [90-100]% [60-70]%

Folks — that’s nearly what we call a monopoly, in two big markets — and highly concentrated in the third large market, to boot.

It would seem that the European Competition Commission ought to take the view that the proposed concentration raises serious doubts as to its compatibility with the common market as regards the markets for monovalent multispecies rabies vaccines in Finland, Greece and the United Kingdom. . . .

Ruminant Vaccines

At the EEA level, Schering-Plough [even with several intervening divestitures, post 2007] and Intervet are the clear market leaders on the market for multivalent clostridia vaccines for ruminants (the term “ruminant” includes farm animals — cattle, sheep and goat, but not pigs). The other important competitors that market clostridia vaccines for ruminants in the EEA are Hipra and Merial (each with a 8-antigen vaccines for sheep, cattle and goats) and CEVA (with a 3-antigen vaccine for cattle and sheep and a 6-antigen vaccine for sheep and goats). . . .

The table below sets out the market share of the parties and of their competitors on the broader market for multivalent clostridia vaccines for ruminants, including multivalent clostridials/pasteurella vaccines in these countries in 2006 (no other participant — except whomever Schering-Plough divested to, in 2007 — had more than 20 percent share in any of these markets, as of 2006):

Competitors United Kingdom Greece Italy
Intervet [80-90]% [50-60]% [20-30]%
Merial/Sanofi [0-5]% [0-5]% [40-50]%
M/I COMBO [85-90]% [55-60]% [65-70]%

These concentrations raise serious concerns.

. . . .[Even after divesting ECC mandated lines in 2007] Schering-Plough retained the right to manufacture the ten-strain clostridial vaccine, but agreed to re-register and rebrand it, as the trademark Covexin was transferred to the purchaser. . . .

So, this is yet a[nother] public service mailer — print, or cut and paste the above, and mail in the next ten days — if you are at all concerned about preserving European price- and product-offering competition in animal health businesses. Mail it (Old School-style) to this address:

European Commission
Directorate-General for Competition
Merger Registry
1049 Bruxelles/Brussel

Whiskey for my men; beer for my horses. . . .”

A Reader Asked “When Will FTC Seek Public Comments” — On Merck/Schering-Plough/Sanofi Transactions. . . .

While I answered the question, in the comment-box, I thought it might be useful to reprint it here, in full — as (time-permitting) later today, I will outline more on the likely competitive concentrations in Europe, such as multivalent clostridia/pasteurella vaccines in Italy and the U.K.; multivalent cat vaccines in the U.K.; and monovalent multispecies rabies vaccines in the U.K., Greece and Finland. In any event, here was my answer to the headline’s question:

. . . .Our United States anticompetitive merger review system works a little differently than the European (ECC) one.

There is no formal call for public comment, under the Hart-Scott Rodino rules.

More than occasionally, FTC staffers will contact various competitors (of the parties to the proposed transaction) in a given market, as they conduct their analysis — we know that analysis is ongoing, so we know that some competitors (Pfizer, for example) have been/will be contacted. Of course, FTC has already cleared Pfizer to buy Wyeth, so those executives ought to speak a little more freely with FTC, now.

That said, there is absolutely nothing to prevent any concerned party (or private citizen) from writing directly to FTC, and expressing his or her concerns — about the anticompetitive effect of the Sanofi call option (or any other part of the proposed transactions).

Here’s a good address — [and an FTC brochure (PDF file) to review] — just make sure that you clearly label yours as a letter concerning the overall proposed acquisition of Schering-Plough, by Merck. The office below will get it routed to the right FTC staff member — the one handling the Hart-Scott review:

Premerger Notification Office
Bureau of Competition, Room 303
600 Pennsylvania Avenue, N.W.
Washington, D.C. 20580
Director of Operations
and Civil Enforcement
Antitrust Division,
Department of Justice
950 Pennsylvania Avenue, N.W., Room 3335
Washington, D.C. 20530
(For FEDEX air bills to the Department of Justice, do not use the 20530 zip code, use zip code 20004)

Mark the packet thus:

In Re: Merck/Schering-Plough
Reverse Merger Transaction (and
Sanofi-Aventis Merial Purchase;
call option on Intervet Business)

If you wish to submit confidential information, I would send it by mail only, and a copy to this address (below), as well as the above — and mark it “Confidential”.

Federal Trade Commission
Bureau of Competition-H374,
Washington, D.C. 20580
In Re: Merck/Schering-Plough
Reverse Merger Transaction (and
Sanofi-Aventis Merial purchase;
call option on Intervet Business)

Or Telephone (if non-confidential):

Email (also if non-confidential):


[If your packet is to be confidential, be sure you have the absolute right to deliver the materials to a third party (consult a lawyer).

I would advise against e-mailing it in. Use the old school mail, or Fed Ex details, above.]