Fine chemicals deal probed by EC
22 May 2003
The European Commission has launched a detailed investigation into the planned acquisition of the Vitamins and Fine Chemicals division of Swiss company Roche by Dutch-based DSM.
On March 31 2003, DSM notified the Commission of an agreement under which it would acquire sole control of Roche Vitamins and Fine Chemicals (RV&FC).
DSM and RV&FC are active in a broad range of product areas. However, the only overlap between the two businesses is in the field of feed enzymes that are added to animal feed - in particular non-starch polysaccharide degrading enzymes (NSP degrading enzymes) and phytase. NSP-degrading enzymes help animals release nutrients in their feed. Phytase is an enzyme used to increase the amount of digestible phosphorus in animal feed.
DSM and RV&FC belong to two different vertical alliances in this market area. DSM has an alliance with BASF and RV&FC with Novozymes, a Danish producer of industrial enzymes. In their respective alliances, DSM and Novozymes are mainly responsible for research and development and production whilst BASF and RV&FC are mainly responsible for sales and distribution.
The EC has expressed concern that the acquisition of RV&FC by DSM will create a structural link between the two alliances and lead to near monopolies on the production and distribution of phytase.
In the course of the first-phase review of the case, DSM offered to terminate the DSM/BASF alliance and to establish BASF as an effective competitor, but the Commission could not determine in a clear-cut manner whether that would fully restore effective competition. However, the Commission has not yet ruled out that the proposal could form the basis of a possible solution.
The deal is also being reviewed by the US Federal Trade Commission with which the Commission is closely co-operating.
