(2004/C 33 E/021)

WRITTEN QUESTION P-3415/02

by Harald Ettl (PSE) to the Commission

(25 November 2002)

Subject:   Notification of the Pfizer-Pharmacia concentration, announcement in OJ C 265, 31.10.2002, p. 2

How closely did the Commission/DG Competition examine whether the Pfizer-Pharmacia concentration will create or strengthen a dominant position as a result of which effective competition will be significantly impeded on the common market or in a substantial part of it, in particular in view of the fact that by taking over Pharmacia Pfizer will become the world's largest pharmaceuticals company? To what extent can conditions be imposed with a view to preventing the creation or strengthening of a dominant position in certain product sectors which would be incompatible with Article 2(3) of Regulation (EEC) No 4064/89 (concentration control regulation)?

By means of the concentration Pfizer will secure a dominant position in many product markets which may result in a worsening of the supply situation for consumers, in the form of a reduced variety of products and higher prices. How closely did the Commission/DG Competition consider this aspect, and what conclusions did it come to? What conditions were imposed with a view to preventing such a development?

Did the Commission/DG Competition consider whether the concentration in question is consistent, pursuant to Article 2(1) of the concentration control regulation, with the need to preserve and develop effective competition within the common market in view of the structure of all the markets concerned, given that, as a result of the concentration, some 30 000 to 40 000 jobs will be lost around the world, including 10 000 in Europe and a third of the existing jobs in Austria?

Answer given by Mr Monti on behalf of the Commission

(13 January 2003)

When the Commission examines a merger, the aim is always to establish whether the operation will create or strengthen a dominant position as a result of which effective competition will be significantly impeded in the common market or in a substantial part of it (Article 2.2 of Regulation (EEC) No 4064/89, ‘the Merger Regulation’) (1). This has also been the case with this particular merger. The Directorate General for Competition has launched a broad market investigation, including detailed questionnaires to customers and competitors in all relevant markets. The fact that the merged entity will become the world's largest pharmaceutical company does not alter the scope of the investigation — to detect strengthening or creation of dominance.

When a concentration raises serious doubts as to its compatibility with the common market, the undertakings concerned may suggest remedies to remove the competition concerns. If the Commission finds the proposed remedies to be sufficient and remove the serious doubts, it may decide to declare the concentration compatible with the common market, on the basis of Article 6.2 of the Merger Regulation. A typical remedy would be to divest the part of the business in the markets where serious doubts arise. Proposed divestitures are then subject to scrutiny by the Commission which will ask customers and competitors for their views as to whether the proposals will effectively remove competition concerns. In addition to divestitures, the Commission can prevent the creation or strengthening of a dominant position in certain product markets by declaring the whole operation incompatible with the common market and, effectively, to prohibit it. Such a decision would be taken only after an in-depth investigation and only in those cases where the proposed undertakings do not adequately address the competition concerns.

As the investigation of the proposed merger between Pfizer and Pharmacia is still ongoing, the Commission is not in a position to comment on the details or the likely outcome of the case.

The preservation and development of effective competition, which is the aim of merger control, focuses in large measure on the potential economic impact of the transaction upon consumers. Although the restructuring caused by mergers may have effects on employment, such considerations are not within the remit of an economic analysis of the specific effects of a transaction upon competition in a particular market. However, the Merger Regulation affords third parties, including the representatives of the employees, a right to express their opinion in writing and/or orally. In the present case, interested third parties have been invited to submit their observations on the operation in a document published on 31 October 2002 in the Official Journal (2).

(1)  Council Regulation (EEC) No 4064/89 of 21 December 1989 on the control of concentrations between undertakings, OJ L 395, 30.12.1989.

(2)  OJ C 265, 31.10.2002.