The European Commission has approved, under the EU Merger Regulation, the proposed merger between Novozymes and Christian Hansen.
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The approval is conditional upon full compliance with the commitments offered by the parties.
Novozymes and Chr. Hansen are both bioscience companies.
Novozymes develops, manufactures and supplies industrial enzymes to multiple industries, such as agriculture, animal health food and beverage. Chr. Hansen develops natural ingredients solutions for the food, nutritional, pharmaceutical and agricultural industries.
The Commission's investigation showed that the merger, as initially notified, would have reduced competition in the market for the manufacture of one specific enzyme, lactase, using genetic modification technology.
In particular, the Commission found that Chr Hansen had a project to start manufacturing this product and would very likely grow into an effective competitor within a short timeframe.
The Commission also found that post-merger there would not be sufficient potential competitors to exert sufficient competitive pressure on the merged entity.
To address the Commission's competition concerns, the parties offered to divest:
• Chr. Hansen's project to enter the market for the manufacture of lactase;
• Chr. Hansen's lactase distribution business; and
• Novozymes' lactase production facility.
These commitments fully address the competition concerns identified by the Commission, by paving the way for the creation of a divested business with the necessary production assets and research and development capabilities to grow as a viable competitive producer of lactase on a lasting basis.
Following the positive feedback received in the context of the commitments' market test, the Commission concluded that the transaction, as modified by the commitments, would no longer raise competition concerns.
The Commission also undertook a detailed investigation into whether this transaction could have a negative impact on innovation in the industrial biotech sector.
After a comprehensive review and extensive benchmarking exercise, the Commission established that merged entity's competitors have the equivalent ability to invest in R&D and that the parties do not have any specific R&D capabilities that rivals could not otherwise access.
The decision is conditional upon full compliance with the commitments. Under supervision of the Commission, an independent trustee will monitor their implementation. ■