This Decision is addressed to:
Novartis AG Schwarzwaldallee 215 CH - 4058 Basel Switzerland
AstraZeneca PLC 15 Stanhope Gate London W1Y 6LN United Kingdom
Done at Brussels, 26 July 2000.
For the Commission
Mario Monti
Member of the Commission
(1) OJ L 395, 30.12.1989, p. 1; corrected version OJ L 257, 21.9.1990, p. 13.
(2) OJ L 180, 9.7.1997, p. 1.
(3) OJ C 92, 16.4.2004.
(4) Commission Decision 97/469/EC (Case IV/M.737, Ciba-Geigy/Sandoz) (OJ L 201, 29.7.1997, p. 1).
(5) Commission decision of 26 February 1999, in Case IV/M.1403 - Astra/Zeneca.
(6) Parts of this text have been edited to ensure that confidential information is not disclosed; those parts are enclosed in square brackets and marked with an asterisk.
(7) Decision of 9.8.1999 in Case IV/M.1378 - Hoechst/Rhône-Poulenc (OJ C 254, 7.9.1999, p. 5); decision of 17.7.1996 in Case IV/M.737 - Ciba-Geigy/Sandoz (OJ L 201, 29.7.1997, p. 1).
(8) A cross between two plants with different numbers of genes, giving a high yield and with a rich protein content.
(9) Triazoles are broad spectrum fungicides with utility as foliar sprays or seed dressings on a wide range of crops worldwide, particularly wheat, barley, grapevines, banana, top fruit, turf and a range of vegetables. Triazoles are systemic within the plant and generally curative. They are active at low use rates and control fungi by inhibiting the synthesis of ergosterol (a key component of cell membranes) via inhibition of the 14-demethalyse enzyme. This enzyme is different from the enzymes inhibited by morpholines.
(10) Morpholines (including piperidines) are relatively narrow spectrum fungicides used primarily as foliar fungicides on wheat and barley in Europe. They are active at moderate use rates and control fungi by inhibiting the synthesis of ergosterol. Morpholines are systemic within the plant and curative. They are also vapour active.
(11) Systemic means movement of a chemical within the plant so that protection is given to (new) plant parts that were not directly sprayed.
(12) Vapour active means the ability of a chemical to control disease by means of its volatile component only. The chemical does not fix itself on the plant, nor does it enter.
(13) "A compilation of strobilurin related questions and answers", a document distributed in the United Kingdom.
(14) See data in "Perspectives agricoles, février 2000, pp. 61 to 65" on gross and net profits resulting from strobilurin treatment compared to non-strobilurin treatments.
(15) See data in "Welche Fungizidstrategien im Weizen 2000?", published in Top Agrar 1/2000, pp. 52 to 57.
(16) Broadleaf weeds, as the name suggests, are weeds with leafs; grass weeds are grasses. Within these weed types it is possible to make an additional distinction between annual weeds and perennial weeds. Annual weeds are those weeds that complete their life cycle (from seed germination to seed production) in one season. Perennial weeds stay alive for more than one season.
(17) A herbicide can be broad spectrum either because the active substance contained in it has itself broad spectrum activity, or because the product contains both active substances against grasses and active substances against broadleaf weeds.
(18) Decision of 22.12.1993 (OJ C 9, 13.1.1994).
(19) Decision of 1.10.1993 (OJ C 273, 9.10.1993).
(20) As was confirmed by a competitor, adequate efficacy on only one or two commercially important annual grasses is not sufficient to create a commercial product. Furthermore, grass weed herbicides and broadleaf weed herbicides are not substitutable from a supply side perspective either. This is due to the existence of patents and the official registration process for crop protection products (to be discussed in detail in the section on the geographic market definition).
(21) See also: Commission Notice on the definition of the relevant market for the purposes of Community competition law, para 2 (OJ C 372, 9.12.1997, p. 5).
(22) Commission Notice on the definition of the relevant market for the purposes of Community competition law, point 57.
(23) There is little pre-sowing herbicide use in maize other than the use of non-selective herbicides such as glyphosate (e.g. Roundup, Monsanto) or paraquat (Gramoxone, Zeneca) that are used to prepare fields for planting.
(24) However, farmers, before sowing at least, do consider the post-emergence herbicides to be substitutes for the pre-emergence herbicides. The prices of the latter are therefore constrained by the prices of the former. Furthermore, in pre-emergence, there are broadspectrum products that constitute a substantial link between the broadleaf segment and the grass segment. The consequences of the concentration for herbicides other than post-emergence graminicides are therefore assessed on the basis of herbicides by type of crop.
(25) There is, however, some variation both between the four crops and between countries.
(26) In the context of herbicides for vineyards and orchards, the parties have defined herbicides which have residual or residual + foliar activity as "selective" and those with only foliar activity as "non-selective". A herbicide has residual activity if it remains active for, normally, a period of one month or longer. A herbicide that acts via the foliage usually only has activity for two to three days. Novartis actually sells in France some foliar herbicides for use in fruits and nuts; however, these are not sold as non-selective herbicides in the traditional sense.
(27) OJ L 230, 19.8.1991, p. 1.
(28) OJ L 210, 10.8.1999, p. 13.
(29) [Novartis business secret - price differentials]*.
(30) ITCF recommendations in "Perspective agricoles, février 2000", p. 61 onwards.
(31) In view of resistance management, a maximum of two strobilurin sprays is recommended.
(32) Dr. Manfred Bartels in Top Agrar 1/2000, p. 53.
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(36) Only Novartis and BASF have provided estimates for the total EEA market, and BASF's estimate for 2000 comes closest to the total market value resulting from the market investigation for 1999. Only BASF has provided estimates for the national markets. Even for Germany and the United Kingdom the 2000 estimate is relatively close to the 1999 market value emerging from the Commission's market investigation. This is not the case for France, where BASF's estimate for 2000 is considerably below sales in 1999. However, for consistency reasons, the estimate is used.
(37) The data available to the Commission does not allow a similar projection for the Nordic countries to be made.
(38) See article of Dr. Manfred Bartels, o.c. and Perspectives agricoles, février 2000.
(39) [...]*
(40) See Journée UIPP, fongicides céréales, 12 octobre 1999, "Traitements et interventions de printemps".
(41) The 1999 data, provided in reply to a questionnaire, seem to be based on a different methodology than the information contained in the CO form. This applies to all the 1999 data given in this sugar beet fungicide part.
(42) [...]*
(43) Novartis indicates that Aventis has sales of [5 to 10]* % in 1999 that could, totally or partly, result from the sales of Novartis products.
(44) Calculated on the basis of using AstraZeneca's reply to the questionnaire and multiplying this with the same factor ([20 to 30]* % increase) as results from the correlation between the AZ reply for 1998 and the data in the CO Form.
(45) This is also illustrated by the fact that the products used in early post-emergence treatments are often no different than the products used in pre-emergence treatments. This holds for example for the chemical class of acetanilides (alachlor, acetochlor, metolachlor, dimethenamid, flufenacet), which is commonly referred to as a pre-emergence herbicide class, although [10 to 20]* % is applied in early post-emergence treatments. Post-emergence treatments in the proper sense are typically applied from 4 to 10 weeks after planting. Typical products applied in post-emergence include sulcotrione, rimsulfuron and nicosulfuron.
(46) All figures contained in these tables have been rounded to the nearest one percent. This explains why the sum of the figures in the first and the second column does not always seem to equal the total in the third column. In the countries that are not mentioned in the table (Finland, Ireland, Sweden, Luxemburg, Norway, Iceland, Liechtenstein), the cultivation of maize crops is insignificant. In Austria [5 to 10]* %, Greece [0 to 5]* %, Italy [0 to 5]* % and France [0 to 50]* %, Novartis and AstraZeneca have additional sales through third parties. Even though comparatively small, these figures have been included in the above market share data
(47) According to the parties, the most important perennial grasses are Elymus repens (couch grass), Cynodon dactylon (bermuda grass) and Sorghum halepense (Johnson grass). The most important annual grass weeds are Avena fatua (wild oat), Alopecurus myosuroides (blackgrass), Apera spica-venti (loose silky bent), Lolium multiflorum (Italian rye grass), Echinochloa crus-galli (barnyard grass), Digitaria sanguinalis (large crabgrass), Setaria spp. (foxtail), Panicum spp. (Panicum), and Poa spp. (meadow grass). The most important perennial broadleaf weeds are Convolvulus arvensis (field bindweed), Cirsium arvense (Canada histle) and Rumex obtusifolius (round leaved dock). The most important annual broadleaf weeds are Amaranthus retroflexus (pigweed), Chenopodium album (common lambsquarters), Mercurialis annua (annual mercury), Galium aparine (cleavers), Geranium spp. (Geranium), Lamium pupureum (red deadnettle), Matricaria spp. (mayweeds), Papaver rhoeas (field poppy), Polygonum spp. (knotweeds), Capsella bursa pastoris (Shepherd's Purse), Sinapis arvensis (Charlock), Solanum nigrum (black nightshade), Stellaria media (chickweed), Veronica spp. (speedwells) and Viola arvensis (field pansy).
(48) In their reply to the statement of objections, the parties maintain that isoxaflutole (Aventis) is a broadspectrum herbicide; Aventis itself, however, considers it to be a broadleaf herbicide (and so do the competitors that discuss isoxaflutole). The parties consider terbuthylazine (generic) to be a broadleaf herbicide; certain competitors and the Pesticide Manual of the British Crop Protection Council classify it as a broad spectrum herbicide. The parties consider rimsulfuron (DuPont) to be a broad spectrum herbicide; Dupont, however, submits that it is a graminicide. In their reply to the statement of objections, the parties further present nicosulfuron as broad spectrum herbicide. AstraZeneca, however, has classified it as a graminicide in its reply to Commission question 2ph2, q49 and in its internal documents (e.g. in the ABR product briefings ). This view is confirmed by the Pesticides Manual and the Farm Chemicals Handbook 2000. The parties also maintain that some more active substances of the competitors should be included as they will be introduced in the years to come. In the Commission's view, these substances should not be included, as their introduction date is not expected in the two-three years to come or because they cannot be considered important enough (on the basis of the companies' market expectations for these substances).
(49) Based on the aforementioned 30 important weeds, the parties (Novartis) and their competitors have provided a further categorisation of weeds as a function of their economic importance.
(50) The figures have been provided by Novartis based on its datasource, Impact. Due to the fact that some products are double counted (notably broad spectrum products but also products that can be used both pre and post), the figures do not add up.
(51) Acetochlor and alachlor belong to the same chemical class, the acetalinides (to which also metolachlor, flufenacet and dimethenamid belong). Acetochlor has a generally better efficacy in weed control than alachlor. Acetochlor is also reported to be a better solution to the farmer than dimethenamid and flufenacet. Acetochlor and metolachlor are both considered best in their class.
(52) As another reference, it can be noted that acetochlor achieved a [10 to 20]* % market share during the first year of launch in Hungary and even [20 to 30]* % in the Czech Republic.
(53) Registration packages for safeners also enjoy data protection. According to AstraZeneca (AZ reply to 4ph2, q15), this affects the safener for acetochlor in particular as the large scale trials are too expensive to replicate, constituting an entry barrier.
(54) [Monsanto business secret]*
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(69) Safeners are chemicals which are used in combination with herbicidal active substances and which reduce phytotoxity to levels acceptable in modern agriculture. Not all herbicidal substances require the use of a safener, but acetochlor and metolachlor do.
(70) [...]*
(71) N reply to 4ph2, q67; Novartis Western European post patent strategy for dicamba.
(72) [...]*.
(73) [BASF business secret]*
(74) [Monsanto business secret]*
(75) [Aventis business secret]* [Bayer business secret]* [BASF business secret]* [Dow business secret]*
(76) [Aventis business secret]* [BASF business secret]* [DuPont business secret]* [Dow business secret]* [American Cyanamid business secret]* [Monsanto business secret]*.
(77) [...]*
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(79) [Aventis business secret]* [BASF business secret]* [Bayer business secret]*
(80) [AmCy business secret]* [Monsanto business secret]* Access to generic products, where they are registered at least, is less of an issue due to the wide availability of supply options and registration data packages. This is not the case for terbuthylazine in Germany, where Novartis is the only company who has a registration.
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(83) In IV/M.1378 Hoechst/Rhône Poulenc (Aventis), serious doubts existed with respect to the position of the merging parties in the production of herbicides containing Isoproturon (IPU), either straight or blended with other active substances (IV/M.1378 Hoechst/Rhône Poulenc (Aventis), point 31).
(84) The parties have in a later submission argued that the market shares of AstraZeneca for Greece and Ireland given in the notification erroneously included sales of non-selective herbicides. The parties would then not have a combined market share above [20 to 30]* % in these two countries.
(85) [Competitors business secret]*
(86) The Commission takes note of the fact that the registrations for the products Axian and Caragard expired in April 1998. These products are therefore not included in the commitment.
