Article 4
This Decision is addressed to: General Electric Company 3135 Easton Turnpike Fairfield Connecticut 06431 USA Done at Brussels, 2 September 2003. 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) OJ C 92, 16.4.2004. (5) OJ L 61, 2.3.1998, p. 1. (6) Turnover calculated in accordance with Article 5(1) of the Merger Regulation and the Commission Notice on the calculation of turnover (OJ C 66, 2.3.1998, p. 25). To the extent that figures include turnover for the period before 1 January 1999, they are calculated on the basis of average ECU exchange rates and translated into EUR on a one-for-one basis. (7) 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. (8) Form CO pages 40, 41 and 42. (9) Customers in each country were asked whether they would sometimes use perioperative monitors in the critical care area and vice versa. A vast majority of respondents indicated that this would not be the case (France, 81 %; Spain: 86 %; the United Kingdom: 62 %; Sweden: 69 %; Italy: 58 %). (10) Form CO, p. 43. (11) For the five bigger markets at national level, the market investigation shows that: for PO monitors, the proposal to purchase a given type of monitor is made in most of the cases by the anaesthesiologist (France 95 %, Germany 97 %, Italy 94 %, Spain 100 % and the United Kingdom 72 %) and only in a few cases by other medical departments; for CC monitors the influence is exerted by the relevant medical departments. (12) The market investigation results regarding the last tender organised by the respondents show that the percentage of tenders organised exclusively for PO or CC monitors is France 65 %, Germany 69 %, Italy 73 %, Spain 70 % and the United Kingdom 67 %. (13) Form CO, p. 47. (14) Form CO, p. 44. (15) Form CO, p. 43. (16) The results from the market investigation (questionnaire sent to patient monitors customers on 7 May 2003, questions 19 and 21) indicate that, for example, for PO monitors the more important reasons not to change of supplier are: in France and Spain the proven track record and better technology of the current supplier, in the United Kingdom the proven track record and the avoidance of switching cost, and in Germany that PO and CC are of the same brand. The more important reasons to change are: in France and Spain the proven track record and better technology of the new supplier, in the United Kingdom the better technology, the connection capabilities and the proven track record and in Germany the better technology and the electronic interoperability. (17) OJ L 311, 14.12.2002, p. 12. (18) Frost & Sullivan US Fluoroscopy and Mobile C-arms Markets 2002, 2-1, 2-2. (19) Form CO, p. 62, footnote 77. (20) Form CO, p. 62, footnote 78. (21) Frost & Sullivan US Fluoroscopy and Mobile C-arms Markets 2002, Chapter 6 World Mobile C-arm Market, 6-1. (22) Frost & Sullivan US Fluoroscopy and Mobile C-arms Markets 2002, Chapter 6 World Mobile C-arm Market, 6-2. (23) Frost & Sullivan US Fluoroscopy and Mobile C-arms Markets 2002, Chapter 6 World Mobile C-arm Market, 6-1. (24) The use of C-arms for cardiac applications is not permitted in national legislation in France and Germany. (25) Replies to the Commission's Article 11 letter to hospitals (mobile C-arms customers) of 11 March 2003. (26) Replies to the Commission's Article 11 letter to competitors of 11 March 2003. (27) Annex 6.8 to the Form CO. (28) Annex 6.8 to the Form CO. (29) Form CO, p. 64. (30) Annex 6.8 to the Form CO. (31) Annex 6.8 to the Form CO. (32) Form CO, p. 64. (33) Annex 6.8 to the Form CO. (34) Annex 6.8 to the Form CO. (35) Form CO, p. 63. (36) Replies to the Commission's Article 11 letter to hospitals (mobile C-arms customers) of 11 March 2003. (37) Annex 6.16 to the Form CO. (38) Replies to the Commission's Article 11 letter to hospitals (mobile C-arms customers) of 11 March 2003. (39) Replies to the Commission's Article 11 letter to hospitals (mobile C-arms customers) of 11 March 2003. (40) Frost & Sullivan, US Fluoroscopy and Mobile C-arms Markets, Chapter 6 World Mobile C-arm Market (2002), 6-1. (41) Replies to the Commission's Article 11 letter to competitors of 11 March 2003. (42) Replies to the Commission's Article 11 letter to competitors of 8 May 2003. (43) Frost & Sullivan, World X-Ray Mammography Market, 2001, Chapter 3. (44) Replies to questionnaire to customers of 11 March 2003. (45) Competitors' reply to the Commission's questionnaires on R& D in Mammography dated 28 May 2003. (46) Form CO, p. 93. (47) According to Frost & Sullivan, GE has spent over USD 100000000 over 10 years, while Siemens USD 50000000, and Fischer Imaging almost USD 30000000. (48) Philip' reply to the Commission's questionnaire dated 28 May 2003 and dealing with R& D in Mammography, p. 3. (49) For instance: Instrumentarium, Siemens and Philips. (50) Medical Devices Directive 93/42/EC of 14 June 1993. (51) Annex 6.16 to the Form CO. (52) Frost & Sullivan report on the European Anaesthesia and Respiratory Equipment, 2001 (3981-56), pages 5 to 18, 6 to 17, 7 to 17, 8 to 17, 9 to 17, 10 to 15, 11 to 17. (53) In the market investigation the customers in the various countries were asked to assess the importance of 20 different factors when choosing a patient monitor's supplier. In Germany and Spain, the ability of the supplier to provide maintenance and service over the life cycle of the product was the second most important factor for respondents. In France and the United Kingdom, this was mentioned as the third most important factor, and in Sweden the fourth. (54) See also T for G, 2000, 3.3. p. 131. (55) Annex 6.9 to the Form CO. The total size figures are based on the parties' best estimates initially derived from publicly available data complied by COCIR. Companies not providing information to COCIR include GMM, SIMAD, Sia, Eurocolumbus, Technix, Metaltronica, Gilardoni, and Villa, mainly active in Italy, Greece, Spain, Portugal. COCIR provides information on C-arms sales in Belgium, France, Italy, Germany, the Netherlands, the United Kingdom, Spain and Sweden. The parties do not have COCIR information for Finland, Norway, Ireland, Greece, Portugal, Denmark and Austria. (56) Frost & Sullivan, US Fluoroscopy and Mobile C-arms Markets, Chapter 6 World Mobile C-arm Market (2002), 6-1 considers these as "smaller local companies and the value end of the market that are considered to be assemblers of full-size C-arms and not manufacturers. They procure parts such as X-ray tubes and image intensifiers from other manufacturers and assemble a general mobile C-arm as opposed to a user focused C-arms used for specific purposes such as vascular surgery". (57) [...]*. (58) Annex 6.16 to Form CO. GE's average net price 2002 with most basic configurations. (59) Most hospitals' responses to Question 6 of the Commission's Article 11 letter of 23 to 27 May 2003 gave most weight to factors such as continuous maintenance, local customer support, and after-sales service in addition to specifications, quality and price. (60) Annex 6.16 to Form CO, p. 9. (61) Replies to the Commission's Article 11 letter to hospitals (mobile C-arms customers) of 11 March 2003. See also Annex 6.13 to Form CO. (62) Instrumentarium Diagnostic Imaging - Strategic plan 2002. (63) Annex 6.11 to Form CO. (64) See GE's answer to question 9 of the Article 11 letter dated 8 May 2003. (65) See Instrumentarium's answer to question 4 in the Commission's questionnaire dated 16 May 2003. (66) See Instrumentarium's answer to question 1 of the Article 11 letter dated 8 May 2003. (67) In the market investigation public and private customers were asked to assess the importance of 20 different factors when choosing a mammography devices supplier (Article 11 questionnaires). The more valued factors in each national market were: specifications, quality continuous maintenance, maintenance and service over the whole life-cycle of the product, after-sales service, price and training. (68) Frost & Sullivan (F& S), European Anaesthesia and Respiratory Equipment Markets Report, 2001, 3981-56; T for G market report: Monitors and Ventilators (December 2000). (69) T for G, page 10; F& S, 2001, p. 4-47. (70) F& S, page 4-41; T for G, p. 31. (71) See also T for G, p. 16. (72) F& S, p. 4-50. (73) F& S, p. 3 and 4 "The European anaesthesia and respiratory equipment market is going through a period of significant consolidation. Smaller players are leaving the market and focusing their resources on other sectors of healthcare. F& S also noticed a trend toward divesting, that is, some companies are focusing on a specific country. Finally, there has been a high degree of collaborations and alliances between companies. The major issue is to understand which are the companies that will take advantage of this situations. In a mature market, even a small gain in market share can be of important value, thus market consolidation represents a major challenge for all the market players". (74) Annex 6.5 of the Form C/O. (75) See for instance, Frost & Sullivan 2001, "European Anaesthesia and Respiratory Equipment Markets Report", (F& S 2001); T for G market report: Monitors and Ventilators (December 2000). (76) The small players mentioned in the form CO (p. 44) as being active in the market for perioperative monitors were Criticare Medical Systems, Datascope, Fukuda-Denshi, Huntleigh, Invivo, Nihon Kohden, and Welch Allyn Protocol. In the course of the investigation, the parties were asked, in respect of the unattributed market shares, to give a full list of their competitors. (77) When firms did not provide the requested breakdown between direct and indirect sales, the average margin indicated by the parties (as being common in the industry) was added to the companies' turnover. This methodology was used in order not to over-estimate the market shares of the parties to the concentration. (78) Response to the 6.1.c decision, p. 3. (79) See the F& S's report (2001), at p. 4-44. (80) In [...]*, GE's 2002 market share corresponded to sales amounting to EUR [...]* and, in 2000 and 2001, [...]*. As a result, market shares for 2002 on their own are not sufficiently reliable. (81) 2002 market shares. (82) The Commission notes that, if the market shares were to be calculated on the weighted average over the last three years, the market shares of the new entity would be as follows - France: [55 to 60 %]**; Germany: [50 to 60 %]**, Spain: [80 to 85 %]**, the United Kingdom: [80 to 85 %]** and Sweden: [75 to 80 %]**. (83) Form CO p. 54. (84) Form CO, Annex 6.1: This goes from 40 % in France, 45 % in Spain, 50 % in Germany, to 80 % in the United Kingdom and Sweden. (85) Form CO Annex 6.1. 60 % in Spain and Germany, 70 % in France, 80 % in the United Kingdom and Sweden. (86) This is the case in the United Kingdom, Germany and Spain (See customers' survey and also T for G, Section 3.2, p. 4-7). (87) This is the case in France (See customers' survey and also T for G, Section 3.2, p. 6). (88) This is mostly the case in Sweden according to the customers' survey. (89) According to the customers' survey, in France, quality, specifications, and after-sales service were the most important factors before price. In Germany, the long-term prospects of the supplier and its ability to innovate are also mentioned as important factors before price. In Spain, customers put emphasis on quality and specifications as well as on after-sales, training and compatibility with existing monitors. In the United Kingdom, the ability of the supplier to provide training came as the first mentioned factor, just before quality, after-sales service and specifications. In Sweden, after-sales service, quality and training came as the first mentioned factors. (90) In all countries, this came as one of the least important factors together with the need to have a local production plant. (91) Bidding data submitted by Instrumentarium thus revealed that, out of [...]* bids in the EEA, [80 to 90 %]* of them were less than EUR 100000 in value. In France, for example, the proportion reached [90 to 100 %]* between 1998 and 2002. In Spain, Instrumentarium mentions [...]* bids to which it participated between 1998 and 2002. Out of [...]* bids that they won, [...]* were less than EUR 100000. The same proportions can be observed in Germany ([...]* won bids, out of which [...]* were less than EUR 100000) and the United Kingdom ([...]* won bids out of which [...]* were less than EUR 100000). (92) [...]*. (93) Form CO p. 54. (94) Form CO p. 51. (95) Form CO p. 52. (96) See responses to the Commission's Article 11 letter to competitors on R& D of 28 May 2003. (97) T for G, p. 26. (98) F & S 3981-56, p. 4-49. (99) This is the case for instance in France. In Sweden, GE and Instrumentarium come first before Philips and Siemens. In the United Kingdom, Instrumentarium comes first before Philips, GE and Siemens. In Spain, customers ranked Instrumentarium first before GE, Siemens and Philips. In Germany, Instrumentarium comes first, before GE, Philips and Siemens at the same level. (100) 551 data points out of Philips' bidding data were useable for this analysis. (101) Under certain assumptions, it is possible to assess to what extent the analysis overestimates the frequency of encounters of both parties in Germany. As a matter of fact, it could reasonably be assumed that GE and Instrumentarium met in the bids won by Siemens roughly as often as in the bids won by Philips, i.e. [20 to 30 %]* of the cases, according to a study submitted by Philips on 8 May 2003. Since Siemens' market share (i.e. won bids in value) in Germany is in the range of [30 to 40]* %, it can be inferred that GE and Instrumentarium meet in [70 to 80 %]* of the cases in [70 to 80 %]* of the bids (those won by either Instrumentarium, GE or Philips) and in [20 to 30 %]* of the cases in [30 to 40 %]* of the remaining bids (those won by Siemens). This lead to an extrapolated frequency of encounter of [50 to 60]* %. This figure shows that Instrumentarium encounters GE still significantly much more often than Siemens ([20 to 30 %]*) or Philips ([10 to 20 %]*). (102) Among the 432 tenders in Germany where the information about the present bidders was available, the parties were simultaneously present in [300 to 350]* tenders. Among those, the parties were the only bidders in [100 to 150]* tenders, faced one single other competitor in [100 to 150]* bids, among which [50 to 100]* corresponded to a fringe player (i.e. any player but Siemens, Philips or the parties). (103) RBB Study, p. 3. (104) The data include only less than ten data points in Austria and Norway. (105) The data set contains more than 10 observations for the following countries: Belgium ([200 to 300]*), Finland ([200 to 300]*), France ([300 to 400]*), Germany ([300 to 400]*), Greece ([0 to 100]*), Italy ([100 to 200]*), the Netherlands ([0 to 100]*), Spain ([400 to 500]*) and the United Kingdom ([300 to 400]*). (106) GE/Draeger is also identified as the runner-up in Norway in [50 to 60 %]* of cases but on the basis of nine data. (107) There are, however, only [0 to 10]* observations relating to Portugal. (108) Siemens is actually identified by the sales forces as the runner-up in [...]* out of [100 to 200]* bids. (109) RBB study, p. 10. (110) RBB Study, p. 10. (111) Response to Article 11 request of 10 June 2003, p. 2. (112) RBB Study, p. 10. (113) See e-mail of 25 September 2001 (from P. van Ryzin to K. King). (114) Internal document of GE, [...]*. (115) Form CO, p. 47. (116) RBB Study, p. 14. (117) See pp. 14 and 15 of the RBB study. (118) Response to Article 11 request dated 10 June 2003. (119) RBB Study, page 16. (120) Form CO page 47. (121) [...]* (122) [50 to 100]* tenders where Draeger won, from 2000 through 2002 in France. (123) Given the data limitation, several variables were included in the model to explain variations in Draeger's discount. For example, the value of the final tender is one of these variables. Large discounts may be associated with high tender value. Also, when some customers may receive larger discount either because they organise many tenders, or the overall value of their tenders is important. The presence of other major bidders may also affect the size of the discount offered by Draeger. In the [50 to 100]* bid recorded that Draeger won, Instrumentarium and Siemens but not Philips participated in the bids. Interestingly enough, when Siemens is present, Instrumentarium is always bidding as well. Conversely, when Instrumentarium participate in a tender, Siemens is not always a rival bidder. As a result, we let the impact of Instrumentarium varies with the presence of Siemens. [5 to 10 %]* and [5 to 10 %]* refer to the variation of Draeger's discount due to, respectively, Instrumentarium along with Siemens and Instrumentarium alone. (124) The Draeger average discount when Instrumentarium is present is about [30 to 40 %]*. Using this as a basis, a decrease of [5 to 10 %]* (respectively [5 to 10 %]*) in the discount of Draeger after the removal of Instrumentarium would lead to a price increase of [5 to 10 %]* (respectively [15 to 20 %]*) for the tenders in which Instrumentarium was present. (125) [50 to 100]* tenders where GE won, from 1998, 1999, 2001 and 2002 in France. (126) The results are statistically significant. (127) Philips' average discount for perioperative monitors is around [30 to 40]* %, based on the study submitted by Philips on 8 May 2003. (128) See exhibit 3 in Philips' study dated 10 June 2003, column (a). (129) RBB study "A preliminary critique of NERA's econometric analysis of the perioperative monitoring market", dated 24 June 2003. (130) Form CO, p. 44. (131) Form CO, p. 50. (132) See T for G, Positioning and tactics, 3.3.2 at p. 130. (133) RBB study p. 9. (134) Preference for the brand is also mentioned as the next important factor but, logically, only by customers who have not switched. (135) Form CO, p. 47. (136) See for example F & S 2001, at pp. 4-49 and 4-50, which lists, among the competitive factors "the gaining of a competitive advantage through technological innovation" and where it is stated that "pricing strategy and the degree of technological innovation will always remain crucial issues that will play a key role in this market". (137) Form CO, p. 47. (138) T for G, p. 131. T for G further also indicates that, with respect to large companies, "there is a national training and response centre in all countries". (139) Form CO, p. 45. (140) T for G, p. 25. (141) GE/Draeger alliance, minutes of a meeting of 12 May 2000. (142) In Spain, Instrumentarium mentions [1500 to 2000]* bids to which it participated between 1998 and 2002. Out of [500 to 1000]* bids that they won, [500 to 1000]* were less than EUR 100000. The same proportions can be observed in Germany ([1000 to 1500]* won bids, out of which [500 to 1000]* were less than EUR 100000) and the United Kingdom ([1500 to 2000]* won bids out of which [1000 to 1500]* were less than EUR 100000). (143) The same method as described for perioperative monitors was followed in the case of critical care monitors. (144) RBB study, p. 20 et seq. (145) RBB study, Table 8, p. 20. (146) Siemens and Philips. Eventually, Siemens' data set could not be used for the analysis because of the poor quality of the data. (147) The volume market shares do not differ significantly. (148) The GE win data presented by the parties contains [400 to 500]* data points from tenders across the EEA from 1998 to 2003 that GE won. The cross-country distribution of the data seems to be based simply on availability. More than 15 data points each are included from the following countries: Belgium ([50 to 100]*), France ([50 to 100]*), Germany ([50 to 100]*), Italy ([50 to 100]*), Spain ([0 to 50]*) and the United Kingdom ([50 to 100]*). (149) The Instrumentarium win data presented by the parties contains [0 to 100]* data points from 1998 to 2002, all from Germany. The parties claim that, because Instrumentarium sells predominantly through independent distributors, they were unable to gather accurate bidding data for more EU countries to be included in their analysis. (150) There are, however, only [0 to 10]* observations relating to Portugal. (151) The parties' conclusion from this analysis appears to go further, implying that GE and Instrumentarium would need to be closest substitute for a merger to lead to any competitive harm: [...]* The Commission does not follow this analysis. (152) I.e. Siemens and Philips. Eventually, Philips' data set could not be used for the analysis because of the poor quality of the data. (153) Competitors' reply to the Commission's questionnaires on R& D in Mammography dated 28 May 2003. (154) Frost & Sullivan, World X-Ray Mammography Market, 2001, Chapter 3. (155) Competitors' reply to the Commission's questionnaires on R& D in Mammography dated 28 May 2003. (156) Frost & Sullivan, World X-Ray Mammography Market, 2001, Chapter 4. (157) Annex 6.11 of the Form C/O. (158) The volume market shares do not differ significantly. (159) Among GE's bids for which the distinction private/public is made, around [1500 to 2000]* were private and around [500 to 1000]* public (for a total number of bids available of [2500 to 3000]*). (160) Among Instrumentarium's bids for which the distinction private/public is specified, [100 to 150]* were private and [0 to 50]* public (total bids available to the Commission: [300 to 400]*). (161) [...]* (162) In the questionnaires sent to customers was required to indicate who makes the proposal to purchase and it came out that in all the countries this Decision is mostly taken by radiologists (90 % in France, 95 % in Spain, 72 % in Italy). (163) The parties were able to gather the information necessary to carry out this type of analysis for [600 to 700]* tenders from 1998 through 2003. There are more than 15 observations in all countries (e.g. France: [300 to 400]*; Italy: [100 to 200]*; Germany: [0 to 100]*; the United Kingdom: [0 to 100]*; Spain: [0 to 100]*) but Ireland ([0 to 15]*). (164) That is: Siemens and Philips. Eventually, Philips' data set could not be used for the analysis because of the poor quality of the data. (165) [...]* (166) Competitors' reply to the Commission's questionnaires on R& D in Mammography dated 28 May 2003. (167) Competitors' reply to the Commission's questionnaires on R& D in Mammography dated 28 May 2003. (168) Instrumentarium Diagnostic Imaging - Strategic plan 2002. (169) See case No COMP/M.2861 - Siemens/Drägerwerk/JV (not yet published), point 149. (170) Point 125 of Decision in case COMP/M.2861 - Siemens/Drägerwerk/JV. (171) Points 72-74 of Decision in case COMP/M.2861 - Siemens/Drägerwerk/JV. (172) Frost and Sullivan, European Anaesthesia and Respiratory Equipment Markets Report, 2001 "F& S Anaesthesia Report 2001". (173) A similar exercise was performed in the Siemens/Draeger proceedings (see Siemens/Draeger decision at point 116). Due to the inability to obtain data from all competitors in the market, the reconstruction of market shares in the Siemens/Draeger decision remained incomplete (see point 116 in fine of the Siemens/Draeger decision). Therefore, a new reconstruction of market shares in the context of the current case was performed. It should, nonetheless be noted, that, according to the figures in the Siemens/Draeger decision, Instrumentarium would be the leading company in at least Ireland, Sweden and the United Kingdom. Draeger was found to be presumptively dominant in the following EEA countries (see point 153): Denmark, Germany, Finland, France, the Netherlands and Norway. (174) Many smaller competitors were unable to provide precise turnover data on a national basis. (175) For example, Instrumentarium spent EUR 66600000 million on research and development in 2001 representing 7 % of net sales for the anaesthesia and critical care business. (See Instrumentarium's annual report 2001, p. 19). The F& S Anaesthesia Report (2001) reports that "the market is fairly concentrated" and that there is "difficulty for new players to enter the market", p. 4-13. (176) The overwhelming majority of respondents to the Commission's survey (anaesthesia questionnaire) stated that Datex-Ohmeda had "high" specifications and "high" quality respectively. Instrumentarium's leadership in anaesthesia machines vis-à-vis its smaller competitors is also evidenced by Instrumentarium's own documents. Instrumentarium's annual report of 2001 states that "with sales of EUR 714 million, it became clear during the year that we are now the largest supplier in the world of anaesthesia and critical care equipment and solutions. This position is highly advantageous for us in that it allows us to benefit from economies of scale in many areas, and hence it allows us to take carefully calculated risks in developing new businesses." Instrumentarium's leadership is such that it is "the only company in the world to be able to offer a broad family of anaesthesia machines for varying applications". See Instrumentarium Annual Report (2001), pp. 4 and 8. (177) Form CO, p. 121. (178) Instrumentarium's response to the Article 11 request dated 9 April 2003, Question 14: "new monitors have an incorporated flat panel and LCD displays, which make it possible to mount monitoring elements on a side arm". (179) Submission by third party dated 24 March 2003, p. 2. (180) F& S Anaesthesia Report (2001), p. 4-31. (181) A number of competitors stated that the completion of a validly tested configuration requires significant time of approximately six months and in some cases well over six months. (Third party responses dated 24 April 2003, 14 May 2003, 30 April 2003 and in particular third party response to Article 11 letter dated 11 April 2003, Question 4.) One third party stated that the minimum information and support required to achieve mechanical integration was "Specification of the maximum weight that can be borne by the wheels; Specification of the channels and the weight they support, if channels are available; Location of fixing points for mounting hardware and their specified intended use; Information about possible places to adapt mounting solutions for the patient monitors; Information about all the possible set-ups, including all parts required in order to perform tests according IEC and UL; contact person for technical questions". (182) Including, for example, the following standards: EN 740: 1998 and EN 12218: 1998 + A1: 2002 (harmonised standards related to medical devices under Council Directive 93/42/EEC); EN 740: 1998 (European standard relating to anaesthetic workstations). (183) GE's response to the Commission's Article 11 request for information dated 9 April 2003, p. 4. (184) See third party submission of 24 March 2003, p. 2. (185) In its response of 18 June 2003, Instrumentarium discussed its cooperation with monitor suppliers and mounting solution suppliers: "it is important to note that the latest machine from Datex-Ohmeda, the S/5 Avance, due out in late June 2003, already has mounting solutions for Philips, Siemens, GE, Spacelabs and Datex-Ohmeda monitors developed and tested by GCX. This is due to Instrumentarium's proactive collaboration with GCX to develop the mounts. [...]*. Instrumentarium worked with the third-party mounting solution provider before the product launch." (186) Electronic connection between anaesthesia machines and monitors can be achieved by means of small interface devices in which the machines are plugged. Each manufacturer has created its own solution (e.g. GE's "Octicomm" or Philips' "VueLink" device). Such physical components may be necessary for achieving an interface connection between an anaesthesia machine and patient monitor. (187) "Real-time" transmission of data means that data generated by the anaesthesia machine are displayed alongside physiological data measured by the patient monitor on the patient monitor's display. This makes it easier for the physician to assimilate information on the patient's actual condition at any given point in time and to adjust the therapy accordingly. (188) A significant number of respondents stated specific advantages arising from electronic integration. Results of responses to the Commission's questionnaire to customers show that a very large number of respondents stated convenience of displaying data on a single display and producing automated record as the main advantages of such electronic integration. (189) [25 to 30 %]* of sales in 2000 and [20 to 25 %]* of sales in 2002. (190) See Instrumentarium's response to question 28 of the Commission's Article 11 request for information dated 9 April 2003. (191) Third party response to Question 15 of the Article 11 request for information dated 11 April 2003 providing information on electronic interoperability problems. (192) Customers were asked to state whether they had faced difficulties in electronic connectivity and whether it was easy to connect a monitor and anaesthesia machine electronically without assistance from the supplier. A large number of customers responding to this question states that they had faced difficulties and that it was not easy to connect without supplier assistance. (193) GE's response to the Commission's Article 11 request for information dated 9 April 2003, p. 6. (194) See Instrumentarium's response to question 29 of the Commission's Article 11 request for information dated 9 April 2003 where it states that [...]*. [...]*. (195) Professor [...]*, Industrial Liaison Officer, European Society of Anaesthesiologists quoted in a third party's response to Question 17 of the Article 11 request for information of 11 April 2003. (196) The market investigation also showed that a significant number of customers values the ability to "mix and match". (197) See Annex 17 to GE's response to the Article 11 request of 9 April 2003, presentation "System Selling Go". (198) See Annex 5.4 to the Notification, GEMS presentation on the rationale of the Instrumentarium deal. (199) A significant percentage of respondents to the Commission's market investigation stated that they had plans to connect their anaesthesia machines and monitors to CIS systems. (200) As noted above, the parties do not deny that cooperation is necessary for effective and seamless mechanical and electronic integration nor that an anaesthesia machine supplier would have the ability to withhold necessary cooperation or to degrade cooperation. (201) There are many ways in which GE/Instrumentarium could attempt to achieve such foreclosure. Refusal of cooperation or "closure" of architecture could be an extreme measure that would immediately deprive independent monitor manufacturers from being able to sell monitors to customers using Instrumentarium anaesthesia machines. According to third party submissions a variety of more subtle and difficult to detect ways could be employed including for example frequent modifications and upgrades resulting in constant need for cooperation which the merged entity could delay or refuse, manipulation of the output to optimise performance when GE/Instrumentarium monitors are connected rather than another manufacturer's monitor; use of more proprietary protocols; provision of inferior connectivity to CIS systems; frequent changes in software code resulting in problems in the interoperability of rival monitors; manipulation of machine mounting brackets to reduce rivals' mechanical integration; refusal to loan equipment or cooperate in testing equipment for validation in accordance with international standards; delayed cooperation preventing competing manufacturers from showing their products in a timely way at important international trade fairs; etc. Third party and the parties' internal documents reveal certain cooperation problems with interoperability in the past. (202) In its Annex 5.4 documents (Annex to the Notification), GE explains that one of the main reasons for the Instrumentarium deal was to combine the respective strengths of Instrumentarium and GE in the perioperative and critical care areas: "Continuing GEMS IT commitment to clinical excellence at the point of care with a corresponding expansion of parameter base and core competencies"; "expand presence in the perioperative area (Datex-Ohmeda: Global Leader)", "significantly enhance the perinatal care offering", "provide a significantly strengthened position and platform for growth in Europe", "expands non-invasive cardiology line-up", "provides additional building blocks for the convergence of devices and IT systems". (203) [20 to 25 %]* taking into account the horizontal divestiture offered by the notifying party. (204) GE is active in the critical care and perioperative areas with its "Centricity Critical Care" and "Centricity Perioperative" products. Apart from the parties, the other main medical sector CIS suppliers are Siemens and Philips. Instrumentarium is present in the same care areas through its "Deio" and "Clinisoft" products. The notifying party has not provided market shares in CIS claiming that this is a fragmented, nascent and growing market. The notifying part, in the notification, also claims that their market share would remain below [25 to 30* %]. In subsequent responses both parties stated that their market share would be minimal and that, given the nascent nature of the market, market share calculation is not meaningful. Information collected by the Commission during its investigation by the main market players shows that in terms of 2001 and 2002 sales GE/Instrumentarium would be larger than Philips and Siemens and slightly smaller than Philips but much larger than Siemens in terms of installed base In addition, in its web site GE speaks of its "leadership" in CIS: "With over 700 Clinical Information Systems world-wide, GE Medical Systems Information Technologies proven leadership means we can deliver highly evolved systems for all your perinatal and critical care applications." Instrumentarium also claims that its CIS product "Deio is a world leader in the management of perioperative and critical care information through solutions that allow healthcare professionals offer better quality of care while conserving resources" (See www.deio.com). (205) This claim was included not only in Instrumentarium's internet site and in strategy documents of marketing advisers but also in Instrumentarium's Annual Report of 2001. (206) In its response of 18 June 2003, Instrumentarium states that it "has consistently supported open interfacing of anaesthesia machines and monitors. To support this effort, the company's long-standing policy has been to publish and support interfaces to its machines and monitors". (207) In its response of 18 June 2003, Instrumentarium explains that it had certain limitations in its product range, parameter capabilities and networking capabilities that did not allow it to adopt a standardisation strategy contrary to the major players such as GE, Philips and Siemens: [...]* (208) In internal presentations submitted in response to the Article 11 questionnaire of 9 April 2003, Instrumentarium states that [...]*. (see slide 4 of the presentation "ICU outside US strategy plan" of 18 August 1999). In its response of 18 June 2003, Instrumentarium explained that [...]*. (209) See Notification, p. 122 et seq. and the parties' letter of 28 April 2003 with comments to the Article 6(1)(c) decision in which they already suggested their willingness to offer a commitment to dispel the expressed foreclosure-related serious doubts. See also the parties' economic advisers', RBB, paper of 19 June 2003. (210) The parties deny that Instrumentarium has market power in anaesthesia machines. This argument has been discussed above in the section describing Instrumentarium's market power in anaesthesia delivery machines in specific national countries where its market share exceeds 50 %. The parties do not deny that an anaesthesia machine supplier could "close" the architecture of its machines or degrade interoperability and thus prevent or prejudice sales of rival patient monitor or CIS products that need to interface, mechanically or electronically, with anaesthesia machines. (211) As defined in the undertakings: "Effective Date: the closing date as defined in the Combination Agreement dated 18 December 2002 between GE and Instrumentarium, whereby GE will acquire sole control of Instrumentarium." (212) The Ultraview 1030, 1050, 1500, 1600 and 1700. (213) See T for G, Section 3.1 "Products and Markets", p. 6. (214) T for G, Section 3.3.1, "Market Shares Monitors Europe" p. 6. (215) Questionnaires were sent to approximately 200 hospitals which had participated in the Commission's in-depth investigation as well as to patient monitor, anaesthesia machine and CIS competitors of the parties. A significant number of responses were received by both competitors and customers. Overall, competitors were split fairly evenly as to the efficacy of the proposed commitment. Overall, a majority of customers expressed satisfaction that the commitment would eliminate the vertical concerns identified by the Commission. A minority of customers expressed certain concerns while others provided no or only unclear answers.