Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EC approves acquisition of parts of Cegedim by IMS Health, (Dec 22, 2014)

By Linda O’Brien, J.D., LL.M.

The European Commission (EC) has cleared under European Union (EU) merger regulations the proposed acquisition of part of Cegedim S.A.'s customer relationship management and strategic data business by IMS Health, according to a December 19 announcement. The decision is conditional upon IMS' commitment to divest parts of its primary market research business and to grant third party access to the structure underlying its sales tracking data (“brick structure”). The Commission was notified of the transaction on November 4, 2014.

IMS Health is a U.S. company listed on the New York stock exchange. Cegedim is based in France. IMS Health and Cegedim provide companies in the pharmaceutical, biotech, life sciences, and healthcare sectors with solutions to measure and improve their performance. IMS Health is market leader in the European Economic Area (EEA) for tracking sales of prescription drugs by which pharmaceutical companies measure their performance. Cegedim offers one of the largest databases of doctors' contact details in Europe on which pharmaceutical companies rely to target their sales efforts. Cegedim is also an important provider of customer relationship management software to pharmaceutical companies in the EEA.

The Commission's investigation indicated that the proposed transaction would reduce competition on the market for standardized primary market research, because the merged entity would face insufficient competitive constraint from the few small remaining players in the EEA. Standardized primary market research consists of studies and reports compiled on a regular basis by market research providers based on information and data gathered from panels of physicians. The reports are provided to pharmaceutical companies with a view to allowing them to assess the success of their marketing and sales efforts.

The EC also had concerns that IMS Health would shut out Cegedim's competitors from access to its brick structure, since this is an important input for these players to be able to operate in the market. Given IMS Health’ leading position in sales tracking data in the EEA, pharmaceutical companies typically expect that providers of other data and services, such as doctors’ contact details and software products, are able to deliver their data based on the same structure or to use it in their software solutions.

To dispel these concerns, IMS Health offered to divest its standardized primary market research business and to grant Cegedim's competitors access to the brick structure for ten years.

The Commission also examined the competitive effects of the proposed acquisition on the markets for customer relationship management software, business intelligence solutions, consulting services, and “Real World Evidence”, where the companies' activities overlap. Real World Evidence is information provided to pharmaceutical companies regarding the “real life” performance of their drugs. The Commission concluded that the transaction would raise no competition concerns on these markets, because there will remain on the market a sufficient number of competitors.

The Commission found that the transaction does not raise competition concerns regarding a number of vertical and conglomerate relationships between the different products offered by the companies. The EC determined that the merger will not bring about any significant changes on these markets. Moreover, any possible tying or bundling practice by IMS Health is unlikely to have anticompetitive effects, because alternative providers will continue to compete effectively on the markets concerned.

Companies: IMS Health; Cegedim S.A

News: Antitrust