On June 17, 2024, the German Federal Cartel Office (“FCO”) unconditionally cleared the acquisition of Olink Holding AB (publ) (“Olink”) by Thermo Fisher Scientific Inc. (“Thermo Fisher”) following the FCO’s first in-depth investigation of a case caught by the transaction value threshold.[1]

Background

Olink is a leading provider of next-generation proteomics and offers solutions for advanced proteomic discovery essential for disease research and therapy development.  Its proprietary technology, Proximity Extension Assay (“PEA”), enables high-throughput protein analysis and is widely used in the life sciences.[2]  Thermo Fisher, a leading supplier of life science research equipment, develops and manufactures, among other things, high-resolution mass spectrometers (“HRAM”), which are also used in protein analysis, but are based on a different technology.

While the parties’ turnover was below the relevant thresholds in Germany, the transaction had to be notified under the transaction value test due to the high purchase price of €2.8 billion and significant domestic activity of the target in Germany.[3]  As the target is an innovative player with great market potential in biotechnology not (yet) reflected in domestic turnover figures, the transaction can be seen as a perfect example of the type of transaction the German legislator had in mind when it introduced the new test, which allows the FCO to scrutinize deals that would previously have escaped review.[4]

The FCO’s Assessment

The FCO carried out an in-depth investigation, in particular to examine possible conglomerate effects of the transaction through product bundling or market foreclosure.  In the end, the FCO concluded that bundling was unlikely due to differences in technology, which made bundling technically impossible, and large differences in procurement cycles and pricing, which made bundling commercially unattractive.  The FCO also found that foreclosure was unlikely to occur because customers would have sufficient alternative suppliers to choose from, strong and innovative competitors would increasingly diversify their portfolios through acquisitions and cooperations and would be able to contest the combined entity’s market position, and HRAM- and PEA-markets, as innovative growth markets, were generally not concentrated market structures.[5] 

The FCO also concluded that Thermo Fischer’s strong position in the HRAM-market would not be further strengthened by the acquisition because the markets for Olink’s and Thermo Fisher’s technologies were distinct, with only minimal customer overlap, and because of the competitive landscape in these markets.  Potential competition was not considered an issue either as the FCO found it unlikely that the two technologies would merge into an overall proteomics discovery market within the five-year forecast period.

Implications

This case suggests that in the field of innovative technology-driven markets in-depth (“Phase-II“) investigations can be expected more frequently, even if only caught by the transaction value threshold and in the absence of horizontal overlaps between the parties.  In such cases, the FCO’s focus is likely to be on conglomerate effects, with the regulator stating that “it [is] crucial to carefully analyze the markets and gain an understanding of how different activities and branches of research complement each other”.[6]  However, even an in-depth investigation may result in an unconditional clearance decision if the market structure allows the FCO’s concerns to be addressed.

[1]              The FCO’s press release of June 17, 2024 available in English here.

[2]              Seethe FCO’s press release, see also here and Olink’s press release of October 17, 2023, available in English here

[3]              This threshold introduced in 2017 enables the FCO to examine acquisitions of undertakings with little or no turnover, if the purchase price exceeds €400 million and the target has significant domestic activity in Germany.

[4]              Guidance on Transaction Value Thresholds for Mandatory Pre-merger Notification (Section 35 (1a) German Competition Act and Section 9 (4) of the Austrian Cartel Act), January 2022, para. 3; available in English here .

[5]              See the FCO’s press release of June 17, 2024 available in English here.

[6]              See the FCO’s press release of June 17, 2024 available in English here.