According to the merger notification (Z-6483), the applicant Miele Beteiligungs-GmbH, a company in the Miele Group (“Miele”), plans to create a joint venture (“JV”) with Metall Zug AG (“Metall Zug”). Miele Beteiligungs-GmbH plans to contribute its indirect subsidiary International Steelco S.p.A. and Metall Zug is to contribute its subsidiaries Belimed AG and Belimed Life Science AG. The plan is for Miele to hold a stake of 67% and Metall Zug a stake of 33% in the JV.
In addition to electrical household appliances, Miele also manufactures and markets washers, disinfectors and sterilizers for hospitals and medical/dental practices. Metall Zug is a group of industrial companies engaged in the fields of infection control and contamination prevention.
The planned joint venture’s business areas would comprise the manufacture and sale as well as customer services in the fields of infection control and contamination prevention with (i) washers and disinfectors, (ii) high and low-temperature sterilizers, (iii) endoscope reprocessing devices and (iv) flusher disinfectors. Its customers are hospitals, pharmaceutical companies and laboratories, as well as medical and dental practices.
AFCA examination raises significant competition concerns
In the course of its merger examination, the AFCA gathered large amounts of data and questioned competitors, customers and suppliers. The examination confirmed that actual market conditions differed strongly from those depicted in the notification. In summary, the AFCA identified strong competition concerns on the demand side in the following markets with hospitals:
- Sale and servicing of washers and disinfectors
- Sale and servicing of high-temperature sterilizers
- Sale and servicing of endoscope reprocessing devices.
The analysis also revealed that sales volumes with related services (e.g. maintenance and repair, training courses) and sales with ancillary products (e.g. accessories and spare parts) made up a significant share of the markets concerned. This was confirmed by both the competitors and the customers questioned (“after sales”).
The AFCA therefore finds that the establishment of the joint venture constitutes an anticompetitive merger. Specifically, the AFCA fears that it would considerably reduce horizontal competition intensity, resulting in higher prices and a lower quality of devices, related services and ancillary products in the field of infection control for hospitals. This would be caused by such factors as the involved companies’ high market shares, the high market concentration, and also – in the AFCA’s opinion – entry barriers for potential new market participants in the relevant markets.
The AFCA concludes that the merger should be prohibited in its current form. It has therefore filed a request for examination prior to expiry of the Phase I deadline. The Federal Cartel Prosecutor has also made a request for examination by the Cartel Court.
“The Austrian health sector is highly concentrated in some areas, and we at the AFCA have already conducted several in-depth sector inquiries into the various markets. It is our job to ensure that competition is not hindered any further,” stated Director General Natalie Harsdorf-Borsch.