Commission, July 22, 2013, No M.6851

Dear Sir/Madam,

Subject: Case No COMP/M.6851 – Baxter International/ Gambro

Commission decision pursuant to Article 6(1)(b) in conjunction with Article 6(2) of Council Regulation No 139/20041

 1.    On 3 June 2013, the European Commission received notification of a proposed concentration pursuant to Article 4 of the Merger Regulation by which Baxter International Inc. ("Baxter" or "the Notifying Party", United States) acquires within  the meaning of Article 3(1)(b) of the Merger Regulation control of the whole of Gambro AB ("Gambro", Sweden) ultimately controlled by Indap Sweden AB, by way of purchase of shares (hereinafter referred to as "the Transaction").2 Baxter and Gambro are collectively referred to as "the Parties".

I.  THE PARTIES AND THE OPERATION

 2.    Baxter is a healthcare company, which develops, manufactures and markets products used in the treatment of patients suffering from haemophilia, immune disorders, infectious diseases, kidney disease, trauma, and other chronic and acute medical conditions.

3.    Gambro is a medical technology company, which develops, manufactures and supplies products and therapies for acute and chronic kidney dialysis, liver dialysis, myeloma kidney therapy, water treatment systems and other extracorporeal therapies for chronic and acute patients.

4.    On 4 December 2012, Baxter and Indap Sweden AB entered into an agreement by which Baxter intends to acquire all of the share capital of Indap Holding AB, a wholly-owned subsidiary of Indap Sweden AB, whose only assets are the shares in Gambro. Since Baxter will acquire sole control of Gambro, the Transaction constitutes a concentration within the meaning of Article 3(1)(b) of the Merger Regulation.

II. EU DIMENSION

 5.    The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 000 million3 (Baxter: EUR 11 044 million, Gambro: EUR 1 245 million). Each of them has an EU-wide turnover in excess of EUR 250 million (Baxter: EUR […] million, Gambro: EUR […] million), but they do not achieve more than two- thirds of their aggregate EU-wide turnover within one and the same Member State.  The notified operation therefore has an EU dimension pursuant to Article 1(2) of the Merger Regulation.

III. MARKET DEFINITION

 A.       Introduction

6.    The Parties' activities overlap in markets for the supply of renal replacement therapy ("RRT") products. In addition, the Parties' activities overlap to a limited extent in the areas of water treatment equipment, therapeutic plasma exchange and saline solutions, which are adjacent to the renal replacement therapies markets.4 An overview of renal replacement therapies is provided in the remainder of this Section.

7.    When renal function deteriorates or fails, renal replacement therapy ("kidney dialysis") is required, unless the patient receives a kidney transplant. Kidney dialysis is an artificial process that performs the key functions of healthy kidneys: filtering the  blood, controlling the blood’s electrolyte composition, and balancing fluid levels. Two types of patients require such therapies: (i) chronic patients with an end-stage renal disease and (ii) acute patients facing a sudden kidney failure.

8.    Three   categories   of   dialysis   treatments   exist:   (i)   peritoneal   dialysis    ("PD"),

(ii) haemodialysis ("HD") and (iii) continuous renal replacement therapy ("CRRT"). In the remainder of this Section, each of these therapies will be introduced in turn.

9.    In PD, a dialysis fluid (“dialysate”) is run into the abdomen's peritoneal cavity through a soft plastic tube, called a PD catheter. PD is used almost exclusively to treat chronic patients. The equipment required to perform PD consists of a small pumping machine, a so-called cycler (only necessary for so-called automated PD treatments) and several disposables, including a transfer set that connects the catheter to a bag system.

PD cycler, catheter and transfer set

10.    In HD, blood is pumped into a machine and purified through an exchange with another fluid (dialysate or replacement fluid) through a membrane (dialyser). The blood is then returned to the patient's body. HD is mainly used for chronic patients but can also be used for acute patients in certain circumstances. Unlike CRRT, which is continuous (see below), HD is an intermittent therapy, which means that patients receive HD through various sessions each of which lasts several hours.

11.    An HD treatment system consists of a monitor, disposables (including a dialyser and bloodlines) and fluids that are prepared from concentrates (fluids and disposables being also referred to as "consumables").5 The monitor allows the physician or nurse  to choose the treatment modalities (such as blood pump speed) and to check how the patient responds to the treatment. The monitor has a control display and serves as the apparatus to which the disposables are attached. Bloodlines are tubes that connect the patient’s blood stream with the dialyser and the fluids. Dialysers perform the blood filtering.

HD monitor, fluids (concentrates), bloodlines, dialysers

 12.    CRRT is based on the same principles as HD but is a continuous treatment, that is to say, it is applied 24 hours a day for several days in a row to treat acute patients. CRRT is generally performed in intensive care units ("ICU") using special equipment, consisting of a dedicated CRRT monitor and disposables.

Gambro CRRT monitor  Baxter CRRT monitor

 13.    Disposables include dialysers and bloodlines, which can be provided together as a “set”. Moreover, CRRT requires fluids that are delivered in ready-to-use bags.

Source Form CO: CRRT fluids, pre-connected set

 14.    The Parties' activities overlap in the supply of HD and CRRT monitors and consumables. Gambro, unlike Baxter, does not supply PD products6.

B.  Product market definition

1. Distinction between HD, CRRT and PD

a.  Baxter's view

15.  Baxter considers that PD, HD and CRRT products belong to separate product markets for the following reasons.

16. First, Baxter stresses that each product is specifically designed for a given type of therapy and cannot be used for other therapies7. Second, Baxter submits that for a given patient, the three therapies are not fully substitutable. When it comes to acute patients, Baxter claims that medical studies suggest that CRRT should be preferred to HD for certain types of patients, whereas other patients could be treated with either CRRT or HD but this depends on the equipment available at the hospital and/or the ward where the patient is being treated. As regards chronic patients, Baxter indicates that PD is not suitable for a significant proportion of them and HD is not suitable for another significant sub-group, for medical reasons or on other grounds such as mobility and assistance needed to perform the treatments at home in the case of PD.

17. Third, Baxter argues that the selection of a particular type of therapy depends to a significant extent on physicians' preferences linked to therapeutic considerations and on the location of the patient when the kidney condition is diagnosed (general renal ward, where the patient will most likely be treated with HD or ICU where CRRT is typically administered).

18. Fourth, cost differences exist between the various types of therapies. As regards acute patients, Baxter claims that there are a number of factors suggesting that CRRT is  more expensive than HD and that the cost differences translate into different reimbursement rates for the two types of therapies in most national health reimbursement systems8. As regards chronic patients, HD is typically seen as more expensive than PD and the reimbursement schemes for HD and PD differ across countries.

19. Fifth, Baxter submits that HD, CRRT and PD products are usually purchased through different tenders, or are at least part of separate lots within a given tender.

b.  Commission's assessment

20.  In past cases, the Commission did not conduct an extensive market definition analysis in the area of RRT equipment and consumables. In a previous case, the Commission has left open the question whether the product market definition for dialysis services should cover both HD and PD9. Another Commission decision briefly considered fluids for dialysis treatments without reaching a conclusion on the product market definition.10 Lastly, the Commission has also considered a separate product market for catheters and kits used in haemodialysis.11

21.  As regards the possible distinction between HD and CRRT products, replies to the Commission's market investigation have indicated that CRRT equipment can normally not be used for HD treatments and vice versa.12 Acute patients are relatively rarely treated with HD.13 Moreover, respondents have confirmed that the treatment location (ICU, or nephrology units) of acute patients influences the choice of the treatment: CRRT is mainly used in ICU, while HD is used in nephrology units.14 Although hospitals purchase both HD and CRRT equipment, specialised clinics and dialysis centres generally do not purchase CRRT equipment because they do not treat acute patients.15 Importantly also, price differences between HD and CRRT products do not appear to be a significant criterion for the physicians to prescribe one treatment rather than the other.16

22.  Therefore, a small but significant increase in the price of CRRT products would be unlikely to induce a significant number of customers to switch to a significant degree to HD to treat acute patients, and vice-versa. In light of the above, the Commission considers that CRRT products and HD products belong to separate product markets.

23.   As regards the possible distinction between HD and PD, replies to the Commission's market investigation have indicated that HD equipment cannot be used for PD treatments and vice versa. The choice between HD and PD to treat a given chronic patient mainly depends on the clinical status of the patient, but also on the patient's preferences and the suitability of the treatment with his or her lifestyle (in particular because PD, which is performed at home, requires a certain level of assistance and autonomy on the part of the patients, unlike HD17)18. Importantly, price differences between PD and HD do not appear to be a significant criterion for the treatment prescription by the physician19.

24.   Therefore, a small but significant increase in the price of HD products would be unlikely to induce a significant number of customers to switch to PD to treat chronic patients, and vice-versa. In light of the above, the Commission considers that PD products and HD products belong to separate product markets.

25.   Finally, CRRT and PD products are fundamentally different and used for treatments applying to two very distinct categories of patients (acute and chronic patients respectively). Therefore, the Commission considers that these products also belong to two separate product markets.

26.  In view of the above, the Commission concludes that CRRT, HD and PD products belong to separate product markets.

27.  The extent to which, for each of CRRT and HD, the relevant product market should encompass all or several types of devices and consumables considered together as forming a single "system", or whether the market should be defined on the basis of each main type of device and consumable ("components") is considered in the following two sections. As the merging Parties' activities do not overlap in PD, this treatment method is not further assessed in this respect.

2.   HD: system versus components

28.   Baxter submits that it would not be appropriate to treat the individual components of an HD system as each constituting a distinct product market. It notes that customers often do not purchase monitors, disposables and fluids separately. In some cases, they conclude a "pay per treatment" contract20. Furthermore, according to Baxter, CRRT suppliers typically offer all (or most) CRRT components.

29. In previous decisions dealing with medical devices21 in fields other than RRT, where the Commission assessed the relevance of defining markets on the basis of whole medical systems rather than individual "components" forming such systems, technical interoperability between components of different suppliers was an important criterion taken into consideration in such assessment. The following considerations may be relevant to such assessment: whether the main device in a system is a low value product - sometimes given for free by suppliers and the extent to which the choice of the main device is a key factor in determining the choice of the supplier.22

30.  In the present case, Baxter provided detailed information about the compatibility of dialysers,  fluids  and  bloodlines  with  different  HD  monitors23.  The information indicates that various HD components originating from different suppliers appear to be generally interoperable. This fact was confirmed in the market investigation.24 Dialysers and fluids are generally compatible with various suppliers' monitors. Although bloodlines are generally monitor specific, as they are designed for the monitor model in question, they can be produced by different manufacturers25. Exceptionally, there are a few HD monitors that work exclusively with pre-connected sets and cassettes.26

31.  The market investigation indicated that the majority of customers buy monitors27, dialysers and fluids separately, in most instances from different providers.28  The reason indicated for such choice was customers' desire to maintain a degree of independence and to have some protection against production problems. Certain customers believe that if they buy items individually they are able to procure the best products at the best prices. Hospitals and clinics generally conclude agreements allowing them to buy at least some of the consumables (dialysers and fluids) from different suppliers when technically possible.29

32.  Furthermore, an analysis of the tendering data provided by Baxter indicates that although the purchasing pattern varies among EEA countries, tenders are generally organised in lots and competitors bid for different lots, containing specific components or sets. This way of structuring tenders allows customers to select different providers for different HD products if they see fit.

33.  Although, the system-based market definition proposed by Baxter is not strongly supported by the market investigation, for the purposes of the present case, the market definition can be left open in this respect as the Transaction does not raise serious doubts on the HD markets under both the "system" and "components" scenario.

3.  CRRT: systems versus components

34.  As in the case of HD, Baxter submits that it would be inappropriate to further segment the CRRT market according to its various components. First, almost all CRRT suppliers offer the entire range of CRRT components. Second, hospitals and other purchasers often purchase at least bloodlines and dialysers from the monitor's producer because they are "sets" dedicated to that particular type of monitor. According to the Parties, bloodlines and dialysers in CRRT are dedicated and possibly proprietary to a specific monitor.30 Universal bloodlines do not exist in CRRT. Also, Baxter explains that CRRT bloodlines are only offered by the manufacturers of the corresponding CRRT monitors.

35.   As regards fluids, Baxter submits that CRRT fluids are typically not technically linked to the use of specific monitors or dialysers and that each fluid could be used with all or most of the other CRRT components. However, Baxter also mentions that differences in the fluid bags exist, which may discourage to some extent the use of another supplier’s fluids. Firstly, different types of connections between fluid bags and monitors exist, which then require an adaptor for the use of the solution of another manufacturer. Secondly, the bag can be attached to the monitor in different ways (for example Gambro’s Prismaflex monitor carries bags by three hooks to improve stability, instead of one hook per bag as, for instance, Baxter’s Aquarius monitor).

36.  The result of the market investigation indicated that bloodlines and dialysers ("CRRT sets") are generally technically linked (dedicated) to the CRRT monitor.31

37.  As regards fluids, the results of the market investigation are mixed. First, it seems that fluids are generally compatible with third-party CRRT sets.32 Second, in some cases, a different department within the hospital deals with the purchasing of CRRT fluids as they are considered as pharmaceutical products.33 Third, out of all responding customers, only one third said they would have PPT contracts (typically requiring  them to source all components from one supplier).34

38.  However, a number of elements point towards CRRT fluids being part of an overall CRRT system market. First, in practice, the majority of customers that replied to the Commission's market investigation buy all disposables from the same supplier, even though fluids could in principle be purchased from different suppliers according to usual contractual arrangements.35 Second, the majority of customers prefer to source all main categories of CRRT products from the same provider.36  Third, the majority of the competitors indicated that the ability to provide all main categories of CRRT products is a crucial aspect of being successful in this market.37

39. In view of the above, the Commission will assess the effects of the Transaction on the markets for CRRT products on the basis of two possible alternative market definitions:

(i)   a single product market for CRRT systems, comprising all CRRT components,  and

(ii)     two product markets, one encompassing CRRT monitors and sets (including bloodlines and dialysers) and another including CRRT fluids and other disposables. In the present case, the precise product market definition can be left open in this respect because the Transaction raises serious doubts as to its compatibility with the internal market in a number of EEA countries on all these alternative product market definitions.

4.     Adjacent markets

40.  The Parties' activities overlap in water treatment systems and therapeutic plasma exchange.

a.    Water treatment systems

41.  Water treatment systems generate purified pre-treated water that is used by HD machines to produce dialysate and replacement fluids. Baxter submits that water treatment systems should be considered as forming one single product market, without it being necessary to distinguish between large-scale water treatment systems such as those serving a large HD treatment unit (renal wards or large dialysis centres) and smaller units such as those used by individual patients for home HD treatments or for in-centre treatment in small dialysis centres.

42.  In previous cases the Commission examined water treatment systems used among others for healthcare applications, but did not define the product or geographic market for water treatment systems related to dialysis, and more generally to healthcare applications.38

43.  For the purposes of the present case, the precise market definition can be left open as the Transaction does not raise serious doubts irrespective of the market definition considered.

b.  Therapeutic plasma exchange (TPE) therapy

44.  Therapeutic plasma exchange ("TPE") is an extracorporeal therapy used to filter large molecular weight substances from the blood plasma. TPE can be used to treat a large variety of disorders, mainly neurological or haematological. Baxter submits that TPE is not as such a renal replacement therapy and should therefore not be considered part of the HD and/or CRRT market.

45.   For the purposes of assessing the competitive effects of the Transaction, the Commission will consider the narrowest plausible market, namely that of TPE.

C. Geographic market definition

1. HD and CRRT markets

a.                  Baxter's view

46.    Baxter submits that in previous cases,39 the Commission has dealt with the provision  of dialysis treatment services (rather than the supply of equipment to providers of dialysis services as is the case here), and left open whether the geographic market was regional/local or national. In another decision related to the dialysis market40 among others, and more particularly to “haemodialysis catheters/kits” the Commission had considered an EEA wide geographic market.

47.    Baxter also submits that although some characteristics of the HD and CRRT sectors may point towards a national definition, these markets should be regarded as EEA- wide in scope for several reasons.

48.    First, public hospitals often issue EEA-wide tenders for the supply of these products and there are no geographic limitations for suppliers invited to participate. Second, the main HD and CRRT suppliers are all active across the EEA and have centralized R&D and production facilities by product categories, shipping these products across the  EEA (or worldwide), with transportation costs representing a minor proportion of the overall sales price.

49.    Third, there are no regulatory barriers impeding cross-border trade within the EEA. Monitors, dialysers and bloodlines are subject to the Medical Devices Directive41 and once a CE marking has been obtained, a product can be sold throughout the EEA. This would also be true for fluids, including - though to a more limited extent - fluids that can be used to generate replacement fluids, which qualify as medicinal products under the Community Code (that is to say CRRT replacement fluids which enter the patient's blood stream),42 whose marketing authorisations are granted at national level  but which benefit from a decentralized43 or mutual recognition procedure.44

50.    Fourth, Baxter claims that local presence is not a crucial factor in the award of a tender/contract, even though some customers may require some form of local  presence, for instance to provide technical support and/or training services. Fifth, Baxter argues that reimbursement schemes in EEA countries do not in any way affect the ability of suppliers to compete with their products in any EEA country as HD or CRRT suppliers do not have to apply separately for reimbursement status in each EEA country.

51.    Sixth, Baxter claims that the fact that suppliers’ market shares may vary from one  EEA country to another is to a large extent due to historic reasons which does not in any way impair other suppliers’ ability to compete in the same market.

b.  The Commission's assessment

52.    The market investigation does not support Baxter's views.

53.    A majority of the customers that replied to the Commission's market investigation indicated, for both HD and CRRT, that when purchasing devices and consumables, they attach importance to the local presence or local sales force of the supplier or its distributors, as well as to the reputation of the supplier in their country. In particular, elements such as the potential supplier's local training and maintenance team are among the important factors influencing the customers' choice, given the importance of these after-sales services for monitor users45.

54.    Regarding the supply of monitors, customers generally require the presence of a maintenance representative working for the supplier in the country where they are located46. Regarding the supply of consumables (fluids, dialysers and bloodlines), customers also expressed a preference to have locally active suppliers. The main reason is the need for short delivery times and for hospitals and clinics to have rapid response in case of problems with the products.47 Distributors confirmed that  regarding consumables, local warehouses are necessary in order to be able to meet customers' time-of-delivery requirements.48 Local warehouses are generally situated at a distance ranging from 150 to 400 km from the customer's premises.49 As to monitors, distributors emphasised the importance of having permanently available maintenance support teams for training and technical service.50

55.    The market investigation in this case indicated that competitors generally do not respond to public tenders in EEA countries where they do not have a direct or indirect presence, both for HD and CRRT.51 For example, Nikkiso Europe stated that it "is not responding to requests from markets where [they] have no partners".52 Moreover, the market investigation indicated that almost all competitors and distributors have a   sale or distribution network organized at national level, or even at sub-national / local level.53

56.    In addition, the bidding data submitted by Baxter indicates that tenders are organized  at national level and market conditions vary from country to country.

57.    Furthermore, the market investigation has indicated the existence of significant differences as regard the final price of the product, namely price fluctuations of more than 10-20% between EEA countries for HD. Competitors explain this fluctuation by the different reimbursement rates applicable under the various national reimbursement schemes, which are taken into account by suppliers when proposing or negotiating prices.54 As regards national reimbursement system for CRRT, the market  investigation indicates that modalities vary from country to country.55

58.    Finally, as regards regulatory barriers, while having a CE mark is sufficient to sell CRRT or HD medical device products across the EEA, this does not apply to fluids that can be used to generate replacement fluids as these are considered pharmaceutical products and are subject to approval by national authorities under the Community Code. Moreover, additional notification or registration is necessary for medical  devices in some countries such as Spain or Greece56. Besides, language differences may be an additional burden when applying for regulatory approvals for the pharmaceutical products as all necessary documentation has to be translated.57

c.                  Conclusion

59.    In view of the foregoing, the relevant geographic markets for HD systems and components are likely to be national in scope, rather than EEA-wide. For the purposes of the present case, however, the precise definition can be left open as the Transaction does not raise serious doubts with respect to HD under any alternative geographic market definition.

60.    Similarly, the relevant geographic markets for CRRT systems, sets and disposables are likely to be national in scope, rather than EEA-wide. For the purposes of the present case, however, the precise definition can be left open as the Transaction raises serious doubts under the alternative geographic market definitions.

2.  Adjacent markets

a.    Water treatment systems

61.    Baxter submits that the relevant geographic market for water treatment systems is (at least) EEA-wide in scope.

62.    For the purposes of the present case, however, the precise market definition can be left open since the Transaction does not raise serious doubts whether the market is considered to be national or EEA-wide in scope.

a.     Therapeutic plasma exchange

63.    Baxter submits that the TPE market should be considered as EEA-wide.

64.    For the purposes of the present case, however, the precise market definition can be left open since the Transaction does not raise serious doubts whether the market is considered to be national or EEA-wide in scope.

IV. COMPETITIVE ASSESSMENT

A.       Haemodialysis (HD) Therapy equipment and consumables - Horizontal overlaps

1.  EEA level

65.    The Parties estimate that the overall EEA HD market (encompassing all HD  equipment and consumables) was worth EUR […] billion in 2012.

66.    Gambro produces and sells HD monitors, associated technical services, disposables, and fluids. Whilst Baxter also sells all these products, it only manufactures fluids and sources the other components from third parties. Baxter supplies monitors in eight EEA countries, namely Denmark, Finland, Ireland, Italy, the Netherlands, Spain, Sweden, and the United Kingdom. These monitors are manufactured for Baxter by Nikkiso and bear Nikkiso's label. Until recently, Baxter offered dialysers […].58  Baxter offers bloodlines dedicated for use with Nikkiso’s monitors, which are […]. It also sources dedicated bloodlines […]. Moreover, it distributes bloodlines dedicated for use with competing monitors (such as those manufactured by Gambro or  Fresenius) […].

67.    However, [Baxter's supply agreements].59

68.    The Parties supply HD products either directly to end-customers or through distributors, depending on the country concerned.

a.  HD systems

Market Structure – Market shares

69.    The market shares estimated by the Parties on the EEA HD systems market (comprising monitors, bloodlines, dialysers, fluids and other disposables) are as follows:

Table 1: Market shares for the EEA HD systems market (in value)

Source: Parties' estimates

 70.    Baxter submits that the Parties' combined EEA market share is moderate (approximately [30-40]%) and that the increment is small ([0-5]%). Baxter stresses  that it is currently the […] largest player, behind B. Braun ([5-10]%), while Gambro currently ranks second with a market share of [20-30]%. Baxter also stresses that the combined entity will still only rank […] behind the leading player Fresenius Medical Care ("Fresenius" or "FMC"), which has a market share of [30-40]%.

71.    In the Commission's view, the market shares indeed suggest that on an EEA-wide basis, the combined entity will continue to face competition from several  strong market players, first and foremost Fresenius, which achieves a […] share than the Parties' combined market share, but also B. Braun and to a lesser extent, Bellco, Nipro and Nikkiso. In addition, while Baxter's market share has remained stable over the past six years at some [0-5]%, Gambro's market share has been declining significantly over the same period, and this decrease is correlated to a significant increase in Fresenius', and to a lesser extent, B. Braun's market share. This suggests that Fresenius and B. Braun are dynamic competitors in the HD markets and would have the potential to attract a significant number of customers should the combined entity attempt to raise prices or decrease quality post-Transaction.

72.    In addition, the increment is relatively limited, which is indicative of limited merger- specific effects on the competitive dynamics.

73.    In the course of the market investigation, a majority of customers and competitors indicated that the combined entity would continue to face significant competition from other HD product suppliers post-Transaction. A large majority of the competitors that took this view identified Fresenius as a source of competitive pressure. Other suppliers mentioned as a source of competitive pressure on the merged entity included B. Braun. Bellco, Nipro, Nikkiso and Asahi60. Other elements collected in the course of the market investigation tend to confirm the strength of Fresenius and B. Braun, and the non-negligible role played by other market participants such as Bellco and Nipro. In particular, customers were asked to score the strength of Baxter, Gambro, Fresenius and B. Braun with respect to various criteria, namely price, quality, range of products offered, technical assistance, capacity to offer innovative products and local presence. Fresenius appears to be viewed as the strongest supplier with respect to all criteria while Gambro ranks second. Baxter and B. Braun have similar scores and are viewed as significantly weaker than both Gambro and Fresenius, notably with respect to quality and the range of products offered. Furthermore, a significant number of respondents mentioned Bellco and Nipro and gave them relatively high scores61. The results are largely corroborated by the views expressed by competitors as regards the respective strengths of the main market participants62.

Closeness of competition

74.    Furthermore, the Parties do not appear to be particularly close competitors. Asked to identify Gambro's closest competitor in regard to HD systems, a large majority of customers named Fresenius. All the other market participants were each either mentioned by a minority or not mentioned at all. Baxter and B. Braun were identified by a similar number of customers, and were followed by Bellco and Nipro63. The same outcome emerges from the views conveyed by competitors as regards Gambro's  closest competitor64. In addition, customers overall see Gambro and Fresenius as similarly strong competitors with respect to product quality and the range of products offered, with all other competitors, including Baxter, being significantly weaker in respect of these two criteria65. This is consistent with the views expressed by Baxter, according to which the Parties are not particularly close competitors notably because Gambro, for which HD is a key market, strives to differentiate itself from rivals by innovation and quality whereas Baxter – […]66.

75.    Information provided by customers about the switching events that occurred over the last three years further supports the conclusion that the Parties are not particularly  close competitors. Indeed, out of all the switching events reported by customers, only  a small minority relates to switching between the Parties. Twice as many switching events involved one of the Parties and Fresenius. Moreover, out of all the switching events involving Gambro, only 20% also involved Baxter while almost 45%   involved Fresenius, 20% involved B. Braun and 35% involved other competitors such as Nipro and Bellco in particular67.

76.    The Commission also analysed the extent to which the Parties may be close competitors with respect to the development of new or upgraded products. It appears that the Parties are not particularly close competitors in this respect either, since  Baxter is focussing on the development of […] whereas Gambro is dedicating its R&D resources to the development of […]. This is consistently confirmed by internal documents obtained from the Parties68.

Customer's ability to switch to other suppliers

77.    The market investigation indicates that switching from one supplier to another as a result of a price increase would encounter some barriers in particular if switching involves the HD monitor. These barriers, however, may ultimately not prevent HD customers from switching.

78.    Overall, competitors consider that switching supplier is easy for consumables (including fluids, bloodlines, dialysers and other disposables) if the customers' monitors are not technically bundled to disposables exclusively produced by the manufacturer of the monitors, which is generally not the case69, and if the customer does not prefer to purchase them as part of a package including monitors and associated technical services, such as a "pay-per-treatment" contract. As regards monitors, switching supplier is more burdensome in the eyes of competitors because customers need to test the new monitor model, modify their operational processes and retrain their staff. According to competitors, overall, switching the supplier entails the same difficulties for disposables as for monitors when the customer is technically and/or contractually prevented from buying disposables from a supplier other than the supplier of the monitors.70

79.    Customers' comments suggest that switching is not excessively difficult. A majority of the customers consider that switching supplier does not entail significant lead time or costs for dialysers, fluids and bloodlines71. Responses are more nuanced  when  it comes to monitors or whole HD systems. Respondents referred to the need to retrain staff, and to a lesser extent, test the new equipment and get used to new operating and maintenance processes72. However, even if switching supplier requires adaptations and entails costs when it involves a change of monitor model, those obstacles appear to be surmountable without major difficulties for HD customers. First, the time indicated by customers as necessary to test the new products and retrain staff broadly ranges from 3 to 12 months. According to certain customers, it can even be a matter of a few weeks only73. Second, switching does not appear to entail disproportionate costs74. Third and importantly, it appears easier to convince a HD customer to switch at the end of a contract period than a CRRT customer,75 based on a cost/ benefit analysis of  switching. Nurses in (HD) dialysis centres or clinics typically exclusively work on dialysis treatment and therefore HD equipment is used routinely and constantly by them.76 The cost and time to retrain specialised dialysis nurses on a different monitor  is therefore more rapidly amortised. Moreover, the benefits of switching are higher as the various HD components determine a large part of the cost for equipment and consumables in such centres / clinics.77 Taken together, these factors therefore explain why the barriers to switching that exist are unlikely to act as major deterrents.

80.    Besides, long-term contracts are not widespread in the HD markets, irrespective of the categories of products included in the scope of the contracts, which provides  customers with frequent opportunities to switch. Indeed, according to a majority of competitors, the typical duration of supply agreements does not exceed two to three years78. Switching is further fostered in national markets where formal tenders constitute a standard purchasing pattern, since tenders lead customers to conduct in-depth reviews and comparisons of the various propositions of the main suppliers. Furthermore, on the basis of the outcome of the market investigation, it appears that customers are not particularly inclined to maintain a long-term relationship with a single supplier in the HD markets79.

81.    Customers' replies to the Commission's requests for information show that switching is far from uncommon. Around one third of the respondents indicated that they switched supplier for HD systems or for one or more categories of HD products in the last three years80. Around half of the switching events concerned one category of products only and a large majority of the switching events concerned one or more categories of consumables, excluding monitors81. This outcome reflects the possibility enjoyed by HD customers to switch the supplier for only part of the HD products. This possibility, which stems from the high degree of interoperability of the various HD devices and consumables – and which does not exist in the area of CRRT or is much more   limited

– facilitates switching to a significant extent. In addition, for a majority of reported switching events, customers indicated that they had experienced no significant difficulties and that they incurred no significant costs82.

82.    Therefore, even though there are hurdles to switching supplier in particular for monitors, and in certain circumstances, for disposables, these hurdles would not be sufficient to prevent a significant number of customers from switching away from the combined entity relatively quickly, if the latter were to raise prices, to alternative suppliers.

Competitive significance of Baxter

83.    Market share data show that Gambro is a much more significant competitor than Baxter, which has had a modest and stable market share of around [0-5]% only over the last six years and which in addition, only manufactures itself […] of the categories of HD products […] and depends on third party manufacturers for […]. Switching events reported by customers in the framework of the market investigation tend to confirm the limited competitive constraint exerted by Baxter on other competitors, in particular Gambro. Indeed, for only […]% of these switching events83, the relevant customers switched to Baxter. The corresponding figures for Gambro, B. Braun and Fresenius are respectively […]%, […]% and […]%84. As regards B. Braun, which has much lower market shares than Gambro and Fresenius, but to which an equivalent number of customers switched in recent years, this figure shows that it is a dynamic competitor, likely to continue to grow in the near future. There is no similar indication concerning Baxter, whether in market share developments, switching events or any other elements collected in the course of the market investigation.

84.    Therefore, the Transaction would not eliminate an important competitive force on the HD systems market at EEA level.

Barriers to entry and expansion

85.    The market investigation indicates that barriers to entry into the EEA HD market appear to be high. This is the case in particular for monitors, for which customers' brand loyalty, the need to conduct significant research and development programmes, obtain regulatory approvals and intellectual property rights and the need for a local presence at national level with qualified sales forces constitute major obstacles to  entry. For consumables, the outcome of the market investigation indicates that barriers to entry are substantial, in particular in view of the importance of economies of scale, which implies that a manufacturer needs to produce and sell large volumes in order to be competitive85. According to competitors, overall, a company would need between two to four years to launch consumables on the market and around five years to launch a monitor86.

86.    For a company already supplying HD products in certain countries (whether within or outside the EEA) and willing to enter into an EEA country where it is not yet present, barriers to entry would, according to respondents, also be significant. The main obstacles relate to the need to advertise products, build up a good reputation, and set  up local technical, training, marketing and sales teams.87

87.    Therefore, barriers to entry into the markets for HD system, whether at EEA or national level, are generally significant.

Buyer power

88.    Baxter argues that the Parties face sophisticated customers which increasingly join forces through purchasing consortia or similar structures with a view to enhancing their bargaining power vis-à-vis suppliers. It also argues that customers pursue a number of strategies in order to increase the number of companies that compete against each other and to ensure that they are in a position to select multiple suppliers. Finally, it argues that customers can easily switch supplier, that their procurement processes are increasingly professionalised and that they are under rising pressure by national security systems to drive prices down through negotiations with suppliers.

89.    The Commission notes that the value of customers' procurement contracts appears to vary significantly from one customer to another88. Whereas certain contracts cover the needs of a large share of the whole market of individual countries, many others are much more modest, especially when they cover a single healthcare centre, which still occurs to a significant extent. Since prices are individually negotiated and not set by suppliers for the whole of their customer portfolio, it is unlikely that the possible buyer power enjoyed by large consortia and hospitals could protect smaller customers  against hypothetical price rises rendered possible as a result of the Transaction.

90.    Yet, the question of whether buyer power would be sufficient to offset hypothetical negative effects of the Transaction can be left open since the Transaction does not  raise serious doubts as to its compatibility with the internal market with respect to an EEA market for HD systems.

Conclusion

91.    In view of the Parties' respective market shares and their development over recent years, the strength of competitors such as Fresenius, B. Braun, Bellco and Nipro, the fact that the Parties are not close competitors and the possibility for customers to switch supplier relatively quickly and without major costs, the Commission concludes that the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to an EEA market for HD systems.

b.   HD monitors

Market Structure – Market shares

92.    The market shares estimated by the Parties on an EEA market for HD monitors are as follows:

Table 2: Market shares in the EEA HD monitor market (in value)

Source: Parties' estimates

 93.    Baxter stresses that its market share only amounted to [0-5]% in 2012 and that consequently very limited merger-specific effects can be expected. Baxter argues that the combined entity will continue to face strong competition notably from Fresenius,

B. Braun, Nikkiso, and Bellco. Baxter further remarks that Nipro and NxStage managed to expand their HD activities also with regard to HD monitors. Besides, Baxter considers that it does not exert a particularly important competitive constraint on Gambro.

94.    Gambro's market share has been declining over recent years. Baxter's market share has never exceeded [0-5]% over the last six years nor is this share likely to grow significantly.

95.    Indeed, [Baxter's supply agreements]. Furthermore, a majority of customers sourcing monitors from Baxter (or having sourced monitors from Baxter in the last 12 months), these monitors being all manufactured by Nikkiso, indicated that they would be ready to source the same monitors through an alternative distribution channel that would not involve Baxter.89 This means that if Nikkiso started to distribute its monitors directly  or through a distributor other than Baxter, this would not deter customers from continuing to buy these monitors.

96.    […] is likely to expand its operations in the markets for HD monitors in Denmark, Sweden, Finland and the Netherlands in the next few months and is likely to capture a very significant proportion of Baxter's customers. This element will be discussed as appropriate in the assessment of the effects of the Transaction on the national markets concerned.

Conclusion

97.    In view of the foregoing, the Commission concludes that the Transaction does not  raise serious doubts as to its compatibility with the internal market with respect to an EEA market for HD monitors.

c.       HD bloodlines

98.    The market shares estimated by the Parties on the EEA-wide market for HD  bloodlines are as follows:

Table 3: Market shares in the EEA HD bloodlines market (in value)

Source: Parties' estimates

 99.    As in the case of monitors, Gambro's market share has been declining over recent years. The increment is also small: Baxter's market share has never exceeded [0-5]% over the last six years.

100.   Furthermore, [Baxter's supply agreement]. This element will be discussed as appropriate in the assessment of the effects of the Transaction on the national markets concerned.

101.   In view of the foregoing, the Commission concludes that the Transaction does not  raise serious doubts as to its compatibility with the internal market with respect to an EEA market for HD bloodlines.

d.  HD dialysers

Market Structure – Market shares

102.   The market shares estimated by the Parties on an EEA-wide market for HD dialysers are as follows:

Table 4: Market shares in the EEA HD dialysers market (in value)

Source: Parties' estimates

103.   The Parties' combined market share does not exceed [30-40]% and the increment is small, with Baxter's market share not exceeding [0-5]% over the last two years and never more than [0-5]% in any of the last six years.

104.   Furthermore, […]90, […]. […] has indicated that it has already developed its own distribution network.91 Besides, in response to the Commission's requests for information, a large majority of customers sourcing dialysers from Baxter (or having sourced dialysers from Baxter in the last 12 months) indicated that they would be  ready to source dialysers through an alternative distribution channel92.

105.   As indicated at paragraph 66 above, whereas the monitors produced by […] and sold by Baxter [Baxter's manufacturing and sourcing strategy], dialysers manufactured by […] and sold by Baxter [Baxter's manufacturing and sourcing strategy]. However, customers' responses to the Commission's requests for information indicate that for a large majority of the respondents, a label on HD products is in itself of limited importance. By contrast, customers attach importance both to the actual identity of the manufacturer (which has an impact on the quality of the product) and the identity of the distributor (which has an impact on the quality of the distribution and after-sales services)93, which can be independent of the label borne by the product. A large majority of the respondents are aware of the identity of the actual manufacturer of the HD products that they purchase even if its label is not on these products94 and responses show that customers base their selection of a manufacturer (and the associated distribution channel) on the basis of a relatively thorough knowledge of  both the manufacturer and the distributor, going far beyond the information   provided by the label. For instance, […] indicated that it "needs to know the country where the resold product is manufactured and the quality standards applied in that country"95.

106.   Therefore, if dialysers originating from […] started to be sold under a different […] than Baxter's one, this change of […] would be unlikely to have a significant impact  on the customer's decisions to continue to buy these dialysers or not.

107.   In view of these elements, […] is likely to expand its operations on the markets for  HD dialysers in the EEA in the next few months and is likely to capture a significant proportion of Baxter's customers. This element will be discussed as appropriate in the assessment of the effects of the Transaction on national markets.

Conclusion

108.   In view of the foregoing, the Commission concludes that the Transaction does not  raise serious doubts as to its compatibility with the internal market with respect to an EEA market for HD dialysers.

e.   HD fluids

Market Structure – Market shares

109.   The market shares estimated by the Parties on a EEA market for HD fluids are as follows:

Table 5: Market shares in the EEA-wide market for HD fluids (in value)

Source: Parties' estimates

 110.   Baxter submits that Fresenius is the market leader with a [40-50]% share in 2012, followed by Gambro ([20-30]%), B. Braun ([10-20]%), Bellco ([5-10]%), Baxter ([5- 10]%), and others. According to Baxter, the Transaction will not materially alter the competitive situation as the new entity will not be able to close the gap with Fresenius, Baxter being only a smaller player and a number of other competitors will remain active in HD fluids. In the near future, Baxter also expects increased competition from Nipro, which allegedly is already a viable competitor in some EEA countries, such   as Greece ([5-10]%), Portugal ([0-5]%), and Slovakia ([10-20]%), and is expected to expand its activities into other EEA countries.

111.   In the Commission's view, the market shares suggest that on an EEA-wide market, the combined entity will face significant competition from several strong market players, first and foremost Fresenius, which achieves a significantly higher market share than the Parties' combined market share, but also B. Braun and to a lesser extent, Bellco. In addition, while Baxter's market shares have remained stable, Gambro's shares have been declining considerably over the last six years, and this decrease is correlated to a significant increase in Fresenius', and to a lesser extent, B. Braun's market shares. This suggests that Fresenius and B. Braun are dynamic competitors which would have the potential to attract customers should the combined entity attempt to raise prices or decrease quality post-Transaction.

Closeness of competition

112.   In addition, the Parties do not appear to be particularly close competitors. Asked to identify Gambro's closest competitor in regard to HD fluids, a large majority of customers named Fresenius. All the other market participants were each either mentioned by a minority or not mentioned at all. Baxter and B. Braun were   identified

by a similar number of respondents, and were followed by Bellco, Dirinco and  Nipro96. The same outcome emerges from the views conveyed by competitors as regards Gambro's closest competitor97. Therefore, the Parties are not close competitors on an EEA market for HD fluids.

Conclusion

113.   In view of the foregoing as well as the findings regarding barriers to switching for disposables (including fluids), it is likely that if the combined entity were to raise prices for fluids post-Transaction, customers would switch to strong competitors such as Fresenius and B. Braun.

114.   Consequently, the Commission concludes that the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to an EEA- market for HD fluids.

2.     National level

115.   The Parties' HD supply activities overlap in 24 EEA countries: Austria, Belgium, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Lithuania, Luxembourg, the Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom.

116.   The merged entity's market shares are below 15% on all possible product markets in six of these EEA countries (the Czech Republic, Estonia, Greece, Hungary, Romania and Slovakia). Consequently, the Transaction does not give rise to affected markets in any of these EEA countries. This also holds true for the Irish monitors market, which  is not affected either.

117.   For the purposes of the competitive assessment in this case , the various national product markets that are horizontally affected were allocated to one of three categories:98

i.     Group 1 markets: where the Parties' combined market share exceeds 35% and the increment exceeds 1%;

ii.    Group 2 markets: where the Parties' combined market share exceeds 35% but the increment does not exceed 1%;

iii.    Group 3 markets: where the Parties' combined market share does not exceed 35%.

118.   The Norwegian markets for HD systems and HD dialysers99 fall within Group 2 as the Parties' combined market shares exceeded 35% in 2012 and the increment did not exceed 1% on these two markets. Given the insignificant increment, the Commission concludes that the Transaction does not raise serious doubts as to its compatibility  with the internal market in respect of these possible markets.

119.   All the possible HD markets in the following countries fall within Group 3: Belgium and Luxembourg100, Germany, Lithuania, Poland, Portugal and Slovenia.101 In addition the HD markets in the following countries also fall within Group 3: Finland (HD systems, bloodlines and fluids); Ireland (HD systems and bloodlines); Spain  (dialysers) and the United Kingdom (HD systems, bloodlines and fluids).

120.   In most of the various product markets in these countries, the increment is minimal,  not exceeding 1%. When this is the case, the Transaction is not likely to result in a significant increase in market power. In the few markets where the increment is higher than 1%, the Parties' combined market share does not exceed 34% and the combined entity will face very significant competition from Fresenius (which in all cases has a market share higher than [30-40]%) but also from a range of other competitors102. In addition, no substantiated concerns have been raised by customers in the course of the market investigation as regards these markets. The Commission therefore concludes that the Transaction is unlikely to raise serious doubts as to its compatibility with the internal market in respect of any possible HD market in Belgium, Luxembourg, Germany, Lithuania, Poland, Portugal and Slovenia or in Finland with respect to HD systems, bloodlines and fluids, in Ireland with respect to HD systems and bloodlines, in Spain with respect to dialysers and in the United Kingdom with respect to HD systems, bloodlines and fluids.

b.   Group 1 markets - Introduction

121.   The following section therefore focuses on markets in ten Member States (Austria, Denmark, Finland, France, Ireland, Italy, the Netherlands, Spain, Sweden and the United Kingdom) that fall within Group 1, referring as appropriate to the findings of the assessment of the effects of the Transaction at EEA level, insofar as these findings are applicable to the relevant national market.

122.   For the purposes of assessing the closeness of competition between the Parties, the Commission requested the Parties to submit bidding data for these ten EEA countries covering their participation in competitive processes, including both formal tenders and informal requests for quotes103. Generally, information gathered in this way may constitute relevant evidence for assessing the degree of competition between the merging parties especially in markets such as the ones in the current case where products are differentiated and the duration of contracts is generally longer than one year. Diversion ratios based on tender data are informative about the actual  competition taking place when bidding for contracts. In particular, quantifying the proportion of bids lost by one of the Parties and attributing them proportionally to the winners provides a real positioning of the competitors of that party in the market.

123.   The bidding data submitted by the Parties cover a period of five years (2008-2012), and is structured into two separate files for each EEA country, one including the tenders which Baxter is aware of and another the tenders of which Gambro is aware.

124.   The Commission analysed these bidding data on a country-by-country basis. The results of this analysis are presented below when assessing the effects of the Transaction on the various national markets.

b.   Austria

125.   The Parties estimate that the market for HD systems, encompassing all the HD equipment and consumables, was worth EUR […] million in Austria in 2012.

126.   Gambro sells a full range of HD products. It supplies them [Gambro's distribution system]. Baxter [Composition of Baxter's monitor sales]. In Austria, Baxter sells dialysers originating from […], bloodlines for older generation Baxter monitors as  well as for monitors manufactured by other players, and fluids. Baxter sells these products [Baxter's distribution system].

127.   The Parties' main competitors in Austria are Fresenius, B. Braun, and to a lesser extent, Nikkiso and Nipro. Fresenius and B. Braun offer the full range of HD products in Austria. […] has recently acquired two dialysis clinics (in […] and in […], in the province of […]).

128.   Baxter submits that its own position in the Austrian HD market as the […] largest supplier is very limited. Also, Gambro's market shares have been steadily decreasing over the past years.

129.   Baxter submits that the small increment brought about by the Transaction will not significantly impede competition. Baxter claims that it is not a close competitor of Gambro, and that the Parties will continue to face fierce competition from other players. Baxter adds that there are no Austria-specific barriers to entry or expansion, and that customers can exercise significant countervailing power.

HD systems

Market structure – Market shares

130.   The market shares estimated by the Parties on an Austrian market for HD systems are as follows:

Table 6: Market shares in the Austrian market for HD systems (in value)

Source: Parties' estimates

 131.   The increment is insignificant (approximately [0-5]%). In addition, Gambro's market share has been decreasing substantially over the last years, whereas Fresenius' market share has been increasing significantly. Post-Transaction, the combined entity is expected to continue to face significant competition from a range of dynamic market participants, first and foremost Fresenius but also B. Braun and to a more limited extent, Nikkiso and Nipro.

Closeness of competition

132.   Also, the Parties do not appear to be particularly close competitors. A majority of Austrian customers replying to the Commission's requests for information named Fresenius as Gambro's closest competitor. B. Braun was also mentioned whilst Baxter was not104. This, in addition, to the general findings reached as regards closeness of competition between the Parties in the EEA-wide assessment, confirms Baxter's view that it is not a close competitor of Gambro.

Competitive significance of Baxter - customers' ability to switch to other suppliers

133.   In view of the development of Baxter's market shares over recent years and the fact that it only manufactures fluids and depends on third party manufacturers for other products, Baxter does not appear as a source of significant competitive constraint to Gambro. By contrast, Fresenius and B. Braun appear as strong competitors. The fact that […] has recently opened clinics in Austria (providing an outlet for its HD products) tends to indicate that this company is likely to expand in Austria in the near future.

134.   Furthermore, the general conclusions arrived at in the EEA-wide assessment as to the possibility for customers to switch supplier relatively quickly without incurring major costs, if the combined entity were to increase prices post-Transaction applies also to the current assessment.

Conclusion

135.   Therefore, the Commission concludes that the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the Austrian market for HD systems.

HD monitors

136.   The market shares estimated by the Parties on the Austrian market for HD monitors  are as follows:

Table 7: Market shares in the Austrian market for HD monitors (in value)

Source: Parties' estimates

 137.   The increment is very limited. In addition, [Composition of Baxter's sales]. Therefore, Baxter's  modest  market  share overstates  its role  in  the  competitive  dynamics. This means that the increment ([0-5]%) overstates the merger-specific effects. Besides, Gambro's market share has been declining significantly over the last three years.

138.   Therefore, the Commission concludes that the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the Austrian market for HD monitors.

HD bloodlines

139.   The market shares estimated by the Parties on the Austrian market for HD bloodlines are as follows:

Table 8: Market shares in the Austrian market for HD bloodlines (in value)

Source: Parties' estimates

 140.   The increment is rather small (approximately [0-5]%). In addition, Gambro's market share has been decreasing substantially over the last years, whereas Fresenius' market share has been increasing significantly. Post-Transaction, the combined entity is expected to face significant competition from a range of dynamic market participants, first and foremost Fresenius but also B. Braun and Nikkiso.

141.   In addition, the Parties do not appear to be particularly close competitors. A majority  of customers replying to the Commission's requests for information named Fresenius as Gambro's closest competitor. B.Braun was also mentioned whilst Baxter was not105. This, in addition, to the general findings reached as regards closeness of competition between the Parties in the EEA-wide assessment, confirms Baxter's view that it is not  a close competitor of Gambro.

142.   The general conclusions arrived at in the EEA-wide assessment as to the possibility  for customers to switch supplier relatively quickly without incurring major costs also applies to this assessment.

143.   Therefore, the Commission concludes that the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the Austrian market for HD bloodlines.

HD dialysers

144.   The market shares estimated by the Parties on the Austrian market for HD dialysers  are as follows:

Table 9: Market shares in the Austrian market for HD dialysers (in value)

Source: Parties' estimates

145.   The increment is small (approximately [0-5]%). In addition, Gambro's market share  has been decreasing over the last years, whereas Fresenius' market share has been increasing significantly. Post-Transaction, the combined entity is expected to face significant competition from a range of significant market participants, first and foremost Fresenius but also Nipro and B. Braun.

146.   In addition, the Parties do not appear to be particularly close competitors. A majority  of customers replying to the Commission's requests for information named Fresenius as Gambro's closest competitor. B.Braun and Nipro were also mentioned whilst Baxter was not106. This, in addition, to the general findings reached as regards closeness of competition between the Parties in the EEA-wide assessment, confirms Baxter's view that it is not a close competitor of Gambro.

147.   The general conclusions arrived at in the EEA-wide assessment as to the possibility  for customers to switch supplier relatively quickly without incurring major costs, if the combined entity were to increase prices post-Transaction also applies to this assessment.

148.   Therefore, the Commission concludes that the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the Austrian market for HD dialysers.

HD fluids

149.   The market shares estimated by the Parties on the Austrian market for HD fluids are as follows:

Table 10: Market shares in the Austrian market for HD fluids (in value)

Source: Parties' estimates

 150.   The increment, (approximately [0-5]%) is small. In addition, Gambro's market share has been decreasing over the last years, whereas Fresenius' market share has been increasing significantly. Post-Transaction, the combined entity is expected to face significant competition from a range of significant market participants, first and foremost Fresenius but also B. Braun, which has had a market share of around [10- 20]% over the last six years, and Nikkiso.

151.   In addition, the Parties do not appear to be particularly close competitors. A majority  of customers replying to the Commission's requests for information named Fresenius as Gambro's closest competitor. B.Braun was also mentioned whilst Baxter was not107. This, in addition, to the general findings reached as regards closeness of competition between the Parties in the EEA-wide assessment, confirms Baxter's view that it is not  a close competitor of Gambro.

152.   The general conclusions arrived at in the EEA-wide assessment as to the possibility  for customers to switch supplier relatively quickly without incurring major costs, if the combined entity were to increase prices post-Transaction also applies to this assessment.

153.   Therefore, the Commission concludes that the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the Austrian market for HD fluids.

c.                  Denmark

154.   The Parties estimate that the market for HD systems, encompassing all the HD equipment and consumables, was worth EUR […] million in Denmark in 2012.

155.   Gambro offers the same HD products in Denmark as EEA-wide108, that is monitors, associated technical services, disposables, and fluids. It supplies them [Gambro's distribution system]. Baxter offers the same categories of HD products in Denmark as EEA-wide including monitors and bloodlines originating from […] and dialysers manufactured by […], as well as its own fluids. Baxter sells its HD products in Denmark [Baxter's distribution system].

156.   The Parties' main competitors in Denmark are Fresenius and B. Braun. Fresenius  offers all categories of HD products. B. Braun offers the main consumables, and has a direct sales force in Denmark.

157.   According to Baxter, the Transaction will not significantly impede effective competition in HD in Denmark because Baxter’s share in HD and in each HD segment in Denmark is small, and continues to decrease, and the combined entity will continue to face fierce and increasing competition from other suppliers, including Gambro’s closest competitor Fresenius. Baxter further notes that Denmark is extremely tender driven, as almost 100% of the purchases of HD products are made via tenders, providing significant buyer power to hospitals and regions. According to Baxter, four of five regions source the HD demand for the entire region in one large tender.

HD systems

Market structure – market shares

158.   The market shares estimated by the Parties on the Danish market for HD systems are  as follows:

Table 11: Market shares in the Danish market for HD systems (in value)

Source: Parties' estimates

 159.   The Transaction combines the leading HD supplier, Gambro (with HD sales in 2012 of approximately EUR […] million and a share of [50-60]%) with the number […]  Baxter (with HD sales in 2012 of approximately EUR […] and a share of [0-5]%). Fresenius is the number two with a share of [30-40]%.

160.   Baxter submits that Fresenius has been competing aggressively and has won a series  of important tenders across Denmark. For example, in 2012, Gambro lost a tender for the supply of […] in the […] to Fresenius. According to Baxter, this tender accounted for approximately […]% of the total Danish HD demand.

161.   Baxter also emphasised the role of B. Braun, which has further expanded its activities in Denmark in 2011 and 2012. According to Baxter, B. Braun competes vigorously in tenders against Gambro and Fresenius. Baxter indicated that B. Braun had won (part of) a tender in 2013 for the […] for […].

162.   The Danish market appears to be fairly concentrated, with the Parties and Fresenius accounting together for [90-100]% of the sales in 2012. Gambro and Fresenius appear to be strong suppliers compared to all the other market participants. The Parties' combined market share is high and Gambro's market share has been increasing, whereas Baxter's market share has been decreasing over the same period.

Closeness of competition

163.   The market investigation has not yielded fully reliable results as regards the closeness of competition between the Parties. For HD systems, half of the respondents identified Baxter as Gambro's closest competitor and the other half identified Fresenius. However, for HD monitors, HD bloodlines, HD dialysers and HD fluids considered separately, all respondents named Fresenius and none mentioned Baxter109. This is a first indication that Baxter is a more remote competitor to Gambro than Fresenius.

164.   Moreover, the bidding analysis carried out by the Commission and summarised below confirms that the Parties are not close competitors110.

Bidding analysis

(i)  Gambro's bidding data

165.   Gambro, participated in […] tenders organised between 2008 and 2012 (overall […] events) in Denmark, where approximately […] of Gambro's sales are made via tenders.

166.   For those cases where the presence of a competitor in tenders was recorded by Gambro's sales workforce, Fresenius was mentioned by far most often, followed by Baxter and Scan-Med111 both mentioned with the same frequency. Other competitors that were present in the tenders include Vingmed, Globe Medical, NordiaTech and Covidien112. Amongst the events for which the bid value is available, Fresenius is by far the competitor who participated in the highest value bids.

167.   As regards the effective pressure exerted by these competitors on Gambro, measured by the number of competitive events won from Gambro, information is limited. However, out of the […] events lost by Gambro for which the winner's name is identified, Baxter won […] tenders, […] within tenders which include a wide range of products. The other events lost by Gambro were won by Fresenius ([…] cases, for […]), Scan-Med ([…] cases), Vingmed ([…] cases), Globe Medical, Bard and Nordic Medcom each in […].

168.   Therefore, Gambro's bidding data in Denmark confirms Baxter's weak position as well as the presence of many other viable competitors that effectively win tenders lost by Gambro. Moreover, since the bidding data extends only to 2012, it does not cover B. Braun's more recent successes in Denmark.

(ii)   Baxter's bidding data

169.   Baxter only participated in […] tenders over the relevant period, comprising […] competitive events (lots). Baxter only made an offer for […] of the lots.

170.   Baxter's dataset confirms the information from Gambro's bidding data according to which Baxter won only […] of the lots lost by Gambro, […] for […]and […] for […]. The […]competitive events (lots) lost by Baxter were won by Fresenius ([…]), Gambro ([…]) and Scan-Med ([…]). Although Scan-Med won less frequently than the other two large competitors, it participated in tenders for a wide range of products including dialysis systems/monitors and fluids. Therefore, its effective presence on the Danish market is largely disregarded by the market shares calculated on the basis of annual sales on a manufacturer basis.

(iii)   Conclusion of the bidding analysis

171.   On the basis of the bidding analysis, the Danish market for HD systems appears to be characterised by two large suppliers (Fresenius and Gambro) and a number of medium and smaller rivals (including not only Baxter but also Scan-Med, Vingmed, Nordic Medcom and, based on its recent success, B. Braun). Therefore the loss of independent competition from Baxter cannot be expected to have a material impact on the vigour of competition on the market post-Transaction.

Competitive significance of Baxter - customers' ability to switch to other suppliers

172.   Moreover, […], the actual market share increment would be lower than Baxter's current [0-5]%. As explained in paragraph 67 above, both Nikkiso and Nipro are expected to expand their operations significantly in the countries where […], which include Denmark, and are likely to capture a very significant part of Baxter's  customers for the relevant product.113

173.   Furthermore, the general conclusions arrived at in the EEA-wide assessment as to the possibility for customers to switch supplier relatively quickly without incurring major costs, if the combined entity were to increase prices post-Transaction applies also to the current assessment.

Conclusion

174.   Therefore, the Commission concludes that the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the Danish market for HD systems.

HD monitors

175.   The market shares estimated by the Parties on the Danish market for HD monitors are as follows:

Table 12: Market shares in the Danish market for HD monitors (in value)

Source: Parties' estimates

176.   Baxter argues that it only had […] sales in 2012 and that the market shares in 2012 do not accurately reflect the competitive landscape in the monitors segment in Denmark, which would essentially be split between Gambro and Fresenius. Baxter indicated that most of Denmark’s requirements for HD monitors have been tendered by four regions and that of these, Gambro has won the […] and […] while Fresenius supplies the […].

177.   Furthermore, Baxter indicated that it could not participate in most tenders that also involved HD monitors in Denmark, since [Details of Baxter's products]. Baxter indicated that it only participated in […] in 2012, in which no central regional purchasing takes place.

178.   The Danish market for HD monitors appears to be highly concentrated, with only the Parties and Fresenius being active. The Parties' combined market share is high and has been increasing very significantly since 2007 as a result of Gambro's growing market share, whereas Fresenius' market shares has decreased significantly.

179.   However, the increment is small and the market investigation114 and the Commission's bidding analysis indicated that the Parties are not particularly close competitors.

180.   The general conclusions arrived at in the EEA-wide assessment as to the possibility  for customers to switch supplier relatively quickly without incurring major costs also applies to this assessment.

181.   The Commission therefore concludes that the Transaction does not raise serious  doubts as to its compatibility with the internal market with respect to the Danish market for HD monitors.

HD bloodlines

182.   The market shares estimated by the Parties on the Danish market for HD bloodlines  are as follows:

Table 13: Market shares in the Danish market for HD bloodlines (in value)

Source: Parties' estimates

 183.   The increment is minimal ([0-5]%). Fresenius appears as a strong competitor, with a market share above [50-60]% in each of the last two years. Moreover, the market investigation and the bidding analysis (the results of which have been  presented above) indicate that the Parties are not particularly close competitors. The general conclusions arrived at in the EEA-wide assessment as to the possibility for customers to switch supplier relatively quickly without incurring major costs also applies to this assessment.

184.   The Commission therefore concludes that the Transaction does not raise serious  doubts as to its compatibility with the internal market with respect to the Danish market for HD bloodlines.

HD dialysers

185.   The market shares estimated by the Parties on the Danish market for HD dialysers are as follows:

Table 14: Market shares in the Danish market for HD dialysers (in value)

Source: Parties' estimates

 186.   Baxter submits that Post-Transaction, Danish customers will still have a choice of at least two other existing dialyser suppliers in Denmark - Fresenius with a [20-30]% share in 2012 and Asahi with [5-10]%. Baxter further submits that the static view of the market shares in 2012 does not adequately reflect the fierce competition in this segment. Baxter explained that it expected to lose dialyser sales in the near future because of the loss of important contracts. For example, Fresenius won a […] in […], for which Baxter currently supplies […]. Baxter considers that it may well lose its […] business in […] to Fresenius. Besides, Baxter claims that it has lost significant business to Fresenius when the latter won the […], respectively, which is not yet reflected in the value shares provided above.

187.   Baxter further believes that the market shares do not reflect the competitive pressure exerted by B. Braun. For example, according to Baxter, B. Braun participated […]    in at least […] tenders, which included […] in 2011 ([…]) and 2012 ([…]) and its efforts to win such tenders are expected to continue.

188.   The Parties' combined market share is high and growing. However, the Parties do not appear to be particularly close competitors in view of the market investigation115 and more importantly, in view of the bidding analysis. Moreover, as it results from the conclusions of the bidding analysis, the market shares are not fully representative of the competitive interactions on the Danish market for dialysers. In particular, they tend to overstate Baxter's role.

189.   Furthermore, post-Transaction, in Denmark, the actual market share increment would be lower than Baxter's current market share since […]. An expansion by Nipro is  likely to occur in the next few months. Nipro's expansion on the Danish market for dialysers appears sufficiently likely and timely and sufficient in scope for Nipro to exert a significant constraint on the combined entity. The general conclusions arrived at in the EEA-wide assessment as to the possibility for customers to switch supplier relatively quickly without incurring major costs also applies to this assessment.

190.   The Commission therefore concludes that Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the Danish market for HD dialysers.

HD fluids

191.   The market shares estimated by the Parties on the Danish market for HD fluids are as follows:

Table 15: Market shares in the Danish market for HD fluids (in value)

Source: Parties' estimates

192.   The increment is very limited (approximately [0-5]%) and Fresenius appears as a significant competitor, with a market share above [40-50]% in each of the last six years. Moreover, the market investigation and the bidding analysis, which has been presented above, indicate that the Parties are not close competitors. The general conclusions arrived at in the EEA-wide assessment as to the possibility for customers to switch supplier relatively quickly without incurring major costs also applies to this assessment.

193.   The Commission concludes that the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the Danish market for HD fluids.

d.  Finland

194.   The Parties estimate that the market for HD systems, encompassing all the HD equipment and consumables, was worth EUR […] million in Finland in 2012.

195.   Gambro offers a full HD product range in Finland. It supplies them [Gambro's distribution system]. Baxter offers the same HD products and brands in Finland as EEA-wide, including monitors and bloodlines originating from […] and dialysers manufactured by […], as well as its own fluids. Baxter sells its HD products in  Finland [Baxter's distribution system].

196.   The Parties' main competitors in Finland are Fresenius and B. Braun. Fresenius offers  a full HD product range in Finland. So does B. Braun, which has a dedicated HD sales force in Finland and in addition, owns two private HD clinics in Helsinki.

197.   In Finland, only the markets for monitors and dialysers are Group 1 markets.116 HD monitors

198.   The market shares estimated by the Parties on the Finnish market for HD monitors  are

as follows:

Table 16: Market shares in the Finnish market for HD monitors (in value)

Source: Parties' estimates

 199.   As a result of the steep decline in Baxter's market shares since 2009, the increment is small.

200.   Post-Transaction, the combined entity is expected to face significant competition from Fresenius, whose market share has been growing and which is expected to remain the market leader, and to a lesser extent, B. Braun. The bidding analysis carried out by the Commission indicates that the Parties are not particularly close competitors.

(i)  Gambro's bidding data

201.   […] Gambro's sales in Finland are made through tenders. Gambro has participated in more than […]% of the tenders over the relevant period but lost more than […] of them. According to Gambro's bidding data, Fresenius and B. Braun are the closest competitors of Gambro in Finland, winning most of the bids lost by Gambro or being identified by Gambro as runner-ups in the bids won by Gambro. Fresenius won […] of the bids lost by Gambro, B. Braun more than […]% and Baxter […]%. This ranking is roughly consistent with the position of these three competitors of Gambro in Finland in terms of market shares. Moreover, a number of fringe players (such as Carbonex  and Bard) are also effective competitors winning some of the bids lost by Gambro.

(ii)   Baxter's bidding data

202.   Baxter participated in slightly less tenders than Gambro. Its sales are also made […] through tenders.

203.   The presence of Baxter in tenders decreased considerably in the last few years (2009-2010: […] tenders and 2011-2012: […] tenders). This is consistent with the decrease in its market shares. Overall Baxter lost […]% of the tenders where it participated and in 2012 it won only […] of them. The competitive events lost by Baxter were won by Fresenius in […]% of the cases, Gambro in […]%, B. Braun in […]% and the rest by multiple suppliers.

204.   Moreover, the actual market share increment would be lower than Baxter's current market share since […], Nikkiso is expected to expand its operations significantly in Finland. Nikkiso's entry is likely to occur in the next few months. For the reasons explained at paragraphs 95 and 96, Nikkiso's entry appears sufficient in scope and sufficiently likely and timely for Nikkiso to constitute a source of significant competitive pressure on the combined entity.

205.   The general conclusions arrived at in the EEA-wide assessment as to the possibility  for customers to switch supplier relatively quickly without incurring major costs also applies to this assessment.

206.   In light of the above, the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the Finnish market for HD monitors.

HD dialysers

207.   The market shares estimated by the Parties on the Finnish market for HD dialysers are as follows:

Table 17: Market shares in the Finnish market for HD dialysers (in value)

Source: Parties' estimates

208.   The increment ([10-20]%) is large and the Parties' combined market share is higher than the market shares of their competitors. However, overall, the market shares of both Baxter and Gambro have been declining substantially over the last six years whereas the market shares of each of Fresenius and B. Braun have been increasing. Post-Transaction, the combined entity is expected to face significant competition from these competitors.

209.   The Commission's bidding analysis also indicated that Fresenius and B. Braun are Gambro's closest competitors and that Baxter lost strength significantly in the last few years.

210.   Also, the actual market share increment would be lower than Baxter's current market share as […]. Entry by […] is likely to occur in the next few months. For the reasons explained at paragraphs 104 to 107, […] expansion appears sufficient in scope and sufficiently likely and timely for […] to exert a significant constraint on the combined entity.

211.   The general conclusions arrived at in the EEA-wide assessment as to the possibility  for customers to switch supplier relatively quickly without incurring major costs also applies to this assessment.

212.   In light of the above, the Commission concludes that the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the Finnish market for HD dialysers.

e.                  France

213.   The Parties estimate that the market for HD systems, encompassing all the HD equipment and consumables, was worth EUR […] million in France in 2012.

214.   Gambro offers a full HD product range in France. According to Baxter, Gambro historically has a strong position in France, notably due to its acquisition of Hospal in 1987, which is still a separate brand in France. Baxter submits that Hospal has been strong since the 1970s, because of local production capabilities and close relationships with local hospitals. In France, Gambro only sells its products through [Gambro's distribution system].

215.   In France, Baxter offers the same HD product range as at the EEA level, with the exception of […], which it no longer distributes in that country. Baxter sells HD products in France through [Baxter's distribution system].

216.   According to Baxter, there are numerous suppliers of HD products in France in addition to the Parties, including Fresenius, B. Braun, Nikkiso, Asahi, Toray, Bellco, Nipro, and Hemodia. Fresenius and B. Braun offer a full HD product range in France. Bellco offers monitors, dialysers and fluids.

HD systems

Market structure – market shares

217.   The market shares estimated by the Parties on the French market for HD systems are  as follows:

Table 18: Market shares in the French market for HD systems (in value)

Source: Parties' estimates

 218.   Baxter argues that it is not a particularly close competitor of Gambro, claiming that the HD products that Baxter and Gambro sell in France are not regarded as close substitutes. Baxter considers that the combined entity will continue to face fierce competition from strong rivals. Baxter further argues that customers are strong and can exercise significant countervailing power.

219.   The combined entity would remain the market leader. Yet, while Baxter's market share has been fairly stable over the last six years, Gambro's market share has been decreasing significantly over the same period, to the benefit of a range of other competitors. Market shares suggest that post-Transaction, the combined entity would face significant competition from Fresenius but also from a range of smaller competitors, including Toray, B. Braun, Nikkiso, Asahi, Nipro and Bellco.

Closeness of competition

220.   In addition, the Parties do not appear to be particularly close competitors. A majority  of French customers named Fresenius as Gambro's closest competitor. Baxter was mentioned by only a limited minority117.

221.   Switching events reported by French customers tend to confirm that the Parties are not close competitors. […] of these switching events involved Gambro. However, only […]% of the events involving Gambro also involved Baxter, whilst the other events involved other competitors such as Fresenius, Nipro and Hemotech 118.

Competitive significance of Baxter – Customers' ability to switch to other suppliers

222.   Furthermore, Nipro […] and is expected to expand its operations significantly in France in the coming months. Since dialysers sales account for almost […]% of Baxter's total HD sales in France, this means that the post-merger increment is likely to overstate the magnitude of the merger-specific effects on the French market for HD systems.

223.   The general conclusions arrived at in the EEA-wide assessment as to the possibility  for customers to switch supplier relatively quickly without incurring major costs also applies to this assessment.

224.   In light of the above, the Commission concludes that the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the French market for HD systems.

HD dialysers119

225.   The market shares estimated by the Parties on the French market for HD dialysers are as follows:

Table 19: Market shares in the French market for HD dialysers (in value)

Source: Parties' estimates

226.   Post-Transaction, the combined entity would remain the market leader. However, Gambro's market share has been decreasing substantially, a trend which has benefitted a range of competitors which do not include Baxter, whose market share has remained almost constant over the last six years. Market shares suggest that post-Transaction,  the combined entity would face significant competition from Fresenius, Toray, Asahi, and to a lesser but non-negligible extent, Nipro, Nikkiso and B. Braun.

227.   Furthermore, Nipro […] and is expected to expand its operations significantly in France. This implies that the post-merger increment likely to overstate the magnitude of the Transaction, for the reasons explained at paragraphs 104 to 107.

228.   The general conclusions arrived at in the EEA-wide assessment as to the possibility  for customers to switch supplier relatively quickly without incurring major costs also applies to this assessment.

229.   In light of the above, the Commission concludes that the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the French market for HD dialysers.

HD fluids

Market structure – market shares

 230.   The market shares estimated by the Parties on the French market for HD fluids are as follows:

Table 20: Market shares in the French market for HD fluids (in value)

Source: Parties' estimates

231.   Baxter argues that the product offerings of the Parties are largely complementary, because in France Baxter is mainly active in the supply of concentrates in liquid form whereas Gambro is mainly active in the supply of concentrates in powder form120. Baxter provided information according to which, by volume, Baxter has the […] in liquid concentrates ([30-40]%), […] Fresenius ([30-40]%) and Bellco ([20-30]%), while Gambro only has a share of [5-10]%. By contrast, when it comes to powders, Gambro’s share by volume in France is [40-50]%, while Baxter is one of the smallest suppliers with a share of [0-5]%. Baxter also indicated that Fresenius had significant powder activities in France, with a share of [30-40]%.

232.   Baxter infers from those elements that the Transaction would not eliminate Gambro’s closest competitor in the HD fluids segment. Baxter submits that post-Transaction the combined entity would continue to face vigorous competition and would be constrained by a number of existing competitors, including Fresenius, B. Braun and Bellco.

233.   Post-Transaction, the combined entity would be the clear market leader, well ahead of all the other competitors. The Parties' combined market share has been on a general upward trend over the last six years, whereas Bellco's market share has declined and Fresenius' market share has remained relatively stable. Market shares suggest that post-Transaction, while enjoying a strong position, the combined entity would face significant competition from Fresenius and Bellco (with market shares of respectively [20-30]% and [10-20]%) and to a lesser extent, B. Braun. In the framework of the market investigation, a large majority of the French customers indicated that they would switch to B. Braun if the combined entity raised prices121. This suggests that B. Braun is a significant competitor to the Parties.

Closeness of competition

234.   In addition, the Parties do appear to have different focuses in their respective fluid operations in France, with Gambro focussing on powders and Baxter on liquid concentrates. The market investigation has not yielded unequivocal results as to the customers' views on the identity of Gambro's closest competitors122 but as shown below, the Commission's bidding analysis supports Baxter's view that the Parties are not particularly close competitors.

Bidding analysis

235.   Overall, the bidding data confirms that Fresenius, Bellco, B. Braun, Hemotech (which distributes Asahi and Nikkiso's products) and Meditor (which distributes Toray's products) would be important remaining rivals for HD tenders post-merger. Moreover, although each of the Parties has a presence in relation to fluids in France, the tender data shows that there will remain a range of strong rivals in the fluid segment post- Transaction. These rivals include Fresenius, Bellco, B. Braun, Hemotech and Nipro,  all of which contest and also win fluid lots.

236.   Gambro's dataset does not allow for a meaningful analysis of winners due to the lack  of information. However, Baxter's database shows the effective competitive constraint imposed by at least five competitors that actively participate and win the bids lost by Baxter in [HD product]. For the last two years where information is available for the tenders concerning fluids, Gambro won […]% of the bids, Bellco […]%, B. Braun […]%, Nipro […]%, Fresenius […]%, Hemotech […]% and other competitors won  the remaining contracts.

237.   Gambro won much less competitive events in 2012 than in 2011 (both in absolute and in relative terms). In 2012 Gambro won in […] cases (out of […]) compared to […] cases (out of […]) in 2011. Moreover, Baxter bidding data clearly confirms the significant presence of Nipro as a competitor in fluids, which is disregarded by the market share data. Besides its real presence in the market through bids won, the tender data also informs about the increasing participation of Nipro, in terms of number of competitive events where it submitted a bid, which went up from […]% in 2010 to […]% in 2012.

238.   Therefore, the bidding analysis shows that the Parties are not particularly close competitors and that they face significant competition from a number of other market participants.

Conclusion

239.   The general conclusions arrived at in the EEA-wide assessment as to the possibility  for customers to switch supplier relatively quickly without incurring major costs applies also to this analysis.

240.   In view of the foregoing, the Commission concludes that the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the French market for HD fluids.

f.  Ireland

241.   The Parties estimate that the market for HD systems, encompassing all the HD equipment and consumables, was worth EUR […] million in Ireland in 2012.

242.   Gambro offers a full HD product range in Ireland. Gambro supplies these products through [Gambro's distribution system]. Baxter offers the same HD products in Ireland as at the EEA level, including monitors and bloodlines manufactured by[…] , dialysers manufactured by […], as well as its own fluids. Baxter sells its HD products in Ireland [Baxter's distribution system].

243.   According to Baxter, apart from the Parties, the main HD suppliers active in Ireland are Fresenius and B. Braun. B. Braun is a recent entrant. It entered into the Irish  market in 2011. B. Braun offers a full range of HD products in that country. So does Fresenius.

244.   The Health Service Executive (HSE) acts a central procurement entity in Ireland, purchasing HD equipment and consumables on behalf of public hospitals and HD private "satellite" units, namely, privately owned healthcare centres which are also subject to the HSE tender process. The HSE enters into framework agreements with HD suppliers following tenders. Once a framework agreement has been concluded  (and eligible suppliers have been selected), public hospitals and private HD satellite units may then contact eligible suppliers and ask for the submission of bids. The HSE distinguishes three main regions for tenders: the Southwest, the Midwest and the Dublin regions.

245.   In Ireland, only the market for dialysers falls within Group 1.123

HD dialysers

246.   The market shares estimated by the Parties on the Irish market for HD dialysers are as follows:

Table 21: Market shares in the Irish market for HD dialysers (in value)

Source: Parties' estimates

 247.   On the basis of this data, it appears that post-Transaction, the combined entity would rank first. However, Gambro's market share has declined significantly over the years (especially since 2011), whereas B. Braun has achieved a significant market share of [20-30]% since its entry into the market.

248.   Also, the Commission's bidding data analysis indicates that the Parties participated in very few tenders over the relevant period and lost […] of them. Gambro participated in […] tenders in total over the relevant period. It lost […] of them, […] to Fresenius, […] to B. Braun and […] to Baxter. Baxter participated in […] tenders where the outcome is known and also lost […] of them: […] to B. Braun, […] to Fresenius and […] to both of them. The […] tender won by Baxter was with a customer where […].

249.   Moreover, B. Braun and Fresenius' strength has been confirmed by the […], which identified these two competitors as both Baxter and Gambro's closest competitors124. Furthermore, the […] reported various recent switching events. In all cases, the […] switched either to Fresenius or to B. Braun. In certain cases, Gambro was the previous supplier125. This illustrates that the Parties are not particularly close competitors (no reported switching events involved both of them), as well as the strength of Fresenius and B. Braun.

250.   These elements, in addition, to the general findings reached as regards closeness of competition between the Parties in the EEA-wide assessment (see paragraphs 74 and following) confirm that the Parties are not close competitors.

251.   Moreover, […] it also appears that the actual post-Transaction increment may be overstated, for the reasons explained at paragraphs 104 to 107.

252.   The general conclusions arrived at in the EEA-wide assessment as to the possibility  for customers to switch supplier relatively quickly without incurring major costs also applies to this assessment.

253.   In light of the above, the Commission concludes that the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the Irish market for HD dialysers126.

g.       Italy

254.   The Parties estimate that the market for HD systems, encompassing all the HD equipment and consumables, was worth EUR […] million in Italy in 2012.

255.   Gambro offers the full HD product range in Italy. Gambro does not offer […], but it does offer technical support and maintenance services. It relies on [Gambro's distribution system].

256.   Baxter offers the same HD products as at the EEA level, including monitors and bloodlines manufactured by […], dialysers manufactured by […], as well as its own fluids. In addition, Baxter offers synthetic dialysers manufactured by […]. Regarding HD monitors, Baxter offers the […] monitors, but […]. Baxter thus sources the […] monitors it offers from […]. Baxter uses a [Baxter's distribution system] for HD sales in Italy, […]. Baxter does not […] in HD.

257.   According to Baxter, the Parties' main competitors are Fresenius, Bellco (an Italian company which according to Baxter enjoys a strong and stable presence in its home country), B. Braun as well as Nipro, Nikkiso, Toray and Asahi.

258.   Fresenius, B. Braun and Bellco offer a full range of HD products in Italy. HD systems

Market structure – market shares

259.   The market shares estimated by the Parties on the Italian market for HD systems are as follows:

Table 22: Market shares in the Italian market for HD systems (in value)

Source: Parties' estimates

 260.   According to Baxter, Fresenius is the main challenger to Gambro with a share of [20- 30]%, and it will continue to be the combined entity’s closest competitor post- Transaction. Baxter also puts emphasis on the role of Bellco, B. Braun, Toray and Nikkiso. According to Baxter, Fresenius aggressively targets HD in Italy and is understood to participate in virtually all Italian tenders with great success.

261.   Post-Transaction, the combined entity would be the clear market leader (as Gambro currently is), well ahead of all the other competitors. However, while Baxter and Bellco's market share is fairly stable, Gambro's market share has been decreasing significantly over the last six years, mirroring a sizable increase in Fresenius' market share. Market shares suggest that post-Transaction, the combined entity would face significant competition from Fresenius and Bellco (with market shares of respectively [20-30]% and [10-20]%) – which are able to satisfy the needs of customers which  want to buy all the HD products as a package -, but also competition from a range of other players, notably B. Braun, Toray and Nikkiso.

Closeness of competition

262.   In addition, the Parties do not appear to be particularly close competitors. Asked to identify Gambro's closest competitor in HD systems, a large majority of Italian customers named Fresenius. B. Braun and Bellco were each identified by a limited minority and no respondent referred to Baxter127. This, in addition, to the general findings reached as regards closeness of competition between the Parties in the EEA-wide assessment, tends to confirm Baxter's view that it is not a close competitor of Gambro.

Competitive significance of Baxter – Customers' ability to switch to other suppliers

263.   Moreover […], the actual market share increment would be lower than Baxter's  current [5-10]%. As explained in paragraph 67 above, Nipro is expected to expand its operations significantly in the countries […], which include Italy, and is likely to capture a very significant part of Baxter's customers.

264.   Furthermore, the general conclusions arrived at in the EEA-wide assessment as to the possibility for customers to switch supplier relatively quickly without incurring major costs, if the combined entity were to increase prices post-Transaction applies also to the current assessment.

Conclusion

265.   Therefore, the Commission concludes that the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the Italian market for HD systems.

HD bloodlines128

266.   The market shares estimated by the Parties on the Italian market for HD bloodlines are as follows:

Table 23: Market shares in the Italian market for HD bloodlines (in value)

Source: Parties' estimates

 267.   The increment in market share is limited at [0-5]% reflecting Baxter's marginal presence on this market. Consequently, the Transaction would not result in a significant change to the structure of the market. In addition, the merged entity would continue to face competition from a number of long-established suppliers such as Fresenius, Bellco, B. Braun and Nikkiso. Therefore, taking these elements into  account and in the absence of substantiated concerns during the market investigation, the Commission concludes that the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the Italian market for HD bloodlines.

HD dialysers

268.   The market shares estimated by the Parties on the Italian market for HD dialysers are  as follows:

Table 24: Market shares in the Italian market for HD dialysers (in value)

Source: Parties' estimates

269.   Post-Transaction, the combined entity would be the clear market leader (as Gambro currently is), well ahead of all the other competitors. However, while Baxter and Bellco's market share is fairly stable, Gambro's market share has been decreasing over the last six years, mirroring an increase in Fresenius' market share. Market shares suggest that post-Transaction, the combined entity would face significant competition from Fresenius and Bellco (with market shares of respectively [20-30]% and [10- 20]%) but also competition from a range of other players, notably Toray and Asahi.

270.   In addition, the Parties do not appear to be particularly close competitors. Asked to identify Gambro's closest competitor in HD dialysers, a large majority of Italian customers named Fresenius. B. Braun and Bellco were each identified by a limited minority and no respondent referred to Baxter129. This, in addition, to the general findings reached as regards closeness of competition between the Parties in the EEA-wide assessment, tends to confirm Baxter's view that the Parties are not close competitors.

271.   Furthermore, post-Transaction, in Italy, the actual market share increment would be lower than Baxter's current market share since […]. An expansion by Nipro is likely to occur in the next few months. For the reasons explained at paragraphs 104 to 107, Nipro's expansion on the Italian market for dialysers appears sufficiently likely and timely and sufficient in scope for Nipro to exert a significant constraint on the combined entity. The general conclusions arrived at in the EEA-wide assessment as to the possibility for customers to switch supplier relatively quickly without incurring major costs also applies to this assessment.

272.   The Commission therefore concludes that Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the Italian market for HD dialysers.

HD fluids

273.   The market shares estimated by the Parties on the Italian market for HD fluids are as follows:

Table 25: Market shares in the Italian market for HD fluids (in value)

Source: Parties' estimates

 274.   Baxter stresses the important role of Fresenius on the Italian market for HD fluids and its own limited presence on that market. Baxter further argues that the Parties are not close competitors, and that they in fact only directly compete in a very limited number of HD tenders/lots in that country. In support of its claim that the Parties are not close competitors, Baxter also submits that its HD fluid offering is […] than that of Gambro, because it does […] - while Gambro and Fresenius do130.

275.   Post-Transaction, the combined entity would be the clear market leader (as Gambro currently is), well ahead of all the other competitors. However, Baxter's market share has been decreasing significantly over the last six years. Fresenius' market share, on the other hand, follows a growing trend. Market shares suggest that post-Transaction, the combined entity would face significant competition from Fresenius and Bellco (with market shares of respectively [20-30]% and [10-20]%).

276.   In addition, the Parties do not appear to be particularly close competitors. Asked to identify Gambro's closest competitor in regard to HD fluids, a large majority of Italian customers named Fresenius. B. Braun and Baxter were each mentioned by a limited minority (and by a similar number of respondents) and Bellco was also mentioned131. This, in addition, to the general findings reached as regards closeness of competition between the Parties in the EEA-wide assessment, tends to confirm Baxter's view that the Parties are not close competitors.

277.   The analysis of the Parties' bidding data, discussed below, supports this finding.

Bidding analysis

278.   The tender data provided by the Parties for fluids in Italy reveals that the Parties face significant competitive pressure in HD from rivals such as Bellco, Nipro, Fresenius and B. Braun.

279.   An analysis of the tender data shows that Baxter bids for HD fluid lots considerably less frequently than Gambro, which suggests that Baxter does not exert a very strong constraint on Gambro.

280.   In order to get a better insight into the extent to which the Parties compete head-to- head in the market for HD fluids, the Parties' economic consultants combined their individual datasets. This exercise indicates that it is relatively rare for Baxter and Gambro to bid for the same lots within a tender, even where they both participate in the bidding process for the same tender. For the […] tenders ([…] lots) involving [HD product], where full tender details are available in both Parties’ tender datasets, Baxter and Gambro only bid for the same lot in […] of the […] cases. In addition, in more than […]% of the cases ([…] lots out of […]) where Baxter and Gambro competed against each other the lots were won by another competitor (the identity of the winner(s) being unknown).

281.   There is thus an important proportion of bids for which Baxter and Gambro do not face each other as competitors. In the few instances where both Gambro and Baxter participate in the same tenders, the tender data shows that competitively strong and credible alternatives will remain post-Transaction.

Conclusion

282.   Furthermore, the general conclusions arrived at in the EEA-wide assessment as to the possibility for customers to switch supplier relatively quickly without incurring major costs, if the combined entity were to increase prices post-Transaction applies also to the current assessment.

283.   Therefore, the Commission concludes that the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the Italian market for HD fluids.

h.                  Netherlands

284.   The Parties estimate that the market for HD systems, encompassing all the HD equipment and consumables, was worth EUR […] million in the Netherlands in 2012.

285.   Gambro offers a full range of HD products in the Netherlands. It supplies them [Gambro's distribution system]. Baxter also offers a full range of HD products including monitors manufactured by […] , dialysers manufactured by […], bloodlines for […] monitors, which are sourced in particular from […], as well as its own fluids. In addition, Baxter offers dialysers manufactured by […]. However, […]132. Baxter sells its HD products in the Netherlands [Baxter's distribution system].

286.   According to Baxter, the main HD suppliers active in the Netherlands are Fresenius, Gambro, Baxter, B. Braun, Medcomp, Dirinco, Nipro and MTN Neubrandenburg.

287.   Fresenius and B. Braun offer a full range of HD products. Medcomp does not particularly focus on RRT products but is specialized in vascular access products for various medical applications133. Dirinco, for its part, is not involved in the  manufacture of any HD product but distributes monitors, bloodlines and dialysers manufactured by NxStage as well as fluids originating from SALF and HAAS, dialysers from Medica and Toray, bloodlines from Effe Emme and vascular access products from Joline, Kimal and JMS134. In the HD area, MTN Neubrandenburg is only involved in the production and distribution of fluids135.

HD systems

288.   The market shares estimated by the Parties on the Dutch market for HD systems are as follows:

Table 26: Market shares in the Dutch market for HD systems (in value)136

Source: Parties' estimates

 289.   Baxter stresses that Fresenius currently ranks […] with a share of [30-40]% while B. Braun, ranks fourth (with a share of [5-10]%). Baxter further notes that Gambro’s position has continuously decreased over recent years, due in particular to Fresenius' aggressive pricing policy. Baxter argues that Gambro's closest competitor is Fresenius. Baxter considers that its own current position is due to the relatively recent acquisition of a distributor – Cablon – and its success in […] tenders in 2011, whereas its position was much more limited prior to 2011. Baxter notes that the main competitors in the HD market are active globally, market several specialized HD products and could easily expand their operations in the Netherlands if the combined entity were  to attempt to raise prices post-Transaction. Baxter refers in that respect to various examples of expansion into HD in the Netherlands, such as the recent opening of a sales office in the Netherlands by Bellco, the recent hiring of additional sales representatives by Nipro, and NxStage's relatively recent entry.

290.   The Parties' combined market shares are significant and the increment is large ([20- 30]%) and increasing due to Baxter's increasing market shares. By contrast, Gambro's market share has gone down substantially since 2007. Market shares suggest that the Parties will face significant competition by Fresenius (which has a market share of [30-40]%), and to a much lesser extent, B. Braun, all the more since both competitors offer a comprehensive range of HD products and are thus able to satisfy the needs of the customers that want to buy all these products as a single package. Other competitors only have a modest presence.

Closeness of competition

291.   The Parties do not appear to be particularly close competitors. Asked to identify Gambro's closest competitor in regard to HD systems, a large majority of Dutch customers named Fresenius. Baxter was identified by a minority and no other competitor was mentioned137.  This,  in  addition, to  the  general  findings  reached  as regards closeness of competition between the Parties in the EEA-wide assessment, tends to confirm Baxter's view that it is not a close competitor of Gambro.

292.   The analysis of the Parties' bidding data, described below, supports this finding.

Bidding analysis

(i)  Gambro's bidding data

293.   According to information gathered by Gambro, it participated in approximately […]% of the tenders in the Netherlands, a country where […]% of its sales are made via tenders. Therefore, the information provided by this bidding analysis is fairly representative.

294.   In terms of participation in tenders over the years, it seems that Gambro submitted a bid in […] tenders in the last two years as compared to the previous period. Given that the total number of tenders in the Netherlands does not seem to have changed considerably, it can be inferred that Gambro became less active.

295.   Tenders are generally split into lots including product categories or sets of product categories. Generally the lots represent the competitive events where competition takes place. The dataset identifies the companies that were invited to the tender. Also information on the outcome as well as the winner is available in general. However, information on the volume and price is too scarce to allow for a systematic  quantitative analysis.

296.   Fresenius is the rival most frequently seen by Gambro in the Netherlands, followed by Baxter, B. Braun, Nipro and Dirinco. Baxter's participation in bids was very low  before 2011 (less than […]% of bids) and only increased after that year (to approximately […]% of bids) due to its acquisition of Cablon. Over the last five years, Baxter was the unique other competitor invited in only […]% of the events where Gambro participated (and for […] of the events recorded for 2012). In the vast majority of the competitive events, a set of at least three to four competitors was invited.

297.   For the tenders where the ranking of competitors was recorded, Fresenius was identified (as perceived by Gambro's sales workforce) as the closest competitor of Gambro in almost […]% of the cases. Baxter is rather perceived as the second closest competitor of Gambro in the majority of events.

298.   As regards the tenders lost by Gambro138 where information on the winner is available, approximately […] of them were won by Fresenius. Baxter won slightly less than […]% of the tenders lost by Gambro, B. Braun […]%, Nipro […]% and Dirinco […]%. However, the success of Baxter mainly predates its acquisition of Cablon in 2011. Subsequently, Baxter won only […] of the events lost by Gambro (approximately […]%). Therefore, the increasing participation of Baxter in tenders did not trigger high winning rates, but the opposite. These percentages suggest that Baxter's market share ([20-30]% in 2012) overstates the current competitive constraint it exerts on Gambro based on the number of wins in the tender data. Furthermore,other competitors' market shares (B. Braun – [5-10]%, Nipro and Dirinco – [0-5]% each) seem to underestimate their effective constraint imposed on Gambro, reflected in the contracts won in Gambro's tenders.

(ii)   Baxter's bidding data

299.   The dataset of Baxter is much smaller than the one of Gambro; it includes approximately […] tenders ("final" offers) for the last five years. However, tenders cover […] of the sales made by Baxter; therefore, this bidding data has some  relevance.

300.   Consistent with the evidence from Gambro's data set, the number of tenders in which Baxter participated increased in the last few years (reflecting the acquisition of Cablon). However, Baxter has not managed to […] in the last two years as all the tenders won by Baxter in 2011-2012 concern […].

301.   The tenders lost by Baxter were won by Fresenius ([…] events) and Gambro ([…] events). The tender […] (more than EUR […] million, for […]) was lost by Baxter to Fresenius and the […] tender (more than EUR […] million, again for […]) was lost by Baxter to Gambro in 2011. In both cases the stated reason for losing was the price.

(iii)   Conclusion of the bidding analysis

302.   The tender data of both Parties suggests therefore that Fresenius is the main  competitor of both Parties, in line with the outcome of the market investigation. Furthermore, Baxter is not a strong or dynamic competitor. Despite its acquisition of Cablon in 2011, Baxter did not manage to increase its success in tenders. Moreover, other competitors such as B. Braun, Nipro and Dirinco all exert a significant competitive constraint on the Parties, effectively winning competitive events at a rate much higher than what their market shares might indicate.

Competitive significance of Baxter – Customers' ability to switch to other suppliers

303.   Moreover, […], the actual market share increment would be lower than  Baxter's current [20-30]%. For the reasons explained at paragraphs 95 and 96 and paragraphs 104 to 107, both Nikkiso and […] are expected to expand their operations significantly in the countries […], which include the Netherlands, and are likely to capture a very significant part of Baxter's customers for the relevant product.139

304.   Furthermore, the general conclusions arrived at in the EEA-wide assessment as to the possibility for customers to switch supplier relatively quickly without incurring major costs, if the combined entity were to increase prices post-Transaction applies also to the current assessment.

Conclusion

305.   Therefore, the Commission concludes that the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the Dutch market for HD systems.

HD monitors

Market structure – market shares

 306.   The market shares estimated by the Parties on the Dutch market for HD monitors are  as follows:

Table 27: Market shares in the Dutch market for HD monitors (in value)

Source: Parties' estimates

 307.   According to Baxter, the sudden increase in its own shares illustrates that market shares may significantly fluctuate by winning or losing a few tenders. Moreover, the Parties expect Fresenius to further expand its market share in the future as a result of its aggressive pricing strategy and close relationships with physicians.

308.   The Parties' combined market share is significant and the increment is large ([20- 30]%). The Parties' combined market share has increased very significantly since 2007 as a result of Baxter's growing shares since its acquisition of Cablon. Market shares suggest that Fresenius will continue to be a significant competitor, nonetheless far more modest than the combined entity. B. Braun, for its part, with a market share of [5-10]%, is expected to play an important role. Besides, the Dutch market appears to be quite concentrated, with the Parties, Fresenius, Nikkiso and B. Braun having a combined market share of [90-100]% in 2012 and [90-100]% in previous years.

Closeness of competition

309.   However, the Parties do not appear to be particularly close competitors. Asked to identify Gambro's closest competitor in regard to HD monitors, a large majority of Dutch customers named Fresenius. Baxter was identified by a minority and no other competitor was mentioned140. This, in addition, to the general findings reached as regards closeness of competition between the Parties in the EEA-wide assessment, and the findings of the bidding analysis presented in the assessment of the effects of the Transaction on the Dutch market for HD systems, tends to confirm Baxter's view that  it is not a close competitor of Gambro. It further appears from the bidding analysis that competitors such as B. Braun, Nipro and Dirinco, have a much more significant role  on this market than their market shares would suggest.

Competitive significance of Baxter – Customers' ability to switch to other suppliers

310.   Moreover, […], the combined entity's market share would be lower than the Parties' combined market share. Indeed, for the reasons explained at paragraphs 95 and 96, Nikkiso is expected to expand its monitors sales significantly in the countries […], which include the Netherlands, and is likely to capture a very significant part of Baxter's customers.

311.   Furthermore, the general conclusions arrived at in the EEA-wide assessment as to the possibility for customers to switch supplier relatively quickly without incurring major costs, if the combined entity were to increase prices post-Transaction applies also to the current assessment.

Conclusion

312.   Therefore, the Commission concludes that the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the Dutch market for HD monitors.

HD bloodlines

313.   The market shares estimated by the Parties on the Dutch market for HD bloodlines are as follows:

Table 28: Market shares in the Dutch market for HD bloodlines (in value)

Source: Parties' estimates

 314.   Baxter stresses that Fresenius ranks […] ([30-40]%), […][…]Gambro ([30-40]%), whereas Baxter ranks […] ([20-30]%), and B. Braun […] ([0-5]%). Baxter notes that Gambro’ share considerably decreased from [50-60]% in 2007, and that there are other active players such as Meise and Dirinco. Baxter considers that Gambro and Baxter  are not close competitors in the area of HD bloodlines (with Gambro offering captive cassettes for its Artis monitors and dedicated bloodlines for its other HD monitors).

315.   The Parties' combined market shares are significant and the increment is large ([20- 30]%). The Parties' combined market share has increased very significantly since 2010 as a result of Baxter's growing share since its acquisition of Cablon. The market  share more modest than the combined entity. As in the case of monitors, the Dutch bloodlines market appears to be very concentrated, with the Parties and Fresenius accounting together for [90-100]% of sales.

316.   However, the Parties do not appear to be particularly close competitors. Asked to identify Gambro's closest competitor in regard to HD bloodlines, a large majority of Dutch customers named Fresenius. Baxter was not identified at all141. This, in  addition, to the general findings reached as regards closeness of competition between the Parties in the EEA-wide assessment, and the findings of the bidding analysis presented in the assessment of the effects of the Transaction on the Dutch market for HD systems, tends to confirm Baxter's view that it is not a close competitor  of Gambro. It further appears from the bidding analysis that competitors such as B.  Braun and Dirinco, have a much more significant role on this market than their market shares would suggest.

317.   Moreover, post-Transaction, in the Netherlands, the combined entity's market share is expected to be lower than the Parties' current combined market share […].

318.   Furthermore, the general conclusions arrived at in the EEA-wide assessment as to the possibility for customers to switch supplier relatively quickly without incurring major costs, if the combined entity were to increase prices post-Transaction applies also to the current assessment.

319.   Therefore, the Commission concludes that the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the Dutch market for HD bloodlines.

HD dialysers

320.   The market shares estimated by the Parties on the Dutch market for HD dialysers are as follows:

Table 29: Market shares in the Dutch market for HD dialysers (in value)

Source: Parties' estimates

 321.   Baxter stresses that Fresenius is the […] supplier (with a market share of [40-50]%) whereas Gambro ranks […][30-40]%), having lost 10 percentage points from 2007 to 2012, Baxter ranks […] ([5-10]%), B. Braun ranks […] ([5-10]%), and Nipro […] ([0- 5]%).

322.   The Parties' combined market shares is significant but has been decreasing over recent years, due to a significant reduction in Gambro's market share, correlated to an  increase in Fresenius and B. Braun's market shares. Market shares suggest that Fresenius will continue to be a significant competitor of a similar size as the combined entity, and even a greater size if trends observed in recent years persist. B. Braun is also expected to act as a non-negligible constraint on the combined entity.

323.   In addition, the Parties do not appear to be particularly close competitors. Asked to identify Gambro's closest competitor in regard to HD dialysers, a large majority of Dutch customers named Fresenius142. This, in addition, to the general findings reached as regards closeness of competition between the Parties in the EEA-wide assessment, and the findings of the bidding analysis presented in the assessment of the effects of the Transaction on the Dutch market for HD systems, tends to confirm Baxter's view that it is not a close competitor of Gambro. It further appears from the bidding analysis that competitors such as B. Braun have a much more significant role on this market than their market shares would suggest.

Competitive significance of Baxter – Customers' ability to switch to other suppliers

324.   Furthermore, post-Transaction, in the Netherlands, the actual market share increment would be lower than Baxter's current market share since […]. Indeed, in 2012, around […]%143 of Baxter's sales of dialysers in the Netherlands were made up of dialysers originating from and supplied […]. An expansion by […] is likely to occur in the next few months. For the reasons explained at paragraphs 104 to 107, […] expansion on the Dutch market for dialysers appears sufficiently likely and timely and sufficient  in scope for […] to exert a significant constraint on the combined entity.

325.   Moreover, the general conclusions arrived at in the EEA-wide assessment as to the possibility for customers to switch supplier relatively quickly without incurring major costs also applies to this assessment.

Conclusion

326.   Therefore, the Commission concludes that the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the Dutch market for HD dialysers.

HD fluids

327.   The market shares estimated by the Parties on the Dutch market for HD fluids are as follows:

Table 30: Market shares in the Dutch market for HD fluids (in value)144

Source: Parties' estimates

 328.   Baxter stresses that Fresenius would remain the leading supplier post-merger and  refers to the role of other suppliers such as MTN Neubrandenburg, B. Braun and Dirinco.

329.   The Parties' combined market share is significantly lower than that of Fresenius, which has been going up very substantially over the last five years, while Gambro's market share has decreased significantly. The Parties' combined market share has not  exceeded [40-50]% since 2008. Moreover, MTN Neubrandenburg appears to be an important source of competitive constraint.

330.   In addition, the Parties do not appear to be particularly close competitors. Asked to identify Gambro's closest competitor in regard to HD fluids, a large majority of Dutch customers named Fresenius145. This, in addition, to the general findings reached as regards closeness of competition between the Parties in the EEA-wide assessment, and the findings of the bidding analysis presented in the assessment of the effects of the Transaction on the Dutch market for HD systems, tends to confirm Baxter's view that  it is not a close competitor of Gambro. It further appears from the bidding analysis that competitors such as B. Braun and Dirinco have a much more significant role on this market than their market shares would suggest.

331.   In view of the foregoing as well as the general conclusions arrived at in the EEA-wide assessment as to the possibility for customers to switch supplier relatively quickly without incurring major costs, the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the Dutch market for HD fluids.

i.  Spain

332.   The Parties estimate that the market for HD systems, encompassing all the HD equipment and consumables, was worth EUR […] million in Spain in 2012.

333.   Gambro offers a full HD product range in Spain and the same brands as at the EEA-level. It sells its products through [Gambro's distribution system]. Baxter also offers a full HD product range in Spain, including monitors and bloodlines manufactured by […], dialysers manufactured by […] and its own fluids. Baxter operates [Baxter's distribution system] in Spain.

334.   Fresenius, Nipro, and to a lesser extent, Bellco and B. Braun are the Parties' main competitors in Spain. Fresenius offers a full HD product range in Spain. Nipro also supplies a full range of HD products in Spain, where it has its own sales forces146.

335.   In Spain, the markets for HD systems, bloodlines and fluids are Group 1 markets.147 HD systems

Market structure – market shares

336.   The market shares estimated by the Parties on the Spanish market for HD systems are as follows:

Table 31: Market shares in the Spanish market for HD systems (in value)

Source: Parties' estimates

 337.   Baxter notes that the Transaction will combine the current number […] Gambro (with a market share of [30-40]% in 2012) and the number […] Baxter (with a market share of [5-10]% in 2012), whereas Fresenius is the current […] (with a market share of [30- 40]% in 2012), and will […]. Baxter considers that Fresenius, but also Nipro,   Bellco,

B. Braun, and Asahi will continue to exert competitive pressure on the combined entity. Baxter claims that all of those competitors actively participate in tenders in Spain, including the largest tenders such as those organised in 2011 by […], the […] and […].

338.   The Parties' combined market share is in the same order of magnitude as that of the market leader, Fresenius. The market share data suggest that the Parties will face significant competition by Fresenius but also from a range of smaller competitors, notably Nipro, which has a market share of [5-10]% and which, as Fresenius, offers a full range of HD products and is thus able to satisfy the customers that want to buy  all these products as a package. Moreover, other competitors such as B. Braun  and Bellco, have a non-negligible presence.

339.   In addition, whereas the market shares of Baxter, Bellco, Fresenius and B. Braun have remained relatively stable, Gambro's market share has been declining significantly  over the last six years, whereas Nipro's market share has been increasing significantly, suggesting that it is a very dynamic competitor.

Closeness of competition

340.   Furthermore, the Parties do not appear to be particularly close competitors. Asked to identify Gambro's closest competitor in regard to HD systems, a large majority of Spanish customers named Fresenius. Other competitors were mentioned at best by a very small minority148. This, in addition, to the general findings reached as regards closeness of competition between the Parties in the EEA-wide assessment, tends to confirm Baxter's view that it is not a close competitor of Gambro.

341.   The analysis of the Parties' bidding data, described below, supports this finding.

Bidding analysis

342.   In Spain, Gambro has maintained the separate Hospal brand under which it offers mainly CRRT products but also HD products. Therefore, two separate datasets were provided by Gambro. In both of them the presence of Baxter is marginal or inexistent.

343.   Amongst the HD tenders in the Hospal database that were lost, […] was won by Baxter. In the Gambro database which contains about […] competitive events over the relevant period, Baxter won only […] of the bids lost by Gambro and […] of them were for [HD product].

344.   The tender data provided by Baxter reveals the strength of Nipro, which won […]% of the bids lost by Baxter. This competitive constraint exerted by Nipro is definitely higher than what the market shares might indicate. Nipro's market share has been increasing constantly over the last five years, but the effective competitive strength  that Nipro will exhibit in Spain in the future is clearly grasped by the high number of contracts won recently.

345.   Furthermore, Gambro together with Hospal won another […]% of the bids lost by Baxter, followed by Fresenius with only […]%. Many other players were identified as winners in Baxter's database, including Diaverum, B. Braun, Bellco, Zento Medical, Palex Medica and Izasa among others.

346.   Therefore, the bidding data available for Spain reveal a market with a large number of suppliers, all actively present and effectively constraining the Parties in tenders. Gambro, Fresenius and Nipro are the main players, whereas Baxter has only a  marginal effective presence, even lower than what is indicated by its market share.

Competitive significance of Baxter – Customers' ability to switch to other suppliers

347.   Furthermore, post-Transaction, in Spain, the actual market share increment would be lower than Baxter's current market share ([5-10]%) since […]. An expansion by Nipro is likely to occur in the next few months. Nipro's expansion on the Spanish market for dialysers appears sufficiently likely and timely and sufficient in scope for Nipro to exert a significant constraint on the combined entity149. The general conclusions  arrived at in the EEA-wide assessment as to the possibility for customers to switch supplier relatively quickly without incurring major costs also applies to this assessment.

Conclusion

348.   The Commission therefore concludes that the Transaction does not raise serious  doubts as to its compatibility with the internal market with respect to the Spanish market for HD systems.

HD bloodlines150

349.   The market shares estimated by the Parties on the Spanish market for HD bloodlines are as follows:

Table 32: Market shares in the Spanish market for HD bloodlines (in value)

Source: Parties' estimates

350.   The Parties' combined market share is in the same order of magnitude as that of the […], Fresenius. The market shares suggest that the Parties will face significant competition from Fresenius but also from a range of smaller competitors, notably Nipro, which has a market share of [5-10]%.

351.   In addition, whereas Baxter's market share has remained relatively stable, Gambro's market share has been declining significantly over the last six years. Over the same period, both Nipro and Fresenius' market shares have been growing.

352.   Furthermore, the Parties do not appear to be particularly close competitors. Asked to identify Gambro's closest competitor in regard to HD bloodlines, a large majority of Spanish customers named Fresenius. Other competitors were mentioned at best by a very small minority151. This, in addition to the general findings reached as regards closeness of competition between the Parties in the EEA-wide assessment, tends to confirm Baxter's view that it is not a close competitor of Gambro.

353.   Moreover, as already indicated, bidding data available for Spain reveals a market with a large number of suppliers, all actively present and effectively constraining the Parties in tenders, in addition to Fresenius. Besides, the general conclusions arrived at in the EEA-wide assessment as to the possibility for customers to switch supplier relatively quickly without incurring major costs also applies to this assessment.

354.   The Commission therefore concludes that the Transaction does not raise serious  doubts as to its compatibility with the internal market with respect to the Spanish market for HD bloodlines.

HD fluids

355.   The market shares estimated by the Parties on the Spanish market for HD fluids are as follows:

Table 33: Market shares in the Spanish market for HD fluids (in value)

Source: Parties' estimates

356.   The Transaction would enable the combined entity to reach […] market share as that of Fresenius, the […]. Market shares suggest that the Parties will face significant competition by Fresenius but also from other competitors, notably B. Braun, which   has a market share of [5-10]%.

357.   In addition, whereas Baxter and B. Braun's market shares have remained relatively stable, Gambro's market share has been declining significantly over the last six years, mirroring a substantial increase in Fresenius' market share.

358.   Furthermore, the Parties do not appear to be particularly close competitors. Asked to identify Gambro's closest competitor in regard to HD fluids, a large majority of Spanish customers named Fresenius. Other competitors were mentioned at best by a very small minority152. This, in addition to the general findings reached as regards closeness of competition between the Parties in the EEA-wide assessment, tends to confirm that Fresenius is a closer competitor to Gambro than Baxter.

359.   Moreover, as already indicated, bidding data available for Spain reveals a market with a large number of suppliers, all actively present and effectively constraining the Parties in tenders, in addition to Fresenius.

360.   The general conclusions arrived at in the EEA-wide assessment as to the possibility  for customers to switch supplier relatively quickly without incurring major costs also applies to this assessment.

361.   The Commission therefore concludes that Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the Spanish market for HD fluids.

j.                    Sweden

362.   The Parties estimate that the market for HD systems, encompassing all the HD equipment and consumables, was worth EUR […] million in Sweden in 2012.

363.   Gambro offers a full HD product range in Sweden and the same brands as at the EEA level. It sells its products through [Gambro's distribution system].

364.   Baxter offers a full HD product range in Sweden including monitors and bloodlines manufactured by […], dialysers manufactured by […], as well as its own fluids.  Baxter sells its HD products in Sweden [Baxter's distribution system].

365.   According to Baxter, the main HD suppliers active in Sweden are Gambro, Fresenius, Baxter, and B. Braun and additional suppliers are active in certain HD segments. Fresenius offers a full HD product range in Sweden and markets its products   directly.

B. Braun has significant HD sales in Sweden only in the fluid market. B. Braun has a direct sales force in Sweden but also uses distributors.

HD systems

Market structure – market shares

366.   The market shares estimated by the Parties on the Swedish market for HD systems are as follows:

Table 34: Market shares in the Swedish market for HD systems (in value)

Source: Parties' estimates

367.   Baxter argues that it is not a close competitor of Gambro, the HD products that Baxter and Gambro sell in Sweden not being regarded as close substitutes. According to Baxter, the combined entity will continue to face fierce competition from strong rivals, in particular Fresenius, as well as from B. Braun and other growing players.

368.   Baxter indicates that Fresenius has expanded its Swedish business successfully in recent years at the expense of the Parties, in particular through aggressive pricing. An illustration of this success would be a tender organised in […] by […] covering […] that is […], which was won by Fresenius.

369.   As regards B. Braun, Baxter notes that it has been present in Sweden for some years but only recently further expanded its HD activities in that country (in 2011-2012). In spite of B. Braun's currently minor market position, Baxter expects this competitor, in light of its experience and position in other Nordic countries, such as Finland, to gain a significant position also in Sweden in the near future.

370.   Baxter also notes that Bellco is active on the Swedish HD market with bicarbonate- based fluids and dialysers, which are distributed by Nordic Medcom, a large distributor present in the Nordic countries. Besides, Baxter believes that Bellco is currently looking to expand its activities and to increase its presence in Sweden.

371.   On the basis of the market share data, the Swedish market appears to be fairly concentrated, with only three suppliers – the Parties and Fresenius – enjoying a significant market presence. The Parties' combined market share is significant, well above Fresenius' market share.

372.   However, the Parties' combined market share has been decreasing significantly over the last six years, primarily due to the declining path followed by Gambro's market share. This decrease has been mirrored by a significant increase in the market share of Fresenius, which has reached almost [40-50]%. Fresenius thus emerges as a strong and dynamic competitor, all the more since it offers a full HD product range and is thus able to satisfy the needs of customers willing to purchase all these products as a single package.

Closeness of competition

373.   Moreover, in the framework of the market investigation, Fresenius has been identified by a large majority of Swedish customers as Gambro's closest competitor whereas Baxter has been identified by around half of the respondents and B. Braun by a minority153. This, in addition, to the general findings reached as regards closeness of competition between the Parties in the EEA-wide assessment, is a first indication that the Parties are not particularly close competitors and that Fresenius is a closer competitor to Gambro than Baxter.

374.   The analysis of the Parties' bidding data, described below, supports this finding.

Bidding analysis

(i)  Gambro's bidding data

375.   According to information gathered by Gambro, the latter participated in […] tenders in Sweden, a country where […]% of its sales are made via tenders (hence the highly informative nature of the information provided by the bidding analysis). Overall, the bidding dataset reveals the presence of many active competitors in Sweden. For the vast majority of competitive events, more than two and up to five competitors were mentioned. Moreover, where the information on the incumbent supplier was available, it showed that the vast majority of contracts were served by multi-sourcing. Customers source generally every component / consumable from various suppliers.

376.   In terms of ranking of competitors present in a tender, Fresenius was perceived by Gambro's sales forces as its closest rival in […]% of the cases. Nordic Medcom, which distributes products originating in particular from Bellco, was named as Gambro's closest competitor in […]% of the cases and Baxter only in […]%. Baxter is rather viewed as the second closest competitor on the Swedish market in the majority of the tenders.

377.   In 2012 Gambro won […]% of the competitive events where it participated, much less than its average winning rate of almost […]% for the last 5 years. For those tenders where both Parties won part of the contract, there were other winners as well, showing again a market preference by Swedish customers to procure from multiple suppliers.

378.   When Gambro lost a competitive event, the winner was Fresenius in more than […]% of the cases followed by Baxter and Nordic Medcom, each winning in approximately […]% of the cases. Moreover, Baxter […] event lost by Gambro in 2012. Of the […] events lost by Gambro in 2012, […] were won by Fresenius and […] by Nordic Medcom. Since the sales data show a market share for Nordic Medcom that is much smaller than the market share of Baxter (even if the entirety of Bellco sales as estimated by the Parties is attributed to Nordic Medcom), the tender data suggests that historical market share data may understate the growing significance of Nordic Medcom in the competition for tenders and its future competitive position.

(ii)   Baxter's bidding data

379.   Baxter's dataset is relatively smaller than Gambro's dataset but nevertheless it is believed to cover all tenders where Baxter participated in the relevant period. Moreover, as already indicated, […]% of its sales in Sweden are made through tenders.

380.   Baxter's position seems to weaken over time on the Swedish market. It lost considerably more events in 2012 ([…]%) than on average in previous years ([…]%).

381.   Even if its market share is smaller than Gambro's, Fresenius is perceived as Baxter's main competitor in more than […] of the competitive events where Baxter  participated, much ahead of Gambro. Fresenius also won more than […]% of the tenders lost by Baxter whereas Gambro won only […] of them.

382.   Baxter tender data also reveals the presence of two other strong effective competitors: Nordic Medcom and Scandinavian Medical, which distributes products originating from B. Braun and Nipro among others. They won together […]% of the tenders lost by Baxter.

(iii)   Conclusion of the bidding analysis

383.   The tender data suggests that Fresenius is the main competitor of both Parties in Sweden. Both Gambro and Baxter are losing strength at the expense of solid distributors supplying products originating from well-known manufacturers, which are increasing their effective presence. Both datasets identify Nordic Medcom and Scandinavian Medical as winners in a considerable number of bids, showing them as a much stronger competitive constraint to both Parties than it is indicated by the market shares of the Parties' competitors.

Competitive significance of Baxter – Customers' ability to switch to other suppliers

384.   Moreover, […], the actual market share increment would be lower than Baxter's current [10-20]%. As explained in paragraphs 95 above and 104 above, both Nikkiso and […] are expected to expand their operations significantly in the countries […], which include Sweden, and are likely to capture a very significant part of Baxter's customers for the relevant product.154

385.   Furthermore, the general conclusions arrived at in the EEA-wide assessment as to the possibility for customers to switch supplier relatively quickly without incurring major costs, if the combined entity were to increase prices post-Transaction applies also to the current assessment.

386.   Therefore, the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the Swedish HD system market.

HD monitors

387.   The market shares estimated by the Parties on the Swedish market for HD monitors  are as follows:

Table 35: Market shares in the Swedish market for HD monitors (in value)

Source: Parties' estimates

388.   Baxter expects B. Braun and Bellco to expand their activities in Sweden further, including into the monitors segment. Baxter further stresses that NxStage has  expanded into Sweden in 2010. According to Baxter, NxStage sells its products in Sweden through the distributor Nordic Medcom, which actively participates in tenders and  for  instance,  was  one  of  the  winners of  the  tender  organized by […].  Baxter

considers it likely that NxStage’s presence in Sweden will be more visible in the future.

389.   The Swedish market for monitors appears to be very concentrated in light of the  market share data, with only three significant suppliers, namely the Parties and Fresenius. Moreover, the Parties have a high combined market share, positioning the combined entity well ahead of Fresenius in terms of revenues.

390.   However, the Parties' combined market share has been severely declining over recent years. This sharp decline is mainly due to the decrease in Gambro's market share, correlated to a very marked growing trend followed by Fresenius' market share155, which was [30-40]% in 2012. Fresenius thus emerges as a strong and dynamic competitor. In addition, as already indicated, it results from the bidding analysis that the competitive strengths of distributors such as Nordic Medcom and Scandinavian Medical, which distribute products originating from manufacturers other than the Parties and Fresenius, is significant and is not reflected in the market share data.

391.   Furthermore, in the framework of the market investigation, Fresenius has been identified by a large majority of Swedish customers as Gambro's closest competitor whereas Baxter has been identified by around half of the respondents and B. Braun by a minority156. This, in addition to the general findings reached as regards closeness of competition between the Parties in the EEA-wide assessment, and the findings of the bidding analysis presented in the assessment of the effects of the Transaction on the Swedish market for HD systems, tends to confirm Baxter's view that it is not a close competitor of Gambro.

392.   Moreover, […], the actual market share increment would be lower than Baxter's current [5-10]%. As explained in paragraph above, Nikkiso is expected to expand its operations significantly in the countries […], which include Sweden, and is likely to capture a very significant part of Baxter's customers for HD monitors.

393.   Furthermore, the general conclusions arrived at in the EEA-wide assessment as to the possibility for customers to switch supplier relatively quickly without incurring major costs, if the combined entity were to increase prices post-Transaction applies also to the current assessment.

394.   Therefore, the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the Swedish HD monitors market.

HD bloodlines

395.   The market shares estimated by the Parties on the Swedish market for HD bloodlines are as follows:

Table 36: Market shares in the Swedish market for HD bloodlines (in value)

Source: Parties' estimates

 396.   Baxter puts emphasis on the leading role of Fresenius, which has a market share of [50-60]%, and claims that some smaller players such as MedTech, Scandinavian Medical and Nordic Medcom currently focus on the disposables segment.

397.   As in the case of monitors, the Swedish market for bloodlines appears to be very concentrated in light of the market share data, with only three significant suppliers, namely the Parties and Fresenius. Moreover, the Parties have a high combined market share.

398.   However, the Parties' combined market share has been declining over recent years. This sharp decline is mainly due to the decrease in Gambro's market share, correlated to a very marked increase in Fresenius' market share. Fresenius thus emerges as a strong and dynamic competitor. In addition, as already indicated, it results from the bidding analysis that the competitive strengths of distributors such as Nordic Medcom and Scandinavian Medical, which distribute products originating from manufacturers other than the Parties and Fresenius, is significant and is not reflected in the market share data.

399.   Furthermore, in the framework of the market investigation, Fresenius has been identified by a large majority of Swedish customers as Gambro's closest competitor whereas Baxter has been identified by around half of the respondents and B. Braun by a minority157. This, in addition to the general findings reached as regards closeness of competition between the Parties in the EEA-wide assessment, and the results of the bidding analysis presented in the assessment of the effects of the Transaction on the Swedish market for HD systems, tends to confirm that Fresenius is a closer competitor to Gambro than Baxter.

400.   Moreover, […], the actual market share increment would be lower than Baxter's current [5-10]%.

401.   Furthermore, the general conclusions arrived at in the EEA-wide assessment as to the possibility for customers to switch supplier relatively quickly without incurring major costs, if the combined entity were to increase prices post-Transaction applies also to the current assessment.

402.   Therefore, the Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the Swedish HD bloodlines market.

HD dialysers

403.   The market shares estimated by the Parties on the Swedish market for HD dialysers  are as follows:

Table 37: Market shares in the Swedish market for HD dialysers (in value)

Source: Parties' estimates

 404.   As in the case of monitors and bloodlines, the Swedish market for dialysers appears to be very concentrated in light of the market share data, with only three significant suppliers, namely the Parties and Fresenius. The Parties' combined market share is significant but it has been decreasing over the last four years, due to a reduction in Baxter's market share. By contrast, Fresenius' market share has increased significantly over the same period. Market shares suggest that the combined entity will face significant competition from Fresenius, which is a strong and dynamic competitor in Sweden. In addition, as already indicated, it results from the bidding analysis that the competitive strengths of distributors such as Nordic Medcom and Scandinavian Medical, which distribute products originating from manufacturers other than the Parties and Fresenius, is significant and is not reflected in the market share data.

405.   Furthermore, in the framework of the market investigation, Fresenius has been identified by a large majority of Swedish customers as Gambro's closest competitor whereas Baxter has been identified by around half of the respondents and B. Braun by a minority158. This, in addition to the general findings reached as regards closeness of competition between the Parties in the EEA-wide assessment, and the results of the bidding analysis presented in the assessment of the effects of the Transaction on the Swedish market for HD systems, tends to confirm that Fresenius is a closer competitor to Gambro than Baxter.

406.   Furthermore, post-Transaction, in Sweden, the actual market share increment would be lower than Baxter's current market share since […]. An expansion by Nipro is likely to occur in the next few months. Nipro's expansion on the Swedish market for dialysers appears sufficiently likely and timely and sufficient in scope for Nipro to exert a significant constraint on the combined entity. The general conclusions arrived at in the EEA-wide assessment as to the possibility for customers to switch supplier relatively quickly without incurring major costs also applies to this assessment.

407.   The Commission therefore concludes that Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the Swedish market for HD dialysers.

HD fluids

408.   The market shares estimated by the Parties on the Swedish market for HD fluids are as follows:

Table 38: Market shares in the Swedish market for HD fluids (in value)

Source: Parties' estimates

409.   According to Baxter, over the past five years, Gambro and Baxter have gradually lost business in this segment, whereas Fresenius has expanded its business, from [10-20]% in 2007 to [30-40]% in 2012. Baxter expects Fresenius to continue to compete aggressively in this segment. In addition, it expects B. Braun to further grow.

410.   As in the case of monitors, bloodlines and dialysers, the Swedish market for fluids appears to be very concentrated in light of the market share data, with only four significant suppliers, namely the Parties, Fresenius and B. Braun. The Parties' combined market share is high but has been decreasing over the six years, as the market shares of each of Baxter and Gambro have been decreasing, mirroring a substantial increase in Fresenius' market share. Market shares suggest that the combined entity will face significant competition from Fresenius, which is a strong  and dynamic competitor in Sweden, and to a more limited but non negligible extent, from B. Braun. In addition, as already indicated, it results from the bidding analysis that the competitive strengths of distributors such as Nordic Medcom and Scandinavian Medical, which distribute products originating from manufacturers other than the Parties and Fresenius, is significant and is not reflected in the market share data.

411.   Furthermore, in the framework of the market investigation, Fresenius has been identified by a large majority of Swedish customers as Gambro's closest competitor whereas Baxter has been identified by around half of the respondents and B. Braun by a minority159. This, in addition to the general findings reached as regards closeness of competition between the Parties in the EEA-wide assessment, and the results of the bidding analysis presented in the assessment of the effects of the Transaction on the Swedish market for HD systems, tends to confirm that Fresenius is a closer competitor to Gambro than Baxter.

412.   The general conclusions arrived at in the EEA-wide assessment as to the possibility  for customers to switch supplier relatively quickly without incurring major costs also applies to this assessment.

413.   The Commission therefore concludes that Transaction does not raise serious doubts as to its compatibility with the internal market with respect to the Swedish market for HD fluids.

k.        United Kingdom

414.   The Parties estimate that the market for HD systems, encompassing all the HD equipment and consumables, was worth EUR […] million in the United Kingdom in 2012.

415.   Gambro offers a full HD product range in the United Kingdom. It sells its products [Gambro's distribution system]. Baxter also offers a full HD product range including monitors and bloodlines manufactured by […], dialysers manufactured by […], as  well as its own fluids. However, Baxter’s presence in HD in the United Kingdom is modest. Baxter is mainly active in relation to HD products for home HD products. Otherwise, Baxter’s activities focus on Northern Ireland. Baxter does not have [Baxter's distribution system]. In Northern Ireland, Baxter provides repair and maintenance services for HD products. In the remainder of the United Kingdom, Baxter merely provides repair and maintenance services for home HD products.

416.   According to Baxter, the main HD suppliers active in the United Kingdom are  Gambro, Fresenius, B. Braun, Kimal and Nipro and there is a group of other, less significant, suppliers, which include Baxter and Allmed.

417.   Fresenius offers a full HD product range in the United Kingdom, as well as dialysis services in partnership with the National Health Service (NHS). B. Braun also offers a full HD product range as well as dialysis services, alone or in cooperation with the NHS.

418.   In the United Kingdom, only the market for dialysers falls within Group 1.160 HD dialysers

419.   The market shares estimated by the Parties on the United Kingdom market for HD

dialysers are as follows:

Table 39: Market shares in the United Kingdom market for HD dialysers (in value)