Sigma-Aldrich hit with $9M fine for misleading info during Merck KGaA merger
Although it’s been more than six years since Merck KGaA first notified the European Commission of its plan to acquire Sigma-Aldrich, the European Commission announced Monday that it has fined Sigma-Aldrich €7.5 million ($9 million) for misleading the commission during an investigation into the merger.
While the decision won’t impact the commission’s decision to authorize the $17 billion merger, which was finalized last summer, the fine serves as a warning shot to the rest of the industry that lying or providing misleading information will not be tolerated.
In this case, the commission raised competition concerns as Merck and Sigma-Aldrich are the two leading European suppliers of lab solvents and inorganics used by biopharma and other research companies.
“The combination of all these elements would have led to the loss of an important competitive force in the supply of solvents and inorganics following the merger,” the EC said.
To help resolve these concerns, the companies agreed to divest certain lab chemical assets. But the commission says that Sigma-Aldrich didn’t disclose an innovation project, known as iCap, that was relevant to these divestitures.
“Had this project been correctly disclosed to the Commission, it would have had to be included in the remedy package,” the commission said. “This is because the innovation at stake was closely linked to the divested business and had the potential to substantially increase its sales. By not including it, the viability and competitiveness of the divested business was impaired.”
Overall, the commission said it found three Sigma-Aldrich infringements, which “are of serious nature and particularly grave” because the incorrect or misleading information was “clearly related to and important for the divestment business,” and because it was a secret and sensitive project, so the commission’s only way to obtain the relevant information was from Sigma-Aldrich.
A Merck spokesperson said in an emailed statement: “We disagree with the EU Commission’s conclusions, reject the allegations of intentional or even negligent behavior and will review the decision in detail. We have fully cooperated with the EU Commission and acted with integrity and transparency throughout the entire process.”
The fine will likely have wider ramifications as the commission works closely with the US Federal Trade Commission as part of an international working group that is being set up to more closely evaluate pharmaceutical company mergers in light of concerns around anticompetitive behavior.
In addition to this fine, the European Commission in March also opened a formal antitrust investigation into whether Teva Pharmaceuticals has illegally delayed the market entry and uptake of drugs that compete with its blockbuster multiple sclerosis drug Copaxone (glatiramer acetate).