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).

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Josep Bassaganya-Riera, Landos Biopharma CEO (Landos)

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