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Merck KGaA charged with breaching merger rules

European Commission says 2015 acquisition of Sigma-Aldrich was tainted by incomplete information

by Marc S. Reisch
July 7, 2017

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Credit: Honeywell
A Honeywell Research Chemicals quality control chemist.
Credit: Honeywell
A Honeywell Research Chemicals quality control chemist.

European antitrust regulators have charged Merck KGaA with holding back important information prior to completing its late-2015 acquisition of lab chemicals maker Sigma-Aldrich for $17 billion.

The lapse won’t scuttle the two-year-old deal that formed the research chemicals powerhouse MilliporeSigma, but it could result in a fine of up to $165 million, equal to 1% of Merck’s annual revenues.

In applying for approval of their merger, Merck and Sigma-Aldrich didn’t reveal information about newly developed technology affecting “certain laboratory chemicals,” the European Commission says. Had regulators known about the technology, the Commission says, they would have ordered it to be divested along with the manufacturing assets and lab chemical brands that they required to be sold for antitrust reasons. Honeywell bought the assets and brands in October 2015.

The Commission didn’t disclose the technology, saying only that it “was closely linked to the divested business and had the potential to substantially increase its sales.” A Merck spokesperson says the technology, not yet on the market, involves a packaging innovation “which has several potential applications outside the divested portfolio.”

Merck ultimately licensed the technology to Honeywell “free of charge,” says the spokesperson, a year after the acquisition closed and after Honeywell told the Commission of the disclosure lapse.

By not revealing the packaging innovation from the start, Merck impaired “the viability and competitiveness” of the businesses sold to Honeywell, the Commission says.

Merck counters that “it acted in good faith” and “is committed to a constructive dialogue with the European Commission.” The firm says it “is confident this issue will be resolved in a satisfactory manner.”

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