Fair Trade Commission: "Danaher, Concerns of Monopoly if Acquiring GE's Bio Business... Divest Some Assets Fairly"

[Sejong=Asia Economy Reporter Joo Sang-don] The Korea Fair Trade Commission (KFTC) has imposed corrective measures for the first time on a corporate merger between global bioprocessing operators. Danaher Corporation, a global bioprocessing operator, was required to divest some processes due to concerns over monopolistic harm following its acquisition of General Electric Company's (GE) biopharma (biotechnology) business division.

On the 4th, the KFTC announced the results of its review of Danaher's acquisition of GE's biopharma (biotechnology) business division.

Previously, Danaher signed a contract with GE to acquire the biopharma business division that produces biopharmaceutical manufacturing equipment, consumables, and other life science products (hereinafter referred to as bioprocessing products), and reported the corporate merger to the KFTC on May 13 of last year.

Danaher is the ultimate parent company of the U.S.-based Danaher Group, which operates globally in fields such as life sciences, diagnostics, water treatment, and dentistry. Through its subsidiaries, the Danaher Group supplies bioprocessing products (mainly filtration products) to the relevant market.

GE is the ultimate parent company of the U.S.-based GE Group, which operates globally in sectors such as aviation, power, energy, and healthcare. The biopharma business division of GE, which is the subject of the business transfer, supplies bioprocessing products (mainly chromatography and cell culture products) to the relevant market.

The KFTC determined that bioprocessing products are classified by process and use, and are not easily substitutable. Therefore, it designated each of the 32 bioprocessing product markets, where the merging parties directly compete, as separate product markets. Considering that bioprocessing products do not risk spoilage or deterioration during transportation and that transportation costs constitute a low proportion of the sales price, the geographic market was defined as the global market.

First, the KFTC examined the horizontal merger's potential to restrict competition, given that the merging parties compete in 32 bioprocessing product markets. As a result, eight global bioprocessing product markets, including microcarriers, were presumed to have competition restrictions under Article 7, Paragraph 4 of the Act, and the merger was deemed likely to substantially restrict competition in those markets.

The KFTC judged that the merging parties are highly likely to adopt strategies that restrict competition unilaterally, such as raising prices in the eight bioprocessing product markets after the merger by leveraging their dominant position. Due to their very high market shares, lack of alternative suppliers, and relatively superior product quality, it is difficult for buyers to switch purchases. Additionally, since the merging parties' products all possess high levels of technology and market reputation, the degree of direct competition between their products is high, increasing the likelihood of price increases post-merger.

Accordingly, the KFTC ordered Danaher to divest all assets related to the operation of the eight bioprocessing products belonging to one of the merging parties within six months from the completion date of the merger.

A KFTC official stated, "This decision is significant in protecting the growth and innovation of the bio industry, one of the three core new industries the government is fostering, while preventing monopolistic harm in the bioprocessing product market." He added, "Although Korea ranks second globally in biopharmaceutical production capacity, the domestic production rate of bioprocessing products is only 16.5%, which is still low. Therefore, protecting innovative competition in the global bioprocessing product market is essential for nurturing the bio industry."

This content was produced with the assistance of AI translation services.