The European Commission has raised a formal objection to Merck KGaA’s US$17 billion acquisition of Sigma-Aldrich — a deal completed in November 2015 — saying the companies breached the European Union’s merger rules by providing incorrect or misleading information.
The Commission acknowledged that its Statement of Objections will not affect its earlier approval of the companies’ merger, which will remain effective. The deal was announced in 2014 and won Commission approval the following year, conditioned in part on Sigma-Aldrich selling off its laboratory research chemicals business to Honeywell.
However, if the Commission finds that Merck and Sigma-Aldrich intentionally or negligently supplied incorrect or misleading information, it could impose a fine of up to 1% of the companies’ annual worldwide revenue. Merck finished last year with €15.024 billion (US$17.1 billion) in net sales, up 17% from 2015, largely reflecting the acquisition of Sigma-Aldrich.
On Thursday, the Commission formally accused Merck and Sigma-Aldrich of failing to provide it with important information about an “innovation project with relevance for certain laboratory chemicals” tied to the sold business. Merck has said it was a packaging technology being developed by Sigma-Aldrich — a technology that the Commission said would have had to have been sold as part of the lab research chemicals business.
Once the Commission got wind of the project a year later through a third party it did not name, Merck licensed the technology to Honeywell.
“This means that Honeywell now has the technology it should have received with the divested business. However, this happened almost one year after our decision and only because the Commission was made aware of the issue by a third party,” Margrethe Vestager, the European Commission’s commissioner in charge of competition policy, said in a statement.
Full Content: Chemistry World
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