TEVA Pharmaceutical Industries (TEVA), the biggest drug company in Israel, planned to buy 100 per cent share in Novopharm, a Canadian manufacturer and distributor of drugs. Following this merger TEVA Pharmaceuticals Europe B. V., exclusively owned by TEVA, agreed with the Hungarian State Privatisation and State Holding Company on buying 25,3 per cent shares in Human Serum Production and Medicine Manufacturing Ltd (Human). Applying for the authorisation of the Office of Economic Competition TEVA argued that the concentration would make possible to complete their activity and the choice of each other product as well as to offer a wider range of product for their consumers.

Considering the effect of the merger on the Hungarian market the Competition Council divided the undertakings into two groups: (i) Biogal-Teva group, included one manufacture and trading and servicing companies, controlled directly by TEVA; its joint turnover in the previous business year was HUF 25 billion, (ii) Human group, controlled directly by Novopharm (55,5 per cent ownership over Human) or indirectly (over manufacturers and trading companies); its joint turnover in the previous business year was HUF 22,4 billion. The turnover of both groups exceeded the notification thresholds, provided by the Competition Act.

As far as the Hungarian market as the relevant geographic market for manufacturing of drugs is concerned there are 23 manufacturers and the share of the import is considerable. The highest market shares (10,2; 9,2 and 6,5 per cent) belong to three companies while the Teva-Biogal group has 5,1 and the Human group has 1,7 per cent share.

On the relevant wholesaler market of drugs there are about 80 licensed undertakings where the Teva-Biogal group has 0,3 per cent and the Human group has 5,2 per cent market share.

There are almost 80 groups of product on the relevant market and both groups of undertakings have market share on the market of three groups of products only although one of the group of undertakings operates as wholesaler and there is only one group of products where 100 per cent joint market share will be expected by the transaction although the ratio of this group of products is rather law considering the whole range of the product market in question.

In its decision, the Competition Council authorised the concentration of TEVA and Novopharm concluding that market power of a drug company depends on its share on the whole market of drugs and the combined share of the undertakings concerned is 6,8 per cent which does not raise competition concerns. Similarly on the wholesale market the combined market share (5,5 per cent) does not have restrictive effect either horizontally or through vertical relations. (The transaction between TEVA Europe and Human was taken into consideration by the Competition Council as part of the above concentration therefore it was not investigated separately.)

13, 2000. Budapest

dr. Bodócsi András sk. előadó
Fógel Jánosné dr
dr. Sólyom Eszter sk.
Szabó Györgyi