EU suspends Pfizer/Pharmacia merger review
pharmafile | October 22, 2003 | News story | |Â Â Â
The European Union has put on hold its review of the proposed merger of Pfizer and Pharmacia merger, delaying the $60 billion deal until well into 2003.
The European Commission has halted its month-long preliminary review of the merger, demanding further information from the companies before it progresses to the next stage of its antitrust review system.
This process is expected to take another two weeks, after which the EC could give the deal the all-clear or launch a more in-depth investigation, which would last four months.
The delay to the review comes as the EC has just approved reforms to current competition laws, which aim to streamline the investigation of cartels and abuses of a dominant market position.
The two companies are, however, confident that their merger will not be significantly delayed. Pfizer said: "The companies continue to target closing the transaction by year end 2002. However, the final regulatory process may result in a closing occurring early in the first quarter of 2003".
Shareholders of both companies will vote on the merger at special meetings to be held on 6 December (Pfizer) and 11 December (Pharmacia).
The delay has come as a surprise to analysts, who see few overlaps in products that would raise concerns about a merger creating a monopoly in certain therapy areas. The Commission is likely to scrutinise these few areas, including drugs for lung complaints and urinary incontinence.
The companies, which have built up a strong partnership in the marketing of arthritis treatment Celebrex, also held in-depth discussions with the regulators before the investigation officially begun.
Meanwhile, the equivalent process in the US is still on track, with the Federal Trade Commission saying it expects to clear the deal by the end of this year, despite requesting further information from Pfizer in October.
The EC's antitrust reforms are an attempt to crack down on price-fixing cartels and unfair monopolies referred to as "cancers" by Competition Commissioner Mario Monti but the new regulations, recently passed unanimously by the Competitiveness Council, have proved controversial.
Mr Monti said they were "the most important legislative initiative in the competition field" for over 10 years, adding that they would simplify procedures and cut back on bureaucracy. Companies and lawyers, however, say the new measures, due to come into effect in 2004, may prove to be confusing and could even hinder attempts to detect illegal activity.
Currently, the EC is the only organisation with the ability to take action against cartels and unfair monopolies but the new laws would devolve some of these powers to national regulators, forming a 'European Competition Network'.
As a general rule, the EC will take charge in larger cases spanning three or more countries, leaving the rest to individual member states. The EC could, however, intervene in these cases if necessary.
Criticisms that this will lead to fragmentation of law enforcement were unjustified, said the EC, as all the bodies involved would be implementing European-wide, rather than national, laws.
