OFT's full report on reference of Carl Zeiss Jena's acquisition of Bio-Rad's microscopy business to UK Competition Commission

February 4, 2004

London, 3 February 2004

Anticipated acquisition by Carl Zeiss Jena GmbH of the microscopy business of Bio-Rad Laboratories Inc
Affected Market: Advanced 3D microscopes

Full text of the decision pdf file (107 kb)

What follows are extracts regarding the parties, the transaction, jurisdiction, assessment, and decision.


Carl Zeiss Group GmbH (CZ Group) is active in the fields of optics, precision engineering and electronic visualisation. It has six operating divisions: consumer optics (camera lenses, binoculars, eyeglass lenses and frames); medical systems (surgical instruments/microscopes); microscopy (microscopes including laser scanning and 3D); opto-electronic systems (equipment for laboratories, defence optics, telescopes); semiconductor technology; and industrial metrology. In the year to 30 September 2003 CZ Group had total worldwide turnover of € 2,029 million. In the preceding year its microscopy division sales totalled [ ] (see note 1), including [ ] (see note 1)for advanced imaging microscopes. Carl Zeiss Jena GmbH, which carries on the microscopy business, is a wholly owned subsidiary of CZ the Group.

Bio-Rad Laboratories Inc (Bio-Rad) is a US company involved in the manufacture and distribution of life science research products and clinical diagnostics, and analytical instruments. Bio-Rad had total sales of US$ 892.7 million in 2002. Its Cell Science Division develops and sells advanced 3D microscopes.


CZ proposes to buy the advanced microscopes business which forms part of the Cell Sciences Division of Bio-Rad, including the assets of its UK subsidiary Bio-Rad Microscience Ltd (the business). The business is concerned with the sale, maintenance and servicing of advanced 3D microscopes. Bio-Rad's Cell Science Division had total sales of [ ] (see note 1) in 2002 [ ] (see note 1) - with UK sales of [ ] (see note 1) in 2001, and estimated sales of [ ] (see note 1) in 2002. CZ's sales in the UK are approximately [ ] (see note 1).

The merger has been notified and received competition clearance in Germany.

OFT has been informed by CZ that Bio-Rad has decided to sell its microscopy business - [ ] (see note 1) and forms only a small part of its overall sales. [ ] (see note 1). [ ] (see note 1) an outstanding dispute over patent rights held by Bio-Rad for femto-second technology used in multi-photon confocal laser scanning microscope systems (CSLM) and to obtain certain specialist know-how in the field of microscopy. Bio-Rad introduced multi-photon CSLM in 1996. [ ] (see note 1). Bio-Rad was subsequently granted a European patent (covering the UK) in September 1998, which was challenged by CZ and Leica, revoked, and then reinstated on appeal in November 2002 by the European Patent Office. The parties have been in [ ] (see note 1) negotiation about the acquisition of the Bio-Rad business, since before November 2002. Because of this situation, the pending US and other legal action between Bio-Rad and CZ has been suspended.

Details of the merger, in the form of a complete submission, were received in OFT on 14 October 2003. The 40 day administrative deadline is 31 December 2003 following certain delays in receipt of information.


As a result of this transaction arrangements are in progress or in contemplation which if carried into effect will result in the creation of a relevant merger situation under sections 33(1)(a) and 23 of the Enterprise Act 2002 (the Act) whereby CZ and the Bio-Rad business will cease to be distinct. The parties overlap in the supply of advanced 3D microscopes and the share of supply test in section 23 of the Act is met in respect of the supply of both single photon and multi-photon confocal laser scanning microscopes (CLSM). A relevant merger situation is therefore likely to be created.


CZ and Bio-Rad are leading suppliers of single and multi-photon CLSM in the UK and worldwide, and will hold a combined share of 35-45 per cent (see note 2) in single and 40-50 per cent (see note 2) in multi-photon CLSM in the UK, with a similar presence worldwide. In particular the merger would result in the reduction in suppliers from three to two in multi-photon CLSM and consequently significantly reduce customer choice in the supply of such equipment. Evidence provided to the OFT does not suggest that countervailing buyer power to offset the increase in concentration is present, and as well as high barriers to entry, is unlikely to act as an effective constraint post-merger.

CZ has argued that the acquisition of the Bio-Rad business will be pro-competitive since it would strengthen CZ as a direct competitor to Leica, which is of similar size to CZ. CZ contends that Bio-Rad is not currently a strong competitive constraint, and a stronger CZ post-merger would be preferable [ ] (see note 1). A merger with Bio-Rad could thus increase rivalry between CZ and Leica and benefit innovation, particularly as both companies are recognised as leading innovative companies in this area. It would also serve to resolve the legal dispute with Bio-Rad, [ ] (see note 1).

The OFT considers CZ's argument plausible, in particular as it is supported by some customers. The weight of evidence, however, does not permit the conclusion that this is the likely outcome and that anti-competitive effects either will not result or will be outweighed by customer benefits. Similarly, the weight of evidence does not allow the OFT to conclude with sufficient certainty that [ ] (see note 1). Consequently, the OFT believes that there is a significant prospect that the merger would substantially lessen competition in the UK. That is a sufficient condition for OFT to refer the merger to the Competition Commission. It has not been necessary therefore, in this case, to assess the merger further in relation to the interpretation of the test for reference given in the recent judgment of the Competition Appeals Tribunal in IBA Health v OFT [2003] CAT .


Where the duty to make a reference under section 33(1) of the Act is met, pursuant to section 73(2) of the Act the OFT may, instead of making such a reference, accept undertakings for the purposes of remedying, mitigating or preventing the substantial lessening of competition concerned or any adverse effect which may be expected to result from it. In considering whether to accept such undertakings, the OFT is, in particular to have regard to the need to achieve as comprehensive a solution as is reasonable and practicable to the substantial lessening of competition and adverse effects resulting from it pursuant to section 73(3) of the Act. In this case, CZ was not prepared to offer any undertakings in lieu of reference.


This merger will therefore be referred to the Competition Commission under section 33(1) of the Act.


1. Text deleted at the request of the parties

2. Actual figures replaced by a range at the request of the parties

Office of Fair Trading
Item source: http://www.oft.gov.uk/Business/Mergers+E A02/Decisions/Clearances+and+referrals/C arl+Zeiss+Jena+GmbH.htm

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