The European Commission is currently investigating theplanned acquisition of the Roche Vitamins and Fine Chemicals division by Dutch company DSM due to competition concerns in the feed enzymes market.
Animal feed additives are only a small part of the overall transaction and the only area in which the companies overlap. Enzymes, in particular non-starch polysaccharide degrading enzymes (NSP degrading enzymes) and phytase, are of concern to the Commission because of the alliances built up by both companies.
DSM has an alliance with BASF and Roche with Danish firm Novozymes. In their respective alliances DSM and Novozymes are mainly responsible for research and development and production while BASF and Roche are mainly responsible for sales and distribution. Both alliances provide for a high level of economic integration and mutual interdependence, according to the Commission, and the acquisition will create a structural link between thetwo, leading to near monopolies on the market for phytase at boththe levels of production and distribution.
NSP-degrading enzymes help animals release nutrients in their feed. Phytase is an enzyme used to increase the amount of digestible phosphorus in animal feed.
In the course of the first-phase review of the case, DSM offeredto terminate the DSM/BASF alliance and to establish BASF as aneffective competitor, but the Commission could not determinewhether that solution would fully restore effective competition.
However, it said that the proposed undertakingscould form the basis of a possible solution in which case it might not needto use the full four-months available in second-phase merger proceedings.
The operation is also being reviewed by the US Federal Trade Commission withwhich the Commission is closely co-operating.
Both Roche vitamins and DSM were exhibiting at Vitafoods last week, where DSM presented its new Lafti probiotic strain.