The CNMC clears the acquisition of IVI by investment fund KKR in phase I, subject to commitments.
On December 21, 2022, the CNMC authorized the acquisition of Instituto Valenciano de Infertilidad (IVI-RMA) by KKR in phase I, subject to certain structural (divestment) and behavioral commitments. This is the latest of four transactions authorized by the CNMC in phase I with commitments since October 26, 2022.
KKR’s acquisition of IVI
Throughout clinics all over Spain, IVI-RMA (“IVI”) offers fertility treatments and is specialized in assisted human reproduction techniques. KKR is a multinational company dedicated, among other activities, to the management and administration of investment and venture capital funds.
In its assessment, the CNMC considered that the transaction would lead to a relevant horizontal overlap between Spain’s leader in assisted reproductive treatments (IVI) and GeneraLife, a KKR portfolio company. Likewise, the CNMC analyzed potential horizontal overlap in other activities such as the management and donation of gametes.
After performing several market tests, the CNMC identified potential risks for competition due to the fact that the resulting company would achieve a significant market share in the provision of fertility services to private patients in Seville, Zaragoza and Murcia. In Madrid, the transaction would result in the merger between the first and third market playersresulting in insufficient competitive pressure. This is even more so given the fertility service agreements previously entered into by KKR (through GeneraLife) with its main regional competitor.
According to the CNMC, the major risks regarding the market for the provision of fertility services to private patients are: (i) higher prices for consumers; and (ii) KKR’s privileged negotiating position in Seville, Zaragoza, Murcia and Madrid when deciding the type of services offered and their conditions.
To eliminate the competition concerns identified by the CNMC, KKR undertook to divest clinics in Seville, Murcia and Zaragoza, thus avoiding overlaps due to the transaction.
In Madrid, KKR undertook the following commitments for a period of three years: (i) to limit the price increases to the evolution of the cost structure; (ii) not to worsen the commercial conditions of its current services; and (iii) not to enter into agreements for the provision of fertility services with its main competitor in the region. Finally, KKR undertook to modify IVI’s preexisting exclusive long-term distribution agreement for vitrification solutions.
Mergers cleared subject to commitments in phase I in 2022
This decision reflects the increasing tendency of the CNMC to authorize concentrations in phase I with commitments. Among the transactions recently authorized by the CNMC, the following stand out:
- Merger by absorption of Farmacéutica Conquense (COFARCU) by Hermandad Farmacéutica del Mediterráneo (HEFAME), on October 26, 2022. The transaction, which raised competition concerns in the full-line wholesale distribution market for pharmaceutical products to pharmacies, was authorized subject to the modification of the bylaws of HEFAME so as to eliminate the minimum period of permanence and to lower the minimum purchase volumes applicable to its members.
- Karnov’s acquisition of Thomson Reuters España, Wolters Kluwer España and Wolters Kluwer France, on November 3, 2022. The CNMC raised competition concerns in the following matters: (i) legal databases in Spain; and (ii) publishing and distribution of professional legal publications in Spain. Consequently, Karnov undertook the following commitments for a period of three years (extendable for another two years): (i) not to link customers’ purchases or renewals of legal databases or legal publications to the purchase or renewal of any other product offered by Karnov; and (ii) not to include exclusivity clauses or incentives in the contracts to be concluded or renewed with authors who publish with Karnov.
All of the above shows the tendency of the CNMC to analyze in greater detail concentrations under its jurisdiction, as well as their increasing complexity, which undoubtedly has an impact on the terms and costs of the transaction.