Anticipated Acquisition by Danaher Corporation of LEM Instruments from LEM Holdings SA

Affected market: Power quality analysers and electrical testing and measurement instruments

No. ME/1619/05

Please note that the full text of the decision can be downloaded by using the link on the right. What follows are extracts regarding the parties, the transaction, jurisdiction, third party views, assessment and decision.

The OFT's decision on reference under section 33(1) given on 10 June 2005. Full text of decision published 23 June 2005.

Please note square brackets indicate information excised or replaced by a range at the request of the parties for reasons of commercial confidentiality.

PARTIES

Danaher Corporation (Danaher) is a company headquartered in the USA and listed on the New York Stock Exchange and the Pacific Stock Exchange. Danaher is a manufacturer of professional instrumentation, industrial technologies, and tools and components. Danaher's UK turnover in 2003 in the electrical testing and measurement instruments and of power quality analysers sectors was £[ ] million.

LEM Instruments (LEM) is a business division of LEM Holding SA. LEM Holding SA is based in Switzerland and is listed on the SWX Swiss Exchange. LEM Instruments' main business involves the design, manufacture and marketing of instruments and probes for the measurement and analysis of electricity parameters. LEM's UK turnover in 2004 was £[ ] million.

TRANSACTION

Danaher proposes to acquire LEM from LEM Holding SA. A satisfactory submission was received on 18 March 2005.

JURISDICTION

As a result of this transaction, Danaher and LEM will cease to be distinct. The parties overlap in the supply of electrical testing and measurement instruments and of power quality analysers; the share of supply test in section 23 of the Enterprise Act 2002 (the Act) is met in certain categories of electrical testing and measurement instruments. The Office of Fair Trading therefore believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation.

THIRD PARTY VIEWS

During these investigations, 64 customers and 27 competitors were contacted. We received a very small number of replies: only three competitors and five customers actually made comments on the transaction. In addition we received one unsolicited response.

The majority of customers who have expressed a view say they are unconcerned by the transaction. A small number of competitors have expressed some concern, mainly about the share of supply that the merged entity will have. There were a few more substantive responses that prompted more detailed evidence-gathering on specific points such as entry and buyer power and which, in addition to concern on some points, also put forward detailed evidence on why the merger will not harm competition.

ASSESSMENT

Within the UK (and EC), the parties overlap in the supply of products falling within the broad categories of power quality analysers and electrical testing and measuring instruments.

Within power quality analysers, the parties both supply, in the UK, hand-held and portable power quality analysers and stationary permanent power quality monitoring systems (in the EC the parties overlap in all the product sectors). It has been difficult to reconcile the parties' share of supply figures with those of third parties.

Within electrical testing and measuring instruments, figures suggest that the merger will give rise to high shares of supply, in the UK and EC, at least in earth testers and clampmeters. As it is the case with power quality analysers, the comments of third parties would suggest that the shares of supply in other segments may be higher than the merging parties believe to be the case.

Nevertheless, there are a number of factors that lead the OFT to conclude that the merger will not have a significant adverse impact on competition in the UK. These are that: a number of large alternative suppliers remain in the market; the main entry challenge, concerning distribution access, could be overcome; the largest customers will retain significant buyer power; and catalogue price transparency will help maintain the position of the smaller distributors.

Consequently, the OFT does not believe that it is or may be the case that the merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.

DECISION

This merger will therefore not be referred to the Competition Commission under section 33(1) of the Act.

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