Mergers: Commission waives the commitments made by Takeda to obtain clearance of its acquisition of Shire

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The European Commission has waived, under the EU Merger Regulation, the commitments made by Takeda to obtain clearance of its acquisition of Shire.

The Commission approved the acquisition of Shire by Takeda on 20 November 2018, subject to the divestment of a biologic drug under development by Shire to treat inflammatory bowel diseases (“IBD”), namely SHP 647.

IBD is a lifelong autoimmune disease that involve inflammation of the digestive tract. Biologic drugs are typically prescribed after the failure of conventional therapies, such as corticosteroids and immunosuppressants.

The Commission’s investigation

Following a number of circumstances that took place during the divestiture process, Takeda submitted a reasoned request to waive the commitments in their entirety.

Upon receipt of the request by Takeda to waive the commitments, the Commission has initiated a market investigation to determine whether a waiver is justified in light of the changed market conditions and developments.

The Commission’s investigation revealed that several permanent, significant and unforeseeable developments took place during the divestiture process, affecting both the evolution of the competitive landscape in IBD treatments and the development of Shire’s pipeline drug. In particular, during the divestiture process: (i) new promising drugs have emerged, which are expected to have a better efficacy and safety profile than the ones of Takeda’s and Shire’s drugs; (ii) some studies on SHP 647 yielded negative results; and (iii) the management of the divestment business experienced unforeseeable difficulties in recruiting patients for the clinical trials of SHP 647. These developments have negatively impacted the profile of SHP 647 and timeline with longer development duration, and severely impaired its prospects.

On this basis, the Commission concluded that the combination of the above developments amounted to exceptional circumstances so that the divestment of SHP 647 was no longer necessary to render Takeda’s acquisition of Shire compatible with the internal market.

As a result, the Commission has decided to waive the commitments submitted by Takeda in November 2018, in their entirety.

Companies involved

Takeda Pharmaceutical Company Limited, headquartered in Japan, is a global pharmaceutical company active in four main therapeutic areas: oncology, gastroenterology, neuroscience and vaccines.

Shire plc (now part of Takeda), headquartered in Ireland, is a global biopharmaceutical company, which specialises in developing treatments for rare diseases across a range of therapeutic areas including immunology, haematology, neuroscience, gastroenterology and genetic diseases.

Merger control rules and procedures

The transaction was notified to the Commission on 28 September 2018 and was approved, under the EU Merger Regulation by the Commission on 20 November 2018.

The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.

The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II). This deadline is extended to 35 working days in cases where remedies are submitted by the parties, such as in this case.

More information will be available on the Commission’s competition website, in the public case register under the case number M.8955.