"The new entity [Tencel and Lenzing] when merged will have a monopoly in the downstream market for lyocell staple fibre and will thus have no interest in seeing this monopoly challenged by a potential market entrant on the basis of a licence for their own technology."
247. Acordis and Lenzing are the only two players currently active in the market for packages of 'ready-to-operate' lyocell production and processing technology. Each of them produces lyocell based on own technology. With a view to settling an intellectual property dispute between them, both entered into a cross licence agreement on 22 December 1997 whereby each party granted the other a nonexclusive, royalty-free worldwide licence to manufacture, use and sell lyocell and lyocell products for the lifetime of the respective patents. As a consequence, each of the parties has had full access to the other party's lyocell production technology since December 1997.
248. Together, the parties hold the vast majority of all existing patents for lyocell production and treatment.
249. On the basis of their respective patent rights, Acordis and Lenzing are in a position to block or significantly delay the entry of third parties to the lyocell production market. Third parties who might consider marketing lyocell production and processing technology or selling lyocell production lines to potential producers of lyocell are consistently confronted with a danger of violating these patents and of subsequent litigation with the parties. For the same reasons, third parties who could be seen as potential producers of lyocell are reluctant to purchase lyocell production and processing technology or production lines developed by suppliers other than Acordis or Lenzing.
250. The notified operation will render it more difficult for third parties to obtain packages of licences for Acordis' and Lenzing's lyocell production and processing technologies. First, the number of potential licensors will be reduced from two to one; whilst there are currently two potential licensors (redacted) there will be only one potential licensor left after the merger. Secondly, the incentive to grant packages of 'ready-to-operate' licences to third parties will be significantly reduced after the merger; as set out above the new entity will hold a monopoly in the downstream market for lyocell staple fibres and will thus have no interest in seeing this monopoly challenged by a potential market entrant on the basis of a licence for their own technology. In view of these effects competition in the development of individual production and processing patents in this market will also be stifled as the number of potential buyers will be reduced.
(more to come)
Case No COMP/M.2187 CVC/Lenzing
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