Back to "Technology" for this extract from the EU Mergers report, signed incidentally by the then Commissioner Mario Monti who has just had a rather torrid time in the Italian elections.
This is an amplification of the view that the Tencel/Lenzing merger would stifle the development of the technology not only for staple but for filament, film and membranes.
The production and processing technology for both lyocell staple fibres and lyocell filament yarn is entirely distinct from any other fibre production and processing technology. Whereas viscose technology (including environmental compatibility) is well established and readily available, the technology for lyocell production is rather young; it has been developed since the 1970s and has seen its first commercial application in the 1990s. It is characterised by the existence of a large number of patents. Whilst some of the initial patents have already expired, this is not the case for others, mostly those related to the production process and to the treatment of lyocell
119. Both Acordis and Lenzing are key players in this market in which some East Asian companies and the German engineering company Zimmer AG are also active, partly in co-operation with research institutions. Whilst some of these undertakings are at the same time involved in lyocell production, others, such as Zimmer AG, are not. Acordis and Lenzing cross licensed their lyocell technology in 1997. From this cross licensing agreement it becomes clear that Lenzing and Acordis are already active as sub-licensors and sub-licensees on this market and that therefore there is trade in licenses. The same agreement also substantiates that this market not only includes technology for staple fibre production and processing but also for other lyocell products such as extruded films and membranes and filament. As the technology in these other areas is linked with the technology of lyocell staple fibre production and processing through certain patents common to all areas, these areas of lyocell production and processing technology belong to the same product market.
Moreover, lyocell filament technology has not yet entered the stage of commercial production and consequently competition in this area can only take place on the level of production and processing technology. The Commission's market investigation has furthermore revealed that there is demand for lyocell technology licences.
120. In their Reply, the parties [CVC and Lenzing] argue that there is no market for lyocell technology in the sense that there is currently no significant licensing of lyocell technology and patent rights, and that it is highly unusual to identify a separate market for technology. Secondly, they contend that the parties themselves are currently not active in sub-licensing and that Zimmer AG is currently the only significant supplier.
(The Commission's response follows in the next post)