Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE  
Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel,   BELGIË  
 
Tel: +32 229- 91111. Fax: +32 229 -64301. E -mail: COMP -MERGER -REGISTRY@ec.europa.eu.   EUROPEAN COMMISSION  
Brussels,  05.09.2019  
C(2019)  6476 final  
PUBLIC VERSION 
 
To the notifying party 
Subject : Case M.9406 – Lone  Star – Stark Group/ Saint -Gobain BDD  
Commission decision pursuant to Article 6(1)(b) of Council Regulation 
No 139/20041 and Article 57 of the Agreement on the European Economic 
Area2 
Dear Sir or Madam,  
(1) On 14 June  2019, the European Commission received a notification of a proposed 
concentration pursuant to Article 4 of the Merger Regulation  by which Lone Star 
(USA), through its subsidiary Stark Group A/S (Denmark, the “Notifying Party”), 
and ultimately through the Notifying Party’s subsidiary S tark Group Holding 
Germany GmbH  (Germany) intends to acquire sole control over Saint -Gobain 
Building Distribu tion Deutschland GmbH ( Germany; “SGBDD ” or the “Target” ) 
(the “Transaction”) . Stark Group A/S and Stark Group Holding Germany GmbH are 
collectively  referre d to as “Stark”. Lone Star , Stark and SGBDD are collectively 
referred to as “ the Parties ”. 
                                                 
1  OJ L 24, 29.1.2004, p. 1 (the “ Merger Regulation ”). With effect from 1 December 2009,  the Treaty of 
Lisbon  has introduced certain changes  of use of terminology in the Treaty on the Functioning of the 
European Uni on (TFEU), such as the replacement of  the term “ Community ” by “Union”  and the term 
“common market ” by “internal market ”. The terminology of the TFEU will be used throughout this 
decision.  
2  OJ L 1, 3.1.1994, p. 3 (the “EEA Agreement”).  
In the published version of this decision, 
some information has been omitted 
pursuant to Article 17(2) of Council 
Regulation (EC) No 139/2004 concerning 
non-disclosure of business secrets and 
other  confidential information. The 
omissions are shown thus […] . Where 
possible the information omitted has been 
replaced by ranges of figures or a general 
description.  
 
 
2 (2) On 27 June  2019, t he notification was declared incomplete within the meaning of 
Article 5(2) of the Commission Regulation  No 802/2004.3  
(3) In subsequent submissions ,4 the Notifying Party provided further information 
necessary for the assessment of the concentration under the Merger Regulation and 
on 31 July 2019 filed a revised Form CO  (“Form CO”) . Therefore, b ased on this 
additional information  and the Form CO , the notification became complete within 
the meaning of A rticle 10(1) of the Merger Regulation on 31 July 2019.5 
1. THE PARTIES  
(4) Lone Star  is a private equity firm that invests globally in real estate, equity, credit 
and other financial assets. Among others, Lone Star controls Stark , a retailer of 
building and insul ation materials active predominantly in the Nordic countries. 
(5) SGBDD  is a retailer of building materials that operates a network of physical retail 
outlets in Germany and sells mostly third -party products to small and medium -sized 
enterprises and larger con struction companies and, to a smaller extent, private and 
“do-it-yourself” (“DIY”) consumers.  
2. THE OPERATION  AND CONCENTRATION  
(6) On 20 May 2019, Compagnie de Saint -Gobain S.A. as the seller and Stark Group 
Holding Germany GmbH as the purchaser signed a share purchase agreement 
(“SPA”) according to which Stark would acquire all of the shares in SGBDD for a 
purchase price calculated on the basis of the assumed enterprise value of 
EUR  335 million, subject to various deductions and additions. Upon closing, Stark 
will be the sole owner of the shares in SGBDD. The completion of the proposed 
Transaction would thus result in Lone Star indirectly acquiring sole control over 
SGBDD within the mea ning of Article 3(1)(b) of the Merger Regulation . 
(7) The notified Transaction therefore constitutes a co ncentration pursuant to 
Article  3(1)(b) of the Merger Regulation.  
3. EU DIMENSION  
(8) The undertakings concerned have a combined aggregate world- wide turnover of 
more than EUR 5 000 million6 in 2018 (Lone Star : EUR […]  million; SGBDD:  EUR 
[…] million ). Each of them has an EU-wide turnover in excess of EUR 250 million  
(Lone Star : EUR […]  million; SGBDD: EUR  […]  million ), but they do not each 
achieve more than two -thirds of their aggregate EU-wide turnover within one and 
                                                 
3  OJ L  133, 30.4.2004, p.  1. 
4  Submissions of 8 , 14, 22 , 23, 24, 26 and 29 July 2019.  
5  Publication in the Official Journal of the European Union No C 266, 8.8.2019, p. 5.  
6  Turnover calculated in accordance with Article 5 of the Merger Regulation . 
 
 
3 the same Member State.7 The notified operation therefore has an EU dimension  
pursuant to Article 1(2) of the Merger Regulation.  
4. MARKET DEFINITION  
4.1. Introduction to the T ransaction and the building materials markets  
4.1.1. The Parties’ activities  
(9) The proposed Transaction  concerns the markets for the production and distribution 
of building and insulation materials in Germany.  
(10) Lone Star’s portfolio company  Stark  is a distributor of building and insulation 
materials active in the Nordic countries .  
(11) Lone Star’s por tfolio company Xella International GmbH  (Germany, “Xella”) 
manufactures and markets building and insulation materials . In particular, Xella  sells 
the following  products in German y. 
(a) Autoclaved aerated concrete (“AAC”) blocks, which are a lightweight, 
precas t, foam concrete building material made of autoclaved aerated 
concrete. AAC blocks can be lifted by hand and do not require equipment for 
handling. Xella markets AAC blocks under the Ytong brand.8 
(b) AAC l arge format prefabricated compound units  (“AAC large f ormat units”), 
which are made of the same material as AAC blocks, but require equipment 
such as cranes for handling. Xella markets AAC large format units under the 
Ytong and Hebel  brands. The AAC large format units include aerated 
concrete ceiling and roof ing panels, firewalls and outer walls and can  roughly 
be divided into AAC large format units for residential construction (Ytong  
brand)  and industrial /commercial  construction ( Hebel  brand) .9 
(c) Calcium silicate units (“CSUs”), which are masonry product s made from a 
mixture of lime and natural siliceous materials (sand, siliceous grav el or rock 
or mixtures thereof) that can typically be lifted by hand and which are used 
for the construction of walls . As a material, calcium silicate has a higher 
density, a nd is therefore heavier than AAC. Xella markets CSUs under the 
Silka  brand.10  
(d) Mineral insulation boards , which are niche insulation products suitable for 
special types of applications. Xella markets these products under the brand 
Multipor .11 As regards the Multipor  insulation products, the Commission 
notes that Xella’s market share does  not exceed , under any plausible 
                                                 
7  Only SGBDD achieves more than two -thirds of its  EU-wide turnover within one Member State , namely in 
Germany . 
8  Form CO, paragraph 98.  
9  Form CO, paragraphs 110- 111. 
10  Form CO, paragraph 154.  
11  Form CO, paragraph 144.  
 
 
4 alternative product market definition , [0-5]%12. Additionally, SGBDD’s sales 
of mineral insulation boards accounted for EUR [less than 5]  million in 2018, 
thus accounting for a mere fraction of SGBDD’s overall sales turnover in 
Germany13. Therefore, the Commission abstained from investigating the 
Multipor  insulation products. 
(12) Moreover, URSA Insulation, S.A.  (Spain, “URSA”), an insulation material 
producer , is a subsidiary of Xella. URSA’s main products include glass mineral wool 
and extruded polystyrene (“XPS”) , which are used for the insulation of residential 
and non- residential buildings .14 The Commission c onsidered in precedent cases that 
the relevant geographic market on the wholesale sale to retailers market for building 
insulation products15 is at least national16, albeit leaving the exact geographic market 
definition open. In view of this, URSA’s market s hares on the upstream market for 
the two building insulation products are below 30% under any plausible relevant 
product and geographic market definition17. With respect to  the relevant geographic 
market for building insulation products on the market of retail sales to professional 
customers, the Commission considered this market national in scope , although it left 
the exact market definition open18. Against this background, SGBDD’s market 
shares for the two products of glass mineral wool and XPS  downstream  are 
below  30% under any plausible relevant product and geographic market definition.19 
Therefore, the Commission refrained from further investigation of the products of 
glass mineral wool and XPS for the purpose of the assessment of the proposed 
Transaction.  
(13) Furthermore, Lone Star owns  Balta Finance S.à.r.l , the holding company of the 
Balta Group (Belgium, “Balta”), a producer of textile floor coverings in Europe . 
Balta has no sales to SGBDD. Moreover, SGBDD is not active in th e distribution of 
carpets at all because carpets are not within its portfolio . Since SGBDD  is not active 
downstream in the distribution of carpets at all, and Balta’s market share upstream in 
a potential overall market for floor coverings would be below 30%  in Germany , 
there are no horizontal or vertical relationships between Balta and SGBDD .20 
Therefore, these products are not discussed further in this decision. 
(14) Finally, Lone Star owns  Edilians , a French producer of roofing products including 
clay-roofing products, i.e., clay  tiles, clay roof accessories , non-clay pitched roof 
                                                 
12  Form CO, paragraph 151.  
13  Form CO, Annex 6: SGBDD’s turnover in Germany was EUR [1 -2 billion]  in 2018.  
14  Form CO, paragraph 176.  
15  The Commission considered in previous decisions that insulation products constitute a separate product 
market from other building materials  and that insulation products can be segmented into building 
insulation products and technical insulation products; M. 8733 – Lone Star/Stark , paragraph 18 with 
references to earlier decisions.  
16  M.7457 – CVC/PAROC , paragraph 19, with references to earlier  decisions.  
17  Form CO, paragraph 183. URSA’s German- wide market shares both for glass mineral wool and for XPS 
are below 20%.  
18  M.7457 – CVC/PAROC , paragraphs 26 et seq. , with references to earlier decisions.  
19  RFI 12 dated 2 August 2019, response to qu estion 3 dated 5 August 2019.  SGBDD’s market shares with 
the scope of Germany are [5-10]% for gla ss mineral wool and [5-10]% for XPS.  In a plausible market 
limited to XPS, the market share of SGBDD is well below 30% both at national level and at regional 
level, except in East Germany, where it is below [30 -40]%. 
20  Form CO, paragraphs 169- 173. 
 
 
5 accessories and solar roofing solutions .21 Edilians’  total sales to Germany  are very 
limited and  in 2018 amounted to EUR [less than 200,000] . SGBDD’s  market shares 
are below 15% under any plausible produc t and geographic market definition. 
Therefore , the potential relationship between Edilians upstream and SGBDD 
downstream does not give rise to any vertically affected markets  nor horizontal 
overlaps.22 Therefore, these products are not discussed further in this decision . 
(15) The Target  is active in the  field of retail distribution of building materials to  
professional customers, also called business -to-business  (“B2B”) , in Germany, 
operating via own branches and direct delivery. SGBDD  has 216 branches in 
Germany and one branch in Luxembourg. SGBDD is present across the whole 
territory of Germany.23  
(16) SGBDD operates through three business units: (i) “Generalists”, which includes 
products such as heavy building materials, dry walling and j oinery, and also includes 
SGBDD’s leading brand Raab Karcher (120 branches out of a total of 150 branches 
for this business unit); (ii) “Tiles”, which includes tiles for all applications; and 
(iii) “Civil Engineering”, which includes materials used for was tewater, fresh water 
supply and surface.24 
(17) The Notifying Party estimates that more than 90% of SGBDD’s customers are 
buying from it in a predominantly professional capacity .25 
(18) As SGBDD’s activities are geographically  in essence26 limited to Germany, the 
asses sment focusses on impact of the proposed Transaction in Germany, at national 
as well as sub -national/local level.  
4.1.2. Characteristics of the b uilding materials markets  
(19) In its precedents27, while leaving the question ultimately open, t he Commission 
considered  that the relevant product markets for the distribution of building materials 
in general can be divided into:  
(a) wholesale sales to retailers ; 
(b) retail sales to professional customers (B2B) ; and 
(c) retail sale to non -professional customers (B2C – primarily through do- it-
yourself stores).  
                                                 
21  Form CO, paragraph 174.  
22  Form CO, paragraph 175 and footnote 61.  
23  Form CO, paragraphs 192, 195.  
24  Form CO, paragraph 193.  
25  Form CO, paragraph 194.  
26  SGBDD operates one branch in Luxembourg, which is specialised for civil engineering and not a 
generalist branch for building distribution. As such, SGBDD Luxembourg does not have any sales of the 
products concerned by the transaction. SGBDD’s generalist di stribution business in Germany has very 
limited sales to customers in Luxembourg. Xella has limited sales in Luxembourg, supplied from 
neighbouring countries such as Belgium and Germany. (RFI 12 dated 2 August 2019, res ponse to 
question  1 dated 5 August 2019).  
27  M.7910 – Kesko/Onninen, paragraph 16;  M.7703 – PontMeyer/DBS , paragraphs 11 -12; M.3407 – Saint 
Gobain/Dahl , paragraphs 12 and 16; and M.3142 –  CVC/Danske Traelast , paragraphs 11 -13. 
 
 
6 The ‘ wholesale sales to retailers ’ market is upstream of the ‘ retail sales to 
professional customers ’ market and the ‘retail sale to non -professional customers’ 
market.  
(20) Furthermore, according to the Notifying Party,  one characteristic of building 
material markets as regards products of the type sold by Xella is the distinction 
between “project sales”28 and “stock sales”29.  
(21) Stock sales, on the one hand, are sales from a manufacturer, who acts as a wholesaler 
in this re gard, to retailers. The manufacturer delivers, or the retailer picks up, the 
products and stores them on the retailer’s premises. The retailer sells these products 
on to end- customers.  
(22) According to the Notifying Party, i n project sales, on the other hand, the two -step 
proces s of sale and delivery, which is characteristic for stock sales, is merged into 
one step. Manufacturers, retailers and end customer are involved in the sale/purchase 
of the products, which are shipped directly from the manufacturer to t he end 
customer. Typically, project sales relate to a specific construction project. However, 
the retailer is always involved in project sales, even though the level of involvement 
varies from project to project. Regularly, the retailer is the contractual counter party 
for the supply of these products, takes on the insolvency risk of the end- customers, 
provides certain logistic services and is responsible for the invoicing. The main 
reasons for the setup of project sales are the retailer’s local presence and  hence his 
local industry contacts, his willingness to vet the end customers' financial strength 
and to take on the end customers' insolvency risks, the end- customer’s need for a 
variety of products and/or little volumes of products, which manufacturers ar e not 
able to provide, as well as the retailer’s logistic and other services.  
(23) In addition to stock sales and project sales , the Notifying Party submits that 
manufacturers sell and deliver certain products directly to end -customers, without 
any involvement  of a retailer (“direct sales”). In the case of direct sales, there are no 
vertical links between manufacturers and retailers.  
(24) The Notifying Party submits that i n the event that any of the m anufacturers 
concerned  by this Transaction , namely Xella, URSA, B alta and Edilians,  distribute 
their products by way of direct sales , they distribute these products exclusively 
through this sales channel and not, in addition, through project sales or stock sales30. 
Therefore, for the purpose of the proposed Transaction, the Commission considers 
that direct sales do not lead to horizontal overlaps for the products sold through this 
sales channel . Market participants commonly do not distinguish between project 
sales and direct sales.31 This distinction is, however, relevant for an assessment of 
the proposed T ransaction under the Merger Regulation, because of the role of the 
Target who is not involved in direct sales .  
                                                 
28  In German: “Streckengeschäft ” or “ Objektgeschäft ”. 
29  In German : “Lagergeschäft “.; Form CO, paragraphs 56 et seq.  
30  RFI 12 dated 2 August 2019, response to question 4 dated 5 August 2019.  
31  The Notifying Party also does not make this distinction but uses “direct sales” as a synonym for project 
sales, Form CO, paragraph 210.  
 
 
7 (25) Xella as manufacturer /wholesaler  engages in project sales, direct sales and stock 
sales. Xella’s project sales and stock sales are to be allocated to the ‘ wholesale sales 
to retailers ’ market. In view of the established Commission’s precedents32 relating to 
markets for distribution of building materials, for the purpose of the proposed 
Transaction, direct sales ar e not part of the markets analysed for the purposes of the 
Transaction . 
(26) SGBDD as a retailer engages in project sales and stock sales. SGBDD’s downstream 
activities are to be allocated to the ‘ retail sales to professional customers ’ market, as 
SGBDD does not operate DIY stores typically targeting DIY customers on the ‘ retail 
sale to non- professional customers ’ market. SGBDD’s sales to DIY customers are 
minor and a consequence of DIY customers occasionally purchasing products 
directly from SGBDD. SGBDD does  not track the occasional purchases from DIY 
customers separately from its professional customers.33  
4.2. Relevant product markets  
4.2.1. Autoclaved aerated concrete (AAC)  blocks  on the market for  wholesale sales to 
retailers  
(27) AAC blocks are lightweight masonry products made of foam concrete that can 
typically be lifted by hand and are used for the construction of walls.  
(28) In its previous decisions , the Commission noted that the relevant product market 
may comprise not only AAC blocks but also other products such as aggregate 
concrete blocks , but ultimately left the precise scope of the relevant product market 
open.34 However, in one decision, by which the Commission partially referred a case 
for assessment to the German Bundeskart ellamt, the Commission found that wall -
building materials such as AAC blocks, CSUs, clay bricks and others are not fully 
substitutable in view of their characteristics, intended use and price35, even though 
the Commission has not finally concluded on the re levant product market.  
(29) The Notifying Party submits that there  may be more than one plausible alternative 
for the definition of the relevant product markets including AAC blocks. The 
Notifying Party submit s that the narrowest possible – although by no means most 
plausible – definition would consider AAC  blocks as constituting a single relevant 
product market. However, the Notifying Party contends  that the more plausible 
product market definition  comprise s AAC blocks , aggregate blocks and potentially 
also ot her wall -building materials, in particular bricks, sand -lime bricks/calcium 
silicate units and pumice blocks.36 
(30) The Commission’s market investigation indicated that the relevant product market is 
not likely to comprise other products than AAC blocks , such as clay bricks, CSU s 
and pumice blocks. Even if different wall -building  materials may be partially 
                                                 
32  M.7910 – Kesko/Onninen, paragraph 16;  M.7703 – PontMeyer/DBS , paragraphs 11 -12; M.3407 – Saint 
Gobain/Dahl , paragraphs 12 and 16; and M.3142 –  CVC/Danske Traelast , paragraphs 11 -13. 
33  Form  CO, paragr aph 198.  
34  M.8341 – Lone Star Fund/Xella International , paragraph 27; M. 8733 – Lone Star/Stark , paragraph 13. 
35  M.2568 – Haniel/Ytong , paragraph 15.  
36  Form CO, paragraph 98.  
 
 
8 substitutable during the design stage of a construction project37, this does not apply 
to a later stage of such project. Once a project is designed, the various materials are 
selected to work together and replacement by alternatives becomes more difficult. 
Some respondents explained that the architect determines the use of a particular 
building material.38 Further more , market participants stress ed the diffe rent 
characteristics of the materials, maintaining, for example that “AAC has entirely 
different physical characteristics than calcium silicate ”39, or that “ calcium silicate 
has a very high bulk density and can hardly be substituted for certain areas of use . 
In the local market, there is no comparable product .”40 
(31) Internal documents of the Notifying Party support these findings. When comparing 
different wall -building materials , Xella’s comparison between AAC  blocks , CSU s, 
clay bricks and concrete blocks demons trates the partially significant differences in 
characteristics, as shown in Figure 1 below .41 
Figure 1 : Extract from Xella’s internal document  
 
 
                                                 
37  One respondent considered that „ often, building companies submit alternative materials and should the 
alternative offer a better price, often the plans are changed, e.g. one uses clay instead of AAC products. ”; 
reply to Q2 – Questionnaire to Producers, q. 8.1 (convenience translation from German: “ Häufig legen 
Bauunternehmen im Zuge von Vergabeverhandlungen Alternativvorschläge mit Alternativprodukten vor, 
dabei kommt es bei preisgünstigeren Varianten häufig zu Umplanungen und z. B. Ziegel kommen statt 
Porenbeton- Produkten zum Einsatz.” ). 
38  E.g. replies to Q1 –  Question naire to Retailers, q. 7.1; Q3 –  Questionnaire to End customers, q. 11.1.  
39  Reply to Q2 –  Questionnaire to Producers, q. 8.1 (convenience translation from German: “Porenbeton hat 
ganz andere Physikalische Eigenschaften als KS.” ). 
40  Reply to Q3 – Question naire to End customers, q. 13.1 (convenience translation from German: 
“Kalksandstein hat eine hohe Rohdichte und kann daher für gewisse Einsatzgebiete schlecht ausgetauscht  
werden. In dem hiesigen Markt gibt es kein vergleichbares Produkt .“). 
41  Form CO, Annex 24 J, page 9 . 

 
 
9 (32) Moreover, Xella’s statements in its internal documents point to product markets, 
which do not comprise several wall -building materials. When considering potential 
acquisitions, Xella commented as regards  masonry brick s that such  “market would 
probably not be considered competitive to Xella’s current business making potential 
acquisitions easy to get approval for by the authorities.”42 
(33) However, for the purpose of this decision, the exact product market definition with 
respect to AAC blocks can be left open as the outcome of the competitive 
assessment would be the same under any plausible alternative product market 
definition.  
4.2.2. AAC large format units  on the market for wholesale sales to retailers  
(34) AAC large format units  are building materials made of foam concrete that cannot be 
lifted by hand and require equipment such as a crane for handling , and are used for 
the construction of walls, ceilings, floors and roofs. Xella offers such products both 
for industrial and residential construction. The products for the construction of 
industrial buildings, such as  logistics centres, warehou ses and manufacturing 
facilities , are sold under the Hebel  brand. Xella’s  large format units  for the 
residential sector , together with floors, slabs or roofs are sold under the Ytong brand 
as a complete system .  
(35) There are no relevant Commission precedents,  which specifically concern AAC 
large format units . 
(36) The Notifying Party  submits  that the AAC large format wall and roof panels sold 
under the Hebel brand for industrial buildings on the one hand, and the Ytong 
complete systems, which include ceiling and roof large format units for single -
family houses on the other, are part of two separate product markets.43  
(37) In addition, the Notifying Party submits  that from a demand side perspective, AAC 
large format units for industrial construction are part of a broader market , which 
includes concrete panels and steel elements,44 while AAC large format  units for 
residential construction belong to a broader market including concrete floor elements 
and full assembly floors.45 However, the Notifying Party submits that from  a supply 
side perspective, the product market definition is narrower, as producers cannot 
easily switch from one product to the other.46 
(38) As regards the substitutability between AAC large format units for industrial and 
residential construction, t he Commission ’s market investigation indicate d relevant 
differences between these products.  
(39) Firstly, industrial buildings and residential buildings differ partially with respect to 
their relevant technical requirements. For example, o n the one hand, a  market 
participan t explained that while  for residential buildings the focus is on thermal 
insulation, this is less the case for industrial buildings. On the other hand, 
                                                 
42  Form CO, Annex 24 J, page 8.  
43  Form CO, paragraph 113.  
44  Form CO, paragraph 122.  
45  Form CO, paragraph 115.  
46  Form CO, paragraphs 116 and 123.  
 
 
10 components for industrial buildings have to meet structural requirements for, among 
others, wind forces and snow loads.47  
(40) Secondly, a round half of the respondent s active at the retail level considered AAC 
large format units for industrial and residential construction not to be substitutable 
products. However, roughly the same amount of respondents expressed the view that 
these two types of AAC large format units are substitutable.48  
(41) With respect to substitutability of AAC large format units with other materials, 
whether for the residential or industrial sector, the  majority of retailers responding to 
the Comm ission’s investigation did not consider AAC large format units to be 
substitutable with other materials .49 One market participant expressed doubts 
whether  AAC large format units could be substituted with other materials such as 
steel, mainly due to the diff erent characteristics of the materials.50  
(42) The Commission considers that the information obtained during its market 
investigation indicates that AAC large format units for industrial construction are not 
substitutable with those for residential construction , in particular  due to the different 
technical requirements for residential and industrial constructions. As regards 
substitutability of AAC large format units with other materials, similar 
considerations apply.  
(43) However, for the purpose of this decision, t he exact product market definition with 
respect to AAC large format units whether for residential or industrial construction 
can be left open as the outcome of the competitive assessment would be the same 
under any plausible alternative product market definition.  
(44) Finally , the Commission notes that AAC large format units for industrial 
construction under  the Hebel  brand are only sold via direct sales to end customers 
without any involvement of reta ilers.51 Therefore, there are no horizontal overlaps or 
vertical links between the Notifying Party  and SGBDD as regards AAC large format 
units for industrial construction. Therefore, these products are not discussed further 
in this decision. 
4.2.3. Calcium silicate units (CSUs)  on the market for wholesale sales to retailers  
(45) CSU s are masonry products made from a mixture of lime and natural siliceous 
materials (sand, siliceous gravel or rock or mixtures thereof) that can typically be 
lifted by hand and which are used  for the construction of walls . As a material, CSU 
has a higher density, and is therefore heavier than AAC. 
(46) The Commission has not previously taken a definitive position on the relevant 
product market for CSU s, when it considered CSUs as being potentially part of the 
same market as AAC blocks52. 
                                                 
47  Minutes of a call with a market participant dated 31 July 2019.  
48  Replies to Q1 –  Questionnaire to Retailers, q. 9 and q. 10.  
49  Replies to Q1 –  Questionnaire to Retailers, q. 11 and q. 12.  
50  Minutes of a call with a market participant dated 31 July 2019.  
51  RFI 11 dated 1 August 2019, response to question 5 dated 5 August 2019.  
52  In M.8733 – Lone Star / Stark , paragraphs 10 to 13.  
 
 
11 (47) The Notifying Party  contends  that the more plausible market definition for CSU s is a 
product market comprising CSU s, AAC blocks, clay bricks and pumice bricks .53 
(48) Feedback from the Commission’s market  investigation as regards the substitutability 
of AAC blocks with other wall- building materials presented in section 4.2.1 of this 
decision applies also to the substitutability of CSUs  with other wall- building 
materials . Therefore, there are credible indications that the relevant product market 
comprise s only CSU s, and no other products such as AAC blocks , pumice blocks, 
and clay bricks.  
(49) However, for the purpose of this decision, the exact product market definition with 
respect to CSUs  can be left open, as the outcome of the competitive assessment 
would be the sam e under any plausible alternative product market definition.  
4.2.4. Distribution  of building materials  on the market for  retail sales to professional 
customers , in particular as regards AAC blocks and CSU s  
(50) SGBDD’s operations are limited to distribution of build ing materials. More 
specifically, its activities in distribution of building materials are limited to the retail 
sales to professional customers (B2B). SGBDD is not active on the DIY market, or 
on the market for wholesale sales to retailers. As stated in p aragraph (17), according 
to the Parties, more than 90% of SGBDD’s customers are estimated to be 
predominantly professional customers.  
(51) In its previous decisions, the Commission has considered that the markets for the 
distribution of building materials  in general can be divided into:  (i) wholesale sales 
to retailers ; (ii) retail sale s to professional customers (B2B); and (iii) retail sale s to 
non-professional customers (primarily through DIY  stores) , but has left the  precise 
product market definition ultimately open.54  
(52) As regards distribution on the retail level more specifically, in past decisions the 
Commission has also considered sub- segmentation by product groups, including the 
specific product group of building materials.55 
(53) The Notifying Party submits  that w hile further segmentation of the distribution  
markets by produ ct category may be conceivable, it is extremely difficult to provide 
any reliable market share estimates on such a narrow product market basis.  The 
Notifying Party also claims that distributors of building materials do no 
systematically track various product segments as distinct markets, as they are more 
interested in increa sing their overall sales and offering as comprehensive a range of 
products as possible.56 
                                                 
53  Form CO, paragraph 156.  
54  M.7910 – Kesko/Onninen, paragraph 16; M.7703 –  PontMeyer/DBS , paragraphs 11 -12; M.3407 – Saint 
Gobain/Dahl , paragraphs 12 and 16; and M.3142 –  CVC/Danske Traelast , paragraphs 11- 13. 
55  M.7283 – Kingfisher/Mr Bricolage , paragraph 13; M.7107 – Cordes & Graefe/Pompac/Comafranc , 
paragraph 15.  
56  Form CO, paragraph 203.  
 
 
12 (54) The Commission’s investigation indicated that Xella’s products represent only a 
minor part of the retailers’ portfolio based on their overall purchasing volumes.57 
The business model of retailers is based on having a large portfolio of building 
materials products and even other types of products such as insulation materials that 
they can offer to end customers for various types of construction projects, rather than 
speci alising in a few types of building materials, such as AAC blocks, CSUs or AAC 
large format units.58 For instance, in 2018, SGBDD generated revenues of only 
EUR  [less than 50] million and EUR [less than 100] million in AAC blocks and 
CSUs respectively (stock sales and project sales combined), while the overall 
turnover generated from the distribution of building materials was 
EUR  [1-2 billion] .59  
(55) However, for the purpose of this decision, the exact product market defini tion with 
respect to the retail sales of building materials to professional customers can be left 
open as the outcome of the competitive assessment would be the same under any 
plausible alternative product market definition . 
4.3. Relevant geographic markets  
4.3.1. AAC  blocks  on the market for wholesale sales to retailers  
(56) With regard to the relevant geographic market , the Commission has previously 
considered the wholesale sales to retailers market for AAC blocks  as at most national 
level , but left the exact market defin ition open.60 However,  the Commission found in 
the referral decision Haniel/Fels  (2001) and Haniel/Ytong (2001) that a local market 
appears to be appropriate, mainly because of the catchment areas of the production 
plants61 and acknowledged local aspect s of the supply of AAC in Germany in the 
Xella/H+H  (2011) referral decision62. Moreover, B undeskartellamt precedents 
from  2002 ( Haniel/Ytong) and 2012 ( Xella/H+H ), both dealing with the supply of 
AAC blocks in Germany  on the wholesale sales to retailers market , considered the 
geographical market to be subnational in scope, based on 200- km catchment areas 
around production plants , and North, West, South and East German regions 
respectively.63 
                                                 
57  Replies to Q1 –  Questionnaire to Retailers, q. 6.  
58  Replies to Q1 –  Questionnaire to Retailers, q. 1.  
59  Form CO, paragraph 275.  
60  Case M.8341 –  Lone Star Fund/Xella International , paragraph 30 et seq.  
61  Cases M.2495 –  Haniel/Fels , paragraphs 18 and 19, M.2568 –  Haniel/Ytong , paragraph 19.  
62  M.6146  – XELLA/H+H, paragraphs 11 et seq . 
63  Bundeskartellamt , 1. Beschlussabteilung, B 1 –  26401 – U - 263/01, section B.II.2 ; Bundeskartellamt, 1. 
Beschlussabteilung, B 1 -  30/11, paragraph 189. The Bundeskartellamt defined the four local market 
within Germany based on zip codes areas: North Germany is defined by zip codes 18xxx, 19xxx and 
2xxxx and therefore comprises Schleswig- Holstein, the north of Niedersachsen and the largest (northern) 
part of Mecklenb urg-Vorpommern. West Germany is defined by zip codes 30xxx- 38xxx, 4xxxx, 5xxxx, 
6xxxx and comprises Nordrhein- West phalen, Rheinland -Pfalz, Saarland, the south of Niedersachsen and 
Hessen. South Germany is defined by zip codes 7xxxx, 8xxxx, 90xxx- 97xxx and comprises Bayern and 
Baden -Württemberg. East Germany is defined by the zip codes 0xxxx- 17xxx, 39xxx, 98xxx, 99xxx and 
comprises Sachsen, Sachsen -Anhalt, Thüringen, Brandenburg as well as the southern part of 
Mecklenburg -Vorpommern . The Commission understands that the federal state of Berlin is geographically 
comprised by Brandenburg and hence part of the East Germany market.  
 
 
13 (57) The Notifying Party  submits  that the geographic market for AAC products s hould be 
defined as (at least) national in scope.64  
(58) In contrast, however, feedback from the market unambiguously indicates  that the 
geographic market  for AAC blocks is subnational in scope . A clear majority of 
retailers indicated that they purchase buildin gs materials, in particular, AAC blocks 
and CSUs, on a local level, whilst only a minority indicated a national scope for their 
purchases.65 For the similar question, more than two- thirds of manufacturers stated 
that they sell their products on a local leve l66 One manufacturer commented, “ we sell 
exclusively through regional builders merchants ”67. As regards diverging wholesale 
prices, a clear majority of retailers confirmed that wholesale prices of building 
materials, in particular, AAC blocks and CSUs, differ significantly between different 
regions within Germany.68 Respondent s also confirmed that transport costs matter 
and that, therefore, the catchment areas around pr oductions sites are 
between  150 and 300 kilometres.69  
(59) The Commission notes that in part icular because of the catchment areas around 
production facilities for AAC blocks, it is impossible to assume an economically 
reasonable national geographic market. Whereas this may be different for smaller 
countries, the size of Germany determines the local scope of the  markets. This is 
even more so, as Xella appears to be the only AAC blocks manufacturer with 
production facilities across Germany, whilst in all German regions there are AAC 
blocks manufacturers that are active only locally, as can be seen f rom a map 
provided by the Notifying Party  presented in Figure 2.70 
                                                 
64  Form CO, paragraphs 104 et seq . 
65  Replies to Q1 –  Questionnaire to Retailers, q. 14.  
66  Replies to Q2 –  Questionnaire to Producers, q. 19.  
67  Replies to Q2 –  Questionnaire to Producers, q. 19.1.  
68  Replies to Q1 –  Questionnaire to Retailers, q. 15.  
69  “Up to 200 kilometres ” according to the r eply by one respondent to Q1 –  Questionnaire to Retailers , q 14; 
“deliver radius of 150 –  200 kilometres ” according to a market participant , Minutes of a call with a retailer 
dated 2 August 2019;  according  to a retailer, the transport cost would not be economically reasonable 
above a radius of 200- 300 kilometres,  Minutes of a call with a retailer dated 25 July 2019 ; “as transport 
costs are high, it is economically reasonable to transport (…) AAC blocks up t o 300 kilometre ”, Minutes 
of a call with a manufacturer dated 30 July 2019 . 
70  Form CO, Annex W, page 20.  
 
 
14 Figure 2 : Map of AAC, calcium silicate and clay bricks production sites in Germany  
[redacted version]  
 
 
(60) Furthermore , the Commission takes note of strongly diverg ing market shares of 
AAC blocks manufacturers in different German regions  (section 5.3.2.1 of this 
decision) . For example, Xella’s market shares for the sale of AAC blocks on the 
wholesale to retailer market are as high as [70- 80]% in South Germany , [60-70]% in 
East Germany  but only [30-40]% in North and West Germany . H+H, Xella’s 
strongest competitor in AAC blocks, faces a similar diverging spread with [30-40]% 
in North Germany, [20- 30]% in West Germany but only [0 -5]% in East G ermany 
and [0 -5]% in South Germany.  
(61) Therefore, the Commission considers that the relevant geographic market s for AAC 
blocks in Germany are local in scope and comprise certain areas within Germany . 
The Commission considers the delineation of four local markets established by the 
Bundeskartellamt  to be the m ost suitable definition of the local markets. For this 
purpose , the Commission endorses this geographic market definition for AAC 
blocks within Germany . 

 
 
15 4.3.2. AAC large format units  for residential construction on the market f or wholesale 
sales to retailers  
(62) There are no precedents in the Commission's previous decisional practice as regards 
the relevant geographic market definition for AAC large format units  for residential 
use.  
(63) The Notifying Party contends  that the  geographic market for large format 
prefabri cated compound units for residential use  are national in scope , which is in 
line with the usual deliver y radius of up to 600 kilometre s.71  
(64) In the market investigation, one market participant confirmed that manufacturers sell 
and deliver these products within  the whole of Germany.72 
(65) The Commission considers that, for the purposes of this decision, the precise scope 
of the relevant geographic market for AAC large format units for residential use  
products can be ultimately left open in the current case, since t he Transaction does 
not give rise to serious doubts about its compatibility with the internal market under 
any plausible market definition.  
4.3.3. CSUs  on the market for wholesale sales to retailers  
(66) As for the geographic scope, the Commission acknowledged the local aspect of the 
supply of CSU s in Germany in several referral decision .73  
(67) The Notifying Party consider s that CSU s are not different from other building 
materials  in that respect and that t he geographic market for the distribution of CSU s 
is therefore in all likelihood national.74  
(68) However, as for AAC blocks, the market investigation demonstrated that the relevant 
geographic market is subnational in scope.75 The arguments and considerations 
brought forward for AAC blocks apply in the same ma nner to CSUs: t he production 
facilities for CSUs are spread over Germany in a similar manner as those of AAC 
blocks. Xella’s market shares are also strongly diverging with [70- 80]% in North 
Germany, [40-50]% in East Germany, [20- 30]% in West Germany and [5 -10]% in 
South Germany, and so do they for H+H with [20-30]% in South Germany, 
[20-30]% in East Germany, [0 -5]% in North Germany and [0 -5]% in West Germany. 
One difference between AAC blocks and CSUs is that the  catchment areas around 
production sites  are smaller for CSUs due to the lower  monetary  value of these 
products76, which even more supports the view that the relevant geographic markets 
are local in scope.   
                                                 
71  Form CO, paragraph 128.  
72  Minutes of a call with a market participant dated 31 July 2019.  
73  Cases COMP/M.2495 – Haniel/Fels , paragraphs 18 and 19, COMP/M.2568 – Haniel/Ytong , 
paragraph  19, COMP/M.6146  – XELLA/ H+H, paragraphs 11 et seq . 
74  Form CO, paragraph 155.  
75  Paragraph (58) of this decision .  
76  A market participant indicated that the catchment areas fo r CSUs are 100 to 150 kilometre, Minutes of a 
call with a retailer dated 2 August 2019.  
 
 
16 (69) Therefore, the Commission considers that the relevant geographic markets for CSUs 
in Germany are local in scope and comprise certain areas within Germany . The 
Commission considers the delineation of four local markets established by the 
Bundeskartellamt  to be the most suitable definition of the local markets. For this 
purpose, the Commission endor ses this geographic market definition for CSUs  
within Germany.   
4.3.4. Distribution  of building materials, in particular AAC and CSU products , on the 
market for  retail sales to professional customers  
(70) With regard to  the relevant geographic market, the Commission has previously 
considered that the scope of the market of retail sales to professional customers  for 
the distribution of building products is either national or potentially smaller than 
national.77 
(71) The Notifying Party contends that the relevant geographic m arket for retail sales to 
professional customers  is national.78  
(72) The market investigation  and the information submitted by the Notifying Party , 
however, point  towards a local market of retail sales to professional customers  for 
building materials . Firstly, some end -customers enter into supply contracts directly 
with manufacturers such as Xella. The delivery of the products and the invoicing, 
however, are carried out through a local retailer.79 One respondent described the 
typical constellation as follows: “ The planning and the technical agreements are 
done directly with the manufacturer. The purchase of the products is carried out 
through several retailers.”80 Other end -customers source exclusively through 
retailers. Secondly, the geographic presence of the mos t of SGBDD’s competitors is 
limited to certain areas in Germany81, with SGBDD’s competitors putting forward 
that they compete with SGBDD only locally.82 
(73) In any event, the Commission considers that, for the purposes of this decision, the 
precise scope of the relevant geographic market for building materials  distributed on 
the market of retail sales to professional customers can be left open in the current 
case, since the Transaction does not give rise to serious doubts about its 
compatibility with the internal market under any plausible market definition.  
                                                 
77  Case COMP/M.7910 -  Kesko/Onninen, paragraph 23 with references to previous decisions.  
78  Form CO, paragrap hs 204 et seq . 
79  Replies to Q3 –  Questionnaire to End customers, q. 4 and q. 8.  
80  Replies to Q3 –  Questionnaire to End customers, q. 3 (the quote is a convenience translation  from 
German, which reads: “Die Planungen und technischen Absprachen werden dire kt mit dem Hersteller 
getroffen. Der Einkauf dieser Produkte erfolgt ü ber diverse Einzelh ändler .“) 
81  Form CO, Annex 15, with maps of SGBDD’s strongest competitors, displaying the local presence of the 
vast majority of these competitors.  
82  Minutes of a call with a retailer dated 26 June 2019.  
 
 
17 5. COMPETITIVE ASSESSMEN T 
5.1. Introduction 
(74) Under Article 2(2) and (3) of the Merger Regulation and Annex XIV to the EEA 
Agreement , the Commission is required to examine whether notified concentrations 
are compatible with the internal market and the functioning of the EEA Agreement , 
by assessing whether they would significantly impede effective competition in the 
internal market or in a substantial part of it, in particular through the creation or 
strengthening of a dominant position.  
(75) In addition, Article 57(1) of the EEA Agreement requires the Commission to 
examine whether notified concentrations are compatible with the functioning of the 
EEA Agreement, by assessing whether they would create or strengthen a dominant 
position as a result of which effective competition would be significantly impeded 
within the EEA territory or a substantial part of it.  
(76) In this respect, a proposed concentration may entail horizontal and/or non- horizontal 
effects.  
5.2. Horizontal effects  
5.2.1. Analytical framework  
(77) As regards horizontal effects, the Horizontal  Merger Guidelines83 distinguish 
between two main ways in which concentrations concerning  undertakings that are 
actual or potential competitors on the same relevant market (“horizontal mergers”)  
may significantly impede effective competition, namely non -coordinated and 
coordinated effects.  
(78) Non-coordinated effects may significantly impede competition by eliminating 
important competitive constraints on one or more firms, which consequentl y would 
have increased market power, without resorting to coordinated behaviour. In that 
regard, the Horizontal Merger Guidelines consider not only the direct loss  of 
competition between the undertakings involved in the horizontal merger , but also the 
reduction in competitive pressure on undertakings not involved in the horizontal 
merger  in the same market that could be brought about by the horizontal merger.  
(79) The Horizontal Merger Guidelines list a number of factors which may influence 
whether significant non- coordinated effects are likely to result from a horizontal 
merger, such as the large market shares of the undertakings involved in the 
horizontal merger , the fact that the undertakings involved in the horizontal merger  
are close competitors, the limited  possibilities for customers to switch suppliers, or 
the fact that a horizontal merger would eliminate an important competitive force. 
That list of factors applies equally if a horizontal merger would create or strengthen 
a dominant position, or would othe rwise significantly impede effective competition 
due to non- coordinated effects . 
                                                 
83  Guidelines on the assessment of horizontal mergers under the Counci l Regulation on the control of 
concentrations between undertakings, OJ C 31, 5.2.2004, p.  5. 
 
 
18 (80) Section 5.2.2 of this decision will analyse whether the proposed Transaction is like ly 
to raise doubts as to its compatibility with the internal market due to non- coordinated 
effects . 
5.2.2. The Commission’s assessment  
(81) The Notifying Party  contends that the proposed Transaction does not give rise to 
horizontal overlaps both between Stark and SGBD D on the one hand84 and Xella and 
SGBDD on the other hand.85  
(82) Horizontal overlaps  on the market s of retail sales to professional customers and retail 
sale to non- professional customers between Stark and SGBDD, if any, are minimal. 
Stark has no operations in Germany and only very limited cr oss-border sales into 
Germany. SGBDD’s exports to Denmark (and its total exports to all Nordic 
countries in which Stark is present) represent [less than 1] % of its overall sales; and 
Stark’s exports to Germany are about [les s than 1] % of its sales in Denmark.86 
(83) As regards Xella’s production and sale of AAC blocks and CSUs, t he Commission’s 
market investigation confirm ed that Xella does not sell these products directly to end 
customers, but only through retailers  such as SGBDD .87  
(84) Xella distributes AAC large format units under the Ytong brand for residential 
construction by way of project sales through retailers, but not directly to end-
customers.88  
(85) Therefore, in light of the results of the market investigation and the evidence 
provided by the Notifying Party , the Commission considers that the proposed 
Transaction does not give rise to any , or only minimal , horizontal overlaps. 
Therefore, the Commission considers that the proposed Transaction does not raise 
any concerns as to its compatibility with internal market or the functioning of the 
EEA Agreement with respect to horizontal non- coordinated effects.  
5.3. Vertical effects  
5.3.1. Analytical framework  
(86) As regards non- horizontal effects, the Non-Horizontal Merger Guidelines89 
distinguish between two broad types of concentrations that concern undertakings 
which are active on different relevant markets (“non- horizontal mergers ”), namely 
vertical mergers and conglomerate mergers.  
                                                 
84  Form CO, paragraphs 260 et seq . 
85  Form CO, parag raphs 263 et seq . 
86  Form CO, paragraph 46.  
87  Replies to Q3 –  Questionnaire to End customers, q. 10: An overwhelming majority of respondents stated 
that Xella and SGBDD do not compete in the distribution of building materials, in particular of AAC 
blocks,  CSUs and AAC large format units.  
88  Form CO, paragraph 111; RFI 11 dated 1 August 2019, response to question 5  dated 5 August 2019.  
89  Guidelines on the assessment of non -horizontal mergers under the Council Regulation on the control of 
concentrations between undertakings, OJ C 265, 18.10.2008, p.  6. 
 
 
19 (87) A vertical merger may result in anti- competitive ef fects due to foreclosure. 
Foreclosure concerns a situation where actual or potential rivals ’ access to supplies 
or markets is hampered or eliminated as a result of the vertical merger, thereby 
reducing these companies ’ ability and/or incentive to compete .90 
(88) Two forms of foreclosure can be distinguished in a vertical relationship: input and 
customer foreclosure. The first is where the vertical merger is likely to raise the costs 
of downstream rivals by restricting their access to an important input (input 
foreclosure). The second is where the vertical merger is likely to foreclose upstream 
rivals by restricting their access to a sufficient customer base (customer 
foreclosure ).91 
(89) Input foreclosure arises where, post -Transaction , the new entity would be likely to  
restrict access to the products or services that it would have otherwise supplied 
absent the vertical merger, thereby raising its downstream rivals' costs by making it 
harder for them to obtain supplies of the input under similar prices and conditions as 
absent the vertical merger .92 
(90) Customer foreclosure may occur when a supplier integrates with an important 
customer in the downstream market. Because of this downstream presence, the 
merged entity may foreclose access to a sufficient customer base to its act ual or 
potential rivals in the upstream market (the input market) and reduce their ability or 
incentive to compete. In turn, this may raise downstream rivals' costs by making it 
harder for them to obtain supplies of the input under similar prices and condi tions as 
absent the vertical merger .93 
(91) For an input or customer foreclosure scenario to raise competition concerns, three 
cumulative factors need to be taken into account: (i) the ability of the merged entity 
to engage in foreclosure; (ii) the incentives of  the merged entity to do so; and 
(iii) whether a foreclosure strategy would have a significant detrimental effect on 
competition in the downstream market.94 
5.3.2. Market structure of the u pstream markets: wholesale sales of AAC blocks, CSUs  and 
AAC large format unit for residential construction 
5.3.2.1. AAC blocks   
(92) According to the Notifying Party, Xella’s and its relevant competitors’ market shares 
in the sale of AAC blocks  on the market for wholesale sales to retailers  on the 
German national  market as well as on four local markets within Germany  are as 
follows:  
                                                 
90  Non-Horizontal Merger Guidelines, paragraphs 29 -30. 
91  Non-Horizontal Merger Guidelines, paragraphs 29 -30. 
92  Non-Horizontal Merger Guidelines, paragraph 31.  
93  Non-Horizontal Merger Guidelines, paragraph 58.  
94  Non-Horizontal Merger Guidelines, paragraphs 32, 59.  
 
 
20 Table 1: Upstream w holesale of AAC blocks Germany -wide  in 2018  
Company  Total sales 
values in '000 
EUR in 2018 Market share 
in value in 
2018 Total sales 
volume (m3) 
in 2018  Market 
shares in 
volume in 
2018  
All manufacturers  
in Germany  [200- 300,000]  100%  [2-3 m] 100%  
Xella  […] [50-60]% […] [40-50]% 
H+H  […] [10-20]% […] [10-20]% 
Porit  […] [10-20]% […] [10-20]% 
Others  […] [10-20]% […] [20-30]% 
 
Table 2: Upstream wholesale of AAC blocks in North Germany in 2018 
Company  Total sales 
values in '000 
EUR in 2018 Market share 
in value in 
2018 Total sales 
volume (m3) in 
2018 Market 
shares in 
volume in 
2018  
All manufacturers  
in North Germany  [less than 
50,000]  100%  [less than 
500,000]  100%  
Xella  […] [30-40]% […] [30-40]% 
H+H  […] [30-40]% […] [30-40]% 
Porit  […] [5-10]% […] [5-10]% 
Others  […] [20-30]% […] [20-30]% 
 
Table 3: Upstream wholesale of AAC blocks in West Germany in 2018  
Company  Total sales values 
in '000 EUR in 
2018 Market 
share in 
value in 
2018 Total sales 
volume (m3) 
in 2018  Market 
shares in 
volume in 
2018 
All 
manufacturers  in 
West Germany  [less than 100,000]  100%  [less than 1  m] 100%  
Xella  […] [30-40]% […] [30-40]% 
H+H  […] [20-30]% […] [20-30]% 
Porit  […] [20-30]% […] [20-30]% 
Others  […] [20-30]% […] [20-30]% 
 
 
 
21 Table 4: Upstream wholesale of AAC blocks in South Germany in 2018 
Company  Total sales values 
in '000 EUR in 
2018 Market 
share in 
value in 
2018  Total sales 
volume (m3) 
in 2018  Market 
shares in 
volume in 
2018  
All manufacturers  
in South Germany  [less than 100,000]  100%  [less than 1  m] 100%  
Xella  […] [70-80]% […] [70-80]% 
H+H  […] [0-5]% […] [0-5]% 
Porit  […] [10-20]% […] [10-20]% 
Others  […] [10-20]% […] [10-20]% 
 
Table 5: Upstream wholesale of AAC blocks in East  Germany in 2018 
Company  Total sales values 
in '000 EUR in 
2018 Market 
share in 
value in 
2018  Total sales 
volume (m3) 
in 2018  Market 
shares in 
volume in 
2018  
All manufacturers  
in East  Germany  [less than 100,000]  100.00%  [less than 1  m] 100%  
Xella  […] [60-70]% […] [60-70]% 
H+H  […] [0-5]% […] [0-5]% 
Porit  […] [10-20]% […] [10-20]% 
Others  […] [10-20]% […] [10-20]% 
 
 
 
22 5.3.2.2. CSUs  
(93) According to the Notifying Party, Xella’s and its relevant competitors’ market shares 
in the sale of CSUs on the market for wholesale sales to retailers  on the German 
national  market as well as on four local markets within Germany are as follows:  
Table 6: Upstream wholesale of CSUs Germany -wide  in 2018  
Company  Total sales 
values in '000 
EUR in 2018 Market share 
in value in 
2018 Total sales 
volume (m3) 
in 2018  Market 
shares in 
volume in 
2018  
All manufacturers  
in Germany  [400- 500,000]  100%  [3.5-4 m] 100%  
Xella  […] [30-40]% […] [30-40]% 
H+H  […] [10-20]% […] [10-20]% 
Unika  […] [10-20]% […] [10-20]% 
BMO  […] [5-10]% […] [5-10]% 
Others  […] [30-40]% […] [40-50]% 
 
Table 7: Upstream wholesale of CSUs  in North Germany in 2018 
Company  Total sales 
values in '000 
EUR in 2018 Market share 
in value in 
2018 Total sales 
volume (m3) 
in 2018  Market 
shares in 
volume in 
2018  
All manufacturers  
in North Germany  [less than 
100,000]  100%  [less than 
750,000]  100%  
Xella  […] [70-80]% […] [70-80]% 
H+H  […] [0-5]% […] [0-5]% 
Unika  […] [0-5]% […] [0-5]% 
Others  […] [20-30]% […] [20-30]% 
 
 
 
23 Table 8: Upstream wholesale of CSUs in West Germany in 2018 
Company  Total sales 
values in '000 
EUR in 2018 Market share 
in value in 
2018 Total sales 
volume (m3) 
in 2018  Market 
shares in 
volume in 
2018  
All manufacturers  
in West Germany  [less than 
250,000]  100%  [less than 2 m ] 100%  
Xella  […] [20-30]% […] [20-30]% 
H+H  […] [0-5]% […] [0-5]% 
Unika  […] [10-20]% […] [10-20]% 
BMO  […] [10-20]% […] [10-20]% 
Others  […] [40-50]% […] [40-50]% 
 
Table 9: Upstream wholesale of CSUs in South Germany in 2018  
Company  Total sales 
values in '000 
EUR in 2018 Market share 
in value in 
2018 Total sales 
volume (m3) 
in 2018  Market 
shares in 
volume in 
2018  
All manufacturers  
in South Germany  [less than 
100,000]  100%  [less than 
750,000]  100%  
Xella  […] [5-10]% […] [5-10]% 
H+H  […] [20-30]% […] [20-30]% 
Unika  […] [10-20]% […] [10-20]% 
Others  […] [50-60]% […] [50-60]% 
 
Table 10: Upstream wholesale of CSUs in East Germany in 2018 
Company  Total sales 
values in '000 
EUR in 2018 Market share 
in value in 
2018 Total sales 
volume (m3) 
in 2018  Market 
shares in 
volume in 
2018  
All manufacturers  
in East Germany  [less than 
150,000]  100%  [less than 
1 m] 100%  
Xella  […] [40-50]% […] [40-50]% 
H+H  […] [20-30]% […] [20-30]% 
Unika  […] [10-20]% […] [10-20]% 
Others  […] [20-30]% […] [20-30]% 
 
 
 
24 5.3.2.3. AAC large format units  for residential construction  
(94) With respect to AAC large format units for the residential construction, the 
Notifying Party submits that it would have a market share of 100% on a plausible 
market, which only comprises this product, as it is the only manufac turer selling this 
product in Germany.95 
5.3.3. Market structure of the d ownstream markets: retail sales of building materials  to 
professional customers  
(95) For the downstream market, according to estimates of the Notifying Party, 
SGBDD’s market shares and the market shares of its competitors in d istribution of 
building materials on the market for retail sales to professional customers  are as 
follows:  
Table 11: R etail sales  of building materials  to professional customers  German y-wide 
in 201796 
Company  Value of retail 
sales (EUR 
million) (2018)97 Estimated market shares, 
nation -wide, 2017  
SGBDD  [1-2 bn]  [5-10]%  
BayWa AG   [5-10]%  
Bauking AG   [0-5]%  
WeGo Systembaustoffe GmbH   [0-5]%  
team AG   [0-5]%  
Kemmler SE   [0-5]%  
mobau Wirtz & Classen   [0-5]%  
Hornbach Baustoff Union   [0-5]%  
Wertheimer Gruppe   [0-5]%  
BAUEN + LEBEN   [0-5]%  
Bauzentrum Mayer   [0-5]%  
Theodor Wölpert   [0-5]%  
 
(96) SGBDD’s market shares differ in different subnational regions of Germany. 
According to the Notifying Party, SGBDD’s market shares are between [0 -5]% in 
North Germany and [20- 30]% in the area of Berlin -Brandenburg, which roughly 
corresponds to the East Germ an region. According to this data, SGBDD is market 
leader in the area of Berlin -Brandenburg followed by Bauking and Holz Possling 
                                                 
95  Form CO, paragraph 118.  
96  The Notifying Party confirmed that these data would differ only marginally, if at all, if they were based on 
data for 2018; RFI 13  dated 2 7 August 2019, response to question 1  dated 28 August 2019 . 
97  The Notifying Party submits that the Target does not have any reliable information on its competitors’ 
market shares by category of products, not least because the German market for the distribution of 
construction produ cts is fragmented. To the best of the Target’s knowledge, there are no third party 
sources it has access to that track market shares by product category reliably. (Form CO, Annex 13).  
 
 
25 with each [5-10]% market share, and in the area of Middle Germany with a market 
share of [10- 20]%, followed by WeGO with [0 -5]%. In other German regions, 
SGBDD does not command the highest market shares amongst its competitors.98 In 
any case, the competitive assessment relates to narrowest plausible product markets 
on a subnational level, where the highest market shares exceed tho se on the national 
level.  
(97) As regards the Germany -wide and regional sale of AAC blocks and CSUs, the 
Notifying Party estimates the following market shares for SGBDD99: 
Table 12: SGBDD’s market share s on the market for r etail sales of AAC blocks to 
professional customers  in Germany and in German regions  
 Total sales values 
all retailers  in 
EUR in 2018 Market share 
SGBDD in 
value (EUR) 
in 2018  Total sales 
volume (m3) 
in 2018  Market 
shares in 
volume in 
2018  
Germany  [200- 300 m ] [10-20]% [2.5- 3 m] [5-10]% 
North Germany  [30-40 m ] [5-10]% [400- 500,000]  [5-10]% 
West Germany  [70-80 m ] [0-5]% [900,000- 1 m] [0-5]% 
South Germany  [50-60 m ] [5-10]% [600- 700,000]  [5-10]% 
East Germany  [50-60 m ] [20-30]% [600- 700,000]  [20-30]% 
 
Table 13: SGBDD’s market shares on the market for r etail sales of CSUs to 
professional customers  in Germany and in German regions  
 
Total sales values 
all retailers in 
EUR in 2018 Market 
share 
SGBDD in 
value (EUR) 
in 2018  Total sales 
volume (m3) in 
2018 Market 
shares in 
volume in 
2018 
Germany  [400- 500 m ] [10-20]% [3-4 m] [10-20]% 
North Germany  [60-70 m ] [10-20]% [500- 600,000]  [10-20]% 
West Germany  [200- 300 m ] [5-10]% [1-2 m] [0-5]% 
South Germany  [60-70 m ] [10-20]% [600- 700,000]  [5-10]% 
East Germany  [100- 200 m ] [20-30]% [900,000- 1 m] [20-30]% 
 
(98) With regard to SGBDD’s competitors in the sales of AAC blocks and CSUs on the 
Germany -wide and local level, the Notifying Party submitted only approximations of 
market shares, maintaining that no other data is available or known to the Notifying 
Party.100 According to the Notifying Party, t hese approximations are based on 
                                                 
98  Form CO, Annex 13 -D. 
99  Form CO, Annex 13 ; RFI 15 dated 2 September 2019, response to question 1 dated 3 September 2019.  
100  Form CO, paragraphs 242 et se q.; Form CO, Annex 13 -E. 
 
 
26 several assumptions in relation to purchase and sales volumes of SGBDD’s 
competitors and therefore may deviate from market  reality101. 
(99) The approximations indicate that in respect of AAC blocks, SGBDD commands the 
highest market shares on a Germany -wide level with [10-20]%102, followed by 
BayWa with [5-10]% and Bauking, Union Bau zentrum Hornbach and Raiffeisen 
Waren each with  [0-5]%. SGBDD is also market leader in East Germany, with 
[20-30]%103, followed by Raiffeisen Waren with [5-10]% and BayWa holding 
[0-5]%. SGBDD is not , however, market leader in the sale of AAC blocks in North 
Germany, where, according to the market share a pproximation, it is the fifth largest 
retailer with [0 -5]%104, in West Germany as the third largest retailer with [5 -10]%105 
and South Germany  as the third largest retailer with  [5-10]%106.  
(100)  The same applies to SGBDD’s approximations of market shares of CSUs’ sales.  On 
the national level  it would hold the highest market share with [10- 20]%107, followed 
by Bauking with [5-10]% and Team baucenter, Henri Benthack and 
Krüger+Scharnberg each with [0 -5]%. In East Germany, SGBDD would hold the 
highest market shares with  [30- 40]%108, with Bauking holding [5 -10]% and 
Rothkelgel with [0 -5]% being the second and third strongest competitor. SGBDD is 
fifths largest retailer with [5 -10]%109in North Germany. In West Germany , it would 
hold [5-10]%110 and be the third strongest retailer and in South Germany on fourth 
position with [5-10]%111. 
                                                 
101  Form CO, paragraphs 243 to 255.  
102  The Notifying Party’s estimate for SGBDD’s market share Germany -wide is [10 -20]%; Table 12 of this 
decision.  
103  The Notifying Party’s estimate for SGBDD’s market share in East Germany is [20 -30]%; Table 12 of this 
decision.  
104 The Notifying Party’s estimate for SGBDD’s market share in North Germany is [5 -10]%; Table 12 of this 
decision.  
105  The Notifying Party’s es timate for SGBDD’s market share in West Germany is [0 -5]%; Table 12 of this 
decision.  
106  The Notifying Party’s estimate for SGBDD’s market share in South Germany is [5 -10]%; Table 12 of this 
decision.  
107  The Notifying Party’s estimate for SGBDD’s market share Germany -wide is [10 -20]%; Table 13 of this 
decision.  
108  The Notifying Party’s estimate for SGBDD’s market share in East Germany is [20 -30]%; Table 13 of this 
decision.  
109 The Notifying Party’s estimate for SGBDD’s market share in North Germany is [10 -20]%; Table 13 of this 
decision.  
110  The Notifying Party’s estimate for SGBDD’s market share in West Germany is [5 -10]%; Table 13 of this 
decision.  
111  The Notifying Party’s est imate for SGBDD’s market share in South Germany is [10 -20]%; Table 13 of 
this decision.  
 
 
27 (101)  With respect to AAC l arge format units  for residential construction, according to the 
Notifying Party, proxy estimates of SGBDD ’s market shares are presented in Tab le 
14.  
Table 14: Proxy estimates of SGBDD’s  market shares for AAC large format units for 
residential construction (2018)112 
 
SGBDD’s  value of 
purchases from 
Xella in EUR in 
2018 SGBDD’s 
share of 
purchases 
from Xella by 
value (EUR) 
in 2018, in %  SGBDD’s total 
volume of 
purchases from 
Xella (m 3) in 
2018 SGBDD’s share 
of purchases 
from Xella by 
volume in 2018, 
in %  
Germany  [1-2 m] [10-20]% [less than 10,000]  [10-20]% 
North 
Germany  [less than 50,000]  [0-5]% [less than 200]  [0-5]% 
West Germany  [less than 50,000]  [0-5]% [less than 100]  [0-5]% 
South 
Germany  [less than 200,000]  [5-10]% [less than 500]  [5-10]% 
East Germany  [less than 2  m] [30-40]% [less than 10,000]  [30-40]% 
 
5.3.4. Vertically affected  markets  
(102)  Based on the market shares submitted by the Notifying Party , as presented in 
sections 5.3.2 and 5.3.3 of this decision , and based on  the methodology proposed and 
applied by the Notifying Party f or the purpose of calculating the market shares, the 
Transaction gives rise to the following vertically affected markets.  
(103)  As regards AAC blocks:  
(a) Upstream wholesale supply of AAC blocks by Xella and downstream retail 
distribution of AAC blocks to professional customers by SGBDD in 
Germany  (upstream [50-60]% by value, [40- 50]% by volume; downstream 
[10-20]% by value , [5-10]% by volume ); 
(b) Upstream wholesale supply of AAC blocks by Xella and downstream retail 
distribution of AAC blocks to professional customers by SGBDD in North 
Germany  (upstream [30-40]% by volume , [30-40]% by value ; downstream 
[5-10]% by value , [5-10]% by volume ); 
(c) Upstream  wholesale supply of AAC blocks by Xella and downstream retail 
distribution of AAC blocks to professional customers by SGBDD in West 
Germany  (upstream [30-40]% by volume , [30-40]% by value ; downstream 
[0-5]% by value , [0-5]% by volume ); 
(d) Upstream wholesale supply of AAC blocks by Xella and downstream retail 
distribution of AAC blocks to professional customers by SGBDD in South 
                                                 
112  RFI 14  dated 2 8 August 2019, response to question 1(d)  dated 29 August 2019.  
 
 
28 Germany  (upstream [70-80]% by volume , [70-80]% by value ; downstream 
[5-10]% by value , [5-10]% by volume ); 
(e) Upstream wholesale supply o f AAC blocks by Xella and downstream retail 
distribution of AAC blocks to professional customers by SGBDD in East 
Germany  (upstream [60-70]% by volume , [60-70]% by value ; downstream 
[20-30]% by value , [20- 30]% by volume ). 
(104)  As regards CSUs:  
(a) Upstream wholesale supply of CSUs by Xella and downstream retail 
distribution of CSUs to professional customers by SGBDD in Germany  
(upstream [30-40]% by value, [30-40]% by volume; downstream [10 -20]% 
by value , [10- 20]% by volume ); 
(b) Upstream wholesale suppl y of CSUs by Xella and downstream retail 
distribution of CSUs to professional customers by SGBDD in North  
Germany  (upstream [70-80]% by volume  and value ; downstream [10- 20]% 
by value , [10-20]% by volume ); 
(c) Upstream wholesale supply of CSUs by Xella and downstream retail 
distribution of CSUs to professional customers by SGBDD in East  Germany  
(upstream [40-50]% by volume  and value ; downstream [20 -30]% by value , 
[20-30]% by volume ). 
(105)  As regards AAC large format un its for re sidential construction , upstream wholesale 
supply of AAC large format units for residential construction by Xella and 
downstream retail distribution of AAC large format units for residential construction 
to professional customers by SGBDD in:   
(a) Germany  (upstream [90-100]% by volume and val ue; downstream 
[10-20]% by volume, [10- 20]% by value);  
(b) North Germany ( upstream [90-100]% by volume and value; downstream 
[0-5]% by volume and value);  
(c) West Germany (upstream [90-100]% by volume and value; downstream 
[0-5]% by volume, [0-5]% by value);  
(d) South Germany  (upstream [90-100]% by volume and value; downstream 
[5-10]% by volume, [5-10]% by value);  
(e) East Germany  (upstream [90-100]% by volume and value; downstream 
[30-40]% by volume, [30- 40]% by value).  
(106)  The Notifying Party submits that even if there were affected markets brought about 
by the proposed Transaction, it would not give rise to any significant impediment to 
effective competition by restricting downstream rivals’ access to an important input 
 
 
29 (input foreclosure) or by restricting upstream rivals’ access to a sufficient customer 
base (customer foreclosure).113 
5.3.5. Input foreclosure  
5.3.5.1. The Notifying Part y’s arguments  
(107)  The Notifying Party submits that there is no risk that the proposed Transaction 
would lead to input foreclosure. Post -Transaction , Xella would have neither  the 
ability nor the incentive to restrict access to its products vis -à-vis other distributors 
competing with SGBDD on the downstream level.114 
(108)  As regards ability, the Notifying Party submits that Xella would not have the ability 
to foreclose SGBDD’s downstream competitors from access to AAC blocks and 
CSUs as Xella’s products, and in particular AAC blocks, are not a ‘must have’ input 
for distributors of building materials. Moreover, any such attem pt would be 
unsuccessful given that AAC blocks account for a very small share of both 
downstream costs as well as downstream revenues.  More specifically, AAC blocks 
represented only [0 -5]% and CSUs only [0 -5]% of SGBDD ’s overall procurement 
costs in  2018. At the same time, SGBDD only gene rated EUR [less than 50] million 
and EUR  [less than 100]  million worth of revenue with AAC and CSU blocks 
overall (stock sales and project sales combined), while the overall turnover of 
SGBDD’s activities in distribution of  building materials amounted to 
EUR  [1-2 billion] .115 Therefore, the Notifying Party submits that AAC blocks and 
CSUs do not constitute an important input downstream.  
(109)  As regards incentive, the Notifying Party submits that an attempt to foreclose 
competitors of SGBDD would not be profitable against the background of SGBDD’s 
limited downstream market shares, because SGBDD is not an important wholesale 
customer for producers like Xella. Moreover, any potential benefits for SGBDD on 
the downstream market would be  outweighed by the loss of profits for Xella on the 
upstream market, not only because SGBDD is one of Xella’s less important 
customers, but also because upstream margins are considerably larger than 
downstream margins. Therefore, the merged entity would not have any economic 
incentive to carry out input foreclosure.  
(110)  As regards AAC large format units for residential construction, the Notifying Party 
submits that Xella does not sell such products  separately  but only as part of a 
“complete Ytong system” , which includes other materials such as AAC blocks.116 
Therefore, the Notifying Party contends that Xella would have neither  the ability nor 
the incentive to restrict access to its AAC large format units for residential 
construction vis -à-vis other distributors competing with SGBDD on a downstream 
level.  Not only are the AAC large format units no “must have” inputs for the 
retailers, but also account for very limited sales volumes. With only [10- 20]% of the 
sales of this product to SGBDD, the Notifying Party maintains that any attempt to 
rely only on SGBDD for the distribution of the AAC large format units would be 
                                                 
113  Form CO, paragraphs 267 -  270. 
114  Form CO, paragraph 271 et seq.  
115  Form CO, paragrap h 275.  
116  Form CO, paragraph 111.  
 
 
30 unprofitable and hence without any incentive for Xella. Finally, Xella would face 
repercussions if such strategy alienates other retailers.117 
5.3.5.2. The Commission’s assessment  
(111)  The Commission notes that certain retailers responding to the Commission’s market 
investigation rais ed concerns as regards the impact of the Transaction on their 
business, and in particular the impact if Xella were to stop supplying or raise prices 
for building materials for their company post -Transaction.118 However, the majority 
of retailers responding t o the Commission’s market investigation found it unlikely 
that Xella would stop supplying building materials to their company or raise prices 
of building materials for their company.119 The Commission considers that the 
Transaction does not give rise to comp etition concerns related to input foreclosure 
with respect to AAC blocks , CSUs  or AAC large format units for residential 
construction due to the following reasons.  
(A) AAC blocks  
(112)  The Commission notes that the assessment presented in this section is applicable to 
all affected markets listed in paragraph (103)  as the competitively relevant 
conditions are similar for all these geographic markets.  
(113)  The Commission notes that while Xella’s market shares  in Germany nationwide and 
in several German regions are high on the upstream market of wholesale sale of 
AAC blocks to retailers, the shares of SGBDD downstream on the retail sale to 
professional customers are considerably lower .  
(114)  As shown in Table 1, Xella’s market share upstream in Germany is [40 -50]% by 
volume and [50- 60]% by value for AAC blocks. On a local level, Xella’s market 
share is hi gher in South Germany ( [70-80]% by volume) and in East 
Germany  ([60-70]% by volume), while Xella’s position is weaker in the North and 
West ( [30-40]% by volume in both regions).  
(115)  As shown in Table 12, SGBDD’s market share downstream is significantly lower, 
accounting for [10- 20]% (by value) of the distribution of AAC blocks to professional 
customers in Germany. On a local level SGBDD’s market shares are even lower 
(below 10% by value) in all regions except for East Germany, where its market share 
is higher ( [20-30]% by value).  
(116)  However, even under the narrowest plausible market definition, under which AAC 
blocks constitute a separate product market and under which the geographic market 
is local with four regions in Germany, the Commission considers that Xella’s ability 
and incentive to engage in input foreclosure post -Transaction would be  very limited. 
Therefore, the Transaction is unlikely to result in a significant impedime nt to 
effective competi tion due to input foreclosure.  
(117)  First, the Commission considers that it is not likely that Xella would have the ability 
to engage in an input foreclosure strategy post -Transaction.  
                                                 
117  RFI 14  dated 2 8 August 2019, response to question 2  dated 29 August 2019.  
118 Replies to Q1 –  Questionnaire to Retailers, q. 22, q. 23, q. 24.  
119  Replies to Q1 –  Questionnaire to Retailers, q. 23.  
 
 
31 (118)  In the first place, the Commission’s market investigation indicated that Xella’s AAC 
blocks are not an important input for retailers of building materials. Retailers’ 
purchases from Xella do not constitute a significant proportion of their overall 
purchases of building materials, indicating that the  portfolio of products distributed 
by the retailers is much wider than products offered by Xella.120 AAC blocks are just 
one of Xella’s products, and therefore represent an even smaller proportion of the 
retailers’ overall purchases. This is also confirmed  by SGBDD. For SGBDD, AAC 
blocks represented only [0 -5]% of its overall procurement costs in 2018. At the same 
time, SGBDD only generated revenues of EUR [less than 50] million with AAC 
blocks overall (stock sales and project sales combined), while the overa ll turnover of 
its activities in distribution of building materials amounted to EUR [1 -2 billion] .121 
(119)  In the second place , the large majority of retailers responding to the Commission’s 
market investigation did not consider a specific brand, such as Xella’s Ytong  brand, a 
very important  product for their business.122 
(120)  In the third place , the Commission’s market investigation clearly indicated that for 
retailers, Xella’s AAC blocks are substitutable in terms of product specifications, 
price and customer preferences with the same or similar types of products offered by 
competitors of Xella.123 This was also confirmed by Xella’s competitors upstream124 
and a majority of end customers.125 The Commission’s investigation did not indicate 
that there would be differences in the quality of the AAC blocks from different 
producers.  
(121)  In the f ourth place, even in the areas where Xella achieves high market shares  for 
AAC blocks , such as in East and South Germany, the Commission’s investigation 
indicated that there are smaller regional players present who could supply retailers if 
there were  foreclosed by Xella.  Many retailers indicated that in such a scenario, they 
would for instance focus on finding alternatives, start buying AAC blocks from 
Xella’s competitors and stop their business relationship with Xella.126 Based on the 
Notifying Party’s submissions, Xella’s sales of AAC blocks in 2018 amounted to 
EUR [less than 200,000]  out of its total sales of all products worth EUR [less 
than 500,000]  (out of which EUR [less than 500,000]  were sales made through 
retailers).127 As such, AAC blocks account for ca. [30- 40]% of Xella’s overall sales 
in Germany. Therefore, an input foreclosure strategy by Xella could put at risk a 
larger part of its  revenues if retailers would stop their business relationship with 
Xella.  
(122)  Second , the Commission considers that it is not likely that Xella would have the 
incentive to engage in an input foreclosure strategy post -Transaction. 
                                                 
120 Replies to Q1 –  Questionnaire to Retailers, q. 6.  
121  Form CO, paragraph 275.  
122  Replies to Q1 –  Questionnaire to Retailers, q. 18.  
123  Replies to Q1 –  Questionnaire to Retailers, q. 19.  
124  Replies to Q2 –  Questionnaire to Producers, q. 24.  
125  Replies to Q3 –  Questionnaire to End customers, q. 12.  
126  Replies to Q1 –  Questionnaire to Retailers, q. 25 and q. 26.  
127  Form CO, Annex 9.  
 
 
32 (123)  In the first place , the Notif ying Party’s  submissions  and feedback from the market 
indicated that the margins achieved by producers of AAC blocks are roughly twice 
that achieved by retailers, which would limit the incentive for input foreclosure 
practices.  For instance, the screen mar gin of SGBDD for AAC blocks from projects 
sales in 2018 was [5 -10]%, while Xella’s gross margin for AAC blocks from project 
sales in 2018 was [30- 40]%. For stock sales of AAC blocks, Xella’s gross margin 
was [30-40]%, while SGBDD’s screen margin was [20- 30]%.128 Therefore, 
foreclosing competitors of SGBDD post -Transaction would not be profitable for 
Xella and thus the Notifying Party .  
(124)  In the second place, the Commission’s market investigation confirmed the 
fragmented nature of the distribution market on the level of retailers. Two large 
purchasing cooperatives that are present across Germany, namely Hagebau and 
Eurobaustoff, represent large number of smaller retailers in the procurement of 
building materials, including AAC blocks. Given that SGBDD accounts for 
only [10- 20]% of the distribution of AAC blocks to professional customers in 
Germany, it is unlikely that Xella could rely only on SGBDD for the distribution of 
AAC blocks. As a result of such strategy, Xella would likely considerably reduce the 
sales of  its AAC blocks, which given the higher margins upstream would be 
economically unprofitable. Moreover, half of the respondents to the Commission’s 
market investigation active on the upstream level indicated that they could expand 
capacity to satisfy additi onal demand for their products.129 Therefore , it would seem 
that in all plausible markets SGBDD’ s competitors would still have a choice of 
suppliers  that would be able to supply  the required quantities of AAC blocks . In 
addition, the purchasing cooperatives seem to have strong purchasing power, which 
allows them to negotiate prices with producer like Xella. Given their large presence 
and commercial importance, it is unlikely that Xella would have the incentive  to 
foreclose their access to AAC blocks.130 
(125)  Third, the Commission considers that it is unlikely that the downstream rivals’ costs 
would increase as a result of the Transaction. In fact, SGBDD’s downstream rivals 
include purchasing cooperatives whose purchasing power on the market would likely 
counterbalance any attempt by  Xella to pursue an input foreclosure strategy. Thus, 
they would be able to continue procuring AAC blocks without increased costs. 
Moreover, as reported in paragraph (111) , majority of retailers that responded to the 
Commission’s market investigation found it unlikely that Xella foreclose input for 
their company. Therefore, the Transaction is unlikely to result in a significant 
impediment to effective competition due to input foreclosure.  
(126)  Therefore, taking into account the results of the Commission’s market investigation 
and the evidence provided by the Notifying Party , the Commission considers that it 
is not likely that the “merged entity ” would have t he ability and/or incentive to 
engage post -Transaction in an input foreclosure strategy in any of the plausible 
markets.  
                                                 
128  Form CO, paragraph 72, Table 3; paragraph 76, Table 5; paragraph 81, Table 7.  
129  Replies to Q1 –  Questionnaire to Retailers, q. 32.  
130   Minutes  of a call with a market participant  dated 1 July 2019: According to this market participant, Xella 
cannot afford to sell only to SGBDD as it would face retaliation from large purchasing cooperatives.  
 
 
33 (B) CSUs  
(127)  The Commission notes that the assessment presented in this section is applicable to 
all affected markets listed in paragraph (104)  as the competitively relevant 
conditions are similar for all these geographic markets.  
(128)  The Commission notes that while Xella’s market share s in Germany nationwide and 
in several German regions are high on the upstream market of wholesale sale of 
CSUs to retailers, the shares of SGBDD downstream on the retail sale to 
professional customers are considerably lower.  
(129)  As shown in Table 6, Xella’s market share upstream for CSUs in Germany is 
[30-40]% by volume and [30- 40]% by value, which is considerably lower than its 
nationwide market share for AAC blocks. On a local level, Xella’s market share is 
higher in North Germany ( [70-80]% by volume) and in East Germany ( [40-50]% by 
volume), while Xella’s position is weaker in the West and South ( [20-30]% 
and [5-10]% by volume respectively).  
(130)  As shown in Table 13, SGBDD’s market share downstream is significantly lower, 
accounting for [10- 20]% (by value) of the distribution of CSUs to professional 
customers in Germany. On a local level SGB DD’s market shares are even lower 
(below [10-20]% by value) in all regions except for East Germany, where its market 
share is higher ( [20-30]% by value).  
(131)  However, even under the narrowest plausible market definition, under which CSUs  
constitute a separate product market and under which the geographic market is local 
with four regions in Germany, the Commission considers that Xella’s ability and /or 
incentive to engage in input foreclosure post -Transaction would be  very limited.  
Therefore, the Transaction is unlikely to result in a significant impediment to 
effective competition due to input foreclosure . 
(132)  First, the Commission considers that it is not likely that Xella would have the ability 
to engage in an input foreclosure strategy post -Transaction.  
(133)  In the fi rst place, similarly as with regard to the AAC blocks, the Commission’s 
market investigation indicated that Xella’s CSUs are not an important input for 
retailers of building materials. Retailers’ purchases from Xella do not constitute a 
significant proport ion of their overall purchases of building materials, indicating that 
the portfolio of products distributed by the retailers is much wider than products 
offered by Xella.131 CSUs are just one of Xella’s products, and therefore represent an 
even smaller proportion of the retailers’ overall purchases. This is also confirmed by 
SGBDD. For SGBDD, CSUs represented only [0 -5]% of SGBDD’s overall 
procurement costs in 2018. At the sa me time, SGBDD only generated 
EUR  [less  than 100] million worth of revenue with CSUs overall (stock sales and 
project sales combined), while the overall turnover of SGBDD’s activities in 
distribution of building materials amounted to EUR [1 -2 billion] .132  
                                                 
131 Replies to Q1 –  Questionnaire to Retailers, q. 6.  
132  Form CO, paragraph 275.  
 
 
34 (134)  In the second place, the Commission’s market investigation did not indicate that 
Xella’s brand for CSUs ( Silka ) would be a very important  product for retailers.133 
(135)  In the third place , as in the case of AAC blocks, the Commission’s market 
investigation clearly  indicated that for retailers, Xella’s CSUs are substitutable in 
terms of product specifications, price and customer preferences with the same or 
similar types of products offered by competitors of Xella.134 This was also confirmed 
by Xella’s competitors ups tream135 and a majority of end customers.136 The 
Commission’s investigation did not indicate that there would be differences in the 
quality of the CSUs from different producers.  
(136)  In the fourth place , even in the areas where Xella achieves high market shares  for 
CSUs , such as North  and East Germany, the Commission’s investigation indicated 
that there are smaller regional players present who could supply retailers if there 
were  foreclosed by Xella.  As in the case of AAC blocks, many retailers indicated 
that in such scenario, they would for instance focus on finding alternatives, start 
buying CSUs from Xella’s competitors and stop their business relationship with 
Xella.137 
(137)  Second , the Commission considers that it is not likely that Xella would have the 
incentive to engage in an input foreclosure strategy post -Transaction. 
(138)  In the first place, the Notifying Party’s  submissions  and feedback from the market 
indicated that the margins achieved by producers of CSUs are roughly twice that 
achieved by retailers, which would limit the incentive for input foreclosure practices.  
For instance, the screen margin of SGBDD for CSUs from projects sales in 2018 
was [5-10]%, while Xella’s gross margin for CSUs from projec t sales in 2018 was 
[20-30]%. For stock sales of CSUs, Xella’s gross margin was [30- 40]%, while 
SGBDD’s screen margin was [30- 40]%.138 Therefore, foreclosing competitors of 
SGBDD post -Transaction would not be profitable for Xella and thus the Notifying 
Party . 
(139)  In the second place , the fragmentation of the retailers market and the role of the 
purchasing cooperatives is similar with regard to CSUs as in the case of AAC 
blocks, assessed in paragraph (124) . 
(140)  Third, the Commission considers that it is unlikely that the downstream rivals’ costs 
would increase as a result of the Transaction. In fact, SGBDD’s downstream rivals 
include purchasing cooperatives whose purchasing power on the market would likely 
counterbalance any attempt by Xella to pursue an input foreclosure strategy. Thus, 
they would be able to continue procuring CSUs  without increased costs. Moreover, 
as reported in paragraph (111) , majority of retailers that responded to the 
Commission’s market investigation found it unlikely that Xella foreclose input for 
their company. Therefore, the Transaction is unlikely to result in a significant 
impediment to effective competition due to input foreclosure . 
                                                 
133  Replies to Q1 –  Questionnaire to Retailers, q. 18.  
134  Replies to Q1 –  Questionnaire to Retailers, q. 21.  
135  Replies to Q2 –  Questionnaire to Producers, q. 26.  
136  Replies to Q3 –  Questionnaire to End customers, q. 14.  
137  Replies to Q1 –  Questionnaire to Retailers, q. 25, q. 26.  
138  Form CO, paragraph 72, Table 3; paragraph 76, Table 5; paragraph 81, Table 7.  
 
 
35 (141)  Therefore, taking into account the results of the Commission’s market investigation 
and the evidence provided by the Notifying Party , the Commission considers that  it 
is unlikel y that the “merged entity ” would have the ability and/or incentive to engage 
in an input foreclosure strategy post -Transaction in any of the plausible markets.  
(C) AAC large format units for residential construction  
(142)  The Commission notes that AAC large format u nits for residential construction are 
indirectly sold through retailers. However, as regards Xella’s AAC large format units 
for residential construction, the Notifying Party submits that those are only sold as 
part of a “complete Ytong  solution” and not as  a separate product. Given that Xella’s 
market share in this hypothetical narrow product market in Germany amounts to 
100%  and the products are only sold as part of the “complete Ytong solution” , it 
follow that these products are not sold as a standalone products in general. T he 
Commission’s market investigation indicate d that Xella’s Ytong brand is indeed the 
only brand available for these products.139 
(143)  However, based on the submissions made by the Notifying Party and the 
Commission’s investigation, the Commission considers that these products 
constitute a niche product that can only be used for the construction of single -family 
houses and only if a customer chose to build a complete Ytong system single -family 
house. In 2018, such houses represented only [0 -5]% of the total number of single -
family houses built in that  year in Germany.140 
(144)  In 2018, the value of Ytong  AAC large format units represented only a m arket value 
of EUR [less than 20]  million . In comparison, other elements that are available for a 
similar use such as concrete floor elements and full assembly floor  made  out of 
reinforced concrete, while arguably in different product market s, represented value 
of EUR  170 and 230 million respectively.141 Moreover, the revenues from the Ytong 
system do not represent a considerable part of the retailers’ revenues and are not a 
very important product for retailers in general. This is due to the fact that retaile rs’ 
portfolio includes a large variety of building materials.142 Moreover, only [0 -5]% of 
single -family houses in 2018 in Germany were built with a complete Ytong  system, 
which further indicates the limited application of this system.143 As regards SGBDD, 
in 2018, Xella’s total sales to SGBDD of all products (that is including AAC blocks, 
CSUs, and large format units as well as any other ancillary products) amounted to 
EUR [less than 50]  million.144 While the Target did not provide information as to the 
amount of  revenues achieved from the Ytong system, the Ytong system is unlikely to 
be of any significance to SGBDD’s revenues given its overall turnover of 
EUR  [1-2 billion]  achieved in building materials sold to professional customers.145 
Therefore,  the lack of access to an Ytong system would not have an effect on the 
retailers’ business.  
                                                 
139  Replies to Q1 –  Questionnaire to Retailers, q. 18.  
140  Form CO, paragraph 111 and 136.  
141  Form CO, paragraph 135, Table 14.  
142  Replies to Q1 –  Questionnaire to Retailers, q. 1 and q.5.  
143  Form CO, paragraphs 111 and 136.  
144  Form CO, Annex 9.  
145  Form CO, Annex 13.  
 
 
36 (145)  Moreover, sales of the Ytong system through SGBDD are likely to represent only a  
part of the overall Ytong  system sales.  As can be seen from Table 14, SGBDD’s 
shares with regards to AAC large format units for residential construction do not 
indicate that SGBDD would be the only retailer selling such products. Given that 
these products are o nly sold as part of the Ytong  system, it should therefore follow 
that also other retailers are active in the distribution on the retail level of Ytong  
systems.  Therefore, the Notifying Party is unlikely to limit the sales just to SGBDD.  
(146)  Given the limited application of the Ytong AAC large format units and the fact that 
they are sold only as part of an Ytong system together with other Ytong products, 
such as AAC blocks, it can be considered that Xella’s revenues and thus any market 
power would be derived fr om these main products, for which there are competing 
products for customers, and not the “complementary” AAC large format units.  
(147)  Moreover, given that Xella’s AAC large format units for residential construction are 
sold as part of project sales, which can  also be initiated by retailers, Xella and thus 
the Notifying Party would not have the incentive to foreclose competing retailers of 
SGBDD as it would lose sales to those retailers without having the possibility to 
recoup the lost sales. This is also due t o the niche nature of the product and the 
limited use.  
(148)  Therefore, the merged entity is unlikely to have the ability and incentive to engage in 
input foreclosure strategy with regard to AAC large format units post -Transaction  
and it is also unlikely that th e Transaction would result in a significant impediment 
to effective competition due to input foreclosure.  
5.3.6. Customer foreclosure   
5.3.6.1. The Notifying Party’s arguments  
(149)  The Notifying Party submits that there is no risk that the proposed Transaction 
would lead to customer foreclosure  with regard to AAC blocks and CSUs . Post -
Transaction, the merged entity would have neither the ability nor the incentive to 
impede or restrict access to a sufficient customer base for Xella’s actual or potential 
rivals on the upstream ma rket.146  
(150)  As regards ability, the Notifying Party submits that the merged entity would not have 
the ability to foreclose competing upstream suppliers from access to customers. 
According to the Notifying Party, Xella’s AAC large format units for residential 
construction are in competition with a variety o f substitutes, which have been chosen 
as the preferred technical solution in [90-100]% of the new single -family houses in 
Germany. As such, these upstream rivals would have a choice between a large 
number of major or smaller retailers in every region of Germany.147 SGBDD’s 
presence downstream is limited. Even where SGBDD is the largest player 
downstream, as in the Berlin- Brandenburg region, it is not the most important 
customer, as purchasing cooperative such as  Eurobaustoff and Hagebau are larger.148 
                                                 
146  Form CO, paragraph 292 et seq.  
147  RFI 14  dated 2 8 August 2019, response to question 2  dated 29 August 2019.  
148  Form CO, paragraph 294.  
 
 
37 (151)  As regards incentive, the Notifying Party submits that Xella and SGBDD would 
have no incentive to engage in customer foreclosure. Excluding Xella’s competitors 
from its list of suppliers would not make economic sense for SGBDD as the 
downside of losing such alternative sources of supply would outweigh any potential 
benefits for SGBDD or Xella. AAC large format units for residential c onstruction 
play an insignificant role in SGBDD’s portfolio.149 The costs of not procuring from 
Xella’s upstream competitors would be high because SGBDD would lose a large 
number of downstream sales that are necessarily tied to a specific competitor brand. 
Thus, it would not be profitable for SGBDD to adopt a single -brand business 
strategy.150 
(152)  Eventually, the Notifying Party maintains that there would be no impact on effective 
competition on the market, mainly because of SGBDD’s small presence on the 
downstream  market and high upstream margins of Xella’s competitors, who could 
easily allow them to maintain their sales levels.151 
5.3.6.2. The Commission ’s assessment  
(153)  The Commission notes that certain m arket participants  active on the upstream level 
raised concerns  as regards  potential customer foreclosure  in respect of AAC blocks 
and CSUs  and the impact of the Transaction on their business .152  
(154)  However , the Commission considers that the proposed Transaction does not give rise 
to competition concerns related to customer foreclos ure with respect to AAC blocks , 
CSUs and AAC large format units for residential construction  due to the following 
reasons .  
(155)  The Commission notes that the assessment presented in this section is applicable to 
all affected markets listed in paragraphs (103)  and (104)  as the competitively 
relevant conditions are similar for all these geographic markets. For the sake of 
completeness, an assessment for the affected market listed in paragraph (105)  is not 
developed further due to the fact tha t if the hypothetical product market was limited 
to constitute only AAC large format units for residential construction, no customer 
foreclosure could be undertaken by Xella as Xella is the only producer of such 
products in Germany  (105) . On the other hand, if the product market was broader 
and included other substitutable products, customer foreclosure would be unlikely 
given that alternatives would be available.  
(156)  First, the Commission considers  that SGBDD does not have the  ability to foreclose 
access for upstream suppliers other than Xella to customers active on the 
downstream markets. SGBDD is not an important customer  for Xella and Xella’s 
competitors upstream . Accor ding to statements from market participants, the 
strongest players on the downstream  market are purchasing cooperatives that 
represent hundreds of smaller retailer s for the procurement of building materials and 
are present across  the whole of Germany.153  
                                                 
149  RFI 14  dated 2 8 August 2019, response to question 2  dated 29 August 2019.  
150  Form CO, paragraph 295.  
151  Form CO, paragraph 296.  
152  Replies to Q2 –  Questionnaire to Producers, q. 27 and q. 28.  
153  Minutes of a call with a retailer dated 30 July 2019.  
 
 
38 (157)  Second , although SGBDD is the largest retailer for building materials Germany -
wide, its market share  on the market for retail sales of building materials to 
professional customers in Germany  is modest with [5 -10]%. In addition, as can be 
seen from Table 11, the market for retailers  of building materials  is largely  
fragmented . Therefore, competitors of Xella should be able to sell their AAC blocks 
and CSUs to a  range of  alternative retailers  even if Xella were to foreclose their 
access to SGBDD post -Transaction .  
(158)  Third, e ven when considering the sales of AAC blocks  and CSUs specifically in East 
Germany, where SGBDD holds the strongest position amongst several regions 
within  Germany, its market shares do not exceed [30- 40]%154. Therefore,  SGBDD's  
importance for reaching end customers in Germany or in specific German regions is 
not significant  and the Commission’s market investigation did not yield any 
indication to the contrary.155 Therefore , the Commission does not consider SGBDD 
to have significant market power in the downstream market. As such, it is unlikely 
that the merged entity would be able to increase the cost of its upstream competitors 
to access downstream custo mers or by restricting access to a significant customer 
base.  
(159)  Fourth, g iven that margins on the upstream market  are considerable, as presented in 
paragraphs (122)  and (137) , the Commission finds that even in the event that  
competitors such as H+H, Porit and Unika would initially incur sales losses  because 
of a customer foreclosure strategy, they would be in the position to implement price -
related counterstrategies  in order to recover and to maintain their sales levels . Such 
strategies could include decreasing the price of their products in order to regain sales 
volumes. Given that the upstream producers enjoy a margin buffer, they could afford 
to implement such strategy and thus a customer foreclosure strategy would likely be 
unprofitable for Xella. Therefore,  Xella is unlikely to have an incentive to engage in 
customer f oreclosure post -Transaction. 
(160)  Fifth, it is unlikely that SGBDD’s rivals downstream would be at competitive 
disadvantage given SGBDD’s limited power downstream and the position of Xella’s 
rivals upstream. Therefore, the Transaction is unlikely to result in a  significant 
impediment to effective competition due to customer foreclosure.  
(161)  Therefore, taking into account the results of the Commission’s market investigation 
and the evidence provided by the Notifying Party , the Commission considers that  it 
is unlikely  that the “merged entity ” would have the ability and/or incentive to engage 
in a customer foreclosure strategy post -Transaction in any of the plausible markets.  
5.3.7. Conclusion on vertical effects  
(162)  In light of the considerations in sections  5.3.5 and 5.3.6, the Commission concludes 
that the proposed Transaction does not give rise to serious doubts about its 
compatibility with the internal market or  the functioning of the EEA Agreement due 
to input or customer foreclosure as regards the markets  of AAC blocks, CSUs and 
AAC large format units for residen tial construction .  
                                                 
154  This does not apply to the approximations provided by the Notifying Party  for East Germany for CSUs, as 
explained in paragraph 100 of this decision. However, the limitations of accuracy of the approximations 
are explained in paragraph 98 of this decision . 
155  Replies to Q3 –  Questionnaire to End customers, q. 3.  
 
 
39 6. CONCLUSION  
(163)  For the above reasons, the European Commission has decided not to oppose the 
notified operation and to declare it compatible with the internal  market and with the 
EEA Agreement. This decision is adopted in application of Arti cle 6(1)(b) of the 
Merger Regulation and Article 57 of the EEA Agreement .  
For the Commission 
 
 
(Signed)  
Margrethe VESTAGER  
Member of the Commission