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, 28.2.2019  
C(2019 ) 1798 final  
  
 
 
To the notifying parties  
 
Subject : Case M. 8773  - LETTERONE / BASF  / WINTERSHALL  DEA  
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 24 January 2019 , the European Commission  received notification of a 
proposed concentration pursuant to Article 4 of the Merger Regulation by which 
LetterOne Holdings (“LetterOne” ) and BASF S.E. (“BASF” ) will acquire within 
the meaning of Article 3(1)(b) and 3(4) of the Merger Regulation joint control of 
Wintershall DEA , by way of purchase of shares in a newly created company 
constituting a joint venture (the “Transaction”) .3 LetterOne and BASF are 
collectively referred to as the “Notifying Parties ”. 
1. THE PARTIES  
(2) LetterOne  is a private investment holding company focusing on investments in 
the energy sector. LetterOne owns DEA Deutsche Erdoel AG, an international 
exploration and production company for oil and gas . 
                                                 
1  OJ L 24, 29.1.2004, p. 1 (the 'Merger Regulation '). With effect from 1 December 2009,  the Treaty 
on the Functioning of the European Union ( 'TFEU ') has introduced certain changes, such as the 
replacement of  'Community ' by 'Union ' and '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').  
3  Publication in the Official Journal of the European Union No C 038, 31.01. 2019 , p. 20. 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omitted has been replaced by ranges of figures or a 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.  PUBLIC VERSION  
2 (3) BASF  is mainly active in the chemical  sector, with a portfolio split into 
chemicals, performance products, functional materials and solutions, agricultural 
solutions and oil and gas. BASF owns Wintershall Holding GmbH , which is 
active in the exploration and production of oil and gas inter ali a in Europe . 
(4) In Wintershall DEA , LetterOne and BASF  will combine Wintershall’s and 
DEA’s business es in the exploration and production of oil and gas . In addition, 
Wintershall DEA will also , to a limited extent , be active  in gas transportation.  
2. THE CONCENTRATION  
(5) The Transaction consists in the formation of a full -function joint venture (the 
“JV”) Wintershall DEA, between BASF in relation to its Wintershall’s business, 
and LetterOne in relation to its DEA Group’s business.4  
2.1. Joint control  
(6) While Letter One and BASF will hold respectively 33% and 67% in Wintershall 
DEA, the Transaction consists of the creation of a company jointly controlled by 
the Notifying Parties. The JV will have three corporate bodies:  
(a) A Management Board , in charge of the day -to-day operations of the JV;  
(b) A Shareholder’s Meeting , whose approval is necessary for some of the 
strategic decisions, namely the annual budget and relating business plans, 
during the Initial Period (i.e. the period until the earlier of an initial public 
offering5 or the expiry of […] following Closing), and in which 
shareholders exercise their voting rights in proportion with their 
shareholding  and take decisions with a simple majority ; 
(c) A Supervisory Board , whose approval is necessary for some of the 
strategic de cisions, such as on the annual budget and relating business 
plans as well as the appointment of the members of the management 
board, after the Initial Period. The Supervisory Board consists of […] 
members – […] employee representatives, […] BASF members an d […] 
LetterOne members - and takes decisions by […]. 
(7) In addition, the JV will have a shareholders’ committee  (“SC”), in which the 
strategic decisions, such as the determination of the business plan, the approval or 
amendment of the annual budget and the approval of any investment exceeding 
[…], are discussed beforehand. The purpose of the SC is to coordinate the  
interests of the parents, to pre -align their views and resolve any strategic 
decisions on the agenda of the upcoming Shareholder’s Meeting or Supervisory 
Board meeting.  
                                                 
4  For the sake of completeness, we note that in parallel to the Transaction, DEA has divested all its 
natural gas storage business in Germ any, as per a transaction that was approved by the 
Bundeskartellamt and completed on 1 January 2019.  
5  By the initial public offering (“IPO”), Wintershall DEA will become a publicly listed company on 
the Frankfurt or other stock exchange. […].  
3 (8) During the Initial Period, decisions in the SC are taken by […], by lack of which 
the respective resolution is dropped and the matter will not be discussed at the 
level of the respective corporate body. Also, the shareholders have the obligation 
to use their influence to ensure that decisions at the level of the Shareholders’ 
Meeting are t aken in accordance with the corresponding decision taken in the SC, 
which includes the obligation to uniformly exercise their voting rights in the 
Shareholders’ Meeting. As such, the SC can be considered a legally binding 
pooling agreement within the meani ng of paragraph 75 of the Jurisdictional 
Notice, determining the voting behaviour in the JV’s relevant corporate body.  
(9) In view of the above, the Notifying Parties jointly control Wintershall DEA in the 
Initial Period, which is in view of paragraph 34 of th e Jurisdictional Notice 
sufficiently long to constitute a lasting change of control.  
2.2. Full functionality  
(10) Wintershall DEA will be a joint venture performing on a lasting basis all the 
functions of an autonomous economic entity within the meaning of Article 3(4) of 
the Merger Regulation. As it is the entirety of both DEA’s and Wintershall’s 
already existing functioning standalone businesses that will be combined in the 
JV, the JV’s activities will consequently necessarily go beyond one specific 
function for t he parent companies, it will have its own presence on the market and 
will possess sufficient resources to operate independently. Furthermore, it will 
have its own management team6 that is free to determine its own commercial 
policy, in addition to independ ent employees. Also, it will possess all necessary 
regulatory authorisations, permits and licences to conduct its business. Lastly, the 
JV’s existence is not limited in time; the agreement can only be terminated as of 
the twentieth anniversary of Closing.  
3. EU DIMENSION  
(11) The undertakings concerned have a combined aggregate worldwide turnover of 
more than EUR 5 000 m illion7 (LetterOne: EUR 8  999 million BASF: EUR 
64 475 million) . Each of them ha s an EU-wide turnover in excess of EUR 250 
million  (LetterOne: […] BASF: EUR […]), but they do not achieve more than 
two-thirds of their aggregate EU-wide turnover within one and the same Member 
State. The notified operation therefore has a n EU dimension  pursuant to Article 
1(2) of the Merger Regulation . 
                                                 
6  Concret ely, the JV will have a management board in charge of its day -to-day operations, which 
shall consist of five managing directors, including one chairman – the chief executive officer – that 
will be appointed by BASF, and one deputy chairman – the deputy chi ef executive officer – that 
will be appointed by LetterOne. The other directors will be appointed by BASF and LetterOne by 
consensus.  
7  Turnover calculated in accordance with Article 5 of the Merger Regulation and the Commission 
Consolidated Jurisdictiona l Notice (OJ C  95, 16.4.2008 , p. 1).  
4 4. MARKET DEFINITIO N 
(12) The Transaction will give rise to two main horizontal overlaps in relation to (i) 
the exploration of crude oil and natural gas ; and (ii) the development, production 
and upstream supply of natural gas  (see Sections  4.1 and 4.2 below) . 
(13) For completeness, the Commission notes that the Transaction also results in 
horizontal over laps in relation to  (i) the development, production and upstream 
supply of crude oil, and (ii) the development, production and sale of natural gas 
liquids (“NGLs”) . Neither of these horizontal overlaps however lead to affected 
markets. Therefore, the Commission wi ll not discuss these markets any further in 
this decision.  
(14) Furthermore, the Transaction gives  rise to  the following vertical relationships : 
(a) the Notifying Parties’ activities in relation to the exploration of oil and 
natural gas (upstream) and their activit ies in the development, production 
and sale of (i) oil and (ii) natural gas (downstream);  
(b) BASF ’s activities in various oilfield solutions (upstream) and the 
Notifying Parties’ activities in each of (i) the exploration of crude oil and 
natural gas (downstream), (ii) the development, production and sale of 
crude oil (downstream) and (iii) the development, production and sale of 
natural gas  (downstream) ; 
(c) BASF ’s activities for various gas treatment products (upstream), and the 
Notifying Parties’ activities in each of (i) the development, production and 
sale of natural gas (downstream) and (ii) the development, production and 
sale of NGLs (downstream) ; 
(d) each of the Notifying Parties’ activities in relation to the production and 
sale of gas treatment products (upstream) and (i) BASF’s activities in the 
development, production and sale of natural gas (upstream) and (ii) DEA’s 
activities in the liquefaction of LNG ( down stream) ; 
(e) the Notifying Parties’ activities in relation to the development, production 
and sale  of natural gas (upstream) and Wintershall’s activities in the 
transport of natural gas (downstream) ; 
(f) the Notifying Parties’ activities in the development, production and sale of 
natural gas (upstream) and BASF’s activities in the production and sale of 
natural gas -based products ( down stream) ; 
(g) the Notifying Parties’ activities in the development, production and sale of 
natural gas (upstream) and (i) BASF’s activities in the production and sale 
of natural gas -based products (upstream), and (ii) Wintershall’s activities 
in the retail supply of natural gas (downstream) ; and 
5 (h) the Notifying Parties’ activities in the development, production and sale of 
NGLs (upstream) and BASF’s activities in the production and sale of 
NGL -based products .8  
(15) However, none of these vertical links lead to vertically affected markets.9 
Therefore, the Commission will not discuss these markets any further in this 
decision.  
4.1. Exploration of crude oil and natural gas  
4.1.1.  Product market definition  
The Commission’s decision -making practice  
(16) In previous decisions, the Commission has concluded that the exploration of 
crude oil and natural gas, i.e. the finding of new hydrocarbon reserves, constitutes 
a separate market.10 Furthermore , the Commission has considered  that no 
distinction is necessary between the exploration of crude oil  on the one hand  and 
the exploration of natural gas  on the other hand , as the contents of underground 
reservoirs cannot be known at the exploration stage.11 
The Notifying Parties ’ view  
(17) The Notifying Parties do not contest  the Commission’s decisional practice with 
regard to the product market definition.   
The Commission’s assessment  
(18) The market investigation has not  brought to light any indication that would 
contradict the Commission’s decisional practice to define a separate relevant 
product market for the exploration of oil and natural gas.  
(19) In light of the above, the Commission takes the view that the exploration o f oil 
and natural gas constitutes a separate relevant product market.  
                                                 
8  For completeness, as DEA divested its gas storage business on 1 January 2019. As such, no vertical 
link arises between the Notifying Parties’ activities in relation to the development, production and 
sale on the one hand, and DEA’s activities in gas storage on the other, or between DEA’s activities 
in gas storage and the Notifying Parties’ activities for the retail supply of natural gas . 
9  For the sake of completeness the Commission notes that should the market for the development, 
production and natural gas be defined on the narrowest basis both geographically (national) and 
regarding the relevant product market, the Transaction leads to technically vertically affected 
markets between the worldwide market for exploration of oil and natural gas (upstream) and the 
development, production and sale of L -gas in Germany (downstream). In view of the very limited 
market shares of the Notifying Parties on the upstream market, as well as the declining downstream 
market (see section 5.1.2), the Commission takes the view that input or customer foreclosure is 
unlikely to occur.  
10  M.7318, Rosneft / Morgan Stanley Global Oil Merchanting unit , paras. 9-10; M.5629, Normenston / 
Mol / JV , paras. 10 -11; M.5585, Centrica / Venture Production , paras. 8 -9; M.4934, Kazmunaigaz / 
Rompetrol , para. 3; M.3294, Exxonmobil / BEB , para. 11 ; M.3086, Gaz de France / Preussag 
Energie , paras. 8-10. 
11  M.3294, Exxonmobil  / BEB , para. 16.  
6 4.1.2.  Geographic market definition  
The Commission’s decision -making practice  
(20) In previous decisions,  the Commission has defined the market for exploration of 
oil and natural gas as worldwide in  scope12 as the companies engaged in 
exploration do not tend to limit their activities to a particular geographical area .13  
The Notifying Parties’ view  
(21) The Notifying Parties agree with the Commission’s decisional practice to define 
the market for the explor ation of oil and natural gas as worldwide in scope.14  
(22) In this regard, the Notifying Parties  submit that the licensing system is highly 
competitive and open to companies worldwide. They consider that national 
differences in the regulatory framework do not w arrant the definition of national 
markets. Furthermore, the companies looking to acquire exploration licen ces will 
consider projects at least on a European -wide basis.15 Therefore , the Notifying 
Parties consider that no Member State  (MS) constitutes a national market with 
regard to the exploration of oil and gas.16 
The Commission’s assessment  
(23) The market investigation  indicated that the geographic scope of the activities of 
companies in oil and natural gas exploration differs. Indeed, while there are a 
number of companies active on a worldwide basis, some smaller competitors only 
hold licences in some or even one  MS.17 
(24) In particular, two of the competitors responding to the market investigation 
suggested that Germany constitutes a separate – national – geog raphic market due 
to certain regulatory mechanisms and subsurface data ownership and 
availability.18 
(25) However, the vast majority of respondents consider s that there are no barriers to 
entry into any specific regions or Member States . Moreover,  the majority o f the 
players  active in Germany  does not consider Germany to be a separate geographic 
market . 19  
(26) Furthermore,  a representative of public authorities in charge of geological data  
confirmed that although geological data is indeed the property of the explorat ion 
companies, given the maturity of the German fields, the data is generally known. 
                                                 
12  M.7318, Rosneft / Morgan Stanley Global Oil Merchanting unit , paras. 9-10; M.5629, Normenston / 
Mol / JV , para. 11; M.5585, Centrica / Venture Production , para. 9; M.4934, Kazmunaigaz / 
Rompetrol , para. 11; M.3294, Exxonmobil / BEB , para. 17 ; M.3086, Gaz de France / Preussag 
Energie , para. 10.  
13  M.5629, Normenston / Mol / JV , para. 11 ; M.5585, Centrica / Venture Production , para. 9. 
14  Paras. 187 -188 of the Form CO.  
15  The Notifying Parties note that they […]. 
16  Para. 187 of the  Form CO.  
17  Replies to questions 3 and 4  of questionnaire Q1 – Exploration of oil and gas – Competitors.  
18  Replies to question 5 of questionnaire Q1 – Exploration of oil and gas – Competitors . 
19  Replies to question 5 of questionnaire Q1 – Exploration of  oil and gas – Competitors.  
7 Moreover, on a private bas is, any other company can buy the data from the 
licen ce holder.20 
(27) In view of the above and in line with its previous de cisions , the Commission 
considers that the marke t for exploration of oil and gas is worldwide in scope.  
4.2. Development, production and upstream supply of natural  gas 
4.2.1.  Product market definition  
The Commission’s decision -making practice  
(28) As mentioned above, as for the product market definition the Commission has 
previously defined a separate market for the development, production and 
upstream supply of natural gas, distinct from the upstream production of crude 
oil.  
(29) Furthermore, the Commi ssion has in the past considered that piped gas and 
liquefied natural gas (“LNG”) present distinguishing features and for this reason 
can be part of distinct markets .21 In any event, the exact product market definition 
can be left open  for the purpose of th is decision since the Transaction does not 
lead to serious doubts as to its compatibility with the internal market regardless of  
whether the upstream supply of LNG constitutes a separate market or forms part 
of a broader market encompassing also non -liquef ied natural gas .22  
(30) In addition, the Commission has considered in previous cases a distinction 
between high calorific value gas (“H -gas”) and low calorific value gas (“L -gas”) 
at each level of the gas supply chain as well as in respect of gas transmission and 
gas distribution services.23 While stating that there are a number of elements 
pleading in favour of a distinction of L -gas and H -gas also with regard to 
wholesale supply, the Commission has ultimately left the market definition open 
save with respect f or Belgium and France where the Commission found that H -
gas and L -gas do not belong to the same product market.24  
The Notifying Parties’ view  
(31) The Notifying Part ies consider that the relevant product market comprises the 
development, production and sale of natural gas includ ing both piped gas and 
LNG.  
                                                 
20  Minutes of the conference call with the Ministry of Economic Affairs of Lower Saxony on 14 
February 2019, paras. 6 -7. 
21  Case M.7631 – Royal Dutch Shell/BG Group . 
22  M.8771, Total / Engie (part of liquefied natural gas busine ss), para. 17; M. 6801 Rosneft / TNK BP; 
para. 16; M.6910, Gazprom / Wintershall / Target Companies , para. 83 and para. 91.  For the sake of 
completeness, the Commission notes that only LetterOne is active in the wholesale supply of LNG. 
As such, the Transac tion does not result in a horizontal overlap in this regard. The Notifying Parties 
have also confirmed that if a market for the development, production and sale of LNG were to be 
considered, this would not give rise to a vertically affected market. For the se reasons, this potential 
sub-segmentation  will not be discussed further in this decision.  
23  M.6910 Gazprom / Wintershall / Target companies , paras. 73-82; M.4180 Gaz de France/Suez, 
paras. 64-69; M.5467 RWE/Essent, paras. 327 -329; M.5802 RWE Energy/Mitgas , para. 17. 
24  M.6910 Gazprom / Wintershall / Target companies , paras. 75-83; M.4180 Gaz de France/Suez, 
paras. 64-69; M.5467 RWE  / Essent , paras. 327-329. 
8 (32) As regards a possible distinction between L-gas and H-gas, the Notifying Parties 
claim that there would be no justification for such a distinction given that the 
production of L-gas (i) is limited to Germany and the Netherlands in the EEA; (ii) 
has been consistently diminishing and is to be expected non-existent by 2029 as 
the German L-gas transmission network will have been converted into a H-gas 
network. Furthermore, even though H-gas and L-gas have slightly different 
technical characteristics, the Notifying Parties submit that they remain 
interchangeable as they can be used for the same purposes and can be easily 
physically converted into one or the other in exchange for a small – EUR 
0,45/MWh for conversion of H-gas into L-gas - or no conversion fee – for 
conversion of L-gas into H-gas.25  
The Commission’s assessment  
(33) The Commission’s market investigation revealed some indications pointing to a 
need to distinguish between H-gas and L-gas.  
(34) As regards the supply side, in the EEA L-gas is only produced in the Netherlands 
and parts of Germany. T he majority of L-gas sales in Germany are in fact imports 
from the Netherlands.26 While some producers can supply both L-gas and H-gas, 
often they only supply one quality or the other. Upstream wholesale suppliers 
usually offer both qualities of gas.27 
(35) As regards the demand side, respondents to the market investigation pointed out 
that the L-gas and H-gas transmission grids in Germany, where the Notifying 
Parties are active, are physically separated , with the interconnection points, 
transport capacities from and to gas storage facilities across the value chain being 
assigned to one quality.28 In addition, contracts with upstream wholesale gas 
suppliers specify th e type of L -gas to be delivered. Indeed,  the delivered gas must 
comply with the quality specification of the delivery point, and it is in Germany 
not possible to transfer gas without identifying the delivery point and thus the 
quality. As such, in case one would want to switch, a new contract needs to be 
concluded.29 
(36) However, it is possible to physically convert H -gas into L -gas and vice versa. In 
fact, this is the responsibility of the “ Market Area Managers”, NetConnect 
Germany (“NCG”) and Gaspool, who are obliged to enab le the trade across gas 
qualities within their respective Market Area, meaning that they have to provide 
the L -gas quantities necessary to enable all market participants  to fulfil  their 
supply obligations, even to those market participants bring  H-gas into  the area 
while delivering L -gas. That being said, m arket respondents indicated that in 
                                                 
25  See the Notifying Parties’ reply to question 1 of RFI03 of 8 February 2019.  
26  See FNB Gas Netzenwicklungsplan Gas 2018-2028, tables 18, 22, 24 and 27, https://www.fnb-
gas.de/files/2018 03 29 entwurf nep-gas- 2018 -2028 1.pdf  and replies to question  2 of follow -up 
questionnaire to questionnaire Q 3 – Development, production and sale of natural gas – Customers  
27  Reply to RFI 3 of 11 February 2019, para. 9 ; Replies to question  2 of follow -up questionnaire to 
questionnaire Q 3 – Development, production and  sale of natural gas – Customers . 
28  Replies to question s of follow -up questionnaire to questionnaire Q3 – Development, production and 
sale of natural gas – Customers ; FNB Gas Netzenwicklungsplan Gas 2018 -2028, Chapter 5, 
https://www.fnb-gas.de/files/2018 03 29 entwurf nep-gas- 2018 -2028 1.pdf . 
29  Replies to question 10 of follow -up questionnaire to questionnaire Q3 – Development, production 
and sale of natural gas – Customers.  
9 Germany no large -scale conversion plants are built, so that based on the existing 
conversion facilities, only a part of the demand can be fulfilled by technically 
conve rted H -gas. A respondent also mentioned that d ue to the ongoing reduction 
of physical L -gas supply, the possibility of switching big volumes from H -gas to 
L-gas also appears limited. When using the technical conversion facilities is not 
sufficient to count erbalance market shifts, Market Area Managers have to revert 
to commercial balancing measures.30  
(37) In addition, conversion comes at a cost.  Concretely, if a market participant wants 
to convert the gas quality supplied from H -gas to L -gas, a conversion fee is  due 
which  is currently capped  at 0.45 €/MWh. Furthermore , since the revenues from 
the conversion fee do not fully cover the costs for providing physical L -gas, the 
Market Area Managers are entitled to charge a “conversion neutrality charge”. 
While the “conversion fee” is charged only to those market participants  that 
actually convert H -gas, the conversion neutrality charge is to be p aid by all 
market participants  in the respective Market Area .31 
(38) The Commission notes that the above considerations  argue in favour of 
distinguishing between L -gas and H -gas for the development, production and sale 
of natural gas.  
(39) In any event, for the purpose of this decision , the exact scope of the product 
market definition can be left open, as the Transaction does not give rise to serious 
doubts irrespective of the exact market definition upheld.  
4.2.2.  Geographic market definition  
The Commission’s decision -making practice  
(40) In previous decisions, t he Commission has considered that from a demand -side 
perspective the market c ould potentially be EEA -wide in scope, though from a 
supply -side perspective, due to limited interconnection infrastructure or lack of 
available cross -border capacity, the relevant geographic market might be 
narrower and potentially  regional  as encompassin g several Member States  or even  
national in scope .32 
The Notifying Parties’ view  
(41) The Notifying Party considers that the relevant geographic  comprises at least the 
EEA, if it is not worldwide, since producers compete with importers, market rules 
are similar and there are sufficient transportation capacities.  
  
                                                 
30  Replies to question s 4, 5 and 8  of follow -up questionnaire to questionnaire Q 3 – Development, 
production and sale of natural gas – Customers. See also NCG General information about the 
conversion mechanism , https://www.net -connect -germany.de/ en-gb/Information/Balancing -Group -
Managers/Gas -Quality -Conversion/Information -Conversion -Mechanism . 
31  Replies to question s 4 and 7  of follow -up questionnaire to questionnaire Q 3 – Development, 
production and sale of natural gas – Customers.  
32  M.6910 Gazp rom / Wintershall / Target Companies , para. 86; M.6801 Rosneft/TNK -BP, para. 12; 
M.4545 Statoil/Hydro , paras. 13-16. 
10 The Commission’s assessment  
(42) The mark et investigation indicated that while the majority sources on an EEA -
wide basis, some companies are also only active in some or one  Member State . In 
particular in relation to L -gas, some market investigation respondents hinted to 
the existence of a market comprising only L-gas produced in Germany.33 
(43) In any event, for the purpose of this decision the exact scope of the geographic 
market definition c an be left open, as the Transaction does not give rise to serious 
doubts as to its compatibility with the internal market even under the narrowest 
plausible market definition, being national.  
5. COMPETITIVE ASSESSMENT  
5.1. Horizontal non -coordinated effects  
5.1.1.  Exploration of crude oil and natural gas  
The Notifying Parties’ view  
(44) The Notifying Parties submit that the Transaction will not lead to competition 
concerns in view of their limited combined market shares, as well as the presence 
of strong competitors.34 
The Commission ’s assessment  
(45) In the course of the market investigation, some concerns were raised in relation to 
the exploration of crude oil and natural gas. The Commission however considers 
that the Transaction does not raise serious doubts with regard to m arket for oil 
and natural gas exploration based on the following  reasons . 
(46) First, the Notifying Parties’ market shares are very limited on a worldwide basis. 
Indeed, LetterOne and BASF respectively achieved a market share of less than [0-
5]% and [0-5]% in 2 017.35 36 
(47) Second, even after the combination of the exploration businesses of the Notifying 
Parties, a competitive constraint […]*  to be exerted  on Wintershall DEA  by 
various competitors including large  players such as Saudi Aramco, Total, Shell, 
Exxon Mobil  or Gazprom, as well as more regional players.  
(48) Third, the market investigation did not indicate that the Notifying Parties would 
be particularly close competitors of each other. Indeed, the vast majority of 
                                                 
33  Replies to questions 1 and 3 of questionnaire Q3 – Development, production and sale of natural gas 
– Customers.  
34  Paras. 346 -347 of the  Form CO.  
35  Table 7 of the Form CO.  
36  For the sake of completeness, the Commission notes that even on a narrower Germany -only basis , a 
market definition which is not confirmed by the market investigation, the Notifying Parties achieve 
a combined market s hare of [10-20]%, not amounting to an affected market  (reply to question 2 of 
RFI1 of 4 February 2019).  
* Should read: “will continue”  
11 respondents to the Commission’s market investigation did not consider them 
among each other’s three closest competitors.37 
(49) Fourth, the vast majority of respondents indicated that it would not be more 
difficult to efficiently compete in the market for the exploration of  oil and natural 
gas post -transaction;38 and that the Transaction would not have an impact on the 
access to upstream services or input material.39 
(50) Finally, the vast majority of respondents indicated that the Transaction would not 
have an effect on prices or the competitiveness of the oil and gas exploration 
market.  
(51) Therefore, the Commission considers that the Transaction does not raise serious 
doubts as to its compatibility with the internal market with regard to the market 
for exploration of oil and natural gas. 
5.1.2.  Development, production and upstream supply of natural gas  
The Notifying Parties’ view  
(52) The Notifying Parties submit that the Transaction will not result in competition 
concerns in view of the limited market share increment and the fact that the joint 
venture will face strong competi tion from several competitors, notably from BEB 
Erdgas und Erdöl  GmbH & Co. KG ( a joint venture in which each of Exxon 
Mobil and Shell have a 50% share, “BEB”) but also from others such as for 
example Engie E&P.  
(53) Furthermore , there is a significant competitive constraint from importers such as 
Gazprom, as only 5% to 10% of the German demand is covered by local 
production with the rest being covered by imports.  
(54) In addition, wholesalers purchasing natural gas are typically soph isticated 
customers who diversify their procurement and often apply multi -sourcing 
strategies.  
The Commission assessment  
(55) The Commission considers that the Transaction does not raise serious doubts with 
regard to market for the development, production and upstream supply of natural 
gas based on the reasons  explained in the following paragraphs . 
(56) On an overall market for the development, production and upstream supply of 
natural gas – encompassing both L -gas and H -gas – Wintershall  DEA’s market 
shares would be  low. On an EEA -wide basis DEA’s market share remains below 
[0-5]% and Wintershall holds a market share of [0-5]%. On a national level, the 
Transaction gives within the EEA rise to an overlap in each of Norway and 
Germany, where the Notifying Parties’ combined market share would be 
respectively [0-5]% and [20-30]%.  
                                                 
37  Replies to question 7 of questionnaire Q1 – Exploration of oil and gas – Competitors.  
38  Replies to question 9 of questionnaire Q1 – Exploration of oil and gas – Competitors . 
39  Replies to question 10 of questionnaire Q1 – Exploration of oil and gas – Competitors  
12 (57) Moreover, at both EEA level and in Norway and Germany, multiple competitors 
exist such as ExxonMobil, Gazprom, PetroChina, BP, Equinor and Total, and as 
explained in paragraph 53 above, in Germany imports play a critical role. 
(58) As regards  the narrowest plausible market, that is considering a separate product 
market for each of L-gas and H-gas, the Commission notes that the Notifying 
Parties’ activities only overlap  as regards L-gas in Germany . L-gas sold in 
Germany is either produced domestically or imported from the Netherlands. In 
fact, Germany relies heavily on Dutch imports for its L-gas (and that there are no 
exports of L-gas out of Germany).40  
(59) On a market encompassing only local German L-gas production, the Notifying 
Parties’ estimate their combined market share to be [30-40]%, with an increment 
of [10-20]% brought about by BASF.  This market share is, however,  likely to 
overestimate Wintershall DEA’s  competitive position in the market for the 
development, production and sale of L-gas in Germany. Concretely, it appears 
that currently 61 .6% of German demand is met by imports from the Netherlands, 
while only 9. 3% is satisfied by domestic production; the remaining demand being 
covered from storage capacity and – to a limited extent – physical conversion of 
H-gas to L-gas.41 The proportion of demand to be met by local production is 
expected to remain and even decrease in the coming years.42 If imports from the 
Netherlands are taken into account, Wintershall DEA’s  combined market share in 
a market for the development, production and sale of L-gas in Germany would be 
only [5-10]%43.  
(60) Some third parties raised concerns in the course of the market investigation that 
the Transaction would lead to a highly concentrated market.  However, whilst the 
Transaction has a concentrative effect (as all mergers do), Wintershall DEA 
would continue to face significant competitive constraints from various strong 
competitors such as BEB, Mobil Erdgas- Erdöl GmbH44 and Vermilion who 
together represent a volume that is higher than Wintershall DEA, in addition to 
importers.45 As such, customers’ ability to multi -source is unlikely to be 
jeopardised. 
(61) Furthermore, L-gas production in Germany is steadily decreasing, accompanied 
by a steady decline of imports into Germany from the Netherlands.46 In reaction, 
a Germany-wide initiative - the “Gas Network Development Plan”  - was 
launched. This Gas Network Development Plan sets out the timeline for the 
conversion of the German gas transmission network from L-gas to H -gas until 
                                                 
40  Reply to questions 1 and 2 of RFI 4 of 13 February 2019. 
41  See FNB Gas Netzenwicklungsplan Gas 2018 -2028, table 24, https://www.fnb-
gas.de/files/2018 03 29 entwurf nep-gas- 2018 -2028 1.pdf . 
42  Concretely, according to the conversion plan of the German transmission system operator, domestic 
production will be used for 8.5% of German demand in 2018/19, 8.3% in 2019/20 and 8.6% in 
2020/21. See FNB Gas Netzenwicklungsplan Gas 2018 -2028, table 24, https://www.fnb-
gas.de/files/2018 03 29 entwurf nep-gas- 2018 -2028 1.pdf .  
43  As Wintershall’s volumes include also H -gas produced offshore, accounting for roughly about 
[…]% of Wintershall’s total natural gas production in Germany, this combined market share might 
be slightly inflated. 
44  Mobil Erdgas-Erdöl GmbH is a subsidiary of Exxon Mobil. 
45  Reply to question 3 of RFI 4 of 13 February 2019. 
46  FNB Gas Netzenwicklungsplan Gas 2018 -2028, Chapter 5, https://www.fnb-
gas.de/files/2018 03 29 entwurf nep-gas- 2018 -2028 1.pdf . 
13 2030 when L-gas is expected to disappear completely from Germany.47 The Gas 
Network Development Plan provides no indications of a change in the supply-
side market structure. Even more, it estimates that already as of 2020, the German 
L-gas demand will be lower than the overall L-gas supply in Germany.48  
(62) Therefore, the Commission considers that the Transaction does not raise serious 
doubts as to its compatibility with the internal market with regard to the 
development, production and sale of natural gas whether H-gas and L-gas are 
considered as belonging to the same or separate markets. 
6. CONCLUSION  
(63) 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 Article 6(1)(b) of 
the Merger Regulation and Article 57 of the EEA Agreement. 
For the Commission 
 
(Signed) 
Margrethe VESTAGER 
Member of the Commission 
 
 
                                                 
47  As by 1 October 2029, natural gas will no longer be imported from the Netherlands into Germany 
and by 2030 L-gas will virtually disappear from the Germany. Reply to question 1 of RFI 3 of 11 
February 2018; Monitoring Report 2017 Bundesnetzagentur / Bundeskartellamt, page 322, 
https://www.bundesnetzagentur.de/SharedDocs/Downloads/EN/Areas/ElectricityGas/CollectionCo
mpanySpecificData/Monitoring/MonitoringReport2017.pdf? blob=publicationFile&v=2 .  
48  FNB Gas Netzenwicklungsplan Gas 2018 -2028, Figure 18 and 20, https://www.fnb-
gas.de/files/2018 03 29 entwurf nep-gas- 2018 -2028 1.pdf .