EUROPEAN COMMISSION C(2016) 3934 final



To the Notifying Party Dear Sir/Madam, Subject:Case M. 8000 – DCC / Dansk Fuels

Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/2004 and Article 57 of the Agreement on the European Economic Area (1)On 13 May 2016, the European Commission received notification of a proposed concentration ("Proposed Transaction or Transaction") pursuant to Article 4 of the Merger Regulation by which DCC Holdings ("DCC", Denmark) will acquire sole control within the meaning of Article 3(1)(b) of the Merger Regulation over Dansk Fuels A/S ("Dansk Fuels", Denmark). (DCC is designated hereinafter as the "Notifying Party" and both DCC and Dansk Fuels are designated hereinafter as the "Parties"). 1.THE PARTIES (2)DCC operates across four divisions in the fields of technology, healthcare, environment and energy. DCC is active in Denmark in the non-retail supply of refined oil products as a distributor of Shell-branded commercial fuels. (3)Dansk Fuels is active in Denmark in the non-retail sales of aviation fuels and refined oil products, as well as the retail sales of motor fuels via a nationwide network of 205 Shell-branded fuel stations. 2.THE OPERATION AND CONCENTRATION (4)The current Transaction is related to case M.7603, pursuant to which Statoil Fuel and Retail ("SFR") acquired Shell's Danish retail, non-retail and aviation fuels’ businesses, Dansk Fuels. As a condition to the Commission's clearance of that transaction, SFR undertook to divest certain assets. These assets are the only assets currently owned by Dansk Fuels. (5)DCC will acquire a 100% shareholding in Dansk Fuels with its current assets, from SFR. As a result of the "Proposed Transaction" DCC will acquire sole control over Dansk Fuels. Therefore, the Proposed Transaction constitutes a concentration pursuant to Article 3(1)(b) of the Merger Regulation. 3.EU DIMENSION (6)The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 000 million (DCC: EUR […], Dansk Fuels: EUR […]). Each of them has an EU-wide turnover in excess of EUR 250 million (DCC: EUR […], Dansk Fuels: […]), but they do not achieve more than two-thirds of their aggregate EU-wide turnover within one and the same Member State. (7)Therefore, the concentration has an EU dimension within the meaning of Article 1(2) of the Merger Regulation. 4.Relevant Markets

(8)Regarding the market of supply of refined oil products the Commission has previously distinguished three different levels: ex-refinery sales, non-retail sales and retail sales. DCC is active at the non-retail and Dansk Fuels is active on both the non-retail and the retail level. 4.1.Non-retail sales of refined oil products (9)In its previous decisions the Commission considered that the non-retail market of refined oil products consists of the wholesale supply to independent resellers or retailers not integrated upstream (e.g. unbranded service station operators such as hypermarkets) as well as to large industrial and commercial end-customers (hospitals, car rental fleets, factories, etc.). The Commission has also stated that the non-retail sale of each of these refined fuel products constitutes a distinct relevant product market. (10)In a previous decision, the Commission also considered whether a further distinction should be made between: 1) sales to resellers/retailers and 2) sales to end-customers. (11)The Notifying Party claims that all sales made on the non-retail level should be seen as one market and therefore not be broken down by different refined oil products. (12)The Commission considers that the precise product market definition can be left open, since the Proposed Transaction does not raise serious doubts as to its compatibility with the internal market under any plausible product market definition. (13)In its previous decisions the Commission has considered non-retail sales of refined fuels as national in scope. The Notifying Party agrees with the Commission's market definition. (14)The Commission considers that the precise geographic market definition can be left open, since the Proposed Transaction does not raise serious doubts as to its compatibility with the internal market under any plausible product market definition. 4.2.Retail sales of motor fuels (15)The Commission in its previous decisions considered that the retail sales of motor fuels encompasses sales made at all service stations, both branded and unbranded, in- and outside an integrated retail network. A further sub-segmentation of the overall market for the retail sales of motor fuels has previously been considered (and left open), into motorway and non-motorway sales, or into sales made from (i) motorway stations, (ii) rural stations, (iii) diesel truck stations, and (iv) marine stations. The market was also further segmented into retail sales of motor fuel to business customers (B2B) and to end-customers (B2C). However, the final product market definition was left open. (16)As to the geographic market definition, the Commission has considered this market as national in scope but with strong local elements as vehicle owners usually resort to service stations in their vicinity. The Notifying Party agrees with the Commission's market definition. (17)The Proposed Transaction does not raise serious doubts as to its compatibility with the internal market under any plausible product and geographic market definition; hence the precise market definition can be left open. 5.Competitive assessment (18)In Denmark, end-customers on the non-retail market procure their supplies both from large distributors of branded products which acquire their refined oil products directly from refineries and have access to various terminal storage capacity in Denmark to store these products, and from resellers which do not have supply agreements in place with refineries and have no access to storage capacity. (19)As a result, the market for the non-retail supply of the various refined oil products to end-customers can be said to be "downstream" from the market for the non-retail supply of these same product to resellers/retailers ("upstream"). Although the focus of Dansk Fuels’ non-retail activity is on the sales to resellers (mostly DCC) and retailers, Dansk Fuels also supplies end-customers directly. On the other hand, DCC is only active in the non-retail sales of refined oil products to end-customers. (20)The market structure in the above mentioned plausible markets is provided in Tables 1, 2, 3, 4 and 5. Gasoline – Table 1 Market shares Resellers/Retailers End-customers DCC [0-5]% [5-10]% Dansk Fuels [60-70]% [5-10]% Combined market share [60-70]% [10-20]% SFR [0-5]% [10-20]% OK [0-5]% [5-10]% Q8 [0-5]% [30-40]% Uno-X [0-5]% [20-40]% Others [30-40]% [0-5]%





Diesel – Table 2 Market shares Resellers/Retailers End-customers DCC [0-5]% [20-30]% Dansk Fuels [60-70]% [0-5]% Combined market share [60-70]% [20-30]% SFR [20-30]% [10-20]% OK [0-5]% [10-20]% Q8 [0-5]% [10-20]% Uno-X [0-5]% [10-20]% DLA [0-5]% [5-10]% Others [0-5]% [0-5]% Heating oil – Table 3 Market shares Resellers/Retailers End-customers DCC [0-5]% [10-20]% Dansk Fuels [70-80]% [0-5]% Combined market share [40-50]% [10-20]% SFR [10-20]% [10-20]% OK [0-5]% [20-30]% Q8 [0-5]% [10-20]% Uno-X [0-5]% [10-20]% DLA [0-5]% Others [0-5]% [5-10]% Gasoil – Table 4 Market shares Resellers/Retailers End-customers DCC [0-5]% [30-40]% Dansk Fuels [90-100]% [0-5]% Combined market share [90-100]% [30-40]% SFR [0-5]% [5-10]% OK [0-5]% [0-5]% Q8 [0-5]% [10-20]% Uno-X [0-5]% [40-50]% Others [0-5]% [0-5]% Heavy fuel oil – Table 5 Market shares Resellers/Retailers End-customers DCC [0-5]% [5-10]% Dansk Fuels [80-90]% [70-80]% Combined market share [80-90]% [70-80]% SFR [10-20]% [0-5]% OK [0-5]% [0-5]% Q8 [0-5]% [0-5]% Uno-X [0-5]% [0-5]% DLA [0-5]% [0-5]% Others [0-5]% [10-20]% (21)In section 5.1, the Commission assesses the horizontal overlap of the Parties on the plausible markets for the non-retail sales of refined oil products to end-customers. In section 5.2, the Commission assesses the vertical overlap that arises from (1) Dansk fuels’ activity on the plausible markets for the non-retail sales of the various refined oil products to resellers and retailers and (2) DCC’s activity on the plausible markets for the non-retail sales of refined oil products to end-customers. This vertical link was pre-existent to the Transaction, as Dansk Fuels already supplied end-customers. 5.1.Horizontal effects (22)The Proposed Transaction gives rise to the following horizontally affected plausible markets in Denmark: (i) non-retail supply of diesel to end-customers; (ii) non-retail supply of gasoil to end-customers and (iii) non-retail supply of heavy fuel oil to end-customers. (23)The Notifying Party claims that the Proposed Transaction will not raise any competitions concerns. The main arguments provided are: 1) DCC is active as a distribution business. They do not store, process or otherwise alter the refined oil fuel products picked up from the refinery or terminal. This business model is different from the one of large suppliers that have significant fixed infrastructure costs. Therefore DCC is not a strong competitor in the non-retail refined oil products market; 2) post-transaction the combined entity will face strong competition from vertically integrated competitors such as SFR, Q8 and Uno-X. (24)The Commission considers that the Transaction will not have a significant impact on the market structure in the non-retail sales of the refined oil products in Denmark. (25)First, the Parties face intense competition in Denmark from large and sophisticated vertically integrated companies such as SFR, Q8 and others. These competitors have significant capacity and can respond timely and effectively to any potential price increases. (26)Moreover, DCC and Dansk Fuels are not close competitors and do not exercise a significant competitive constraint on each other. Prior to the Proposed Transaction, Dansk Fuels and DCC focused their businesses on different customer groups. Accordingly, the acquisition does not remove a significant competitive constraint on the non-retail market for the supply of refined oil products. (27)In addition, the increment brought by the Proposed Transaction to the market share of the merged entity would be small in both the non-retail sales of diesel to end-customers ([0-5]%) and the non-retail sales of gasoil to end-customers ([0-5]%), and limited in the case of heating oil ([5-10]%).