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,  09.12.2021  
C(2021 ) 9280  final 
PUBLIC VERSION  
 
SK Capital Partners  
430, Park Ave  
New York, NY 10022  
United States of America  
Subject : Case M. 10503 – SK CAPITAL PARTNERS / SEQENS  
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 8 November  2021 , the European Commission received notification of a proposed 
concentration , pursuant to Article 4 of the Merger Regulation , by which SK Capital 
Partners, LP (“SKCP ”, US)  acquires control of the whole of Seqens Group Holding 
SAS (“Seqens”, France)  by way of  purchase of shares (the “Transaction”),3 within 
the meaning of Article 3(1)(b) of the Merger Regulation . SKCP is designated 
hereinafter as the “Notifying Party ” and together with Seqens as the  “Parties ”. 
                                                 
1  OJ L 24, 29.1.2004, p. 1 (the ’Merger Regulation ’). With effe ct from 1 December 2009,  the Treaty on the 
Functioning of the European Union ( the ‘ 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 463 , 16.11.2021, p. 22. 
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information omitted has been replaced by 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 1. THE  PARTIE S   
(2) SKCP is a private investment firm focused on the specialty materials, chemicals and 
pharmaceutical sectors. SKCP is active globally, through its portfolio companies, 
with a specific focus on North America, the EEA, the Middle East and Australia.  
(3) Seqens en gages, through its subsidiaries, in the business of the international 
manufacturing and sales of diversified essential chemicals, pharmaceutical solutions 
and specialty ingredients that are used in everyday products. Seqens is mainly active 
in the EEA, Asi a Pacific and North America.  
2. THE  CONCE NTRATION  
(4) Pursuant to a put option agreement dated 25 August 2021, to which an agreed share 
and purchase agreement is attached, SK CP is acquiring indirect sole control over the 
Target. SKCP has committed to acquire […] of the shares of Seqens. The acquisition 
will be carried out through one of SKCP’s affiliates, […],4 and through the special 
purpose vehicles  indirectly controlled by […], notably […], which are ultimately 
controlled by funds managed by SKCP  (the “SK Funds ”). At present, […] controls 
[…], which is the indirect purchaser of the entire share capital of the Target through 
the abovementioned special purpose vehicles .5  
(5) At closing of the Transaction, the SK Funds will hold […] of the shares of Seqens 
among which  […] (holding approximately […] of the shares of […]), which is 
ultimately controlled by […]. The remaining shares in Seqens  will be held by BPI 
France  ([…]), Seqens Rolling Share holders (incl. affiliates of Eurazeo Nov Santé 
([…]), LH Seqens ( […])), Ardian ( […]) Mérieux Participations 2 ( […]), Mérieux 
Développement ( […]), MxCA ( […]) and Crusader/Eximium ( […]), Wavelength 
management ( […]) and Seqens management (up to […] depending on the final 
amount of each manager’s reinvestment).  None of those indir ect shareholders will 
hold any veto rights or other rights enabling them to exercise control over Seqens.6 
(6) Pursuant to clause 4.1 of the share purchase agreement, SKCP will acquire the entire 
issued share capital and voting rights of Seqens for an aggregat e consideration of 
EUR […] subject to certain adjustments mechanisms. […].  
(7) SKCP will therefore solely control Seqens within the meaning of Article 3(1)(b) of 
the Merger Regulation.  
3. UNION  DIME NSION  
(8) The undertakings concerned have a combined aggregate world -wide turnover of 
more than EUR 5 000 million  (SKCP: EUR 8 ,194 million, Seqens: EUR 794 
million)7. Each of them has a  Union -wide turnover in excess of EUR 250 million  
(SKCP: EUR […], Seqens: EUR […]), but they do not achieve more than two -thirds 
                                                 
4  […]. 
5  […]. 
6  Notifying Party’s response to RFI 3, question 8.  
7  Turnover calculated in accordance with Article 5 of the Merger Regulation . 
 
 
3 of their aggregate Union-wide turnover within one and the same Member State. The 
Transaction  therefore has a U nion dimension.   
4. OVE RVIE W OF AFFE CTED MARKE TS  
(9) The Transaction relates to the following markets: (i) the supply of Active 
Pharmaceutical Ingredient  (API) Contract Development and Manufacturing 
Organisation ( CDMO )8 services; (ii) API manufacturing on a proprietary basis; (iii) 
the supply of phenol; (iv) the supply of acetone; (v) the supply of lubricant additives; 
(vi) the supply of cosmetic ingredien ts; and (vii) the supply of alkylphenols.  
(10) Of those markets, the Transaction leads to the following vertically affected  markets : 
 Supply of phenol (upstream) and the following alkylphenol markets downstream:  
a. Paranonylphenol (“PNP”)  
b. Para-ter-butylphenol (“PT BP”)  
c. 2,4-di-tert-Butylphenol (“2,4 -DTBP”)  
d. 2,6-di-tert-Butylphenol (“2,6 -DTBP”)  
e. Di-sec-butylphenol (“DSBP”)  
f. Ortho -sec-Butylphenol (“OSBP”)  
(11) The activities of the Parties have so far not been horizontally overlapping. Hence, the 
Transaction does not relate to markets that are currently horizontally affected.9 
5. MARKE T DE FINITIONS  
5.1. Phenol  
(12) In terms of product market, phenol is a white, crystalline soli d that is often 
transported in a molten state. Phenol is a commodity raw material which is used to 
produce bisphenol -A (BPA , which accounts for ca. 50% of phenol demand in the EU 
in 2020 ), phenolic resin, caprolactam (which is used to make 6 -nylon fibres, 
                                                 
8  API CDMO services consist in the outsourcing of the manufacturing process of a given drug to a third 
party or parties.  
9  SKCP is active as a supplier of propofol through its portfolio company SI Group. Seqens is currently not 
active in supplying propofol, but has plans to enter the market. As a result, there is a potential future 
horizontal overlap due to pipeline competitio n. However, SI Group currently has market shares in the 
narrowest plausible market (propofol in the EEA) of at most [20-30]% (by volume), i.e. below the 35% 
threshold that the Commission has applied in previous cases of pipeline -to-marketed competition (e. g. 
COMP/M.7975 – Mylan/Meda, paragraph 581), and Seqens’ market entry is currently foreseen in 2024, 
i.e. more than two years away (two years being the threshold applied in previous cases). In any case, the 
following competitors of propofol will remain act ive post -Transaction in the EEA: Bachem with a market 
share of 50 -60% and AMRI Euticals with a market share of 20 -30%. Apart from that, Porton is currently 
not active in the EEA but has a market share of 0 -10% globally.  
 
 
4 engineering res ins and film) and as a slimicide, disinfectant and an anastaethic in 
medicinal preparations.10  
(13) The Commission has considered different product market definitions  comprising 
phenol in the past : i) a wider product market consisting of phenol, acetone, 
alphamethylstyrol and acetophenol11 and ii) a narrower product market consisting 
only of phenol.12  
(14) The Commission notes that acetone is a by -product of producing phenol using the 
cumene -phenol method , which would point to a broader market from a su pply side 
perspective . However, acetone can also be produced from isopropyl alcohol, and 
from a demand side perspective, there is only very limited substitutability between 
some of the above -mentioned chemicals . In particular for phenol, there is no 
substi tute, except in the production of nylon .13 This would therefore rather point to a 
distinct market for phenol.  
(15) For the present case, the definition of the exact product market can be left open, as 
even under the narrower product market definition (i.e. phen ol), no competition 
concerns would arise.  
(16) In terms of geographic market,  the Commission has left the geographic market 
definition for phenol open, but considered in past decisions that the scope could be 
wider than Western Europe.14 Responses to the market investigation suggested that 
the market is at most EEA -wide and could potentially be more limited  while no 
respondent indicates that the phenol market may be national .15 
(17) For the present case, the definition of the exact geographic market can be left open, 
as even under the narrower market definition (i.e. Western Europe) , no competition 
concerns would arise.  
5.2. Alkylphenols  
(18) In terms of product market, a lkylphenols are phenol derivatives that are mainly used 
as raw materials in the production of several industri al products such as surfactants, 
detergents, emulsifiers, solubilizers and polymer additives. The category of 
alkylphenols comprises 30 different products.  
(19) The Commission has previously considered the broad market of alkylphenols as 
potentially a distinct market.16 The Notifying Party submits that on a conservative 
basis, the market can be defined at the product level for each of SI Group’s products 
belonging to the category of alkylphenols ( further defined in sections 5.3 – 5.7), 
where SI Group has a market  share of above 30%.  
                                                 
10  See e.g. COMP/M.6171 IPIC/CEPSA, paragraph 10.  
11  COMP/M.439 - Hüls/Phenolchemie, paragraph 8.  
12  COMP/M.3024 – BAIN Capital/Rhodia, paragraph 12.  
13  COMP/M.3024 – BAIN Capital/Rhodia, paragraph 12.  
14 ` COMP/M.6171 IPIC/CEPSA, paragraph 18.  
15  Responses to question 5 from phenol suppliers received on 12 November 2021.  
16  COMP/M.9017 - SK Capital Partners/Schenectady International Group , paragraph 47.  
 
 
5 (20) Given that in this case the Commission assesses the relationship between 
alkylphenol markets and the phenol market upstream, and that phenol is a 
commodity which is supplied in the same quality for all applications (including 
alkylphe nols)17, it does not seem to be relevant to conclude on whether the market of 
alkylphenols is broad comprising all alkylphenols or narrow, consisting of distinct 
products.  
(21) For the present case, the definition of the exact product market can be left open, a s 
even under the narrower product market definition (i.e. individual alkylphenols), no 
competition concerns would arise.  
(22) In terms of geographic market, the Commission has not previously considered a 
geographic market for all alkylphenols.  However, the Comm ission has considered 
geographic markets for several individual alkylphenols  (see references in sections 
5.3-5.7 below) . 
(23) The Notifying Party submits that in line with the geographic market being at least 
EEA-wide for individual  alkylphenols (see sections 5.3 -5.7 below), the geographic 
market for the broader category of all alkylphenols should be considered at least 
EEA-wide too.  
(24) The Commission notes that individual alkylphenols further defined below are used 
as input in the prod uction of different end -products or intermediate products and it is 
unclear to what extent different alkylphenols are substitutable for different use cases. 
However, for the purpose of assessing the affected markets of phenol as an input 
upstream and sever al alkylphenols downstream, the exact market definition of i) all 
alkylphenols or ii) individual alkylphenols has no impact on the Commission’s 
assessment and can therefore  be left open.  
5.3. Paranonylphenol (“PNP”)  
(25) In terms of product market, PNP is a chemical  intermediate for the production of 
antioxidants, additives and other downstream chemical products. All commercially 
used PNP is produced from nonene based on the trimerization of propylene. The 
Commission has not previously explicitly considered a market for PNP, but the 
Notifying Party submits that , in previous decisions involving chemical intermediate 
products, the Commission found separate markets for chemical intermediates that 
exhibit distinct chemical compositions or product characteristics.18 In addi tion, 
according to the Notifying Party there is no plausible distinction by use cases for 
PNP on the basis of which there could be different markets. Indeed, although PNP is 
sold into several applications (namely (i) oilfields resins, (ii) mining, (iii) in k resins 
and (iv) surfactants) and the same quality of PNP is used in all applications.19 The 
Commission received no feedback from the market contradicting this view and 
therefore considers that for the purpose of this case the market of PNP is a separate 
market without further distinctions.  
                                                 
17  Responses to questions 3 and 4 from phenol suppliers received on 12 November 2021.  
18  COMP/M.7858, Ineos/Celanese Assets, paragraph 30.  
19  Notifying Party’s response to RFI 3, question 2.  
 
 
6 (26) In terms of geographic market,  the Commission has not considered the market for 
PNP specifically in previous decisions. However, the Notifying Party submits that , 
in previous decisions involving chemical intermediates, the Commission concluded 
that the market was not broader than the EEA  due to transport costs .20 In that 
particular case, the majority of competitors and customers agreed on the geographic 
market being  EEA-wide in scope.  The Notifying Party submits that PNP is easily 
transportable.21 The Commission received no feedback from the market 
contradicting this view and therefore considers that , for the purpose of this case , the 
scope of the geographic market fo r PNP is EEA -wide, but considers that the 
definition can be left open, as no competition concerns would arise regardless of the 
geographic market definition  (EEA -wide or narrower) .22 
5.4. Para -ter-butylphenol (“PTBP”)  
(27) In terms of product market, PTBP is a chemical intermediate belonging to the group 
of alkylphenols, which is created by reacting phenol with high purity isobutylene. 
PTBP is used in the production of surfactants, tackifier resins, ink resins and as 
polycarbonate chain terminator. In a previous case, the Commission’s market 
investigation provided evidence that neither supply nor demand side substitutability 
exists regarding PTBP, as it cannot be easily replaced by other products and 
suppliers use dedicated equipment for the manufacturi ng of this chemical.23 
However, the Commission did not conclude on the product market definition of 
PTBP in that case. According to the Notifying Party there are two grades of PTBP 
(polymer grade and resin grade) which are however both produced and marketed  by 
all competitors, and would hence not lead to a plausible narrower market 
definition.24 The Commission received no market feedback that would contradict 
this claim.  For the purpose of the present case, the Commission therefore considers 
the market to con sist of PTBP without further distinctions, but the product market 
definition can be left open, as no concerns arise regardless of the exact product 
market ((i) PTBP or (ii) PTBP polymer grade and PTBP resin grade) .  
(28) In terms of geographic market,  the marke t investigation in a previous case provided 
evidence that the geographic scope of the market for PTBP is at least EEA -wide and 
possibly global.25  
(29) However, the Commission did not conclude on geographic market definition in that 
case. The Commission consider ed in that case that PTBP is easily transportable and 
transport costs and import duties are low.26 The Commission received no feedback 
from the market contradicting this view in this case and , therefore , for the purpose of 
this case , it considers that the geographic scope  for the plausible markets of PTBP, 
PTBP polymer grade and PTBP resin grade could be  EEA-wide. However, the 
definition can be left open , as no competition concerns would arise regardless of the 
                                                 
20  COMP/M.7858, Ineos/Celanese Assets, paragraph 42.  
21  Notifying Party’s response to RFI 3, question 2.  
22  Notifying Party’s response to RFI 5, question 1. Specifically, the Notifying Party confirmed that the 
Parties’ market shares would not significantly change should the market for PNP be considered as national 
in scope.  
23  COMP/M.9017 - SK Capital Partners/Schenectady International Group , paragraph 168 . 
24  Notifying Party’s response to RFI  3, question 3.  
25  COMP/M.9017 - SK Capital Partners/Schenectady International Group , paragraph 170.  
26  COMP/M.9017 - SK Capital Partners/Schenectady International Group , paragraph 171.  
 
 
7 exact product (PTBP or narrower ) or geogra phic market definitions  (EEA -wide or 
global) .27 
5.5. 2,4-di-tert-Butylphenol (“2,4 -DTBP”)  and 2,6 -di-tert-Butylphenol (“2,6 -
DTBP”)  
(30) In terms of product market, 2,4-DTBP and 2,6 -DTBP are organic compounds that 
belong to the group of alkylphenols. 2,6 DTBP is used in different concentrations 
either as intermediate raw material (with 99% 2,6 DTBP content) in the production 
of antioxidants or as a standalone antioxidant (with 75% 2,6 -DTBP content). 2,4 
DTBP is used in the synthesis of a range of different secondary an tioxidants or other 
chemical products.  
(31) The Commission previously considered whether 2,4 and 2,6 DTBP belong to the 
same or different product markets, finding some evidence for limited substitutability 
both on the supply and demand side, but left the defin ition open.28 The Commission 
received no market feedback indicating that the markets for 2,4 and 2,6 DTBP are 
separate or belong to the same market, or an even wider market of alkylphenols. 
Conservatively, the Commission considers the market in the present case at the level 
of the individual alkylphenols separately, i.e. i) 2,4 DTBP and ii) 2,6 DTBP. 
However,  a conclusion on the exact product market definition of i) 2,4-DTBP , ii) 
2,6-DTBP or iii) 2,4 DTBP and 2,6 DTBP is not necessary as no concerns arise 
regardless of the definition.  
(32) In terms of geographic market,  the Commission has not previously concluded on the 
scope for the market of 2,4 -DTBP or 2,6 -DTBP. However, the Commission found 
evidence supporting an at least EEA -wide market, and potentially a gl obal market.29 
For the purpose of the present case, the Commission considers the market to be 
EEA-wide in scope. However, there is no need to conclude on the geographic market 
definition for the plausible markets of i) 2,4-DTB P, ii) 2,6-DTBP  or iii) 2,4 and 2,6 
DTBP , as no concerns arise regardless of a wider (global) or narrower (EEA -wide) 
market definition.  
5.6. Di-sec-butylphenol (“DSBP”)  
(33) In terms of product market, DSBP also belongs to the group of alkylphenols and is 
manufactured by reacting Butene -1 with phe nol. DSBP is mainly used as a bespoke 
wetting agent for various herbicides. In a previous case, the Commission left the 
product market definition for DSBP open. The Notifying Party submits that no 
segmentation based on grade or other criteria is relevant i n the case of DSBP.  The 
Commission received no market feedback indicating the contrary.  
(34) Given that  SI Group is the only supplier globally of DSBP and  no concerns arise 
with respect to the specific relationship in this case regardless of this market 
positi on, the Commission considers for the purpose of this decision the market of 
DSBP . 
                                                 
27  Notifying Party’s response to RFI 5, question 2. Specifically, the Notifying Party confirmed that the 
Parties’ market shares for the plausible markets of PTBP, PTBP polymer grade and PTBP resin grade 
would not significantly change considering either an EEA -wide or global -wide scope of the market.  
28  COMP/M.9017 - SK Capital Partners/Schenectady International Group , paragraph 46f.  
29  COMP/M.9017 - SK Capital Partners/Schenectady International Group , paragraph 49f.  
 
 
8 (35) In terms of geographic market,  the Commission has not previously concluded on a 
geographic market for DSBP.30 The Notifying Party submits that the market for 
DSBP is likely global, as DSBP is easily transportable and transport costs are low.31 
The Notifying Party submits that in any case the market definition can be left open, 
as no concerns arise in any case.  SI Group is the only supplier of DSBP globally, and 
supplies the va st majority of its volumes in the EEA to […] for the production of a 
pesticide product.  
(36) Given that no concerns arise regardless of the geographic market definition, the 
Commission considers it conservatively as EEA -wide for the purpose of this case, 
but co nsiders that it can be left open.  
5.7. Ortho -sec-Butylphenol (“OSBP”)  
(37) In terms of product market, OSBP is an industrial chemical raw material belonging 
to the group of alkyphenols , which is created by reacting Butene -1 with phenol.  
OSBP is used in dying and as a chemical intermediate for the production of polymer 
inhibitors (such as DNBP32), pesticides , fuel additives and stabiliser intermediates. 
In a past decision, the Commission found evidence that OSBP cannot be replaced by 
other chemicals in the production o f downstream applications , and inconclusive 
evidence on whether a further segmentation could be relevant.33  
(38) The Notifying Party submits that OSBP cannot be further sub -segmented based on 
grade or other criteria. The Commission did not receive any market fe edback 
contradicting this view. Given that the Transaction does not raise any concerns 
regardless of whether the market of OSBP is considered to be limited to OSBP or 
broader (all alkylphenols), the exact product market definition can be left open. For 
the purpose of the assessment, the Commission considers the market for OSBP.  
(39) In terms of geographic market,  the Commission considered in a past decision that the 
scope of the geographic market for OSBP was likely EEA -wide,34 due to the need 
for a REACH35-regist ration for this chemical, but ultimately left the market 
definition open. For the purpose of the present case, the Commission considers the 
market for OSBP to be EEA -wide in scope due to the regulatory constraints for 
marketing OSBP in the EEA . However , there is no need to conclude on the 
geographic market definition for OSBP, as no concerns arise regardless of a wider 
(global) or narrower (EEA -wide) market definition.  
                                                 
30  COMP/M.9017 - SK Capital Partners/Schene ctady International Group , paragraph 151.  
31  Notifying Party’s response to RFI 3, question 4.  
32  DNBP stands for 2,4 -dinitro -6-sec butyl phenol, see Notifying Party’s response to RFI 3, question 6.  
33  COMP/M.9017 - SK Capital Partners/Schenectady Internati onal Group , paragraph 96.  
34  COMP/M.9017 - SK Capital Partners/Schenectady International Group , paragraph 100.  
35  See Regulation (EC) No 1907/2006 of the European Parliament and of the Council of 18 December 2006 
concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH), 
establishing a European Chemicals Agency, amending Directive 1999/45/EC and repealing Council 
Regulation (EEC) No 793/93 and Commission Regulation (EC) No 1488/94 as well as Council Directive 
76/769/EEC a nd Commission Directives 91/155/EEC, 93/67/EEC, 93/105/EC and 2000/21/EC  (OJ L 396, 
30.12.2006, p.  1). 
 
 
9 6. COMPE TITIVE ASSE SSME N T 
6.1. Phenol (upstream) – Alkylphenols (downstream)  
(40) Both Parties are a ctive upstream in the supply of phenol. Two of SKCP’s portfolio 
companies (SI Group and Tilley Chemical) are active in phenol markets. However, 
both companies’ supply of phenol is marginal: SI Group only supplies phenol in 
India and Tilley Chemical sold […] of phenol in 2020 with a revenue of USD […] to 
very few clients  based in the US . Any market shares of SI Group and Tilley would 
be below [0-5]% in the EEA or worldwide, according to the Notifying Party.  
(41) Seqens produces phenol, a small part ( […]) of which  is targeted at captive  use for 
the production of salicylic acid and parts of which it sells on the merchant market.  
Under the  narrow est market definition (phenol sold in Western Europe (EU -14 and 
the UK ), Seqens would have a market share of [5-10]% in ter ms of volume and 
value in 2020.  
(42) Downstream, SKCP’s portfolio company SI Group purchased […] of phenol from 
Seqens in the EEA in 2020.36 SI Group used the phenol to produce PNP, PTBP, 2,4 
DTBP, 2,6 DTBP, DSBP and OSBP. SKCP’s market shares in those downstrea m 
markets are presented below in Table 1. 
Table 1: SKCP’s market shares in six alkylphenol markets in the EEA, 2020  
Product  Market share in the EEA in 2020  
Alkylphenols overall  [40-50]% 
PNP  [50-60]%37 
PTBP  [50-60]%38 
2,4-DTBP  [60-70]% 
2,6-DTBP  [60-70]% 
DSBP  [90-100]% 
OSBP  [90-100]% 
Source: Form CO, paragraphs 225, 230, 234, 237, 241 . 
                                                 
36  SI Group’s total demand of phenol in the EEA in 2020 was […] and globally […]. 
37  The Notifying Party confirmed that their market share in the market for PNP at EEA -wide level is not 
substantially different from their market shares at a plausible narrower geographic market level (e.g. 
national).  
38  The Notifying Party confirms that the market share of SI Group for each unique application /grade  of 
PTBP  does not deviate significantly from the market share for PTBP  overall, see Notifying Party’s 
response to RFI 3, question 3 . 
 
 
10 6.2. The Notifying Party’s view  
(43) The Notifying Party submits that the Transaction will not raise any concerns 
regarding the vertical relationship between the Parties with respect to phenol 
(upstream) and the six alkylphenols downstream  markets . Seqens has no market 
power upstream with a market share of at most [5-10]% and a n umber of phenol 
suppliers remaining active, such as Ineos, CEPSA Quimica, Versalis and Borealis. 
The Notifying Party therefore considers that the merged entity would have no ability 
to foreclose downstream rivals, and , as a result , also no incentives, sinc e a 
foreclosure would only backfire and lead customers to doubt on its reliability as a 
supplier, resulting in customers changing supplier away from Seqens. Furthermore, 
the Notifying Party highlights that Seqens’ phenol production capacity is […], 
whereas  the total demand for phenol in the EEA amounted to ca. 2 million tons in 
2020. If the merged entity were to foreclose rivals downstream, that demand could 
be easily satisfied by Seqens’ rivals.  
(44) In terms of customer foreclosure, the Notifying Party submit s that no concerns arise 
because phenol is used in the production of a very large number of chemical 
products and therefore, SI Group’s purchases for six alkylphenols are not an 
important route to market for phenol suppliers. SI Group’s purchases represent  [0-
5]% of the total EEA volume and value of demand in the upstream market . In terms 
of incentives, according to the Notifying Party, customer foreclosure would not be 
profitable, as foreclosure would not have any impact on costs and prices of 
competitors given the significant share of demand from different companies 
downstream (not only alkyphenol suppliers) that would still be available post -
Transaction.  
6.3. The Commission’s assessment  
6.3.1.  Input foreclosure  
(45) Input foreclosure arises where, post -merger, the new entity would be likely to restrict 
access to the products or services that it would have otherwise supplied, absent the 
merger, thereby raising its downstream rivals’  costs by making it harder for them to 
obtain supplies of the input under similar prices a nd conditions as absent the merger. 
This may lead the merged entity to profitably increase the price charged to 
consumers, resulting in a significant impediment to effective competition.39 In 
assessing the likelihood of an anticompetitive input foreclosure scenario, the 
Commission examines, first, whether the merged entity would have, post -merger, the 
ability to substantially foreclose access to inputs, second, whether it would have the 
incentive to do so, and third, whether a foreclosure strategy would have  a significant 
detrimental effect on competition downstream.40  
(46) Firstly, for input foreclosure to be a concern, the vertically integrated firm resulting 
from the Transaction must have a significant degree of market power in the upstream 
market. In this resp ect, the Commission  notes that Seqens’ market share upstream is 
below 10%, which would normally suggest the absence of market power41, and 
hence no ability to foreclose access to phenol as an input . The Commission has no 
                                                 
39  Non-Horizontal Merger Guidelines, recital 31.  
40  Non-Horizontal Merger Guidelines, recital 32.  
41  Non-Horizontal Merger Guidelines, recital 35.  
 
 
11 indication that the market share in this case does not reflect the competitive strength 
of Seqens in the market of phenol. None of the respondents to the market 
investigation questioned the fact  that Seqens does not hold a significant degree of 
market power in the upstream market for phenol.  The market investigation, 
additionally, confirmed the  Notifying Party’s view with respect to phenol not 
representing a significant source of product differentiation for the downstream 
market, since there is no specific phenol quality required as input for  alkylphenols or 
other applications42, with the exception of when the intended end -use is for contact 
with food.   
(47) Second ly, given that the merged entity would have no ability to foreclose, the 
Commission considers it unnecessary to assess whether the merged  entity would 
have incentives  to foreclose. Nevertheless , the Commission notes that the incentive 
to foreclose would depend on the degree to which the trade -off between the profit 
lost in the upstream market due to a reduction of input sales to rivals and the profit 
gain from expanding sales downstream would be profitable .43 In this respect, the 
Commission observes  that there are several suppliers of phenol in the market and 
phenol is a commoditized product , which does not require a specific level of quality 
or purity ; phenol sold by Seqens in the downstream market does not differentiate 
itself from phenol sold by its competitors. The Commission considers that, s hould 
the Parties restrict access to phenol , it is highly likely that the downstream demand 
for phenol would be diverted to competitors. Moreover , none of the responding 
competitors raised any concerns in this regard.   
(48) Third ly, in terms of impact, the competitors responding to the market investigation  
unanimously confirmed that they expect no impact on the market for phenol in the 
EEA44 and expect the market for the supply of phenol to remain competitive post -
Transaction.45 
(49) Based on the above considerations, the Commission concludes that the Transaction 
does not raise serious doubts as to its compatibility with the internal market in 
relation to the vertical relationship between the supply of phenol (upstream) and the 
supply of alkylphenols (or even plausible individual alkylphenol  markets , namely 
PNP, PT BP, PTBP polymer grade , PTBP resin grade, 2,4 DTBP, 2,6 DTBP, DSBP 
and OSBP) (downstream)  as a result of input foreclosure.  
6.3.2.  Customer foreclosure  
(50) 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 actual 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 conditions as 
absent the merger. This may a llow the merged entity profitably to establish higher 
                                                 
42  Responses to questions 3 and 4 from phenol suppliers received on 12 November 2021.  
43  Non-Horizontal Merger Guidelines, recitals 40 -41.  
44  Responses to question 9 from phenol suppliers received on 12 November 2021.  
45  Responses to question 6 from phenol suppliers received on 12 November 2021.  
 
 
12 prices on the downstream market.46 In assessing the likelihood of an anticompetitive 
customer foreclosure scenario, the Commission examines, first, whether the merged 
entity would have the ability to foreclose access to downstream markets by reducing 
its purchases from its upstream rivals,  second, whether it would have the incentive to 
reduce its purchases upstream, and third, whether a foreclosure strategy would have 
a significant detrimental effect on consumers in the downstream market.47  
(51) Firstly, in relation to the merged entity’s ability to foreclose access to downstream 
market, a merger may affect upstream competitors by increasing their cost to access 
downstream customers or by restricting access to a significant customer base.48 
Given that the market shares of SKCP in the narrow er plausible markets of 
individual alkylphenols is between 50 and 100%, the Commission conducted a 
market investigation to verify the Notifying Party’s claims in respect of the absence 
of customer foreclosure from the perspective of Seqens’ rivals upstream.  
(52) The market investigation confirmed the Notifying Party’s views. First, all 
responding competitors replied that no specific quality or purity of phenol is required 
for the production of alkylphenols, or any other application for which phenol is used
 49, con firming that the demand for phenol is indeed much broader than just limited to 
manufacturers and suppliers of alkylphenols. The Commission notes , in that respect , 
that the phenol demand attributable to alkylphenols (where SI Group is active in six 
specific  alkylphenols downstream with high market shares between 50 and 100% in 
the EEA in 2020) is just 5.7%  of overall phenol demand50. Given this very limited 
share of phenol demand , it is apparent that there would remain sufficient economic 
alternatives in the downstream market for the upstream rivals to sell their phenol to. 
The customer base for phenol in the EEA does not comprise only customers who 
manufacture and supply alkylphenols but it encompasses different applications, such 
as phenolic resins (19.7% of  demand of phenol), BPA (Bisphenol A, representing 
48.9% of demand of phenol), cyclohexane (23.2% of demand of phenol) and a 
number of other applications together representing 23% of demand of phenol. 
Therefore, the customer base is sufficiently large to e xclude competition concerns on 
the ground of lack of ability to foreclose customers.  
(53) Second ly, given that the merged entity would have no ability to foreclose, the 
Commission considers it unnecessary to assess whether the merged entity would 
have incentiv es to foreclose. Nevertheless, the Commission notes that the incentive 
to foreclose access to downstream markets would depend on the degree to which the 
trade -off between the possible costs associated with not procuring products from 
upstream rivals and th e possible gains from doing so is profitable. Given the 
significant share of demand for phenol that would still be available on the market, 
the Commission considers that it is very unlikely that a strategy of customer 
foreclosure  could be profitable , as this strategy would not have any impact on costs 
and prices of competitors. Additionally, none of the market respondents to the 
market investigation raised any concerns in relation to a potential strategy of 
                                                 
46  Non-Horizontal Merger Guidelines, recital 58.  
47  Non-Horizontal Merger Guidelines, recital 59.  
48  Non-Horizontal Merger Guidelines, recital 60.  
49  Responses to questions 3 and 4 from p henol suppliers received on 12 November 2021.  
50  Form CO, paragraph 223.  
 
 
13 customer foreclosure, arguing that a suffic ient level of demand for phenol would 
remain on the market.  
(54) Third ly, in terms of impact, the competitors responding to the market investigation 
unanimously confirmed that post -Transaction there would still be sufficient demand 
for phenol in the EEA  and tha t, should the merged entity stop sourcing phenol from 
rivals and source this product only from Seqens, this strategy would have no impact 
on competitors’ access to the market.51 Competitors  expect the Transaction will have 
no impact in the EEA.52 
(55) Based on th e above considerations, the Commission concludes that the Transaction 
does not raise serious doubts as to its compatibility with the internal market in 
relation to the vertical relationship between the supply of phenol (upstream) and the 
supply of alkylphe nols (or even plausible individual alkylphenol  markets , namely 
PNP, PTBP , PTBP polymer grade, PTBP resin grade , 2,4 DTBP, 2,6 DTBP, DSBP 
and OSBP) (downstream) as a result of customer foreclosure.  
7. CONCLUSION  
(56) For the above reasons, the European Commission h as decided not to oppose the 
notified concentration  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  
Executive Vice-President  
 
                                                 
51  Responses to question 8 from phenol suppliers received on 12 November 2021.  
52  Responses to question 9 from phenol suppliers received on 12 November 2021.