EUROPEAN COMMISSION C(2016) 5550



To the notifying party: Dear Sir/Madam, Subject:Case M.8107-CVC / ÅR Packaging

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 1 August 2016, the European Commission received notification of a proposed concentration pursuant to Article 4 of the Merger Regulation by which CVC Capital Partners SICAV-FIS S.A. ("CVC", Luxembourg) acquires within the meaning of Article 3(1)(b) of the Merger Regulation sole control of the whole of ÅR Packaging Group AB (Sweden) by way of purchase of shares. CVC and ÅR Packaging are collectively referred to as "Parties". 1.THE PARTIES AND THE OPERATION (2)CVC is a private equity fund providing investment advice to and managing investments on behalf of investment funds ("CVC Funds"). CVC Funds holds interests in companies in various industries, including chemicals, utilities, manufacturing, retailing and distribution. (3)ÅR Packaging is a producer of paperboard and flexible packaging products, including flexible packaging for food, healthcare and pharmaceutical products. ÅR Packaging is jointly owned by A16 Packaging Limited and ACPack B.V. (together "the Sellers"). (4)On 27 May 2016, Bidco, a special purpose vehicle indirectly owned by CVC Fund VI, and the Sellers entered into a sale and purchase agreement under which Bidco agreed to acquire 100% of the issued share capital of ÅR Packaging (the "Target"). Post-transaction CVC will acquire indirect sole control over the Target. (5)The transaction therefore constitutes a concentration within the meaning of Article 3(1)b of the Merger Regulation. 2.EU DIMENSION (6)The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 000 million [CVC Group: EUR […] million, Target: EUR 514 million]. Each of them has an EU-wide turnover in excess of EUR 250 million [CVC Group: EUR […] million, Target: EUR […] million], 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 an EU dimension.

3.COMPETITIVE ASSESSMENT (7)Continental Foods, one of CVC Funds portfolio companies, specialises in food products such as packet soups, sauces and bouillon. It is primarily active in Belgium, France, Germany, Finland and Sweden. Alvogen, another CVC portfolio company is a niche pharmaceutical manufacturer operating in the US and Europe. (8)The transaction therefore gives rise to vertical relationships between the Target's upstream activities in flexible packaging and CVC's downstream activities in the market for (i) dry mix products and (ii) pharmaceutical products. (9)There are no horizontal overlaps between the Parties' activities. 3.1.Market definitions 3.1.1.Upstream market: flexible packaging (10)Flexible packaging involves the conversion and printing of plastic and cellulose films, aluminium foils and papers, which are used separately or in combination, to produce primary and secondary packaging products for a wide variety of end-users. (11)Previously, the Commission has found that the market for flexible packaging could be segmented on the basis of end-use applications as follows: (i) food, (ii) medical, (iii) pharmaceuticals, (iv) household products and (v) other non-food. (12)Within food flexible packaging, a narrower segmentation has been considered by distinguishing flexible packaging in respect of various categories of food: (a) dairy; (b) beverages; (c) confectionary; (d) fresh; (e) dried; (f) frozen; and (g) pet food, but it was ultimately left open. Within pharmaceutical flexible packaging, a narrower segmentation has been considered into (a) laminated sachets, (b) cold-form blister bases, (c) plastic-based blister bases and (d) blister lidding, but it was ultimately left open. (13)The Parties submit that there is a high degree of supply-side substitutability since manufacturers of flexible packaging displaying one set of characteristics can readily produce flexible packaging displaying a different set of characteristics. Furthermore, according to the Parties, demand-side substitutability is inextricably linked to supply-side substitutability since each customer of flexible packaging has its own specific requirements. (14)The Commission has previously considered that the geographic market for flexible packaging is EEA-wide or wider, but ultimately left the market definition open.The Parties concur with the Commission's previous analysis on the geographic scope for flexible packaging. 3.1.2.Downstream markets: dry food products and pharmaceutical products (15)The Commission has previously found that Continental Foods was active in the market for the provision of instant dry soups and regular dry soups. The Commission also found a distinction between cold sauces and hot sauces with a further division of hot sauces into wet sauces and dry sauces. The Commission found the market for the production of food to be national in scope. (16)The Commission has previously considered that pharmaceuticals may be subdivided into therapeutic classes by reference to the Anatomical Therapeutic Classification (ATC) system which is a hierarchical and coded four-level system that classifies medicinal products according to their indication, therapeutic use, composition and mode of action. The Commission has previously considered markets for pharmaceutical products to be national in scope, despite the trend for standardisation at a European level. (17)The Parties submit that the relevant downstream market for the purpose of assessing the proposed transaction would be the purchasing market for flexible packaging in the EEA rather than the downstream markets in which CVC's portfolio companies compete. According to the Parties, given the structure of supply and demand in the upstream market, Continental Foods' and Alvogen's market position at national level has no impact on competition either at downstream or upstream level. 3.1.3.Conclusion on market definitions (18)In light of the above, the Commission considers that the exact delineation of the relevant product and geographic markets can be left open in the present case, as no serious doubts arise under any plausible product and geographic market definitions. 3.2.Competitive assessment 3.2.1.Downstream markets (19)Continental Food purchases flexible food packaging for its dry mix products such as instant and regular dry soups and dry hot sauces. Its national market shares in the sale of soups and sauces range from [30-40]% to [90-100]%, but its share in the purchase of flexible food packaging is less than [0-5]% in the EEA.