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, 19.1.2021  
C(2021 ) 389 final  
PUBLIC VERSION  
 
Black Diamond Capital Management  
L.L.C.  
One Sound Shore Drive  
Suite 200  
Greenwich, CT 06830  
United States of America  
 
Fusion Investment S.à r.l.  
23, Avenue Monterey  
L-2163 Luxembourg  
Grand Duchy of Luxembourg  
 
Subject : Case M.10028  – BLACK DIAMOND CAPITAL MANAGEMENT / 
INVESTINDUSTRIAL GROUP / PHENOLIC SPECIALTY RESINS 
BUSINESS OF HEXION  
Commission decision pursuant to Article 6(1)(b) of Council Regulation 
No 139/20041 2 and Article 57 of the Agreement on the European 
Economic  Area3 
                                                 
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 ‘int ernal market’. The terminology of the TFEU will 
be used throughout this decision.  
2  For the purposes of this Decision, although the United Kingdom withdrew from the European Union as of 
1 February 2020, according to Article 92 of the Agreement on the with drawal of the United Kingdom of 
Great Britain and Northern Ireland from the European Union and the European Atomic Energy 
Community (OJ L 29, 31.1.2020, p. 7), the Commission continues to be competent to apply Union law as 
 
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information omitted has been replaced by 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 figu res or a general description.  
 
 
2 Dear Sir or Madam,  
(1) On 4.12.2020 , the European Commission received a notification of a proposed 
concentration  (the ‘Transaction’)  pursuant to Article 4 of the Merger Regulation by 
which  Black Diamond Capital Management LLC (‘Black Diamond’, the Unite d 
States of America) and Investindustrial S.A. (‘Investindustrial’, Luxembourg) 
through its subsidiary Fusion Investment S.a.r.l. (‘FI’, Luxembourg) , acquire  within 
the meaning of Article 3(1)(b) of the Merger Regulation  joint control of  the Phenolic 
Specialty Resins Business of Hexion (‘Target’) , belonging to Hexion Inc (‘Hexion’, 
the United States of America) .4 Black Diamond and Investindustrial are designated 
hereinafter as the ‘Notifying Parties’, while the Notifying Parties together with  the 
Target are referred to as the ‘Parties’ .  
1. THE PARTIES  
(2) Black Diamond  is an investment advisory firm with a focus on four investment 
areas: (i) control distressed/private equity funds; (ii) hedge funds; (iii) non -control 
stress/distressed closed end fund s; and (iv) collateralised loan obligations.  
(3) Investindustrial  is a group of independently managed investment, holding and 
financial advisory companies. Independently managed subsidiaries of funds 
managed by companies of Investindustrial invest predominant ly in medium -sized 
enterprises active in industry sectors such as consumer and leisure; healthcare and 
services; and industrial manufacturing.  
(4) Hexion  produces  thermosetting resins, or thermosets, and adhesive and structural 
resins and coatings. The Target  is mainly a producer of phenolic specialty resins, 
which are used in applications that require extreme heat resistance and strength, such 
as after -market automotive and OEM truck brake pads, filtration, aircraft 
components and foundry resins.  
2. THE OPERATIO N 
(5) The Transaction is structured as a purchase of assets, pursuant to a Purchase 
Agreement and a Framework Agreement, both signed on 27 September 2020. 
According to the Purchase Agreement, Fusion UK Holding Ltd., a subsidiary 
indirectly controlled by Invest industrial , will acquire the Target through wholly 
owned acquisition vehicles set up for the purposes of the Transaction. Upon closing 
of the Transaction, Black Diamond and Investindustrial will each indirectly hold 
equal equity interests in Fusion UK Hold ing Ltd. and therefore the Target.  
(6) As such, following completion of the Transaction, the Target will be jointly owned 
and controlled by Black Diamond and Investindustrial. The  Transaction therefore 
qualifies as a concentration pursuant to Article 3(1)(b)  of the Merger Regulation.  
                                                                                                                                                      
regards the United Kingdom for ad ministrative procedures which were initiated before the end of the 
transition period.  
3  OJ L 1, 3.1.1994, p. 3 (the ‘EEA Agreement’).  
4  Publication in the Official Journal of the European Union No C 435, 16.12.2020, p. 5 –6. 
 
 
3 3. UNION  DIMENSION  
(7) The undertakings concerned have a combined aggregate worldwide turnover of more 
than EUR 5 000 million (Black Diamond : EUR […]; Investindustrial : EUR […]; 
Target : EUR […]). Each of them has a Union -wide turnover in  excess of EUR 250 
million (Black Diamond : EUR […]; Investindustrial : EUR […]; Target : EUR […]), 
but they do not achieve more than two -thirds of their aggregate Union -wide turnover 
within one and the same Member State.   
(8) As a result, t he Transaction has a U nion dimension  pursuant to Article 1(2) of the 
Merger Regulation .  
4. MARKET DEFINITION  
(9) The main products relevant to the merger control assessment of the Transaction are 
(i) the liquid polymer known as unsaturated polyester resins (‘UPR’) , and 
(ii) thermoset  moulding compounds5 which use UPR as their input (‘UPR -based 
thermoset compounds’),  namely bulk and sheet mo ulding compounds (‘BMCs’ and 
‘SMCs’) , as well as dry granular thermoset mo ulding compounds (‘DGMCs’).  
(10) Polynt -Reichhold , a portfolio company controlled by Black Diamond and 
Investindustrial,  is an integrated manufacturer of composites, coatings, resins and 
intermediate and specialty chemical polymers, UPR, as well as UPR -based bulk and 
sheet moulding compounds (BMCs, SMCs) . The Target is active in the production 
and supply of DGMCs which use various polymers as inputs , including UPR -based 
DGMCs.  
(11) The Notifying Parties explain that UPRs are produced by the polycondensation of 
saturated and unsaturated dicarboxylic acids with glycols.6 UPRs form highly 
durable structures and coatings when they are cross -linked with a vinylic reactive 
monomer, most commonly styrene  (‘pure UPR’  or “non -reinforced UPR’ ). Because 
on their own UPRs have only limited structural integrity, they are of ten combined 
with fiberglass or mineral fillers (‘reinforced UPR’) before cross -linking to enhance 
their mechanical strength. Reinforced UPRs are mostl y used in construction , as well 
as marine  and land transportation industries, while non -reinforced UPRs a re used to 
make cultured marble and solid surface counter tops, gelcoats, automotive repair 
putty and filler, and other products , such as bowling balls and buttons.  
(12) As for thermoset moulding compound s (which include , among others,  BMCs, SMCs 
and DGMCs) , they are produced using thermosetting polymeric matrices, the most 
common ones being , phenolic  (‘PF’) , melamine /phenolic (‘MF’) , unsaturated 
                                                 
5  ‘Based on their response to  temperature, plastic materials may be classified into two main categories: 
thermoplastics and thermosets. A thermoplastic behaves like a fluid above certain temperature level, but 
the heating of a thermoset lea ds to its degradation without its going throu gh a fluid state. […] This 
classification is not restricted to plastic material but may also be extended to the behavior of coatings, 
adhesives and several other categories’. Source: Jea n-Pierre Pascault, Henry Sautereau, Jaques Verdu, 
Roberto J.J. William s, Thermosetting Polymers ( CRC Press, 2002 ) 1.  
6  Form CO, paras. 6.39 -6.41.  
 
 
4 polyester, vinylester and epoxy (‘EP’) resins. The end uses of thermoset compounds 
typically relate to transportation , electrical, or construction services.7 
4.1 Product market definition  
 Unsaturated polyester resins (UPRs)  
4.1.1.1  The Commission’s precedents  
(13) In its past decision s, the Commission found that UPR could constitute a separate 
product market as it is not substitutable with other resins or chemical compounds 
intended for the same use.8  
(14) Moreover, in previous cases, the Commission found that UPR is not a homogenous 
product, as it can be supplied in two forms: pure UPR or reinforced UPR. As 
opposed to pure UPR with a stand ard formulation, reinforced UPR combines UPR 
with different additives in certain quantities to match the specific requirements and 
needs of each customer.9 However, although for each end -use application ( industr y) 
it is necessary to have a special formulat ion of UPR, suppliers that are focused on 
customers from certain industries can easily adapt their production to start supplying 
UPR for use in other industries as well.10  
(15) Thus, due to an extensive supply -side substitutability with regard to the 
manufactur ing of UPR for different end -uses, the Commission considered the market 
for UPR as a single, differentiated product market.11 
4.1.1.2  The Notifying Parties ’ view  
(16) The Notifying Parties submit that there is a relevant product market for UPR, which 
relates to the prod uction and supply of pure UPR,12 which is generally styrene based, 
and not reinforced UPR. In particular, they recall  arguments made by the parties in 
M.7359  - PCCR USA/ TOTAL'S CCP COMPOSITE BUSINESS  that suppliers 
produce only pure UPR, with customers themselves, if needed, producing reinforced 
UPR13 at a later stage .14 
                                                 
7  Form CO, paras 6.3 ff and Annex 6.1.b.  
8  Case COMP/M.7359 – PCCR USA/Total’s CCP Composite Business , 27 October 2014, para. 17.  
9  Case COMP/M.8059 – Investindustrial / Blac k Diamond / Polynt/ Reichhold, 12 May 2017, para. 30  
10  Case COMP/M.7359 – PCCR USA/Total’s CCP Composite Business , 27 October 2014, paras 16 -19. 
11  Ibid, paras 31 -34. 
12  In the Form CO, the Notifying Parties use the terms ‘ liquid’ , ‘virgin’  and ‘ non-reinf orced’  to refer to 
‘pure’ UPR. In reply to request for information 8 of 15.01.2021, the Notifying Parties confirmed that the 
terms ‘ non-reinforced’, ‘liquid’ and ‘virgin’  used in the Form CO, refer to the format of UPR referred to 
as ‘pure’ by the Commissi on in Case COMP/M.8059 – Investindustrial / Black Diamond / Polynt/ 
Reichhold, 12 May 2017 .  
13  In the Form CO, the Notifying Parties also use the terms ‘ dry’ or ‘solid’  to refer to ‘ reinforced’  UPR. In 
reply to request for information 8 of 15.01.2021, the  Notifying Parties confirmed that the terms ‘ dry’ and 
‘solid’  used in the Form C O, refer to the format of UPR referred to  as ‘reinforced’  by the Commission in 
Case COMP/M.8059 – Investindustrial / Black Diamond / Polynt/ Reichhold, 12 May 2017.   
14  Form CO , paras 6.44 -6.53.  
 
 
5 4.1.1.3  The Commission’s assessment  
(17) The results of the Commission’s market i nvestigation  confirm the findings from 
M.8059 – Investindustrial / Black Diamond / Polynt/ Reichhold.  In particular, whi le 
many suppliers indeed produce UPR in its pure form  only, others offer both pure and 
reinforced  UPR.15 
(18) Thus,  in line with its past decisional practice , the Commission considers that the 
production  and s upply  of UPR in any of its forms (pure or reinforced ) constitutes 
one relevant product market  without any warranted segmentations . 
 Bulk mo ulding compounds, sheet mo ulding compounds and dry granular thermoset  
moulding compounds (BMCs, SMCs and DGMCs)  
4.1.2.1  The Commission’s precedents  
(19) In its only  precedent defining the market for BMCs and SMCs,16 the Commission 
considered these  two compounds  to be competing in the same market , due to their 
demand - and supply -side substitutability , but it left the exact market definition open.  
(20) The Commission has not previously examined market definition in relation to 
DGMCs.  
4.1.2.2  The Notifying Parties ’ view  
(21) The Notifying Parties  submit  that BMCs and SMCs are not substitutable with 
DGMCs, arguing that the compounds are distinct in terms of compositio n, 
manufacturing, processing, final production and type of application.17 
(22) As for the supply -side perspective , the Notifying Parties argue that the production of 
DGMCs differs in manufacturing technologie s used from  that of  BMCs and SMCs. 
Moreover, for the p roduction of the former various polymers  can be used as an input  
(i.e. reinforced UPR, PF, MF or EP resins ), whilst the production of the latter 
requires  pure UPR as an input.  
(23) Regarding the  demand side, the Notifying Parties submit that SMCs and BMCs are 
liquid /semi -liquid  resins , composed of long fibres and suitable for compression 
moulding , whilst DGMCs are dry granular raw materials , suitable for injection 
moulding. Moreover,  the Notifying Parties claim  that SMCs and BMCs are heavier 
and cheaper compare d to DGMCs. Although all three compounds are generally used 
in similar industries (i.e. automotive, electrical engineering and electrical 
components industries), the Notifying Parties argue that their application differs due 
to their distinct product chara cteristics.  
(24) For example, DGMCs may be used in household appliances and tight tolerance/high 
performance parts in automotive under -the-hood applications, such as pistons, 
pulle ys, valve blocks and pump parts, due to their better dimensional stability, high er 
heat resistance high viscosity flow, high mechanical propertie s and insulating 
                                                 
15  Reply to the Commission’s market investigation received on  11.12.2020.  
16  Case COMP/M.8059 – Investindustrial / Black Diamond / Polynt/ Reichhold, 12 May 2017, para. 88.  
17  Form  CO paras 6.3 -6.35 and Table 2.  
 
 
6 properties , whilst  SMC s and BMCs’ typical applications include more demanding 
electrical applications, corrosion resistant needs, and structural components due to 
their mecha nical strength . 
4.1.2.3  The Commission’s assessment  
(25) The majority of the respondents to the  Commission’s  market investigation supported 
the Notifying Parties’ view on the abs ence of supply -side substitutability, confirming 
that different technologies are require d for the production of DGMCs  on the one 
hand  and of SMCs/BMCs  on the other hand .18 
(26) Moreover, some of the respondents  further agreed with  the distinction between 
DGMCs and SMCs/BMCs made by the Notifying Parties  due to the absence of 
demand -side substitutabili ty.19  
(27) However, other respondents expressed a contrary view, outlining a number of 
similarities between DGMCs and SMCs/BMCs. More specifically,  these respondents  
indicated that when it comes to processing of these three compounds , similar 
technologies can  be used. For instance, one responde nt stated that ‘DGMCs can also 
be compression moul ded’20 using the ‘same press equipment ’.21 In addition, the 
compounds’ weight was considered to  often be comparable  depending on its 
composition.22 More specifically, the  length of the fibres of DGMCs ‘can be 
increased ’,23 and their density can ‘range between 1.35 and 2.1 g/cm3’.24 Similarly, 
depending on the type of DGMC (i.e. EP -, PF-based ), the three compounds ‘can be 
at the same price level or be cheaper ’25 and there is therefore, ‘no clear line between 
prices ’.26 Finally, as regards the compounds’ properties, ‘specific DGMCs will 
outperform SMCs/BMCs in mechanical strength ’.27 
(28) The participants’ responses to the market investigation also suggest that , while  the 
properties of DGMCs can vary  according to the polymer used as an input (UPR, EP, 
PF, MF) ,28 since DGMCs based on different inputs share some similar properties,  
they are  also to some degree substitutable with each other . More specifically, 
according to th e respondents, customers can substitute different DGMCs because of  
(i) the similarity of their ‘strong points ’29 (i.e. properties) , which is  sufficient 
according to the customers’ technical requirements ,30 (ii) the price of each 
                                                 
18  Replies to the Commis sion’s market investigation received on 08.12.2020 and 14.12.2020 (1). One reply 
to the Commission’s market investigation received on 11.12.2020 suggested that the materials can be 
substituted from a  supply -side perspective  ‘depend[ing] on the market, tech nical requests on products, 
laws’.  
19  Reply to the Commission’s market investigation received on 14.12.2020 (2).  
20  Reply to the Commission’s market investigation received on 11.12.2020.  
21  Reply to the Commission’s market investigation received on 14.12 .2020 (1).  
22  Reply to the Commission’s market investigation received on 14.12.2020 (3).  
23  Reply to the Commission’s market investigation received on 11.12.2020.  
24  Reply to the Commission’s market investigation received on 14.12.2020 (1).  
25  ibid. 
26  Reply to the Commission’s market investigation received on 14.12.2020 (3).  
27  Reply to the Commission’s market investigation received on 14.12.2020 (1).  
28  Replies to the Commission’s market investigation received on 11.12.2020 and 14.12.2020 (2).  
29  Reply  to the Commission’s market investigation received on 14.12.2020 (2).  
30 Reply to the Commission’s market investiga tion received on 14.12.2020 (2) points out some of the 
similarities between DGMCs of various inputs. The respondent suggests that, among others, (i) UPR -, 
 
 
 
7 compound ,31 and (iii) other reasons  (i.e. certain change s in regulatory requirements 
due to , among others,  some thermoset moulding compounds being considered as 
environmentally unfriendly) .32 None of the participants’ responses to the market 
investigation suggested that DGMCs should c onstitute separate product markets 
based on their input.  
(29) On that note , market participants suggested  that thermoset moulding compounds are 
easily substitutable  between one another,  depending on the technical requirements of 
their customers .33 More specific ally, market participants suggest that in some fields 
of application, DGMCs can be substituted by SMC/BMCs, and vice versa , whilst 
other fields of application ‘can only be covered by one of the two prod uct classes ; 
and that ‘this strongly depends on the in dividual [end-] product propertie s’.34 Other 
market participants suggested that the substitutability  between DGMCs and 
SMCs/BMCs is possible  only in ‘small industrial niche s where two different 
material groups can cross ’.35 
(30) Overall, t he responses to  the market investigation suggest that, from a dem and-side 
perspective , DGMCs, SMCs and BMCs  are to some degree substitutable. Although 
some responses to the market investigation distinguish the various thermoset 
moulding compounds according to  the polymer  used as  their input (i.e. UPR, EP, PF, 
MP),36 none of the responses support the fact that thermoset moulding compounds 
belong to separate product markets based on their input .  
(31) Therefore , the Commission considers that  BMCs/SMCs and DGMCs could belong 
to a broader, differentiated market for thermoset moulding compounds of various 
polymers  (e.g. pure/reinforced  UPR, PF, MP and EP resins) .  
(32) Whether or not a distinction should be drawn between (i) SMCs/BMCs and (ii) 
DGMCs  can be left open, since the Transaction  does not raise serious doubts as to its 
compatibility with the  internal market under any plausible market definition .  
 Conclus ion on product market definition  
(33) On the basis of the above, the Commission finds that:  
i) UPR  constitutes a separate  relevant produc t market ; 
ii) Thermos et moulding  compounds  (i.e. BMCs, SMCs and DGMCs)  of different 
polymers (e.g. pure/reinforced  UPR, phenolic, melamin e/phenolic and epoxy 
resins)  could constitute a relevant product market  or, alternatively, (i) 
SMCs/BMCs and (ii) DGMCs  could constitute separate relevant product 
market s. This question can be left open . 
                                                                                                                                                      
MP- and EP - based DGMCs, all have good electrical properties, (ii) UPR - and PF - based DGMCs both 
have dimensional stability MP - and EP -based DGMCs both have copper adhesion, etc.  
31  Reply to the Commission’s market investigation received  on 11.12.2020 . 
32  ibid.  
33  Reply to the Commission’s market investigation received on 11.12.2020.  
34  Reply to the Commission’s market investigation received on 08.12.2020.  
35  Reply to the Commission’s market investigation received on 14.12.2020  (2). 
36  Replies to the Commission’s market investigation received on 08.12.2020, 11.12.2020 and 14.12.2020 
(2). 
 
 
8 4.2 Geographic market definition  
 Unsaturated polyester resins (UPRs)  
4.2.1.1  The Commission’s precedents  
(34) In previous decisions, t he Commission considered the geographic market definition 
for production and sale of  UPR to be EEA -wide .37 In fact,  despite moderate transport 
costs, some product characteristics , in particular product stability and temperature 
conditions, impede UPR from being transported over long distance s. As a result,  
European customers’ plants are mainly sourced within Europe.  
4.2.1.2  The Notifying Parties ’ view  
(35) The Notifying  Parties submit that, f or the purposes of the assessment of the 
Transaction , it is not necessary to d etermine whether the geographic scope of the 
UPR market is EEA -wide or worldwide in scope, since they consider that the 
Transaction does not raise any competition  concerns under any possible geographic 
market definition.  
4.2.1.3  The Commission’s assessment  
(36) The Com mission’s market investigation did not provide any elements that would 
warrant a depar ture from its past decisional practice . Thus, t he Commission finds 
that the relevant  geographic  market for the production and  sale of UPR is EEA -wide  
in scope .  
4.2.2 Bulk mo ulding compounds, sheet mo ulding compounds and dry granular thermoset 
moulding compounds (BMCs, SMCs and DGMCs)  
4.2.2.1  The Commission’s precedents  
(37) As for BMCs and SMCs, in M.8059 – Investindustrial / Black Diamond / Polynt/ 
Reichhold, the Commission found  the relevant geographic market to be EEA -wide, 
due to product supplie s taking place across the EEA, relatively low transport costs 
and the fact that customers explained that sourcing outside the EEA was  not 
considered a suitable option. In the absence of competition concerns, the exact scope 
of the geographic market was left open.38 
(38) The Commission has not previously defined a geographic market for DGMCs.  
4.2.2.2  The Notifying Parties ’ view  
(39) The Notifying Parties submit that DGMCs are not substitutable with, and con stitute 
a separate product market from SMCs and BMCs. As a result, they consider that 
SMCs and BMCs are not relevant to the Transaction and therefore, do not submit 
their view on the relevant geographic market for SMCs/BMCs.   
                                                 
37  Case COMP/M.7359 - PCCR USA/Total’s CCP Composite Business , 27 October 2014, paras. 21 and 23;  
Case COMP/M.8059 – Investindustrial / Black Diamond / Polynt/ Reichhold, 12 May 2017, para. 44.  
38  Case COMP/M.8059 – Investindustrial / Black Diamond / Polynt/ Reichhold, 12 May 2017, paras 80 -90.  
 
 
9 (40) They nevertheless suggest that  the relevant geographic market for DGMCs is at least 
EEA -wide in scope, in light of product supplies taking place across the EEA and 
relatively low transport costs, resulting from the fact that  DGMCs are dry, non -
hazardous products that can be stored for very long periods of time (6 -12 months). 
To support their view,  the Notifying Parties  submit that  the Target produces DGMCs 
only in Germany, but sells them worldwide . 
4.2.2.3  The Commission’s assessment  
(41) In line with its past decisional practice for SMCs and BMCs, the Commission finds,  
for the purposes of the assessment of the Transaction,  the geographic market for 
thermoset moulding compounds (and sub -segments thereof) to be at least EEA -wide.  
(42) However, t he precise definition of the relevant geographic market , i.e. whether it is 
EEA -wide or wider (e.g. worldwide) in scope,  can be left open, as the Transaction  
does not raise serious doubts as to its compatibility with the  internal market under 
any plausible market definition .  
 Conclus ion on geographic market definiti ons 
(43) On the basis of the above, the Commission  finds that for  
i) UPR  the relevant geographic market is EEA -wide in scope ; 
ii) Thermos et moulding compounds  (and possible segments thereof) the relevant 
geographic market  is EEA -wide or wider  (e.g. worldwide) in scope but the exact 
market definition can be left open . 
5. COMPETITIVE ASSESSMEN T 
5.1 Legal framework  
(44) Under Article 2(2) and (3) of the Merger Regulation, the Commission must assess 
whether a proposed concentration would significantly impede effective competition 
in the internal market or in a substantial part of it, in particular through the creation 
or strengthening of a dominant position. In this respect, a merger can entail 
horizontal and/or non -horizontal effects.  
5.1.1 Horizontal effects  
(45) Horizontal effe cts are those deriving from a concentration where the undertakings 
concerned are actual or potential competitors of each other in one or more of the 
relevant markets concerned. The Commission appraises horizontal effects in 
accordance with the Horizontal M erger Guidelines.39 Horizontal effects may be non -
coordinated or coordinated.  
(46) As regards horizontal non -coordinated effects, a ccording to paragraph 26 of the 
Horizontal Merger Guidelines, a number of factors  (the list of which is non-
                                                 
39  Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of 
concentra tions between undertakings (‘Horizontal Merger Guidelines’), OJ C 31, 5.2.2014.  
 
 
10 exhaustive ) may be take n into account in order to determine whether significant non -
coordinated effects are likely to result from a concentration.  
(47) In assessing the likelihood of coordinated effects, the Commission takes into account 
all available relevant information on the cha racteristics of the markets concerned, 
including both structural features and the past behaviour of firm s.40 
5.1.2 Non-horizontal effects  
(48) Non-horizontal effects mainly relate to the foreclosure of competitors that can arise 
from vertical or conglomerate integration. In general, vertical integration is the 
consequence of the combination of products, services or businesses across different 
levels of the same supply chain. Conglomerate integration relates to the combination 
of complementary products or services that are generally purchased by the same set 
of customers.  
(49) Pursuant to the Non -Horizontal Merger Guidelines,41 vertical integration may result 
in two forms of foreclos ure: input foreclosure, where the concentration is likely to 
raise costs of downstream rivals by restricting access to an important input or 
deteriorating supply conditions, and customer foreclosure, where the concentration is 
likely to foreclose upstream rivals by restricting their access to a sufficient customer 
base.  
(50) In assessing the likelihood of foreclosure scenarios, the Commission examines, first, 
whether the merged firm would have the ability to foreclose its rivals, second, 
whether it would have t he economic incentive to do so  and, third, whether a 
foreclosure strategy would have a significant detrimental effect on competition, thus 
causing harm to consumers. In practice, these factors are often examined together as 
they are closely intertwined.  
5.2 Market structure  
5.2.1 Horizontal relationship s and horizontally affected markets  
(51) The Transaction give rise to a horizontal relationship  in the overall market for 
thermoset moulding compounds between the production and sale of UPR -based bulk 
and sheet mo ulding com pounds (BMCs  and SMCs ) by Polynt -Reichhold , a portfolio 
company controlled by Black Diamond and Investindustrial, and the production and 
sale of dry granula r thermoset mo ulding compounds (DGMCs ) by the Target.  
(52) Under the narrowest plausible market definiti on, that is to say  the production and 
sale of DGMCs , on the one hand, and of BMCs and SMCs, on the other hand, the 
Transaction does not result in any horizontal overlaps (and thus there are also no 
horizontally affected markets ).  
(53) As for the horizontal overlap between the Parties’ activities on the wider  market for  
production and sale of  thermoset moulding compounds  (BMCs, SMCs and DGMCs) 
in the EEA  and world -wide , the Transaction does not lead to any horizontally 
                                                 
40  Horizontal Merger Guidelines, paragraph 43.  
41  Guidelines on the assessment of non -horizontal mergers under the Council Regulation on the control 
of concentrations between undertakings. OJ C 265, 18.10.2008, p. 6.  

 
 
12 that clos ed in December 2020 . On that basis, this potential non -horizontal 
relationship will not be further discussed in the present decision .44 
(58) As regards the vertical link between the upstream production and sale of UPR by 
Polynt -Reichhold  and the downstream production and sale of UPR -based DGMCs 
by the Target , the Transaction gives rise to  affected market s both upstream and 
downstream.  
(59) Indeed, first, Polynt -Reichhold ’s share of the upstream market for UPR production  
and sale  in the EEA  amounted to [30-40]% in 2019.45  
(60) Second, a s for the downstream activities, in 2019, the Parties held [10-20]% and [0-
5]% of the market for  production and sale of thermoset  moulding  compounds  
(including SMCs, BMCs and DGMCs) respectively in the EEA and worldwid e (see 
paragraph  (53) above). The Target’s  shares of the market for DGMCs amounted in 
2019  in the EEA  to [30-40]%46 and worldwide to [0-5]%.47  
5.3 Non-horizontal effects  
5.3.1 The Notifying Party’s view  
(61) The Notifying Parties  argue that t here is no actual or potential vertical link between 
the UPR produced by Polynt -Reichhold and UPR -based DGMCs produced by the 
Target .48  
(62) In particular, they submit that  for its production of UPR -based DGMCs, the Target 
purchases exclusively UPR resins in their reinforced  form , while Polynt -Reichhold 
only produces pure UPR (based on styrene ). 
(63) Moreover, according to the Notifying Parties, Polynt -Reichhold would not be able to 
produce reinforced UPR without very substan tial cost and time investments, whilst 
the Target would not be able to use pure UPR due to i)  a specific granular form of its 
DGMCs that requires a use of reinforced  UPR, ii) the inability to process pure UPR 
by its manufacturing assets and finally iii)  the flammable character of styrene 
contained in pure UPR, which  would require the establishment of an explosive -
protection zone in its production operations.  
5.3.2 The Commission’s assessment  
5.3.2.1  Input foreclosure  
Ability t o foreclose  
(64) The Notifying Parties submit that Polynt -Reichhold’s share per volume in the market 
for the production and supply of UPR in 2019 in the EEA was [30-40]%. As 
                                                 
44  Reply to the request for information 6 of 11.01.2021. For the press release issued by Vertellus  see 
https://vertellus.com/pritzker -private -capital -acquires -vertellus/.  
45  Form CO, Table 9.  
46  Form CO, Table 11.  
47  Form CO, Table 1 0. 
48  Form CO, paras 6.78 ff.  

 
 
14 Incentive s to foreclose  
(68) According to the Notifying Parties’ submissions recalled in paragraph (62), Polynt -
Reichhold produces only pure UPR based on styrene, while the Target, for its UPR -
based DGMCs production, purchases exclusively UPR in its reinforced  form  and 
would not be able to rely on pure UPR instead . Thus, the merged  entity would not be 
able to source UPR for its downstream production of DGMCs internally, which 
makes the recuperation of  losses generated by a potential  input foreclosure strategy 
upstream via its downstream activit ies in the production and sale of DGMCs  
unlikely .  
(69) Moreover, the results of the market investigation did not suggest that an input 
foreclosure  strategy could be profitable .  
Overall effects  on competition  
(70) In light of the lack of abili ty and incentives for the merged entity to engage in input 
foreclosure, the Commission finds that any such strategy would be unlikely to have any 
detrimental effect on overall competition. This assessment is further supported by the 
results of the market i nvestigation, as the respondents did not raise any substantial 
concerns in this regard.  
Conclusion on input foreclosure  
(71) On the basi s of the above, the Commission considers that  the Transaction does not raise 
any competition concerns related to input foreclosure.  
5.3.2.2  Customer foreclosure  
Ability to foreclose  
(72) As stated in paragraph (62), the Notifying P arties submit that Polynt -Reichhold 
produces only pure UPR, while the Target, for its UPR -based DGMCs production, 
purchases exclusively UPR  resins in their reinforced  form.  Thus, post -Transaction, 
the merged entity would not have an ability to engage in cu stomer foreclosure by 
resorting to self -supply . 
(73) Moreover, as stated in paragraph  (60), the Target’s  share of the market for DGMCs 
amounted in 2019  in the EEA  and worldwide  to [30-40]% and [0-5]% respectively , 
which, even in the event  of a customer foreclosure  strategy , would leave more than 
[60-70]% of the EEA demand available to other UPR suppliers.  
(74) Moreover , the respondents to the market investigation did n ot raise any concerns 
related to the merged entity’s ability to engage in customer foreclosure. On the 
contrary, one of the respondents who supplies UPR to the Target stated that any 
foreclosure behaviour of the merged entity ‘ wouldn´t cause any impact on our 
company resp. our profitability, since this would only affect a quite small part of our 
whole sales ’.55 Another UPR supplier that has a commercial relationship with the 
Target did not reply to the market investigation.  
                                                 
 
 
 
15 (75)  In light of the above considerat ions, the Commission finds that the merged entity 
would not have the ability to foreclose upstream  compet itors by reducing access to 
customers.  
Incentives to foreclose  
(76) The aforementioned inability of the Target to use UPR produced by Polynt -
Reichhold for i ts DGMCs production results in a lack of incentives to engage in 
customer foreclosure.  
(77) Furthermore, any potential incentives would in any case be reduced by  important 
switching costs. The Notifying Parties  claim  that to  be able to  start producing  
reinforced  UPR , the merged entity would need to incur substantial cost s and invest 
significant time .  
(78) Thus , post -Transaction , the merged entity would have no incentives to engage in 
customer foreclosure.  
Overall effects  on competition  
(79) In light of the lack of ability and incentives for the merged entity to engage in 
customer foreclosure, the Commission finds that any such strategy would be unlikely 
to have any detrimental  effect on overall competition. This assessment is further 
supported by the results of t he market investigation, as the respondents did not raise 
any substantial concerns in this regard.  
Conclusion on customer  foreclosure  
(80) On the basis of the above, the Commission considers that the Transaction does not 
raise any competition concerns r elated to customer foreclosure.  
5.3.3 Conclusion on non -horizontal effects  
(81) On the basis of all of the above  considerations and in view of the results of the 
market investigation , the Commission considers that the Transaction does not raise  
serious doubts as to its com patibility with the internal market as a result of non-
horizontal effects.  
 
 
16 6. CONCLUSION  
(82) 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 Ag reement. 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