COMMISSION DECISION of 19/01/1995 declaring a concentration to be compatible with the common market (Case No IV/M.523 - Akzo Nobel/Monsanto) according to Council Regulation (EEC) No 4064/89

(Only the English text is authentic).

The paper version of the decision is available through the sales offices of the Office of Official Publications of the European Communities.

PUBLIC VERSION

MERGER PROCEDURE ARTICLE 6(1)(b) DECISION

Registered with advice of delivery

To the notifying party

Dear Sirs,

Subject :<ind> Case No IV/M.523 - AKZO NOBEL/MONSANTO

<ind> <ind> Notification of a concentration pursuant to Article 4 of Council Regulation No 4064/89

1.<ind> The proposed concentration concerns the creation of a joint venture between Akzo Nobel and Monsanto, called Rubber Chemicals Joint Venture (RCJV). The operation was notified to the Commission on 8 December 1994 pursuant to Article 4 of Council Regulation (EEC) N* 4064/89.

<ind> I.<ind> THE PARTIES

2.<ind> Akzo Nobel is a publicly quoted Dutch company, formed earlier this year from the merger (Case N IV/M.390 - AKZO/NOBEL INDUSTRIER - Decision of 10/01/1994) between Akzo NV of the Netherlands ("Akzo") and Nobel Industrier AB of Sweden ("Nobel"). It operates in four sectors : chemicals, coatings (i.e. paints), pharmaceuticals and fibres.

3.<ind> Monsanto is a publicly quoted US company. It is active in four sectors : chemicals, agricultural chemicals, pharmaceuticals and sweeteners.

<ind> II.<ind> THE OPERATION

4.<ind> The proposed operation consists in the creation of a joint venture (RCJV) which will be owned and controlled 50/50 by Akzo Nobel and Monsanto. They will transfer their entire own activities in rubber chemicals to RCJV.

<ind> Joint Control

5.<ind> RCJV will have a supervisory board with six members (the "Board"). Each party shall appoint three members. The decisions of the Board shall be by majority vote of the members present, provided that such majority vote includes the affirmative vote of at least two members appointed by each party. A Chairman of the Board shall be appointed from among the members of the Board. The first Chairman shall be appointed by Monsanto. The Chairman shall not have a casting vote. In addition to establishing various authorizations and delegations for Management to conduct the business of RCJV, the Board shall :

<ind> <ind> -<tab> select the officers and directors who will manage RCJV,

<ind> <ind> - <tab> approve the annual budget of RCJV,

<ind> <ind> - <ind> approve any and all capital investments to be made by RCJV,

<ind> <ind> - <ind> approve any dividend or profit distribution to be made to the shareholders or the partners,

<ind> <ind> -<ind> set the performance standards and targets for the joint venture.

<ind> Consequently, RCJV will be jointly controlled by its parents.

<ind> Autonomous full function joint venture

6.<ind> RCJV will have all the resources and assets necessary to enable it to perform on a lasting basis all the functions of an autonomous economic entity including production facilities, marketing resources, personnel and the appropriate know-how and technology. Where either parent has an interest in a joint venture which is operating in a market of RCJV, it will transfer that interest to the JV.

7.<ind> The rubber chemicals business of Akzo Nobel, which is to be placed into RCJV, is presently managed as a distinct Business Unit ("BU") within the group's chemicals sector. In 1993, the rubber chemicals BU had a worldwide turnover of around ECU m, of which around ECU [...] (Deleted: business secret) m was in the EU.

8.<ind> The businesses that Monsanto are to put into RCJV are presently managed as two distinct Strategic Business Units ("SBUs") within its Industrial Products Group; they are its rubber chemicals SBU and its rubber instruments SBU. In 1993 Monsanto's rubber chemicals SBU had a worldwide turnover of around ECU 320 m, of which about ECU [...] (Deleted: business secret) m was in the EU. In 1993 Monsanto's rubber instruments SBU had a worldwide turnover of around ECU 25 m, of which about [...] (Deleted: business secret) m was in the EU.

<ind> In conclusion, RCJV will perform on a lasting basis all the functions of an autonomous economic entity.

<ind> Absence of risk of coordination

9.<ind> The Joint Venture Agreement provides that both parties will withdraw entirely from the markets in which RCJV will be active and will undertake not to compete with RCJV.

10.<ind> However, Akzo Nobel will remain active in the production of one of the key raw materials used in the production of primary accelerators, namely carbon disulphide (Akzo Nobel accounts for around [...] (Deleted: business secret)% of the EU sales of this product) and will continue to supply RCJV in the future on an arm's length basis. Nevertheless, there is no risk of horizontal coordination between the parents, because this raw material is not produced by Monsanto and is widely available in the EU.

11.<ind> Similarly, Monsanto will continue to provide PNCB to RCJV. This product is used in the process for manufacturing "4NDPA", a raw material necessary for the production of aryl-alkyl PPDs, which is a category of antiozonant. The manufacture of "4NDPA" and the process for the conversion of "4NDPA" will be transferred [...] (Deleted: business secret) to the JV. There will be no risk of horizontal coordination between the parents, since on the one hand Akzo Nobel does not manufacture PNCB and will withdraw from the manufacture of "4NDPA" and aryl-alkyl PPDs, and on the other hand, the JV is free to purchase PNCB on the open market from other producers such as Bayer, Uniroyal and Duslo Sala.

<ind> In conclusion there is no risk of coordination of competitive behaviour among the parents of RCJV.

<ind> III.<ind> COMMUNITY DIMENSION

12.<ind> The combined aggregate turnover of the undertakings concerned is more than ECU 5.000 m (in 1993, Akzo Nobel had a total worldwide turnover ECU 9.582 billion, for Monsanto, ECU 6.742 billion). The aggregate Community-wide turnover of each is more than ECU 250 m (in 1993, for Akzo Nobel it was ECU 4.9 billion, for Monsanto ECU 0.985 billion). The parties did not achieve more than two thirds of their Community-wide turnover in one and same Member State. Consequently the concentration has a Community dimension. The operation is not an EEA "cooperation" case.

<ind> IV.<ind> COMPATIBILITY WITH THE COMMON MARKET

<ind> Relevant product markets

13.<ind> RCJV will be active in the development, manufacture and sale of a number of products properly described as rubber chemicals. The rubber chemicals employed in the specific process called "vulcanisation" by which natural and synthetic rubbers are converted from their "raw" to their final state, are needed for two main end uses, mainly vehicle tyres and industrial rubber products. Some of these chemicals have very different functions and tend to be categorised on a functional basis.

14.<ind> The following categories are widely recognised by most companies within the rubber and rubber chemicals industry :

<ind> <ind> -<ind> vulcanising agents (ordinary sulphur, insoluble sulphur)

<ind> <ind> -<ind> accelerators (sometimes called "primary accelerators") and activators (sometimes called "secondary" or "ultra" accelerators),

<ind> <ind> -<ind> anti-degradants and antiozonants,

<ind> <ind> -<ind> other chemicals.

15.<ind> i) vulcanising agents

<ind> The most common vulcanisation agent is ordinary or soluble sulphur. However, when this is heated in the vulcanisation process, some of it migrates to the surface and crystallises causing what is known as "sulphur bloom". For certain products (e.g. tyres) this gives rise to problems in subsequent processing and use. Insoluble sulphur avoids these problems.

<ind> ii) accelerators

<ind> Two types of accelerators can be distinguished, "primary" accelerators and "ultra" accelerators. Primary accelerators are used to increase the speed and/or reduce the temperature at which vulcanisation occurs; ultra accelerators are used for certain applications in conjunction with primary accelerators to improve cross-linking efficiency and to maximise the overall effect of accelerators.

<ind> iii) anti-degradants

<ind> There are two types: antiozonants and antioxidants. Antiozonants are additives used to protect finished rubber products, particularly those destined for outside use under dynamic conditions, from damage created by ozone. Similarly, antioxidants are added to protect finished rubber products from damage caused by oxidation.

<ind> iv) other chemicals

<ind> These include retarders (which are applied to delay the vulcanisation process until the desired moment), 'white fillers' (which increase the strength and durability of finished rubber products), and organic peroxides (sometimes used with synthetic rubbers to produce the 'cross-linking' reaction).

16.<ind> At the technical level, except for insoluble sulphur, there would appear to be some, albeit limited, fringe supply-side substitutability-both between products within a given category and across the categories themselves.

17.<ind> The parties and one of their five main competitors consider that the above rubber chemical product categories and divisions constitute separate relevant product markets. Three other competitors contacted by the Commission view the rubber chemical product market as a whole with the exception of vulcanising agents which constitute two distinct product markets (i.e. ordinary sulphur and insoluble sulphur). Finally, the fifth main competitor divides the whole rubber chemicals market between tyre and non-tyre producers.

18.<ind> With regard to the demand side, the Commission contacted the six leading producers of tyres. Here also there was variation on market delimitation with one exception. This was that all producers clearly separated vulcanising agents from the other rubber chemicals and within vulcanising agents, all but one considered soluble and insoluble sulphur as different markets. With respect to accelerators and anti-degradants, three considered these as constituting one single market, two that accelerators and anti-degradents were separate and the sixth that accelerators could be divided between primary and ultra accelerators and anti-degradents between antiozonants and antioxidants.

<ind> The main reasons advanced to justify the inclusion of accelerators and anti-degradants in the same market were:

<ind> <ind>

<ind> <ind> -<ind> the various rubber chemicals have the same end-user,

<ind> <ind> - <ind> the prices within the product families covering accelerators and anti- degradants move in parallel,

<ind> <ind> -<ind> the products are derived from the same basic chemicals, and

<ind> <ind> - <tab> worldwide suppliers are active on the full product range.

19.<ind> Because the proposed operation will not create or a strengthen a dominant position even on the narrowest basis considered above, the precise delimitation of the relevant product market definition can be left open.

<ind> Geographical reference market

20.<ind> The geographical reference market extends to at least the whole of the Community. There is a high level of intra-Community shipments, the major suppliers are present in most Member States and transports costs are low. However, the relevant geographic market is likely to be wider since imports into the EU have increased significantly from Slovakia over the last two to three years and the level of exports from the EU is significant.

<ind> Moreover, with the exception of ordinary sulphur, the market for the other rubber chemicals is becoming increasingly globalised. This is because the major suppliers are present in each of the principal economic regions of the world, the main customers of rubber chemical products are tending to operate on a global basis and price negotiations are now often conducted on a world-wide basis. This development has been confirmed by the Commission's findings. All competitors and nearly all tyre manufacturers consider the relevant geographic market as worldwide, except for ordinary sulphur which appears to have an EU/WE wide dimension.

<ind> Competitive Assessment

<ind> A.<ind> SINGLE DOMINANCE

21.<ind> i) Affected product markets

<ind> The parties' rubber chemicals activities only overlap in antiozonants, primary and ultra accelerators. There is no overlap between the parties' activities with regard to the following rubber chemical products: white fillers, insoluble sulphur and organic peroxides (which are only manufactured by Akzo Nobel) and antioxidants, retarders, miscellaneous rubber chemicals, and reinforcing fibres (where Monsanto alone is active). Neither sells soluble sulphur. Based on the information provided by the parties there are no vertically affected markets.

22.<ind> The market shares of the parties for accelerators and antidegradants are shown in the annex 1.

23.<ind> Ultra accelerators

<ind> The degree of market share addition is minimal and less than 1% both by volume and value. Moreover, Monsanto cannot be considered as an independent market supplier. It does not manufacture ultra accelerators itself and its activities are limited to buying in and reselling two types of ultra accelerators, one of which (accounting for [...] (Deleted: business secret) of its requirements) it buys from Akzo Nobel whilst the other is purchased from [...] (Deleted: business secret). Therefore Monsanto is not a separate supplier to this market of any significance. Important suppliers of ultra accelerators in the EU are: Atochem [...] (Business secret: between 15-30%), General Quimica, which is part of the Repsol group, [...] (Business secret: between 5-15%) and Bayer [...] (Business secret: between 5-15%) as well as a series of other smaller suppliers. Market shares are based ultra accelerators used for rubber applications.

24.<ind> Primary accelerators

<ind> The combined 1993 EU market share of the parties is [...] (Business secret: between 30-50%) by volume ([...] (Business secret: between 30-50%) by value). Although the parties will now become the market leader, there are other effective competitors. Bayer has a market share of [...] (Business secret: between 30-50%) (volume terms) and General Quimica [...] (Business secret: between 5- 15%). There are also several other competitors : Istrochem, a Slovakian company, which has recently entered the market, already holds [...] (Business secret: between 0-5%) and Atochem, a French company, has a market share of [...] (Business secret: between 0-5%) through its subsidiary MLPC. The remaining 5 % is shared by a number of much smaller companies (about 20) located both inside and outside the EU.

25.<ind> Antiozonants

<ind> The parties will become the largest supplier in the EU with a combined 1993 EU market share of [...] (Business secret: between 30-50%) by volume ([...] (Business secret: between 30-50%) by value). There are again major alternative suppliers with significant market shares in the EU, Bayer ([...] (Business secret: between 15-30%) in volume), Uniroyal [...] (Business secret: between 15- 30%), Goodyear [...] (Business secret: between 5-15%) as well as Duslo Sala, another Slovakian company which has recently entered the Community market and in the space of three years has acquired a market share of [...] (Business secret: between 5-15%), Atochem (MLPC) with [...] (Business secret: between 0-5%) and series of less important smaller suppliers.

26.<ind> ii) Full product range

<ind> After the completion of the joint venture, RCJV will be able to provide a complete product range for rubber chemicals (see the table in annex 2). The same is also largely true for Bayer except for insoluble sulphur- a product which requires separate competitive assessment below. Rubber chemicals suppliers who can offer tyre manufacturers (as described below) a full product range may enjoy a certain advantage because of the tendency of these customers to conduct negotiations on an across-the-board basis.

27.<ind> Nevertheless, in the present case it does not seem necessary for a supplier to be able to offer a full product range in order to be an effective market competitor and to have a major impact on the overall market price. This has been clearly demonstrated by the recent EU market entry of Duslo Sala and Istrochem. The former is only active in antiozonants while the latter only in primary accelerators. Leaving aside the issue of supply-side substitutability, the current limitation in the product range sold has not prevented them acquiring a significant EU market share in a period of only three years. Moreover, the available data for 1994 indicates that their market share in their respective segments is continuing to rapidly grow. Similarly, General Quimica which only produces accelerators has seen a steep rise in its EU market share from [...] (Business secret: between 5-15%) in 1991 to [...] (Business secret: between 5-15%) in 1994.

28.<ind> In this light it would seem that the tendency for tyre manufacturers to conduct negotiations on an across-the-board basis is motivated by the objective of securing maximum leverage to obtain a favourable contract price for a given product whilst retaining at the same time their ability to purchase on a product-by-product basis.

29.<ind> iii) Customer bargaining power (tyre companies)

<ind> Although rubber chemicals including insoluble sulphur account for less than 5% of total production costs, by far the primary source of demand for rubber chemicals is tyre manufacture. Tyre companies' purchases of primary accelerators, antiozonants and insoluble sulphur account for more than 60% of worldwide demand for primary accelerators, more than 90% for antiozonants and approximately 95% for insoluble sulphur.

30.<ind> Consequently, the market for rubber chemicals products is heavily influenced by economic factors affecting the rubber industry in general and the tyre industry in particular. The increasingly cost-consciousness of the motor vehicle industry has reinforced the pressure on the major tyre companies to achieve costs savings. This has resulted in a process of consolidation and rationalisation among the tyre companies of which there now remains only six major tyre manufacturers operating on a global basis (Michelin, Bridgestone, Goodyear, Continental, Sumitomo and Pirelli). This process has led to a strengthening of their bargaining power with suppliers.

31.<ind> At the same time the recession in the motor vehicle industry has provoked a dramatic decline in demand for rubber and therefore for rubber chemicals. This has given rise to a position of substantial over capacity in Western and Eastern Europe for rubber chemicals, estimated at around [...] (Deleted: business secret). The impact of the over-capacity in Western Europe for rubber chemicals has been aggravated by the recent entry of Eastern competitors at very low prices disposing of substantial over-capacity because of the decline of their traditional Comecom markets. This has acted to strengthen the hand of tyre manufacturers.

32.<ind> The global bargaining power of the major tyre manufacturers has manifested itself in the fact that the rubber chemical suppliers have been compelled to substantially decrease prices (this varies by product but is generally of the order of [...] (Deleted: business secret) for the period 1990/1994) and offer favourable long term contracts. Tyre manufacturers are also increasingly looking to the smaller producers of rubber chemical to provide a source of actual and potential competition to the major suppliers (for example, quotations from an Indian manufacturer may be used to negotiate a better price from a traditional supplier in Europe). Lastly, tyre manufacturers have in recent years demonstrated their ability to rapidly change supplier for substantial amounts of their rubber chemical requirements.

33.<ind> Apart from tyres the other main application of rubber chemicals lies in the manufacture of industrial rubber products ("IRPs"). These are rubber products such as pipes, hoses, sealings, belts, profiles, foam, soles, adhesives etc. They are manufactured in range of industries including the motor vehicle industry.

34.<ind> The Commission's analysis shows that these customers have also benefitted from the substantial price reductions achieved by tyre manufacturers. Although prices have moved in a comparable manner, in general terms prices are somewhat higher for IRP customers. This may be partly explained by the lower product volumes purchased. Even so the price difference between the two market segments appears to be of the order of no more than [...] (Business secret: between 5- 15%). There also appears to be a certain trend towards price convergence. There is no reason to conclude that subsequent to the proposed concentration these users will be unable to continue to benefit from the general price levels available to tyre manufacturers. In particular, traditional suppliers to the latter are increasingly seeking to compensate the lower volumes sold to tyre manufacturers by pursuing a policy of active sales to IRP customers.

35.<ind> iv) insoluble sulphur

<ind> Akzo Nobel is the current world leader for insoluble sulphur. Including the full sales of two important production joint ventures, as described below) Akzo Nobel's market share was [...] (Business secret: between 75-100%) in the EU and [...] (Business secret: between 75-100%) in the world (value basis). Akzo Nobel's sales (by volume) of insoluble sulphur were [...] (Deleted: business secret) ktonnes in the EU, whilst total EU sales were [...] (Deleted: business secret) ktonnes. Akzo Nobel's 1993 sales of insoluble sulphur amounted to [...] (Deleted: business secret) million ECU in the EU and [...] (Deleted: business secret) million ECU in the world. Monsanto has no interests in insoluble sulphur. Consequently the present operation does not lead to any addition in market share arising from Akzo Nobel's existing quasi-monopoly position.

36.<ind> Akzo Nobel has two production joint ventures for insoluble sulphur. One is a 50/50 joint venture called Kali-Chemie with Solvay. The other is 70/30 joint venture in Japan with Tosoh. These interests were acquired by Akzo in 1987 when it acquired the US chemical company, Stauffer. In 1989 Kali Chemie purchased ESI, a French producer of insoluble sulphur.

37.<ind> Based on the Commission's findings, insoluble sulphur would appear to be a strategic product in the rubber chemicals market. Because of the specific properties of insoluble sulphur, it would seem that tyre manufacturers are unable to employ a comparable rubber chemical for technical reasons. This is the position today and has been the position in the past.

38.<ind> The parties have stated that in the past Akzo/Akzo Nobel has never supplied insoluble sulphur as part of a "package" with its other rubber chemical products, or offered discounts and rebates over a range of products that includes insoluble sulphur. The parties have also stated that there is no reason to suppose that the joint venture will sell insoluble sulphur on a different basis.

39.<ind> As regards Akzo/Akzo Nobel's past behaviour the Commission's enquiries support the above comments and in fact no competitor or customer claimed that Akzo/Akzo Nobel had abused its market position for insoluble sulphur to promote sales of other rubber chemical products.

40.<ind> There are other producers of insoluble sulphur both in Europe and more importantly, with regard to the increasingly global nature of the market for rubber chemicals, further afield in the world. These are Siarkopol Grzybow (Poland), Scientific Research and Design (Ukraine), Metazinc Ltd. and Oriental Carbon & Chemicals Ltd. (both India), Shikoku Chemicals, Sanshin Chemicals and Nihon Kanru KKK (all of Japan), Shanghai Jin-Hai Chemical and Shanghai Waxie Chemical (both Peoples' Republic of China) and Altequin (Mexico). Akzo Nobel does not have any joint ventures with any of the above companies for the production of insoluble sulphur. Nor has Akzo Nobel licensed its technology for the production of insoluble sulphur to any third party.

41.<ind> The three Japanese suppliers of insoluble sulphur are already selling into the Community market, albeit with relatively limited market share. The Commission is also aware that other non- European suppliers are capable of EU market entry and that product approval is currently under examination. Lastly, two tyre manufacturers have drawn to the Commission's attention that one European chemical producer is currently evaluating the possible construction of a plant for insoluble sulphur production.

42.<ind> Consequently, in the light of the information currently available to the Commission and given the conditions stated in the paragraph 26 et seq. above, the risk that the proposed concentration might lead to the strengthening of a possible existing dominant position held by Akzo/Nobel with regard to the sale of insoluble sulphur in the European Union significantly impeding effective competition through the implementation of a tied sales policy for the sale of other rubber chemicals does not seem founded.

43.<ind> Conclusion

<ind> On the basis of the Commission's findings and analysis, the proposed operation does not raise serious doubts as to its compatibility with the common market through the creation or strengthening of a position of single dominance for the notifying parties.

<tab> B.<ind> ANTI-COMPETITIVE PARALLEL BEHAVIOUR

44.<ind> Upon the completion of the proposed operation, there will be a relatively concentrated supply structure in the two affected product markets of significance, i.e. primary accelerators and antiozonants. For the former four suppliers and for the latter five suppliers will hold a combined market share of approximately 90%. Such a concentrated supply side structure gives rise to the question of whether the concentration could lead to the creation a collective dominant position permitting anti-collective parallel behaviour by the oligopoly group. This is unlikely for the following reasons.

45.<ind> First, market transparency is inadequate to permit anti-collective parallel behaviour. Although the rubber chemical producers are aware of the overall requirements for tyre manufacturers, contract negotiations are carried on an individual basis with customers. As a result there is no systematic method by which the prices and volumes at which an individual rubber chemical producer sells can be made known to the other producers.

46.<ind> Secondly, the market for these rubber chemicals has been highly competitive in the past and has been subject to substantial price reductions even in nominal terms over the last few years. Having regard to the substantial bargaining power which can be exercised by the tyre manufacturers and the other structural features of the market as described below, this can be expected to remain the case in the future.

47.<ind> Thirdly, within the group composed of the leading suppliers there is wide variation in the respective market positions of the different companies. In general terms, the producers with lower market shares (General Quimica, Istrochem and Duslo Sala) have actively competed and achieved rapid sales growth in recent years (1991-1994). The new East European producers, Istrochem and Duslo Sala, have in the space of only 2 to 3 years built-up relatively significant market shares in the EU and for internal domestic reasons the maximisation of sales in hard currency zones are likely to be particularly attractive to them. Istrochem and Duslo Sala currently have excess capacities for primary accelerators and antiozonants respectively exceeding [...] (Deleted: business secret.) and [...] (Deleted: business secret) of current EU sales.

<ind> Consequently, there is no indication that as a result of the proposed operation these companies will reverse their current business strategies and, instead of seeking to continue to improve their market positions through sales growth, will engage in possible anti-competitive parallel behaviour.

48.<ind> Fourthly and lastly, as to potential competition from outside the EU, transport costs are low and there is a clear trend towards global purchasing. In this regard it appears significant that customers have approved new suppliers from Eastern Europe and even India and Korea. Valid alternative suppliers exist and the market is already envisaging their possible use.

49.<ind> Conclusion

<ind> For the reasons set out above, the risk of the emergence of possible anti-competitive parallel behaviour as a result of the proposed concentration alone cannot be considered as giving in to serious doubts as to the compatibility of the operation with the common market.

<ind> V.<ind> ANCILLARY RESTRICTIONS

50.<ind> The parties have asked that certain restrictions be considered as ancillary to the concentration :

<ind> Under clause 5 of the Joint Venture Agreement both parents agree to withdraw from the markets in which the JV will be active and each of them gives an undertaking not to compete with the JV for as long as it continues to participate in the JV.

<ind> Under clause 8.1 of the Joint Venture Agreement both parents agree for reasonable support and services to be provided to the JV for a transitional period of not more than two years from the effective date of the agreement under a Transition Services Agreement.

<ind> Under clause 8.2 of the Joint Venture Agreement both parents and the JV agree to conclude Operating Agreements relating to the operation of production facilities at multi-function sites.

<ind> Under clause 8.3 of the Joint Venture Agreement Akzo Nobel agrees to grant a lease to the JV of part of its R&D premises at Deventer (Netherlands) and to provide related services. The agreement is to be for an initial period of [...] (For a period not exceeding five years) years, thereafter renewable at the option of the JV for up to 3 additional periods of [...] (For a period not exceeding five years) years. Similar agreements may be entered into from time to time in respect of other locations.

<ind> Under clause 8.4 of the Joint Venture Agreement the parents agree to supply to the JV certain up-stream materials currently supplied by them to their respective rubber chemicals business (Paranitrochlorobenzine (PNCB), and Para nitro aniline (PNA) in the case of Monsanto and Carbon disulfide (CS) in the case of Akzo Nobel. Such supply shall be at the option of the JV, at market prices (where practicable) and shall last for an initial term of [...] (For a period not exceeding five years) years renewable thereafter at the option of the JV. These supply agreements shall not be exclusive.

<ind> Further, when the JV has installed new antiozonant technology [...] (Deleted: business secret) , Monsanto is to have the right of first refusal to supply the JV with 100% of its requirements of [...] (Deleted: business secret). Such agreement would be for an initial term of [...] (For a period not exceeding five years) years, renewable at the option of the JV.

<ind> Under clause 10.1 of the Joint Venture Agreement both parents agree that if either develops, discovers or acquires proprietary rights over a product which has application in the markets in which the JV will be active (the "Field"), and that parent is still a participant in the JV, the JV shall obtain exclusive rights from such parents to exploit (on reasonable terms) such product within the Field.

<ind> Clause 10.2/10.3 provides that if the JV develops, discovers or acquires proprietary rights over a process or product which has applications outside the field in which either parent is active, the JV shall offer to license that product or process to the interested parent on reasonable commercial terms but shall remain free to licence others.

<ind> Lastly, clause 4 of the Asset Transfer Agreement sets out the terms on which intellectual property rights including patents, trade secrets (together "I.P.") know-how and trademarks will be transferred or licensed between the JV and its parents. IP and know-how that is primarily applicable in the Field, will be assigned to the JV with an irrevocable exclusive, royalty free, worldwide licence back to the assigning party of rights outside the Field. Where IP and know-how is primarily applicable outside the FIeld but has (or may have) potential application within the Field, the JV will be granted an irrevocable, exclusive, royalty-free licence to use such IP in the Field.

<ind> The JV will receive irrevocable exclusive royalty free worldwide licences for use within the Field of trademarks currently used by the parents in thee Field.

51.<ind> The Commission considers that Clauses 10.2/10.3 and Clause 8.4 with the exception of that part of the latter clause relating to the supply of [...] (Deleted: business secret) are not restrictive of competition. Possible future restrictions of competition agreed subsequent to the last part of clause 8.3 cannot be covered under this decision because their scope is unknown.

52.<ind> The remaining clauses and that part of clause 8.4 relating to the supply of [...] (Deleted: business secret) can be considered as directly related to and necessary for the successful implementation of the JV. These restrictions can therefore be treated as ancillary to the concentration and are covered by the present decision.

<ind> VI.<ind> OVERALL ASSESSMENT

53.<ind> For the foregoing reasons the proposed concentration does not raise serious doubts as to its compatibility with the common market and with the functioning EEA Agreement.

For the above reasons, the Commission has decided not to oppose the notified operation and to declare it compatible with the common market and with the functioning EEA Agreement. This decision is adopted in application of Article 6(1)b of Council Regulation No. 4064/89.

This decision is without prejudice to the application of the general Community competition rules to Akzo Nobel's pre-existing joint ventures.

For the Commission,

ANNEX 1

MARKET SHARES OF THE PARTIES FOR ACCELERATORS AND ANTIDEGRADANTS

PRODUCTS<tab> AKZO NOBEL (MARKET SHARE) <tab> <tab> MONSANTO (MARKET SHARE) <tab> <tab> MARKET SIZE (MILLION ECU) <tab> <tab> JV (MARKET SHARE)

All figures for 1993 <tab> WORLD VALUE (%) <tab> EC VALUE (%) <tab> WORLD VALUE (%) <tab> EC VALUE (%) <tab> WORLD VALUE <tab> EC VALUE <tab> WORLD VALUE (%) <tab> EC VALUE (%)

Primary accelerators <tab> 5-15 <tab> 5-15 <tab> 15-30 <tab> 15-30 <tab> [...]* <tab> [...]* <tab> 15-30 <tab> 30-50

Ultra accelerators <tab> 5-15 <tab> 15-30 <tab> 0-5 <tab> 0-5 <tab> [...]* <tab> [...]* <tab> 15-30 <tab> 30-50

TOTAL accelerators <tab> 5-15 <tab> 5-15 <tab> 5-15 <tab> 15-30 <tab> [...]* <tab> [...]* <tab> 15-30 <tab> 30-50

Antiozonants <tab> 0-5 <tab> 5-15 <tab> 15-30 <tab> 15-30 <tab> [...]* <tab> [...]* <tab> 30-50 <tab> 30-50

Antioxidants <tab> 0-5 <tab> 0-5 <tab> 5-15 <tab> 15-30 <tab> [...]* <tab> [...]* <tab> 10-15 <tab> 15-30

TOTAL antidegrad. <tab> 0-5 <tab> 5-15 <tab> 15-30 <tab> 15-30 <tab> [...]* <tab> [...]* <tab> 15-30 <tab> 30-50

(*) Deleted : Business secret

ANNEX 2

COMPLETE PRODUCT RANGE FOR RUBBER CHEMICALS

MARKET SHARES

PRODUCTS <tab> AKZO NOBEL market share (%) <tab> <tab> MONSANTO market share (%) <tab> <tab> JV market share (%)

Value 1993 <tab> W <tab> EC <tab> W <tab> EC <tab> W <tab> EC

Primary Accelerators <tab> 5-15 <tab> 15-30 <tab> 15-30 <tab> 15-30 <tab> 15-30 <tab> 30-50

Ultra Accelerators <tab> 5-15 <tab> 15-30 <tab> 0-5 <tab> 0-5 <tab> 15-30 <tab> 15-30

Antiozonants <tab> 0-5 <tab> 5-15 <tab> 15-30 <tab> 15-30 <tab> 30-50 <tab> 30-50

White fillers <tab> 0-5 <tab> 15-30 <tab> 0-5 <tab> 0-5 <tab> 5-15 <tab> 15-30

Insoluble sulphur <tab> 75-100 <tab> 75-100 <tab> 0-5 <tab> 0-5 <tab> 75-100 <tab> 75-100

Organic peroxides <tab> 15-30 <tab> 30-50 <tab> 0-5 <tab> 0-5 <tab> 15-30 <tab> 30-50

Antioxidants <tab> 0-5 <tab> 0-5 <tab> 15-30 <tab> 15-30 <tab> 15-30 <tab> 5-15

Retarders <tab> 0-5 <tab> 0-5 <tab> 50-75 <tab> 50-75 <tab> 50-75 <tab> 50-75

Miscellaneous rubber chemicals <tab> 0-5 <tab> 0-5 <tab> 30-50 <tab> 30-50 <tab> 30-50 <tab> 30-50

Reinforcing fibres <tab> 0-5 <tab> 0-5 <tab> 5-15 <tab> 5-15 <tab> 5-15 <tab> 5-15

TOTAL <tab> 5-15 <tab> 15-30 <tab> 15-30 <tab> 15-30 <tab> 15-30 <tab> 30-50