COMMISSION DECISION of 03/03/1999 declaring a concentration to be compatible with the common market (Case No IV/M.1442 - MMP/AFP) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

Brussels, 03.03.1999

To the notifying party

Dear Sirs,

Subject: Case No IV/M. 1442 - MMP /AFP Corrugated

Notification of 02.02.1999 pursuant to Article 4 of Council Regulation No 4064/89

1. On 02.02.1999 the Commission received the notification of a proposed concentration pursuant to Article 4 of Council Regulation (EEC) No 4064/89 (1) through which Mondi Minorco Paper S.A ("MMP") acquires the corrugated board and corrugated cases business of AFP (Europe) Limited.

(1) OJ L 395, 30.12.1989 p. 1; corrigendum OJ L 257 of 21.9.1990, p. 13; Regulation as last amended by Regulation (EC) No 1310/97 (OJ L 180, 9. 7. 1997, p. 1, corrigendum OJ L 40, 13.2.1998, p. 17).

2. After examination of the notification, the Commission has concluded that the notified operation falls within the scope of Council regulation No 4064/89 and does not raise serious doubts as to its compatibility with the common market and the functioning of the EEA agreement.

I. THE PARTIES AND THE OPERATION

3. MMP is controlled by the Anglo American Corporation of South Africa Limited ("AAC Group") and owns the non-South African pulp and paper interests of the AAC Group.

4. AFP (Europe) Limited is a holding company controlled by Amcor Limited (Australia) and sells its corrugated board and corrugated cases business ("AFP Corrugated") to MMP. MMP will acquire the entire share capital of Amcor Packaging (UK) Limited, Amcor Emballages S.A. (F) and Wallbray Limited (UK) as well as a 49% shareholding in Willander Holdings Limited (UK), the remaining 51% being held by Wallbray Limited.

II. CONCENTRATION

5. The transaction involving MMP's acquisition of sole control of AFP Corrugated by way of an acquisition of shares is a concentration within the meaning of article 3(1) (b) of the Merger Regulation.

III. COMMUNITY DIMENSION

6. The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 billion (2). Each of MMP and AFP Corrugated have a Community-wide turnover in excess of EUR 250 million, but they do not achieve more than two-thirds of their aggregate Community-wide turnover within one and the same Member State. The notified operation therefore has a Community dimension.

(2) Turnover calculated in accordance with Article 5(1) of the Merger Regulation and the Commission Notice on the calculation of turnover (OJ C66, 2.3.1998, p25). To the extent that figures include turnover for the period before 1.1.1999, they are calculated on the basis of average ECU exchange rates and translated into EUR on a one-for-one basis.

V. COMPETITIVE ASSESSMENT

7. AFP Corrugated produces corrugated board and corrugated cases in the UK and in France. It also exports some corrugated board from the UK to Ireland.

8. MMP does not produce corrugated board or cases in the EEA. It imports small quantities of corrugated board and cases from Poland into Germany. [ ]. MMP produces and imports corrugated case materials (CCM) which are the input for making corrugated board.

9. The present operation does not give rise to affected markets.

10. In previous decisions (3) the Commission has considered the markets for corrugated board and cases but the Commission has not reached a definitive view neither on the definition of the relevant product market nor on the definition of the relevant geographic market. With regard to corrugated board it was suggested in the KNP/BT/VRG decision that the geographic market is regional and crosses national borders (e.g. with the Benelux countries, northern France and central Germany forming a separate geographic market from southern Germany, eastern France, Austria and Switzerland). With regard to corrugated cases it was stated that corrugated cases are characterised by low density and relatively high transport costs which results in largely regional markets (radius of 200 to 300 km between the corrugator plant and its customers) crossing national borders. These regional markets do not operate in isolation as a number of multinational customers seek to have their packaging problems solved by a single supplier.

(3) Cases Nos IV/M.291 - KNP/BT/VRG, IV/M. 499 - Jefferson Smurfit/St. Gobain, IV/M.549 - SCA/PWA, IV/M. 613 - Jefferson Smurfit/Munskjo and IV/M. 1208 - Jefferson Smurfit/Stone Container.

11. As there is no geographic overlap with regard to corrugated board and cases, the only MMP activities relevant for the examination of this case are MMP's sales of CCM.

12. In these previous cases the Commission has identified a product market for CCM but the Commission left open the question of whether the market could be subdivided into virgin based fibre products and waste-based products, but noted that a certain degree of cross-substitutability existed and that prices for both types followed similar patterns. For the purpose of the present case it is not necessary to decide whether the market could be subdivided as the operation will not create or strengthen a dominant position.

13. In these previous decisions the Commission has held the CCM market to be at least EEA wide because of the high cross-border trade in raw materials and end product. This cross border trade results from the high density and thus easy transportability of CCM.

14. The requirements of AFP Corrugated for CCM represent