1 
  EUROPEAN COMMISSION  
 
 
 
 
 
Brussels , 14.03 .2018  
C(2018) 1648  final 
 
 
 
To the notifying party  
Subject:  Case M.8733 - Lone Star/Stark  
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 7 February 2018, the Commission received notification of a proposed 
concentration pursuant to Article 4 of the Merger Regulation by which Lone Star 
(US), through its indirect subsidiary LSF10 Wolverine Investments S.C.A., 
intends to acquire within the meanin g of Article 3(1)(b) of the Merger Regulation 
sole control of the whole of Stark Group A/S ('Stark', Denmark) by way of 
purchase of shares ('the Transaction').3 Lone Star and Stark are designated 
hereinafter as the 'Parties', whilst the undertaking resulti ng from the Transaction is 
referred to as 'the merged entity'.  
1. THE PARTIES  
(2) Lone Star is a private equity firm that invests globally in real estate, equity, credit 
and other financial assets. Lone Star controls the building material supplier Xella 
Intern ational S.A. ('Xella')4 which produces and distributes mainly masonry 
                                                           
1  OJ L 24, 29.1.2004, p. 1 (the 'Merger Regulation'). With effect from 1 December 2009, the T reaty on 
the Functioning of the European Union ('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 57 , 15.02.2018 , p. 7. 
4   The acquisition of Xella by Lone Star was approved by the European Commission in 2017 (Case 
COMP/M.8341 – Lone Star Fund / Xella International ) 
PUBLIC VERSION  In the publish ed version of this decision, som e 
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omitted has been replaced by ranges of figures or a 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 
 products, in particular autoclaved aerated concrete blocks. Xella also owns the 
insulation material manufacturer Ursa Insulation S.A. ('Ursa')5. Furthermore, Lone 
Star controls the gypsu m fibre board manufacturer Fermacell GmbH ('Fermacell')6 
and the carpet producer LSF9 Balta Issuer S.A. ('Balta')7. 
(3) Stark is a retailer and distributor of building materials in the Nordic region. It 
serves its customers - professionals and DIY builders - through four business 
units: Stark Denmark (72 branches), Stark Finland (27 branches), Beijer in 
Sweden (66 branches)  and Neumann in Norway (15 branches). The current 
ultimate owner of Stark is Ferguson plc.8 
 
2. THE OPERATION AND THE CONCENTRATION  
(4) Pursuant to a Share Purchase Agreement entered into on 10 November 2017, Lone 
Star will indirectly acquire sole control over Stark through its subsidiary LSF10 
Wolverine Investments S.C.A. by way of a share acquisition. Hence, the 
Transaction qualifies as a concentration within the meaning of Article 3(1)(b) of 
the Merger Regulation.  
 
3. UNION DIMENSION  
(5) The undertakings  concerned have a combined aggregate world -wide turnover of 
more than EUR 5 000 million9 [Lone Star: EUR […] million, Stark: EUR […] 
million]. Each of them has a Union -wide turnover in excess of EUR 250 million 
[Lone Star: EUR […] million, Stark: EUR […] million], but they do not achieve 
more than two -thirds of their aggregate Union -wide turnover within one and the 
same Member State. The notified operation therefore has a Union dimension 
under Article 1(2) of the Merger Regulation.  
                                                           
5  The acquisition of Ursa by Xella was approved by the European Commission in 2017 (Case 
COMP/M.8604 – Xella / Ursa ). 
6  Xella has recently sold Fermacell to James Hardie Industries Plc. This transaction does not meet the 
turnover thr esholds for an EU merger review filing. Closing is currently expected to take place before 
the end of […] 2018 . Pending the closing of that Transaction, the Commission’s assessment will 
include the activities of Fermacell.  
7  The acquisition of Balta by Lo ne Star was approved by the European Commission in 2015 (Case 
COMP/M.7696 – Lone Star / Balta ). 
8  The acquisition of Stark by Wolseley plc (now Ferguson plc) was approved by the European 
Commission in 2006 (Case COMP/M.4351 - Wolseley / DT Group) . 
9  Turn over calculated in accordance with Article 5 of the Merger Regulation . 
 
 
3 
 4. COMPETITIVE ASSESSMENT  
4.1. Introduction  
(6) The operation concerns the markets for the production and distribution of building 
materials and gives potentially rise to horizontal and vertical overlaps.  
(7) First, the activities of Lone Star's portfolio companies and Stark overlap in the 
(potential) supply of the following products:  
– autoclaved aerated concrete products ('AAC') supplied by Xella,  
– gypsum fibre board products ('GFB'), supplied by Fermacell,  
– insulation products supplied by Ursa, and  
– carpet products poten tially supplied by Balta.  
(8) Lone Star's portfolio companies sell their products not only through retailers but 
also directly to end consumers. These are potentially the same end customers 
supplied by Stark.  
(9) Second, there are four (potential) vertical  links, namely as regards the (potential) 
supply by Lone Star’s portfolio companies of AAC blocks, GFB products, 
insulation products and carpet products to Stark and its retail competitors.  
4.2. Market definitions  
4.2.1. Autoclaved aerated concrete (AAC)  
(10) AAC blocks are a lightweight, precast, foam concrete building material. The 
Parties argue that there may be more than one plausible alternative for the 
definition of the relevant product markets for AAC blocks. The Parties further 
maintain that the na rrowest possible – although by no means most plausible – 
definition would consider aerated concrete blocks as constituting a single relevant 
product market. Other plausible market definitions may include aggregate blocks 
and potentially also other wall -building materials, in particular bricks, sand -lime 
bricks/calcium silicate units and pumice blocks.  
(11) In a previous decision, the Commission considered that – even though the precise 
scope of the relevant product market was ultimately left open – the rele vant 
product  market may comprise not only AAC blocks but also other products such 
as aggregate concrete blocks.10 This is supported by the view of the majority of 
market participants responding to the Commission’s market investigation in the 
present case.11 A number of respondents noted that " AAC products can be 
replaced with – concrete elements, concrete blocks, calcium silicate blocks "12 and 
that "[ s]and -lime bricks are a substitute in some situation, as per Xella's own  
                                                           
10  Case COMP/M.8341 – Lone Star Fund / Xella International , paragraph 27.  
11  Replies to question 7 of Q1 – Questionnaire to retailers, and to question 7 of Q2 – Questionnaire to 
building material competitors . 
12  Replies to question 7 of Q1 – Questionnaire to retailers  
 
 
4 
 explanation ".13 Other market participan ts also referred to LECA14 products and 
clay blocks as potential substitutes.15 
(12) With regard to the relevant geographic market, the Commission considered in a 
previous decision that the geographical market for the distribution of building 
products in general is either national or potentially smaller than national.16 With 
respect to AAC blocks, the Commission has not adopted any diverging view.17 
Market respondents indicated predominantly that the relevant geographic market 
is national in geographic scope .18 
(13) In any event, the Commission considers that, for the purposes of this Decision, the 
precise scope of the relevant product and the relevant geographic market for AAC 
blocks can be left open in the current case, since the Transaction does not give ri se 
to serious doubts about its compatibility with the interal market under any 
plausible market definition.  
4.2.2. Gypsum fibre board (GFB)  
(14) Fermacell’s GFB products are dry lining building materials, suitable for general 
construction, fire protection and rooms with variable humidity (for instance 
domestic or hotel bathrooms). The Parties maintain that a broad market definition 
would be appropriate, encompassing interchangeable solutions, with various 
alternative possibilities, such as dry construction;  dry construction limited to 
value -added boards; dry construction broken down depending on type of 
application (exterior walls, interior walls, flooring, ceiling); dry lining including at 
least some types of plaster board; and others. According to the Part ies it could be 
claimed that GFB products are a substitute of gypsum drywall products.  
(15) There are no precedents in the Commission's previous decisional practice as 
regards the relevant product and geographic market definition for GFB. In this 
respect, the market investigation in this case indicates that the relevant product 
market is likely to be broader than only GFB products. On the one hand, a 
majority of market participants indicate that GFB is substitutable by other 
products: respondents stated tha t "GFB products are dominated by Fermacell and 
the competition comes from other substitute products as standard gypsum 
boards19" and that as regards GFB boards " Fermacell / Hunton, Knauf /Norgips 
and BPB Gyproc are all alternatives suppliers."20 One responde nt noted that 
"GFB products can be replaced with standard gypcum plasterboards in some  
                                                           
13  Ibid. 
14  Lightweight expanded clay aggregate: a light -weight aggregate made by heating clay. Its common uses 
are in concrete blocks or concrete slabs.  
15  Replies to question 7 of Q2 – Questionnaire to building material competitors.  
16  Case COMP/M.7910 - Kesko/Onninen , paragraph 16 with references to previous decisions.  
17  Case COMP/M.8341 – Lone Star Fund / Xella International , paragraph 30 et seq.  
18  Replies to qu estion 11 of Q1 – Questionnaire to retailers, and to question 10 of Q2 – Questionnaire to 
building material competitors.  
19  Reply to question 13 of Q1 – Questionnaire to retailers.  
20  Reply to question 13 of Q1 – Questionnaire to retailers.  
 
 
5 
 constructions, fiber cement boards in [other] constructions .21" On the other hand, 
the Commission also received diverging statements such as that it " is difficult to 
find an exact alternative .”22 
(16) As regards the relevant geographic market, the results of the market investigation 
indicate that similarly to AAC the market is national.23 
(17) In any event, the Commission considers that, for the purposes of this Decision, th e 
precise scope of the relevant product and the relevant geographic market for GFB 
products can be ultimately left open in the current case, since the Transaction does 
not give rise to serious doubts about its compatibility with the interal market under 
any plausible market definition.  
4.2.3. Insulation products  
(18) Insulation products reduce the thermal and acoustic exchange through a wall, roof 
or a duct on which they are placed. In previous decisions, the Commission 
previously found that insulation prod ucts constitute a separate market from other 
building products24. Furthermore, the Commission considered in previous cases a 
possible sub -segmentation of insulation products by insulation material, namely 
between (a) mineral wools (stone or glass wools); an d (b) foams (expanded 
polystyrene (EPS), extruded polystyrene or polyurethane)25. Moreover, the 
Commission considered in the past segmenting the relevant market into building 
and technical insulation.26 
(19) As regards the relevant geographic market, the Com mission has left open whether 
the market should be defined as national, regional or EEA -wide.27 
(20) The Parties endorse the Commission's view both as regards the relevant product 
market as well as the relevant geographic market.  
(21) In any event, the Comm ission considers that, for the purposes of this Decision, the 
precise scope of the relevant product and the relevant geographic market for 
insulation products can be ultimately left open in the current case, since the 
Transaction does not give rise to seri ous doubts about its compatibility with the 
interal market under any plausible market definition.   
                                                           
21  Reply to que stion 8 of Q1 – Questionnaire to retailers.  
22  Reply to question 8 of Q1 – Questionnaire to retailers.  
23  Replies to question 11 of Q1 – Questionnaire to retailers, and to question 10 of Q2 – Questionnaire to 
building material competitors.  
24  Case COMP/M.8721 – Owens Corning/Paroc , paragraph 7 (not yet published); Case COMP/M.7457 – 
CVC/Paroc , para. 17 -18; Case COMP/M.3407 – Saint Gobain/Dahl , paragraphs 8 and 9; Case 
COMP/M.1974 – Compagnie de Saint -Gobain/Raab Karcher , paragraph 9; and Case C OMP/M.1873 
– Compagnie de Saint -Gobain/Meyer International , paragraphs 9 and 10. See also Case 
COMP/M.6871 – Mohawk Industries/Spano Invest, paragraphs 28 and 29.  
25  Case COMP/M.8721 – Owens Corning/Paroc , paragraph 8, Case COMP/M.3407 – Saint 
Gobain/Dahl , para 10; Case COMP/M.3943 – Saint Gobain/BPB , para. 29.  
26  Case COMP/M.8721 – Owens Corning/Paroc , paragraphs 9 and 13; Case COMP/M.7457 – 
CVC/Paroc , para. 18.  
27  Case COMP/M.8721 – Owens Corning/Paroc , paragraphs 15 -16. 
 
 
6 
 4.2.4. Carpet products  
(22) The Parties submit that the relevant product market should comprise all carpets, 
which would include all types of carpets produced by Balta, in particular covering 
both carpet tiles and broadloom carpets.  
(23) The Commission previously took the stance that the relevant product market, at 
least at the retailing level, comprises carpets and other floor coverings, wallpaper 
and curtains.28 With regard to the relevant geographic market, while leaving the 
market definition open, the Commission did not object in previous decisions to 
claims that the markets are national, particularly in view of differing national 
consumer preferences .29 
(24) In any event, the Commission considers that, for the purposes of this Decision, the 
precise scope of the relevant product and the relevant geographic market for carpet 
products can be ultimately left open in the current case, since the Transaction does 
not give rise to serious doubts about its compatibility with the interal market under 
any plausible market definition.  
4.2.5. Sales channels: wholesale/retail sales and direct sales  
(25) In a previous decision, the Commission considered that the markets for the 
distribution of building products in general can be divided into (i) wholesale to 
retailers, (ii) retail sale to professional customers and (iii) retail sale to 
nonprofessional customers (primarily through do -it-yourself stores) but left th e 
precise product market definitions ultimately open.30 This will be the relevant 
framework for the assessment of the vertical links between Lone Star’s upstream 
activities in wholesale (Xella, Ursa, Fermacell, Balta) and Stark’s downstream 
activities in re tail. 
(26) With particular regard to the retail level, the Commission considered in a previous 
decision a sub -segmentation by product groups, including the specific product 
group of building materials.31 As regards the geographic market, the Commission 
considered the geographic markets to be national or potentially local in scope.32 
(27) Xella also sells its AAC blocks directly to end customers. The Commission has 
not, however, discussed direct sales of manufacturers to end customers in its 
previous decisiona l practice concerning the distribution of building products. The 
alternative sales channels are shown below in Figure 1.  
                                                           
28  Case COMP/M.1708 – Tapis Saint -Maclou/Allied Carpets Group, paragraphs 8 and 9.  
29  Case COMP/M.1708 – Tapis Saint -Maclou/Allied Carpets Group, paragraph 10.  
30  Case COMP/M.7910 – Kesko / Onninen , paragraph 16.  
31  Case COMP/M.7283 – Kingfisher / Mr Bricolage , paragraph 13.  
32  Case COMP/M.7283 – Kingfisher / Mr Bricolage , paragraph 17.  
 
 
7 
 Figure 1 Illustration of the sales channels  
 
(28)  As regards AAC blocks, the Parties generally claim that the market where Xella  
and Stark (potentially) compete has the following characteristics:  
(a) The market is confined to such products that are distributed by both 
Parties;  
(b) These products are suitable for sale to end customers both from Xella 
as manufacturer and Stark as retailer in  view of the products' size, 
weight and other characteristics, and  
(c) The orders for such products have a volume for which end customers 
consider both the manufacturer and the retailer as potential supplier.  
(29)  For AAC blocks33, the Parties maintain that, as a rule of thumb, end customers 
consider both the manufacturer and the retailer as potential supplier when the 
order exceeds [20-100] m3. 
(30)  In light of the results of the market investigation and the information available  to 
it, the Commission concludes that in terms of the relevant product market, the 
retail market for the sale of AAC blocks could be segmented into (i) a retail 
market on which only retailers compete for sales to end customers, as at least one 
of the three  criteria outlined above is not met, and (ii) a market for sales to end 
customers with competition taking place between retailers and wholesalers, if the 
three criteria are met.  
(31)  In any event, the Commission considers that, for the purposes of this De cision, the 
precise scope of the relevant product and the relevant geographic market for the 
distribution of building materials can be ultimately left open in the current case, 
since the Transaction does not give rise to serious doubts about its compatibil ity 
with the interal market under any plausible market definition.  
                                                           
33  The Parties submit that the only masonry product where Xella competes with Stark in sales to end 
customers are AAC blocks. Accordingly, the distribution of AAC panels, calcium silicate units an d the 
Multipor product would not lead to any horizontal overlap between the activities of Xella and Stark.  

 
 
8 
 4.3.  Competitive assessment  
(32) None of Lone Star's portfolio companies have a direct presence in the operation 
of retail stores selling building or insulation materials, or carpet produc ts in the 
EEA.  
(33) Except for some limited competition in Denmark and Finland, discussed in 
Section 4.3.1, the Parties' relationship is predominantly vertical, through Lone 
Star’s ownership interest in Xella (including Fermacell), Ursa and Balta, discusse d 
in section 4.3.2.  
(34) As a result, the Transaction gives rise to affected markets due to a horizontal 
overlap in the sale of AAC blocks to end consumers in Denmark and Finland, and 
due to vertical links between Xella's supply of AAC blocks and Stark's r etail 
activities in Denmark and Finland, and between Xella's supply of GFB panels and 
Stark's retail activities in Denmark, Sweden, Norway and Finland.  
4.3.1.  Horizontal overlaps  
4.3.1.1.  Assessment  of horizontal overlap – sale of AAC blocks to end consumers  
(35) The activities of Xella and Stark overlap in the supply of AAC blocks to end 
consumers in the context of the sale channel described in Section 4.2.5. As Xella’s 
products are sold to end cons umers both directly and indirectly through retailers, 
this Decision will distinguish between Xella’s wholesale sales made to third party 
retailers, and those made directly to end consumers. This approach is borne out by 
the results of the market investigat ion, which indicates that the same end 
consumers may purchase directly from manufacturers or indirectly from 
retailers.34 
(36) In any case, this potential overlap is limited to that share of Stark's sales over 
which it has control. The market investigation has confirmed that it is common 
for large -volume orders from customers such as building companies, to be 
invoiced by a retailer even though the sale is ultimately controlled by the 
manufacturer.35 Therefore, it is justified to allocate to Stark those sales over 
which it has control and to allocate to the manufacturers those sales over which 
they have control (be it through direct commercial relationships with the end 
customers or through the involvement of a retailer in an agent -like relationship).  
  
                                                           
34  Replies to questions 4 and 5 – Questionnaire to end consumers.  
35  Replies to question 7 – Questionnaire to customers.  
 
 
9 
 (37) AAC blocks are the only product for which Xella has significant sales both 
through retailers and directly to end customers in the Nordic countries.36 In 
contrast to Xella's other masonry products such as AAC panels and CSU blocks, 
which Xella sells mostly dir ectly to project customers, AAC blocks are more of a 
commodity product that can also be bought for small constructions. The 
Commission's assessment will therefore focus on the overlap in sales of AAC 
blocks to end consumers.  
(38) Xella’s AAC blocks are not  sold through retailers in Sweden and Norway because 
of historically different customer preferences, while sales through retailers are 
increasingly minimal in Finland. The horizontal overlap between the Parties’ 
activities is therefore limited to Denmark a nd, to a lesser extent, Finland.  
(39) With regard to the Danish market for sales of AAC blocks to end consumers 
where retailers and wholesalers compete,37 the combined market share of the 
Parties would be [30-40]%  (Xella [20-30]% and Stark [10-20]%). In light of the 
results of the market investigation, the Commission considers that the Transaction 
does not give rise to serious doubts in that market for the following  reasons:  
(a) The Parties' combined market share is not in itself an indication of likely 
competition concerns.  
(b) The market investigation has confirmed the availability of alternatives 
sources of supply, namely H+H with a market share of [20-30]%, and 
retailers Bygma and XL Byg with each a market share of [10-20]%. 
(c) In particular, the Comm ission's investigation has indicated that the AAC 
product range offered by competitor H+H is very comparable to that 
offered by Xella. A retailer stated: "The AAC products sourced from Xella 
and H+H are very similar. Competition between those two suppliers  has 
been effective, which has kept prices down. "38 An overwhelming majority 
of Danish retailers responding to the market investigation said that they 
considered H+H's AAC blocks to be a close substitute for Xella's Ytong 
blocks in terms of the relevant pro duct specifications, including price.39 
  
                                                           
36  In the Nordic countries, Fermacell's sales of GFB panels are predominantly stock sales to retailers, 
over which it has no control: [90 -100]% in Norway and Finland, and [90 -100]% in Sweden  (Fermacell 
controlling EUR [less than 1 m] of sales). In Denmark [80 -90]% are stock sales and  [10-20]% project 
sales through retailers where prices are set by the retailer, which leaves just [0 -5]% of sales controlled 
by Fermacell (EUR [less than 1 m ]). Ursa has only minimal direct sales of insulation materials to end 
consumers in the Nordic count ries, which are limited to isolated sales to individual customers. Lone 
Star company Balta sells carpet products directly and indirectly through dealers in the Nordic countries 
but its direct sales do not exceed [5 -10]%, while Stark’s market shares in the retail of carpet products 
are below [0 -5]% in each of those countri es. 
37  This segment covers sales above [20 -100] m3  and represents [20 -30]% of the t otal market for sales to 
end consumers.  
38  Non-confidential minutes of a call with a retailer, 6 February 2018  
39  Replies to question 18 – Questionnaire to retailers.  
 
 
10 
 (d) The results of the investigation have shown that customers in Denmark can 
easily switch suppliers and turn to various substitutes to AAC. All Danish 
retailers responding to the market investigation said that the y consider 
autoclaved aerated concrete (AAC) blocks to be substitutable by other 
products such as sand -lime bricks, calcium silicate units or pumice 
blocks,40 and that they could purchase all their requirements for 
masonryproducts, in particular AAC blocks,  in the EEA from alternative 
suppliers.41 
(e) None of the customers or competitors who replied to the Commission's 
investigation expected any impact from the Transaction on their business 
due to the overlap of the Parties' activities in the sale of AAC bloc ks to end 
consumers, and no competition concerns were raised in this regard for the 
Danish market.  
(40)  In Finland, AAC products were originally mainly sold through retailers but 
have increasingly been sold directly to end customers over the last 10 years. 
Xella's sales of AAC products [confidential sales strategy]42 to end customers. 
Currently [80-90]% of Xella's AAC sales (in volume) in  Finland are invoiced 
directly by Xella to the end consumer, the remaining [10-20]% being business 
controlled by retailers. Overall stock sales43 of AAC blocks in Finland 
currently  range between 1,000 and less than 4,000 m3, compared with about 
15,700 m3 fo r direct sales or project sales controlled by producers. Therefore, 
if there is still a market in Finland for sales of AAC blocks to end consumers 
where retailers and manufacturers compete, this must represent a minimal 
volume of less than [500 -2000] m3, c onsidering that the market for volumes 
above [20-100] m3 represents [10-30]% of the total market. In addition, the 
Commission considers that the Transaction does not give rise to serious doubts 
in that market for the following reasons:  
(a) The results of t he investigation have indicated that customers in Finland 
can easily switch suppliers and turn to various substitutes to AAC and that 
they could purchase all their requirements for masonry products, in 
particular AAC blocks, in the EEA from alternative sup pliers.44 
(b) The market investigation has also indicated that Finnish retailers consider 
H+H's AAC blocks to be a close substitute for Xella's Ytong blocks in 
terms of the relevant product specifications, including price.45 
 
                                                           
40  Replies to question 7 – Questionnaire to retailers.  
41  Replies to question 16 – Questionnaire to retailers.  
42  Project sales are sales of larger volumes, such as [20 -100] m3 or  more of AAC blo cks, that are 
important enough to require drawings and technical advice, and justify customer requests to several 
alternative sources of supply in order to obtain the best deal.  
43  Stock sales are sales made by a producer to a retailer, who stocks them for  resale to its retail customers  
44  Replies to question 16 – Questionnaire to retailers.  
45  Replies to question 18 – Questionnaire to retailers.  
 
 
11 
 (c) None of the customers or competitors who replied to the Commission's 
investigation expected any impact from the Transaction on their business 
due to the overlap of the Parties' activities in the sale of AAC blocks to end 
consumers, and no competition concerns were raised in this r egard for the 
Finnish market.  
4.3.1.2. Conclusion on horizontal overlaps  
(41)  In light of the considerations set out in recitals (35) to (40) and in view of the 
results of the market investigation and the information available to it, the 
Commission concludes that the Transaction does not give rise to serious doubts 
about its compat ibility with the internal market due to horizontal effects in the sale 
of AAC blocks to end consumers.  
4.3.2. Vertical relationships  
4.3.2.1. Assessment of vertical relationships – AAC blocks and GFB panels  
(42) The Transaction gives rise to vertically aff ected markets with respect to two 
vertical links.46 They relate in particular to:  
a. the supply by Xella of autoclaved aerated concrete (AAC) blocks and 
Stark's retail activities,  
b. the supply by Xella (Fermacell) of gypsum fibre board (GFB) panels and 
Stark's r etail activities.  
(a) Downstream markets: retail of building materials, in particular AAC blocks 
and GFB panels  
(43)  Xella does not sell its AAC products through retailers in Sweden and Norway 
because of historically different customer preferences, as Xel la’s sales in those 
countries are driven by direct relationships with end consumers. Vertical links 
between the Parties' upstream AAC and downstream retail activities are therefore 
limited to Denmark and Finland.  
(44)  With regard to GFB panels, in the Nor dic countries Xella sells the bulk of its 
Fermacell products to retailers: [80-90]% of its sales in Denmark, [90-100]% in 
Sweden, [90-100]% in Norway and [90-100]% in Finland.  
(b) Upstream markets: wholesale of masonry products, in particular AAC, and 
dry lining panels, in particular GFB  
  
                                                           
46  With regard to insulation and carpet products, the vertical links do not lead to affected markets, as the 
market shares achieved by Ursa and Balta do not exceed 10% in any of the Nordic countries, and 
Stark’s market share is lower than 30% in each of those countries.  
 
 
12 
 Masonry products, in particular AAC  
(45)  When considering a masonry product market comprising AAC, CSU47, claybricks 
and Leca, Xella's market share equals [50-60]% in Denmark and [5-10]% in  
Finland. Xella's  main competitor in Denmark is H+H with [40-50]%, and Aeroc in 
Finland with [20-30]%. 
(46) In a m arket for AAC products only, Xella's market share amounts to [40-50]%, in 
Denmark, and [10-20]% in Finland. The largest competitor is H+H with 
respectively  [50-60]% and [20-30]% in those  countries.  
Dry lining panels, in particular GFB  
(47) When considering a market comprising gypsum fibre board and glass fibre board 
panels, Xella's market share amounts to [80-90]% in Denmark, [40-50]% in 
Sweden, [40-50]% in Norway and [40-50]% in Finland. Xella's main competitor is 
Knauf with [10-20]% in Denmark, [20-30]% in Sweden, [30-40]% in Norway and 
[20-30]% in Finland. If GFB is considered to be a substitute for gypsum drywall 
products, Fermacell's share of this par ticular market would appear to be 
considerably smaller.  
(c) Foreclosure assessment  
Input foreclosure  
(48) The risk of input foreclosure through the notified concentration appears limited. It 
seems unlikely that, post -merger, Lone Star would restrict access  to its products 
by other retailers competing against Stark in any of the Nordic countries. The 
results of the investigation showed that customers have few concerns about 
possible input foreclosure. A clear majority of retailers replying to the market 
investigation do not consider it likely that Xella could stop supplying building 
materials in any of the Nordic countries in which they are active. A Danish 
retailer replied: " They all need access to the total market, and that is not possible 
through Stark ".48 
(49)  With regard to AAC and GFB products,  in light of the result of the market 
investigation and of the information available to it, the Commission considers 
that:  
a. Despite Xella's relatively high market shares in several Nordic countries, 
its AAC and GFB products represent a small share of retailers' overall 
sales and product range. Xella’s share in Stark’s overall sourcing 
expenditure does not exceed [0-5%] in Denmark, while a large proportion 
of this expenditure relates to sales that are effectiv ely controlled by Xella. 
Xella’s sales to the Stark business units in Sweden, Norway and Finland 
are insignificant in volume, as they do not exceed EUR […] in any of these  
three countries.  
                                                           
47  Calcium silicate units: building materials with high sound -absorbent qualities, fire safety st andards and 
pressure resistance  
48  Replies to question 21 – Questionnaire to retailers.  
 
 
13 
 b. AAC blocks can be replaced by the same or similar types of produ cts from 
competitors, such as sand -lime bricks, calcium silicate units or pumice 
blocks,49 with varying degrees of substitutability.  
c. There are alternative suppliers from which they could purchase similar 
volumes of building materials with a s imilar quali ty at a competitive  
price.50 
d. Customers would switch to such alternative suppliers if Xella stopped its 
supplies or offered worse conditions. In particular, one Danish retailer 
stated: " Xella - switch to H+H or importing; Fermacell - switch to Knauf 
or im porting ".51 
e. H+H offers a very similar AAC product range compared to Xella.52 
f. In Denmark Xella currently relies more on retailers other than Stark. It 
achieves [30-40]%  of its sales through Bygma and [10-20]% through 
Davidsen, compared with [10-20%] for Stark. If it were to stop its sales to 
those retailers and sell exclusively through  Stark post -merger, this would 
lead to reduced sales of its products as it seems unlikely that Stark could 
take over all or a large part of the retail sales of its comp etitors.  
(50) Therefore, in light of the results of the market investigation and the evidence 
available to it, the Commission considers that even if the merged entity had the 
ability to engage in input foreclosure, it is unlikely that it would have sufficient 
incentives to do so. Thus, the Commission concludes that the Transaction would 
not give rise to competition concerns related to input foreclosure as regards the 
markets for AAC blocks and GFB panels in Denmark, Sweden, Norway and 
Finland.  
Custom er foreclosure  
(51) The risk of customer foreclosure appears to be limited, as Stark's market share in 
the retail of building materials is less than 30% in the countries where it operates. 
Only a minority of competitors replying to the market investigation  consider it 
likely that following the transaction Stark would stop sourcing products that 
compete with Xella or Fermacell or only source those products at worse 
conditions.53 Competitors indicated that they would be able to find alternative 
ways to the mar ket if Stark were to stop purchasing from them or offer worse 
commercial conditions. A competitor replied: " We would try to find solution how 
to keep selling our products to Stark but not at any cost. Most likely we would try 
to compete with Xella by selli ng our products through competitors of Stark. "54 
                                                           
49  Replies to questions 7 and 16 – Questionnaire to retailers.  
50  Replies to question 22 – Questionnaire to retailers . 
51  Replies to question 22.1 – Questionnaire to re tailers.  
52  Non-confidential minutes of a call with a retailer, 6 February 2018  
53   Replies to question 18 – Questionnaire to building material competitors.  
54  Replies to question 19 – Questionnaire to building material competitors . 
 
 
14 
 AAC blocks  
(52) In Denmark,  Stark has a market share of [20-30]% in the overall retail supply of 
building materials ( [20-30]%  professional customers, [10-20]% DIY), and [20-
30]%  in the overall retail supply of masonry products. It sources its AAC blocks 
mainly from H+H. However, the Commission's investigation has indicated that 
Stark's importance for reaching final customers in Denmark is considerably lower 
than its market share in retail sales suggests. In the overall sale of AAC products 
to end customers, allocating to Stark those sales over which it has control, Stark 
has a share of only [5-10]%, while its purchasing share of AAC blocks comes to 
[10-20]%. This suggests that if a customer foreclosure strategy was implemented, 
the volume of the potential lo st business for H+H would be limited. Furthermore, 
it is doubtful whether losing potential sales to Stark in Denmark would impact 
H+H’s competitiveness, given that it would reta in its sales to all alternative 
retailers in Denmark as well as its sales in other Nordic countries.  
(53) In Finland,  Stark has a market share of [10-20]% in the overall retail supply of 
building materials ( [20-30]% professional customers, [5-10]% DIY), wh ile its 
purchasing share of AAC blocks is less than [0-5]%. This means that the vast 
majority of retail sales would remain available to Xella’s  competitors.  
GFB panels  
(54) In the overall retail supply of building materials Stark has a market share of [20-
30]% in Denmark, [5-10]% in Sweden, [0-5]% in Norway and [10-20]% in 
Finland. However, Stark's purchasing share of GFB panels does not exceed [0-5]% 
in any of the Nordic countries . This indicates that Stark's importance for reaching 
final customers is cons iderably lower than its market share in retail sales suggests 
and that the vast majority of retail sales would remain available to Xella’s 
competitors.  
(55) Therefore, in light of the results of the market investigation and the evidence 
available to it, th e Commission considers that the merged entity is unlikely to have 
the ability to engage in customer foreclosure. Thus, the Commission concludes 
that the Transaction would not give rise to competition concerns related to 
customer foreclosure as regards the markets for AAC blocks and GFB panels in 
Denmark, Sweden, Norway and Finland.  
4.3.2.2. Conclusion on vertical effects  
(56) In light of the considerations set out in recitals (42) to (55), the Commission 
concludes that the Transaction does not give rise to serious doubts about its 
compatibility with the internal market due to input or customer foreclosure 
concerns as regards AAC blocks and GFB panels.  
  
 
 
15 
 5. CONCLUSION  
(57) For the above reasons, the Commission has decided not to oppose the notified 
operation 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 
Membe r of the Commission