COMMISSION DECISION of 05/07/2000 declaring a concentration to be compatible with the common market (Case No IV/M.1996 - SCA/GRANINGE/JV) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

Brussels, 05.07.2000 SG(2000)

to the notifying parties

Subject: Case No COMP/M.1996 - SCA / GRANINGE / SCANINGE TIMBER

Notification of 30th May 2000 pursuant to Article 4 of Council Regulation No 4064/89

1. On the 30th May 2000, the Commission received a notification of a proposed concentration pursuant of Article 4 of Council Regulation (EEC) No. 4064/89 [1], whereby Svenska Cellulosa Aktiebolaget SCA (SCA) and Graninge AB (Graninge) acquire within the meaning of Article 3(1)(b) of the Council Regulation joint control by purchase of shares in a newly created company constituting a joint venture (Scaninge Timber)

[1] OJ L 395, 30.12.1989 p.1 corrigendum OJ L 257 of 21.09.1990, p.13; Regulation as last amended by Regulation (EC) No 1310/97 (OJ L 180, 9.7.1997, p1, corrigendum OJ L 40, 13.2.1998, p 17)

2. After examination of the notification, the Commission has concluded that the proposed operation falls within the scope of Council Regulation (EEC) n° 4064/89 and does not raise serious doubt as to its compatibility with the common market and the functioning of the EEA agreement.

I. THE PARTIES AND THE OPERATION

3. SCA is a forest industry company that specialises in the production and sale of hygiene products, corrugated board packaging and graphic paper. Graninge produces and distributes electricity and district heating in Sweden and Finland. SCA and Graninge both have forest holdings and operate sawmills. The parties will combine all of Graninge's and a part of SCA's forestry and sawmill operations into the joint venture.

II. THE CONCENTRATION

4. SCA and Graninge will each hold 50% of the voting rights in Scaninge Timber, with veto rights on certain matters including the determination of business plan and budget. The joint venture will operate as an autonomous entity. It will have sufficient resources to conduct its activities on a lasting basis and benefits from a non-exclusive supply agreement from SCA. It can therefore be concluded that the joint-venture will perform, on a lasting basis, all the functions of an autonomous economic entity.

III. COMMUNITY DIMENSION

5. Graninge is jointly controlled by the Eléctricité de France group and the shareholding descendants of A.N Versteegh. Therefore, EDF's turnover has to be considered for the purpose of the turnover calculation.

6. The undertakings concerned have a combined aggregate world-wide turnover of more than EUR5 billion [2] (SCA, EUR7365 millions, EDF EUR29 494 millions, Graninge EUR385millions). Each of them has a Community-wide turnover in excess of EUR250 million (SCA EUR6213 millions, EDF EUR28125 millions, Graninge EUR363 millions), 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.

IV. COMPETITIVE ASSESSMENT

A. The relevant markets

7. The parties consider the relevant product markets to be those for softwood timber, sawn timber and forest fuel. The softwood timber has two dimensions: the purchase and the sale of softwood timber, as producers source raw material from their holdings but also purchase (and sale) timber on the open market. For the purpose of this decision, the Commission considers that it is not necessary to define the relevant product markets precisely, as even on the basis of the narrowest definition, the concentration does not raise serious doubts as to its compatibility with the common market.

8. The notifying parties state that the relevant geographic market for timber and forest fuel is Sweden and that the market for sawn timber is at least EEA wide as defined by the Commission in previous decisions. However, it is not necessary to reach a definite conclusion on the exact scope of the geographic market, because regardless of the definition, the parties' market shares in neither of the product markets would not exceed 15%.

B. Assessment

9. There are no affected markets within the meaning of the merger regulation. The parties combined market shares on the three markets are as follows: for softwood timber, it is around 6% of total purchase and around 3% of total sales in Sweden; for the sales of sawn timber in the EEA, it does not exceed 2%. In this market, if each country within the EEA were considered separately, the combined market shares do not exceed 8% in any country. Finally, the parties combined share of sales of forest-fuel in Sweden is around 6%. Consequently, on the horizontal level, the combined market shares of the parties, in these markets, do not exceed 15%. There are no vertically integrated markets; Graninge produces and distributes electricity to the pulpwood industry in Sweden and Finland. However, Graninge's share of sales is well below 25% in all EEA States. SCA does not have any vertically integrated activity.

V. CONCLUSION

10. 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 EEA Agreement. This decision is adopted in application of Article 6(1)(b) of Council Regulation (EEC) No 4064/89.

For the Commission,

signed by

Günter VERHEUGEN

Member of the Commission