Notice pursuant to Article 19(3) of Council Regulation No 17(1) concerning Case COMP/E-2/37.747 - StoHaas Joint Venture

(2001/C 117/03)

(Text with EEA relevance)

I. The application/notification

1. On 22 December 1999, the Commission received from Stockhausen GmbH & Co. KG (hereafter "Stockhausen") and Rohm and Haas Company (hereafter "Rohm and Haas") an application for negative clearance, or alternatively, a notification for exemption under Article 81(3) of the EC Treaty of a joint venture agreement and a set of other agreements concerning, inter alia, the setting up of a joint venture in order to produce crude acrylic acid (hereafter "CAA") at Deer Park, Texas, United States of America, and at Marl, Germany. On 6 February 2001, the parties transmitted to the Commission an amendment agreement, concluded on 27 December 2000, which amended two provisions of the notified joint venture agreement in order to remove the concerns expressed, on 14 April 2000, by the Commission regarding the compatiblity of these provisions with Article 81 of the EC Treaty.

2. CAA is not an end product, but it is used as a basis for manufacturing other products such as butyl acrylate (hereafter "BA") or glacial acrylic acid (hereafter "GAA").

The joint venture will be solely dedicated to CAA manufacturing and this CAA will be entirely sold to the parent companies.

3. In addition, on the basis of an asset purchase agreement, Rohm and Haas will acquire Stockhausen's German business of (i) manufacturing, marketing, distributing and selling BA to any and all Parties, and of (ii) marketing, distributing and selling GAA to third parties other than members of the group of companies to which Stockhausen belongs.

II. The Parties

4. Both Rohm and Haas and Stockhausen are principally engaged in the production of speciality chemicals. In the chemical industry the term "specialty chemicals" is used to refer to chemical compounds which have been engineered by a chemical producer to incorporate attributes desired for a specific end use. These are differentiated products as distinguished from commodity chemicals, which are inherently fungible and undifferentiated.

Both Stockhausen and Rohm and Haas manufacture acrylic acid such as CAA, GAA and the esters of acrylic acid as the key raw materials for some of their products.

5. Rohm and Haas is a publicly quoted company incorporated under the law of Delaware, United States of America. It has production facilities all over the world.

6. Stockhausen is a 99,871 % subsidiary of Degussa AG. Degussa AG is part of the E.ON Group. E.ON holds a 64,55 % stake in Degussa AG.

Degussa AG is in effect the chemicals arm of the E.ON Group. E.ON is a German publicly quoted joint stock company (AG).

III. The notified agreements

III.1. The setting up of the joint venture

7. The Parties are setting up a Joint Venture(2) ("StoHaas Monomer GmbH & Co. KG", to manufacture CAA at Deer Park, Texas and at Marl, Germany.

In Germany, Stockhausen will attribute all of its Marl CAA production capacity to a new subsidiary (hereafter "StoHaas Marl GmbH") which will be contributed to the joint venture on the 1 January 2001.

In the United States, Rohm and Haas will attribute a part of its Deer Park production capacity, equal to the production capacity attributed by Stockhausen, to a new subsidiary (hereafter "ROH Delaware LP") which will be contributed to the joint venture on the 1 January 2001.

8. The joint venture will be formed for an indefinite period of time. However, it may be terminated by either Party upon 24 months written notice to take effect as of the end of the calendar year, for the first time having an effective date as of 31 December 2030.

III.2. The joint control

9. The joint venture will be jointly controlled (50/50). It will be ultimately governed by the partners' meeting. The partners' meeting decides upon changes to the partnership deed, increases or decreases of the capital accounts, the approval of the annual financial statements of the joint venture and the entering into, change or termination of any intra-group agreements pursuant to Article 291 of the German Aktiengesetz. All other powers of the partners' meeting will be delegated to the Board, but the partners' meeting may withdraw, amend or change all delegated powers of the Board at any point of time at its own discretion.

III.3. The general partner of the joint venture

10. The general partner of the joint venture will be StoHaas Management GmbH. The shareholders of StoHaas Management GmbH, i.e. the notifying parties, will be limited partners of the joint venture. Each of the shareholders will hold a 50 % interest in the general partner.

StoHaas Management GmbH will be responsible for the management and representation of the joint venture. StoHaas Management GmbH will have two Managing Directors, representing StoHaas Management GmbH jointly. The Managing Directors will prepare annual investments and financial budgets and short-term profit and loss statements for the joint venture.

III.4. The structure of the joint venture

11. The joint venture will have a Board, which will exercise the powers delegated to it by the partners' meeting, advise the general partner and its management and make overall policy decisions with respect to the business and affairs of the venture. Unless otherwise decided by the partners' meeting, each of the Parties has the right to appoint two members of the Board. Resolutions of the Board are adopted unanimously.

The Board may give instructions, which shall be binding upon the Managing Directors. Furthermore, the Managing Directors of StoHaas Management GmbH shall not, without the consent of the Board, take any actions or enter into any business transactions beyond the ordinary scope of business of the joint venture entity.

12. The entity operating each of the joint venture's facilities (Rohm and Haas in Texas and Stockhausen at Marl) will have employees and these employees will provide services to the joint venture pursuant to the respective operating agreements.

The Parents will contribute to the joint venture or its subsidiaries all the technology and know-how required to carry out its operations.

The joint venture agreement limits the joint venture's use of the technology licensed by third parties to its CAA operations at Marl, Germany.

In the event that a new technology is created by the joint venture, it will be co-owned by the Parties.

III.5. The joint venture activities at Marl and in Deer Park

13. The joint venture will be solely dedicated to CAA manufacturing and this CAA is entirely sold to the two parent companies. The parent companies will then use the CAA purchased from the joint venture for further production. The CAA produced by the joint venture is >90 % pure acrylic acid.

14. The joint venture will manufacture CAA in Marl. Stockhausen will continue to run the Marl CAA plant on behalf of the joint venture under an operating agreement.

All of the CAA manufactured in Marl will be owned by the joint venture, and sold to the parent companies as the only customers under two supply agreements (the supply agreement between StoHaas Marl GmbH and Stockhausen and the supply agreement between StoHaas Marl GmbH and Rohm and Haas). This is the joint venture's sole activity in Marl.

15. The joint venture will also manufacture CAA in Deer Park. Rohm and Haas Texas will continue to run the CAA plant in Deer Park on behalf of the joint venture, under an operating agreement.

All of the CAA manufactured for the joint venture in Deer Park will be owned by the joint venture and sold to the parent companies as the only customers under two supply agreements (the supply agreement between ROH Delaware LP and Stockhausen and the supply agreement between ROH Delaware LP and Rohm and Haas). This will be the joint venture's sole activity in Deer Park.

16. The CAA will be turned into either GAA or BA, as explained in more detail below.

III.6. Production of GAA in Marl

17. The majority of the CAA purchased by Stockhausen from the joint venture in Marl will be further purified by Stockhausen into GAA(3). GAA is a >95 % pure acrylic acid. The GAA is required for Stockhausen's internal use, primarily to produce super absorbent polymers (SAP) and to supply other GAA-consuming businesses within the E.ON Group.

18. The transformation from CAA into GAA for both Parties will be carried out using Stockhausen-owned equipment.

19. A toll manufacturing agreement between Stockhausen and Rohm and Haas will be used to allow Stockhausen to convert the Rohm and Haas-owned CAA into GAA for Rohm and Haas. Stockhausen will be remunerated by Rohm and Haas. Rohm and Haas' portion of GAA is required for internal use and for external sales on the GAA merchant market.

III.7. Production of BA by Rohm and Haas in Marl

20. The remainder of the CAA produced by the joint venture at Marl will be further processed by Rohm and Haas into BA. BA is produced through the esterification of CAA with butanol. At Marl, this conversion will take place in the facilities that Stockhausen sold to Rohm and Haas on 1 January 2000 on the basis of an asset sale agreement. In addition, all the Stockhausen customers for BA (both internal to Degussa and in the external merchant market) and the external merchant market customers for GAA, have been included in this agreement.

21. The asset purchase agreement provides that Stockhausen (or any member of the Degussa affiliated group) shall not, for a defined period from 1 January 2000 on, compete with Rohm and Haas in the marketing, distribution or sale of BA and or GAA to any third party in any country in the world.

22. Stockhausen will continue to operate the BA facility on behalf of Rohm and Haas under a BA operating agreement.

23. All BA produced in the Marl plant will be owned by Rohm and Haas. The majority of the BA produced in the existing Marl plant will be used to continue to supply the newly acquired BA customers. Any additional BA production may be used by Rohm and Haas to offset their captive BA needs in Europe.

24. In order to meet its entire European BA demand, Rohm and Haas will (at its sole expense) construct at the Marl site a BA plant. The timing for this expansion will be in conjunction with the joint venture's CAA expansion, currently estimated for July 2003.

III.8. Production of FGAA in Deer Park

25. All the CAA purchased by Stockhausen from the Joint Venture in Deer Park will be further purified into FGAA(4). FGAA is a > 95 % pure acrylic acid. The FGAA is required for Stockhausen's internal use to produce SAP in North America. A toll manufacturing agreement will be used to allow Rohm and Haas to convert the Stockhausen-owned CAA into FGAA for Stockhausen. CAA needed for the toll-manufacturing of FGAA under this Agreement will preferentially be provided from the joint venture.

IV. The Commission intention

26. The Commission intends to adopt a favourable position with regard to the notified agreements summarised above. Before doing so, it invites the interested parties to submit their comments within one month of the date of publication of this notice, quoting reference COMP/E-2/37.747, to European Commission Directorate General for Competition

Directorate E

Rue Joseph II/Jozef II-straat 70 B - 1049 Brussels ( fax (32-2) 299 24 64 ).

(1) OJ 13, 21.2.1962, p. 204/62.

(2) It should be noted that the joint venture agreement itself is actually concluded between Rohm and Haas Texas, Inc., ROH Venture GmbH, Stockhausen GmbH & Co. KG and Rohm and Haas Company.

(3) In North America GAA is also known as FGAA (Flocculent-GAA).

(4) FGAA is a US term for GAA.