1999/229/EC: Commission Decision of 18 November 1997 relating to proceedings under Council Regulation (EEC) No 4064/89 (Case No IV/M.913 - Siemens/Elektrowatt) (notified under document number C(1997) 3589) (Only the German text is authentic) (Text with EEA relevance)
Date: 1997-11-18
Institutions: European Commission
Subjects: EU Member State, building industry, competition, dominant position, economic concentration, merger control

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 18 November 1997

relating to proceedings under Council Regulation (EEC) No 4064/89

(Case No IV/M.913 — Siemens/Elektrowatt)

(notified under document number C(1997) 3589)

(Only the German text is authentic)

(Text with EEA relevance)

(1999/229/EC)

THE
COMMUNITIES,

COMMISSION

OF

THE

EUROPEAN

Having regard to the Treaty establishing the European
Community,

Having regard to the Agreement on the European
Economic Area, and in particular Article 57 thereof,

regard

to Council Regulation

Having
(EEC)
No 4064/89 of 21 December 1989 on the control of
last
concentrations
amended by Regulation (EC) No 1310/97 (2), and in
particular Article 8(2) thereof,

undertakings (1),

between

as

Having regard to the Commission’s decision of 28 July
1997 to initiate proceedings in this case,

Having regard to the opinion of
Committee on Concentrations (3),

the Advisory

Whereas:

(1) On 24 June 1997 the Commission received,
to Article 4 of Council Regulation

pursuant

(1) OJ L 395, 30.12.1989, p. 1; corrected version: OJ L

257, 21.9.1990, p. 13.
(2) OJ L 180, 9.7.1997, p. 1.
(3) OJ C 90, 31.3.1999.

(EEC) No 4064/89 (the Merger Regulation),
notification of a proposed merger, whereby
intends within the
Siemens AG (Siemens)
meaning of Article 3(1)(b) of
the Merger
Regulation to acquire control of Elektrowatt AG
(Elektrowatt) through the purchase of shares.

(2) By letter dated 15 July 1997 the Commission
informed the parties of its decision to suspend
implementation of
the notified merger under
Articles 7(2) and 18(2) of the Merger Regulation
until a final decision was issued.

(3) After

the

examining

notification,

the
the notified
Commission has established that
the Merger
project
falls within the scope of
Regulation and gives
rise to serious doubts
about its compatibility with the common market
and the functioning of the EEA Agreement. By
the
decision dated 28 July 1997,
Commission
under
initiated
Article 6(1)(c) of the Merger Regulation.

proceedings

therefore,

(4) The Advisory Committee discussed the draft of

the present decision on 24 October 1997.

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I. THE PARTIES

and

automating

distribution,

(5) Siemens is active in many areas. Its operations
are basically in the fields of energy production,
transmission
systems
engineering, propulsion, circuit and installation
engineering, public
engineering,
communications
private
communications systems, protective engineering,
automotive
traffic
engineering,
engineering,
medical engineering,
semi-conductors, passive
construction components and pipes and tubes,
electromechanical
information
technology and lighting technology.

components,

networks,

(6) Elektrowatt is a Swiss holding company which,
via subsidiaries in Switzerland and Germany, is
in electricity generation and supply,
active
technology,
building
engineering,
security
installations and general building
telephone
operations,
and
property
engineering services in various fields.

management,

the other

suppliers. CSG currently owns 44,9 % of
Elektrowatt;
are widely
dispersed. Before its shares are sold to Siemens,
CSG will make the general-public shareholders a
public offer for all Elektrowatt shares.

shares

the public offer

(9) The merger is caught by Article 3(1)(b) of the
Merger Regulation, since Siemens is acquiring
sole control over Elektrowatt. This is still the
case if
to acquire further
Elektrowatt shares through CSG is completely
unsuccessful and Siemens can only purchase the
44,9 % of Elektrowatt already belonging to
CSG. Ownership of these shares gave CSG, via
a secure majority at the general meeting, de
facto
since
attendance at the general meeting in the last
four years was clearly less than 70 % on each
occasion and the other
shares are widely
dispersed.

of Elektrowatt,

control

sole

(7) The activities of Elektrowatt which will be taken

over by Siemens are:

III. EU-WIDE SIGNIFICANCE

— commercial

building

control

(essentially

through Landis & Gyr/Landis & Staefa),

— security engineering (through Cerberus),

— engineering

and general operations

for

building and property management,

— services, systems, installations and equipment

for energy supply companies,

— products, systems and services for telephone
installations operators (particularly card- and
coin-operated phone booths), and

— visual security devices.

Elektrowatt’s activities in the fields of electricity
supply and (inter)connection will be sold to
firms other than Siemens.

(10) Together, Siemens and Elektrowatt have an
aggregate worldwide turnover of more than
ECU 5 billion (Siemens ECU 49,98 billion and
Elektrowatt ECU 4,58 billion). Each of them
has an aggregate EU-wide turnover of more than
ECU 250 million (Siemens ECU 30,325 billion
and Elektrowatt ECU 2,27 billion). Neither
Siemens nor Elektrowatt achieves more than
two thirds of its aggregate EU-wide turnover
within one and the same Member State. The
project therefore has EU-wide significance but
does not constitute a case of cooperation under
the EEA Agreement.

IV. ASSESSMENT PURSUANT TO ARTICLE 2 OF
THE MERGER REGULATION

A. RELEVANT PRODUCT MARKETS

II. MERGER

(11) The operations of Siemens and Elektrowatt
overlap and are divided by the parties into the
following areas of activity:

(8) Siemens intends to purchase the Elektrowatt
shares held by the Cre´dit Suisse Group (CSG),
electricity supply and
Zurich. Elektrowatt’s
split off
(inter)connection activities will be
subsidiary
beforehand and transferred to its
a
Watt AG. They will be
energy
consortium of German and Swiss

acquired by

— commercial building control,

— building security technology (fire alarms,
security

intrusion protection, and other
systems),

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— network control technology,

— energy meters, energy management systems,
ripple control transmitters and receivers,

— payphones

(coin-

and

card-operated

telephones).

is active on a significant scale. For all practical
purposes, Siemens does not supply equipment
and components outside
its own building
management systems. No further discussion is
needed, therefore, of the markets for equipment
and components
for building management
systems.

(12) The procedure was

initiated on account of
possible competition problems in the fields of
fire alarms, electricity and heat meters, ripple
control
and
payphones.

transmitters

receivers,

and

1. Commercial building control

(13) By commercial building control

includes

therefore,

is meant the
measuring, control, regulation and management
of heat, ventilation, air-conditioning and other
technical installations, such as building systems,
in commercial buildings. Commercial building
control,
and
electronic data-processing systems and their
components (excluding the heating, ventilation
and air-conditioning equipment itself) which are
economic and energy-efficient
used for
control
the operational
installations in commercial buildings, including
the preparation and commissioning of
such
systems and showing
building management
operators how to use them.

and regulation of

electronic

the

(14) A distinction should be made between the
for building management systems as
and
the markets
such
servicing the

market
such,
components
systems, and the market
systems (4).

equipment
for

needed
for

(hardware)

for

(a) Equipment and components for building

management systems

(15) Equipment

and

systems

components

building
for
management
can be divided into
different groups of appliances and components
that are not interchangeable, for example cables,
valves and valve mechanisms. These markets are
upstream of
for building management
systems per se, since hardware is a primary
product for the suppliers of such systems. In the
for
markets
building management systems, only Elektrowatt

for equipment and components

that

(b) Building management systems

and

buildings,

commercial

ventilation
in

(16) The market for building management systems as
such covers the development and manufacture
of systems for the control and regulation of
air-conditioning
heating,
(HVAC)
their
commissioning and showing operators how to
use them. Building management systems are
developed and supplied on a customised basis in
the light of the particular requirements of each
case.
and
commissioning are carried out either by the
product
its
manufacturer
through wholesalers
subsidiaries/branches, or
and undertakings
in the HVAC sector. The
following client segments can be differentiated:
and
office buildings, hospitals, universities
schools,
In
purely residential buildings, however, complex
building management systems are not normally
used.

specialised industries and hotels.

customers

Supply

itself

final

or

to

(c) Servicing of building management systems

(17) Downstream of

for

the market

debugging
System

of
the
manufacturers

building
management systems is the market for servicing
such systems. This covers
the maintenance,
repair, replacement, modernisation, operational
building’s
control
and
installations.
or
companies working for them supply servicing
for their (cid:28)own’ building management systems,
especially as part of the guarantee for newly
(cid:28)Other people’s’ building
installed systems.
also serviced by
management
competitors,
conclude
contracts with suppliers for all these services.
The market for servicing building management
systems therefore covers all the said services.

systems
are
however. Customers

2. Building security technology

(4) See the Commission Decision of 12 February 1996 in
Case No IV/M.692 — Elektrowatt/Landis & Gyr (OJ
C 69, 7.3.1996, p. 3). The delineation of the market
made in that Decision was confirmed to the greatest
possible extent in the course of the investigations in this
case both by the parties and by their competitors.

(18) Building security technology covers fire alarm
alarm)
intrusion
and
security
systems, access
systems.
technology
installations are used primarily in office and
industrial buildings, hospitals and hotels. In this

(burglar
protection
control and other
security

Building

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field, too, a distinction must be made between
the market for equipment and components, the
market for systems and installations as such,
and the market for servicing.

(a) Equipment and components for building

security technology

for

security

building

(19) Only Elektrowatt is significantly active on the
markets
technology
equipment and components. Siemens basically
manufactures such equipment and components
only for its own use (it also sells to third parties,
but on a small scale and only in Germany). The
and
shares
aggregate market
Elektrowatt/Cerberus in Germany are less than
15 %, however. In the other Member States and
throughout
the EEA, Elektrowatt’s market
shares for equipment and components are less
than 25 %; market share aggregation does not
apply. No further discussion is needed therfore
of the markets for equipment and components
for building security systems.

Siemens

of

(b) Building

security

fire
protection installations, intrusion protection
and other building security insallations

installations:

(20) The

to

for

market

separate

building

each customer,

security
installations/systems as such covers modification
in accordance with the specific
of
the plant
requirements of
fitting and
commissioning, and showing operators how to
use the installations/systems. The Commission
has ascertained that fire alarm installations form
a
intrusion
product market
protection and other systems. Such installations
serve different purposes in each case and are not
interchangeable from the customers’ point of
to other building security
view.
installations,
fire protection installations are
frequently required by law and/or insurance
companies. The sensors they use (ionisation,
optical, thermal) are different to those in, say,
intrusion
(sound,
radar). There are also
ultrasound,
require
customers who only, or primarily,
straightforward fire protection systems,
for
commercial
example
establishments.

protection
infrared,

installations

In contrast

hospitals

small

or

(21) There is admittedly a tendency for fire alarm
systems to be integrated with other building
relatively
security installations.
large
etc.
firms
generally require intrusion protection and access

In particular,

government

offices,

and

together

systems must work

fire protection, and the
control as well as
different
as
smoothly as possible. To achieve this, however,
it does not seem necessary for fire alarm and
other safety installations to be purchased from
the same source, since (part) installations from
different manufacturers can be used together.
some
Customer preferences are not
customers prefer
security
technology from the same manufacturer, while
others attach importance to buying from several
suppliers. In any event, large suppliers are able
to deliver fire protection,
intrusion protection
and other building security installations. Despite
the
separate
product markets for fire protection installations
on the one hand and for intrusion protection
and other security installations on the other
should be assumed.

to buy all

integration,

tendency

towards

clear:

their

(c) Servicing building security installations

repair,

maintenance

maintenance,

(22) It could not be clearly established whether the
servicing of fire alarm installations and intrusion
protection and other security systems forms an
independent product market or is to be classed
with the systems market. Servicing includes
the
replacement,
modernisation, performance monitoring and
debugging of the security installations. Often,
the
security
of
installations is carried out by the manufacturer.
The customer often prefers
since the
reliable, bug-free operation of the installation
and the fastest possible debugging are extremely
relevant for security. However, there are also
other
out
maintenance services. The question whether the
servicing of building security installations forms
an independent market does not have to be
decided, however,
since even if a separate
market is assumed there are no problems of
competition.

firms which

(smaller)

building

carry

this,

3. Energy meters, ripple control technology,
energy-management systems, network control
technology (command and control equipment
for energy suppliers)

(23) Command and control equipment

for power
supply companies covers equipment,
systems
and installations which are used (a) to monitor
and control power and other energy networks
(network control systems) and (b) to record and
control energy consumption. The command and
control equipment in the second product group
all uses number recording technology, but can

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be further divided according to its different
applications.

(24) Energy meters are mechanical and electronic
meters and metering systems which record the
quantities of electricity, gas or heat consumed.
As explained by the parties, electricity, gas and
heat meters form independent relevant product
markets, since both the technology used and the
customer categories differ. The customers for
energy meters
energy
suppliers, i.e. electricity, gas and district heating
companies.

respective

are

the

(a) Gas meters

(25) The market for gas meters is not affected by the
merger, since only Siemens with a market share
of 22 % in the United Kingdom is active in this
sector and Elektrowatt does not manufacture
gas meters.

(b) Electricity meters

(26) The market

for

for

in the high-voltage

electricity meters
on

covers
mechanical meters
the
(built
Ferraris
((cid:28)hybrid
electromechanical meters
principle),
meters’) and electronic meters. A distinction can
be drawn, on the basis of
the application,
between meters for tariff customers (households
industrial
and small consumers), meters
customers and (cid:28)high-end’ meters. The high-end
domain comprises
fields of application with
special, particularly high technical requirements
for measuring the exchange of
(e.g. meters
grid between
current
different electricity producers). In the case of
households and small consumers, which use only
low-voltage electricity and are subject to at the
most two tariffs, it is mostly mechanical meters
that are still used, at any rate in western and
central Europe with the exception of France, the
Netherlands
In
Scandinavia, by contrast, it is electronic meters
and in
which are primarily being used,
households
final
consumers, electronic meters primarily are being
used throughout
In the high-end
the EEA.
category, only electronic meters are used.

and the United Kingdom.

too. Among

industrial

(27) Meters with electronic measuring systems and
counting mechanisms are in competition in

a

electronic meters have

spectrum than mechanical

facilitated by electronic meters,

terms of price and function with traditonal
equipment built on the Ferraris principle.
Because
greater
functional range, they can be used in a broader
or
applications
electromechanical meters. Thus
the technical
implementation of tariff schedules, for example
the introduction of complex customer charging,
which is
is
highlighted as a substantial advantage by the
majority of customers surveyed. Compared with
mechanical ones, moreover, electronic meters are
more sensitive. Their operability is less affected
or
by
temperature. Further advantages of electronic
over mechanical meters are a lack of sensitivity
dimensions
to
their
(space-saving
multifunctional
equipment),
installation possibilities (e.g. combination meters
with ripple control receivers or timer) and the
use of cost-saving reading techniques (remote
reading). Among the disadvantages, however,
can be reckoned shorter calibration periods, a
higher breakdown rate and a currently higher
purchase price than the mechanical alternating
current or
three-phase meter built on the
Ferraris principle.

environment,

fluctuations

frequency

voltage,

smaller

in

of

with

alternating

application,

however,
even taking account of

(28) A narrower definition of the market on the basis
is
of
fields
inappropriate,
the
differences between mechanical and electronic
meters. Even though in the domestic field it is
principally Ferraris meters which continue to be
used, at any rate in central Europe, the generally
expected diversification of tariffs will accelerate
the spread of electronic meters, which have in
any case been manufactured for two decades.
The higher cost at present of electronic meters
compared
or
three-phase meters is not an obstacle to their
increasing use, even in households. Their use
may even prove to be more economic on a total
cost basis,
installation and
administrative outlay compared with mechanical
meters is taken into account. A further argument
for the increased use of electronic as opposed to
mechanical meters is that their prices generally
have fallen in the past five years as a result of
constant
improvement and greater
competition from new suppliers. The customer
expectation is that this trend will continue. The
Commission
uniform
market covering all types of electricity meter,
from the traditional Ferraris via the hybrid to
the electronic.

therefore

technical

assumes

current

lower

the

if

a

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(c) Heat meters

(29) Heat meters are appliances which measure and
indicate the consumption of thermal energy in
flats and houses and in industrial and municipal
is
buildings. The
either
equipment
mechanical
electronic
ultrasound). Mechanical
(measurement
meters are being increasingly replaced in all
spheres by electronic ones. The Commission is
therefore assuming a uniform market covering
mechanical and electronic heat meters.

used
(vane mechanism) or

by

(d) Energy management systems

(30) Energy management systems are installations for
recording, controlling and monitoring electricity
consumption. The customers for such systems
are principally power supply companies and
firms, which use
relatively large
optimise
energy management
to
consumption. The aim, for instance,
is to try
and exploit cheap-rate periods and avoid or
flatten consumption peaks.

industrial

systems

(e) Ripple control transmitters and receivers

can be

(31) With the aid of ripple control transmitters and
receivers, multi-tariff meters and consumption
equipment
centrally controlled and
switched on and off. The transmission device of
the ripple control unit is installed at the power
supply company and the receivers at the site of
consumption
the multi-tariff meters
are
equipment. Ripple
in
increasingly
the metering
current-consuming
systems
devices. The
control
transmitters and receivers are chiefly power
supply companies.

incorporated
installed in the

or
transmitters

customers

control

ripple

for

(f) Network control technology

(32) By network control

Such

installations

technology is meant

the
development, engineering, delivery/installation,
maintenance and servicing of control systems for
public power, gas, water and district heating
networks.
of
computerised central control stations (network
control stations) and facilities with which the
geographically separate parts of a network, for
example transformer substations, switchgear and
power
remotely controlled
(remote control or station control technology).
Network control technology does not include

can be

stations

consist

controlled by network control
equipment,
in the power supply field such as
systems,
switching
protection
equipment and transformers. The customers for
essentially
technology
network control
power supply companies.

installations,

overload

are

(33) Network control technology installations must
be tailored to the specific requirements of
individual
customers, whose networks have
usually developed over time and also differ from
each other in terms of commercial organisation.
there
is no justification for
Nevertheless,
relevant
dividing
into separate
sector
the
product markets according to the
type of
network to be controlled, since the basic control
technology for network control
installations
does not differ. In view of the complexity and
size of the equipment, the design,
installation
and maintenance are carried out by one supplier.
According to the Commission’s investigations,
in the network
there are no smaller
control technology field which simply carry out
the maintenance of network control technology
installations. The Commission is
therefore
assuming an overall market for network control
technology for public and industrial power, gas,
water and district heating networks, which
comprises
and
design,
maintenance of the installations.

installation

firms

the

4. Payphones

(34) Payphones

of

services

types of

by mode

payment. There

publicly
terminal

telecommunications

accessible
are
telecommunications
equipment,
through which the general public is supplied
with
for
consideration. Payphones can be distinguished
firstly
are
coin-operated phones, phones using prepaid
phone cards and credit-card telephones. There
are also combined telephones,
for example
combined coin and card phones, or phones
card. This
which take different
circumstance does not mean, however,
that
separate markets could be formed depending on
the mode of payment. All manufacturers supply
phones for the important payment modes (coin,
phonecard and credit-card phones). Customers,
too, usually ask for telephones with several or
all of the abovementioned payment modes. Thus
the conditions of competition for payphones
with different modes of payment do not differ. It
is to be expected, moreover,
that payphones
with different modes of payment will continue
to be demanded (thus, for instance, phonecard
telephones and credit-card telephones sometimes
appeal to different end users; even coin-operated
telephones will not disappear entirely).

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and

(cid:28)private’

(outdoors)

payphones.

(35) A distinction must be made, however, between
(cid:28)public’
(cid:28)Public’
payphones are telephone installations, operated
by telecoms companies that are still State-owned
or by private operators of the public telephone
network authorised to do so as a result of
liberalisation, which are principally located in
public, unsupervised places
and
mostly accessible round the clock.
(cid:28)Private’
payphones are terminal equipment operated
both by the telephone companies and by private
undertakings, with independently set rates often
higher than those of (cid:28)public’ payphones; they are
usually located on private property indoors and
are often accessible only during certain times.
Even after
liberalisation of
complete
it will be necessary to
telecommunications,
maintain a
installations network
consisting of (cid:28)public’ payphones as part of the
basic
(cid:28)Private’ payphones will, by
definition, be used for profit and are therefore
suited to ensuring a nationwide basic
not
telephone
the population. The
therefore assuming different
Commission is
product markets
(cid:28)public’ and (cid:28)private’
payphones.

telephone

supply.

supply

the

for

for

(36) A further

lies

fundamental difference

between
(cid:28)public’ and (cid:28)private’ payphones
in the
additional security measures that are needed for
(cid:28)Public’ payphones must
(cid:28)public’ payphones.
also clearly be more robust
than payphones
installed indoors,
for example in restaurants,
airports and government buildings, where there
is less danger of vandalism. The manufacturing
costs of unsupervised (cid:28)public’ payphones are
therefore clearly higher than those for (cid:28)private’
payphones (two or three times as high). The
therefore assuming different
Commission is
product markets
(cid:28)public’ and (cid:28)private’
payphones.

for

(a) Public payphones

(37)

are

companies

(cid:28)Public’ payphones are to be found in the public
domain, principally on streets and in public
places. Telecoms
frequently
subject, even when they are already privatised,
to State regulations, which oblige them to
provide a basic supply of payphones in the
extra
public domain.
security
the
manufacturing costs of unsupervised (cid:28)public’
payphones are clearly higher
than those of
(cid:28)private’ ones. Also, the operation of (cid:28)public’
payphones
is often not very profitable on
account of higher costs and declining demand
(inter alia, owing to the growing spread of
mobile phones). In this field there are only a few

In addition, because
required,

measures

are

large customers, who (may) take their decisions
not just on the basis of market criteria. The
(cid:28)public’ payphones
market
is essentially
for
determined
customers, whose
these
by
procurement policy and purchasing decisions
have a decisive influence on market share.

(b) Private payphones

(38) The market

for

(cid:28)private’

payphones

is
completely different in competitive structure to
that for (cid:28)public’ payphones. (cid:28)Private’ payphones
are operated on private property by a wide
variety of firms. For instance, (cid:28)private’ payphone
operators may be owners of restaurants, pubs or
hotels. There could also be (cid:28)private’ payphone
for
networks
stations.
example,
in,
Operators of
(cid:28)private’ payphones are free to
decide whether they want to operate payphones
or not and will do so only if they expect a direct
or indirect profit from them.

service

B. RELEVANT GEOGRAPHIC MARKETS

1. Commercial building control

(a) Building management systems

(39) According to the undertakings involved,

the
market for commercial building control covers
the entire EEA. They reason that barriers to
market entry are low and that products and
services are basically the same throughout the
EEA. Any differentiation is basically order, not
country, specific. Differences might also arise as
a result of climatic conditions. The statutory
and administrative provisions in the individual
Member States, however, are not so different as
to affect
In addition,
the
Europe-wide
European Committee for Standardisation (CEN)
will shortly come into force in this field.

trade.
standards drawn up by

cross-border

(40) In its decision in Elektrowatt/Landis & Gyr (5),
the Commission mentioned a few other reasons
for accepting national markets, without however
conclusively defining the geographic market.
The Commission’s more recent enquiries have
essentially confirmed the parties’ submission.

(5) See footnote 4.

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With the introduction of CE standards, which
also cover product documentation and service
manuals, the regulatory differences between the
Member States will become increasingly smaller.
Global manufacturers point out in this respect
that progressive standardisation is leading to
different product designs in the United States
and the EEA.

The Commission is therefore assuming national
markets for servicing.

2. Building security technology

(41) Moreover,

in

be

assumed

to the
local presence/proximity
customer
advantageous,
to
continues
particularly as far as maintenance is concerned.
This is why internationally active suppliers have
a combination of central production plants and
national sales organisations. Differences in the
distribution of market share between Member
can therefore be put down to the
States
historical presence of a number of nationally
established suppliers. However,
this does not
argue against accepting an EEA-wide market.
the development and
There is demand for
installation of complex building management
systems throughout the EEA. Severe restrictions
of a technical or a legal nature do not exist. As
already
abovementioned
decision, any price differences are also not that
significant, because the services (installation of
the equipment, maintenance work) are carried
out on site and prices are therefore strongly
influenced by nationally different labour costs.
climate
Geographical
conditions in southern Member States, do not
warrant a narrower definition of the market.
The building management systems of the large
suppliers are adapted to different conditions. In
the same way as the operational requirements
for each project, which differ markedly from
each other, climate-related requirements affect
only the final configuration of the overall system
and not its basic functions. For these reasons,
the Commission is
an
EEA-wide market
for building management
systems.

pecularities,

assuming

least

such

the

as

at

(b) Servicing building management systems

(42) As already mentioned, the local presence of the
supplier is advantageous as far as servicing is
concerned, since, in the event of a malfunction,
customers require a response in not more than
half a day and are generally not satisfied with
telephone. Building
the
advice
management systems are principally serviced,
therefore, by nationally active, often relatively
small undertakings, which are not associated
system manufacturers.
with the international

given over

security

products

technology. They

reason that
supplied

(43) The parties designate the entire area of the EEA
as the relevant geographic market for building
the
security
building
and
demanded are basically the same and that any
differences are not country, but order, specific.
In some fields, however, different forms for the
equipment
the
required
differences in national provisions. Furthermore,
in this field,
there is already one European
standard in force, and an additional one is
lead to further
expected shortly, which will
harmonisation.

because

are

of

the

existence of national markets.

(44) The Commission’s enquiries have confirmed that
there is a trend towards Europeanisation in this
area also. There is, however, still strong evidence
of
In
particular, many European countries have their
own approval and recognition systems in the
security technology field, which means that in
each country a separate test and recognition
procedure has to be initiated.

(a) Fire alarms

additional

Belgium especially,

(45) There is a European standard (EN 54) for fire
alarms, but it can be regarded only as a (cid:28)lowest
common denominator’ and as a rule does not
suffice on its own to secure recognition in a
Member State as a supplier. In Germany, France
and
local
requirements have to be met. In Germany, for
the VDS
approval/recognition by
example,
(Verband der Sachversicherer) is necessary. In
Italy,
the United Kingdom, France, Austria,
Spain
installation
Scandinavia
standards exist. Fire alarm systems must fit into
the local fire brigade infrastructure; in Ireland
and Greece, for example, the local fire brigade
must be involved at the planning stage. The
Commission is
the
markets for fire alarm systems are still national.

therefore assuming that

local

and

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Official Journal of the European Communities

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(b) Intrusion protection and other building

security installations

(46) Intrusion protection and other building security
installations must bear the CE mark throughout
Europe. The hardware as such can then be
traded across Europe. The actual use of such
still governed in the
hardware is, however,
individual countries as a rule by additional
requirements. National authorisations, either by
authorities or by insurance associations, exist in
Belgium, Germany, Spain, France, Ireland, the
In
Netherlands
Belgium,
Ireland,
transmission equipment still has to be approved
by the respective telecoms company. Intrusion
protection systems must, moreover, fit into the
national police infrastructure. The Commission
has therefore come to the conclusion that the
markets
intrusion protection and other
building security installations are likewise still
national.

and the United Kingdom.

France,

Greece

and

for

(c) Servicing of fire alarm, intrusion protection
and other building security installations

(47) As with equipment markets, the markets for the
servicing of building security installations are
also national. Even more so than in the case of
the
geographical
proximity to the customer plays an important
part in the case of servicing. Such proximity is
especially necessary when faults have to be put
right quickly.

equipment market

itself,

3. Energy meters, ripple control
technology,energy management systems,
network control technology (command and
control equipment for energy suppliers)

(a) Electricity meters

(48) The parties maintain that

for

the EEA is

geographic market

the
relevant
electricity
meters, for the following reasons. Whereas up
until about 10 years ago the markets
for
electricity meters were still separate national
markets with predominantly national production
and a company like Landis & Gyr could do
business throughout Europe only by maintaining
its own manufacturing plants in 10 European
countries,
now changed
fundamentally. Customers no longer attach any
importance to the presence of a manufacturer in

conditions

have

their country, but demand quality, service, short
delivery periods, a high degree of functionality
and greater economy, that is say an altogether
more favourable price/performance ratio. This
is leading to a levelling of market prices in
Europe and to a concentration of production
among suppliers. Market entry costs have, at all
events,
case of
fallen considerably in the
electronic meters. National authorisation or
standardisation provisions do not constitute
significant market entry barriers as they do not
affect the fundamentals of the development and
construction of energy meters.

is

strong

already

(49) The Commission’s enquiries have revealed that
there
trend towards
a
Europeanisation in respect of electricity meters.
Besides the parties there are a number of other
suppliers who are active throughout Europe or
at least in several Member States. The successful
placing on the market of
Iskra Emeco, a
company from Slovenia, shows that the market
for electricity meters is becoming increasingly
international. What
is more, customers are
obliged, at least in the case of large procurement
to tender on a Europe-wide basis
contracts,
pursuant to the Utilities Directive.

for

their

tenders

suppliers

(50) Although the larger electricity supply companies
electricity meter
invite
requirements on a Europe-wide basis,
the
contract will still be performed at national level.
Nearly all
therefore have in each
Member State an establishment or at least a
local sales agency, or else they market
their
products
sales organisation of
another manufacturer who has a presence in the
Member State concerned. Although they did not
regard
national
representation as a decisive factor in their choice
of a particular supplier, the customers surveyed
stated that they considered it at least highly
advantageous when it came to working together,
especially over the timely delivery of spare parts.

through the

presence

such

the

of

a

(51) As far as the technical standards governing
electricity meters are concerned, a distinction
has to be made. There are European standards
for electricity meters, such as,
for example,
EN 60521 for mechanical alternating current
and active-power meters of categories 0,5, 1 and
2, EN 61036 for electronic alternating current
and active-power meters (precision categories 1
and 2), EN 60687 for electronic alternating
(precision
current
categories 0,2 and 0,5) and EN 601268 for
electronic alternating current and reactive energy
meters (precision categories 2 and 3). In some
Member States (e.g. Germany, Austria and the

and active-power meters

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31.3.1999

United Kingdom),
these are coupled with a
national standard (e.g. DIN EN provisions, BS
EN provisions). There
national
provisions on meters, for example concerning
the particulars which may be noted down when
meter readings are made or transcribed.

also

are

are

(52) In most Member States, with the exception of
Denmark, Finland and Luxembourg, electricity
meters must be approved. In Denmark, national
approval provisions for electricity meters are
scheduled to enter into force in August 1998.
The approval conditions are laid down in the
In some cases
respective national provisions.
there
approval
provisions (e.g. Germany, the Netherlands and
Austria). Calibration and the fixing of tolerances
for
the
electricity meters, which guarantee
accuracy of the meter reading and hence serve
to protect
the final consumer, are also the
subject-matter of national rules. Calibration and
for
recalibration
electricity meters
from one
Member State to another.

and
therefore differ

type-specific

tolerances

detailed,

periods

the

technical

provisions

calibration

delimitation. Whether,

requirements,
for

(53) The need to have a branch at national level, the
special
special
statutory
and
tolerances, and the national approval procedures
are so many reasons for a narrower, national
market
that
exercised through Europe-wide
demand is
tenders,
for justifying the
acceptance of meter markets which are currently
still national in character can remain an open
question, since the proposed merger does not
result, either in the EEA or in the individual
Member States, in the creation or strengthening
of a dominant position.

they are sufficient

given

(b) Heat meters

and

tolerances,

special national

statutory
and

technical
provisions

(54) The legal and factual framework for heat meters
corresponds to that for electricity meters. There
requirements,
are
governing
special
calibration
national
approval procedures. Customers, at least in the
case of relatively large procurement procedures,
are obliged to tender on a Europe-wide basis in
accordance with
the Utilities Directive.
Furthermore, as well as the parties, there are a
suppliers, who are active
number of other
throughout Europe or at any rate in several
Member
can remain undecided,
however, whether the markets for heat meters
are currently still national or whether there is

States.

It

already an EEA market, since the proposed
merger does not result, either in the EEA or in
the individual Member States, in the creation or
strengthening of a dominant position.

(c) Ripple control transmitters and receivers

(55) Ripple control

are

ripple

transmitters and receivers are
used in most Member States. The Commission’s
enquiries have established that the requirements
and
control
governing
receivers
throughout
the
Europe. There are no market entry barriers due
to country-specific technical
requirements or
national approval provisions. The Commission
therefore assumes
least an
EEA-wide market for ripple control transmitters
and receivers.

transmitters
same

there is at

largely

that

(d) Energy management systems

the

governing

requirements

throughout Europe.

(56) The Commission’s enquiries have established
energy
that
systems are to a large extent
management
similar
Such different
requirements as do exist are mostly company,
and not country, specific. There are no market
entry barriers due to country-specific technical
therefore
requirements. The Commission is
for
assuming at
energy management systems.

least an EEA-wide market

(e) Network control technology

(57) The

for

that

the
network

parties maintain

relevant
control
geographic market
technology is the EEA, and for the following
reasons. Intermediary trade within the EEA is
not hindered by import restrictions and low
transport costs make it financially worthwhile to
from a central manufacturing
supply goods
plant. This can be seen from the organisation
and marketing policy of the major suppliers.
Network control technology is characterised by
a uniform industry standard resulting from the
universally used electronic data-processing and
data-systems technology. The remaining national
approval requirements or standards affect the
bases neither of the development nor of the
construction of network control systems, and all
suppliers are able to meet national specificities.
The deregulation and liberalisation of the energy
markets is exerting additional price pressure on
the purchasers of network control technology,

31.3.1999

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Official Journal of the European Communities

L 88/11

and this spells the end of national procurement
preferences. Lastly, the Commission has already
recognised, in its Decision of 3 September 1996
in Case No IV/M.706 — GEC Alsthom
NV/AEG (6), a comparable effect of deregulation
in the market for network control components
of power generation plants.

still

they

exist,

control

network

(58) The Commission’s enquiries have confirmed the
parties’ standpoint. The technical standards of
network control technology are largely identical.
country-specific
Where
requirements no longer play any decisive role.
The procurement policy of power
supply
companies is based on Europe-wide calls for
tenders which encompass the planning, design,
building and commissioning of complete or
partial
The
determining factors when it comes to deciding
what to buy are price, specifications and the
quality
services.
Company-specific requirements may, however,
lead to a preference for one manufacturer,
especially in the event of
the extension or
replacement of existing systems. This may help
explain the different market
in the
individual Member States. Both the customers
and the suppliers surveyed share the parties’
point of view. The Commission accordingly
assumes there is at least an EEA-wide market
for network control technology.

products

systems.

shares

and

the

of

4. Payphones

and

technology. The

(59) The notifying parties consider the geographic
market for payphones to be at least EEA-wide.
The reason they give is the largely identical
technology for payphones worldwide. Differing
national access conditions or standards do not
constitute barriers to market entry since they do
not affect the bases of payphone development,
construction
leading
suppliers of payphones can produce equipment
which satisfies national approval criteria and
customer requirements. Differing market share
levels in different European countries can be
explained
purchasing
behaviour of the mostly State-owned monopoly
the
telecommunictions
increasing liberalisation of telecommunications
this
markets,
significant,
is becoming
inasmuch as growing competitive
however,
pressure will
lead to a more cost-conscious
purchasing behaviour on the part of telecoms
operators.

operators. With

historically

less

the

by

(6) OJ C 308, 17.10.1996, p. 4.

(a) Public payphones

specifications made

(60) In the past, markets for (cid:28)public’ payphones were
national. (cid:28)Public’ payphones were operated by
authorities. National
State-owned telephone
product
for
it difficult
(cid:28)public’ payphones to supply in
suppliers of
other Member States. Orders were always given
to a small group of domestic suppliers, which is
why such suppliers usually have high market
shares in their countries. Foreign suppliers could
supply non-domestic markets only through
national
those
markets. This procurement policy promoted the
emergence
network
specifications and technical standards, which are
still in existence today.

subsidiaries

established

payphone

different

of

in

(61) In almost all the Member States the (cid:28)public’
payphones field has not yet been liberalised
(exceptions: Finland, Sweden and the United
Kingdom). In every country, even those in which
the
the sector has already been liberalised,
respective
State-owned)
(still or previously
telecoms company exerts a strong influence.
These telecoms companies operate all or (in
liberalised markets) most (cid:28)public’ payphones and
are therefore able to demand for their payphone
networks specifications and technical standards
which payphone suppliers have to fulfil. These
specifications and technical standards, and in
particular the (cid:28)security philosophy’, differ so
markedly from one country to another that a
separate payphone model has to be developed
for each major Member State.

(62) The question whether national markets must be
assumed, as before, for (cid:28)public’ payphones can
be left open at this point. The merger of Siemens
and Elektrowatt has appreciable competition
effects
(cid:28)public’
payphones in Germany. It is sufficient, therefore,
to examine whether Germany
should be
regarded as a separate relevant geographic
market.

the market

only

for

on

(63) The most important structural features of the
(cid:28)public’ payphones sector in Germany are:

— that Deutsche Telekom has

in the past
(cid:28)public’
exclusively from undertakings

procured, and is today procuring,
payphones
established in Germany,

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Official Journal of the European Communities

31.3.1999

— that changes

for

contract

the development

in this behaviour over

the
forecast period are not to be expected, since
the
and
manufacture of the new cardphone system,
which will replace the current generation of
card phones, has already been given by
Deutsche Telekom to domestic suppliers,
Siemens and Landis & Gyr,

there is

— that there was no Europe-wide tender for the
award of this contract in 1992 and that,
in Germany no genuine
hence,
Community
in the
competition as
(cid:28)public’ payphones sector; nor, given that the
contract
and
manufacture of the new cardphone system
has been awarded to Siemens and Landis &
Gyr, will there be a Europe-wide tender for
the procurement of
(cid:28)public’ payphones
during the forecast period.

development

the

yet

for

(64) In view of the current structural features of the
the
(cid:28)public’ payphones
regarded as a
German market
separate relevant geographic market
the
purpose of whether the merger could create a
dominant position which would significantly
impede effective competition.

sector
should be

in Germany,

for

(b) Private payphones

is

still

also

course,

conditions

increasing.

sector has, of

(65) In the (cid:28)private’ payphones sector, market and
competitive
differ
considerably from one Member State to another,
for example in relation to payphone density.
This
already been
liberalised in all Member States except Italy.
Here, too, the (still or previously) State-owned
telecoms companies continue to control a large
part of the market, but competition from private
suppliers
payphone
networks also need security measures and a
control station linking the network,
together
with appropriate software. The (cid:28)private’ supplier
is free here, however, to choose his standards
and software. A multinational (cid:28)private’ supplier
can therefore, for example, operate in different
countries with the same systems. All that then
has to be installed is an interface with the
respective
The
Commission is therefore assuming there is at
least
(cid:28)private’
payphones.

an EEA-wide market

communications

network.

(cid:28)Private’

for

C. ASSESSMENT

1. Commercial building control

(a) Building control systems

(66) Both Siemens and Elektrowatt are active in the
market for building control systems. According
to the parties’ estimates,
the
market in the EEA may be put at some ECU 1,6
billion. The merger will result in an aggregate
market share of [30 % to 40 %] (*) (Elektrowatt
through Landis & Staefa [25 % to 35 %],
Siemens [0 % to 10 %]).

the volume of

(67) Besides

the parties, Honeywell

Inc., USA
(Honeywell) and Johnson Controls Inc., USA
(Johnson) are leading suppliers of building
control systems. Honeywell and Johnson are
regarded as the world market leaders. In the
EEA, Honeywell and Johnson have market
shares of approximately [10 % to 20 %] and
[5 % to 15 %] respectively. Other significant
competitors are TA Control and Danfoss, which
operate chiefly in the Scandinavian countries
where, according to the Commission’s estimates,
they have market shares of up to 20 %. In the
active
remainder
competitors who often focus clearly on one or
in which they achieve
two Member States
from 5 % to 15 %. This
market
shares of
category includes
in the United
Satchwell
in
Kingdom and France, Kieback & Peter
Germany, Sauter (7) in Germany and France, and
Priva in the Netherlands.

the EEA there

are

of

(68) The

as,

such

example,

commercial

control market
building
overlaps with a number of neighbouring,
markets
heating,
for
ventilation and air-conditioning installations,
computer and software technology, electrical
process
installation
control
security
and
technology. Companies which are active in these
areas are potential competitors, and some of
commercial
them have already entered the
building control market.

industrial
building

technology,

technology

(69) In view of

the existence of a number of
competitors, including several financially strong

(*) Parts of

this text have been edited to ensure that

confidential information is not disclosed.

(7) Elektrowatt holds 36 % of the shares in Sauter, but does
not have any voting rights. In paragraph 35 of Decision
IV/M.692 — Elektrowatt/Landis & Gyr (see footnote 4),
it was established that Elektrowatt could not influence
the conduct of Sauter.

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Official Journal of the European Communities

L 88/13

companies which are world market leaders, and
having regard to further potential market entries
from neighbouring sectors,
to be
expected that Siemens and Elektrowatt will
occupy a dominant position in the market for
building control
the
merger.

systems as a result of

is not

it

newcomers have entered the market, including
the American firms Tyco and Notifier, the latter
being a particularly aggressive competitor. The
position in the relevant national markets may be
assessed as follows:

(b) Servicing

— G e r m a n y

the

system. There

(70) The same holds true for the market for the
servicing of building control systems. Servicing
is often carried out by the company which
supplied/installed
are,
however, a number of, mainly small, regionally
active, companies which specialise in servicing.
Of the parties, only Elektrowatt/Landis & Staefa
is active to any extent in the servicing field (EEA
market share [10 % to 20 %]). Siemens carries
out
and
Belgium/Luxembourg, where its market shares
are
and [0 % to 10 %]
respectively.

[0 % to 10 %]

in Germany

servicing

only

2. Building security technology

(a) Fire alarms

(71) The Community-wide market volume for fire
alarms is, according to the notifying parties,
approximately ECU 1,8 billion. The largest
national market
is Germany (market volume
approximately ECU 550 to 600 million),
followed by France (approximately ECU 300
million)
Kingdom
(approximately ECU 250 to 300 million). There
will be significant increases in market shares in
this area only in Germany and Denmark.

United

and

the

In these countries,

(72) Although Siemens has market shares of more
than 30 % in Luxembourg, the Netherlands and
is not active in those
Austria, Elektrowatt
countries. Equally, Elektrowatt has market
shares of more than 30 % in Finland, France,
Portugal and Sweden, where Siemens is not
there will be no
active.
increase in market shares. There is no likelihood
the mere disappearance of a potential
that
competitor will
lead to the creation of a
dominant position. Nor is there any evidence to
that Siemens or Elektrowatt already
suggest
occupies a dominant position in one of these
countries. In each of these markets there are a
number of competitors with market shares in
to time
excess of 10 %, and from time

is

share

(73) Siemens has a market share for fire alarms in
Germany of approximately [35 % to 50 %] and
is hence the market leader. Elektrowatt/Cerberus
is hardly represented in this field in Germany
(its market
[< 5 %]). The main
competitors are Bosch (market share, according
to the Commission’s estimate, approximately
[15 % to 25 %]), Caradon Esser (market share,
according
estimate,
approximately [15 % to 25 %]) and Hekatron
(owned by Schweizer Securiton AG) (according
to the Commission’s estimate, approximately
[10 % to 20 %]). There are also a number of
suppliers with market shares of up to 10 %
(including Fritz Fuss and Tyco).

the Commission’s

to

least

(74) In view of the minimal increase in market shares
and the presence of at
three strong
competitors, the merger is unlikely to lead to the
creation or
strengthening of an (individual)
dominant position on the part of Siemens in the
German market
Instances of
market entry, for example by Tyco, a firm which
is active internationally in the field of fire-alarm
security
technology
technology, and the Austrian firm Schrack,
show, moreover, that market entry barriers are
not very high.

for fire alarms.

other

types

and

of

it

(75) The German market for fire-alarm systems is
fairly highly concentrated. Nevertheless,
is
unlikely that the merger will result in a joint
dominant position on the part of Siemens and
the other three leading suppliers. Not only are
market
fire
alarms
extremely
heterogeneous product specifically tailored to
the individual customer. Uniform competitive
behaviour can therefore be ruled out with a
sufficient degree of probability.

shares unevenly distributed, but
in

particular

are

an

— D e n m a r k

(76) In Denmark Siemens controls approximately
[10 % to 25 %] of the fire-alarm market, and
Elektrowatt/Cerberus approximately [25 % to
40 %]. The combined market
the
therefore
parties, according to their

share of

figures,

L 88/14

EN

Official Journal of the European Communities

31.3.1999

to approximately

comes
[40 % to 60 %],
although some competitors put it significantly
lower. A major competitor and previous market
leader is the Danish firm Falck, which offers a
broad product range in the fields of building
security, fire protection and fire fighting. Falck
has above all excellent access to the public
authorities
for
example, the fire brigades of more than 60 % of
authorities. Other major
Danish
competitors in the fire-alarm sector in Denmark
are the firms Dansk Hustelefon Selskab (market
share approximately [5 % to 10 %]), Wormald,
the American group Tyco,
which is part of
(market share approximately [5 % to 10 %]),
Semco and Eifa (market shares of less than 5 %).

in Denmark as

supplies,

local

it

in

the Danish

(77) The particular advantages which Falck possesses
in its home market compared with the parties to
the merger will help to ensure that, even after
the merger, the company will retain its strong
security market
position
(according to Falck’s own estimates, its market
share
strong
is approximately 50 %). The
position of Siemens and Elektrowatt in the fire
alarm sector is offset, moreover, by their weak
position in intrusion protection and other
building security installations (only Elektrowatt
is represented in Denmark, with a market share
of less than 10 %), since some customers at least
purchase a complete building security system
from a single supplier. Falck, by contrast, is also
strong in the field of intrusion protection and
other forms of building security.

(78) The possibility that, as a result of the merger,
Siemens and Elektrowatt will dominate the
(individual) market for fire alarms in Denmark
can therefore be ruled out. The same applies to
the creation of a market-dominating oligopoly,
in view in particular of the products’
lack of
of market
homogeneity,
transparency and the fairly low barriers
to
market entry.

low degree

the

(b) Intrusion protection/other building security

installations

(79) According to the parties, the Community-wide
market volume of intrusion protection and other
building security installations is approximately
ECU 3,7 billion. The largest national market
here is the United Kingdom (market volume
followed by
approximately ECU 1 billion),
Germany (ECU 750 to 800 million) and France
(ECU 550 to 600 million). Siemens has a
significant presence in this area only in Germany
and Austria; it maintains a slight presence also

(market share less than [1 %]) in Italy and the
Netherlands. Elektrowatt is likewise not active
in all Member States.

shares.

(80) Only in Germany will there be any significant
increase in market
In that country,
Siemens has a market share of approximately
[5 % to 15 %], while Elektrowatt has a market
share of approximately (0 % to 10 %]. The
market leader in this area is Bosch with, on the
Commission’s estimate, market shares of [30 %
to 40 %], while a number of other competitors
have market shares of up to 10 %. In view of
this market structure, the creation of a dominant
position or a dominant oligopoly can be ruled
out.

(81) In all

the other Member States,

the market
shares of Siemens and Elektrowatt are around or
below 10 %. In most countries the merger will
not lead to any increase in market shares. There
the creation of a
is clearly no danger of
dominant position in these markets.

3. Energy meters, ripple control technology,
energy management systems and network
control technology (command and control
equipment for energy suppliers)

(a) Electricity meters

share

(82) Siemens and Elektrowatt hold substantial shares
of the electricity-meter market. Their EEA-wide
joint market
is put by the parties
themselves at approximately [30 % to 45 %]
(Siemens [10 % to 20 %], Landis & Gyr [15 %
to 25 %]) but is put by competitors on a slightly
higher trend. Overlapping does not occur in
every Member State. According to its own
estimates, Elektrowatt/Landis & Gyr has market
shares of [85 % to 100 %] in Greece and [40 %
to 50 %] in Portugal, countries in which Siemens
is, however, not active. Siemens in turn has a
market share of approximately [65 % to 85 %]
in Ireland, a country in which Elektrowatt is,
however, not active.

the

Sweden,

overlapping.

[5 % to 15 %]

(83) In all the other Member States, there is a degree
of
parties,
In
according to their own figures, have a market
share of
[< 5 %],
Elektrowatt/Landis & Gyr [5 % to 15 %]). In
Norway and the United Kingdom the joint
market
are below 30 % (Norway:
Siemens [0 % to 10 %], Elektrowatt/Landis &
Gyr [15 % to 25 %] = [20 % to 30 %]; United
25 %],
Kingdom:

[15 % to

(Siemens

Siemens

shares

31.3.1999

EN

Official Journal of the European Communities

L 88/15

Siemens

Elektrowatt/Landis & Gyr [5 % to 15 %] =
[20 % to 30 %]. In Germany, Finland, France
and Spain, the joint market shares are below
40 % (Germany: Siemens
[20 % to 30 %],
Elektrowatt/Landis & Gyr [5 % to 15 %] =
[30 % to 40 %]; Finland: Siemens [0 % to 10 %],
Elektrowatt/Landis & Gyr[20 % to 30 %] =
[30 % to 40 %]; France:
[< 5 %],
Elektrowatt/Landis & Gyr [30 % to 40 %] =
[30 % to 40 %]; Spain: Siemens [5 % to 15 %],
Elektrowatt/Landis & Gyr [20 % to 30 %] =
[35 % to 45 %]). In Italy and the Netherlands,
the joint market shares are below 50 % (Italy:
Siemens [25 % to 35 %], Elektrowatt/Landis &
[15 % to 25 %] = [45 % to 55 %];
Gyr
Netherlands:
[< 5 %], Elektrowatt/
Landis & Gyr [40 % to 50 %] = [40 % to
50 %]). The parties achieve joint market shares
of over 50 % in Belgium, Denmark and Austria
(Belgium:
25 %],
Elektrowatt/Landis & Gyr [25 % to 35 %] =
[45 % to 55 %]; Denmark: Siemens
[< 5 %],
Elektrowatt/Landis & Gyr [45 % to 55 %] =
[20 % to
[45 % to 55 %]; Austria: Siemens
30 %], Elektrowatt/Landis & Gyr
[35 % to
45 %] = [60 % to 70 %]).

[15 % to

Siemens

Siemens

(84) In the markets for electricity meters, besides the
parties, Schlumberger is active in almost all
Member States. Like the parties, Schlumberger
manufactures mechanical, electromechanical and
electronic meters. The current market
leader,
Schlumberger, has an EEA-wide market share of
approximately [30 % to 40 %]. According to the
Commission’s estimates, Schlumberger’s market
share in Belgium/Luxembourg comes to [40 %
to 50 %], in Germany [30 % to 40 %], in France
[45 % to 55 %],
in
in Spain [45 % to
Portugal
55 %],
(Denmark,
Norway, Sweden and Finland) [25 % to 35 %]
and in Greece, Ireland and Austria [25 % to
35 %].

in Italy [40 % to 50 %],

[55 % to 65 %],

in the Nordic

countries

(85) A further competitor active in several Member
States is the Slovenian company Iskra Emeco,
whose meter-manufacturing plant is in volume
terms the largest in Europe. Iskra Emeco, too,
manufactures mechanical, electromechanical and
electronic meters. The Commission estimates its
market share in Germany at [20 % to 30 %], in
Belgium at
than 20 % and in the
Netherlands at [20 % to 30 %]. The company is
also active
in Denmark, Norway, Sweden,
Finland, Italy, Spain and the United Kingdom.
The market shares held in these countries are,
however, currently still under 10 %.

less

(86) A significant competitor is the Finnish firm
inter alia,

Enermet. Enermet manufactures,

and

control

ripple
receivers,
transmitters
automatic meter-reading systems and electronic
electricity meters. The
its
operations used to be Scandinavia, where
according to the parties Enermet is the market
leader for meters. Enermet
is also active in
Germany and the Netherlands, where it has
permanent establishments.

focal point of

(87) The ABB group, which is in a strong market
position in the USA following its acquisition of
the meter business of Westinghouse,
is in the
process of building up a Europe-wide presence
in the electricity meter field. The group currently
has electricity meter-manufacturing plants in the
EEA in Sweden, Germany and the United
Kingdom. Prior to its acquisition in 1996 of the
British firm GEC Meters, ABB was active only
in the field of electronic meters. Mechanical
meters are now also manufactured by ABB in
the United Kingdom. According to competitors’
estimates, ABB’s market share in the United
Kingdom comes to [10 % to 15 %].

are

and

locally

regionally
In Germany,

(88) In addition to the abovementioned companies,
active
there
competitors.
there is Deutsche
Z(cid:228)hlergesellschaft (DZG), which is also active,
however, to a so far, limited extent in Belgium,
In
the Netherlands and Austria.
Denmark,
France,
there is Chauvin Arnoux/Matra and
Sagem, which supply electronic meters to EdF.
Sagem also has an establishment in Spain. In the
and
United Kingdom, AMPY, Horstmann
Polymeters Response International are active in
the field of electronic meters.

supply

companies.

in Germany,

(89) The purchasers of electricity meters are mainly
power
Customer
concentration differs widely from one Member
State to another. Whereas
for
example, there are approximately 500 power
supply companies of varying sizes (ranging from
the nine large, interconnected power companies
and VEW,
such as RWE, PreussenElektra
through regional distribution companies
to
municipal works), suppliers are faced in France,
Italy and Greece with only one company (in
in Italy: ENEL and in Greece:
France: EdF,
Public
average,
Power Corporation). On
however, the 20 largest customers account for
80 % of the market volume. The power supply
companies have sufficient market knowledge

L 88/16

EN

Official Journal of the European Communities

31.3.1999

and negotiating power, which they exercise by
way of Europe-wide calls for tenders.

have

for mechanical meters

(90) The customers surveyed by the Commission
have confirmed that prices both for electronic
fallen
and
considerably in the last five years in all Member
States. Whereas up until 1993 prices in both
meter sectors were fairly stable, they have since
collapsed by between 20 % and 40 %. In the
opinion of customers, the collapse in prices is
due to the active competitive behaviour of
suppliers. They mostly believe that the prices of
mechanical meters will stabilise at around the
reductions are,
present
however, expected for electronic meters. In the
opinion of competitors, the collapse in prices is
due
companies’
Europe-wide tendering, which has given those
companies a better overview of prices. The
competitive pressure already existing in the
run-up to the liberalisation of electricity markets
heralds for the future an even greater cost
supply
consciousness on the part of power
companies
and further price pressure on
suppliers.

level. Further price

supply

power

the

to

of

the

revealed

existence

(91) A further reason for the collapse in prices is the
strong competitive pressure from suppliers of
electronic meters. The Commission’s enquiries
have
intensive
competition at the levels of the development and
manufacture of electronic meters. In recent years
there have been a number of market entries in
the field of electronic meters, for example ABB
in the USA and in the EEA, Sagem in France
and AMPY in the United Kingdom. The market
entry barriers in this field are at all events very
low for a company which is already active in the
manufacture of electronic products. Prices for
electronic meters have fallen in recent years.

(92) The

increasing

replacement of mechanical
meters by electronic ones has increased the price
pressure on suppliers of mechanical meters and
contributed greatly to the collapse in prices for
mechanical meters. The
price
behaviour of
to which both
customers and competitors have referred, has,
moreover, resulted in other mechanical meter
suppliers having to reduce their prices further so
as not to lose traditional customers or in order
to win back lost business.

Iskra Emeco,

aggressive

(93) In view of these market structures, the proposed
merger cannot be expected, despite the high
joint market shares, to create or strengthen a
dominant position of the parties in individual
markets in the Member States most affected,
namely Belgium, Denmark, the Netherlands and
Austria:

— B e l g i u m

to

30 %]

[15 %

(Siemens

(Siemens

[0 % to

(94) The parties’ market shares in Belgium were
subject during the last
three years to strong
variations. According to their own estimates, the
parties achieved a joint market share of [45 % to
25 %],
55 %]
Elektrowatt/Landis & Gyr [25 % to 35 %]) in
1995/1996. They succeeded over the last three
years in almost doubling their market share. In
1994/1995 the joint market share came to [20 %
10 %]),
to
Elektrowatt/Landis & Gyr [15 % to 25 %]) and
in 1993/1994 it came to [15 % to 25 %]
(Siemens [5 % to 15 %], Elektrowatt/Landis &
[5 % to 15 %]). Their main rivals are
Gyr
Schlumberger (market share [40 % to 50 %])
less than
and Iskra Emeco (market share of
20 %). DZG is also active in Belgium.
In
Belgium suppliers have essentially one strong
customer, Electrabel, whose procurement policy
and purchasing decisions determine suppliers’
market shares. Each year Electrabel puts its
annual electricity meter requirements up for
tender Europe-wide. In the past, Electrabel has
purchased electricity meters from at least four
different suppliers. There are no reasons why it
should change this procurement policy in future.

— D e n m a r k

to

the

strong

position

share of

[45 % to 55 %]

(95) In Denmark the high joint market shares are due
predominantly
of
Elektrowatt/Landis & Gyr. There will be only a
slight increase in market shares. According to
their own estimates, the parties achieved a joint
market
(Siemens
[< 5 %], Elektrowatt/Landis & Gyr [45 % to
55 %]) in 1995/1996. In 1994/1995 the joint
market share came to [50 % to 60 %] (Siemens
[< 5 %], Elektrowatt/Landis & Gyr [45 % to
55 %]) and in 1993/1994 it came to [50 % to
60 %] (Siemens [< 5 %], Elektrowatt/Landis &
Gyr [50 % to 60 %]). Whereas in recent years
Siemens’s market share was invariably less than
[< 5 %], over the same period Elektrowatt/Landis
& Gyr has lost about 5 % market share. Besides
the
Iskra
Emeco, ABB and DZG are active in Denmark.

Schlumberger, Enermet,

parties,

31.3.1999

EN

Official Journal of the European Communities

L 88/17

In Denmark,

The customers surveyed by the Commission put
their meter requirements up for tender on a
Europe-wide basis.
electronic
meters are
increasingly being used in the
domestic consumer sphere too. Among suppliers
who,
like the parties, Schlumberger and Iskra
Emeco, also manufacture mechanical meters,
there is
the remaining
supply contracts for mechanical meters. The
intensified by
price
companies, such as Enermet and ABB, which
offer for sale only electronic meters, but which
wish to increase their shares in the domestic
consumer sphere.

stiff competition for

competition is

further

— N e t h e r l a n d s

their

(Siemens

[40 % to

combined market

(96) In the Netherlands too, the large jont market
shares are mainly due to the strong position of
Elektrowatt/Landis & Gyr. Only a small market
share is aggregated. According to the parties’
own figures,
share
was
[< 5 %],
50 %]
Elektrowatt/Landis & Gyr [40 % to 50 %]) in
1995/1996, [40 % to 50 %] (Siemens [< 5 %]),
Elektrowatt/Landis & Gyr [35 % to 45 %]) in
1994/1995, and [40 % to 50 %] (Siemens [5 %],
Elektrowatt/Landis & Gyr [35 % to 45 %]) in
the
1993/1994. Other
Netherlands are Schlumberger, Enermet, Iskra
Emeco and DZG. The customers surveyed by
the Commission issue calls for tenders to cover
sometimes on a
their meter
EU-wide basis. Electronic meters have been used
in Dutch homes
that
domestic mechanical meters are now being
replaced with electronic ones
that
both
competition
mechanical and electronic meters and between
them and suppliers of only electronic meters will
become increasingly fierce.

since 1996. The fact

suggests
of

requirements

suppliers

between

active

firms

in

— A u s t r i a

(97) According to the parties’ own figures,

in 1995/1996,
[20 % to

[35 % to 45 %])
(Siemens
65 %]

their
combined market share was [60 % to 70 %]
(Siemens [20 % to 30 %], Elektrowatt/Landis &
[55 %
Gyr
to
30 %],
Elektrowatt/Landis & Gyr [30 % to 40 %]) in
1994/1995, and [60 % to 70 %] (Siemens [15 %
to 25 %], Elektrowatt/Landis & Gyr [35 % to
45 %]) in 1993/1994. Also present in Austria are
Schlumberger (with a market share of [25 % to
35 %]) and,
to a lesser degree, DZG and
Bayrische Z(cid:228)hlerrevision Bauer.

to

the

specific

conditions

(98) The very large market shares which the parties
have hitherto enjoyed in Austria are essentially
attributable
of
competition in that Member State. Prices for
electricity meters were subject to public control
in Austria until
the 1990s.
Traditional supply relationships of many years’
standing existed between the few manufacturers
in Austria and their customers. This regulated
to
latter
market
purchase on a price-conscious basis and to seek
out alternative suppliers.

the beginning of

incentive

little

gave

the

confirmed by all

these calls for tenders,

(99) In recent years, however, prices for electricity
meters have fallen drastically (by up to 60 %), a
fact which is
customers
surveyed. The main reason for this has been
Austria’s accession to the European Union and
the fact
that Austrian customers have, since
1995, been issuing Community-wide calls for
tenders. Although traditional
suppliers have
continued to have the upper hand during the
first of
it cannot be
concluded that the parties will, on the basis of
their existing high market shares, in future have
an insufficiently controllable freedom of action
In Austria too,
with regard to competition.
Europe-wide calls for tenders will
lead to a
better overview of and further pressure on
prices, as has already occurred in the other
Member States. It should also be borne in mind
that Iskra Emeco is at present seeking to enter
the Austrian market. This development will
force the traditional suppliers to reduce their
prices still further in order not to lose their
traditional customers.

at

or

that

States

reduction

an easing of

(100) The proposed merger can also not be expected
to lead to the emergence of a joint dominant
position on the part of Siemens/Elektrowatt and
Schlumberger either at the level of the individual
Member
EEA level. The
Commission’s enquiries have not produced any
indications
competitive
conduct between the main suppliers is to be
expected. The
prices
recorded in all Member States is evidence of
active price
competition between the main
suppliers in all the Member States in recent
the purchasing power of
years.
external
intensity
customers
competition,
that
be
to
competition between Siemens/Elektrowatt and
the
Schlumberger will
merger. Power supply companies have sufficient
market knowledge and negotiating power, which
they use via the system of Europe-wide calls for
tender. Contracts are now generally awarded

In view of
and
it

remain strong after

of
assumed

of meter

the
is

L 88/18

EN

Official Journal of the European Communities

31.3.1999

the

future
suggests

solely on the basis of
low prices. The
competitive pressure which already exists in
liberalisation of
expectation of
the power
electricity markets
that
even more
supply companies will become
cost-conscious and that customers will pressurise
suppliers even more for lower prices. It should
also be borne
the gradual
of mechanical meters with
replacement
increase the pressure
electronic meters will
in particular on the main
of competition,
suppliers which,
and
Siemens/Elektrowatt offer both types.

in mind that

Schlumberger

like

(b) Heat meters

(101) With regard to heat meters,
shares of

the aggregate
EEA-wide market
and
Siemens
Elektrowatt are only just over [10 % to 15 %]
(Siemens
[< 5 %], Elektrowatt/Landis & Gyr
[5 % to 10 %]). There is a noticeable overlap
between the parties only in Denmark (Siemens
[5 % to 10 %], Elektrowatt/Landis & Gyr [25 %
to 35 %] = [30 % to 40 %]) and Austria
(Siemens [5 % to 15 %]), Elektrowatt/Landis &
Gyr [25 % to 35 %] = [35 % to 45 %]).
In
Germany the parties only have a market share
of less than 10 %. Beside the parties, Spanner
Pollux (SPX)
too, which sells heat meters
manufactured by Siemens, is active in Germany,
with a market share of [20 % to 30 %]. The
leading manufacturer Europe-wide is the firm
ISTA (market share [20 % to 25 %]), which
belongs to the Raab Karcher Group (VEBA).
Other important manufacturers are the Danish
firms Kamstrup, Danfoss and Grundfos. Some
manufacturers of electricity meters also make
heat meters
Schlumberger, ABB and
Enermet).

(e.g.

(102) The Commission’s investigations have revealed
that
the conditions of competition for heat
meters are to a large extent the same as for
electricity meters. The main customers of heat
meters are power-supply companies with district
heating operations. They issue calls for tenders
mainly on a Europe-wide basis. The customers
surveyed confirmed that heat-meter prices have
fallen sharply in recent years (by up to 50 %).
Some expect a further drop in prices in coming
years.

(103) In view of these market structures, it is not to be
expected, despite the high joint market shares,

the proposed merger will

that
lead to the
creation or strengthening of a dominant position
for the parties on the individual markets in the
Member States most affected: Denmark, Austria
and Germany.

— D e n m a r k

(104) The large joint market share in Denmark is
the strong position of
largely a result of
Elektrowatt/Landis & Gyr in that country. Only
a small market share is added. The parties’
combined share was, according to their own
figures, [35 % to 45 %] (Siemens [5 % to 10 %],
Elektrowatt/Landis & Gyr [25 % to 35 %]) in
1995/1996, [40 % to 50 %] (Siemens [5 % to
15 %], Elektrowatt/Landis & Gyr
[25 % to
35 %])
in 1994/1995, and [35 % to 45 %]
(Siemens [15 % to 25 %], Elektrowatt/Landis &
Gyr [20 % to 30 %]) in 1993/1994. The market
leader in Denmark is Kamstrup. The merger will
lead to the disappearance of one of the main
competitors on the market segment of static
meters and to the parties’ becoming the second
largest
the parties and
Kamstrup, the firms Grundfos (market share,
according to the Commission’s estimate, of less
than
and
20 %]), Danfoss, Hydrometer
Bailey-Fischer and Porter (Germany) sell heating
meters. The Commission’s investigations have
revealed no indications of any expected easing
of competition between the leading suppliers
Kamstrup and Siemens/Elektrowatt.

supplier. Alongside

— A u s t r i a

50 %]

(Siemens

[10 % to

in 1995/1996,

(105) According to their own figures, the parties had a
joint market share of [35 % to 45 %] (Siemens
[5 % to 15 %], Elektrowatt/Landis & Gyr [25 %
to 35 %])
[40 % to 50 %]
(Siemens [10 % to 20 %], Elektrowatt/Landis &
Gyr [25 % to 35 %]) in 1994/1995, and [40 %
20 %],
to
Elektrowatt/Landis & Gyr [25 % to 35 %]) in
1993/1994. SPX, with a market share of [10 %
is also active in Austria. The main
to 20 %],
ISTA and Kamstrup (with
competitors are
market shares of some [10 % to 20 %] each) and
ABB. According to buyers, Kamstrup has been
particularly
aggressive
competitive
in Austria. Given this
situation, there are no indications here either
that
lead to the parties’
obtaining a market share which would allow
them to avoid the competitive pressure of other
suppliers.

noticeable
conduct

the merger will

for

its

31.3.1999

EN

Official Journal of the European Communities

L 88/19

— G e r m a n y

(106) According to their own figures,

the parties
achieved a joint market share of [5 % to 15 %]
(Siemens [0 % to 10 %], Elektrowatt/Landis &
Gyr [0 % to 10 %]) in 1995/1996. The joint
market shares in 1994/1995 and 1993/1994
were also under [5 % to 15 %]. In Germany,
according to the Commission’s investigations,
SPX achieved a market share of [20 % to 30 %]
in 1995/1996. The most important competitors
are ISTA (market share of approximately [25 %
to 35 %]), and Danfoss and Kamstrup, whose
market shares however are currently still
less
than 5 %. Besides Kamstrup, Siemens and
Landis & Gyr are
the only suppliers of
ultrasound heat meters in Germany. However,
these account for only 15 % of the heat-meter
market at the moment. Given the increasing use
of ultrasound meters
in Germany and the
generally confirmed aggressive price competition
from Kamstrup, substantial price competition
between Siemens/Elektrowatt/Landis & Gyr and
these
Kamstrup can be assumed.
facts,
the
there is no reason to believe that
merger will lead to a dominant position of the
in
parties on the market
Germany.

for heat meters

In view of

(c) Ripple control transmitters and receivers

of

share

Siemens

(Elektrowatt/Landis & Gyr

(107) On the market for ripple control transmitters
and receivers, which is also small
(market
volume of less than ECU 100 million), the joint
EEA market
and
Elektrowatt/Landis & Gyr is some [25 % to
[15 % to
35 %]
25 %], Siemens [5 % to 15 %]), again according
to their own figures. Their competitors estimate
that share to be somewhat larger, but not more
than 35 %. The main internationally active
competitors are Schlumberger
(EEA market
share, according to the Commission’s estimate,
of [25 % to 35 %]), Enermet (EEA market share
[15 % to 25 %]), and ABB (EEA market share
less than 10 %). Iskra has now also begun to
supply ripple
initially in
Germany.

receivers,

control

homogeneous products. They must be designed
to suit the network (including the software) of
supply company concerned. The
the power
in a
customers are mostly energy suppliers
the
quasi-monopsony position. Furthermore,
barriers to market entry are low, particularly for
firms which come from the electronics sector.
The price of ripple control
transmitters and
receivers, too, has fallen drastically over the last
five years. The EEA-wide collapse in prices for
ripple control transmitters and receivers shows
that
in recent years active price competition
between the leading suppliers has prevailed.
the
Given the quasi-monopsony position of
opposite side of the market and the intensity of
foreign competition,
it can be assumed that,
even after the merger, there will be substantial
competition between the leading suppliers.

(d) Energy management systems

(109) In the area of energy management systems,
which is at present a relatively small market
(EEA-wide market volume of some ECU 100
million), it is mainly Elektrowatt/Landis & Gyr
which is active, with an EEA-wide market share
of some [20 % to 30 %]. Siemens is represented
only in Belgium/Luxembourg and Germany,
with market shares of less than 10 %. Siemens’
[< 5 %].
EEA-wide market
share
competitor
Schlumberger
Europe-wide
share of
[10 % to 15 %]). There are also a few other
national and international suppliers (UPS, ABB,
Datawatt).

(Community market

is
important

about

an

is

(110) Given the small addition of market share and an
EEA-wide combined market share of [20 % to
30 %], it cannot be assumed that the merger will
create or strengthen a dominant position.

(e) Network control technology

(108) In view of an EEA-wide market share of no
more than 35 % and the size of the market
shares of their closest competitors, it cannot be
claimed that the merger will give rise to or
strengthen a dominant position. Nor, for the
following reasons, is it to be expected that the
merger plan will lead to a dominant position of
the leading suppliers
taken together. Ripple
transmitters and receivers are not
control

It

(111) The EEA market volume for network control
technology is some ECU 700 million.
is
difficult to put a precise figure on market shares,
since the systems in question are expensive, are
tailored to the individual customer, and have a
long lifespan (up to 20 years). The award of an
individual
company might
therefore influence its national and EEA market
share considerably, which leads to relatively
strong fluctuations. The parties estimate their

contract

to one

L 88/20

EN

Official Journal of the European Communities

31.3.1999

to

share,

(market

according

average EEA-wide market share for network
control technology in the period 1993/1994 to
1995/1996 at [25 % to 35 %] (Siemens [15 % to
25 %], Elektrowatt/Landis & Gyr
[5 % to
15 %]). Important international competitors are
ABB
the
Commission’s estimate, of [7 % to 15 %]) and
Cegelec-AEG,
the
Alcatel-Alsthom Group (market share, according
to the Commission’s estimate, of [5 % to 15 %]).
Other competitors with smaller market shares
(e.g. Harris, PSI, REPAS, Westinghouse) also
exist, but some of them belong to large groups.
Smaller firms originally active only at national
level have also successfully expanded in recent
years (e.g. the Austrian firm SAT into Germany,
the Netherlands, Denmark and eastern Europe.

belongs

which

to

(112) The supply of network control technology is a
service-oriented and customer-oriented business,
whereby account must be taken of the specific
needs of power supply companies. A specific
problem is the short duration of software cycles
compared to the lifespan of an installation. This
that proximity to the customer and
means
than
flexibility are more important
strength. The customers are again
financial
supply companies, which have both
power
market knowledge and negotiating power.
In
view of all of these factors, the merger will not
lead to, or strengthen a dominant position on
this market.

factors

4. Payphones

(a) Public payphones

less

than one third of

(113) The total volume of the payphones market (both
(cid:28)public’ and (cid:28)private’) in the EEA was some ECU
250 to 300 million in 1996, corresponding to an
overall quantity of some 480 000 units. (cid:28)Public’
payphones account for about half of the total
the total
value but
quantity. This is because of the higher unit price
of public installations. Siemens and Elektrowatt
have a stronger market position for (cid:28)public’
payphones, for which the number of suppliers
(cid:28)private’
limited,
and customers
payphones. According to their own information,
the parties have a combined EEA market share
for payphones as a whole of [25 % to 35 %]
(Siemens [5 % to 15 %], Elektrowatt [20 % to

than for

is

least since 1993.

leading supplier of

30 %]). The Commission’s investigations have
revealed that this share does not exceed [30 %
to 40 %]. In the area of (cid:28)public’ payphones, the
parties have a much stronger combined market
position (with an EU share of over [35 % to
45 %]). Elektrowatt’s subsidiary, Landis & Gyr,
has been the
(cid:28)public’
In December
payphones at
the
1996,
Spanish
thereby
and
manufacturer Amper
significantly improved its own market position.
At the level of national markets for (cid:28)public’
payphones, the merger will
lead to an added
market share only in Germany. Outside that
country, Siemens is only active in Spain (via
Amper Elasa), where Elektrowatt has only a
minimal market
for
share of
indoor (i.e. (cid:28)private’) payphones.

some [< 1 %]

acquired

Siemens

Elasa

— G e r m a n y

Market structure

of

programme

(114) With some 20 % of all installed (cid:28)public’ phones
in the EU (more than […] units, including some
[…]
cardphones) and a (cid:28)public’ payphone
network density of some two phones per 1 000
the second-largest
inhabitants, Germany has
market
EEA countries.
all
potential
Developments on the German market are
currently being defined by the renovation and
modernisation
(cid:28)public’
operator, Deutsche Telekom. The number of
(cid:28)public’ payphones purchased fell between 1994
and 1996 because Deutsche Telekom did not
expand its network in view of
the planned
introduction of a new generation of cardphones.
This new system is intended to meet higher
security standards. The project has been the
subject of a call for tenders. The introduction of
these new cardphones from the end of 1997 will
lead to existing phones being gradually replaced
and to market growth (up to […] payphones per
annum, with a total of some […] units).

the

of

(115) Three manufacturers competed for the German
(cid:28)public’ payphones market up to 1995: Siemens,
Landis & Gyr and Bosch Telekom. The latter
stopped developing new (cid:28)public’ payphones in
1995 and now supplies only those phones
covered
obligations.
Nevertheless, Deutsche Telekom has still been
able after 1996 to award its contracts to at least

outstanding

by

its

31.3.1999

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Official Journal of the European Communities

L 88/21

two suppliers. In view of Deutsche Telekom’s
strong purchasing power, the basic conditions
for effective competition continued to be met on
the basis of existing procurement practice even
after Bosch Telecom had withdrawn from the
market because, with Siemens and Landis &
Gyr, two suppliers were still competing with
each other.

Effects of the merger

— Creation of a dominant position

the

seems

of
It

buying

extremely

from two

new (cid:28)N.I.K.E.’,

(116) After the merger of Siemens and Elektrowatt,
Deutsche Telekom will no longer have the
different
possibility
suppliers.
questionable
whether effective competition can be restored on
the basis of an alternative supplier
in the
medium term. Siemens and Landis & Gyr have
developed
system in
conjunction with Deutsche Telekom. […]. The
(cid:28)public’ payphones market in Germany will, in
the foreseeable future, consist of cardphones
developed by Siemens and Landis & Gyr and
operated
For
economic
the only
these phones will be
possible
Siemens and Landis & Gyr. By approaching
these two suppliers for the development of the
new card phone system, Deutsche Telekom had
ensured that it had at its disposal two suppliers
which were independent of each other but
which, in particular, were both still familiar with
the details of
system. The
the management
merger will mean that Siemens will be the only
supplier of the new-generation cardphones. It
will therefore have a dominant position on the
(cid:28)public’ payphones market in Germany.

using Eurochip
and technical

suppliers of

phonecards.

reasons,

(117) […]. Despite

this

agreement

theoretical

cooperation

room for
manoeuvre laid down by contract, the changes
to the market structure caused by the merger
lead to a restriction of competition. The
will
N.I.K.E.
between
Siemens and Landis & Gyr concerned the
development of a new overall
system. The
powerful customer, Deutsche Telekom, was still
able to stimulate competition by awarding its
contracts to a number of suppliers. At the same
time
risk of
introducing untried (cid:28)public’ payphones which
had possibly not been smoothly adapted to the

could avoid the

technical

it

source of

requirements of the management system. Since
the alternative
supply has now
disappeared,
it no longer has this means of
exerting pressure. The investigations carried out
competitive
have
pressure by potential market entrants is not to
be expected.

confirmed

effective

that

(118) Even if the barriers to entry with regard to the
technology developed by Siemens could be
overcome by granting a licence, entry into the
market is not worthwhile for a new supplier.
The new phonecard system is a product line
developed specifically for the German market.
The market volume is limited, and, alongside
Siemens/Landis & Gyr, competitors are already
active on this market which were and are
traditional suppliers of Deutsche Telekom. These
suppliers have developed the new phonecard
system together with Deutsche Telekom for the
the technology
German market and control
applied.
In addition, Deutsche Telekom has
already ordered […] quantities with traditional
suppliers.

the

regarding

the overall

requirements

(119) It should also be remembered that a potential
interested party, even if it receives licences for
the cardphone technology, does not have the
same knowledge of
system that
Siemens/Landis & Gyr does as the developer of
that system […]. For Deutsche Telekom, given
the
company
change of
background system, a complete
supplier for the remaining delivery quantities
[…], for which firm orders have not yet been
placed with Siemens/Landis & Gyr, would be
It can therefore be assumed that
too risky.
Deutsche Telekom, in order to minimise its risk,
would not place an order for the entire delivery
quantity remaining with one potential interested
party. Thus, the prospects of a potential supplier
being awarded a worthwhile contract are very
slight. After the merger, therefore, the lock-in
effect caused by Deutsche Telekom’s long-term
contractual obligation towards
the dominant
supplier Siemens will prevent any effective
pressure being exerted by potential competitors.

Conclusion

(120) In view of the above, the Commission has come
to the conclusion that the proposed merger will

L 88/22

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Official Journal of the European Communities

31.3.1999

it

no

are

obligation

the merger,

pressure. There

lead to the emergence of a dominant position on
the part of Siemens on the market for (cid:28)public’
payphones in Germany and that competition on
that market will be significantly impeded. The
Commission also takes the view that, because of
the lock-in effect caused by Deutsche Telekom’s
long-term contractual
towards
Siemens, which will be the dominant supplier
after
remains unlikely that
potential competitors will be able to exert
effective
visible
indications that Deutsche Telekom’s purchasing
power will be able to offset these effects. The
lock-in effect will also continue to be felt after
the time limit
for fulfilling the contract has
expired. As soon as the new cardphone system is
of
installed,
cardphones has
replaced,
demand in this field for servicing and replacing
the installed base will shrink. Market entry for
firms which have hitherto not received any
orders from Deutsche Telekom will, in view of
the few replacement orders available, hardly
make economic sense, since access to third-party
technology, which is associated with high
investment costs, is generally profitable only if
the number of units involved is relatively large.

been completely

generation

current

the

i.e.

Commitment given by the parties

(121) In the course of the proceedings, the parties
informed the Commission that Elektrowatt AG
had decided to sell all the business and assets of
Landis & Gyr in the area of payphones, chip
cards and visual security features for banknotes
and security documents to third parties. The sale
of
the payphones operation could lead the
Commission to lift its doubts concerning the
emergence of a dominant position in Germany.

(122) Should this sale no longer take place before
completion of the notified merger, the parties
have given the following commitment:

sell all

their activities

and Siemens, see Section 2.1 of the notification),
Elektrowatt AG and the firms associated with it
will
relating to the
development, manufacture and marketing of
payphones (public and private) (subject of the
disposal) to a third party […]. The third party in
question must be independent and unconnected
with the Siemens Group and be an existing or
potential effective competitor […].

(124) (2)

to

the

ensure,

relating

Siemens

undertakes

after
completion of the merger and before the said
sale, that the subject of the disposal covers all
activities
development,
to
manufacture and marketing of public and
private payphones. Siemens also undertakes to
maintain the same conditions of competition in
the subject of the disposal as applied before
completion
also
the merger.
undertakes to ensure that, outside the normal
course of business, the business assets of the
subject of
the disposal will not be reduced
before the sale […].

Siemens

of

(125) (3)

to

the

same

ensure,

Siemens

undertakes

after
completion of the merger and before the said
sale of activities, that the future buyer of the
subject of the disposal will be placed in the same
position (i.e. concerning rights and obligations)
with regard to the N.I.K.E. cardphone system
jointly developed by Landis & Gyr for Deutsche
Telekom as Landis & Gyr was in before the
merger. In particular, this means that the buyer
jointly
will have
developed technology of the N.I.K.E. system as
Landis & Gyr had before the merger. If Landis
& Gyr has
its own patents or any other
intellectual-property rights and own know-how
with regard to the N.I.K.E. system, Siemens
undertakes to transfer them to the buyer.
If
Landis & Gyr does not have its own patents or
other
and own
know-how but has access to the technology
developed by Siemens, Siemens undertakes to
grant the buyer the same access under the same
conditions as are applied to Landis & Gyr.

intellectual-property

to the

rights

rights

(123)

Siemens undertakes to ensure that, after
(cid:28)(1)
control of Elektrowatt AG
acquiring
(deadline
the
agreements between (inter alia) Cre´dit Suisse

sole
II within

the meaning

of

(126) (4)

[…], Siemens will, in consultation with the
Commission, appoint a trustee (the trustee), for
example an investment bank. The latter shall
ensure on behalf of the Commission that until
the disposal
the disposal of
the
fulfils
Siemens

the subject of
its obligations vis-a` -vis

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Official Journal of the European Communities

L 88/23

Commission, entered into under point 2. The
trustee shall also ensure that with regard to the
sale Siemens fulfils its obligations vis-a` -vis the
Commission, entered into under point 3, […].

Should the sale not occur […], Siemens
(127) (5)
will
the
irrevocably transfer authority over
subject of the disposal to the trustee, who, […],
will carry out the sale at the expense of the
owner(s) in accordance with regular commercial
principles, […].

(128) (6)

Every three months, the trustee shall send
the Commission, as well as a copy for Siemens,
the
a written report on the monitoring of
fulfilment of
the obligations entered into by
Siemens vis-a` -vis the Commission.

(129) (7)

Before the signing of a binding contract
and at any rate every three months, the trustee
shall send the Commission, as well as a copy for
Siemens, a written report on the progress of
negotiations with third parties
interested in
buying the subject of the disposal.

(130) (8)

The trustee shall continue the negotiations
with an interested third party only if
the
Commission within two weeks of receiving the
trustee’s report does not formally communicate
its view that
the buyer does not satisfy the
conditions of purchase.

(131) (9)

The duties of the trustee shall end after

the subject of the disposal has been sold.

(132) (10)

[…]’

which effective competition will be impeded in a
substantial part of the common market. On the
basis of the proposed commitment, competitors
are being offered the possibility of buying the
payphone activities of the subsidiary, Landis &
Gyr, on the market for (cid:28)public’ payphones in
Germany. After this sale has occurred, the buyer
will be in the same position as that previously
occupied by Elektrowatt/Landis & Gyr. This
will ensure that Deutsche Telekom will still have
access
the merger.
Deutsche Telekom will therefore still be in a
position
the
its
manufacture and supply of (cid:28)public’ payphones
on the basis of effective competition between
Siemens and the other supplier. The Commission
has
the proposed
concluded that
commitment
is liable to prevent a dominant
position from arising or being strengthened on
the market for (cid:28)public’ payphones in Germany.

to two suppliers after

contracts

therefore

award

for

to

for

in Germany. Restriction of

(134) The commitment proposed by the parties covers
the disposal of the entire payphones division, i.e.
all the payphone activities of Landis & Gyr. The
the
parties have not proposed restricting
to the payphone activities of
commitment
(cid:28)public’
Landis & Gyr on the market
payphones
the
commitment would be considered only if such a
commitment were already enough to avert the
creation or strengthening of a dominant position
in
on the market
Germany with sufficient certainty.
seems
extremely doubtful, however, whether a suitable
buyer could be found for a disposal that was
limited to (cid:28)public’ payphones in Germany, in so
far as such a restriction could be applied at all
in law and in fact. The proposed commitment is
or
if
therefore
strengthening of a dominant position on the
market for (cid:28)public’ payphones in Germany is to
be averted with sufficient certainty.

(cid:28)public’ payphones

necessary

creation

the

for

It

Assessment of this commitment

(b) Private payphones

(133) The merger leads only in Germany to any
significant addition of market shares on the
market for (cid:28)public’ payphones. After a careful
examination of the plan, the Commission takes
the view that the merger will give rise to a
dominant position on the part of Siemens on
this relevant national market, as a result of

(135) On the (cid:28)private’ payphones market, many more
suppliers are active EEA-wide than on the
(cid:28)public’
Alongside
Elektrowatt/Landis & Gyr (with a market share
of approximately 18 %), two other competitors,
Tetrel and GN-Rathdown, had comparable

payphones

market.

L 88/24

EN

Official Journal of the European Communities

31.3.1999

to

the

leading

supplier

market shares in 1995 (approximately 20 % in
each case). Tetrel has considerably improved its
market position in recent years, having become
the
British
Telecommunications Group. Other competitors
are Schlumberger (1995 market share of some
7 %), Ascom-Monetel
(1995 market share of
less than 5 %) and FMN Nordhausen (1995
market share of some 6 %), which are active in
several Member States. In 1996, the Far Eastern
companies Inventec and Vector also entered this
market, which indicates that barriers to entry
are lower than for (cid:28)public’ payphones. Siemens
does not itself manufacture (cid:28)private’ payphones,
but it does have a 40 % holding in GTP (1995
market share of some 5 %).

the purpose of

(136) In the course of the proceedings, the parties
informed the Commission that Elektrowatt has
now bought GN-Rathdown. According to the
this acquisition is to
parties,
(cid:28)round off’ Elektrowatt’s payphones business
with a view to the intended sale and, hence, to
improve the terms for that sale. The effects on
competition of the acquisition are confined at
most to the period before the fulfilment of the
commitment to sell. It is not necessary therefore
to subject
this merely temporary change in
Siemens’s position on the (cid:28)private’ payphones
market to a more thorough assessment. In view
of the existing market structure and given that
Elektrowatt’s payphone business is to be sold,
plus the fact that Siemens, at the latest when the
commitment has been fulfilled, will be active on
the (cid:28)private’ payphones market only through its
holding in GPT, the Commission has concluded
that the merger does not give rise to any doubts
regarding
(cid:28)private’
payphones market.

competition

the

on

2. Fire-alarm installations, intrusion-protection
and other security installations, servicing of
fire-alarm installations, and intrusion-protection
and other security installations

(138) On

for

the

national markets

fire-alarm
installations and for intrusion-protection and
other security installations, and on the national
markets for the servicing of such installations,
the merger will not give rise to, or strengthen a
dominant position which would impede effective
competition in the
common market or a
substantial part thereof.

3. Electricity meters

(139) On the national markets for electricity meters,
the merger will not give rise to, or strengthen a
dominant position which would impede effective
common market or a
competition in the
substantial part thereof.

4. Heat meters

(140) The proposed merger does not

lead to the
emergence or
strengthening of a dominant
position on the affected markets for heat meters.

5. Ripple control transmitters and receivers

(141) The proposed merger does not

emergence, or
position on the part of
affected EEA market
transmitters and receivers.

lead to the
strengthening of a dominant
the parties on the
control
for

ripple

D. OVERALL ASSESSMENT

6. Energy-management systems

1. Building management systems and their
servicing

(137) The proposed merger does not

lead to the
strengthening of a dominant
emergence or
position on the part of the parties on either the
EEA market for building management systems
or on the national markets for the servicing of
such systems.

(142) The proposed merger does not

emergence, or
position on the part of
affected EEA market
systems.

lead to the
strengthening of a dominant
the parties on the
for energy-management

7. Network control technology

(143) The proposed merger does not

emergence, or
position on the part of
affected EEA market
technology.

lead to the
strengthening of a dominant
the parties on the
for network control

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Official Journal of the European Communities

L 88/25

8.

(cid:28)Public’ and (cid:28)private’ payphones

(144) The Commission’s investigations have revealed
that no dominant position will be created or
strengthened as a result of the merger on the
private payphone markets. On condition that
the commitment given by the parties is fulfilled,
this
(cid:28)public’
payphones.

assessment

applies

also

to

V. CONCLUSION

(145) For the reasons set out above, subject to the
condition that
the commitment given by the
parties is fulfilled, it is to be assumed that the
proposed merger will not lead to the creation or
strengthening of a dominant position as a result
of which effective
competition would be
significantly impeded in a substantial part of the
Community. Subject to that condition, therefore,
the merger is to be declared compatible with the
common market and with the functioning of the
EEA Agreement pursuant to Article 2(2) of the
Merger Regulation and Article 57 of the EEA
Agreement,

HAS ADOPTED THIS DECISION:

Article 1

The notified merger between Siemens AG and
Elektrowatt AG is hereby declared compatible with

the common market and with the functioning of the
EEA Agreement, subject
the
commitment given by the parties and set out in recitals
123 to 132 of this Decision is fulfilled.

to the condition that

Article 2

shall be required to report

The parties
Commission on the fulfilment of
Article 1 of this Decision.

to the
the condition in

Article 3

This Decision is addressed to:

Siemens AG
Wittelsbacherplatz 2
D-80333 M(cid:252)nchen.

Done at Brussels, 18 November 1997.

For the Commission

Karel VAN MIERT

Member of the Commission