2000/718/EC: Commission Decision of 1 December 1999 declaring a concentration to be compatible with the common market and the functioning of the EEA Agreement (Case No IV/M.1578 - Sanitec/Sphinx) (notified under document number C(1999) 4005) (Text with EEA relevance.) (Only the English text is authentic)
Date: 1999-12-01
Institutions: European Commission
Subjects: application of EU law, economic concentration, firearms and munitions, plumbing equipment, share, takeover bid

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 1 December 1999

declaring a concentration to be compatible with the common market and the functioning of the
EEA Agreement

(Case No IV/M.1578 (cid:151) Sanitec/Sphinx)

(notified under document number C(1999) 4005)

(Only the English text is authentic)

(Text with EEA relevance)

(2000/718/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Whereas:

Having regard to the Treaty establishing the European
Community,

Having regard to the Agreement on the European Economic
Area, and in particular Article 57(2)(a) thereof,

Having regard to Council Regulation (EEC) No 4064/89 of 21
December 1989 on the control of concentrations between
undertakings (1), as
last amended by Regulation (EC) No
1310/97 (2), and in particular Article 8(2) thereof,

Having regard to the Commission decision of 3 August 1999
to initiate proceedings in this case,

Having given the undertakings concerned the opportunity to
make known their views on the objections raised by the
Commission (3),

Having regard to the opinion of the Advisory Committee on
Concentrations (4),

(1) OJ L 395, 30.12.1989, p. 1; corrected version in OJ L 257,

21.9.1990, p. 13.

(2) OJ L 180, 9.7.1997, p. 1.
(3) Sanitec has refrained from replying to the Commission’s Statement
of Objections. The Commission therefore considers that Sanitec is
in agreement with the Commission’s analysis set out
in the
Statement of Objections.

(4) OJ C 331, 22.11.2000.

(1) On 1 July 1999, the Commission received a notification
of a proposed concentration whereby the Finnish
undertaking Sanitec Ltd Oyj Abp ((cid:145)Sanitec(cid:146)), belonging
to the Finnish industrial group Metra, acquires control
within the meaning of Article 3(1)(b) of Regulation
(EEC) No 4064/89 ((cid:145)the Merger Regulation(cid:146)) of
the
Dutch undertaking NV Koninklijke Sphinx Gustavsberg
((cid:145)Sphinx(cid:146)) by way of a public bid.

(2) After examination of the notification, the Commission
the
concluded by decision of 3 August 1999 that
the
scope of
notified operation falls within the
Merger Regulation and
as
doubts
to its compatibility with the common market. The
Commission therefore decided to initiate proceedings
in application of Article 6(1)(c) of the Merger Regulation
and Article 57 of the EEA Agreement.

serious

raises

I. THE PARTIES

(3) Sanitec is active in the design production and marketing
of bathroom products. The Group has
three core
businesses: bathroom ceramics, bath and shower related
products and vacuum toilet systems. Sanitec is active in
the Middle East,
the Community,
central Europe,
Its best known
south-east Asia and North America.

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If(cid:246),

Ido,

Porgsgrund
(France), Keramag

Scandispa
brands
are
(Germany),
(Scandinavia), Allia
Albatros, Revita and Pozzi-Ginori
(Italy) and
Lecico (the United Kingdom). Sanitec is a wholly owned
subsidiary of the Metra industrial group.

((cid:145)Pozzi(cid:146))

and

(4) Sphinx is also active in the design, production and
marketing of bathroom products,
in
ceramic sanitary ware, shower enclosures, bathtubs and
taps. Sphinx is active in the Community and eastern
Europe. Its best known brands are Sphinx, Gustavsberg,
Selles, Koralle, Leda and V(cid:229)rg(cid:229)rda.

in particular,

II. THE OPERATION

(5) On 3 June 1999, Sanitec made a public offer for all
outstanding ordinary shares not held by the Stichting
Administratiekantoor Aandelen NV Koninklijke Sphinx
Gustavsberg ((cid:145)the Foundation(cid:146)) and all
the depositary
receipts of ordinary shares in Sphinx. Thus, the offer
covers all shares in Sphinx. Given that the depositary
receipts of shares are held by the Foundation and that,
according to Dutch law, the voting rights of the shares
in Sphinx can only be exercised by the Foundation,
Sanitec will take control over all controlling bodies in
Sphinx as well as the Foundation and thus ensure
control over Sphinx.

(6) The offer memorandum was posted to the shareholders
on 17 June 1999 and has
the
Supervisory Board and the Managing Board of Sphinx.
The offer covers the whole Sphinx Group and it
is
envisaged that Sphinx will become the wholly owned
subsidiary of Sanitec.

support of

the

III. CONCENTRATION

(7)

If the public offer succeeds, Sanitec will acquire sole
control of Sphinx. The operation is
a
concentration within the meaning of Article 3(1)(b) of
the Merger Regulation.

therefore

IV. COMMUNITY DIMENSION

(8) The combined aggregate worldwide turnover of

the
undertakings concerned exceeded EUR 2 500 million in
1998 (Sanitec/Metra: EUR 2 603 million; Sphinx: EUR
270 million). The combined aggregate turnover of the
undertakings concerned was more than EUR 100 million

in

Sphinx:

EUR [(cid:133)]* million),

in each of at least three Member States in which each of
those undertakings had an aggregate turnover of more
than EUR 25 million, in [(cid:133)]* (Sanitec/Metra: EUR [(cid:133)]*
million;
[(cid:133)]*
(Sanitec/Metra: EUR [(cid:133)]* million; Sphinx: EUR [(cid:133)]*
in [(cid:133)]* (Sanitec/Metra: EUR [(cid:133)]* million;
million),
Sphinx: EUR [(cid:133)]* million) and in [(cid:133)]* (Sanitec/Metra:
EUR [(cid:133)]* million; Sphinx: EUR [(cid:133)]* million). The
aggregate Community-wide turnover of each of
the
undertakings concerned was more than EUR 100 million
(Sanitec/Metra: EUR [(cid:133)]* million; Sphinx: EUR [(cid:133)]*
million). Furthermore, the undertakings concerned did
not achieve more than two thirds of their aggregate
Community-wide turnover within one and the same
Member State. The notified operation therefore has a
Community dimension within the meaning of Article
1(3) of
a
cooperation case purusuant to Article 57(2)(a) of the
EEA Agreement and Article 2(1)(c) of Protocol 24 to
that Agreement and therefore the case has been assessed
by the Commission in cooperation with the EFTA
Surveillance Authority in accordance with Article 58 of
the EEA Agreement.

the Merger Regulation.

constitutes

It

V. RELEVANT MARKETS

A. RELEVANT PRODUCT MARKETS

1. Market definition proposed by Sanitec

(ii)

(iii)

trays;

shower

shower

(9) Sanitec has submitted that bathroom products may be
divided into the following 12 relevant product markets:
(i) bathtubs;
screens,
enclosures and cubicles ((cid:145)shower screens(cid:146)); (iv) sanitary
taps and mixers; (v) washbasins;
(vi) sinks; (vii) water
closets ((cid:145)WCs(cid:146)); (viii) vacuum and non-vacuum systems
(ix) WC cisterns and
for aircraft,
(x) hydrotherapy
flushing
systems
((cid:145)WC cisterns(cid:146));
(xi) bathroom furniture
products;
and (xii) other
products,
including WC-seats, bidets, urinals, pedestals
and accessories.

trains and ships;

(10) Sanitec argues that an additional segmentation, by price
levels (i.e. high-end and low-end products) or material
used for the production of bathroom products, within
each of
is neither
the suggested product markets
necessary nor feasible because all major manufacturers
of bathroom products produce or trade products across
the whole price range and thus substitution can easily
take place from a supply-side point of view. Sanitec
argues further that there are multiple overlaps of price
ranges among the suppliers of bathroom products and it
is therefore the view of Sanitec that the relevant product
from the
are
markets
consumer’s point of view.

defined most

adequately

*

Parts of
this text have been edited to ensure that confidential
information is not disclosed; those parts are enclosed in square
brackets and marked with an asterisk.

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(11) While Sanitec and Sphinx have overlapping activities in
most of the abovementioned product markets, it is only
the following markets which are horizontally affected by
the concentration (i.e.
the parties have a combined
market
share above 15 %): washbasins, WCs, WC
cisterns, bathtubs, shower trays and shower screens.

(a) Washbasins

(12) Sanitec

that

submits

the market

for washbasins
comprises both ceramic and non-ceramic (acrylic and
steel) products. Sanitec has argued that washbasins
made out of different materials fulfil the same needs for
consumers and that the characteristics and prices are the
same. Thus, Sanitec considers that washbasins made of
different materials are substitutes for one another. In its
notification Sanitec estimates that, at the EEA-wide level,
[< 95 %]* of washbasins are made of ceramic and
[< 15 %]* of non-ceramic material.

(b) WCs

(13) According to Sanitec,

the main type of toilet

is the
water-flushed vitreous ceramic model. There are a
number of different arrangements for WC pans: they
can be either pedestal or affixed to the wall. In addition,
they may be used with a high or low level cistern as
well as with a cistern or flushing valve concealed in or
behind the wall. Sanitec contends that
there are no
substituting products for WCs which are only made of
ceramic materials. Urinals complement WCs but do not
substitute them.
the sales volume of
urinals is negligible.

In any event,

(c) WC cisterns

(14) Sanitec submits that there are two principal solutions
for the flushing of conventional WCs: an exposed or
concealed flushing mechanism inside the cistern or a
self-closing tap triggering a water-pressured
special
flush. Sanitec contends that cisterns made of different
materials are substitutes for one another given that
customers’ preferences do not relate to material but only
to function (which is fulfilled by all
the materials),
design (which does not depend upon material) and
prices.
the
EEA-wide level, [< 70 %]* of all WC cisterns are made of
non-ceramic materials and the rest of ceramic material.

Furthermore, Sanitec

submits

that,

at

(15) While recognising that WCs and WC cisterns are used
they are often bought
should thus be

together, Sanitec submits that
separately and that WC cisterns
considered as a distinct product market from WCs.

(d) Bathtubs

(16) Sanitec

contends

the price ranges of

that bethtubs made of

synthetic
materials, cast iron or steel serve the same purpose from
the demand-side point of view and are substitutes for
one another. Although average prices differ for each
the different
kind of material,
materials
thus
Sanitec
considerably
overlap
considers that the different kinds of bathtub constitute
substitutes. According to Sanitec, the split between the
sales of different types of bathtub is as follows: [< 50 %]*
synthetic materials, [< 60 %]* steel and [< 5 %]* cast iron.
Sanitec has submitted that, due to the durability of the
product, cast-iron bathtubs are mainly used in public
areas
such as hospitals and hotels and constitute
therefore a niche product.

and

(e) Shower trays

iron)

serve

(17) Sanitec submits that, as with bathtubs, shower trays
made out of different materials (ceramic, synthetic, steel
and cast
and are
the
substitutes in terms of function, design and price from
the consumer’s point of view. Shower trays are usually
used together with enclosures. According to Sanitec,
[< 40 %]* of shower trays are made of steel, [< 40 %]* of
ceramic and [< 40 %]* of synthetic materials.

same purpose

(f) Shower screens

tray or a bathtub to protect

(18) Shower screens and enclosures are usually used together
the
with a shower
bathroom from splashes. Shower cubicles
integrate
enclosures and trays into one piece. Sanitec submits that
shower screens, enclosures and cubicles constitute one
single
demand-side.
Furthermore, manufacturers of shower screens always
produce enclosures and often also cubicles. The same
material (acrylic sheets) is used when producing shower
screens, enclosures and cubicles. However, glass is used
in the luxury segment which is estimated to represent
less than [< 5 %]*.

product market

from the

2. An alternative product market definition

(19)

In the course of the Commission’s market investigation,
a number of competitors and customers have suggested
an alternative product market definition according to
which ceramic sanitary ware (including WCs, WC
cisterns, washbasins and bidets made out of ceramic)
could be defined as a separate product market.
In
support of such a broader market definition for ceramic
sanitary ware, a number of arguments have been put

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forward. It has been argued that, from the demand-side,
distributors and wholesalers of bathroom products
usually buy a range of ceramic sanitary ware. A range
refers to WCs, WC cisterns, washbasins, pedestals and
sometimes also bidets and urinals, which are installed in
the bathroom as a set because customers usually require
these products to have a common design. This would
apply both with regard to new construction as well as
to refurbishment
It has furthermore
(see recital 21).
been suggested that it is only in rare replacement cases
(considering the long life cycle of ceramic sanitary ware
products) that single pieces will be sold.

3. Demand-side substitutability

(20) As already stated, Sanitec submitted in its notification
that each of the six affected products mentioned,
i.e.
WCs, WC cisterns, washbasins, bathtubs, shower trays
and shower screens, should be considered as distinct
markets. With respect to the ceramic products, Sanitec’s
that,
main argument was
instance, WCs and
washbasins are not
interchangeable from the final
consumer’s point of view and that, for this reason, they
cannot belong to the same relevant product market.

for

(21) Sanitec submitted further that customers do not

in
line (i.e. a range of
general purchase one product
products encompassing for example either all ceramic
sanitary ware and a bathtub and/or a shower tray).
However, Sanitec has subsequently clarified its position
by submitting further details relating to new building
and refurbishment activities. Reference is made to a
study (5) which identifies the following end-uses for
ceramic sanitary ware: new housing (i.e. construction of
(i.e.
houses
home
of
construction
finally,
improvement via
home improvement via DIY chains. The first
two
categories cover new building activities and represent
[25 % to 45 %]* of the total market whereas the last two
categories cover refurbishment activities and represent
[55 % to 75 %]* of the total market.

hospitals,
installers/showrooms

for private households), non-housing

etc.),
and,

hotels,

(22) According to Sanitec’s estimates, [45 % to 75 %]* of the
ceramic sanitary ware sold to new building activities is
sold as a series of products. With respect
to the
refurbishment market, Sanitec estimates that [65 % to
the ceramic sanitary ware sold to home
85 %]* of
improvement via installers is sold as a series of products
whereas [25 % to 45 %]* of the ceramic sanitary ware
sold to home improvements via DIY chains is sold as a

(5) GB Consult, a consultant company publishing studies analysing the
European bathroom product markets, has carried out two studies
which have been used for the analysis in this Decision: The West
European Bathroom Products Market
(1998 update) (cid:151) 10 Country
International Synthesis (December 1998) and Ceramic Sanitary Ware
Products in Scandinavia (preliminary data) (May 1999).

series of products. With respect to the latter, Sanitec
estimates that the share of sales of series is increasing
steadily (6).

(23)

In conclusion, the information given by Sanitec clearly
confirms the view submitted by a number of
third
parties in the course of the Commission’s investigation,
namely that, while it is true that from the functional
cannot be
view the different products
point of
considered as substitutable,
final consumers tend to
purchase a series of ceramic sanitary ware products for
new construction purposes and that the proportion of
purchases of series for refurbishment purposes is indeed
considerable and amounts at present to more than half
of the total sales in this segment.

(24) Moreover,

therefore,

customers and,

a
large
in their

of
and
distributors
number
wholesalers
to the Commission’s
responses
enquiries have considered it important to be able to
supply the whole range of ceramic sanitary ware to
typically
their
demand a full range of each manufacturer’s product
portfolio. This applies in general both to the Nordic
countries (7)
has
furthermore been indicated that manufacturers typically
offer joint discounts for a range of products, giving an
important incentive for distributors and wholesalers to
buy a range of products.

continental

Europe (8).

they will

and

It

(25) The Commission notes that the typical ceramic sanitary
ware products are only to a very limited extent
substituted by other materials. For example, based on
the information submitted by Sanitec, non-ceramic
washbasins are niche products and represent less than
[< 15 %]* of all washbasins sold at the EEA-wide level as
well as in general on a national
level. This view has
been confirmed by third parties who gnerally consider
the volumes of washbasins made of non-ceramic
materials
to be negligible and only used in niche
segments.

(26) Furthermore,

it has been suggested that the price of
non-ceramic washbasins is considerably higher than the
In addition, based on the
price of ceramic products.
a
information available,
proportionally higher share of the sales of non-ceramic
washbasins than that of ceramic washbasins and it

the parties do not have

(6) Sanitec has estimated that the figure concerning the sales of ranges
via DIY is even higher in some individual countries where DIY
chains are particularly developed, for instance between [< 50 %]*
and [< 60 %]* in Germany. Moreover,
ranges of
products via DIY chains have been estimated to grow at the same
time when DIY chains are gradually gaining market share at the
expense of traditional distribution channels.
In this Decision, the (cid:145)Nordic countries(cid:146) or (cid:145)Nordic area(cid:146) refers to
Denmark, Finland, Iceland, Norway and Sweden.
(cid:145)Continental Europe(cid:146) in this Decision refers to Belgium, Germany,
Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria,
Portugal and the United Kingdom.

the sales of

(8)

(7)

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not

have

investigation

should be noted that third parties responding to the
any
Commission’s
competition concerns with regard to the parties’
position in other materials than ceramics. Hence, the
Commission does not consider it necessary for the
purpose of the present assessment to analyse separately
the impact of the concentration on non-ceramic sanitary
ware products.

raised

it has been suggested that

to bathtubs, shower trays and shower
(27) With respect
screens,
they constitute
distinct separate markets from ceramic sanitary ware
because distributors normally do not buy these products
these products are
as part of a set. Furthermore,
normally not streamlined with ceramic sanitary ware in
terms of a particular design. This would mean in
practice that distributors would buy ceramic sanitary
ware from one supplier while the remaining bathroom
products could be bought from different suppliers. As
far as the division according to different materials is
concerned, the Commission’s investigation suggests,
in
line with the arguments put forward by Sanitec, that a
segmentation based on different materials would not be
from the demand-side, bathtubs,
meaningful. Thus,
shower trays and shower screens are considered as
distinct product markets from ceramic sanitary ware.
Moreover, according to the information provided by
Sanitec, the parties’ market shares for these products on
a national level would not differ significantly even if the
products were broken down into different materials.
Therefore, for the purpose of the present assessment,
the Commission does not consider
it necessary to
in terms of different
further analyse the products
materials from the demand-side point of view.

(28) Finally, the Commission’s investigation has confirmed
that all major competitors offer a range of products
representing different price levels. It has been indicated
that,
it would not be meaningful to
define any of the above products according to the price
level.

for this reason,

(29) Based on the foregoing, the Commission considers that,
from the demand-side, there are strong indications to
define a market comprising a range of ceramic sanitary
ware products and that distinct markets exist
for
bathtubs, shower trays and shower screens, respectively.

4. Supply-side substitutability

in

of

course

(30) From the supply-side point of view,
the

it has been
suggested
the Commission’s
investigations that a separate relevant product market
for ceramic sanitary ware exists. It has been argued that
producers of ceramic sanitary ware typically produce all
ceramic sanitary ware products together and that a
particular plant is confined to producing either ceramic
sanitary ware or products made of other materials, such

as acrylic or steel. Moreover, it has been argued that the
switching of existing production lines to manufacture
different ceramic products is generally possible and
feasible, whereas
the switching of production from
ceramic sanitary ware products to different materials
would require an entirely different type of production.

(31) Sanitec has submitted that the production process for
the manufacturing of ceramic sanitary ware differs from
that used for the manufacturing of steel products and
those used for the manufacturing of acrylic products.
There are different technologies and production lines
used to produce bathroom products out of different
materials.

(32) The production process of ceramic sanitary ware (9) is
briefly described as follows. The production process
slip preparation (ceramic mass), glaze
consists of
preparation,
finishing, drying,
casting, demoulding,
glazing and firing.
In the first production phase, the
loose slip is poured into plaster moulds where, after a
certain period has elapsed, excess slip is removed, the
mould opened and the initial product
is ready for
drying and glazing. The glaze gives the final product a
strong surface and colour. For glazing, the product is
heated in a kiln at a maximum temperature of 1 230 (cid:176)C.
to
After this, a final
ensure that there are no defects.

inspection will be carried out

(33) The production process of enamelled steel products
(bathtubs and shower trays) consists of the following
phases: after the mechanical pressing of the sheet, the
resulting product is degreased and a layer of enamel is
sprayed on the entire product surface. The piece is then
baked in a stove at 850 (cid:176)C after which it is sprayed with
white enamel. The enamelled product is then baked a
second time at 850 (cid:176)C and the final product control is
carried out.

(34) The production of synthetic products (bathtubs and
shower trays) begins with the heating of synthetic/
acrylic sheets at about 180 (cid:176)C. The sheets which are
stamp to be moulded.
then laid down on the
Bodyworks obtained in this way are then strengthened
in the spraying room with a mixture of polyester resin
and calcium carbonate and glass fibres. Subsequently,
the bodyworks are placed in a polymerisation stove at a
temperature of about 40 (cid:176)C. Finally, the bodyworks are
automatically trimmed along the edges.

(35) The production of

screens and
cubicles mainly consists of assembling parts and is a
simple process.

shower enclosures,

(9) The following materials are used for manufacturing ceramic ware:
vitreous china (a fine grain material not absorbing more than 0,5 %
of water),
fire-clay (a porous medium-grained material
absorbing about 9 % of water and covered with white or coloured
enamel) and fire-clay (a porous medium-grained material not
absorbing more than 13 % of water and covered with white or
coloured enamel).

fine

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information in the notification,

(36) As can be seen, the production processes of ceramic,
enamelled steel and acrylic sanitary products differ to a
considerable extent. The Commission’s investigation has
shown that most manufacturers have production plants
specialising in a specific production process based on
material. This appears also to be the case with respect
to the parties’ production plants. For example, based on
the
Sanitec has
10 production plants in the EEA and six production
plants outside the EEA which are all confined to the
production of ceramic sanitary ware. Bathtubs and
shower trays made of synthetics and steel are produced
at other plants. Similarly, Sphinx has five production
plants in the EEA and two production plants outside the
EEA which are all confined to the production of
ceramic sanitary ware. Bathtubs and shower trays made
of synthetic materials are produced in another plant
while shower screens are produced separately.

(37) According to Sanitec,

for

a manufacturing plant

for
ceramics cannot, without significant cost and delay, start
production of bathroom products made of other
materials and vice versa. This view is shared by most
competitors. On the other hand, Sanitec submits that
the starting-up costs
the production of acrylic
products are low and estimated to be at the highest,
EUR [(cid:133)]* million. On that basis, Sanitec considers that
a supplier of ceramic sanitary ware could easily start up
a new plant for the production of acrylic bathroom
The
products
Commission’s investigation reveals, however,
the
start-up costs are considered to be significant by other
competitors. Furthermore, the information obtained by
the Commission in the course of its investigation seems
to suggest
that high-capacity utilisation is generally
needed for profitability in this industry and thus it must
be assumed that such a plant would need considerable
volume of output in order to be profitable.

that were

necessary.

deemed

that

if

(38) Sanitec has argued that although there are differences in
technologies and production lines used to produce
bathroom products of different materials, all major
manufacturers
supply bathroom products made of
the Commission’s
different materials.
investigation this does not, however, seem to be the
case for a number of European manufacturers. For
example, Bette, Metaliberica, Geberit, Kaldewei, Flair and
Merloni do not produce any ceramic sanitary ware.

Based

on

(39) On the basis of the foregoing, the Commission does not
supply-side
is
consider
substitutability between manufacturing plants using
different materials.

sufficient

there

that

shower trays made of ceramics (10). The investigation
shows that competitors who produce ceramic sanitary
ware also produce a range of these products.

(41) According to Sanitec, a supplier of a specific ceramic
sanitary ware product (for example WCs) can switch to
the production of other products of ceramic sanitary
ware (for example washbasins) without major switching
costs. Sanitec estimates that the costs would amount to
EUR [(cid:133)]* for 45 000 pieces of ceramic sanitary ware,
provided that it is only the casting equipment that needs
to be replaced. Sanitec has estimated this
to take
between [(cid:133)]* months. The foregoing has largely been
confirmed by competitors. It has been indicated that, as
long as the model
is available, switching production
would be relatively easy. The investigation shows that
one model can be used some 120 times, after which it
has to be replaced by another model. Depending on
whether casting takes place once or
twice a day,
switching can take place within three to six months, if
the manufacturer wants to use the old model
first
before switching to another one. However, there is no
reason why switching production could not in principle
take place earlier, too.

(42) Based on the above,

it would appear that ceramic
sanitary ware is most
likely to constitute a single
relevant product market from the supply-side point of
view. Furthermore, bathtubs, shower trays and shower
screens also appear to constitute distinct markets from
the supply-side.

5. Conclusion on the relevant product market

(43) On the basis of

the

foregoing,

should comprise

the Commission
considers that there are strong indications that ceramic
sanitary ware constitutes one single product market
both from the demand-side and the supply-side points
of view. It is not, however, necessary for the purpose of
the
the present Decision to define exactly whether
ceramic
relevant product market
sanitary ware as a whole or, alternatively,
individual
products. The product market definition can be left
open because, as will be shown below, in either of the
two alternative market definitions
the
operation would lead to the creation or strengthening of
a
countries.
in
Furthermore, it is the view of the Commission that in
the two alternative market definitions the
either of
operation would
or
to
lead
strengthening of a dominant position as a result of
significantly
which effective

competition would be

the Nordic

considered,

dominant

position

creation

not

the

(40) The Commission further notes that both parties’ ceramic
sanitary ware plants all produce the whole range
of ceramic
i.e. WCs, WC cisterns,
washbasins and in some cases also bidets, pedestals and

sanitary ware,

(10) This is further evidenced by the fact that neither Sanitec nor
Sphinx has been able to provide data on capacity, capacity
utilisation, production costs, etc. for each ceramic sanitary ware
product [(cid:133)]*.

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Official Journal of the European Communities

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impeded in any of the national or regional markets in
continental Europe. Therefore, for the purpose of the
present Decision, it is not necessary to finally decide on
whether the relevant product market comprises ceramic
sanitary ware as a whole or, alternatively,
individual
products.

(44) With respect

to bathtubs, shower trays and shower
screens, the Commission considers on the basis of the
above that
these products constitute distinct product
markets both from the demand-side and the supply-side
point of a view.

B. RELEVANT GEOGRAPHIC MARKETS

(45) Sanitec has

submitted that

lines and often market

the relevant geographic
market for all the abovementioned bathroom products
is at least EEA-wide but could even be wider, arguing
that all competitors are active in the whole of the EEA
or in a large part thereof and that most major players
have European product
the
products under the same names throughout Europe.
Furthermore, Sanitec refers to increasing imports from
inside
considerable
cross-border trade flows, the absence of regulatory or
tariff barriers,
costs, homogeneous
conditions of competition, pan-European marketing and
identical product standards, the
distribution strategies,
increasing
and
converging prices.

low transport

significance

EEA and

European

outside

brands

and

the

of

from the

investigation,

(46) Based on the information submitted by Sanitec and the
information resulting
the
Commission considers, however, that for the reasons set
out below the relevant geographic market should be
considered to be narrower than the EEA. In fact, several
factors indicate that the effects on competition of the
notified operation should be assessed separately for the
Nordic area and for continental Europe either at a
national level or, alternatively, at a regional level.

1. General considerations

(a) Imports into the EEA

(47) Sanitec submits that during the last few years there has
been a steady increase in imports into the EU from
low-cost
Europe,
inter
south-eastern Europe and Africa. Sanitec argues more
particularly that, from 1993 to 1998, the consumption
of bathroom products increased only slightly but that

countries

central

alia,

in,

imports
into the major European countries were
stronger. Sanitec further argues that exports from most
European countries increased during that period, too.

to

countries

offering more

(48) The Commission notes that an important development
in the past few years in the western European bathroom
product market has been a gradual shift of production
capacity
competitive
production costs. The production of bathroom products
has to a large extent moved outside the EEA into
low-cost
and
south-eastern Europe. All major European players in the
field of bathroom products produce at low-cost plants
in countries like Bulgaria, Hungary, Poland and the
Czech Republic and distribute the products throughout
the EEA.

particular

countries

central

in

in

(49) The restructuring of the industry is evidenced by the
large number of factories being closed down in the EEA.
By way of example, Sphinx has recently closed its
Novoboch plant in Belgium. It currently has two plants
in Poland and one in Slovakia. Sanitec has closed down
its plants in Germany and Italy and now has four plants
in Poland, two production locations in Egypt and one in
Ideal Standard has closed down
Lebanon. Similarly,
Italy and the United
plants
Kingdom, and Villeroy & Boch a plant in France.

in Germany, France,

(50) Sanitec has explained that

the driving force behind
moving production into low-cost countries has been the
need to be more competitive on price. Sanitec has
provided examples of production costs in the parties’
It can be
ceramic sanitary ware production facilities.
seen that while the production costs per piece in
Sanitec’s factory in Germany are EUR [(cid:133)]* and between
EUR [(cid:133)]* and [(cid:133)]* in Finland and Sweden, production
costs are only EUR [(cid:133)]* and [(cid:133)]* per piece in Sanitec’s
Polish plants. With regard to Sphinx’s production
facilities, the production costs are EUR [(cid:133)]* per piece
in Sweden and EUR [(cid:133)]* in Germany, while they are
between EUR [(cid:133)]* and [(cid:133)]* in Sovakia and Poland
respectively.

(51) The fact that production capacity has to a large extent
moved outside the EEA appears to be the main reason
for the increasing imports into the EEA. Third parties
have estimated that as much as 80 % to 90 % of total
third country imports originate from production plants
or subsidiaries of companies headquartered in the EEA.
Sanitec has provided information according to which
approximately [< 60 %]* of all imports coming into the
EEA are transactions between entities belonging to the
same group. In assessing the flow of bathroom products
into the EEA,
these
Intra-group imports are
imports should be excluded.
merely logistical trade flows based on more favourable
production costs and, therefore, imports which do not
originate
any
competitive constraint on the behaviour of the market
players already active in the EEA.

the Commission considers that

from third parties do not

impose

L 294/8

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Official Journal of the European Communities

22.11.2000

(52)

In addressing the trade flows,
the Commission has
encountered some statistical difficulties. Sanitec has
collected statistical data from different sources and has
presented data both in terms of value and in volume.
The difficulty in assessing the data from these different
that volume
sources has been in particular the fact
figures have been presented both in tonnes as well as
pieces and that these are not directly comparable. A
further difficulty has been that some statistics relate to
1998 while others
cover only 1997. Moreover,
statistical data covers a range of products (11) and
Sanitec has not been able to provide information
separately for individual products. Finally, some of the
statistical material available suffers
from a lack of
reporting and there are significant differences between
different statistics.

(56)

parties into the EEA did not exceed 7 % under any
circumstances.

imports other

than intra-group imports

Information obtained from third parties has confirmed
that
from
outside the EEA are not substantial enough to warrant a
market definition wider than the EEA. While some
wholesalers import ceramic sanitary ware for instance
from Asia or from eastern Europe, these imports are
small compared to the overall trading volumes of these
wholesalers. Some wholesalers have pointed out
that
imports, for instance from Asia would make commercial
sense only if carried out on a large scale. These
wholesalers have explained that they have to be able to
stock and sell the leading brands and that the demand is
not sufficient for them to import large quantities from
outside the EEA.

(53) The Commission has, however, compared the statistical
material available with information obtained from third
parties, and considers for the reasons below that the
geographic reference area is not wider than the EEA.

(54) Sanitec has provided Eurostat statistics showing the total
imports in 1998 of WCs, WC cisterns, washbasins,
bathtubs, pedestals, urinals and (cid:145)other(cid:146) into the EEA. The
Commission has established on the basis of the value
figures that these imports were some 6 % of the total
value of these products in the EEA. It is to be noted
that, based on the product market
segmentation
provided by Sanitec, pedestals and urinals have not been
included in the total value figures given by Sanitec and,
thus, imports were actually somewhat lower than 6 %.
However,
this figure does not take into account the
large intra-group sales. Given that Sanitec has submitted
that some 50 % of these imports were intra-company
it can be concluded that imports from third
imports,
parties into the EEA totalled only some 3 % at most.

(55) Sanitec has also estimated import flows into the EEA on
the basis of production and consumption of bathroom
products in the EEA. Sanitec submits that imports in
1997 accounted for [< 20 %]* of the consumption in
western Europe. The Commission has calculated on the
basis of the figures submitted that imports totalled at
most some 12 % of production and some 14 % of the
total consumption in the EEA (12). However, given that
between [45 % to 95 %]* of
the imports have to be
allocated to intra-group transactions, imports from third

(11) For

instance, ceramic sanitary ware and bathtubs have been

grouped together in different statistics.

(12) Two different measurements have been submitted, that is, pieces
and tonnes. The Commission has estimated the share of imports
by converting pieces into kilograms. Sanitec has submitted that
one piece weighs [10-15]* kg and the Eurostat figures assume that
one piece weighs 14 kg.

(57) Based on the investigation,

the overall exports from
outside the EEA appear to be insignificant. Most large
players have local production facilities outside the EEA
serving local or regional markets. As a general rule,
exports are made only for some special items.

(58) On the basis of the foregoing, the Commission draws
the conclusion that the evidence on the limited imports
into the EEA together with other evidence as discussed
below does not support
the adoption of a relevant
geographic market wider than the EEA.

(b) Trade flows between EEA countries (13)

(59) Sanitec has

there are

submitted that

considerable
cross-border trade flows within the EEA in the field of
bathroom products. It has estimated that [< 50 %]* of
the total EEA production of bathroom products
is
exported from one EEA country to another and
[< 40 %]* of the total EEA consumption is imported.

the

(60) On the basis of the information submitted by Sanitec,
flows vary
that
the Commission notes
considerably from one EEA country to another. By way
of example, Portugal and Italy are net exporters with
very low imports. Germany on the other hand imports
[< 80 %]* of its consumption of bathroom products and
from
exports
less than one third of what
Germany are, however,

its production. Exports

[< 40 %]* of

trade

(13) (cid:145)EEA countries(cid:146) refers to the Member States of the Community as

well as Norway, Iceland and Liechtenstein.

22.11.2000

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Official Journal of the European Communities

L 294/9

from the

Portugal and Italy each export. It is in particular noted
that with regard to imports, the Nordic countries differ
the EEA. Based on the
most
into the
information submitted by Sanitec,
imports
Nordic
all
than [< 10 %]* of
consumption.

countries

rest of

less

are

(61) Trade flows inside the EEA can partly be explained by
the different production costs within the EEA. For
example,
the production costs per piece in Sanitec’s
factory in Germany are [(cid:133)]* times higher than in the
production facility in Portugal which explains why
almost
is
[< 80 %]* of
exported to Germany.

the production of

that plant

(62) Sanitec has argued that transport costs for bathroom
products
indicate an EEA-wide market. Sanitec has
contended that transport costs are similar in all EEA
countries and represent approximately [< 5 %]* of the
net average sales price per piece. Sanitec therefore
claims that bathroom products can easily be transported
over long distances.

(63) The Commission has nevertheless been able to establish
on the basis of the information supplied by Sanitec that,
with the exception of Portugal, with regard to the
majority of the parties’ production facilities, the country
of production is also the main country of supply and
sales. Sanitec’s Norwegian factory mainly
that of
supplies
the
the Norwegian market.
production in Sanitec’s plant in Germany is supplied in
that country. Some [< 100 %]* of Sanitec’s Finnish and
Swedish production is supplied in those countries and
[< 80 %]* of the production in Italy is supplied there.
in
With regard to Sphinx’s production facilities
Germany,
the
and
overwhelming proportion of production is supplied in
those countries.

[< 95 %]* of

Netherlands,

France

the

(64) Furthermore, an analysis of

the product

flows also
shows that, with the exception of Portugal, the majority
of exports
from the parties’ European production
facilities goes to the neighbouring EEA countries. For
instance, Sanitec’s French production outlet and Sphinx’s
their
Belgian plant export [< 40 %]* and [< 60 %]* of
respective production to Germany. With regard to
Sanitec’s
Italian production facility, which exports
[< 30 %]* of its production to Germany, it is to be noted
that the production outlet is situated in the north of
Italy and, therefore, the physical distance from Germany
does not constitute a barrier for such exports.

(65) The parties’ product

flow patterns would seem to
suggest
that, with the exception of Portugal, where
production costs are on average much lower than in
other EEA countries, production is optimised so that the
production facilities mainly supply the country of

production and exports are mainly directed to the
neighbouring EEA countries. This is supported by the
fact
that most market operators have production
facilities in a number of EEA countries. By way of
example, Sanitec has altogether 24 production facilities
in Europe, 12 of them producing ceramic sanitary ware,
in a number of different countries. Therefore,
the
Commission does not consider that the production of
bathroom products
particularly
is
concentrated in the EEA.

geographically

(66) The Commission notes

serve

further

Indeed,

the EEA market.

that although there
to be a tendency to move production to
appears
low-cost east and southern European countries,
this
does not necessarily mean that these production outlets
would only
the
investigation shows that a large part of the production
in these countries serves mainly local markets (e.g.
[< 70 %]* of the production in Sanitec’s Polish factory is
supplied in Poland). It does not therefore appear likely
that all production would be moved in the near future
to low-cost east European countries. Also the fact that
its
Sanitec has only recently invested in one of
production
Scandinavian
the
argument
regional production within the EEA
would be essential also in the future.

supports

facilities

that

of

costs.

transport

contacted

transporters

Furthermore,

seem to suggest

distances. Replies

the
informed

(67) The existence of numerous production outlets would
that producers avoid long
rather
to the Commission’s
transport
questionnaires show that, depending on the distance,
transport costs could be up to 10 % to 15 % of the sales
price. Transport companies and forwarding agents have
also confirmed that distance is an important factor in
vast
calculating
majority
the
Commission that they transport bathroom products on
a country-by-country basis. The fact that both Sanitec
and Sphinx, who are by far the strongest players in the
Nordic market, have production facilities in the Nordic
countries would seem to suggest that in order to be
competitive in this market, local or regional production
is needed. This would seem to be supported by the fact
that other competitors in the Nordic area have no
production in the area and,
they have to
import all production from continental Europe. These
competitors are only marginally present in the Nordic
area. With regard to Portugal, however,
it can be
the production costs in this plant are
assumed that
sufficiently low to offset transport costs to Germany.
The same would appear to apply to production plants
situated in central and eastern Europe.

therefore,

(68) Evidence

are

further

supports

from competitors

the
assertion that the country of production is usually also
the country of supply and consumption and that trade
flows
to regions
surrounding the production facilities. For instance, a
British manufacturer of ceramic sanitary ware mainly
supplies its products in the United Kingdom. Another
major manufacturer supplies ceramic sanitary ware from

terms directed

in general

L 294/10

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Official Journal of the European Communities

22.11.2000

its multiple production plants across Europe on a
indicating that for instance the United
regional basis,
Kingdom and Ireland constitute one region, the Benelux
area another region, Germany and Austria yet another
one and so on.

(69) Therefore,

the fact

that production has not been
geographically particularly centralised and that
the
parties have a number of production outlets all over
Europe with a tendency to supply home markets and
the neighbouring markets is taken as evidence that the
supply of bathroom products is optimised in order to
minimise the transport distance.

(c) Market structure

(70) The market position of

the players differs from one
the large
country to another. While it
suppliers of bathroom products operate in several
European countries, the market shares vary significantly
between neighbouring countries.

is true that

(75)

(71) Overall,

in

the

For

their

have

their
European manufacturers
strongest presence, both in terms of production and
sales,
instance,
domestic markets.
Duravit/Laufen is strong in Switzerland and Austria but
is not present in Spain, Italy or the United Kingdom.
in its home market,
Villeroy & Boch is
strongest
Germany, but has no activities
Italy or
Portugal. Roca, the Spanish producer, has a substantial
part of the Spanish market but virtually no activities in
Germany or France. Sanitec is by far the strongest
while
player
the
abovementioned competitors are present
there only
marginally.

in Spain,

countries

Nordic

the

in

(72) The Commission considers the foregoing to be a clear
competition are not
conditions of

indication that
homogeneous throughout the EEA.

(d) Structure of the demand-side

(73) Sanitec has submitted that the structure of distribution
channels is similar throughout the EEA. In particular,
Sanitec argued that most products are being distributed
through wholesalers and that wholesalers, together with
DIY retailers, are in general active in large parts of the
EEA. Later in the proceedings, Sanitec submitted that, at
the very least, several large wholesalers are active in an
area covering all of Benelux, France and Germany and
therefore the geographic market should be defined as at
the very least covering that area.

(74) While addressing Sanitec’s arguments
Beneleux,

covering

France

to alternative

relating to a
and
possible market
the Commission’s investigation has shown
Germany,
that
the demand-side in the EEA does not support
Sanitec’s argument of an EEA-wide market. On the
contrary, while recognising that the majority of supplies
of bathroom products are still channelled through
wholesalers in many EEA countries,
the investigation
shows that the structure of the demand-side differs in
particular with respect
distribution
channels (DIY, specialist boutiques and direct supplies).
For example, in central Europe (i.e. Belgium, Germany,
France,
and the United
Kingdom), DIY retailing is highly developed and has a
significant impact on the bathroom market whereas in
the Nordic countries and southern Europe (i.e. Spain,
Italy and Portugal) DIY retailing is far less present.
the wholesalers
Furthermore,
concentration of
in southern
differs throughout the EEA. For example,
is
Europe, wholesaling remains fragmented while it
mostly concentrated in the Nordic countries and to a
lesser extent in central Europe. This could mean that the
access to distribution channels may differ from one
country to another.

the Netherlands, Austria

the

(i.e. wholesalers

In addition, the geographic presence of the immediate
varies
customers
significantly within the EEA territory. As a general
observation, none of
distributors
mentioned by Sanitec has a Europe-wide coverage.
Moreover, the majority of the distributors are present in
at most three EEA countries.

the 21 major

retailers)

and

supplies on at

the
in several EEA countries

(76) Sanitec has furthermore submitted that wholesalers and
least a
DIY retailers purchase their
largest wholesalers with
national basis while
also conclude
presence
level. By way of
contracts on an international
illustration, Sanitec has argued that a number of
wholesalers (and DIY chains) apply a central purchasing
policy making use of their total volumes in several EEA
countries. The Commission notes that these examples
(Belgium, Germany,
cover only five EEA countries
France, the Netherlands and Austria) and can thus not
be considered as an argument in favour of an EEA-wide
market. Furthermore, Sanitec has not been able to
provide evidence showing that such central purchasing
indeed takes place covering all these countries.

(77) On the basis of

the

that

foregoing,

the argument

the Commission
considers that Sanitec has not been able to provide
evidence to support
the demand
structure of bathroom products would be uniform
to warrant a market
throughout
definition comprising the whole of
the EEA. The
Commission’s own enquiries show, on the contrary, that
the vast majority of
the wholesalers and retailers
purchase their products on a national or, at the very
most, regional basis.

the EEA so as

22.11.2000

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Official Journal of the European Communities

L 294/11

and that distributors

(78) Sanitec argues that consolidation is taking place at the
in the bathroom products
level
wholesale and retail
sector
are becoming more
international in their operations. While the Commission
does not exclude the possibility that such consolidation
could take place on a Europe-wide basis in the future,
there is no evidence that the distribution structure at
present would warrant a definition of a geographic
market comprising the whole of the EEA.

(e) Prices and rebates

takes place generally at

(79) As already stated, the investigation shows that sourcing
the
of bathroom products
national level. The existence of national sales offices and
price lists further points towards national rather than
regional markets. Sanitec has explained that German
price lists are used in those countries where national
price lists do not exist. This does not, however, mean
that the prices in those countries would be identical to
those in Germany in the sense that
the geographic
market should be defined to include all those countries.
Quoting the German price list would rather mean that
the product is not normally sold in a particular EEA
country and that such a sale would be an infrequent
transaction.

(80) Sanitec has further submitted that the rebate systems in
different countries differ. By way of example, Sphinx
normally grants higher rebates in [(cid:133)]* than in [(cid:133)]*.
Similarly, Sanitec applies higher initial rebates in [(cid:133)]*
than in [(cid:133)]* whereas the additional customer-related
rebates in [(cid:133)]* are lower than in [(cid:133)]* (14).

the

general perception of

(81) Several competitors and customers in their replies to the
Commission’s enquiries have indicated that prices differ
between EEA countries. The investigation shows further
the price
that while
development in continental Europe has been that prices
have been declining, several Nordic customers have
indicated that prices have actually been increasing. In
this respect,
the general
the Commission notes that
trend of price decline in continental Europe has varied
from one country to another. For instance, it has been
indicated that while prices have gone down in Italy only
by 1 %, in Germany the fall has been as much as 10 %.

(82)

In order to investigate the price levels in EEA countries,
the Commission requested Sanitec to provide prices for
identical products
sold in different EEA countries.
Sanitec subsequently explained that the parties do not
sell products which are identical
in all EEA countries
they are active in. Sanitec was able, however, to provide

(14) [(cid:133)]*.

price information on identical products
number of EEA countries.

sold in a

For most of
given

(83) Sanitec provided gross list prices between 1995 and
1998 for
in the ceramic
some identical products
sanitary ware group for Sanitec’s product line (cid:145)Renova(cid:146)
and Sphinx’s product lines (cid:145)Mycene(cid:146) and (cid:145)Ibiza(cid:146). Sanitec
also provided prices paid by wholesalers net of all
discounts and rebates ((cid:145)net net prices(cid:146)) for some of these
products.
the price
Belgium/Luxembourg,
information was
Germany,
some
products, prices covering Spain, France, Italy, Portugal
and the United Kingdom were submitted.
[Sanitec
submits that there are no data available separately for
Luxembourg and that Belgium and Luxembourg should
be assessed together. Given that the Luxembourg market
is very small, the analysis would not change even if
Belgium and
assessed
separately.]*

these products,
for
the Netherlands and Austria. For

Luxembourg were

be

to

(84) The Commission investigated the level of both gross list
prices and net net prices in different EEA countries
where the products were sold (15). The Commission then
indexed the prices, taking Germany as the base. The
Commission regards Germany as a suitable reference
point because, for instance, the majority of the products
sold under Sanitec’s Keramag brand name,
like the
(cid:145)Renova(cid:146) product line, are sold in Germany and, in the
absence of a national price list, Sanitec quotes the
German price list.

(85) An analysis of the gross list prices shows that there is
considerable variation between the prices in different
EEA countries. By way of example, the list prices for a
[(cid:133)]* WC fluctuated between [< 30]* and [< 50]* points
five EEA countries,
between 1994 and 1999 for
pointing
in prices.
Another example is a [(cid:133)]* WC where the price
difference reached [< 50]* points in 1999.

significant differences

towards

(86) Significant differences in prices can be seen also when
comparing the net net prices. During 1995 to 1998, the
difference between the highest and the lowest indexed
net net price in Belgium/Luxembourg, Germany, Italy,
the Netherlands and Austria for a [(cid:133)]* WC ranged
average
between [< 10]*
deviation for this period was [< 20]* points. At the same
time,
for a
the difference between those countries
(cid:145)Renova(cid:146) washbasin ranged between [< 10]* and [< 20]*

and [< 30]* points. The

(15) Sanitec has argued that the gross list prices are less relevant than
the net net prices. Sanitec has explained that although rebate
structures differ between countries and that, for instance, higher
initial rebates are granted in [(cid:133)]* than in [(cid:133)]*, the net net prices
are approximately the same for identical products in different
countries.

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Official Journal of the European Communities

22.11.2000

the

period

differences

points, with the average being [< 10]* points. For a
[(cid:133)]* shower tray the difference was more pronounced:
during
between
price
Belgium/Luxembourg, Germany, France, the Netherlands
and Austria were [40-100]* points, with an average of
[< 60]* points. As for a [(cid:133)]* WC, where Sanitec has
provided net net prices
for Belgium/Luxembourg,
Germany, the Netherlands and the United Kingdom, the
difference between the highest and the lowest price was
between [< 10]* and [< 30]* points, with an average of
[< 20]* points. The price differences ranged from [< 20]*
to [< 40]* points for a (cid:145)Mycene(cid:146) washbasin in those
countries, with an average of [< 30]* points.

(87) Given that price data have been submitted only for a
few products (Sanitec produces and sells some 8 000
different models), this information should be considered
merely indicative. Sanitec in its submission has used
similar price data as evidence of, for instance, narrowing
price gaps between EEA countries, price correlation
between EEA countries and correlation between prices
and market shares. The Commission considers, however,
that
is not
sufficient for the results to be conclusive. It is neither
possible to establish any reliable trends in the price
movements nor correlations, since price data have been
submitted only for three to six years and only yearly
price data are available.

for any such price analysis

the basis

(88) Sanitec has admitted that

customers

packaging,

guarantees,

and wholesalers,

the price levels at present
differ to some extent between EEA countries. According
to Sanitec, prices differ because the sales mixes,
the
after-sales
structure of
services, delivery times and conditions, warranties,
repurchasing
transportation
costs,
information material and ordering possibilities
differ from one EEA country to another. Given this and
the tendency to source on a national basis, different
national rebate systems and third party indications of
the
different price developments
Commission considers
list
in the net net prices further
prices and,
strengthen the argument of a possibility to discriminate
on price, and point
towards national or, at most
regional markets.

in EEA countries,
in gross

that differences

in particular,

(f) Geographic coverage of brands and product lines

which is marketed in several EEA countries. Sanitec has
explained that such products are identical and do not
vary between EEA countries as far as design, function,
fittings and technical standards are concerned.

(90) The investigation shows, however,

that

the supply
structure of different brands and product lines varies,
from one EEA country to
sometimes considerably,
another. A clear-cut separation can first of all be made
between the brands supplied in the Nordic countries
and those marketed in continental Europe. As a general
observation, the brands supplied in the Nordic countries
are not supplied, to any significant extent, in continental
Europe and vice versa. The brands dominating the
Nordic market are Sanitec’s brands Ido and If(cid:246) and
Sphinx’s brand Gustavsberg. Sanitec’s Porsgrund brand
is sold exclusively in Norway. The sales of those brands
outside the Nordic countries are negligible.

(91) Secondly,

the brands and product

lines marketed in
continental Europe also differ between regions and
frequently from one country to another.
In general
terms, Sanitec supplies the brand Keramag primarily in
Benelux, Germany, Greece, Italy and Austria; the brand
Allia in Benelux and France; and the brand Pozzi
in
Germany and Italy. Sphinx supplies ceramic sanitary
ware in continental Europe under the brand names
Novoboch, Selles, Sphinx and Warneton. The Novoboch
brand is supplied exclusively in Belgium/Luxembourg
and the Selles brand in France. Sphinx markets its
Sphinx brand in Belgium/Luxembourg, Germany,
the
Netherlands, Austria and the United Kingdom.

(92) The Commission investigated the coverage and the
nature of the following of Sanitec’s European product
lines for ceramic sanitary ware: Keramag, Allia, Pozzi,
Revita and Varicor. As far as the sales and the coverage
of bathtubs is concerned, Sanitec has submitted data
regarding the brands Keramag, Revita, Albatros and
Allia. The data submitted cover a total of 54 product
lines (16).

(93) The investigation shows that a large majority of the
product lines supplied by Sanitec are sold under one
brand name. By way of example, Allia is the sole
lines and Pozzi of 18. A
supplier of seven product
number of product lines are also essentially national.
This
is
true
predominantly sold in Italy. Three of Allia’s
seven
product lines are only available in Germany and one in
France.

Pozzi, which

particularly

for

is

(89) Sanictec submits that (cid:145)European production lines(cid:146) are
emerging. Sanitec defines a European product line as a
line of products (cid:151) including ceramic sanitary ware such
as WCs, WC cisterns, washbasins and pedestals (cid:151)

(16) It

is to be noted that Allia branded products are not shown
separately for the Netherlands because they are distributed by
Keramag’s sales organisation in the Netherlands.

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(94) There are six product lines which are all supplied under
(cid:145)Mango(cid:146),
the brand names Keramag, Allia and Pozzi:
(cid:145)Cavelle(cid:146), (cid:145)Courreges(cid:146), (cid:145)Eurotrend(cid:146), (cid:145)Opus(cid:146) and (cid:145)Cleo(cid:146). These
product lines appear to cover most EEA countries in
continental Europe. The investigation has however
shown that the coverage of the individual product lines
marketed
vary
considerably from one country to another, suggesting
both national/regional demand and supply structures.

names may

brand

under

these

(99) Sanitec has explained that although all product lines are
in those countries where they are sold, this
identical
does not mean that every product in a product line is
sold in every country where that product line exists.
Sanitec has explained that
sales organisations
essentially decide on the nature and the coverage of the
product
the
product mix varies between EEA countries and thus
reflects diverging consumer tastes.

line. Sanitec has further submitted that

local

(95)

Indeed, a closer analysis of the specific products shows
that the range of products sold under different brand
names overlaps only marginally. By way of example,
Keramag supplies 73 different products under
the
(cid:145)Mango(cid:146) product line, Allia 25 products and Pozzi 71.
The analysis shows that Keramag and Allia have only
six identical products in their (cid:145)Mango(cid:146) product line and
Keramag and Pozzi have 19 identical products in their
respective lines. Allia and Pozzi, on the other hand, do
not have any identical products in their
respective
(cid:145)Mango(cid:146) product lines.

(96) Another example can be found where a product with an
identical name is supplied under three brand names:
Keramag supplies under the product name (cid:145)Courreges(cid:146)
36 products, Allia 14 and Pozzi 33. The Commission’s
analysis shows that Keramag and Allia supply only six
identical products in their product line, Keramag and
Pozzi 10 products and Allia and Pozzi two identical
products in their respective product lines.

(97) Therefore, based on the foregoing, the fact that products
are offered under the same product line name does not
mean that the products are necessarily identical.

(98) On the other hand, Sanitec offers product lines, where
the products are more or less similar despite different
names. Such product lines include for example (cid:145)Cavelle(cid:146),
(cid:145)Eden(cid:146) and (cid:145)Trylogia(cid:146). By way of example, a 100 cm
washbasin supplied under each of
the three product
lines is identical, although sold under different names in
different countries. However, given that the Commission
has been able to identify only nine such product lines
out of the total of 54 supplied by Sanitec and that these
product lines are very limited in the number of products
they offer (17), the Commission does not consider this to
be an indication of an EEA-wide product coverage.
Therefore, the Commission concludes that the majority
of the product lines vary from one country/region to
another.

(17) (cid:145)Cavelle(cid:146),

(cid:145)Eden(cid:146) and (cid:145)Trylogia(cid:146) product lines comprise some 17
products each, while the (cid:145)Mango(cid:146) product line under the Keramag
brand covers 73 products (excluding bathroom furniture) and the
(cid:145)Renova(cid:146) product line sold under the Pozzi brand name comprises
almost 100 products.

but

uses

cases,

however,

in most

(100) Sanitec submits that the fact that most competitors have
European product lines is a clear sign of an EEA-wide
market. The main competitors to the parties indeed
have brands and product
lines which are sold in a
number of countries. Similarly to the parties’ brands and
product lines, however, many of the competitors’ brands
and product lines vary from one country or region to
another. By way of example, one competitor sells some
of its products under the same brand names throughout
Europe
a
country-specific product name for marketing purposes.
Another competitor markets brands and products under
the same names everywhere, but the product lines are
constructed according to national demand patterns. By
way of example, this competitor offers products in Italy,
which are not sold in any other EEA countries. In the
United Kingdom, where the flushing system based on
the British standard differs from those in other EEA
countries, this competitor does not offer WCs equipped
with this system. Yet another competitor has told the
Commission that although it offers brands and product
lines under the same names in different countries, there
are differences in the product ranges. This competitor
has explained that,
for instance the models for WCs
tend to vary from one country/region to another and
that
the WCs used in the Nordic countries have
traditionally a different distance from the wall compared
with models sold in continental Europe. Therefore, a
is needed to serve this market. These
different model
differences would appear
in
consumer taste, preferences and local traditions between
EEA countries or, at the most, regions.

to reflect differences

(101) Based on the foregoing, the Commission considers that
there is little overlap between the products offered in
different EEA countries or, at most, regions. Therefore,
to be evidence of
the Commission considers
to
according
the
adjusting
national/regional
following
EEA-wide marketing practices.

this
offered
rather

product
demand

than

(g) Technical standards and practices

(102) Sanitec submits that there are no legal barriers to entry
such as government authorisation or standard setting

L 294/14

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Official Journal of the European Communities

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in construction works,

between the EEA countries and that
there are no
non-regulatory barriers. Sanitec argues that bathroom
products are (cid:145)products produced for incorporation in a
permanent manner
including
both buildings and civil engineering works(cid:146) and are
therefore covered by Council Directive 89/106/EEC of
21 December 1988 on the approximation of
laws,
regulations and administrative provisions of the Member
States relating to construction products (18), as amended
by Directive 93/68/EEC (19). Sanitec also submits that
including ceramic sanitary
most bathroom products
products are presently covered by EN standards, such as
EN 33 (pedestal WC pans with close-coupled flushing
cistern), EN 38 (wall hung WC pans with independent
water
supply) or EN 37 (pedestal WC pans with
independent water supply) or preliminary EN standards.

(103) The Commission’s market investigation has, however,
regulations,
and practices which vary between EEA

there are a number of

indicated that
standards
countries.

(104) First,

there are some sanitary appliances (WC pans,
urinals, whirlpools and flushing cisterns for toilets) for
which different national binding regulations exist in EEA
countries. There are also some EEA countries where
there are legally binding rules for construction and
housing products including sanitary ware (such as the
In the United Kingdom
Netherlands and Denmark).
there is a national law on flushing systems for toilets.

(105) Second, while the Commission recognises that European
standards (EN standards) are indeed in place for certain
bathroom appliances, they are still relatively limited in
number (20) and some of them are only applicable or
the EN
applied in certain EEA countries. Moreover,
standards only contain requirements on connecting
dimensions and therefore they are usually combined
standards containing requirements on
with national
dimensions,
It should be
function and performance.
noted that the EN standards are voluntary but producers
who wish to use the EN mark on their products must
conform with the standard’s requirements.

a

are

(106) Third, the Commission’s investigation has shown that
national
considerable
there
to
sanitary
specifications
dimensions,
they
differ between the EEA countries. In France, there are
flushing system of
specific requirements for the dual

of
relating
function and performance and that

number
products

for

(18) The construction products Directive, OJ L 40, 11.2.1989, p. 12.
(19) OJ L 220, 30.8.1993, p. 1.
(20) According to information obtained in the

the
Commission’s investigation, there are currently 29 EN standards in
place. However, 16 thereof are amendments and thus there are
only 13 autonomous EN standards in place.

course of

for

toilets,
load resistance for urinals and thermal
resistance of the products. In the United Kingdom, there
is a siphonic flushing for toilets and floaters for low
pressure have to be applied. In the Nordic countries, the
distance between the outlet pipe and the wall differs
from other EEA countries. In the Netherlands, there is a
special test for water exchange of toilets, and so on.

(107) Although

are

national

voluntary

and
standards
producers are not obliged to comply with them in order
to sell their products in the EEA country concerned, the
investigation has shown that the customers (wholesalers,
installers and plumbers) as a rule ask their producers to
comply with national standards, mostly by having their
products tested and certified by institutions which are
recognised by national law. There seem to be a number
of reasons for this. For example,
in buying products
which are in compliance with the national standards,
customers in general feel they can rely on getting only
products which fulfil the essential requirements for their
intended use. This consideration is an important factor
also for plumbers who grant warranties
to their
end-consumers, which are usually of 10 years duration.
Also, plumbers and installers have an interest
in
purchasing products which can be installed applying
national plumbing practices and for which fittings can
be obtained without difficulty.

are

there

(108) On the basis of the above, the Commission considers
regulatory differences
that
indeed some
between EEA countries and that, although national
standards are in principle voluntary, customers and thus
also competitors have strong commercial incentives to
comply with these standards.

(h)

(cid:145)Europeanisation(cid:146)

(109) Sanitec argues that while old product lines may have
been used in a limited number of countries, the trend is
to introduce European product
lines with a reduced
number of series and identical products in order to cut
costs and to achieve economies of scale. In this context,
Sanitec has explained that Sphinx is striving to reduce
the number of different models [(cid:133)]*.

(110) Sanitec argues further that the development of Sanitec’s
product coverage between 1996 and 1998 would
the argument of a European trend in the
support
market. Sanitec introduced such European product lines
as (cid:145)Cavelle(cid:146),
in 1997 and 1998.
Moreover, Sanitec has only recently started to develop
its Keramag brand’s position in Greece, Spain and the
United Kingdom.

(cid:145)Trylogia(cid:146) and (cid:145)Eden(cid:146)

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Official Journal of the European Communities

L 294/15

to a pan-European market. However,

(111) The Commission recognises that there may be some
tendencies in the industry to streamline products to be
suitable
the
investigation shows
that, at present, products and
product ranges are largely adjusted to national/regional
demand. The fact that Sanitec alone markets more than
50 product lines and 8 000 models under its brands
across Europe is a clear indication of this. Furthermore,
marketing of bathroom products is to a large extent
carried out on a national basis with local
sales
organisations adapting sales catalogues and brochures to
use the local language. Finally, the fact that prices are
set on a national basis and that all market players have
national
prevailing
national/regional nature of the business. The fact that, in
the bathroom product market may
the long term,
become European cannot be taken into account in the
assessment of the present case.

emphasise

offices

sales

the

(i) Barriers to entry

are

essentially national,

(112) The investigation has shown that barriers to entry in the
European bathroom product market are high. The
markets
characterised by
traditional preference for local, well-established brands.
Market entry essentially takes place via acquisition of
local brands which are then preserved. By way of
example,
Ideal Standard recently acquired the Blue
Circle Bathroom Division and is using established
brands,
the
products in the United Kingdom. Sanitec itself has
reached
by
acquisitions. Indeed, in its annual report Sanitec explains
that its enlargement strategy has been to buy companies
with a strong market position. Most of Sanitec’s
subsidiaries are market leaders in their respective home
markets with well-established and well-known brands
and long traditions.

such as Armitage Shanks,

leading position mainly

its present

to market

(113) At present,

there is considerable restructuring in the
European bathroom product market and the market
therefore be
appears to be in transition.
excluded that, as a consequence, direct entry could be
easier in the future. However, in the light of the present
investigation, the Commission considers that the role of
local, traditional brands is still significant.

It cannot

(j) Conclusions

(115) On the basis of the foregoing, the Commission does not
for ceramic
consider the relevant geographic market
sanitary ware, bathtubs
to be
EEA-wide, but national (21) or at best covering a few
countries, as will be shown separately below for the
Nordic countries and continental Europe.

and shower

trays

2. The Nordic area

that

nevertheless

(116) Sanitec has submitted that imports into Scandinavia are
approximately at
into Italy and
the same level as
Portugal, that is, some [< 10 %]* of total consumption.
into
argues
Sanitec
Scandinavia have increased more than [< 400 %]* over
the past
that
imports into Scandinavia from outside the EEA (e.g.
from Poland and Thailand) are rising due to the very
the products. Sanitec has also
competitive prices of
submitted that there are large exports from Scandinavia,
amounting to some [< 40 %]* of the total production in
that area.

three years. Sanitec submits

imports

further

(117) On the basis of

is not

these total

the import

less than 1 % of

reliable and that

submitted by Sanitec,

statistics provided by
Sanitec, the Commission has estimated that the flow of
imports into Scandinavia in terms of value was some
13 % in 1998. However, based on the internal import
the Commission has
figures
estimated that
imports
originated from third parties, the bulk of imports being
intra-group transactions of Sanitec and Sphinx. Sanitec
the statistical data concerning third
has argued that
party imports
third party
imports are underestimated. Statistical difficulties arise
especially from FECS (22) statistics. According to these
statistics, imports in 1996 represented less than 8 % of
total consumption in Scandinavia. However, according
to the same statistics, in 1997 imports dropped to only
half of that figure, which is contrary to what Sanitec has
argued. Sanitec has subsequently explained that FECS
statistics are not reliable due to a lack of reporting. In
any event, the FECS statistics do not distinguish between
imports originating from third parties and intra-group
trade flows which form the major part of the imports
the
going

the Nordic

Therefore,

countries.

to

investigation suggests

(114) Furthermore, the information obtained in the course of
that high
the Commission’s
capacity utilisation is generally necessary for
the
production of bathroom products to be profitable and
thus it must be assumed that a new market entrant
would be required to sell a considerable volume of
output.

(21) The national

scope of certain bathroom products has been
confirmed in a number of decisions from the national competition
authorities. Reference is in particular made to a Decision of April
1999 from the Italian competition authority (Decision No 7080
(C3409) Ideal Standard/Ceramica Dolomite) and a Decision from
the Spanish competition authority (Decision R.104/94 (cid:151) Roca
Radiadores SA) which was upheld in a Spanish court.

(22) Federation europØenne des fabricants de cØramiques sanitaires.

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Official Journal of the European Communities

22.11.2000

concludes

Commission
than
that
intra-group imports mainly by Sanitec and Sphinx into
the Nordic countries are negligible.

imports

other

(118) The Commission’s own investigations confirm that
imports into the Nordic countries are modest. In their
replies to the Commission enquiries, customers have
confirmed that they source bathroom products either on
a national basis or they import ceramic sanitary ware
from other Nordic countries, mainly from Sweden and
Finland.

(119) Sanitec argues that the total exports of ceramic sanitary
ware from Scandinavia totalled some [< 40 %]* in 1997.
By way of example, Sweden exported [< 80 %]* of its
total production to other Nordic countries and Finland
almost [< 70 %]*. The majority of the remaining exports
were intra-group exports mainly to continental Europe.
Finland also exported some ceramic sanitary ware to
to the
Russia
Commission’s estimates these exports were less than 1 %
of
the total exports made from Nordic countries in
1997.

States. According

and the Baltic

(120)

that

In addition to very low imports originating from
continental Europe, a striking feature pointing strongly
towards the separation of the Nordic countries from the
rest of Europe is the fact
the supply structure
differs from that in continental Europe. As explained
above, the brands supplied in the Nordic countries are
not supplied, to any significant extent,
in continental
Europe and vice versa. Other producers, such as Villeroy
& Boch and Ideal Standard, are only very marginally
present in the Nordic countries. Moreover, the products
supplied under
from those
supplied in continental Europe.

these brands also differ

(125)

(121) A further characteristic pointing towards the separation
of the Nordic countries from continental Europe is the
the 21 major European
distribution structure. Of
distributors
and DIY stores) of
bathroom products mentioned by Sanitec only three are
present
the major
distributors present in continental Europe is active in
the Nordic countries.

in the Nordic countries. None of

(i.e. wholesalers

continental Europe supports the inclusion of Denmark
than in continental
in the Nordic countries
Europe.

rather

separately

(123) As for bathtubs and shower trays, no import figures are
available
two product groups.
for
the
However, given that the overall imports into the Nordic
countries are very minor as shown above,
it can be
imports of bathtubs and shower trays
deduced that
other than intra-group, even if considered separately,
would not warrant
relevant
geographic market wider than the Nordic countries.

the definition of

a

(124) As already noted,

The

that

Commission

there are some considerable trade
flows between the Nordic countries, which would
the demand is more or less
appear to suggest
homogeneous and transport costs do not discourage
trade flows within this area. However, the Commission
has found in its investigation that
there are some
considerable price differences between the Nordic
price
countries.
information provided by Sanitec on some individual
products which were sold in different Nordic countries
in 1998. A comparison of the net net prices shows that
the prices between Denmark, Finland, Iceland, Norway
the differences being
and Sweden vary considerably,
often in the region of [15 to 45 %]*. It is not, however,
necessary to define the exact scope of the geographic
market because
in all
alternative definitions considered, the assessment of the
case would not be materially affected.

shown below,

as will be

analysed

has

Conclusion on the Nordic area

a

area

separate

constitutes

In view of the foregoing, the Commission considers that
the Nordic
relevant
geographic market from continental Europe. It is not
necessary, however, to reach a conclusion as to whether
the Nordic area constitutes one relevant geographic
market or whether each country therein should be
regarded as a separate geographic market because,
in
either market definition, the notified operation would
lead to the creation or strengthening of a dominant
position and the assessment of this case consequently
would not be materially affected.

(122) Denmark differs to some extent from the rest of the
Nordic countries in that Villeroy & Boch has somewhat
more sales in ceramic sanitary ware in Denmark than in
the other Nordic countries. However, the Commission’s
investigation shows that these sales are very small and
that both the demand and the overall supply structure
in Denmark are similar to those in the other Nordic
countries. Furthermore,
the
wholesalers active in Denmark also operate in Sweden
in
and/or Finland (Ahlsell, Onninen, Dahl) but not

some of

the fact

that

3. Continental Europe

(126) As already discussed,

the Commission investigations
show that the geographic markets are national or, at

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Official Journal of the European Communities

L 294/17

in scope.

the Merger Regulation,

most, regional
In its Decision of 3 August
1999 to initiate proceedings in accordance with Article
6(1)(c) of
the Commission
identified potential competition problems in Belgium/
Luxembourg and in the Netherlands. However,
the
Commission’s subsequent analysis has shown that, for
later (see recitals 146 to 173), no
reasons set out
competition concerns will arise as a result of
the
operation in this area.

only a fraction of these products are sold in France.
With regard to the product lines sold under the Allia
product lines, with some few exceptions, it appears that
most products are sold in Belgium/Luxembourg, France
and the Netherlands, but not in Germany.

(127)

In the course of proceedings, Sanitec has argued that
Belgium/Luxembourg and the Netherlands are among
the most open markets in the EEA and that there are
large imports of products produced outside those
countries. Sanitec has contended, at a later stage of the
proceedings, that at least Benelux, France and Germany
belong to the same relevant geographic market. The
Commission notes that Sphinx’s production facilities in
the Netherlands and Belgium/Luxembourg are indeed
the only manufacturing plants in this area. Neither
Sanitec nor any of
the competitors produce ceramic
sanitary ware in the Benelux area. Consequently, there
are trade flows in particular from Germany and France.
However,
for the reasons set out below, France and
Germany are not considered to belong to the same
relevant product market as Belgium/Luxembourg and
the Netherlands.

(128) Based on the product information submitted by Sanitec,
it can be seen that there are some similarities between
the products sold in France and in Belgium/Luxembourg
on one hand and between Belgium/Luxembourg,
Netherlands and Germany on the other hand. Due to
lack of data concerning sales to the Netherlands under
the Allia brand (23),
to draw
conclusions on the extent of the products sold in the
Netherlands under this brand nor make comparisons
between the Netherlands, Belgium/Luxembourg and
Sanitec has, however,
Germany
submitted
in
products
Belgium/Luxembourg are also sold in the Netherlands.

is not possible

in this
that

respect.
most

sold

it

(129) By way of example, the majority of identical products
lines (cid:145)Cavelle(cid:146)/(cid:145)Eden(cid:146)/
supplied under Sanitec’s product
(cid:145)Trylogia(cid:146),
(cid:145)Opus(cid:146)/(cid:145)Palaos(cid:146) and (cid:145)Felino(cid:146) are
(cid:145)Eurotrend(cid:146),
supplied in Belgium/Luxembourg, the Netherlands and
Germany. As for the rest of the product lines under the
(cid:145)Mango(cid:146) and
Keramag brand, such as (cid:145)Cleo(cid:146)/(cid:145)Arpege(cid:146),
(cid:145)Courreges(cid:146), some [(cid:133)]* of the products sold in Germany
are
Belgium/
Luxembourg and the Netherlands. At the same time,

identical

those

sold

also

to

in

(23) Allia branded products

are not

the
shown separately for
Netherlands because they are distributed by Keramag’s
sales
organisation in the Netherlands. In other words, any sales made by
Allia to the Netherlands would be registered under sales made by
Keramag there.

(130) On the basis of the foregoing it would appear that the
product coverage in Belgium/Luxembourg, Germany,
France and the Netherlands is not identical. Moreover, a
comparison of list prices shows that prices can vary up
to almost
in
Benelux, Germany and France. A further comparison of
the net net prices in Belgium/Luxembourg, Germany
significant
and
differences between prices exist, often exceeding [5 to
25]* percentage points.

some identical products

the Netherlands (24)

[< 50 %]* for

shows

that

the

conditions of

(131) The fact that the market position of the players differs
significantly in France and Germany as compared with
Belgium/Luxembourg and the Netherlands is a further
indication that
competition are
different. As already discussed, the market shares of the
players vary significantly in neighbouring countries or
regions. While Spinx has traditionally been the strongest
player in the Netherlands and in Belgium/Luxembourg,
it has only a minor presence in Germany and France.
Similarly, Villeroy & Boch accounts for about [< 30 %]*
of the German market, but has a weaker position in
France and, in particular, in the Benelux area. Therefore,
the Commission considers this to be a strong indication
pointing towards different conditions of competition in
these markets.

(132) More similarities can, however, be found between
Belgium/Luxembourg and the Netherlands. With regard
to the product coverage, Sanitec has submitted that
some [< 100 %]* of the parties’ individual models sold in
the Netherlands are also sold in Belgium/Luxembourg
and vice versa. The analysis of Sanitec’s product
coverage above indeed shows that most products sold in
Belgium/Luxembourg are also sold in the Netherlands.
There are some differences in the range of products
available in the two countries, but
the number of
specific models sold only in one country is very small.
large
The same brands are used in Benelux by all
manufacturers of ceramic sanitary ware,
too. Some
Dutch customers have explained that, should the prices
in the Netherlands rise,
they could source (cid:151) and
actually have done so in the past (cid:151) a large part of the
products in Sanitec’s product lines they normally source
in the Netherlands
also in Belgium/Luxembourg.
in the
Therefore,
products supplied in those countries, these differences
are not considered to be significant.

although some differences

exist

(24) Sanitec has not been able to submit net net prices for France.

L 294/18

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Official Journal of the European Communities

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(133) A comparison

of

net

net

the

prices

significant. Price differences

between
Belgium/Luxembourg and the Netherlands shows that
there are some differences in the prices of
identical
products in the two countries. These differences are not,
however,
tend to be
generally below [< 10]* percentage points, exceeding
this figure only for some specific products. Sanitec has
explained that although the list prices and rebate
systems
the
Netherlands, the net net prices paid by wholesalers are
more or less the same in the two EEA countries. Some
customers have explained that the price differences in
the two countries used to be significant some 10 years
ago. However, according to these wholesalers prices
have been more or less the same over the past five
years.

Belgium/Luxembourg

differ

and

in

the

(134) According to Sanitec, the distribution structure is almost
identical
in Belgium/Luxembourg and the Netherlands.
By way of example, in all those countries, some [80 to
95 %]* of ceramic sanitary ware is distributed directly
from the manufacturers to wholesalers. Moreover, a
factor pointing towards a wider geographic market is
the fact that a number of large wholesalers are present
in
Netherlands
in
both
Belgium/Luxembourg.
of wholesalers/DIY
Examples
stores with presence in both countries are Plieger,
Technische Unie, Raab Karcher,
and
Intergamma. It is also noted that [(cid:133)]* wholesalers in
the Benelux, [(cid:133)]* both have central purchasing offices
in the Netherlands. The parties’
both in
Belgium/Luxembourg and the Netherlands go via their
central purchasing offices and the rebates granted are
accounted for on their total purchases through these
central purchasing offices.

Bricorama

sales

also

and

(135) Finally, as already indicated,

the market structure in
Belgium/Luxembourg and the Netherlands
is more
homogeneous as compared with that in Germany and
in France. Sphinx has traditionally been the strongest
player in the Netherlands and, until very recently, the
clear market leader also in Belgium/Luxembourg. With
regard to the other players, however, the Commission
notes that the position varies to some extent. Apart
from Villeroy & Boch, whose market position is more
or less the same in the three countries,
the market
shares of the other players vary. Most importantly, Ideal
Standard accounts for some [< 30 %]* of the ceramic
Belgium/
market
sanitary
Luxembourg but only some [< 5 %]* of
in the
Netherlands. Both Duravit/Laufen’s and Kohler’s market
shares in the Netherlands are only some [< 60 %]* of
those in Belgium/Luxembourg. Therefore, while the
in
position
Belgium/Luxembourg and the Netherlands, the fact that
all other players are stronger in Belgium/Luxembourg
with higher market shares would appear to suggest that
the conditions of competition vary, at least to some
extent, in the three countries.

Sphinx

strong

ware

been

both

that

has

of

in

Conclusion on continental Europe

(136) On the basis of

the

foregoing,

the Commission
considers that there are several factors pointing towards
including the
the existence of a geographic market
whole of the Benelux area, but not Germany or France.
On the other hand, the existence of national price lists,
the differences in the net net prices and the diverging
market positions of the competitors would in particular
seem to suggest that the market conditions vary, which
would point to the existence of purely national markets.

(137) The exact definition of the relevant geographic market
can, however, be left open because,
following the
Commission’s investigation and based on third party
comments, and as will be shown below, even if
assessing the operation on a national
the
or
lead
not
operation would
strengthening of a dominant position in this part of the
EEA or in any substantial part thereof. For the same
reasons,
this geographic market
should also include Germany and/or France can be left
open because the assessment of the case would not be
materially affected in this respect.

the issue whether

level,
creation

the

to

VI. COMPATIBILITY WITH THE COMMON MARKET
AND WITH THE FUNCTIONING OF THE EEA
AGREEMENT

A. OVERVIEW

1. Preliminary remarks

(138) The operation will combine the activities of the second
and fifth largest European producers of bathroom
products. Although both producers offer a large range
of bathroom products, ceramic sanitary ware constitutes
the most important business of each producer. Sanitec
has traditionally held a very strong position in the
Nordic area whereas Sphinx has been the market leader
in Benelux. Sphinx entered the Nordic area in 1994 by
its acquisition of the Swedish company Gustavsberg AB
whereby Sphinx became the second largest competitor
in that area.

(139) As explained above,

the narrowest possible markets
where competition takes place are at
the level of
individual products and at a national level. Based on the
information provided by Sanitec, the operation would
result in overlaps in most of the individual products in
all EEA countries. However, the overlaps whereby the
parties would reach combined market shares of 15 %
and above would be confined to WCs, WC cisterns,
washbasins, bathtubs, shower trays and shower screens
the following EEA countries:
in one or more of
France,
Belgium/Luxembourg,
Denmark,
Germany,
and
Sweden.

the Netherlands, Norway

Finland,

Iceland,

22.11.2000

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Official Journal of the European Communities

L 294/19

individual EEA countries. However,

(140) The following analysis will be carried out primarily at
the
the level of
analysis will also include the alternative broader product
market definition (i.e. ceramic sanitary ware) and the
wider alternative geographic market definition (i.e.
the
Nordic
competitive assessment would not materially change in
either alternative.

to demonstrate

in order

area)

that

and

recent

In recent

restructuring
years,
concentration.
bathroom product manufacturers have mainly increased
their market positions by acquisitions of existing brands
rather than new entries and/or innovations. The most
significant
the
transactions
the European bathroom product
consolidation of
market have been Sanitec’s acquisition of Allia/Keramag,
Sphinx’s acquisition of Gustavsberg,
Ideal Standard’s
acquisition of Blue Circle, Laufen’s acquisition of Duravit
and
of
Duravit/Laufen.

announced

acquisition

recently

leading

Roca’s

to

2. European bathroom product market

(145)

(141) The overall demand in the market

for bathroom
products has been rather static and in some cases
decreasing. The industry follows closely the trends in
the housing, construction and refurbishment markets.
Thus,
the stagnation in the construction industry in
many west European countries in the early 1990s had a
negative impact on the overall market for bathroom
products. In 1996 and 1997, most European countries
started to see an improvement
in total construction
output growth and this upward trend has continued.
Although the development has differed between EEA
countries, the overall trend has been one of decline in
the core products (i.e. ceramic sanitary ware, bathtubs,
taps and mixers) in value terms, whereas the volumes of
these products have generally recovered by one or two
percentage points since 1996. According to forecasts
made by GB Consult, modest volume growth both in
the EEA as a whole and on national level is expected
during the next five years.

(142) The bathroom product market, and the ceramic sanitary
market in particular, show the signs of a mature market.
There is little product innovation and differentiation and
the products normally have long life cycles. No material
fluctuations have occurred in the market shares of the
main European manufacturers during the last
three
years and, moreover, there have not been major market
entries in recent years.

(143) Sanitec has estimated that

the value of

the total
European bathroom market in 1998 was EUR [8 000 to
10 000]* million. Ceramic sanitary ware constituted
around [< 30 %]*, bathtubs and shower trays around
[< 10 %]* each and shower screens/enclosures/cubicles
around [< 20 %]*.

they offer more or

Ideal Standard, Sanitec, Duravit/Laufen, Roca, Sphinx
and Villeroy & Boch are the major players in the
European bathroom product market and, in particular,
in the ceramic sanitary ware market. Generally,
the
largest European suppliers have their strongest presence
in their domestic markets although they are often
present in several EEA countries. By way of illustration,
Laufen is strongest in Switzerland, Roca is strongest in
Spain, Sanitec in the Nordic countries and Sphinx in the
Netherlands. Another characteristic of these suppliers is
less
the whole range of
that
bathroom products.
there are also some
In contrast,
suppliers of a considerable size who specialise in
particular products, for example, the German company
Friedrich Grohe which is only active in taps and mixers.
Moreover, there are many smaller suppliers which either
limit their business activities to a national, or at the
most a regional market, and/or specialise in certain
bathroom products. By way of example, the Swedish
fairly broad range of
a
company Svedbergs has
bathroom products but
is only active in the Nordic
countries whereas the Spanish Metaliberica specialises in
certain bathtubs,
and hydrotherapy
shower
products and is active in several EEA countries.

trays

B. CONTINENTAL EUROPE

1. Belgium/Luxembourg

(a) Actual competition

3. Overall European supply structure

(144) The

European

characterised

by

bathroom products
a high and

growing

industry
level

(146) Ceramic sanitary ware constitutes around [< 20 %]* of
the total bathroom market in Belgium/Luxembourg. In
1998, the volume of the ceramic sanitary market was
estimated by Sanitec at approximately [800 000 to
900 000]* pieces and the value at approximately EUR
[20 to 30]* million.

is
of

(147) The market

shares of

the parties and their main

competitors are given in Table 1.

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Official Journal of the European Communities

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Market shares of producers of ceramic sanitary ware in Belgium/Luxembourg

Table 1 (25)

Ceramic sanitary ware

Washbasins

WCs

Sanitec

Sphinx

Volume

Value

Volume

Value

Volume

Value

[< 20 %] *

[< 20 %] *

[< 15 %] *

[< 15 %] *

[< 30 %] *

[< 20 %] *

[< 30 %] *

[< 30 %] *

[< 15 %] *

[< 15 %] *

[< 40 %] *

[< 30 %] *

Total

[< 40 %] *

[< 50 %] *

[< 30 %] *

[< 30 %] *

[< 60 %] *

[< 50 %] *

Ideal Standard

Duravit/Laufen

Roca

Villeroy & Boch

Kohler/J. Delafon

[< 30 %] *

[< 20 %] *

[< 10 %] *

[< 10 %] *

[< 5 %] *

[< 30 %] *

[< 20 %] *

[< 10 %] *

[< 10 %] *

[< 5 %] *

[< 30 %] *

[< 20 %] *

[< 10 %] *

[< 10 %] *

[< 5 %] *

(148) As can be seen from Table 1, the parties would become
the market leader both in the overall ceramic sanitary
ware market as well as
in washbasins and WCs
individually. However, all major producers of ceramic
sanitary ware offering equivalent products are active in
Belgium/Luxembourg unlike the Nordic countries where
the presence of other competitors is marginal.

1998 from some [< 50 %]* to some [< 30 %]* in the
overall market of ceramic sanitary ware (in value terms).
Hence, Sphinx has lost more than [< 30]* percentage
points of market share in only three years. While
Sanitec has managed to pick up some of Sphinx’s
the majority has been taken over by
market share,
Duravit/Laufen. This
indeed
shifting.

that demand is

shows

(149) The parties would face strong competition in particular
from Ideal Standard, which would account
for some
[< 30 %]* of the markets following the operation. The
parties would have a leading position in WCs and in
ceramic sanitary ware as a whole but, with regard to
washbasins, the market position of the parties and Ideal
Standard would be very similar. There exist also other
on
strong
as
Duravit/Laufen, Roca
and Villeroy & Boch, with
well-known and strong brands, long-term presence and
experience on the market. It should also be noted that,
if
and
Duravit/Laufen proceeds, these two players would have
Ideal
a combined market
Standard.

announced merger

the market,

share similar

competitors

to that of

between

Roca

such

the

(150) A recent example of competitors picking up the market
leader’s market position clearly shows that competitive
Belgium/Luxembourg.
market
Sphinx, which has
in
been strong
share rapidly
Belgium/Luxembourg, has
in 1996 to
there.

In fact, Sphinx’s market share fell

in
traditionally

lost market

conditions

exist

(25) In the following, account will be taken only of 1998 figures.
However, on the basis of the information in the notification, the
market shares have in general been relatively stable over the past
three years.

least

(151) The investigation has also shown that most customers
two or
in Belgium/Luxembourg source from at
three producers,
the number of suppliers of ceramic
sanitary ware being often even higher. This means that,
unlike in the Nordic countries, the customers are usually
familiar with more than one producer. For the suppliers
this means
they have the necessary customer
contacts and do not need to build their customer base
from scratch, as in the case of new entry. Therefore,
should the parties raise prices, customers could switch a
large part of ceramic sanitary ware currently sourced
from the parties to other suppliers.

that

the

effects of

(152) None of the customers contacted by the Commission in
the course of its investigation have expressed concerns
over
the proposed operation in
Belgium/Luxembourg. Instead, they have confirmed that
competitive alternatives exist on the market and that
they would indeed switch suppliers if faced with a price
increase of the order of 5 % to 10 %. Given that the
average duration of a supply contract is normally one
year at the maximum, customers are not tied to an
existing supplier for an unreasonable period of time and
switching is
there are
indications that the commercial relationships between
customers and suppliers have not traditionally been as
long term as in the Nordic countries.

therefore feasible. Moreover,

22.11.2000

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Official Journal of the European Communities

L 294/21

(b) Supply-side substitutability

(153) The Commission’s investigation shows that

from the

there is
supply-side substitutability in ceramic sanitary ware.
Any attempt from the combined entity to raise prices
could be met with a relatively rapid supply-side
response
competitors. The Commission’s
investigation shows that, as long as the producer has a
cast for a particular model, switching the production to
this particular model can take place relatively rapidly.
Switching would take at most three months, which is
the overall life cycle of a cast in the production cycle,
but could easily take place more quickly, too, by simply
replacing an existing cast with another one. No
significant retooling or additional equipment would be
needed and there would be no major costs involved in
such a switch either. As already indicated above, all
competitors have product lines and models which they
already
Switching
production would thus not require any development
of
the
or models.
Commission’s investigation has shown that overcapacity
exists on the market and therefore possible constraints
in this respect would not limit the supply-side response.

Belgium/Luxembourg.

new products

Furthermore,

sell

in

(154) On the basis of

the

the Commission
considers
is
substitutability
sufficient to constrain the behaviour of the combined
entity.

supply-side

foregoing,

that

the

(c) Market entry

national

(155) As already shown, the investigation has confirmed that
market entry normally takes place via acquisitions of
to
brands. With
existing,
Belgium/Luxembourg, however, direct
entry is not
entirely ruled out. As evidence of this, it is to be noted
that, within a few years, Sanitec has been able to build a
market presence of some [< 10 %]* from scratch in
Belgium/Luxembourg. This
the assumption
that the Belgium/Luxembourg market may not be as
foreclosed as the Nordic market.

supports

regard

(156) Sphinx is the only producer with a production facility
in Belgium/Luxembourg. The other players have sales
offices and source their sales from their factories mainly
in Germany. Although it can be argued that, from the
point of view of logistics and transport costs, it may be
an advantage to have local production, the fact that, for
instance,
Ideal Standard currently accounts for more
than [< 30 %]* of the market in Belgium/Luxembourg

the Commission’s

supports
finding that producers
supply from certain production outlets mainly the
country of production but
also the neighbouring
countries. Therefore,
it would appear that a market
operator can be successful in the Belgium/Luxembourg
market even without local production.

(157) Finally, given the current trend towards concentration in
the European bathroom product market, it is reasonable
to assume that
further consolidation will create new
players who are able to challenge the parties’ combined
position in Belgium/Luxembourg. Most
importantly,
Laufen and Roca, who have only recently announced
their merger, are likely to improve their position in a
number of countries, including Belgium/Luxembourg.

(d) Conclusion on Belgium/Luxembourg

(158) On the basis of the foregoing, the Commission does not
consider that the parties would be able to maintain their
market position if, following the operation, they were to
increase prices. Therefore,
the Commission does not
consider that the notified operation would lead to the
creation or strengthening of a dominant position in
Belgium/Luxembourg as a result of which effective
competition would be significantly impeded in the
common market or in a substantial part of it.

2. The Netherlands

(a) Actual competition

the ceramic sanitary market

(159) Ceramic sanitary ware constitutes around [< 30 %]* of
the total bathroom market in the Netherlands. In 1998,
the volume of
in the
Netherlands was estimated by Sanitec at approximately
[1 800 000 to 2 000 000]* pieces
and the value
approximately EUR [70 to 80]* million. Based on the
figures provided by Sanitec,
the market has grown
significantly over the period 1996 to 1998, [< 20 %]* in
terms of value, but it is expected to stagnate in the near
future.

(160) The market

shares of
competitors are presented in Table 2.

the parties and their main

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Market shares of producers of ceramic sanitary ware in the Netherlands

Table 2

Ceramic sanitary ware

Washbasins

WCs

Volume

Value

Volume

Value

Volume

Value

Sanitec (26)

[< 5 %] *

[< 10 %] *

[< 5 %]

[< 10 %] *

[< 5 %] *

[< 10 %] *

Sphinx

[< 50 %] *

[< 60 %] *

[< 50 %] *

[< 50 %] *

[< 60 %] *

[< 70 %] *

Total

[< 50 %] *

[< 60 %] *

[< 50 %] *

[< 50 %] *

[< 60 %] *

[< 70 %] *

Villeroy & Boch

Duravit/Laufen

Kohler (J. Delafon)

Ideal Standard

Vitra (Eczacibasi)

[< 10 %] *

[< 10 %] *

[< 5 %] *

[< 5 %] *

[< 5 %] *

[< 10 %] *

[< 10 %] *

[< 5 %] *

[< 5 %] *

[< 5 %] *

[< 10 %] *

[< 10 %] *

[< 5 %] *

[< 5 %] *

[< 5 %] *

(161) As can be seen from Table 2, the parties would become
the market leader both in the overall ceramic sanitary
ware market as well as
in washbasins and WCs
individually. The parties’ combined market position in
these markets would be somewhat stronger than in
Belgium/Luxembourg. The parties would have market
shares in the region of [< 60 %]*, exceeding [< 70 %]*
only for WCs in value terms.

(162)

some customers,

should be noted that

It
such as
Technische Unie and Plieger, have central purchasing
offices for Benelux in the Netherlands. Therefore, given
that part of the sales attributed to the Netherlands are
actually sold in Belgium/Luxembourg, Sanitec has
estimated that up to [< 5 %]* of the parties’ market share
should be deducted from their market shares in the
Netherlands. Consequently,
combined
market shares in the Netherlands should be lower than
indicated in Table 2.

parties’

the

(163)

It should also be noted that the increment of market
share resulting from the operation is relatively low, only
some [< 10 %]*.

set out below, the Commission does not consider that
the notified operation would lead to the creation or
strengthening
the
Netherlands.

dominant

position

of

in

a

(165) First, although the parties’ combined position would
appear to be relatively strong in the Netherlands, it is to
be noted that Sphinx’s market
shares have been
declining in recent years. The Dutch market has
traditionally been Sphinx’s home market where Sphinx
has been the market
its
market share has decreased by some [< 20]* percentage
points over the period 1996 to 1998, from [< 70 %]* to
some [< 60 %]* for ceramic sanitary ware. The lost
market share has been picked up mainly by Sanitec and
[(cid:133)]*.

leader for many years but

(166) Sphinx has lost considerable market share during this
period, which has been a period of strong growth in the
Dutch market. At present, there is overcapacity on the
market, with indications of falling price levels. On the
basis of the investigation, the total market is expected to
stagnate in the near future. It can therefore be assumed
that the market conditions will not favour the present
positions of Sphinx.

(164) Market shares are only one indication reflecting market
power of
the Commission
the players. Therefore,
considers that market shares alone do not necessarily
indicate
other
considerations to be taken into account. For the reasons

dominance

there

that

but

are

(167)

(26) [(cid:133)]*.

in

the

addition,

line with

the Commission’s

in
situation
In
Belgium/Luxembourg,
investigation
has shown that customers in the Netherlands tend to
apply multiple sourcing strategies. There are indications
that customers
three
ceramic sanitary ware suppliers and, moreover, that the

source from at

two or

least

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Official Journal of the European Communities

L 294/23

from Sphinx

customers who source
also source
considerable amounts of bathroom products from other
alternative suppliers at the same time. Indeed, there are
several competitors on the Dutch market, [(cid:133)]* Villeroy
& Boch,
and Ideal
[(cid:133)]* Duravit/Laufen, Kohler
Standard. All four competitors are resourceful suppliers
with well-known and well-established brands as well as
long-term presence and experience on the market.
Therefore, should the parties raise prices, customers
could switch a large part of ceramic sanitary ware
currently sourced from the parties to other suppliers.

(b) Supply-side substitutability

suppliers. None of
concerns about the transaction.

them have raised any serious

(c) Market entry

(171) As already discussed, Sphinx has traditionally enjoyed a
strong position in its home market but this position has
been somewhat eroded during recent years. As
in
Belgium/Luxembourg, Sanitec has managed to penetrate
the Dutch market within a few years and take some
[< 10 %]* of the market. Another player, the Turkish
manufacturer Eczacibasi, has also been able to penetrate
the Dutch market.

the

customers

(168) The Commission notes first of all that Sphinx’s position
is historically very strong and, on the basis of its market
share, Sphinx appears to be the preferred choice of
many of
in the Netherlands. The
existence of a relatively high level of brand loyalty can
make it difficult to persuade customers to switch to
other products and, therefore, for new suppliers to enter
the market. The Commission considers, however, that
the traditional preference for Sphinx’s products does not
necessarily mean that the parties’ market position would
be maintained, should the parties raise prices following
the operation.

sufficient

in ceramic

sanitary ware

the supply-side substitutability is

(169) The Commission considers that, for the same reasons
that apply for Belgium/Luxembourg, there is supply-side
substitutability
in the
the Commission considers
Netherlands. Furthermore,
to
that
constrain the market power of the merged entity in the
Netherlands. In this respect, the Commission notes that,
as in Belgium/Luxembourg, all the main competitors are
active in the Netherlands, although with lower market
Belgium/Luxembourg.
shares
However,
that most
competitors in the Dutch market have the readiness,
capacity and financial strength to increase their market
in the eventuality of a
position there. Consequently,
the existing models,
price increase by the parties,
knowledge of
contacts
together with overcapacity on the market would lead to
a quick supply-side response and an increased market
penetration by the competitors.

the Commission

compared with

and customer

the market

considers

as

(170) Comments from third parties indicate that the majority
of the market is price sensitive and that the switch from
one competitor to another can be immediate. Indeed, all
Dutch customers who replied to the Commission’s
enquiries have indicated that, should the parties raise
prices by 5 to 10 %, they could would switch to other

(172) Finally,

a

further

consolidation in the European
bathroom product market can be expected to change
the market situation in the Netherlands,
too. Roca,
which currently has no activities in the Dutch market,
can be expected to increase its presence there due to its
recent merger with Duravit/Laufen.

(d) Conclusion on the Netherlands

(173) The market

in

some

investigation of

product markets,

the Commission has
confirmed that, despite the high market shares of the
parties
supply-side
substitutability is significant and actual and potential
competitors are able to act as a counterweight on the
Dutch market. Therefore,
the Commission does not
consider that the notified operation would lead to the
creation or the strengthening of a dominant position as
a result of which effective competition would be
significantly impeded in the common market or in a
substantial part of it.

3. Germany

(174) Germany is the largest single bathroom product market
in Europe, accounting for some [< 40 %]* of the whole
European market. Sanitec has estimated that the total
value of the German bathroom product market in 1998
was some EUR [2 500 to 3 500]* million. The value of
the ceramic sanitary ware market was estimated at EUR
[250 to 450]* million,
to some
[8 000 000 to 10 000 000]* pieces.

corresponding

(175)

In Germany, the parties’ combined market shares exceed
15 % in washbasins and WCs and the overall ceramic
sanitary ware. The market shares are given in Table 3.

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Table 3

Market shares of producers of ceramic sanitary ware in Germany

Ceramic sanitary ware

Washbasins

WCs

Sanitec

Sphinx

Volume

Value

Volume

Value

Volume

Value

[< 40 %] *

[< 30 %] *

[< 30 %] *

[< 40 %] *

[< 40 %] *

[< 30 %] *

[< 5 %] *

[< 5 %] *

[< 5 %] *

[< 5 %] *

[< 5 %] *

[< 5 %] *

Combined

[< 40 %] *

[< 30 %] *

[< 30 %] *

[< 40 %] *

[< 40 %] *

[< 30 %] *

Villeroy & Boch

Duravit/Laufen

Vitra/Eczacibasi

Ideal Standard

Roca

[< 20 %] *

[< 20 %] *

[< 15 %] *

[< 10 %] *

[< 5 %] *

[< 20 %] *

[< 20 %] *

[< 15 %] *

[< 10 %] *

[< 5 %] *

[< 20 %] *

[< 20 %] *

[< 15 %] *

[< 10 %] *

[< 5 %] *

(176) As can be seen from Table 3, the parties’ combined
market shares would be below some [< 40 %]* in all
affected markets. Sphinx has only minor activites in
Germany. The overlap of the parties in all the affected
markets is less than [< 5 %]*; which the Commission
considers insignificant (27).

is not indicative of a dominant position being created
there.

(177) The Commission notes that although the parties will
leaders in all affected markets, other
become market
competitors have significant market shares. The parties
will face strong competition in particular from Villeroy
& Boch and Duravit/Laufen, which both account for
some [< 20 %]* of the markets. The Turkish importer
Vitra/Eczacibasi has achieved a substantial foothold in
the German market with some [< 20 %]* and Ideal
Standard accounts for approximately [< 10 %]*. of the
market.
Standard
have significant domestic production and Germany
is
their home market.
Moreover, most of the competitors also offer a wide
range of bathroom products comparable with that
offered by the parties.

traditionally considered as

Villeroy & Boch

Ideal

and

(178) On the basis of the foregoing, and in particular given
the
the
several
Commission considers that competitive conditions exist
on the German market and the parties’ market position

existence of

competitors,

strong

(27) [(cid:133)]*.

4. France

(179) The total value of the French bathroom product market
has been estimated to amount to EUR [1 to 1 500]*
million. According to information provided by Sanitec,
the French ceramic sanitary ware market comprises
approximately [6 500 000 to 7 500 000]* pieces with a
value of EUR [200 to 300]* million; bathtubs [550 000
to 650 000]* with a value of EUR [50 to 60]* million;
and shower trays [600 000 to 700 000]* pieces with a
value of EUR [30 to 40]* million.

(180) The parties have overlapping activities, where their
combined market shares exceed [< 20 %]*, in the overall
market for ceramic sanitary ware and and the markets
for washbasins and WCs, in bathtubs and shower trays.

(181) On the basis of the abovementioned market volumes
and values, the market shares of the parties and their
main competitors in ceramic sanitary ware are given in
Table 4.

22.11.2000

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Official Journal of the European Communities

L 294/25

Table 4

Market shares of producers of ceramic sanitary ware in France

Ceramic sanitary ware

Washbasins

WCs

Volume

Value

Volume

Value

Volume

Value

Sanitec

Sphinx

[< 20 %] *

[< 20 %] *

[< 20 %] *

[< 30 %] *

[< 20 %] *

[< 20 %] *

[< 10 %] *

[< 10 %] *

[< 10 %] *

[< 10 %] *

[< 10 %] *

[< 10 %] *

Combined

[< 30 %] *

[< 30 %] *

[< 30 %] *

[< 40 %] *

[< 30 %] *

[< 30 %] *

Ideal Standard

Kohler/J. Delafon

Villeroy & Boch

Roca

Duravit/Laufen

[< 20 %] *

[< 15 %] *

[< 15 %] *

[< 10 %] *

[< 5 %] *

[< 20 %] *

[< 15 %] *

[< 15 %] *

[< 10 %] *

[< 5 %] *

[< 20 %] *

[< 15 %] *

[< 15 %] *

[< 10 %] *

[< 5 %] *

(182) With regard to ceramic sanitary ware, the parties will become the market leader but their combined
market shares do not exceed [< 40 %]*. Moreover, a larger number of other bathroom product
manufacturers are present in France with substantial market shares; Ideal Standard accounts for
some [< 20 %]* of the market, Kohler about [< 15 %]* and Villeroy & Boch and Roca around
[< 15 %]* of the market each.

(183) The market shares of the parties and those of their main competitors with regard to bathtubs and

shower trays are given in Table 5.

Table 5

Market shares of producers of bathtubs and shower trays in France

Bathtubs

Shower trays

Sanitec

Sphinx

Volume

[< 10 %] *

[< 5 %] *

Combined

[< 15 %] *

Kohler/J. Delafon

Roca

Merloni (MTS)

Ideal Standard

Aqualine

Villeroy & Boch

Sarreguemines

Volume

[< 30 %] *

[< 10 %] *

[< 40 %] *

Value

[< 15 %] *

[< 5 %] *

[< 20 %] *

[< 30 %] *

[< 20 %] *

[< 20 %] *

[< 15 %] *

[< 10 %] *

Value

[< 30 %] *

[< 15 %] *

[< 40 %] *

[< 15 %] *

[< 15 %] *

[< 5 %] *

[< 15 %] *

[< 15 %] *

(184) With regard to bathtubs, Kohler [(cid:133)]* will remain the market leader with some [< 30 %]* of the
market. Manufacturers such as Roca, Merloni and Ideal Standard also have substantial market
shares. As for shower trays, the parties will become market leaders with some [< 40 %]* of the
market. There are, nevertheless, several other competitors with market shares [< 20 %]* active on
the market.

L 294/26

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(185) Contrary to the situation in the Nordic countries, it is to
be noted that
the major competitors are active in
ceramic sanitary ware as well as in bathtubs and shower
trays and, thus, these competitors have a broad range of
products comparable with that offered by the parties.

C. THE NORDIC AREA

1. Ceramic sanitary ware

(a) Actual competition

(186) On the basis of

the

the Commission
considers that the notified operation will not lead to the
creation of a dominant position in any of the markets
discussed above in France.

foregoing,

5. Overall conclusion for continental Europe

(187) On the basis of

the

foregoing,

the Commission
considers that the notified concentration will not lead to
the creation or strengthening of dominant positions in
any relevant product market in Belgium/Luxembourg,
the Netherlands, Germany or France.

(188) The parties and their brands have a very strong
historical market position in the Nordic countries. As
will be shown below, Sanitec and Sphinx together
would account for between some [55 % to 95 %]* of the
sanitary ware market while other
Nordic
competitors are only marginally present there.

ceramic

(i) S w e d e n

sanitary ware market

(189) Sanitec has estimated that in 1998 the volume of the
ceramic
Sweden was
approximately [600 000 to 700 000]* pieces and the
value approximately EUR [35 to 45]* million. GB
Consult
from 1999 the market should
recover due to the predicted rise in construction
investment,
and
in
gradually grow until 2003.

new construction,

foresees that

especially

in

(190) As a result of the operation, the parties would become
by far the strongest player in all affected markets in
Sweden. The market shares are illustrated in Table 6 (28).

Market shares of producers of ceramic sanitary ware in Sweden

Table 6

Ceramic sanitary ware

Washbasins

WCs

WC cisterns

Volume

Value

Volume

Value

Volume

Value

Volume

Value

55-65 %

55-65 %

55-65 %

55-65 %

[< 60 %] *

[< 60 %] *

[< 60 %] *

[< 60 %] *

25-35 %

25-35 %

25-35 %

25-35 %

[< 40 %] *

[< 30 %] *

[< 40 %] *

[< 30 %] *

Sanitec

Sphinx

Combined

80-90 %

80-90 %

80-90 %

80-90 % [< 90 %] *

[< 90 %] *

[< 90 %] *

[< 90 %] *

Svedbergs

Caradon

Villeroy & Boch

Duravit/Laufen

Ideal Standard

Muscle Machine

[< 5 %] *

[< 5 %] *

[< 5 %] *

[< 5 %] *

[< 5 %] *

[< 5 %] *

< 3,0 %

[< 20 %] *

[< 10 %] *

[< 10 %] *

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

(28) Sanitec has not been able to provide the Commission with reliable
market shares for washbasins. In particular, the Commission has
found that
the parties’ estimates on Muscle Machine’s market
shares for washbasins have proved to be incorrect. Therefore, in
share data for washbasins
the following tables,
allocated both to the parties and Muscle Machine reflects the
Commission’s best estimates and are given as ranges. Furthermore,
given that
the market shares allocated to washbasins have an
impact on the market shares on the overall ceramic sanitary ware
market, the market share figures for the parties have been given as
estimates in this column, too.

the market

22.11.2000

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Official Journal of the European Communities

L 294/27

(191)

the Swedish market

It can be seen from figures in Table 6 that the parties
would reach very high market shares in Sweden in
WCs, cisterns and washbasins. The market shares would
exceed [< 90 %]* both in terms of volume and value.
With regard to washbasins, Sanitec in its notification
has submitted that Muscle Machine accounts for some
[< 50 %]* of
for washbasins.
However,
it appears from the Commission’s market
investigation that Muscle Machine in fact toll-produces
its products under the brand names of its immediate
customers, [(cid:133)]*. Therefore, the market share allocated
to Muscle Machine by Sanitec cannot be considered to
reflect Muscle Machine’s market power as a competitor.
the market share should in fact be divided
Rather,
the
immediate customers, among others
among its
reallocation of Muscle
parties. However,
Machine’s
secrets of
sales would disclose business
Muscle Machine and, moreover, for the purpose of the
present assessment
such a reallocation would not
materially change the Commission’s assessment. The
Commission has therefore estimated that
the correct
market share allocated to Muscle Machine should be in
the region of [< 20 %]* at the maximum.

such a

(192) The market position of the parties would not change
even taking the ceramic sanitary ware market as a

whole. The main competitors to the parties would have
in general terms less than [< 10 %]* of the market each,
the only exception being Muscle Machine which would
have some [< 20 %]* of the market in washbasins.

(ii) F i n l a n d

(193) Sanitec estimates that,

the volume of

in 1998,
sanitary ware market

the
ceramic
Finland was
approximately [450 000 to 550 000]* pieces and the
value approximately EUR [25 to 35]* million. GB
Consult has estimated that the market will continue to
grow in 1999 and then decline slightly so that
the
market will reach the same level in 2003 as in 1998.

in

(194)

In Finland, the parties would also have very high market
shares just as in Sweden and become the market leader
in all affected markets. The market shares are set out in
Table 7.

Table 7

Market shares of producers of ceramic sanitary ware in Finland

Ceramic sanitary ware

Washbasins

WCs

WC cisterns

Volume

Value

Volume

Value

Volume

Value

Volume

Value

Sanitec

Sphinx

70-80 %

60-70 %

65-75 %

55-65 %

[< 80 %] *

[< 80 %] *

[< 80 %] *

[< 80 %] *

5-10 %

5-10 %

5-10 %

5-10 %

[< 15 %] *

[< 15 %] *

[< 15 %] *

[< 15 %] *

Combined

80-90 %

70-80 %

70-80 %

60-70 % [< 95 %] *

[< 90 %] *

[< 95 %] *

[< 95 %] *

Svedbergs

Cersanit

Villeroy & Boch

Roca

Caradon

Muscle Machine

Novotec

Swemolit

[< 5 %] *

[< 5 %] *

[< 5 %] *

[< 5 %] *

[< 5 %] *

[< 5 %] *

< 3,0 %

[< 20 %] *

[< 5 %] *

[< 5 %] *

[< 10 %] *

[< 10 %] *

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

L 294/28

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22.11.2000

(195) As in Sweden, the parties would become by far the
strongest player in WCs, WC cisterns and washbasins
with market shares up to [< 95 %]*. Taking the ceramic
sanitary ware market as a whole, the parties’ combined
market shares would exceed [< 80 %]*. The competitors
would be weakest in WCs and WC cisterns, where the
second largest competitor would have merely [< 10 %]*
of the market.
In washbasins, the largest competitor,
Muscle Machine, would have only some [< 20 %]* of the
market (with respect to the further reduction of Muscle
Machine’s market share see recital 191). The rest of the
competitors would have less
the
market.

than [< 10 %]* of

(196) With regard to washbasins, however, the Commission
considers that the parties’ market share should actually
be somewhat higher than the figure given by Sanitec
share for ceramic
since the parties’ overall market
sanitary ware is also higher. If the market share data
it
available for other Nordic countries are considered,
individual
the market
can be seen that

shares

for

follow closely the overall market

shares
products
allocated for the ceramic sanitary ware market as a
whole.

(iii) D e n m a r k

(197) According to Sanitec’s estimates, in 1998, the volume of
the ceramic sanitary ware market
in Denmark was
approximately [550 000 to 650 000]* pieces and the
value approximately EUR [30 to 40]* million. GB
the market will decrease until
Consult
2001 and, thereafter, the market is expected to grow
again.

forecasts that

(198) As indicated in Table 8, the parties would become the
market leader in all affected markets where they would
also yield very high market shares.

Table 8

Market shares of producers of ceramic sanitary ware in Denmark

Ceramic sanitary ware

Washbasins

WCs

WC cisterns

Volume

Value

Volume

Value

Volume

Value

Volume

Value

Sanitec

Sphinx

60-70 %

60-70 %

60-70 %

55-65 %

[< 70 %] *

[< 70 %] *

[< 70 %] *

[< 70 %] *

15-25 %

15-25 %

5-10 %

5-10 %

[< 20 %] *

[< 20 %] *

[< 20 %] *

[< 20 %] *

Combined

80-90 %

80-90 %

70-80 %

60-70 % [< 90 %] *

[< 90 %] *

[< 90 %] *

[< 90 %] *

Villeroy & Boch

[< 10 %] *

[< 5 %] *

[< 10 %] *

[< 10 %] *

Duravit/Laufen

Caradon

Svedbergs

Cersanit

[< 5 %] *

[< 5 %] *

[< 5 %] *

[< 5 %] *

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

Muscle Machine

[< 20 %] *

Geberit

< 3,0 %

< 3,0 %

< 3,0 %

[< 10 %] *

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L 294/29

(199) The parties’ combined market shares in Denmark would
exceed [> 70 %]* for most product groups, even when
considering the ceramic sanitary ware market as a
whole. The position of competitors would be weakest in
WCs and WC cisterns, with the strongest competitor
In
having merely some
washbasins, where the parties would have a combined
market share of between [55 %]* and [85 %]*, the main
competitor would be Muscle Machine with some
[< 20 %]* of
to the further
reduction of Muscle Machine’s market share see recital
191). Villeroy & Boch would have [< 5 %]* of
the
market, and Duravit/Laufen, Caradon and Svedbergs
would all have market shares below [< 5 %]*.

(with respect

[< 10 %]* of

the market.

the market

(201)

because the parties’ overall market share for ceramic
sanitary ware is also higher.

(iv) N o r w a y

to

the volume of

In 1998,
the ceramic sanitary ware
market in Norway was estimated to be approximately
value
[350 000
approximately EUR [20 to 30]* million. According to
GB Consult, the market will be fairly stable in 1999 and
will
the negative
construction forecasts.

subsequently

450 000]*

decrease

pieces

and

due

the

to

(200) For

the

same

the
Commission considers that the parties’ market share for
washbasins as given by Sanitec should be higher,

as given for Finland,

reasons

(202) The market structure and the position of the parties in
Norway would be similar to the Swedish, Finnish and
Danish markets. As indicated in Table 9, the parties
shares and become
would have very high market
market leader in all affected markets.

Table 9

Market shares of producers of ceramic sanitary ware in Norway

Ceramic sanitary ware

Washbasins

WCs

WC cisterns

Volume

Value

Volume

Value

Volume

Value

Volume

Value

Sanitec

Sphinx

65-75 % 65-75 % 65-75 % 65-75 % [< 70 %] *

[< 70 %] *

[< 70 %] *

[< 70 %] *

15-25 % 15-25 % 15-25 % 15-25 % [< 30 %] *

[< 30 %] *

[< 30 %] *

[< 30 %] *

Combined

80-90 % 80-90 % 80-90 % 80-90 % [< 90 %] *

[< 90 %] *

[< 90 %] *

[< 90 %] *

Villeroy & Boch

[< 5 %] *

[< 5 %] *

Svedbergs

Caradon

Ideal Standard

Vitra/Eczacibasi

Muscle Machine

Swemolit

Geberit

[< 5 %] *

[< 5 %] *

[< 5 %] *

[< 5 %] *

< 3,0 %

< 3,0 %

[< 20 %] *

[< 10 %] *

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

(203) As can be seen from Table 9, the parties would have market shares close to [< 95 %]* in all product
markets and also in the overall market for ceramic sanitary ware (with respect to the market share
of Muscle Machine see recital 191).

L 294/30

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(v) I c e l a n d

(204) Sanitec estimates

in Iceland was
approximately [35 000 to 45 000]* pieces and the value approximately EUR [1 to 2]* million in
1998.

the ceramic sanitary ware market

the volume of

that

(205) The market shares of the parties and those of their competitors are given in Table 10.

Table 10

Market shares of producers of ceramic sanitary ware in Iceland

Ceramic sanitary ware

Washbasins

WCs

WC cisterns

Volume

Value

Volume

Value

Volume

Value

Volume

Value

Sanitec

Sphinx

20-30 % 30-40 % 20-30 % 25-35 % [< 30 %] *

[< 20 %] *

[< 30 %] *

[< 20 %] *

40-50 % 40-50 % 40-50 % 40-50 % [< 60 %] *

[< 60 %] *

[< 60 %] *

[< 60 %] *

Combined

70-80 % 70-80 % 70-80 % 70-80 % [< 80 %] *

[< 80 %] *

[< 80 %] *

[< 80 %] *

Roca

[< 10 %] *

[< 10 %] *

[< 10 %] *

[< 10 %] *

Villeroy & Boch

[< 10 %] *

[< 10 %] *

[< 10 %] *

[< 10 %] *

Caradon

Cersanit

Svedbergs

Muscle Machine

Swemolit

[< 5 %] *

< 3,0 %

[< 5 %] *

[< 5 %] *

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

[< 20 %] *

[< 10 %] *

(206)

In Iceland, although the combined market position of
the parties would be similar to the one identified in all
the other Nordic countries in the sense that the parties
would have high market shares and become market
leaders in all affected markets,
it is to be noted that
Sphinx has, at present, the leading market position in
WCs and WC cisterns and washbasins in Iceland.

(207) Following the operation, the parties would become the
clear market leader in WCs, WC cisterns and washbasins
with market shares of between some [< 80 %]* and
[< 90 %]*. This position would not change considering
the ceramic sanitary ware market as a whole. The
largest competitor, Roca, would have less than [< 15 %]*
of the markets and Villeroy & Boch less than [< 10 %]*.
Other competitors include Caradon and Svedbergs with
very low market shares.

(vi) T h e o v e r a l l N o r d i c a r e a

(208) Sanitec has estimated that

the Nordic area would
account for approximately [< 10 %]* of the total value of
the EEA-wide bathroom product market, corresponding
to some EUR [400 to 500]* million and some [2 to
3]* million pieces in 1998.

(209) With respect to ceramic sanitary ware products, Sanitec
has estimated that, in 1998, the overall Nordic market
accounted
to
volume
3 000 000]* pieces and a value of EUR [100 to
150]* million. Based on these volume and value figures,
the overall position of
the parties and their main
competitors are indicated in Table 11.

[2 000 000

for

of

a

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L 294/31

Table 11

Market shares of producers of ceramic sanitary ware in the Nordic countries

Ceramic sanitary ware

Washbasins

WCs

WC cisterns

Volume

Value

Volume

Value

Volume

Value

Volume

Value

Sanitec

Sphinx

60-70 %

60-70 %

55-65 %

55-65 %

[< 70 %] *

[< 70 %] *

[< 70 %] *

[< 70 %] *

15-25 %

15-25 %

15-25 %

10-20 %

[< 30 %] *

[< 30 %] *

[< 30 %] *

[< 30 %] *

Combined

80-90 %

80-90 %

70-80 %

70-80 % [< 90 %] *

[< 90 %] *

[< 90 %] *

[< 90 %] *

Svedbergs

[< 5 %] *

[< 5 %] *

[< 5 %] *

[< 5 %] *

Villeroy & Boch

[< 5 %] *

[< 5 %] *

[< 5 %] *

[< 5 %] *

Laufen

Caradon

Cersanit

Muscle Machine

Roca

Ideal Standard

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

[< 20 %] *

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

(210) As can be seen from Table 11, the parties would have
market
almost
shares of between [< 80 %]*
[< 100 %]* in WCs, WC cisterns and washbasins, even
relevant
considering the Nordic
geographic market. The leading market position would
also be retained for the ceramic sanitary ware market as
a whole.

countries

as one

and

(211) Compared with the above market data on individual
countries, the market position of the parties would not
materially change whether the geographic market was
to be considered as one overall Nordic market or as
individual markets.

(b) Supply-side substitutability

(212) Sanitec has contended that the existence of high market
shares in the Nordic countries does not in itself confer

it

is

to

since

large,

countries.

Standard
these

strong
easy for
market power,
such as US multinationals American
competitors
compete
and Kohler
Standard/Ideal
The Commission
in
effectively
investigation, however, clearly refutes Sanitec’s argument
of effective competition in the Nordic countries. Sanitec
has submitted that the switching costs between suppliers
are very low for customers and that suppliers are even
willing to contribute to costs in return for the customer
switching to them. Sanitec has therefore argued that,
should the price level for bathroom products rise, there
are numerous players that could increase their presence
in Scandinavia or enter
the market. According to
Sanitec, this is very easy due to low transport costs.
Sanitec has further argued that there is overcapacity (cid:151)
in the EEA, in south-eastern Europe and south-east Asia
(cid:151) in the bathroom products industry, meaning that any
thus
price increase would provoke immediate entry,
constraining the parties’ ability to raise prices.

(213) Most

customers

the
Commission that they would not have real alternatives

however,

replied

have,

to

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22.11.2000

to switch suppliers if faced with a price increase in the
order of 5 % to 10 %. Some customers have indicated
that, if faced with a price increase in the region of 5 %
to 10 %, they would consider importing from Asia or
Poland. However, given that
these customers source
relatively small volumes and they would still need to
stock the parties’ leading brands, the Commission does
not consider this alternative to be realistic. Some large
wholesalers have indicated that the demand for other
than the leading brands is not sufficient for them to
these
import
customers have indicated that
imports over a long
distance could take up to several months and the risk of
product
failure and breakage is too high. Customers
have also mentioned that after-sales services would be
problematic if products were imported over a long
distance. Given that
to be
achieved for the imports to be competitive, importing
from outside the EEA cannot be considered a realistic
alternative for small customers.

some critical mass has

competitive prices.

Furthermore,

at

(214) Furthermore, on the basis of

investigation,

there are no indications that

the
its
Commission does not consider it
feasible either that
these wholesalers could to a significant extent switch
their branded, well-reputed products to low-cost imports
from outside the EEA. Given the current low level of
imports,
the level of
imports would increase to any significant extent in the
future with the effect of off-setting the market position
of the parties. Finally, the current low level of imports,
few alternative suppliers are
despite the fact
available
the
argument that imports are not a feasible alternative for
customers.

in the Nordic

strengthens

countries,

that

(c) Market entry

(215) The majority of wholesalers have indicated that Ido, If(cid:246)
and Gustavsberg are more or less the norm in the
Nordic coutries and that these are the brands customers
demand. As discussed in recitals 102 to 108, there are
different national standards which make entry difficult.
With regard to the Nordic countries, some wholesalers
have gone so far as to suggest that Sanitec and Sphinx,
through the acquisition of Gustavsberg, have in fact
created a Nordic (cid:145)umbrella(cid:146) with specific products and
product standards, which makes it particularly difficult
for competitors to enter the Nordic market.

(216) The Commission’s investigation shows, that should the
rise, competitors
for bathroom products

price level

could not, in a relatively short period of time, increase
their presence in the Nordic countries. This situation
appears to be very different from that in the Benelux
area, where the competitors, even though they have
lower market
are well
established and increasing their presence. This would
also seem to suggest that, unlike continental Europe, the
Nordic area is relatively isolated and local production is
an important competitive advantage. At present, only
Sanitec and Sphinx have production facilities in the
Nordic area.

than the parties,

shares

(217) The tradition and loyalty behind the established brands
in the Nordic countries are further evidenced by the fact
that no new suppliers of importance have emerged in
these markets for more than 20 years and that those
new producers, such as Muscle Machine, which have
entered the market in recent years are active in niche
procucts and/or are specialised in toll production.

(d) Absence of buying power

(218) Sanitec argues

number

represent

that countervailing buying power

is
particularly present in the Nordic countries since a very
limited
large
of wholesalers
proportions of the demand. Sanitec has estimated that,
in Denmark, Dahl has some [< 50 %]* of the market, A
& O Johansen [< 20 %]* and R(cid:246)r & Armatur [< 20 %]*.
In Finland, Onninen has [< 80 %]* of the market, Dahl
[< 20 %]* and LV Tuko [< 15 %]*. Sanitec submits that in
Norway, Dahl has [< 50 %]* of the market, Stavanger
R(cid:246)r [< 30 %]* and Bergens R(cid:246)r [< 20 %]*. Finally, Sanitec
estimates that
the
market, Ahlsell [< 40 %]* and Onninen [< 20 %]*. Sanitec
claims further that consolidation is taking place at the
wholesale and retail
in the Nordic countries. As
examples of this Sanitec has mentioned Ahlsell, which
has recently acquired the Swedish wholesaler Lando AB
and a stake in the Finnish wholesaler Starckjohann;
Dahl, which operates in a number of Scandinavian
countries, acquired the Swedish wholesaler Skoogs VVS;
and Sanist(cid:229)l, which acquired the Danish wholesalers
Erik Hassel-Kjaer A/S and PE Ernhardt A/S.

in Sweden, Dahl has [< 50 %]* of

level

(219) Sanitec has further argued that

the turnover of

the
wholesalers is often greater than that of the suppliers of
bathroom products and that this would confer buying
power. Moreover, Sanitec has argued that companies
often
that may have
their
collaborate
Sanitec,
bargaining

power
increase
to

to
according

in
power.

bargaining

Finally,

limited

buying

groups

22.11.2000

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Official Journal of the European Communities

L 294/33

wholesalers use their buying power for instance to
threaten to switch to other suppliers or to establish
their private label if prices are raised.

(220) The Commission

refutes

Sanitec’s

argument

of
countervailing buying power. Although the Commission
notes that the wholesale market in the Nordic countries
is indeed relatively concentrated, the Commission does
not
in the Nordic
countries have enough purchasing power to offset the
market power of the combined entity.

the wholesalers

consider

that

it has

developed a specific washbasin together with EUDIM.
failed to conclude
According to EUDIM,
agreements with any other strong, branded European
ceramic sanitary ware suppliers, mentioning Sanitec as
an example. The Commission notes, however, that these
the
groups could influence
wholesalers
they may
recommend their members to use a certain supplier and
receive bonuses from this supplier at the end of the
year. However, there is no evidence at present that such
these
activities would increase the buying power of
groups’ Nordic members to the level where they could
offset the parties’ dominant position.

the buying power of

long run in that

in the

(221)

In particular, the Commission notes that in order to
exercise buying power, wholesalers must have viable
alternative suppliers they could switch to.
It is clear
from the investigation that this is not the case. The
Commission’s enquiries show that wholesalers in the
Nordic countries switch to other suppliers very rarely, if
at all. Most wholesalers have told the Commission that
during the past
three to five years they have not
changed suppliers. Some wholesalers have indicated that
Sanitec, for instance, has been their supplier for more
than 50 years. Although Sanitec argues that supply
contracts are short-term (generally one year) and that
wholesalers can, within a short period of time, switch
the Commission’s investigation
suppliers at
shows
in the Nordic
that
countries are in practice long-term and customers are
very loyal
to the established brands. An important
difference between the Nordic countries and the Benelux
area is that the wholesalers in Benelux have indicated
that, in the face of a hypothetical price increase, they
would readily change suppliers. There is also evidence
that this has happened in the past and that the demand
has shifted from the market leader to the competitors.

low cost,
the supply relationships

(222) The investigation also shows that buying groups are not
sufficiently strong to counterbalance the position of the
parties in the Nordic countries. The Commission has
contacted two such groups mentioned by the parties,
EDT and EUDIM (29), whose members also include
Nordic customers. It is clear from the investigation that,
with regard to bathroom products, both groups are
mainly forums for exchanging information, collecting
data, buying market studies and assisting in practical
commercial matters. The groups do not act as direct
purchasing organisations, although EUDIM negotiates
framework agreements. However, according to EUDIM,
it is very difficult to negotiate agreements for ceramic
sanitary ware because design, culture and technical
requirements prevent negotiations on (cid:145)the same product
for everyone(cid:146) basis. Furthermore, during its 20 years of
existence, EUDIM has succeeded in negotiating only one
such framework agreement with a ceramic sanitary ware
producer, namely Duravit/Laufen. This must, however,
be considered as an exceptional case, because Laufen

(29) European United Distributors of Installation Materials.

the investigation shows that

(223) With regard to Sanitec’s submission that, in the face of
a price increase, wholesalers would start producing their
few
own private labels,
wholesalers in Scandinavia have private labels. Similarly
with imports, the traditionally strong position of Sanitec
and Sphinx via Gustavsberg has made it very difficult
for the introduction of cheaper private labels. On the
basis of third party comments, it appears that at present
only a very small part of
the sales includes private
labels. Currently, there are no indications that, within
the near future, wholesalers would switch a considerable
part of their product range to a private label so as to
counterbalance the position of the parties.

(224) Lastly, concerning Sanitec’s submission that the size of
the turnover of
should be taken as
the customer
evidence of buying power, the Commission notes that
all wholesalers mentioned by Sanitec, such as Dahl, are
active in a number of other products. Bathroom
the turnover
products account
generated by those wholesalers and,
large
turnover
evidence of
cannot be
alone
countervailing buying power.

for only a part of

taken as

therefore,

(225) On the basis of the foregoing, the Commission does not
consider that customers in the Nordic countries have
sufficient buying power to offset the market position of
the parties,
feasible
alternative suppliers.

in particular due to lack of

(e) Third party comments

(226) Most

third parties and, most

importantly, customers
have voiced serious concerns about the effects of the

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Official Journal of the European Communities

22.11.2000

operation in the Nordic countries. Both customers and
the operation
competitors have been concerned that
would lead to a significant reduction of competition in
what is already a very concentrated market. Customers
have expressed concerns over possible price increases
and the weakening of their position vis-(cid:224)-vis the parties.
The fact
the parties would
practically control all production in the Nordic countries
has aroused fears in customers that
the choice and
availability of products would be limited in the future.
Competitors have expressed concerns that the operation
would lead to a total foreclosure of the market, which is
already extremely difficult to enter.

that, after the operation,

(f) Conclusion on ceramic sanitary ware

(227) Sanitec’s very high market shares, combined with their
stability over a long period of time, the barriers to entry
and the absence of buying power lead the Commission
to conclude that, at present, Sanitec has a dominant
position in the Nordic countries in ceramic sanitary
ware. The fact that the gap between Sanitec’s market
shares and those of the competitors has, over a long
period of time, been substantial is a further indication
that Sanitec has been able to act relatively independently
sales prices and profit
on the market, keeping its
margins (30). Furthermore, Sanitec’s position has not
been challenged by imports, which have remained at a
low level.

(228) The

a

in

result

operation would

considerable
aggregation of market shares which would reinforce
Sanitec’s very high existing market shares. As already
stated, all other players are only marginally present in
the Commission
the Nordic countries. Furthermore,
notes that Sphinx,
is the only
supplier of products with a
alternative
significant market share in the Nordic countries. Other
competitors are mainly active in niche markets.

in addition to Sanitec,

full-range

customers would be

(229) The investigation has shown that Nordic customers are
currently sourcing a large proportion of their supplies
from Sanitec.
In the absence of viable alternative
even more
suppliers, Nordic
dependent on supplies from Sanitec. Sanitec would thus
be able to employ a number of strategies to further
advance its position in the market which were not
previously available to it.
It could for instance raise
independently from other market operators,
prices
worsen the supply conditions or even refuse to supply
altogether.

(230) The

fact

that

the operation would lead to the
elimination of the only viable alternative supplier with
significant presence in the Nordic countries could lead
to further foreclosure of the market from prospective
entry. Given the significant brand loyalty in this sector
and the well-established position of Gustavsberg in the
Nordic countries, the acquisition would mean that any
potential entrant would be denied the possibility of
entering the Nordic market by buying a strong existing
brand. The operation could foreclose the market also
from direct entry. Given that wholesalers would be
dependent on the new entity, Sanitec could punish
those customers who encouraged alternative suppliers to
enter
instance, making those
for
customers pay higher prices or imposing tougher supply
less
conditions. Customers would
incentive to switch to new entrants.

the market by,

therefore have

(231) On the basis of

the foregoing,

the operation would
enable Sanitec to act on the market even more
its customers and competitors than
independently of
further
today
forcelosed. Therefore, the operation would lead to the
strengthening of Sanitec’s dominant position in the
Nordic markets for ceramic sanitary ware.

and the Nordic market

could be

2. Bathtubs

(a) Actual competition

(i) T h e i n d i v i d u a l N o r d i c c o u n t r i e s

(232) With regard to the individual Nordic countries,

the
value and volume of each bathtub market is as follows:
Sweden: [40 000 to 50 000]* pieces and EUR [9 to
10]* million; Finland: [3 500 to 4 500]* pieces and EUR
[< 1]* million; Denmark: [10 000 to 15 000]* pieces
and EUR [2 to 3]* million; and Norway: [15 000 to
20 000]* pieces and EUR [3 to 4]* million (31). Based
on these figures, it can be seen that Sweden is by far the
most important country for the sale of bathtubs in the
Nordic area.

(233) The market

shares of

the parties and their main
competitors are shown in Table 12 for Sweden, Finland,
Denmark and Norway.

(30) [(cid:133)]*.

(31) [(cid:133)]* that [the bathtub]* market will therefore not be assessed

separately in this context.

22.11.2000

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Official Journal of the European Communities

L 294/35

Table 12

Market shares of producers of bathtubs in individual Nordic countries

Sweden

Finland

Denmark

Norway

Sanitec

Sphinx

Volume

Value

Volume

Value

Volume

Value

Volume

Value

[< 40 %] *

[< 40 %] *

[< 40 %] *

[< 50 %] *

[< 30 %] *

[< 20 %] *

[< 50 %] *

[< 40 %] *

[< 40 %] *

[< 40 %] *

[< 40 %] *

[< 30 %] *

[< 10 %] *

[< 15 %] *

[< 15 %] *

[< 15 %] *

Total

[< 80 %] *

[< 80 %] *

[< 70 %] *

[< 70 %] *

[< 40 %] *

[< 30 %] *

[< 60 %] *

[< 60 %] *

Metaliberica

Bette

Merloni

VVS Marketing

Aqua Novitek

Svedbergs

Kaldewei

< 3,0 %

[< 30 %] *

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

[< 15 %] *

[< 10 %] *

< 3,0 %

[< 15 %] *

[< 10 %] *

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

< 3,0 %

in all

(234) Today, Sanitec and Sphinx are the largest and the
second largest bathtub suppliers
the Nordic
countries. With the exception of Denmark, the parties’
combined market shares would range between [< 60 %]*
and almost
the markets. The market
positions of the main competitors are very fragmented
with typically only one player of a reasonable size. The
largest competitor in Sweden and Finland is
parties’
Svedbergs,
is Bette and in Norway
Metaliberica.

in Denmark it

[< 90 %]* of

(235)

In

by

fact,

Sanitec.

unexplained

in Denmark.

is to be noted that

the market shares based on
It
the
Sanitec’s estimates leave more than [< 50 %]* of
market
the
Commission considers that the actual market share of
the parties should be considered to be higher than
estimated
the Commission’s
investigations show that neither Kaldewei nor Svedbergs
supply bathtubs in Denmark. Moreover, none of the
the largest wholesalers in
customers, who represent
Denmark, have indicated that they purchase bathtubs
from Metaliberica
the
Commission estimates that the parties’ combined market
share in Denmark should be considered at
to
exceed [< 60 %]*.

or Merloni.

Therefore,

Indeed,

least

(236) Similarly, Sanitec has allocated almost [< 30 %]* of the
market in Norway to Metaliberica. However, none of
customers who replied to the Commission’s
the
enquiries have indicated that they buy bathtubs from
Metaliberica. Therefore,
the Commission does not
exclude the possibility that also in Norway the market
share of the parties would in fact be higher than that
estimated by Sanitec.

(ii) T h e N o r d i c a r e a

(237) With regard to the overall Nordic area, Sanitec has
estimated that the total value of the market in 1998 was
EUR [10 to 20]* million, corresponding to [80 000 to
90 000]* pieces.

(238) The market

shares of

the parties and their main

competitors are shown in Table 13.

L 294/36

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Official Journal of the European Communities

22.11.2000

Table 13

Market shares of producers of bathtubs in the Nordic area

(240) On the basis of the foregoing, and in line with the
the Commission
analysis of ceramic sanitary ware,
considers that barriers to entry into the Nordic market
are high.

Nordic area

Volume

Value

[< 40 %] *

[< 40 %] *

[< 30 %] *

[< 30 %] *

Total

[< 70 %] *

[< 70 %] *

Sanitec

Sphinx

Metaliberica

Bette

Merloni

VVS Marketing

Aqua Novitek

[< 10 %] *

[< 10 %] *

[< 5 %] *

< 3,0 %

< 1,0 %

(c) Absence of buying power

(241) On the basis of

the investigation, customers in the
bathtub market are the same as in ceramic sanitary
ware. Therefore, in line with the analysis conducted on
buying power in ceramic sanitary ware (see recitals 220
to 225),
that
customers for bathtubs have sufficient buying power to
offset
the parties resulting
from the operation.

the Commission does not consider

the dominant position of

(d) Conclusion on bathtubs

Sanitec and Sphinx are by far
the largest bathtub
suppliers in the overall Nordic area with a combined
market position of more than [< 70 %]*. The market
shares
very
are
the third largest
fragmented. Metaliberica, which is
player on the market, has a market share of [< 10 %]*,
Bette has [< 10 %]*, Merloni [< 5 %]* and the remaining
competitors less than [< 5 %]* of the market.

competitors

remaining

the

of

(242) On the basis of

the

foregoing,

the Commission
considers that the proposed operation would lead to the
creation of a dominant position in bathtubs in the
individual Nordic countries or, alternatively,
in the
overall Nordic area as a whole.

3. Shower screens

(a) Actual competition

(b) Market entry

(i) T h e i n d i v i d u a l N o r d i c c o u n t r i e s

(239) The Commission’s investigation shows that the parties’
brands in the Nordic bathtub market have an important
position in the Nordic countries and that brand loyalty
among customers is as strong as in ceramic sanitary
ware. Moreover, given that the parties are the only large
and powerful suppliers with a broad range of bathroom
products and that most competitors in bathtubs are
the Commission considers
specialised manufacturers,
that entry into the Nordic bathtub market for those
competitors is particularly difficult. Unlike full-range
suppliers Sanitec and Sphinx, those companies are not
able to establish and further strengthen their position on
the bathtub market with the support of other products.

is as

follows: Sweden:

(243) With regard to the individual Nordic countries, Sanitec
has estimated that the value and volume of each shower
[100 000 to
screen market
150 000]* pieces and EUR [20 to 30]* million; Finland:
[30 000 to 40 000]* pieces and EUR [5 to 10]* million;
Denmark: [40 000 to 50 000]* pieces and EUR [5 to
10]* million; and Norway: [90 000 to 100 000]* pieces
and EUR [20 to 30]* million (32). The market shares of
the market participants are indicated in Table 14.

(32) [(cid:133)]* that

[the shower screen]* market will

therefore not be

assessed separately in this context.

22.11.2000

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Official Journal of the European Communities

L 294/37

Market shares of producers of shower screens in individual Nordic countries

Table 14

Sweden

Finland

Denmark

Norway

Volume

Value

Volume

Value

Volume

Value

Volume

Value

[< 30 %] *

[< 30 %] *

[< 20 %] *

[< 20 %] *

[< 20 %] *

[< 20 %] *

[< 80 %] *

[< 70 %] *

[< 5 %] *

[< 5 %] *

[< 5 %] *

[< 5 %] *

[< 5 %] *

[< 10 %] *

[< 10 %] *

[< 20 %] *

Total

[< 30 %] *

[< 30 %] *

[< 20 %] *

[< 20 %] *

[< 30 %] *

[< 30 %] *

[< 90 %] *

[< 90 %] *

[< 15 %] *

[< 20 %] *

[< 10 %] *

[< 10 %] *

< 3,0 %

[< 15 %] *

[< 10 %] *

< 3,0 %

< 3,0 %

[< 30 %] *

[< 30 %] *

[< 20 %] *

[< 10 %] *

[< 10 %] *

[< 10 %]

[< 5 %] *

[< 10 %] *

< 3,0 %

[< 5 %] *

< 3,0 %

Sanitec

Sphinx

Svedbergs

Makro

Combac

Kesko/Gent

Sanka

Flair

H(cid:252)ppe

Geo

(244) As can be seen from Table 14,

the parties would
achieve a combined market position of some [< 90 %]*
in Norway. In the other Nordic countries, the parties’
combined market
shares would be between some
[< 20 %]* and [< 30 %]*. Despite a more limited presence
in Sweden and in Denmark, the parties would remain
the market leader in those countries, too.

(ii) T h e N o r d i c a r e a

(245) Sanitec has estimated that the total Nordic market for
shower screens in 1998 was in the region of EUR [60
to 70]* million, corresponding to some [200 000 to
300 000]* pieces. The market shares of the parties and
those of their competitors are given in Table 15.

Table 15

Market shares of producers of shower screens in the
Nordic area

Nordic area

Volume

Value

[< 40 %] *

[< 40 %] *

[< 5 %] *

[< 10 %] *

Total

[< 50 %] *

[< 50 %] *

Sanitec

Sphinx

Nordic area

Volume

Value

[< 15 %] *

[< 10 %] *

[< 10 %] *

[< 10 %] *

[< 10 %] *

[< 10 %] *

< 3,0 %

< 3,0 %

< 3,0 %

Gent

Makro

Svedbergs

Combac

Flair

Sanka

Geo

VVS Marketing

H(cid:252)ppe

(246) Following the operation, the parties would achieve a
combined market share of some [< 50 %]*, both in
terms of volume and value, in the overall Nordic area.
According to the information submitted by Sanitec,
Gent accounts
the Nordic market
[< 15 %]* of
whereas Makro and Svedbergs each have [< 10 %]* of
the market. Combac
for
[< 10 %]* of the market. The remaining competitors are
very fragmented.

each account

and Flair

for

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(b) Effects on competition

(247) With regard to shower screens, as indicated in Table 14,
Sanitec is at present market leader and dominant in the
Norwegian market with a market share of [< 70 %]*. The
second competitor there is Sphinx with a share of
[< 20 %]*. Thus, the parties would achieve a combined
market
[< 90 %]*, which the Commission
considers to be a strengthening of Sanitec’s dominant
position for the same reasons as set out for ceramic
sanitary ware (see recitals 227 to 231).

share of

(248) With regard to the overall Nordic area, the Commission
considers that the proposed concentration could lead to
the creation of a dominant position on the market in
shower screens at Nordic level. Given the parties’ very
strong position in ceramic sanitary ware in the Nordic
countries and the fact that the parties are virtually the
only full-range suppliers in that area, this could give
them the possibility of further increasing their sales of
shower screens. The parties could use their high profit
margins in ceramic sanitary ware and bathtubs to set
the prices for shower screens at a considerably lower
the
level
than competitors. This would squeeze
competitors and, eventually, drive them out of
this
market.

(c) Conclusion on shower screens

(249) On the basis of

the

foregoing,

the Commission
considers that the notified operation would lead to the
strengthening of a dominant position in Norway or,
alternatively, to the creation of a dominant position in
the overall Nordic area in the market
shower
screens.

for

4. Overall conclusion on the Nordic area

the

that

conclusion

transaction

notified
common market

(250) For all the above reasons, the Commission has come to
is
the
incompatible with the
and the
functioning of the EEA Agreement, since it would lead
to the strengthening of a dominant position, as a result
of which effective competition would be significantly
impeded within the
common market within the
meaning of Article 2(3) of the Merger Regulation, in the
in the
ceramic sanitary ware market or, alternatively,
markets for WCs, WC cisterns and washbasins in the
Nordic countries or, alternatively, in Denmark, Finland,
Iceland, Norway and Sweden.

(251) The operation would further lead to the creation of a
dominant position as a result of which effective
competition would be significantly impeded in the
market
countries or,
alternatively, in Denmark, Finland, Norway and Sweden.

in the Nordic

for bathtubs

Finally, the operation would lead to the strengthening of
a dominant position in the market for shower screens in
Norway or, alternatively,
lead to the creation of a
dominant position in the market for shower screens in
the overall Nordic area, as a result of which effective
competition would be significantly impeded in this part
of the EEA.

VII. COMMITMENTS PROPOSED BY SANITEC

(252)

In order to resolve the competitive concerns raised by
the Commission with respect to the Nordic countries
and under the precondition that the conditions set out
in Sanitec’s offer document dated 17 June 1999
regarding Sphinx are fulfilled, Sanitec has, by letter of
26 October 1999, offered to enter into the following
commitments.

A. DIVESTMENT OF THE GUSTAVSBERG BATHROOM

PRODUCTS BUSINESS

1. Sanitec will divest the entire Gustavsberg bathroom
products business of Sphinx in Sweden, Denmark,
Finland, Norway,
Iceland, Russia and the Baltic
States which comprises:

(i)

the ceramic sanitary ware production company
Gustavsberg VVS AB in Gustavsberg, Sweden;

(ii)

the taps and mixers company Gustavsberg
V(cid:229)rg(cid:229)rda Armatur AB (the (cid:145)Company(cid:146))
in
V(cid:229)rg(cid:229)rda, Sweden (subject
to the conditions
stipulated in point 4);

(iii) the sales companies Gustavsbergs F(cid:246)rs(cid:228)ljnings
AB in Gustavsberg, Sweden; Gustavsberg VVS
A/S in Rłdovre, Denmark; Oy Gustavsberg Ab
in Helsinki,
sales
companies in Estonia and Lithuania as well as
the sales offices in Latvia, Ukraine and Russia);
the branch office of Gustavsberg VVS AB in
Oslo, Norway;
distributorship
the
agreement concerning Iceland;

Finland (including

and

the

(iv) the (cid:145)Gustavsberg(cid:146) brand name worldwide for

any and all products; and

(v) all other assets and liabilities that form part of

the Business (as defined in point 5).

2. Sanitec

to

the

offer

undertakes

prospective
purchaser
the possibility of enteing into any
subcontracting agreement presently concluded for
the production of bathtubs sold by Sphinx under
the brand name (cid:145)Gustavsberg(cid:146),
to the
approval of the respective subcontractor. [(cid:133)]*.

subject

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3. Sanitec

to

the
enteing

offer
prospective
undertakes
a
of
into
posibility
the
purchaser
subcontracting agreement
according to which
Sanitec shall continue to supply to the prospective
purchaser shower screens/enclosures/cubicles sold
by Sphinx under the brand name (cid:145)Gustavsberg(cid:146) as
part of the Business [(cid:133)]*.

4. Sanitec

undertakes

prospective
purchaser the possibility of acquiring the Company
within the time limit set out in point 9. [(cid:133)]*.

offer

the

to

5. The undertakings referred to in points 1 to 4 are
referred to in the following as (cid:145)the Business(cid:146) to be
divested.

as

for

that

least

favourable

competition as

6. Sanitec undertakes to divest the Business as a single
undertaking and shall pursue this alternative in the
first place. However, this shall not preclude, subject
to the Commission’s explicit approval,
the
Business may be divested as two or more business
units provided that Sanitec has
shown to the
Commission that such divestments would be viable
separately or together with the other activities of
the purchaser and that such divestments would be
at
a
divestment of the Business as a single undertaking.
In this context, a business unit refers to ceramic
sanitary ware (and, if requested by the prospective
and mixers),
purchaser,
shower screens/enclosures/cubicles, and bathtubs,
respectively. Furthermore,
the Business shall be
divested as a going concern and, as such, shall
include
facilities,
particular
in
in
equipment, machinery,
process and finished products as well as any
rights concerning trade marks, patents, inventions,
business secrets, technology, know-how, design and
intellectual property of the respective products of
the Business.

its
inventories,

together with

present

goods

taps

7. Moreover,

in order

to enhance its commercial
viability to prospective purchasers, the divestiture
of
extent
permitted by law or contract, the following, unless
not required by the purchaser:

the Business

include,

to the

shall

(i)

the transfer of relevant sales staff currently
engaged in the Business;

circumstances where the purchaser cannot
the
reasonably
technical matters himself or through resources
existing within the Business;

to manage

expected

be

(iv) Sanitec’s best efforts to ensure that production
capacity and selling activities are maintained,
pursuant to good business practices, at their
current level and that all contracts necessary to
preserve the Business are entered into or
continued in accordance with their
terms,
consistent with past practice and the ordinary
course of business; and

(v) Sanitec’s best efforts to procure the assignment
to the prospective purchaser of other existing
commercial arrangements
(covering current
supply agreements, sales contracts or business
subcontracting and
with customers, current
distributorship agreements as well as other
contracts entered into in the regular course of
business in this respect).

8. Furthermore, with respect

to the staff of

the
Business, Sanitec shall, prior to completion of the
sale of the Business to a purchaser, not hire or
from the
employ current management or staff
Business.

B. TIMING

9.

In the event that the sale of the Business has not
the
been completed by Sanitec within [(cid:133)]* of
Commission’s Decision, Sanitec undertakes to give
the Trustee, referred to in point 15, an irrevocable
mandate to find a valid purchaser for the Business
and to complete the divestment of the Business
within [(cid:133)]* thereafter. The latter period can be
prolonged by another [(cid:133)]* by the Commission on
reasonable grounds upon application from Sanitec.
In the event that the Trustee has not been able to
divest of
the Business within the first [(cid:133)]*, or
alternatively within the second [(cid:133)]* provided that
such a prolongation has been granted by the
Commission, the Business [(cid:133)]*. Such divestiture
shall take place prior to the end of the first [(cid:133)]*
period, or, alternatively, within the second [(cid:133)]*
period provided that such a prolongation has been
granted by the Commission.

(ii)

transfer of production and administrative
personnel
the
dedicated
currently
production facility of the Business;

to

C. THE PURCHASER

(iii) the provision of manufacturing

the production facility of

technical
assistance at
the
Business, for a period of not more than 12
months from the date of the sale. However,
shall only be granted in
such assistance

10. The prospective purchaser referred to in points 2,
3, 4, 6, 7, 8 and 9 shall be a viable existing or
prospective
and
unconnected to Sanitec, possessing the financial
resources and proven expertise in the field of
bathroom products enabling it
to maintain and
develop the Business as an active competitive force

independent

competitor

of

L 294/40

EN

Official Journal of the European Communities

22.11.2000

in competition to Sanitec’s remaining business on
the various markets concerned.

indicate

to the Commission whether

11. Sanitec, within the period of time set out in the
first sentence of point 9 or, thereafter, the Trustee,
shall
it
believes that a purchaser with which it is proposed
to sign a letter of intent or a contract fulfils the
description of a valid purchaser set out in point 10,
and if it considers that negotiations with such a
purchaser should continue. In doing so, Sanitec or,
alternatively,
the
Trustee
Commission with a fully documented and reasoned
proposal enabling the Commission to assess:

provide

shall

the

(i) whether the prospective purchaser satisfies the
to the

relevant purchaser criteria pursuant
provisions of point 10;

(ii)

the envisaged time of completion of
divestiture; and

the

(iii) whether the purchaser has, or reasonably can
be expected to obtain, all necessary approvals
from the competent regulatory bodies.

the prospective purchaser and,

Prior to approval, the Commission may request to
meet
if deemed
necessary, ask for the submission of business plans
for the Business.

12.

If the Commission has not within 10 (ten) working
days
following receipt of a fully documented
proposal for a prospective purchaser expressed in
writing its disagreement, negotiations with such
party as a valid purchaser shall be free to proceed.
In the case that the Commission has to request
additional
such
information shall constitute the starting point for
the 10 (ten) working days referred to above.

information,

receipt

the

of

and distinct
from that of Sanitec’s management
that shall, under the guidance and control of the
Trustee, be under instructions to manage it on an
independent basis in order to ensure its continued
viability,
its market value and its independence
from Sanitec. In addition, Sanitec undertakes that it
shall make no structural changes to the Business
without prior Commission approval.

after
it

than 10 (ten) working days

15. Sanitec undertakes that, as soon as practicable after
the Commission has adopted a favourable decision
under the Merger Regulation and in any event no
the
later
shall
Commission has adopted its decision,
appoint an independent trustee to be approved by
the Commission in accordance with point 16 to
in overseeing the ongoing
act on its behalf
management of
its
the Business,
continued viability and market value and, provided
Sanitec does not itself manage to sell the Business
to a valid purchaser as defined in point 10 within
the period of time set out in point 9, its rapid and
effective divestiture from the rest of Sanitec’s
activities (hereafter referred to as (cid:145)the Trustee(cid:146)).

to ensure

16. Sanitec’s proposal of

be

shall

the appointment of
by
approved

the
the
deemed
Trustee
Commission, if the Commission has not within 10
(ten) working days following receipt of a fully
documented and reasoned request
rejected in
writing any proposal submitted to it for approval.
The Trustee must be an investment bank or similar
institution, such as an auditing institution, having a
proven expertise.

17. Together with Sanitec’s request for approval of a
proposed Trustee, Sanitec shall submit a proposed
draft mandate setting forth in detail the scope of
the mandate of the Trustee and the responsibilities
to be performed under the mandate. Once the
mandate has been concluded, Sanitec shall not
make any changes to such mandate without the
Commission’s approval.

13. Provided the offers concerned have been received
from purchasers recognised as valid according to
the procedure laid down in point 10, Sanitec alone
shall be free to accept any offer or to select the
offer it considers best in case the of a plurality of
offers.

18.

D.

IMPLEMENTATION

14. Prior to and until completion of the sale of the
Business, Sanitec undertakes to ensure that
the
Business is held separate and managed as a distinct
and saleable entity with its own management
accounts. Sanitec
the
Business shall have its own management, separate

further undertakes

that

In adddition to the tasks mentioned above,
Trustee’s mandate
shall
responsibilities:

include

the
following

the

(i)

(ii)

the
to monitor
Sanitec
the
of
according to the undertaking;

satisfactory discharge by
into
obligations

entered

to provide every two months (or at the request
of the Commission at such other reasonable
times in the event of significant developments
in the divestment process) written reports to
the Commission on the progress of
the
discharge of the mandate, containing sufficient
information to enable the Commission to
assess all relevant developments in Sanitec’s

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Official Journal of the European Communities

L 294/41

negotiations in relation to the divestment of
the Business and the time frame within which
is expected. Such supporting
an agreement
documentation shall
include a report by the
management of the Business on its ongoing
commercial operations;

(iii) to provide, in the event that the Trustee is to
carry out the divestiture of the Business, the
Commission with sufficient information on the
prospective purchaser as described in point 10;

that

thus

ensure

(254) The proposed divestments cover the entire Gustavsberg
a
and will
bathroom business
competitive alternative to Sanitec exists in the Nordic
countries. Moreover, the divestments will remove the
entire overlap of Sanitec and Sphinx in the Nordic
countries, except for de minimis sales of ceramic sanitary
ware sold under the brands Sphinx and Warneton.
Given that these sales represent a market share of less
than [< 10 %]* in the overall Nordic area,
they are
considered to be insignificant and would thus not lead
to a strengthening of Sanitec’s dominant position for
ceramic sanitary ware in any of the Nordic countries.

(iv) to manage

the

pending

Business,

the
divestiture, on an independent basis in order
to ensure its continued viability, market value
and independence from Sanitec. In this respect,
the Trustee shall:

(cid:151) in consultation with Sanitec determine the
best management structure to ensure the
viability and marketability of the assets or
businesses to be divested,

(cid:151) monitor that Sanitec maintains the viability
and marketability of
the assests and/or
business to be divested in accordance with
this undertaking,

(cid:151) monitor

that no competitively sensitive
information concerning the assets or the
businesses to be divested is disclosed to
Sanitec for any other purpose than to
allow Sanitec to prepare for the divestiture,
and

(cid:151) independently

exercise
rights in the best interest of the Business.

Sanitec’s

voting

for

supplies

and mixers

to taps and mixers,

(255) The divestments will include the ceramic sanitary ware
production plant in Gustavsberg, Sweden, from where
its sales in the Nordic
Sphinx presently sources all
countries. With a capacity of
[(cid:133)]* pieces and a
utilisation rate of [(cid:133)]*, the plant is considered as a
viable source of
the Nordic countries.
Furthermore, the divested business will also include the
taps
company Gustavsberg V(cid:229)rg(cid:229)rda
Armatur AB. Although the notified operation has not
given rise to any separate competition concerns with
respect
several customers and
competitors in their
responses to the Commission’s
enquiries concerning the commitments indicated that
also the taps and mixers business of Gustavsberg should
the company. Following
be included in the sale of
further investigations, it became clear that the viability
of Gustavsberg would be significantly improved if the
acquirer of Gustavsberg was able to offer the full range
the reaction
of bathroom products. On the basis of
from the market, the Commission therefore considers it
important for the viability of the divested business that
the purchaser will have the possibility of acquiring this
business, should he so wish.

19. Sanitec shall provide the Trustee with all assistance
including copies of all relevant
and information,
documents, as the Trustee may reasonably require
in order to carry out its mandate.

(256)

20. A independent

the

and

arbitrator

prospective

jointly proposed by
Sanitec
and
purchaser
approved of by the Commission, shall, in the case
of a dispute between Sanitec and the prospective
purchaser and within the time limits set out in
point 9, decide [(cid:133)]*.

the

sales

close

companies

importance of

In addition, given the
and
continuous customer relationships and knowledge of the
form an
respective markets,
important part of the divested business. Currently, the
sales companies employ some 130 people in the Nordic
area. Furthermore, the divestment of the brand name
Gustavsberg worldwide for any and all products is
crucial in a market where established brand names are
very important. The Commission’s market investigation
has clearly confirmed that Gustavsberg is a significant
brand in the Nordic markets.

VIII. ASSESSMENT OF THE COMMITMENTS

(253) The Commission is

satisfied that

the commitments
proposed by Sanitec are such as to prevent the creation
or strengthening of a dominant position for ceramic
sanitary ware, bathtubs and shower
in the
Nordic countries.

screens

(257)

[(cid:133)]*.

(258) On the basis of the foregoing, the commitments will
contribute to the maintenance of competitive conditions
for the sale of ceramic sanitary ware, bathtubs and
shower screens in the Nordic area. Given that Sphinx,
through Gustavsberg, is present in all Nordic countries,
customers will have an additional independent source of
supply which will offer a range of products similar to
the ones offered by Sanitec.

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Official Journal of the European Communities

22.11.2000

(259) Finally, the terms and conditions for the divestitures,
which are consistent with the Commission’s practice,
are considered adequate.

IX. CONCLUSION

(260)

the foregoing,

In light of
the notified concentration
should be declared compatible with the common market
and the functioning of the EEA Agreement, subject to
the condition of full compliance with the commitments
given by Sanitec to the Commission, as set out
in
Section VII of this Decision,

HAS ADOPTED THIS DECISION:

Aandelen NV Koninklijke Sphinx Gustavsberg and all
the
in NV Koninklijke
depositary receipts of ordinary shares
Sphinx Gustavsberg, is declared compatible with the common
market and the functioning of the EEA Agreement, subject to
the condition of full compliance with the commitments given
by Sanitec to the Commission, as set out in Section VII of this
Decision.

Article 2

This Decision is addressed to:

Sanitec Ltd Oyj Abp
PO Box 447
FIN-00101 Helsinki
John Stenbergin ranta 2
FIN-00530 Helsinki

Article 1

Done at Brussels, 1 December 1999.

The concentration notified by Sanitec Ltd Oyj Abp on 1 July
1999, relating to the public offer for all outstanding ordinary
Stichting Administratiekantoor
shares not held by

the

For the Commission

Mario MONTI

Member of the Commission