2001/432/EC: Commission Decision of 12 July 2000 declaring a concentration to be compatible with the common market and the functioning of the EEA Agreement (Case COMP/M. 1813 — Industri Kapital (Nordkem/Dyno) (Text with EEA relevance) (notified under document number C(2000) 1988)
Date: 2000-07-12
Institutions: European Commission
Subjects: European Economic Area, application of EU law, chemical industry, economic concentration, financial institution

9.6.2001

EN

Official Journal of the European Communities

L 154/41

COMMISSION

COMMISSION DECISION

of 12 July 2000

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

(Case COMP/M. 1813 — Industri Kapital (Nordkem/Dyno)

(notified under document number C(2000) 1988)

(Only the English text is authentic)

(Text with EEA relevance)

(2001/432/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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,

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

Whereas:

(1)

On 24 January 2000, the Commission received a noti-
fication pursuant to Article 4 of Regulation (EEC) No
4064/89 (the Merger Regulation) of a proposed concen-
tration by which the Industri Kapital group (Industri
Kapital) would acquire within the meaning of Article
3(1)(b) of the Merger Regulation control of the whole of
the undertaking Dyno ASA (Dyno), Norway.

Regulation and raises serious doubts as to its compati-
bility with the common market. The Commission there-
fore decided to initiate proceedings pursuant to Article
6(1)(c) of the Merger Regulation and Article 57 of the
EEA Agreement.

I. PARTIES

(3)

(4)

Industri Kapital manages and controls a number of
private equity funds. These funds control numerous
undertakings. Among the undertakings controlled is
Neste Chemicals Oy (Neste), a chemical company and
Arca, a company active in materials handling systems.

Dyno is the parent of a group of companies active in
explosives, chemicals and plastic packaging. Dyno's two
core businesses are chemicals and explosives. Dyno's
chemical business can be divided into industrial resins,
wood and speciality adhesives, paper overlays, coating
field chemicals, methanol, plastics and
resins, oil
speciality polymers. Dyno has joint control
together
with CVC of
the Polimoon Group (Polimoon), a
company active, inter alia, in materials handling systems
and plastic packaging.

II. OPERATION

(2)

After examination of the notification, the Commission
concluded by Decision of 25 February 2000 that the
notified operation falls within the scope of the Merger

(5)

(1) OJ L 395, 30.12.1989, p. 1;

corrected version OJ L 257,

21.9.1990, p. 13.

(2) OJ L 180, 9.7.1997, p. 1.
(3) OJ C 166, 9.6.2001.

Industri Kapital 1997 Fund (IK 97) and Industri Kapital
2000 fund (IK 2000) will acquire all the shares in Dyno
through a Norwegian holding company, Nordkem AS.
Dyno's explosives operations will be transferred to a
holding company (NewCo Explosives) which will be
jointly owned by IK 97 fund and IK 2000 fund. The

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9.6.2001

(6)

(7)

(8)

(9)

(10)

shares in Dyno, which will be the remaining chemicals
operation, will be owned by the two funds, through
Nordkem AS and Nordkemi. IK 97 fund and IK 2000
fund, through their respective investment managers, will
be in control of both Nordkemi and NewCo Explosives.

and

speciality

chemicals

The rationale of the operation is to create a strong
Nordic-based
explosives
company. In speciality chemicals, the aim is to capture
synergies in resins, wood and speciality adhesives and
paper overlays and, according to the papers presented to
the board members, become the world market leader.
Industrial resins account for [< 60]* % (*) of the new
entity's business.

Industri Kapital acquired Neste from Fortum Corpora-
tion on 30 November 1999. Neste is the largest resin
producer worldwide with a strong presence in Europe
and North America. Based on the 1998 sales figures,
Neste produced 1 980 million tonnes of resins world-
wide. Borden Chemical UK Ltd (Borden) was the second
largest producer with 1 950 million tonnes and Georgia
Pacific the third with some 1 500 million tonnes. Dyno
is currently number four in the world in resins with a
strong presence in Europe and Asia. In 1998, Dyno
produced [some 1 billion] * tonnes of resins.

Industri Kapital Europa BV form separate economic enti-
ties.

legally binding. Furthermore,

(11) However, in a response to a formal request for informa-
tion, Industri Kapital has confirmed that the ‘underta-
kings’ referred to have been given orally, that Industri
Kapital has not made any notes or minutes which refer
to these undertakings on the occasions where they were
given and that in Industri Kapital's view the ‘underta-
Industri
kings’ are not
Kapital has confirmed that, contrary to its previous
statement,
it is not a requirement under the laws of
Jersey that the investors are represented in the board of
the investment management company. According to
IK 97 Ltd's permit to conduct business, it has only to
report changes in the composition of directors to the
relevant authority. Therefore, the composition of the
board of IK 97 Ltd can be determined by its only share-
holder, Industri Kapital Europa BV.

(12) On the basis of the foregoing the Commission concludes
that Dyno will ultimately be controlled by Industri
Kapital NV.

Industri Kapital has submitted that Neste's and Dyno's
most important customers of formaldehyde used resins
are found in the wood panel industry, i.e. in the manu-
facture of plywood, particle board, medium density
fibreboard (MDF) and oriented strand board (OSB).

(13)

III. CONCENTRATION

IK 1997 and IK 2000 are private equity funds. They are
not legal entities but the result of contractual arrange-
ments between the funds' respective investment manage-
ment companies, IK 97 Ltd and IK 2000 Ltd and the
investors. IK 97 Ltd and IK 2000 Ltd are incorporated
under the laws of Jersey. They exercise the voting rights
in the portfolio companies. The investors have no voting
rights.

IK 97 Ltd and IK 2000 Ltd are wholly owned by
Industri Kapital Europa BV which in turn is owned by
Industri Kapital NV Industri Kapital has claimed in the
notification that through ‘undertakings’ made to certain
investors in IK 1997 a number of investors are guaran-
teed representation on the board of IK 97 Ltd. Further-
more, Industri Kapital stated in the notification that it is
a precondition for IK 97 Ltd's permission to conduct
business as an investment management company under
the laws of Jersey that the investors, for whom IK 97
Ltd manage investments, shall be represented by a
majority on IK 97 Ltd's board. Industri Kapital states
therefore, that it can be argued that IK 97 Ltd and

(14)

(15)

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

IV. COMMUNITY DIMENSION

Industri Kapital and Dyno have a combined aggregate
worldwide turnover in excess of EUR 5 000 million
(Industri Kapital, EUR 6 475 million; Dyno, EUR 1 200
million). Each of them has a Community-wide turnover
in excess of EUR 250 million (Industri Kapital,
EUR 4 427 million; Dyno, EUR 250 million), but they
do not achieve more than two thirds of their aggregate
Community-wide turnover within one and the same
Member State. The notified operation therefore has a
Community dimension. It constitutes a cooperation case
pursuant
the EEA Agreement and
Article 2(1)(c) of Protocol 24 to that Agreement and
thus the case is to be assessed by the Commission in
cooperation with the EFTA Surveillance Authority in
accordance with Article 58 of the EEA Agreement.

to Article 57 of

V. COMPETITIVE ASSESSMENT

transaction will

The
in horizontal overlaps
result
between Dyno and Neste. Moreover, horizontal overlaps
will arise between the
controlled
company Arca and Polimoon in plastic materials
handling systems.

Industri Kapital

A. RELEVANT PRODUCT MARKETS

1. Formaldehyde-based resins

Both Dyno and Neste are active as producers of formal-
dehyde based resins. They produce resins for more or
less
for wood
application.

the same applications,

in particular

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L 154/43

(16)

(17)

(18)

(19)

Industri Kapital submits that urea formaldehyde based
resins (UF/(M)UF resins) and phenol formaldehyde based
resins (PF/P(R)F resins) may be delivered in different
mixes with different characteristics, such as difference in
water and/or heat resistance and hardness. UF/(M)UF
resins are combined with melamine for heat, light, mois-
ture and water-resistant applications or applications,
which require a high degree of hardness. PF/P(R)F resins
are combined with resorcinol to get strong bonding
characteristics,
in glue-bonded timber
beams. UF/(M)UF resin is a non-coloured product
whereas PF/P(R)F resin is reddish.

example

for

submits

that UF/(M)UF resins are
Industri Kapital
primarily used for bonding as adhesives in various kinds
of wood panel applications, for instance particleboard,
MDF, OSB and plywood. Industri Kapital submits further
that also PF/P(R)F resins are used to a significant degree
in wood panel applications. According to Industri
Kapital, both UF/(M)UF and PF/P(R)F resins are also used
for glue-bonded timber beams, veneer, parquet, paper
lamination and impregnation, insulation bonding and in
foundry processes. While Industri Kapital argues that,
from the demand side, UF/(M)UF and PF/P(R)F resins can
to a certain degree be used for the same applications,
submits
Industri Kapital nevertheless
that UF/(M)UF
should be regarded as
resins and PF/P(R)F resins
for
belonging to separate product markets due to,
instance, cost considerations and tradition.
In this
respect,
Industri Kapital has provided information,
which shows that PF/P(R)F resins are 60 % to 70 % more
expensive than UF/(M)UF resins.

Industri Kapital further submits that, for some applica-
tions, non-formaldehyde based resins
(Iso Cyanate
(P-MDI) and Polyvinyl Acetate (PVAc)) are effective
substitutes
Industri
Kapital argues that P-MDI is often used as a substitute
for water-resistant wood panels and PVAc is used in
non-structural wood applications, for instance in joiners.

formaldehyde based resins.

for

Industri Kapital finally argues that, from the supply side,
most producers of formaldehyde based resins produce
both UF/(M)UF and PF/P(R)F resins.
Industri Kapital
submits that the basic production principles, the basic
technology and know-how are the same for all kinds of
formaldehyde based resins and for different applications.
Industri Kapital argues further that the production lines
can easily be switched from the production of UF/(M)UF
resins to PF/P(R)F resins without significant cost.

two resins is limited due to technical reasons. These
technical reasons relate both to the product in question,
the inherent properties of the resins and to the technical
processes used. In comparison with PF/P(R)F resins, UF/
(M)UF resins are light in colouring, faster curing and
provide superior hardness and arc resistance. However,
UF/(M)UF resins are less durable, tend to break down in
hot and cold water and have less resistance to a variety
of chemicals. The investigation also shows that substitut-
ability is not possible due to considerable price differ-
ences, PF/P(R)F resins being more expensive.

(21) More particularly, the manufacturers of plywood have
indicated that UF/(M)UF and PF/P(R)F resins are not
substitutes in plywood production as UF/(M)UF resins
are not weatherproof and not suitable for the plywood
producers' main applications, which are in the construc-
tion and transport industries. In this respect, customers
have indicated that while the moisture resistance of an
UF/(M)UF resin based glue can be improved by adding
melamine, this does not make the glue weatherproof.

(22) As for the question whether it is possible to substitute
resins developed for one industry with resins used in
another industry, the investigation shows that the substi-
tutability is very limited. Customers have indicated that
resins are tailored for each end application and that they
differ in respect of the solids content, the degree of
polymerisation and additives. According to customers,
these factors have an impact on the reactivity, viscosity,
cold tack (pre-pressing properties) and the surface
activity of the glue together with the hardener system
that is used.

(23)

The investigation shows further that formaldehyde based
resins are not, in general terms, substitutable with non-
formaldehyde based resins. Customers have indicated
that any substitution would affect the product quality
and require changes to the production process, such as
building new production lines. Moreover, customers
who replied to the Commission's questionnaires have
indicated that substituting formaldehyde based resins for
instance with PVAc is not a realistic alternative, as PVAc
is some five times more expensive than PF/P(R)F resins.
Furthermore,
the investigation shows that PVAc and
PMD-I are dangerous substances and their use is regu-
lated in a number of Member States. In sum, the invest-
igation shows that
the limitations to use PVAc and
PMD-I are such that factors such as costs, equipment,
process and health considerations effectively limit substi-
tution.

a) Demand-side

(20)

The Commission's investigation confirms that UF/(M)UF
resins and PF/P(R)F resins
should be regarded as
belonging to separate product markets from the demand
side. Customers in the wood panel
resin
impregnated papers,
insulation materials and foundry
business have indicated that substitutability between the

industry,

(24)

The investigation confirms Industri Kapital's submission
that the manufacturing process and the equipment for
both types of resins are largely similar. All types of
formaldehyde based resins are made by mixing various

b) Supply-side

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9.6.2001

reactants together. The target molecule distribution of
the final resin is reached by adjusting various parameters
like temperature and pH. The molecules of the reactants
are chained together, in other words polymerised, while
the viscosity of the liquid increases. When the target is
reached, the remaining water is in some cases further
removed in an evaporation step.

(25) UF/(M)UF resins are produced by the controlled reaction
of formaldehyde with urea. PF/P(R)F resins are produced
by condensation from phenol or substituted phenol with
formaldehyde. The investigation shows that the manu-
facturing process is relatively straightforward, the poly-
merisation technology generally well known and has
been established for many years.

(26)

investigation shows, however,

The
switching
that
terms time-consuming and
production is in general
costly if the manufacturer is producing only one type of
formaldehyde based resin. With regard to switching
from producing UF/(M)UF resins to PF/P(R)F resins,
Industri Kapital has submitted that reactions between
formaldehyde and phenol
release large amounts of
excess heat. Therefore, and due to the toxic nature of
phenol, proper cooling and safety systems must be
installed. Competitors have confirmed the exothermic
nature of PF/P(R)F resins and the need to have more heat
transfer area. The investigation also shows that PF/P(R)F
resins are in general manufactured in smaller capacity
reactors than UF/(M)UF resins. Moreover, specific envir-
onmental permits are required for the production of any
products containing phenol. With regard to switching
from producing PF/P(R)F resins to UF/(M)UF resins,
Industri Kapital has argued that a reactor for PF/P(R)F
production does not require any alterations for the
production of UF/(M)UF resins besides possibly the
installation of a new charging system for dry products
since urea and melamine are dry products whereas
phenol, according to the parties,
Industri
Kapital has submitted that such an investment can be
made within a few months and without significant costs.

is liquid.

(27) While it may be true that switching from manufacturing
PF/P(R)F resins to UF/(M)UF resins may be easier than
the reverse, the investigation shows that neither switch
can be made without delay and additional costs. More-
over, as for the question whether manufacturers are able
to alternate between the production of different types of
resins on the same production line, competitors have
indicated that while it may be possible to move in and
out of the production of resins for various end-applica-
tions, switching requires specific technical installations.
Attention must be paid to issues such as cross-contami-
nation,
reactor cleansing and
storage regimes. Although Industri Kapital has submitted
that so called multipurpose reactors allow the switching
between producing both kinds of resins, almost all

temperature controls,

competitors who replied to the Commission's enquiries
have separate production lines for each resin.

(28)

Competitors have indicated that they manufacture resins
for a variety of end applications and that the composi-
tion and condensation of a particular type of resin varies
according to the end-use and the application method. It
has nevertheless been indicated to the Commission that
switching from manufacturing one type of resin to
another is not difficult, provided that the resins belong
to the same family of resins (UF/(M)UF or PF/P(R)F).

(29) With regard to the manufacture of P-MDI and PVAc
resins, the investigation shows that these resins cannot
be produced at plants designed for formaldehyde based
resins. The production process of for instance P-MDI
resins is both complex and hazardous, the technology
not in the public domain and some of the most impor-
tant raw materials are not generally available.

c) Conclusion

(30) On the basis of the foregoing and for the purposes of
this Decision, the Commission draws the conclusion that
UF/(M)UF resins and PF/P(R)F resins constitute separate
product markets from the demand side. Furthermore,
the Commission draws the conclusion that there is not a
sufficient degree of supply-side substitutability to justify
placing UF/(M)UF and PF/P(R)F resins in the same market
from the supply side. In view of the fact that the activi-
ties of Dyno and Neste overlap mainly in wood applica-
tions, the question whether narrower submarkets should
be defined for each type of resin can be left open for the
purposes of this Decision as the operation as notified
would lead to the creation of a dominant position
regardless of whether the operation was assessed at the
overall
level of PF/P(R)F resins or at the level of the
wood application resins.

2. Formaldehyde

(31)

(32)

(33)

Formaldehyde is made from methanol and is a colour-
less gas
compound which is dissolved in water
(formalin). It is primarily used in the manufacture of
UF/(M)UF and PF/P(R)F resins,
in plastics and for a
industrial chemicals, for instance as
variety of special
preservative in some paints and coating products.

Both Dyno and Neste manufacture
formaldehyde
primarily for captive use in their production of resins.
[< 30]* % of Neste's production and [< 15]* % of
Dyno's production of
formaldehyde is sold to third
parties.

Industri Kapital submits that formaldehyde constitutes a
separate product market since it has no realistic substi-
tutes as a chemical building block and in terms of price.
This has been confirmed by the Commission's invest-
igation.

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Conclusion

(34) On the basis of the foregoing and for the purposes of
this Decision, the Commission concludes that formalde-
hyde constitutes a separate relevant product market.

3. Methanol

(35) Methanol is a clear, colourless liquid primarily obtained
from natural gas. It has two main applications: methanol
is used in the production of formaldehyde, acetic acid
and a variety of other chemical additives which form the
foundations of a large number of secondary derivatives.
Methanol is also used in the fuel industry in the produc-
tion of unleaded gasoline. Industri Kapital submits that
methanol constitutes a separate relevant product market.

(36)

Both Dyno and Neste buy methanol from Methanor, a
joint venture between Dyno, Akzo Noble and DSM
Melamine. Dyno owns 40 % of Methanor, Akzo Nobel
and DSM Melamine 30 % each. Dyno and Neste also
distribute small quantities of methanol to third parties.
Therefore, there is both a horizontal and a vertical rela-
tionship between Dyno and Neste.

Conclusion

(37)

The Commission considers methanol to be a separate
product market (4).

4. Materials handling systems

(38)

containers

containers

(stack-nest

through its

Both Industri Kapital,
subsidiary Arca
Systems AB (Arca), and Polimoon produce plastic mate-
rials handling products. For the production of plastic
materials handling systems different techniques can be
used, injection moulding as well as blow moulding and
rotation moulding. These products consist in principle
and stackable
of
containers) and pallets which are used for the transport
and storage of goods in the manufacturing, distribution
and retail sector and of beverage container trays and
crates, which are used by manufacturers and retailers of
food and beverages to transport and to store bottles or
other packaging for liquids. Materials handling systems
are often designed to be used in pooling system, which
collects
reuse by the
distribution company or the manufacturer. Producers
manufacture standard materials handling products but
also products according to the customers' specifications.
In the course of the investigation Industri Kapital stated

the transport packaging for

(4) See also Commission Decision of 31 March 1993, Case IV/M.331

— Fletcher Challenge/Methanex.

that plastic foldable pallet containers, plastic pallets and
plastic small-parts storage systems also form part of the
market of materials handling products.

(39)

Industri Kapital has identified in the notification three
areas of overlap between Arca and Polimoon in mate-
rials handling products: stackable containers, stack-nest
containers and bottle trays.

(40)

Stackable containers are used primarily in the manufac-
turing industry
in-house materials/components
handling.

for

(41)

(42)

(43)

(44)

Stack-nest containers are mainly used for the handling
and transport of food. They are available either with or
without a lid in different sizes. Arca produces sizes
ranging from 18 to 87 litres and Polimoon specialises in
two types of containers, a 37-litre and a 50-litre
container. Stack-nest containers will sit in each other
when empty.

Bottle trays are used for the transport of beverage bottles
to the retail outlet and for the display of these bottles in
the place of sale. Bottle trays are a relatively new
product and have recently begun to replace traditional
bottle crates. Bottles in trays are more visible than in
crates and are therefore attractively displayed. The use of
trays also makes loading easier and more flexible. At
present, bottle trays are used primarily for PET bottles.
Industri Kapital submits that bottle trays are normally
produced according to customers' specific demands
since their bottles differ in shape and size. Therefore,
different bottles cannot be stacked in the same type of
Industri
trays due to differences in shape and size.
Kapital nevertheless submits that a manufacturer deliv-
ering to one customer can easily switch production to
meet other customers' specifications.

Both companies also produce plastic bottle crates for the
storage and transport of bottles. Furthermore, both
companies produce plastic pallets and plastic small-parts
storage systems. Arca also produces plastic foldable
pallet containers.

Industri Kapital submits that the relevant product market
covers all types of materials handling products and that
a further distinction according to the type of the product
is not necessary. Industri Kapital further submits that
materials such as wood, metal, cardboard or plastic are
largely substitutable for materials handling products.
Overall,
the relevant
product market is the market for materials handling
products including all kinds of materials.

Industri Kapital

submits

that

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Official Journal of the European Communities

9.6.2001

(45) As for the substitutability between different materials,
the Commission's investigation shows that substitut-
ability is limited both from the demand and the supply
side. The investigation shows that almost all customers
use containers or trays made of plastic and that, in the
face of a 5 % to 10 % price increase, they would not
switch to other materials. Plastic products can therefore
not be substituted by products made out of other mate-
rials. From the supply side, competitors have indicated
that changing materials and processes is very difficult
and the inherent differences between wood, metal and
plastic make direct conversion impossible. By way of
example, it has been indicated to the Commission that
the entry cost for a wooden container manufacturer to
switch to producing injection moulded plastic containers
would be EUR 15 million. Such entry would also
require specific know-how and take up to two years.

(46)

are

containers

In principle, different materials handling products
cannot be substituted by the user with other material
handling products. With regard to bottle
trays,
customers have indicated that switching is difficult as
trays form part of an integrated system. Some third
parties have indicated that stack-nest containers and
stackable
substitutable. However,
containers used in the food industry must be suitable
and approved for the handling of food. Furthermore,
prices and transportation costs between the two types of
containers differ. Although most producers of materials
handling systems are able to manufacture a range of
different products, considerations of supply-side substi-
tution do not
that all materials
handling products form one product market. A switch
of production which would require investment in new
moulds would involve substantial costs.

lead to the result

Conclusion

(47) On the basis of the foregoing, it seems to be appropriate
to analyse the effects of
the concentration for each
product group separately. However, according to the
figures provided by Industri Kapital the concentration
would also lead to the creation or strengthening of a
dominant position if all plastic material handling prod-
ucts were to constitute one product market. The exact
market definition can, therefore, be left open.

5. Plastic containers

(49)

(50)

(51)

Industri Kapital submits that Superfos and Polimoon are
not primarily active in the same segments of the pack-
aging market. While Polimoon has specialised in high
volume (up to 50 litres) canisters and drums primarily
for the chemical/technical industry and in the food pack-
in lower volume
aging sector, Superfos
(50 ml to 33 litres) containers for the food, chemical/
technical and pharmaceutical industry. Industri Kapital
has identified overlapping activities in the following
segments: pots and tubs below 2 litres, containers
between 2 and 35 litres, and bottles and canisters below
5 litres.

specialises

in particular for marketing reasons,

Industri Kapital submits that the relevant product market
is the packaging market which consists of all kinds of
packaging made out of all kinds of materials (metal,
glass, cardboard, plastic). However, customers have indi-
cated that
they
would not be able to switch from a particular type of
container to another. Tailored or custom-designed prod-
ucts play an important role in certain consumer prod-
ucts
food, baby care and
cosmetics. In addition, switching to a different type and
size of a container could require technical changes to the
filling lines and would therefore not be possible without
changes to the machinery and tooling and investment.
This applies even more to the arguments concerning
switching between different materials.

lubricant oils,

such as

From the supply side, the Commission's investigation
shows that different techniques are used in the produc-
tion of plastic containers. For instance, it has been indi-
cated to the Commission that closed and open top
containers can be made using the blow moulding tech-
nique while open top containers with lids are commonly
the
injection moulded or
thermoformed. Unless
producer has all
these manufacturing processes and
lines, the possibility of switch from one production tech-
nology to another is limited without investment cost
and time. Moreover,
it has been indicated to the
Commission that few companies cover the whole range
of plastic containers but restrict themselves to certain
sizes, applications and customer groups.

Conclusion

(52) On the basis of

the

foregoing,

the Commission
concludes that
there is no justification for placing
containers made of all different kinds of materials in the
same market. The Commission therefore considers that
the relevant market is limited to plastic.

(48) Dyno, through its subsidiary Superfos AS (Superfos), and
Polimoon are both active in the manufacture of plastic
containers used for packaging. These are canisters, pails,
buckets and drums made out of plastic which are used
in the distribution and retail sectors, for example in the
food industry, the chemical industry and the pharma-
ceutical

industry.

(53)

The exact market definition, and whether each of the
aforesaid segments constitute separate submarkets, can
be left open because the transaction does not raise any
competition concerns as to the compatibility of
the
operation with the common market, regardless of the
market definition used.

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L 154/47

B. RELEVANT GEOGRAPHIC MARKETS

Kapital has itself recognised in the papers presented to
the board members, that industrial resins have a short
shelf life and cannot be transported over a long distance.

(54)

(55)

(56)

(57)

(58)

1. Formaldehyde based resins

Industri Kapital submits that UF/(M)UF and PF/P(R)F
resins are produced and traded throughout Europe,
transported over long distances and frequently traded
cross-border. Therefore,
the
relevant geographic markets for UF/(M)UF and PF/P(R)F
resins are at least EEA wide, but should possibly also
include the Baltic States, part of Russia and countries in
central and eastern Europe.

Industri Kapital submits,

For the reasons set out below, however, the Commission
considers that,
in relation to Finland, the market for
formaldehyde based resins is national. With regard to
Norway,
is either national or, at most,
comprises also Sweden.

the market

Comments obtained from customers suggest that the
effects of the operation should be assessed at national
level. Imports are not generally
or, at most, regional
considered to be a realistic alternative first of all due to
high transport costs. Customers, in their replies to the
Commission's enquiries, have indicated that transport
costs can account for as much as 30 % of the resin sales
price and that the radius for transporting formaldehyde
based resins is 400 km to 700 km. Formaldehyde
based resins are said to sell at a relatively low price in
relation to weight and transport is considered to be an
important cost factor.

It is to be noted that Industri Kapital itself has submitted
that proximity to the customer is important due to the
cost of transportation. In this respect, Industri Kapital
has supplied information concerning transport costs.
According to Industri Kapital, the cost of transportation
by truck per tonne and kilometre is [< 1] * DM/tonne
per km for customers close by. For distances of
1 000 km and more the cost of transport is [< 0,5] *
DM/tonne and [< 0,5] * DM/tonne for distances of
700 km or more. In other words, a customer close by
pays up to [< 30] * DM/tonne and a customer within
the radius of 100 km to 700 km pays [> 100] * DM/
tonne, four times more than customers close by.

The investigation also shows that resins require specific
transport conditions due to their perishable nature. In
this respect, it has been indicated to the Commission
that for instance the transport of PF/P(R)F resins for
wood applications and insulation purposes
requires
specific containers and conditions, as the product is
damaged if the temperature drops below a certain level.
The requirement for special transport raises the price of
the final product but may also affect the shelf life of a
resin. Indeed, some customers have indicated that if the
temperature rises above 20 Celsius degrees, the storage
Industri
the product decreases significantly.
time of

(59)

(60)

(61)

(62)

Customers in the plywood and isolation materials indus-
tries have also indicated that formaldehyde based resins
have an inherently short life span. By way of example,
the life span for some resins used in the plywood
industry is said to be only three weeks. This limits
storage possibilities and makes frequent deliveries neces-
sary, emphasising the importance of suppliers close by.
As a result, the industry operates at low inventory levels.

Lastly, the investigation shows that the development of
new resins is a slow process where the supplier and the
customer have to work in close cooperation. In practice,
third parties have indicated that physical proximity of
the supplier to the customer's production site facilitates
this cooperation.

Customers in the plywood,
insulation materials and
resin impregnated papers industries in Finland have indi-
cated to the Commission that they source their resins in
Finland.

explained where

The information provided by Industri Kapital demon-
its UF/(M)UF
strates that Neste supplies the bulk of
resins from its Finnish plant in Finland [< 80] * % and
Industri
some small amounts to Norway [< 10] * %.
Kapital has not
remaining
[< 20] * % of the production is delivered. The bulk of
Neste's production of PF/P(R)F resins in Finland is sold in
that country too [> 80] * %. There are some small deliv-
eries to Sweden [< 10] * % and Norway [< 10] * %.
Industri Kapital has not explained where the remaining
[< 10] * % of the production is shipped. Dyno's Finnish
plant made all its deliveries of formaldehyde based resins
in Finland.

the

(63) An exception of the pattern whereby the bulk of the
production is supplied in the country of supply appears
to be Norway, where Dyno has two plants producing
formaldehyde based resins: one in Lilleström and the
other in Engene. In 1998, the Engene plant produced
[some 60 000] * tonnes of UF/(M)UF resins and [some
6 000] * tonnes of PF/P(R)F resins. The smaller Lilles-
tröm plant produced [some 20 000] * tonnes of UF/
(M)UF resins and [some 30 000] * tonnes of PF/P(R)F
resins. While the bulk of the production from the larger
Engene plant was sold in Norway [< 90] * % of UF/
(M)UF resins and [> 80] * % of PF/P(R)F resins,
the
Lilleström plant supplied only [< 20] * % of its produc-
tion of UF/(M)UF resins and [< 30] * % of PF/P(R)F
resins in Norway. A large part of the production from
this plant was exported to Germany [> 20] * %, Austria
[> 20] * % and Sweden [> 0] * %. Deliveries of smaller
amounts were also made to a number of other Member
on
States.

Commission

estimated,

The

has

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the information submitted by Industri
the basis of
Kapital in the notification and in a subsequent reply to
the Commission's questionnaire, that the total exports
from the two Dyno plants represent [> 30] * % for UF/
(M)UF resins and [> 10] * % for PF/P(R)F resins.

(64) However, while it is true that Dyno exports part of its
formaldehyde based resins to other Member States in
continental Europe, the investigation shows that imports
into Norway from continental Europe are practically
non-existent. None of the customers who replied to the
Commission's enquiries in Norway have indicated that
they source formaldehyde based resins outside the
Nordic region. Exports cannot alone be taken as
evidence of a wider geographic market because the
absence of imports from continental Europe demon-
strates that imports are not a competitive alternative for
customers located in Norway.

(65) As for continental Europe, the investigation suggests
that customers source their resins on a wider than
national base and there is evidence of cross-border trade
with countries located nearby. Therefore, the markets in
continental Europe are larger than national.

(66)

Industri Kapital has submitted that customers of formal-
dehyde based resins could source their supplies from the
Baltic States, Russia and countries in central and Eastern
Europe.

(67) However,

the requirement

the Commission's investigation shows that
none of the resin customers contacted currently source
from these countries. Customers do not consider the
manufacturers in those countries as a realistic alternative
due to high transport costs, the relatively short shelf life
for
of resins, quality considerations,
frequent supplies and supply security in the long term.
Customers have also indicated in their replies to the
Commission's enquiries that imports from those coun-
tries would not be possible because a number of
different resin specifications are needed and the product
range and the quality of the suppliers in the Baltic States,
Russia and other countries in central and eastern europe
is not sufficient due to the outdated technology used. In
this respect, customers have indicated that
the only
producer with sufficient know-how about formaldehyde
based resins, Lignums in Riga, is manufacturing resins
under the licence of Neste.

Conclusion

regarded

(68) On the basis of the foregoing and for the purposes of
this Decision, the Commission concludes that Finland
constitutes a separate relevant geographic market. With
regard to Norway, the question whether Norway should
be
relevant
geographic market or whether the geographic scope
should be extended to include also Sweden can be left
open as the assessment of the case would not be materi-
ally affected regardless of the market definition used. The
possibility cannot be excluded, however,
the
geographic scope for various end-application resins

constituting

separate

that

as

a

than those for wood applications could be
other
different from what has been indicated in this Decision.

2. Formaldehyde

(69)

Industri Kapital submits that formaldehyde is an interna-
tionally traded commodity and prices are relatively
homogenous in all parts of the world. Industri Kapital
therefore argues that the relevant geographic market for
formaldehyde is at least EEA-wide but probably includes
neighbouring countries such as Russia, the Baltic States,
Poland, Hungary, Slovakia and Turkey.

the sale of

(70) Although Industri Kapital argues that formaldehyde can
be profitably transported over long distances, it admits
that the transportation costs are significant due to the
stability problems related to the storing of formaldehyde
for long periods of time. Industri Kapital submits further
in its reply to the Commission's Statement of Objections
formaldehyde to third parties is of
that
limited, off the margin nature, which means that the
producers do not have more than very limited marketing
organisations. According to Industri Kapital, the formal-
dehyde producers' merchant activities are therefore often
restricted to sales nearby. Industri Kapital nevertheless
argues that formaldehyde producers in a certain area
could fairly easily expand the geographical scope of their
marketing efforts if the prices for merchant formalde-
hyde rose in a nearby area.

(71)

(72)

(73)

The Commission's investigation shows that the scope of
the geographic market
trading formaldehyde is
for
narrower than the EEA. Indeed, a number of replies to
the Commission's enquires show that formaldehyde is
sourced at national or, at most, regional level rather than
EEA-wide. All Finnish customers contacted have indi-
cated to the Commission that they buy formaldehyde
only in Finland. The reasons for the limited sourcing
radius of formaldehyde are set out below.

First, Industri Kapital has explained that formaldehyde
stores relatively poorly and large resin manufacturers
therefore normally produce their own formaldehyde
internally. Indeed, the open market for formaldehyde is
relatively small,
total
capacity.

approximately 10 % of

the

Second, the Commission's enquiries show that, due to its
formaldehyde is normally transported
toxic nature,
(formaldehyde with high solid
dissolved in water
contents can be transported over longer distances, but
the transport of solid formaldehyde is not usual). Liquid
derivatives of formaldehyde have a high level of water
content which renders the transport over long distances
unprofitable. It has been indicated to the Commission
that formaldehyde in liquid form is transported within a
radius of approximately 320 km from the production
plant. Industri Kapital submits that the costs of trans-
porting formaldehyde are comparable to resin transpor-
tation costs.

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Official Journal of the European Communities

L 154/49

(74)

The information provided in the notification shows that
the parties' plants tend to supply formaldehyde on
mostly national and, at most, regional bases. By way of
example, all Dyno's plants manufacturing formaldehyde
(in Norway, Denmark, Finland and Ireland)
supply
[> 80] * % of their production in the country where the
plants are located. Neste's plant
in Finland supplies
[> 70] * % of the production in Finland and [< 20] * %
to Sweden. Industri Kapital has explained in its reply to
the Statement of Objections that, for example, Neste's
Finnish resin plant suffers from shortage of formalde-
hyde during peak production periods and,
therefore,
imports formaldehyde from Neste's plant in the Nether-
lands and, from time to time, from Casco and Perstorp
from Sweden. However, these imports are spot deliveries
and do not take place on a continuous basis. Moreover,
it is to be noted that the imports axe typically between
formaldehyde
the
customers who replied to the Commission's question-
naires import formaldehyde.

and resin producers. None of

(75) With regard to continental Europe, it is to be noted that
Neste has no plants in Belgium and it supplies some
quantities to Member States which are physically close
by,
in particular to Germany, from its plants in the
Netherlands and Austria.

(76)

transported over long distances.

These distribution patterns show that formaldehyde is
In this respect,
not
Industri Kapital has submitted that Neste supplies a
customer in Norway from its plant in the Netherlands
and that this confirms the parties' submission regarding
the geographic scope of the market. The Commission
notes, however, that these deliveries constitute less than
[<5] * % of the total production of that plant and cannot
be taken as evidence of a market comprising the whole
of EEA.

the investigation shows

(77) As to Industri Kapital's submission that suppliers could
be found in Russia, the Baltic States, Poland, Hungary,
Slovakia and Turkey,
that
sourcing from these countries is not considered realistic
essentially for the same reasons as apply to formalde-
hyde based resins above. It is not necessary to define any
other geographic markets because on any other conceiv-
able geographic market on which the parties' activities
overlap the combined market shares would not raise
competition concerns.

Conclusion

(80)

Industri Kapital's submission is line with the Commis-
sion's previous decision concerning methanol (5). In that
decision the Commission found that although methanol
is internationally traded as a commodity, conditions of
competition differ between Europe, North America and
Asia.

Conclusion

(81) A precise definition of the relevant geographic market
does not need to be established in this case as the
concentration will not create or strengthen a dominant
position even on the basis of the narrowest geographic
market. In line with the Commission's previous decision
and for the purposes of this Decision, the market for
methanol will be assessed at the EEA-wide level, the
narrowest area where conditions of competition are
homogenous.

4. Materials handling systems

(82) Arca has plants in Sweden, Finland, Germany, France
and Spain. Polimoon has plants in Finland, Sweden,
England and the Netherlands. Industri Kapital submits
that the average transportation distances differ between
different kinds of materials handling systems depending
on whether they can be folded or nested. Industri Kapital
submits that the transport costs for stack-nest containers
are relatively low due to the possibility to nest the
containers during transportation. Therefore,
Industri
Kapital submits that the relevant geographic market is
EEA wide. As for stackable containers, Industri Kapital
submits that these containers cannot be nested but are
locked into each other when transported and therefore
take up more space. The transport costs are therefore
relatively high and Industri Kapital submits the Nordic
countries as the relevant geographic market. The same
reasoning applies to crates. Lastly, concerning bottle
trays, Industri Kapital submits that these are nestable and
can therefore be transported over long distances. Despite
the fact that standards for bottles and thus for the trays
differ from one country to another,
Industri Kapital
submits that the relevant geographic market for bottle
trays is EEA-wide.

(78) On the basis of the foregoing and for the purposes of
this Decision, the Commission concludes that the rele-
vant geographic market is Finland.

(83)

3. Methanol

(79)

Industri Kapital submits that methanol is traded interna-
tionally. However, Industri Kapital submits that due to
tariff barriers, transport costs and varying demand, the
geographic market should possibly be divided into three
main demand areas: Europe, North America and Asia.

The investigation has shown that the transport costs for
materials handling systems are relatively high. Polimoon
submits that the approximate supply radius for nestable
materials handling systems is 400 to 500 km. For
beverage tray systems it is submitted that the transport
distance is longer, but that the geographic market does
not go beyond the Nordic area due to customer service
requirements.

(5) Decision of 31 March 1993, Case No IV/M.331 — Fletcher Chal-

lenge/Methanex.

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Official Journal of the European Communities

9.6.2001

(84)

is

an important

transportation costs
Customers have confirmed that
limit
the area where material handling systems are
sourced. They have also indicated that proximity of the
supplier
factor. Empty materials
handling systems are a relatively voluminous product in
relation to value and weight even if folded or nested. A
returnable transport packaging is not intended to be
transported over
longer distances but between the
producer of the product to be packaged and the reci-
pient of that product such as the retail outlet. In addi-
in the case of a pooling system, the product is
tion,
usually specially designed for that system, which is only
used in a designated area.

(90)

Industri Kapital has verified and amended the market
share information it submitted in the notification for
PF/P(R)F and UF/(M)UF resins.
Industri Kapital has
explained that the new figures are based on new and
more complex calculations and give a better indication
of the position of Dyno and Neste on these markets. In
the Nordic countries, the market position of the new
entity is not materially changed in view of the new
figures.

a) P F / P ( R ) F r e s i n s

Conclusion

(85)

Therefore, on the basis of the foregoing, the geographic
market for all types of materials handling systems does
not extend beyond Sweden, Finland and Norway nor is
it even national.

5. Plastic containers

(86)

(87)

Industri Kapital claims that the geographic market for
plastic containers is EEA-wide.

investigation shows

that empty
The Commission's
plastic containers are a low weight but a large volume
product. This results in relatively high transport costs
and limits to a certain extent the radius within which it
is economical to source plastic containers. On the other
hand, it has been indicated to the Commission that the
transport costs can be outweighed by economies of
scale. The investigation shows that large suppliers cover
a geographic market which is regional and sometimes
even EEA-wide and large customers, in turn, source on a
regional and/or EEA-wide basis.

Conclusion

(88)

In view of the foregoing, the Commission concludes that
geographic markets for plastic containers are at least
regional. Given that the activities of Superfos and Poli-
moon overlap in the Nordic area (Finland, Sweden,
Norway and Denmark),
this
for
Decision, this area will be considered to constitute the
relevant geographic market.

the purposes of

for

[> 70] * % of

(91) On the assumption of national markets, based on the
information submitted by Industri Kapital, Dyno and
Neste would attain high market shares in Finland and
Norway in the market for PF/P(R)F resins. Dyno and
Neste would jointly account
the
market in Finland (Dyno [> 20] * %, Neste [> 50] * %
and [> 60] * % in Norway (Dyno [>55] * % Neste
[> 50] * %). Industri Kapital submits that Perstorp has
[<10] * % of the market in Finland. In Norway, Industri
Kapital submits that Perstorp accounts for [> 20] * % of
the market and Casco [> 5] * %. Assuming a regional
market comprising Norway and Sweden, the Commis-
sion has estimated on the basis of the figures submitted
by Industri Kapital that Dyno and Neste would jointly
account for [> 20] * % of the market for PF/P(R)F resins
in that area (Neste:
[> 10] * %).
Perstorp would account for [> 30] * % of the market
and Casco would have [> 20] * %. Given that
the
production of Neste and Dyno is directed mainly to
wood application resins, considering this end application
area alone, the position of the parties would even be
stronger.

[> 10] * %, Dyno:

(92)

In Finland, the market position of Dyno and Neste has
been relatively stable over the past
three years. By
contrast, in Norway Neste has increased its market share
from [< 5] * % in 1997 to [> 5] * % in 1999. During
the same period, Dyno's market share has dropped 10
percentage points from [> 60] * % in 1997 to [<60] * %
in 1999. It can thus be seen that the bulk of the decline
in Dyno's market share has been picked up by Neste.

(93)

for
In Sweden, Dyno and Neste would account
[> 20] * % of
for PF/P(R)F resins (Dyno
[< 10] * % Neste [< 30] * % while Casco accounts for
some [> 20] * % of the market.

the market

C. ASSESSMENT

b) U F / ( M ) U F r e s i n s

1. Formaldehyde based resins

(94)

Actual competition

(89)

share figures
Industri Kapital has provided market
relating to formaldehyde based resins both including and
excluding captive production. However, Industri Kapi-
tal's estimates of the market shares excluding captive use
do not materially differ from those calculated on the
basis of the total market volume.

the combined market

In UF/(M)UF resins, Dyno and Neste would jointly
achieve very high market shares in two Nordic countries:
in Finland,
share would be
[> 80] * % (Dyno [> 40] * %, Neste [> 30] * % and in
Norway [> 80] * % (Dyno [> 80] * %, Neste [< 10] * %.
Assuming a regional market comprising Norway and
for
Sweden, Dyno and Neste would jointly account
(Dyno:
[> 30] * % of
[> 30] * %, Neste:
the
figures submitted by Industri Kapital, the Commission
for
that Casco would
has

the UF/(M)UF resins market

[< 10] * %. On the basis of

estimated

account

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Official Journal of the European Communities

L 154/51

that market and Elf Atochem for
[> 40] * % of
[< 20] * %. Given that
the production of Neste and
Dyno is directed mainly to wood application resins,
considering this end application area alone, the position
of the parties would be even stronger.

(95)

In Finland and Norway, the new entity's position would
be far superior to that of
Indeed,
Industri Kapital has submitted that Casco would have
[<10] * % in Finland. In Norway, Casco would be the
largest competitor with [> 10] * % of the market while
Borden would have [< 10] * % of the market.

the competitors.

(96) On the basis of the foregoing, Neste and Dyno would
jointly achieve a very strong position in Finland and
Norway with only a few competitors on the market.

Potential competition

(97)

In the following, the arguments apply both to PF/P(R)F
as well as UF/(M)UF resins.

(98)

Industri Kapital argues that new entry to the Nordic
market would easily be feasible. According to Industri
Kapital, the market for PF/P(R)F resin has been growing
slightly above the European average. As for UF/(M)UF
resins, Industri Kapital submits that the growth has been
slightly below the European average.
Industri Kapital
adds further that the growth prospects differ signifi-
cantly depending on application areas. According to
Industri Kapital, future growth is expected in the Finnish
the glue bonded timber beam
plywood industry,
industry and the MDF industry. Moreover,
Industri
Kapital
that new plants have either been
constructed or the construction has been announced in
the particleboard industry. Industri Kapital also argues
that margins in the Nordic countries do not significantly
differ
Industri
from those in other Member States.
Kapital further submits that the probability of market
increase due to customers'
entry post-merger will
multiple
Industri Kapital
argues that
the resin customers could invite a new
supplier to enter the market.

sourcing policies. Finally,

submits

(99)

The Commission notes that there has been no new entry
to the Nordic market in formaldehyde based resins in
general or in Finland or Norway in particular for the
past five years. The investigation shows that new entry is
not viable in the foreseeable future either for the reasons
set out below.

(100) More particularly,

the investigation shows that new
entry in the Nordic area is difficult due to the fact that
the market
for industrial resins is considered to be
mature and the supply and demand in balance. The
Commission notes that the rate of capacity utilisation in

Neste's and Dyno's plants in Finland and Norway for
PF/P(R)F resins is [> 40] * % and for UF/(M)UF resins
[> 30] * %. Given this excess capacity, Dyno and Neste
could use the threat of a temporary capacity increase as
a deterrent to discourage new entry. Industri Kapital has
submitted in the notification that while a new plant
producing formaldehyde based resins may be set up in
12 to 24 months and would cost EUR [> 5] * million,
expansion of existing capacity is less expensive (approxi-
mately EUR [< 5] * million and could be carried out in
a shorter time period,

in 6 to 12 months.

(101) New entry is made difficult also due to the fact that
customers themselves have no access to the specific
resin recipes they purchase. The Commission's invest-
igation shows that customers typically have only limited
knowledge of the specific recipes. Therefore, in case of
new entry, unless the supplier already has suitable
recipes available, the development of a resin must basi-
cally begin from scratch. The Commission's enquiries
show that it would be difficult for a newcomer to enter
the market and develop resins relatively quickly for
instance for the plywood industry due to the special
know-how required to understand the product itself and
the various wood species used in production, unless the
producer already has the specific know-how required. In
their replies to the Commission's enquiries, customers
and competitors have estimated that, for an experienced
supplier, it may take up to two or three years to develop
a new resin which can be marketed. Some customers
have also indicated that they use up to 50 different
resins, some of which can only be sourced from Dyno,
the new
some only from Neste. Therefore, even if
it appears
entrant was an established resins producer,
unlikely that this producer would be able to supply
immediately all
for instance,
plywood manufacturers or paper manufacturers. There-
fore,
the comprehensive supply response from new
entry would not be immediate.

the resins required by,

(102) Moreover, the investigation shows that new entry is
made unattractive due to the relatively small size of the
Nordic market, the isolated geographic location, high
capital expenditure requirements and long and difficult
processes, for obtaining permits.

(103)

Industri Kapital has itself submitted that the manufacture
of industrial resins is scale-driven business particularly in
raw-material purchase, logistics, production and R & D.
Moreover, critical success factors according to Industri
Kapital are raw material volume, proximity to customers
and leading production technology and application
service. Under these conditions, it will be difficult for a
new entrant to compete against a dominant supplier.

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Official Journal of the European Communities

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(104)

Industri Kapital argues further that customers who, at
present, do not have captive production can set up their
own production facilities for the manufacture of formal-
dehyde based resins in a relatively short period of time.
Industri Kapital argues that some of
the customers
already produce their own resins in-house. However,
apart from two producers of insulation materials, no
other customer in the Nordic area has the possibility to
produce its resins in-house.

themselves. The replies

(105) All customers contacted by the Commission have indi-
cated that, in case of a price increase of 5 % to 10 %,
they would not consider starting to produce formalde-
to the
hyde based resins
Commission's questionnaires show that a resin plant
would require not only a significant financial investment
but also know-how and expertise in the development of
resins. Know-how is not readily available, for instance,
in paper impregnation resins and customers are, in any
case,
themselves to something
which is not their core business. Moreover, customers
have indicated that such production would not be prof-
itable due to the relatively small amounts of resins
required. Therefore,
the Commission concludes that
starting in-house production would not be an economic-
ally viable solution for customers to react to a price
increase.

to commit

reluctant

(106) Customers have also indicated that, in case of a price
increase, they would not consider starting to import
from Russia, the Baltic states or countries in central and
the same reasons as
eastern Europe essentially for
relevant
discussed above
geographic market. Customers do not consider
the
manufacturers in these countries as a realistic alternative,
inter alia due to high transport costs,
limited product
range, low quality, and the absence of supply security.

in connection with the

(107) On the basis of

it

the foregoing,

is concluded that
competitive pressure through potential competition
from Russia or the Baltic states or via new entry to the
likely. Given also the limitations
Nordic area is not
is
relating to the captive production of
concluded that potential competition is not sufficient to
offset the market power of the new entity in the market
for formaldehyde based resins in Finland and Norway.

resins,

it

Comments of third parties

(108) Customers situated in the Nordic countries have gener-
ally indicated that competition between Dyno and Neste
in the two markets for formaldehyde based resins, UF/
(M)UF and PF/P(R)F, has been intensive. The comparison
of quantities sourced by customers from the two produ-
cers over the last three years indeed confirms this and
from each
demonstrates

quantities

sourced

that

producer have changed, often drastically, from one year
to another, due to differences in prices and in other
supply conditions.

(109) Customers in particular in the plywood industry, insula-
tion materials
and resin-impregnated paper have
expressed serious concerns over the proposed transac-
tion. Customers have indicated that the operation as
notified would lead to price increases, potential foreclo-
sure of the market, reduction of the current product
range and reduction in R & D.

(110) Following the operation, Industri Kapital would become
the dominant supplier for formaldehyde based resins in
Finland and in Norway. In Finland, it would have a de
facto monopoly. Given the fact that there are only a few
alternative suppliers, who are considerably smaller than
the combined entity, and the absence of potential
competition, Industri Kapital could act independently on
the market and raise prices.

Conclusion

(111)

In view of the foregoing, the Commission concludes that
the operation would lead to the creation of a dominant
position in PF/P(R)F resins and UF/(M)UF resins in
Finland. The question whether Norway constitutes a
distinct geographic market or forms part of a wider
geographic market comprising Norway and Sweden can
finally be left open because the undertaking to divest
one of the Finnish plants necessarily removes any poten-
tial competition problem in Norway.

2. Formaldehyde

Actual competition

(112) Neste and Dyno have overlapping activities in the
production and sale of formaldehyde only in Finland,
where they are the only two producers. Therefore,
following the operation, the parties would have a de
facto monopoly in the supply of formaldehyde to third
parties in that country. Industri Kapital submits that, in
addition to Neste and Dyno, Bang & Bonsomer is active
as an independent distributor of formaldehyde to small
volume customers. However, the Commission notes that
Bang & Bonsomer currently distributes formaldehyde
produced by Neste and cannot therefore be considered
as a competitive alternative to the combined entity.

(113)

Industri Kapital has submitted that Caldic Netherland,
Synthite, Elf Atochem and Degussa are competitors in
the supply of
formaldehyde to third parties. The
Commission's investigation does not, however, show
that any of these producers are active in Finland.

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Potential competition

(114)

Industri Kapital argues that there are producers close to
Finland which all have excess capacity and could start
delivering formaldehyde to the Finnish market within a
short time period. According to Industri Kapital, these
companies include Casco Products in Sweden, Viru
Keemia Grupp in Estonia and Akron in Russia.

from customers

(115) The Commission's investigation and in particular the
comments obtained
demonstrate,
however, that the prices charged by these producers are
higher than those charged by local producers due to the
transport costs. The investigation shows that the vast
majority of formaldehyde is transported within a radius
of 320 km. Therefore, as already discussed, although
Industri Kapital claims that Neste has from time to time
obtained certain volumes of formaldehyde from its plant
in the Netherlands and from Perstorp in Sweden and
Dyno has imported formaldehyde from Casco in Sweden
to Finland, these imports have been mainly spot deliv-
eries. Customers in general terms do not import formal-
dehyde. Customers in Finland have indicated that they
do not consider Casco as a viable alternative to Dyno
and Neste because of transport costs. According to the
investigation, customers in Finland have not sourced
from Casco. The Commission notes
formaldehyde
further that some customers have reported that they
have attempted to purchase formaldehyde from Russia
in the past but that these attempts failed, in particular
due to technical difficulties.

(119)

their excess capacity on the free market in competition
with the considerably stronger new entity. In its reply to
the Commission's Statement of Objections,
Industri
Kapital has submitted that there is formaldehyde tech-
nology available based on reactors designed for a
production of as little as 6 000 tonnes per year and that
formaldehyde production based on this kind of tech-
nology would require
annual
production and still be economically profitable. This has
not been confirmed in the Commission's investigation.

significantly smaller

In this respect,

In its reply to the Commission's Statement of Objec-
tions, Industri Kapital submitted that there is competi-
tive pressure from urea-formaldehyde pre-condensate
(UFC) producers.
Industri Kapital has
submitted that formaldehyde can be further developed
into UFC, which is an interim product produced in
formaldehyde plants by adding urea in the formalde-
Industri Kapital has
hyde/water absorption column.
submitted that UFC can be used as a raw material in the
production of UF/(M)UF resins in the condensation
stage. Industri Kapital has further contended that UFC is
very stable, has a high resin content and contains only a
small amount of water compared to a standard 37 %
solution of formaldehyde. This, Industri Kapital argues,
increases
the transportability of UFC compared to
straight formaldehyde. The Commission's enquires do
not, however, confirm Industri Kapital's argument of
competitive pressure arising from UFC. None of the
third parties contacted by the Commission have indi-
cated that, in the event of an increase in the price of
formaldehyde, they could start sourcing UFC.

(116) Therefore, on the basis of the foregoing and in view of
high transport costs, the Commission does not consider
that imports from Russia or the Baltic States constitute a
competitive alternative for customers located in Finland.

Comments from third parties

(117) The investigation shows further that there has not been
any new market entry to the Finnish market in the last
five years. The investigation also suggests that potential
competitors are not willing to enter the Finnish formal-
dehyde market in the near future. This is due to the fact
that setting up a new plant would take time and is
costly. In addition, the administrative procedures to get
the necessary public approvals are considered to be
burdensome. Moreover, third parties have argued that
because formaldehyde provides as a well-known chem-
ical merely low margins, the likelihood of new market
entry is very low given the strong position of a merged
entity.

(118) As to the question whether customers would be willing
to start own production of formaldehyde, the invest-
igation clearly shows that this is not a realistic altern-
ative essentially for the same reasons as apply to formal-
dehyde based resins. Customers of formaldehyde have
indicated that their need for formaldehyde is relatively
small and an economic production would require a
certain volume (minimum 20 000 to 25 000 tonnes/
year). Therefore, in order to produce formaldehyde on
economically profitable terms, they would have to sell

(120) Customers of

formaldehyde have expressed serious
concern over the transaction. First, since after the opera-
tion the parties would enjoy a de facto monopoly in the
supply of formaldehyde to third parties in Finland, they
would be able to act independently on the market and
increase prices. Second, there is a potential threat that
those customers which currently buy the low-margin
product for their own resin production, would be even-
tually forced to buy more expensive, higher margin
ready-made resins from the new entity. Third, concerns
have also been expressed in relation to possible capacity
decreases. Several third parties have explained to the
Commission that they are concerned that the new entity
would reduce sales of formaldehyde to third parties. The
operation could therefore lead to the foreclosure of the
market.

Conclusion

(121) On the basis of

the

the Commission
concludes that the operation as notified would lead to
the creation of a dominant position in Finland in the
market for the sale of formaldehyde to third parties.

foregoing,

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3. Methanol

(122) Adverse competition effects are unlikely to arise in the manufacture and distribution of methanol.
Neste and Dyno have a combined market share of less than 5 % on the market encompassing the
whole of the EEA. As to the vertical relationship, Methanor's market share is approximately 14 % in
the EEA, which is unlikely to lead to any adverse competition effects such as the foreclosure of the
market.

4. Materials handling systems

(123) Arca and Polimoon are the main producers of plastic materials handling systems in the Nordic
countries and in particular in Finland, Sweden and Norway. Dyno has joint control together with
CVC of Polimoon (6). After the operation, Industri Kapital will not only control Arca but through
Dyno also Polimoon. Both companies produce the whole range of material handling products, with
the exception of plastic foldable pallet containers which are not produced by Polimoon. The
operation will lead to a substantial addition of market shares, regardless whether the product market
is defined as consisting of all types of materials handling systems or consisting of separate markets
defined by each individual product. The market shares of Arca and Polimoon for materials handling
systems in value in 1999 are presented in Tables 1 to 7. The figures are based on Industri Kapital's
estimates; the term ‘Nordic Region’

is understood to comprise Finland, Sweden and Norway.

Table 1

All material handling products

Arca

Polimoon

The Nordic Region

[60 to 70]* %

[10 to 20]* %

[70 to 90]* %

Finland

Sweden

Norway

[70 to 80]* %

[0 to 10]* %

[80 to 90]* %

[70 to 80]* %

[0 to 10]* %

[70 to 80]* %

[20 to 30]* %

[40 to 50]* %

[60 to 80]* %

Table 2

Plastic stack-nest containers

Arca

Polimoon

The Nordic Region

[50 to 60]* %

[20 to 30]* %

[80 to 90]* %

Finland

Sweden

Norway

[70 to 80]* %

[0 to 10]* %

[80 to 90]* %

[70 to 80]* %

[0 to 10]* %

[70 to 90]* %

[20 to 30]* %

[60 to 70]* %

[60 to 100]* %

Table 3

Plastic stackable containers

Arca

Polimoon

The Nordic Region

[60 to 70]* %

[10 to 20]* %

[70 to 90]* %

Finland

Sweden

Norway

[70 to 80]* %

[0 to 10]* %

[70 to 90]* %

[80 to 90]* %

[0 to 10]* %

[80 to 100]* %

[20 to 30]* %

[30 to 40]* %

[50 to 70]* %

(6) Decision of 8 March 1999, Case IV/M. 1349 — CVC Capital Partners/Dynoplast.

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Table 4

Plastic bottle trays

Arca

Polimoon

The Nordic Region

[60 to 70]* %

[20 to 30]* %

[90 to 100]* %

Finland

Sweden

Norway

[60 to 70]* %

[30 to 40]* %

[90 to 100]* %

[80 to 90]* %

[10 to 20]* %

[90 to 100]* %

[50 to 60]* %

[30 to 40]* %

[80 to 100]* %

Table 5

Plastic crates

Arca

Polimoon

The Nordic Region

[50 to 60]* %

[10 to 20]* %

[70 to 80]* %

Finland

Sweden

Norway

[90 to 100]* %

[0 to 10]* %

[90 to 100]* %

[10 to 20]* %

[0 to 20]* %

[20 to 30]* %

[0 to 10]* %

[50 to 60]* %

[50 to 70]* %

Table 6

Plastic pallets

Arca

Polimoon

The Nordic Region

[50 to 60]* %

[10 to 20]* %

[60 to 80]* %

Finland

Sweden

Norway

[40 to 50]* %

[20 to 30]* %

[60 to 80]* %

[50 to 60]* %

[0 to 10]* %

[60 to 70]* %

[50 to 60]* %

[10 to 20]* %

[60 to 80]* %

Table 7

Plastic small-parts storage systems

Arca

Polimoon

The Nordic Region

[60 to 70]* %

[0 to 10]* %

[70 to 80]* %

Finland

Sweden

Norway

[30 to 40]* %

[0 to 10]* %

[30 to 50]* %

[70 to 80]* %

[0 to 10]* %

[70 to 90]* %

[60 to 70]* %

[10 to 20]* %

[70 to 90]* %

(124) The operation gives rise to the possibility of either creation or strengthening of a dominant position
in the markets for plastic stack-nest containers, plastic stackable containers and plastic bottle trays in
Finland, Sweden and Norway where the parties have market shares of [70 to 100] * %. Furthermore,
the parties will obtain market shares above [> 60] * % in the market for plastic pallets in Finland,
in
Sweden and Norway and above

[> 70] * % for plastic

small-parts

systems

storage

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9.6.2001

Sweden and Norway. On the basis of a product market comprising all plastic materials handling
products the parties would likewise achieve a dominant position in Finland, Sweden and Norway
with market shares of [60-80] * %. Even if the geographic reference market was assumed to be wider
including Denmark and Iceland, the parties would still have a market share of [> 60] * % for all
plastic materials handling products in this area.

(125) Arca and Polimoon both produce the whole range of materials handling products,

i.e. plastic
stack-nest containers, plastic stackable containers, plastic bottle trays, plastic crates, plastic pallets
and plastic small-parts storage systems, with the exception of plastic foldable pallet containers which
are not produced by Polimoon. None of the larger European competitors, Linpac Materials Handling,
Allibert, SSI Schäfer and Schoeller Wafin Trepak, have production facilities in Finland, Sweden and
Norway, or have substantial sales in these countries. Plastic Form AB is only active in Sweden and
Schoeller Plast has only limited sales outside Denmark. Industri Kapital stated in response to a formal
decision pursuant to Article 11(5) of the Merger Regulation which requested the names of the five
largest competitors for each product group in Finland, Sweden, Norway and Denmark, that it was
not able to state more than one competitor per country due to the fact that the remaining
competitors had such small market shares that Industri Kapital did not have the necessary informa-
tion. Arca is by far the strongest operator in the Nordic area and Polimoon is the only substantial
competitor to Arca. After the operation Industri Kapital will have a substantial and controlling
interest in its major competitor Polimoon. This will significantly weaken the position of Polimoon as
an independent competitor to Arca which could exercise a restraining pressure on Arca's behaviour
in the market.

(126) There is no indication that competitors from outside the Nordic area intend to enter the market.

Conclusion

(127) On the basis of the foregoing, the Commission concludes that the operation as notified would lead
to the creation or strengthening of a dominant position in the markets for plastic stack-nest
containers, plastic stackable containers, plastic bottle trays and plastic pallets in Finland and Sweden
and Norway, and in the markets for plastic small-parts storage systems in Sweden and Norway or,
alternatively, in the markets for plastic materials handling systems in the Nordic region comprising
Finland, Sweden and Norway.

5. Plastic containers

(128) On the regional market constituted by the Nordic area (Finland, Sweden, Norway and Denmark), the
combined market share of Polimoon and Superfos for open top containers between 2 and 35 litres
would not exceed [< 40] * %. In all the other product segments, the combined market share would
be lower. Competitors active in the Nordic market include such large players as Huhtamaki/Van Leer,
Rexam and PLM. A significant number of smaller suppliers are also present.

(129) Customers have not expressed serious concerns over the transaction in relation to plastic containers.
Customers have indicated that they have switched suppliers in the past and can do so if facing a
price increase of 5 % to 10 %. Most competitors contacted by the Commission have confirmed that
competitive conditions would prevail on the market after the transaction.

(130) On the basis of the foregoing, the Commission concludes that the transaction as notified would not

lead to the creation of a dominant position in plastic containers in the Nordic area.

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VI. MODIFICATIONS TO THE PROPOSED TRANSACTION

(131)

In order to remove the competition concerns identified by the Commission, the parties have offered
the Commission undertakings. The full text of those undertakings is annexed to this Decision. The
full text of the annexed undertakings forms an integral part of this Decision.

(132) First, Industri Kapital proposes to divest the formaldehyde and resin plant of Dyno in Kitee, Finland,
to an existing or potential competitor. In the event that this transaction does not take place within
the time period foreseen, Industri Kapital will divest the formaldehyde and resin plant of Neste in
Hamina, Finland. In the case of a divestiture of the Kitee business, Industri Kapital has further
undertaken to cause Neste to offer the new owner of the Kitee plant a non-exclusive license to use
Neste recipes for the production of impregnation resins in Kitee.

(133) Secondly, Industri Kapital proposes to cause Dyno to sell

its shares in Polimoon to purchaser
independent of Industri Kapital. Industri Kapital shall be released from this commitment if it divests
within the time period foreseen in this Decision its complete holding in Arca to a buyer independent
of Industri Kapital.

(134) The Commission considers that all undertakings are sufficient to remove the competition concerns

identified in this case.

(135) With regard to formaldehyde based resins in Finland and Norway, the dominant position will
disappear if the sale of either the Kitee plant or the Hamina plant is carried out. More particularly, in
Finland, the entire overlap between the activities of Neste and Dyno will be removed regardless of
which plant is divested.

(136)

In Norway, or alternatively in the area covering Norway and Sweden, where the market share
increment results from imports from Neste's Hamina plant, the sale of Neste's Hamina plant would
remove the entire overlap between Dyno and Neste. In the event that Dyno's Kitee plant is sold, the
Commission considers that the new owner could start exporting resins into Norway on an equal
basis with the Hamina plant. The parties have provided information on transport costs showing that
the Kitee plant would not be in any worse position in this respect. Therefore, should the current
customers of Neste in Norway wish to switch to the new owner of the Kitee plant, transport costs
would not inhibit the switch.

(137) As for the market for formaldehyde, the divestment of either the Kitee or the Hamina plant will
remove the entire overlap between Dyno and Neste in Finland and thus remove the competition
concerns arising on this market.

(138) As concerns the market for materials handling systems, either of the undertakings given will remove

the entire overlap between Industri Kapital and Polimoon.

VII. CONCLUSION

(139)

In light of the foregoing, the Commission has reached the conclusion that 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 undertakings given to the Commission,

HAS ADOPTED THIS DECISION:

Article 1

The concentration notified by Industri Kapital on 24 January 2000, whereby Industri Kapital acquires all
the shares in Dyno ASA, is hereby declared compatible with the common market and the functioning of
the EEA Agreement, subject to the condition of full compliance with the undertakings given by Industri
Kapital to the Commission and set out in the Annex.

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Article 2

This Decision is addressed to:

Industri Kapital
Birger Jarlsgatan 2
S-114 34 Stockholm.

Done at Brussels, 12 July 2000.

For the Commission

Mario MONTI

Member of the Commission

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ANNEX

UNDERTAKINGS

Industri Kapital NV, on its own behalf and on behalf of the group of companies ultimately controlled by it (hereinafter
jointly referred to as Industri Kapital), hereby makes the following commitment (the Commitment) to the European
Commission in order to obtain the Commission's clearance of Industri Kapital's (through Nordkem AS) notified public bid
for the shares in Dyno ASA (the Concentration).

Commitment to sell the formaldehyde and resins plant in Kitee or Hamina

1. Industri Kapital shall cause Dyno ASA (Dyno) to divest either the formaldehyde and resins plant in Kitee (the Kitee
Business) or Neste Chemicals Oy to divest the formaldehyde and resins plant in Hamina (the Hamina Business) as an
ongoing concern to a Suitable Purchaser as defined under point 4.

2. Industri Kapital will first seek to sell the Kitee Business during the period of time set out in point 9 (the Kitee Period)
and will, failing such sale, sell the Hamina Business during an additional period of time set out in point 10 (the
Hamina Period).

3. The Kitee Business or the Hamina Business will include personnel and existing assets (including non-exclusive licences
and R & D facilities) necessary to continue the production and sale of formaldehyde as well as wood panel resins and
impregnation resins in Kitee or Hamina, as the case may be. In the case of a divestiture of the Kitee Business, Industri
Kapital shall cause Neste to offer, subject to third-party rights, the new owner of the Kitee Business a non-exclusive
licence to use Neste recipes for the production of impregnation resins in Kitee. Such licence shall be granted on
reasonable commercial terms which in case of disagreement shall be decided in arbitration between Neste and the
new owner of the Kitee Business.

4. A Suitable Purchaser shall be a viable existing or prospective competitor independent of and unconnected with the
merged entity with the ability to maintain and develop the Kitee Business or the Hamina Business as an active
competitive force in the markets concerned.

5. The Suitable Purchaser shall be approved by the Commission prior to the signing of a final agreement of sale.

6. Within one week from the date of the Commission's decision to clear the Concentration, Industri Kapital shall
appoint an independent trustee who shall be an investment bank or a similar institution (the Trustee). The Trustee
shall be subject to approval by the Commission.

7. Immediately upon appointment of the Trustee, Industri Kapital shall give the Trustee a mandate whose terms shall

have been previously agreed with the Commission and which will

include the following functions:

(i) monitoring the operation and management of the Kitee Business during the Kitee Period and the Hamina

Business during the Hamina Period in order to report on its continued viability and marketability;

(ii) monitoring the satisfactory discharge by Industri Kapital of its obligation to divest first the Kitee Business and the

Hamina Business, as the case may be;

(iii) execution of the sale of the Hamina Business in case such mandate is given to the Trustee pursuant to point 10

below;

(iv) providing written reports every second month to the Commission, with copies to Industri Kapital, on the

management and efforts to sell the Kitee Business and the Hamina Business; and

(v) providing evidence to the Commission that the sale of the Kitee Business or the Hamina Business, as the case

may be, has been finally completed.

8. Prior to and until completion of the sale of the Kitee Business and the Hamina Business, as the case may be, Industri
Kapital undertakes to ensure that, during the Kitee Period the Kitee Business, and during the Hamina Period the
Hamina Business, is held separate and managed as a distinct and saleable entity with its own management accounts.
Industri Kapital further undertakes to ensure that the Kitee Business and the Hamina Business, as the case may be, has
its own management, separate and distinct from that of the merged entity and supervised by the Trustee. The
management, under the guidance and control of the Trustee, shall be under instruction to manage the Kitee Business
and the Hamina Business, as the case may be, on an independent basis in order to ensure its continued viability,
market value and independence. In addition, Industri Kapital undertakes to ensure that no structural changes shall be
made to the Kitee Business during the Kitee Period or the Hamina Business during both the Kitee Period and the
Hamina Period without the prior approval of the Commission.

9. Industri Kapital shall have signed a binding agreement of sale of the Kitee Business (subject to due diligence as well as
regulatory and other approvals) with a Suitable Purchaser within [...] months from the date of the Commission's
decision to clear the Concentration. This period of time is referred to as the Kitee Period.

10. If Industri Kapital is not able to fulfil its undertaking to divest the Kitee Business by the end of the time period set out
in point 9, it shall give the Trustee an irrevocable power of attorney to sell the Hamina Business to a Suitable
Purchaser [...] within an additional period of [...] months (i.e. within [...] months from the date of the Commission's
decision to clear the Concentration). The period of time running from the end of the Kitee Period until the end of the
additional period set out herein is referred to as the Hamina Period.

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Commitment to sell the shares in Polimoon Group Ltd

11. Industri Kapital undertakes to cause Dyno to sell its shares (the Shares) in Polimoon Group Ltd (Polimoon) to a

purchaser independent of Industri Kapital (the Share Purchaser).

12. The Share Purchaser shall be approved by the Commission prior to the signing of a final agreement of sale.

13. Within one week from the date of the Commission's decision to clear the Concentration, Industri Kapital shall
propose an investment bank or a similar institution (the Share Trustee) with whom the share certificates in respect of
the Shares shall be deposited pending divestiture of the Shares. The Share Trustee shall be subject to approval by the
Commission.

14. The share certificates in respect of the Shares shall be deposited with the Share Trustee within one week from the

Commission's approval of the Share Trustee, with an irrevocable instruction:

(i) not to consult with or seek or take any instructions from Industri Kapital in relation to the exercise of any right

pertaining to the Shares;

(ii) not to provide any privileged information to Industri Kapital which the Share Trustee has obtained by virtue of

the Shares;

(iii) to appoint, on behalf of Dyno but at its sole discretion, a director of the board of Polimoon which director shall

not be an owner or in the employ of Industri Kapital or part of its management;

(iv) to deliver the share certificates in respect of the Shares to the Share Purchaser when advised by Industri Kapital

that the Shares have been sold.

15. Industri Kapital shall, within one week from the date of the Commission's decision to clear the Concentration, cause
Dyno's nominated director to resign from his current board directorship in Polimoon. Industri Kapital shall thereafter
refrain from giving any instructions to any member of the board of directors or the management of Polimoon or
otherwise exercising any right by virtue of the Shares or the shareholders agreement pertaining to the Shares.

16. Industri Kapital shall have signed a binding agreement for the sale of all the Shares to the Share Purchaser within [...]

from the date of the Commission's decision to clear the Concentration.

17. The Share Trustee shall be instructed by Industri Kapital to immediately confirm in writing to the Commission that
the share certificates in respect of the Shares have been deposited with it and shall thereby provide the Commission
with a copy of the instructions by Industri Kapital pursuant to point 15 above. The Share Trustee shall report in
writing to the Commission when the Shares have been finally divested.

18. Industri Kapital shall be released from this commitment in relation to the Shares in case Industri Kapital divests its
complete holding in Arca Systems AB to a buyer independent of Industri Kapital. Such release shall be subject to the
prior approval of the Commission.

Miscellaneous

19. The Trustee and the Share Trustee may be the same institution subject to the Commission's approval.

20. Industri Kapital shall pay reasonable remuneration to the Trustee and the Share Trustee for their services.

21. Industri Kapital shall ensure that the Trustee and the Share Trustee are given all information and assistance they may

reasonably require in order to carry out their mandates.

22. Industri Kapital, or alternatively the Trustee and/or the Share Trustee, shall provide the Commission with a fully
documented and reasoned proposal pursuant to points 5, 12 and/or 18 enabling the Commission to assess:

(i) whether the prospective purchaser satisfies the relevant purchase criteria;
(ii) the envisaged time of completion of the divestiture; and
(iii) whether the purchaser has, or reasonably can be expected to obtain, all necessary approvals from the competent

regulatory bodies.

Prior to approval, the Commission may request to meet the prospective purchaser and, if deemed necessary, ask for
the submission of a business plan for the Kitee Business or the Hamina Business, as the case may be.

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