2004/275/EC: Commission Decision of 10 October 2001 declaring a concentration to be incompatible with the common market — Council Regulation (EEC) No 4064/89 (Case COMP/M.2283 — Schneider/Legrand) (notified under document number C(2001) 3014) (Text with EEA relevance)
Date: 2001-10-10
Institutions: European Commission
Subjects: economic concentration, electrical industry, exchange of information, merger control

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 10 October 2001

declaring a concentration to be incompatible with the common market

Council Regulation (EEC) No 4064/89

(Case COMP/M.2283 — Schneider/Legrand)

(notified under document number C(2001) 3014)

(Only the French version is authentic)

(Text with EEA relevance)

(2004/275/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 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 Council Regulation (EC)
No 1310/97 of 30 June 1997 (2), and in particular Article 8(3)
thereof,

Having regard to the Commission decision of 30 March 2001
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),

Having regard to the final report by the Hearing Officer in this
case (4),

(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; corrected version: OJ L 40, 13.2.1998,

p. 17.

(3) OJ C 86, 6.4.2004.
(4) OJ C 86, 6.4.2004.

(1)

(2)

(3)

On 16 February 2001 the Commission received
notification, pursuant to Article 4 of Council Regulation
(EEC) No 4064/89, of
takeover plan whereby
a
Schneider Electric was to acquire, within the meaning of
Article 3(1)(b) of Council Regulation (EEC) No 4064/89
(hereinafter ‘the Merger Regulation'), sole control of
Legrand by way of an exchange of shares announced on
15 January 2001.

I. THE PARTIES

‘Schneider'), a French
Schneider Electric (hereinafter
is the parent company of a group
limited company,
whose business
in the production and sale of
is
products and systems in the electricity distribution,
industrial control and automation sectors. It is active
worldwide.

‘Legrand'),

Legrand
company,
business is in the production and sale of
switchgear and accessories. It is active worldwide.

(hereinafter
limited
is the parent company of a group whose
low-voltage

French

a

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(4)

(5)

(6)

(7)

II. THE CONCENTRATION

The concentration involves an offer for an exchange of
shares made by Schneider for all shares in Legrand held
by the public. It therefore constitutes acquisition of sole
control within the meaning of Article 3(1)(b) of the
Merger Regulation. The public offer closed on 25 July
2001 and Schneider holds 98,1 % of Legrand's capital.

III. COMMUNITY DIMENSION

The firms involved achieve total turnover worldwide in
excess of EUR 5 000 million (5) (Schneider: EUR 8 750
million; Legrand: EUR 2 791 million). Each of them
achieves turnover in the Community of more than EUR
250 million (Schneider: EUR 4 095 million; Legrand:
EUR 1 684 million), but neither achieves more than two
thirds of its turnover in a single Member State. The
acquisition therefore has a Community dimension.

the Merger Regulation,

with Article 11(5) of the Merger Regulation. Pursuant to
Article 10(4) of
the period
within which a decision must be adopted under Article
8 of the Merger Regulation was accordingly suspended
on 6 April 2001 until
the
information requested by the Commission was received,
this being 25 June 2001.

the date on which all

(9)

The Commission addressed a statement of objections to
Schneider on 3 August 2001. The parties replied to the
statement of objections in a document (hereinafter ‘the
reply to the statement of objections')
transmitted on
16 August 2001. A hearing was then held on 21 August
2001.

V. COMPATIBILITY WITH THE COMMON MARKET

A. THE LOW-VOLTAGE ELECTRICAL EQUIPMENT SECTOR

IV. PROCEDURE

A.1 INTRODUCTION

the Commission
Having examined the notification,
concluded that the acquisition notified fell within the
scope of
the Merger Regulation and raised serious
doubts about its compatibility with the common market
and the EEA Agreement. By decision of 30 March 2001,
it therefore initiated proceedings under Article 6(1)(c) of
the Merger Regulation.

(10)

(11)

In order to be able to examine the notified acquisition,
the Commission sent a request
information to
Schneider and Legrand on 6 April 2001, pursuant to
Article 11 of the Merger Regulation. The deadline for
replying to the request expired on 18 April 2001.
However, Schneider and Legrand did not provide all the
information requested within the period set.

for

The effects of the merger would be felt primarily in the
low-voltage electrical equipment sector, where all of
Legrand's sales are made and almost half of Schneider's
business is conducted.

all

the

equipment needed for

found in industrial,
This sector comprises equipment
commercial or
residential buildings downstream of
connection to the medium-voltage electricity supply. It
includes
electricity
distribution and connection to the grid in a building
(such as
and
switchboards,
sockets and switches), as well as
junction boxes,
communication and control
air
conditioning, lighting, etc.) and other equipment used in
buildings, such as security systems and fire or intruder
detection and alarm systems.

cable ducts

components

electrical

(for

(8)

The Commission therefore
addressed to Schneider and to Legrand,

adopted two decisions,
in accordance

(12) More specifically, the merger would essentially affect the

following three business categories:

(5) Turnover calculated in accordance with Article 5(1) of the Merger
Regulation and with the Commission notice on calculation of
turnover (OJ C 66, 2.3.1998, p. 25). Where the figures relate to
turnover for a period preceding 1 January 1999, they are calculated
on the basis of the average ecu exchange rates and converted to
euros on a one-to-one basis.

(a)

which

switchboards,

essentially
low-voltage
the
distribute electricity to the various levels of
installation (building,
floor, apartment, etc.) and
protect installation and user from overcurrents and
short circuits.

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These boards, consisting mainly of a cabinet and
protective components (circuit breakers,
fuses or
earth leakage switches), can be subdivided into three
further categories, corresponding to different levels
of electricity distribution: (i) main switchboards (for
connecting large industrial or commercial buildings
to the medium-voltage network),
(ii) distribution
boards (typically used for floors in buildings) and
(iii) final panelboards (for end users with low energy
requirements,
an
apartment);

occupant

such

the

of

as

(b) cable trays and busbar trunking, which support the
routing of electric cables in the basement, service
duct or false ceiling of a building;

(c) electrical

equipment downstream of

the
final
panelboard, which comprises
six categories of
product: (i) wiring accessories, constituting the final
part of the electrical installation (sockets, switches,
that control a specific
etc.),

(ii) control systems,

application (such as heating) in a specific part of a
building, (iii) systems for the protection of property
and life (alarm systems,
fire detection systems,
emergency lighting, etc.),
(iv) data connectors for
data networks (data connectors, wiring cabinets,
etc.), (v) fixing and connecting equipment, for the
connecting,
installations
fixing and cabling of
final panelboards and (vi) cable
downstream of
trunking components (trunking,
floor boxes and
distribution columns).

(13)

The notified merger would also have an effect on other
types of product with industrial applications, such as
control and signalling units, also called ‘industrial
pushbuttons', and electricity supply and transformation
equipment.

(14)

The parties propose the following segmentation of the
sector, which will be taken as the starting point for the
definition of the relevant markets in this Decision:

Segment

Name

Products

Table 1

Segment 1

Segment 2

Segment 3

Segment 4

Main low-voltage switchboards

Cabinet components, circuit breakers, fuses, etc.

Distribution boards

Cabinet components, circuit breakers, fuses, etc.

Cable trays and busbar trunking

Cable trays and busbar trunking

Final panelboards

Cabinet components, circuit breakers, fuses, earth leakage
switches and circuit breakers, etc.

Segment 5

Segment 5A

Electrical equipment downstream of
the final panelboard

Wiring accessories
Control systems
Security and safety systems
Components for data networks

Segment 5B

Installation accessories

Junction boxes, fixing and cabling equipment downstream
of the final panelboard and upstream of the wiring
accessories

Segment 5C

Trunking systems

Floor boxes, wall trunking, distribution columns, etc.

Industrial components

Transformation and power supply
equipment
Control and signalling units

Equipment designed to ensure that industrial equipment is
supplied with alternating current or direct current
electricity
Switching devices designed to control industrial equipment

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A.2 PRESENTATION OF THE SECTOR

A.2.1 Market participants

(15)

There are six distinct types of participant in the market
the equipment concerned, on the supply and
for
panel
sides: manufacturers, wholesalers,
demand
(architects,
project managers
installers,
builders,
engineering consultants, etc.) and end users.

A.2.2 Manufacturers of low-voltage electrical

equipment

(16) Manufacturers of

low-voltage electrical equipment are
industrial groups which develop and manufacture the
equipment concerned. According to Schneider's internal
segmentation (6),
types of player:
are
‘mega-players', ‘dilemmas' and ‘mature players'.

there

three

(17)

range

are ABB,

and capacity

Schneider distinguishes the major international groups
(‘mega-players') principally by their large size, diverse
to undertake major
product
repositioning of their activities. In addition to Schneider
itself, the major groups found in this category at world
Electric, Tyco,
level
Siemens, General
Matsushita and Emerson. Only four of
these groups
carry on significant business in low-voltage electrical
equipment in Europe. They are Schneider, ABB, Siemens
and GE, which all have a vast range of
low-voltage
products and carry on significant business in medium
and high-voltage equipment. ABB, Siemens and GE are
also vertically integrated to some extent and are active
as installers of electrical equipment and/or panelbuilders.
Emerson is present primarily in the United States,
Matsushita is practically absent from Europe, and Tyco's

business in Europe is restricted to a few niches in
equipment downstream of
final panelboards and in
cable trays.

(18) According to Schneider,

the ‘dilemmas'

[…]* (*) are
more specialised firms with their main focus on cyclical
sectors […]* that are suffering from a temporary lack of
growth. These firms are also characterised by major
changes in their range of activities, and they have not
been able to form a coherent group, which is reflected
in a significant drop in their stock-market value.

(19)

(20)

smaller

‘mature players'

[…]*
in low-voltage

companies
are
The
specialised
equipment. They most
frequently have a range of mature activities that changes
very little, but have seen sustained growth in their
This
thanks
turnover
description would also fit […]*.

acquisitions.

external

to

range, which is

The above segmentation is essentially based on size and
in line with Schneider's
product
commercial and strategic vision. Nevertheless,
it also
reflects how internationally diversified the firms are. The
‘mega-players', principally Schneider, ABB and Siemens,
are generally active in a large number of Member States,
while some of the ‘mature players' tend to restrict their
for
business to a small number of
example,
the
Netherlands and Portugal, while […]* achieves more
than half its turnover in Germany and […]* focuses
essentially on Italy.

territories. […]*,
focuses mainly on France, Germany,

(21)

To summarise the above, the following table shows the
activities of the main manufacturers (***= vast range of
products sold in most Member States, **= gaps in
product range or coverage, *= large gaps in product
range or coverage):

(6) ‘Evolution of the strategic positioning of our main competitors'.

(*) Parts of

this document have been omitted to ensure that no
confidential information is disclosed; these are contained in square
brackets and marked with an asterisk.

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Table 2

Name

Main switchboards

Distribution boards

Cable trays and busbar
trunking

Final -
panelboards

Equipment downstream
of final panelboard

Schneider

Legrand

ABB

Siemens

GE

Hager

Moeller

Gewiss

***

***

***

***

**

***

**

***

***

***

**

**

*

***

*

*

*

**

***

***

***

**

**

***

**

*

**

***

**

*

*

*

*

*

A.2.3 Wholesalers

(24)

to carry out an electrical

(22) Wholesalers are local distributors offering the whole
range of equipment needed by installers or panel
installation. As
builders
indicated by the parties,
they perform a local-level
distribution and logistical function, but they also have a
for
product
certain
selection role and sometimes,
products and customers (such as small
installers), a
financing role for the purchase of the products, even
providing technical
that
purchase directly from the manufacturers.

is wholesalers

advice.

It

The role of wholesalers and their importance in the
logistical chain varies significantly from one type of
equipment to another. The data provided by the parties
and corroborated by the Commission's investigations
show that wholesalers are more or less absent from the
market in sales of equipment for main switchboards, but
they are involved in some 80 % of sales of distribution
board equipment and cable trays, and in almost all sales
(more than 90 %) of equipment for final panelboards
and downstream of them.

(23)

per

line

product

discounts

Relations between wholesalers and manufacturers are
governed by contracts, which generally last one year but
which are renewable. These contracts are negotiated at
various geographic levels (essentially local and national)
and for various product lines. Generally speaking, they
include
from the
manufacturer's catalogue price. These discounts are in
relation to the volume of
the products
concerned. In addition to this first discount, contracts
with wholesalers contain further rebates designed as
incentives (they are progressive, for example) to develop
certain product lines or increase general sales of the
manufacturer's products. The rebates are calculated at
the end of a period. These distribution agreements may
sometimes be governed by European agreements, but
in scope and contain no
which tend to be general
financial provisions.

sales

for

(25)

These differences mainly reflect the fact that installers
tend to make most of their purchases from wholesalers,
while large industrial customers and panel builders more
frequently buy directly from the manufacturers. Products
bought mainly by installers or small and medium-sized
panel builders (components for distribution boards and
final panelboards, cable trays and busbar trunking, and
equipment downstream of
the final panelboard) are
mostly sold by manufacturers via wholesalers. Products
for large industrial customers or panel builders, on the
other hand, such as components for main switchboards,
will generally be supplied directly by the manufacturer.

(26)

The Commission's investigation also shows that the size
and the degree of concentration of wholesalers may
vary significantly from one Member State to another.
Distribution is highly concentrated in France around the

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the parties,

Rexel and Sonepar groups, but seems to be much more
fragmented in Spain and Portugal. According to internal
documents (7) of
in
structure affect
in the
countries concerned. It would appear that in countries
such as
where wholesalers
Portugal, competition between wholesalers is generating
a price war which is
the
manufacturers.

the conduct of wholesalers

these differences

fragmented,

are more

level of

the

felt

at

(27)

(28)

A.2.4 Panel builders

In practice,

they perform four functions:

Panel builders are the professionals that assemble the
various components of an electrical switchboard for a
building.
(i)
they design and adapt switchboards to meet the specific
needs of each customer; (ii) they supply and mount the
various switchboard components (cabinet components,
circuit breakers,
they wire up the
switchboard, and (iv) they check that the switchboard
works properly. They then supply the ready-to-use
cabinets to an installer, who will place them for the final
customer. In practice, panel builders primarily work on
main switchboards
Final
panelboards are simpler and are usually adapted and
assembled directly by the installer.

and distribution boards.

fuses, etc.);

(iii)

(and thus

in France

the complexity of

The size and number of panel builders varies depending
on the currents
the
installation) involved. According to the parties, there are
some 3 000 panel builders
capable of
assembling switchboards up to less than 630 amperes,
but only 300 for switchboards up to 1 600 amperes.
Furthermore, some panel builders may be vertically
integrated. For example, a number of manufacturers
such as ABB and Siemens have their own panel building
some panel
outfits
builders may
certain
switchboard-related components (such as busbars or
protective sheet metal), or even work directly on the
installation.

in certain countries. Likewise,
also make

or modify

(29) A further point

to note is that

large panel builders
working on complex jobs (such as main switchboards)
more often than not obtain their supplies directly from
the manufacturer, whereas smaller panel builders that
essentially work on distribution boards tend to purchase
logistical
their
reasons, purchases made by large panel builders directly
from the manufacturer may sometimes pass through a
wholesaler (which acts in a purely logistical role).

from wholesalers.

components

For

(30)

(31)

(32)

be

panel

builders may

by
approved
Lastly,
that a panel
manufacturers. Such approval certifies
builder
the
use
to
capacity
manufacturer's products. In most cases, a panel builder
is approved by a single manufacturer, which will then
be the panel builder's main supplier.

technical

has

the

A.2.5 Installers

for

the

equipment

also choose

low-voltage
Installers are the professionals that install
end customer. They
electrical
frequently
and brand of
range
the
equipment, except in the case of components for main
switchboards, which are selected by the panel builders
or specified by the project managers, and of ‘visible'
are
components
traditionally chosen by project managers
large
commercial or residential buildings or together with the
end customer for small residential buildings.

etc.), which
for

switches,

(sockets,

(sockets,

switches, etc.)

This category is
relatively fragmented and diverse,
comprising a large number of participants (more than
30 000 in France) ranging from sole artisans to firms
with more than 10 employees and a design office. None
the less, as with panel builders, the parties consider that
a relationship can generally be established between the
size of the firm and the complexity of the installation.
Small installers tend to work on final panelboards and
wiring accessories
in small
buildings. For example, the parties state that since final
panelboards are less technical than distribution boards,
‘artisans are often companies of 2 or 3 people
comprising the owner with a worker and/or apprentice;
it is the owner's wife who orders from the distributor.
For reasons of availability and ease of assembly, they
buy the whole
same
brand]*' (8). Medium-sized installers (3 to 10 employees)
are generally hired for projects involving distribution
boards. Larger installers (10 employees plus) focus on
main switchboards. Large installers can be compared to
panel builders.

the panelboard in the

[of

(33) As indicated above,

installers obtain supplies almost
exclusively from their local wholesalers. Moreover, they

(7) Legrand, Medium-term plans.

(8) Message from the parties dated 25 July 2001.

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to keep very

stocks of products.
limited
tend
Wholesalers may supplement their traditionally logistical
role with financing services (since the artisan is usually
paid only on acceptance of the installation). It has also
in a growing number of cases,
been found that,
even
installers may
specification services from the wholesaler, especially
where complex systems are involved.

technical

require

advice

or

Installers are also increasingly using electrical installation
design software supplied with or without charge by the
manufacturers. This kind of software saves installers
time on the design of the installation and the choice of
products and they are specific to each manufacturer.
The Commission's investigation showed that, in practice,
installers use only one or two different manufacturers'
programs on account of the time, and thus the cost,
required to learn how to use them. The distribution of
such software therefore has the purpose and effect of
strengthening
a
manufacturer's products.

installers

loyalty

the

of

to

(37) With the exception of certain components specifically
for industrial use (such as control and signalling units or
transformers and supply equipment), a given item of
low-voltage equipment (such as a circuit breaker) can be
used in an identical way by the two categories of
electricity
customer. This
distribution
and most
installation accessories.

is particularly
cable

true of
trays

components,

(38) Nevertheless, there are important differences between
industrial and construction projects. In particular, most
construction projects
involve small-scale installations
carrying relatively moderate levels of electrical power
(distribution board or final panelboard level). Moreover,
for projects of this type, end customers and specifiers
have significant influence over the choice of range and
brand only as
(sockets,
switches, trunking, etc.). The choice of brand and range
of other equipment (panel components, cable trays, etc.)
is made by the installer or, as appropriate, the panel
builder.

‘visible' equipment

regards

A.2.6 Project managers

for projects

Project managers are architects, engineering consultants,
firms or property
construction and public works
developers
the
involving
responsible
installation of electrical equipment. They are usually
involved only
and
in major projects
commercial as well as residential) and do not buy the
products themselves. However, by defining technical
specifications for the installation (and sometimes the
brand of product),
they can end up in the role of
specifier.

(industrial

A.2.7 Customers

(39)

(40)

(41)

End customers are individuals or firms that own the
buildings in which the electrical equipment
is to be
traditionally divided end
sector has
installed. The
customers (on a basis taken up by Schneider and
Legrand) into two main groups: industrial applications
and construction. The construction sector
then
subdivided into commercial and
sometimes
residential customers.

further

is

(such as

Industrial projects, on the other hand, often involve
high currents
those distributed by main
switchboards). Furthermore, they may go beyond the
simple distribution of electric power and also involve
specific equipment for automation, process control, etc.
Lastly, the end customer or project manager has greater
influence over the choice of brand.

extent of

equipment
therefore

supplied for
differ

industrial
The
for
applications may
commercial or
residential applications. The type of
demand (current, value of the contract) from industrial
customers may also significantly exceed that of an
average construction contract and be comparable to the
largest contracts of this type.

from that

It follows that, in most industrial contracts and major
construction contracts, manufacturers sell the electrical
equipment concerned directly to the end customers (for
large panel builders. The
large industrial
sites) or
situation therefore differs
traditional
from that of
construction contracts, where sales are usually made via
wholesalers. Furthermore, contracts in this sector are
more predictable and fewer in number and, according
to Schneider's internal documents (9), […]* than in most

(9) Schneider

document
switchboard business'.

(reply

to

question

316):

‘Developing

(34)

(35)

(36)

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the specifications may be
construction deals. Lastly,
quite distinct, for example, with greater emphasis on the
use
than on national
standards
installation standards or habits.

of Community

European standards, which do not have any legal force
but which guarantee to manufacturers and users, by way
of a legal presumption, that the products which comply
with them also meet legal requirements.

(42)

it follows from the above that, although
In practice,
manufacturers are as a rule all present on all
the
segments, their reputation and competitive position may
vary significantly from one type of application to
another. Legrand,
for example, has a reputation for
excellence in the residential sector, while Siemens and
ABB seem to have traditionally focused on industrial
customers.

A.3 IMPORTANCE OF STANDARDS

(43)

Since low-voltage electrical equipment will enter into
contact with electric current, the various categories of
equipment are subject to rules designed to ensure that
their use does not endanger human life or health or
property. These rules affect the design of the products.
there is a variety of
In addition,
standards applicable within the EEA, the rules also affect
the scope for marketing products
in the different
Member States.

to the extent

that

(44) Various

categories of

rule and standard must be

distinguished:

A.3.1 The Low Voltage Directive

(47)

(48)

there are mandatory rules, primarily Council
First,
Directive 73/23/EEC of 19 February 1973 on the
harmonisation of the laws of Member States relating to
electrical equipment designed for use within certain
Low Voltage Directive'),
voltage
legislation
subsequent directives
adopted by the Member States to apply them.

and the national

limits (10)

(‘the

(45)

(46)

A.3.2 Product standards issued by standardisation

bodies

international, European and national

Besides harmonised European standards, which are
linked to European legislation in that they flesh out the
essential requirements of the directives, other standards
exist that have been adopted by various standardisation
level,
bodies at
such as the International Electrotechnical Commission
(IEC), Cenelec, the Union technique de l'électricité (UTE)
in France, the Deutsche Elektrotechnische Kommission
(DKE), a joint German standards institute (DIN) and
German electrotechnology association (VDE) body in
Germany, and so on. These standards also lay down
precise requirements regarding the manufacture of the
products concerned. Compliance with them is not
required by law.

the

(manufacturers, users,

sub-committees. Only

etc.) are
The main interests
represented within the standardisation bodies. The IEC is
the international federation, and Cenelec the European
federation, of
the national bodies. Within these two
bodies, technical committees and sub-committees exist
the various categories of product, made up of
for
delegations from the corresponding national committees
and
and
secretaries of each committee and sub-committee are
the
appointed for a fixed period. The members of
national delegations are appointed on an ad hoc basis for
of meetings. The
a
specific meeting
manufacturers usually
represented on
try
committees dealing with the products that they make,
so as to be involved in the standardisation process. An
international presence is therefore an advantage since it
the
enables participation at
parties
their
devotes
involvement in standardisation work.

levels. Each of
resources

chairpersons

considerable

to be

several

series

or

to

The Low Voltage Directive does not contain precise
rules regarding the manufacture of products but
is
confined to setting a minimum safety level that such
products must reach (‘essential requirements') in order
to move freely within the EEA. It leaves it to European
standardisation bodies such as the European Committee
for Electrotechnical Standardisation (Cenelec)
to draw
up, on a mandate from the Commission, harmonised

(49)

Cenelec standards are usually (in 80 % of cases (11))
adopted following the production of a standard by the
IEC, and they follow the IEC standards, sometimes with
certain adaptations. Cenelec standards are binding on
the national standards bodies. They have to be adopted
as national standards without modification, and any
national standards that do not comply with Cenelec
standards must be abolished (12).

(10) OJ L 77, 26.3.1973, p. 29.

(11) www.cenelec.org/Info/about.htm.
(12) www.dke.de/en/wir/normung.

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Official Journal of the European Union

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(50)

(51)

electrical

for most

distribution

The parties state that harmonised European standards
exist
equipment.
However, the harmonisation process in Europe remains
incomplete. Many products are covered by European
standards that do not harmonise all their characteristics.
For example, no attempt has been made to harmonise
the pin configuration of electric sockets.

A.3.3 Installation rules and habits

Installation rules and habits do not apply to the
manufacture of the actual products, but to the way in
which they must be connected to the network (e.g.
neutral point treatment), which often has repercussions
for the configuration of the products themselves. These
rules are normally laid down by standards bodies (IEC,
Cenelec or national bodies). They are
sometimes
adopted by public authorities (such as in the case of the
French
regarding
establishments open to the public, which contains
certain rules on emergency lighting (13)). Lastly, there
may be mere habits or traditions followed by installers
in a given country or region. While such installation
habits are not obligatory in any way,
they oblige
manufacturers de facto to make products in a certain
way if they hope to have any success in marketing them
in the countries concerned.

2 October

decree

1978

of

the

and

that

they

requirements

comply with

cover
conformity

affixing the mark on its products and by doing so
the Directive's
declares
the product
requirements. The
characteristics
assessment
procedures that must be applied before they are placed
on the market. Manufacturers may refer to ‘harmonised'
standards to show that their products comply with the
essential requirements of
the directives, although the
procedures laid down may require the intervention of a
third party. The CE mark ensures in law the free
movement of goods within the EEA.

(55) Quality labels (such as NF in France, VDE in Germany
or CEBEC in Belgium) are granted by an independent
certification
request
following tests carried out by a recognised laboratory
and on payment of a fee. The quality label certifies that
the product complies with the applicable standards
(international, European or national).

the manufacturer's

body

at

(56)

Electricity

distribution

requirements

lay down rules on the equipment

(52) Among installation rules and habits, mention must also
laid down by certain
be made of
for
companies.
example,
to be
connected to the mains supply. These rules, binding de
facto on electrical equipment manufacturers, may be
national in scope, such as in the case of Electricité de
France (EDF), or may be regional or even local, as in the
case of certain regional distribution companies
in
Germany and Austria.

companies,

a

is not

It is not usually compulsory to obtain the quality label.
However, there are exceptions. In France, for example,
is compulsory for emergency
the French quality label
lighting systems. Even though it
legal
requirement
for manufacturers to obtain a country's
quality label in order to sell their products there, it is a
commercial necessity. Installers and end customers often
require
an
the products bearing it are safe and
assurance that
reliable. This
for electrical
is particularly important
equipment, which,
is faulty, may cause serious
accidents. Confidence in national labels is strengthened
by the fact that, unlike the CE mark, they are issued by
independent bodies.

the quality label

constitutes

since

it,

it

if

A.3.4 CE marking and national quality labels

(53)

There are two types of marking: CE marking and
national quality labels.

(54)

The Community directives
require the CE mark to
appear on all products covered by the Low Voltage
Directive. The manufacturer has sole responsibility for

(13) Reply by the parties dated 21 June 2001 to question 187.

(57)

The relative importance of the CE mark and the quality
label in the eyes of installers and consumers is reflected
in their position and visibility on electrical goods.
Where both markings are used on a product, the quality
label is highlighted by the manufacturer, while the CE
mark is often much less visible. On circuit breakers, for
example, the quality label is placed on the front of the
product and is often brightly coloured. The CE mark is

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generally placed on the side of the product, and its
colour is more often than not the same as that of the
product itself.

marking as such serves only to enable products to be
placed on the market and contains no additional
information […]*.

(58) Arnould,

a

Legrand

the
importance to consumers of national quality labels as
follows (14):

summarises

subsidiary,

certification procedure. The NF label

‘The NF label reflects the voluntary commitment of the
manufacturer, which chooses to submit its products to a
rigorous
is
evidence of compliance with French and European
standards. It is issued by an independent certification
body on the basis of comprehensive product tests and
audits of
is maintained
subject to regular checks. The NF label is a guarantee
of far more than just safety. It is a guarantee of the
reliability and quality of electrical equipment.
In
practice, using electrical equipment with the NF label
ensures the smooth operation of your installation.'

the manufacturing sites.

It

intervention of an independent

Many directives applicable to electrical goods apply a
conformity assessment formula that does not involve
the
laboratory or
recognised body. The CE marking is nothing more than
the essential
a declaration by the manufacturer that
requirements have been met.

The CEBEC label
international
independent and reputable certification body.

reflects ongoing conformity with
an

certified by

standards,

safety

as

Consumers will continue to demand electrical goods
with an independent certification. The equipment and
installation industry needs ongoing conformity with
does not
standards. The CE mark
international
guarantee this, but the CEBEC label does.'

(59)

In its product catalogue for 2000, Legrand gives the
following explanations on the CE mark (15):

(61)

In most Member States, national certification bodies are
also responsible for product standardisation.
In some
countries (such as Germany or the United Kingdom),
there are several certification bodies.

it

In France,

‘The CE mark appears on Legrand electrical and/or
electronic goods or on their packaging. It is compulsory
under European Community Council directives. […]* In
no circumstances can the CE marking replace a quality
label.
and
allows
anti-fraud officers (from the DGCCRF) to authorise the
free movement of any product bearing the CE mark.
The manufacturer has sole responsibility for affixing the
CE mark on its products or
their packaging. The
products are not checked for conformity (with national
and international safety and performance standards) by
an external body.'

customs officials

(62) Under

(CCA)
the Cenelec Certification Agreement
concluded between most of the member organisations
that has been granted the
of Cenelec, any product
quality label of a member organisation may obtain the
quality label issued by any other body on request and in
return for a reduced fee, without further tests being
necessary. The fact remains that
there is a different
quality label in each Member State of the EEA and that
electrical goods bear the national label of the country in
which they are marketed.

(60)

Likewise, CEBEC,
explains (16):

the Belgian

certification

body,

A.4 FUNCTIONING OF THE SECTOR

A.4.1 Description of the vertical chain

‘Belgian and European law require goods to conform to
Community directives and thus to bear the CE mark. All
goods must bear the CE mark and any which do not are
not authorised to be placed on the market. The CE

(63)

(14) General catalogue for 2001, p. 319 (bold characters as in the

original).

(15) Catalogue for 2000, p. 800.
(16) www.cebec.be/leaflets/cebec.html.

The chain of distribution linking all these participants
together may be
follows. Demand
summarised as
originates with the end user, who entrusts the design of
installation either to an installer or, for
the electrical
to a project manager. Once the
large-scale projects,
design of the electrical
installation has been outlined,
the electrical equipment is generally selected, purchased
and placed by an installer, who in most cases obtains

6.4.2004

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L 101/11

supplies from a local wholesaler, which may be a
subsidiary of an international wholesaler. The wholesaler
itself
equipment
manufacturers (such as Schneider and Legrand).

supplied by various

electrical

is

the

determining

type, number

(64) When the installation includes switchboards, they must
be specifically adapted to the needs of the customer.
This means
and
the various pieces of equipment
characteristics of
(circuit breakers,
fuses, earth leakage switches) to be
included in the switchboard. As indicated above, the
adaptation and assembly of final panelboards is usually
done directly by the
type of
switchboard is relatively simple. The operation is more
complex, however, in the case of main switchboards and
distribution boards, and must be done be a specialist,
the panel builder. In such cases, it is the panel builders
that select and purchase the various components, either
from wholesalers or,
in the case of the larger panel
builders, directly from the manufacturers.

since this

installer,

(components for final panelboards, cable trays, etc.) is
chosen by the installer.

(68)

It follows that installers (and, to a lesser extent, panel
builders) play a dominant role in the choice of
the
electrical equipment concerned. As pointed out by
Legrand (18),
‘demand for Legrand goods is principally
to which electricians and
determined by the extent
project managers
from
require
wholesalers'.

Legrand products

(69) Attracting this population therefore constitutes one of
the critical
factors of competition between electrical
equipment manufacturers. It is all the more important
given the fact that medium-sized installers and panel
builders tend to remain loyal to the brand that they
habitually use.

(65)

For the sake of completeness, it must lastly be pointed
out that manufacturers may sometimes sell directly to
certain end users (e.g. certain producers of machinery or
equipment using low-voltage electrical equipment such
as plug and socket outlets or control and signalling
units). Moreover, some end users sometimes choose and
place their electrical equipment themselves, purchasing
it from hypermarkets or DIY shops. The volume of such
sales
into
is minimal however, and does not call
question the general description above.

A.4.3 Importance of wholesalers

(70) As indicated above, small and medium-sized installers
and panel builders obtain supplies from wholesalers
within the
their business. Only large
industrial customers or panel builders (working on the
main switchboard market) may find it worthwhile to
purchase directly from the manufacturers.

locality of

(71)

(72)

A.4.2 Importance of installers and panel builders

(66) As indicated above, end users and project managers
tend to be involved to a significant extent only as
(sockets,
regards
switches,
according to
Legrand's internal documents (17), their main selection
criteria are ‘aesthetic and functional'.

for which,

equipment

choice of

trunking,

‘visible'

etc.),

the

(67)

Components for main switchboards and distribution
boards are generally chosen and purchased directly by
the panel builder. The other equipment concerned

builders
for which wholesalers will

There is therefore a split between large projects (or
projects involving large amounts of power), for which
the manufacturers will sell directly to end customers and
other
large
and
panel
the
installations,
unavoidable intermediary between manufacturers and
installers
explained above,
wholesalers are not involved in sales of components for
main switchboards, but they are the outlets for between
80 % and 90 % of other types of electrical equipment.

(or panel builders). As

installers,

and

be

follows that access to wholesalers constitutes an
It
extremely important factor of success for manufacturers
of electrical equipment other than components for main
switchboards. It is important to note that, according to
the parties, all manufacturers will not necessarily have
access
largest
manufacturers tend to work with major international
in
groups

(such as Rexel, Sonepar or Hagemayer

same wholesalers.

The

the

to

(17) Legrand document ‘Overview medium-term plan July 2000'.

(18) Legrand, Form 20-F SEC.

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Official Journal of the European Union

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France), while smaller manufacturers have more of a
regional presence and work with smaller wholesalers.

A.4.4 Selection criteria

It follows from the above that the competitive position
of the various manufacturers will largely be determined
by (i) their ability to establish brand loyalty amongst
installers and panel builders and, therefore, to meet their
expectations; and (ii) their access to wholesalers, at least
in which wholesalers are
in those Member States
sufficiently established.

Reports by certain analysts (19), confirmed by Legrand
documents (20), indicate that the main criteria on which
installers base their choices of product are (i) quality and
safety of equipment, (ii) ease of installation (which cuts
installation time and thus the installer's costs),
(iii)
compatibility with local tastes and standards and (iv)
long-term availability of
(which means
faulty parts can be replaced and new manufacturers do
not need to be found for each job).

the product

are

the products

and safety of

The findings of the Commission's investigations confirm
the importance of these factors. They also show that
quality
essential
requirements, without which a manufacturer cannot
hope to sell its goods. Lastly, they show that the relative
weight of
the different criteria can vary as between
installers and panel builders. The immediate availability
of the goods is a determining factor for installers, which
do not keep stocks, but is less crucial for panel builders.
Likewise, panel builders appear to place less importance
on brand than do installers.

The Commission's findings also confirm that price is not
the fundamental criterion in the choices of installers in
most Member States. This is explained by the fact that
(i) electrical equipment represents only a relatively small
the rest
(usually around 20 %) part of
being accounted for essentially by labour costs,
(ii)
installers (like project managers or panel builders) will
tend to give priority to the safety and quality of the
installation (for reasons of liability, and to avoid having

the contract,

(73)

(74)

(75)

(76)

(19) Crédit Suisse First Boston report on Legrand (11 September 2000),

Williams de Broë report on Schneider (4 January 2000).

(20) Legrand, Form 20-F SEC.

(77)

(78)

(79)

to return to the site, etc.) and (iii) a difference in price
can be more than compensated for by other factors,
such as
installation time (given the importance of
labour costs as a proportion of the total contract, a
10 % gain in installation time would be more profitable
to the installer than a 10 % discount on the price of the
equipment).

in

the

distribution

These selection criteria also go a long way to explaining
the loyalty of installers and panel builders to brands. As
explained by one manufacturer (21), ‘the attitude of the
very
participants
conservative. Reasons of quality, safety and civil liability
are certainly strong incentives for purchasing known
brands'. Installers and panel builders also have a strong
incentive to use products of one brand or of a small
number of brands as this gives them better knowledge
of the products and, ultimately, implies substantial gains
in installation time and thus labour.

chain

is

their

criteria of

follow the

The criteria on which wholesalers select goods must
customers,
obviously
installers and panel builders. However, there are also a
number of factors specific to wholesalers. In particular,
the parties state that wholesalers tend to keep down the
they
number of
distribute for each category of product, for reasons of
cost, storage, computer systems operation, technical and
commercial training of staff, etc. This tends to favour
manufacturers with well-established
and
manufacturers with a wide range of products.

their suppliers and the brands that

brands

A.5 CONCLUSION

of

types

application:

To summarise, low-voltage electrical equipment is used
in three
industrial plants,
commercial buildings and residential buildings. For
industrial and large construction contracts with high
power requirements and thus involving the design of
main switchboards, the equipment is generally chosen
by a project manager or
large panel builder and
supplied directly by the manufacturer. For other types of
contract, most equipment
is chosen and purchased
directly by an installer or panel builder (via a local
wholesaler), and the end user tends only to choose the
‘visible' components on the basis of aesthetic or possibly
practical considerations.

(21) Hager, reply to phase I questionnaire.

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(80)

(81)

Excepting main switchboards, the primary concern of
manufacturers is thus to obtain sufficient listing with
wholesalers and to convince installers and panel builders
to choose their products on the basis of the reputation
of
range of products and their
their brands,
immediate availability.

their

Installers are swayed by the safety and reliability,
availability and ease of installation of products, which
tends to make them loyal to a given brand. Wholesalers
follow the wishes of
their customers (installers and
panel builders), and look for suppliers with the widest
possible range of products.

by a number of successive equipment stages which
allow electricity to be supplied from the grid connection
to the various items of electrical apparatus used in the
building.

(86) A low-voltage electricity distribution system thus uses a
number of interconnected switchboard stages from the
main switchboard (or distribution board in smaller
installations)
Further
final
downstream, wiring accessories such as sockets and
switches are connected to the switchboards by means of
cables and wiring.

panelboards.

the

to

(82) Manufacturers therefore compete primarily on brands,
by which they attempt to distinguish themselves from
their competitors and retain the loyalty of installers and
panel builders. Manufacturers also seek to develop the
widest possible range of products, which is vital as
regards switchboards, and a significant advantage as
regards other types of component.

(87)

by

the merger,

affected
to entry (access

the
These characteristics, which are common to all
create
product markets
significant barriers
to wholesalers,
development of a brand and an extensive product
range), and diversification increasingly takes place by
(acquisitions). Generally
way
speaking, markets
increasingly
becoming
concentrated.

growth
are

external

of

Electricity distribution and the protection of electrical
equipment and/or persons are carried out within the
electrical switchboards, which are accordingly the key
components of the system. Two switchboards belonging
to two consecutive equipment stages are interlinked by
means of electrical cables. Current levels in cables and
switchboards decrease with each successive step away
from the point of connection to the power grid. The
main switchboard is thus the point at which the current
is highest. Current strengths decrease at each successive
stage,
final panelboard and
sockets and switches. Annex 1 shows the typical layout
of a low-voltage electricity distribution system and the
position within it of the various types of equipment
described above.

i.e. distribution board,

B. DEFINITION OF RELEVANT MARKETS

B.1 ELECTRICAL SWITCHBOARDS

B.1.2 Selecting components

switchboards,

the effects of
i.e. main

the merger on
This section looks at
electrical
switchboards,
distribution boards and final panelboards. Schneider and
Legrand both produce distribution boards and final
panelboards.
main
switchboards.

Schneider

produces

also

(88)

Switchboards comprise various components enabling
them to perform their protective function, and these are
housed in a cabinet (steel or plastic). Such components
include circuit breakers,
fuses (for the protection of
equipment), earthing (for the protection of persons) and
various other items.

(83)

(84)

B.1.1 Electricity distribution equipment and how it is

organised

(89)

(85)

Electricity distribution within a building (residential
building, commercial building, factory, etc.) is handled

The type, number and size of these components depend
essentially on the relevant distribution level and on the
type of equipment being used downstream. Thus, main
switchboards
circuit
breakers and moulded case circuit breakers. Distribution
boards mainly contain moulded case circuit breakers

contain heavy-duty

essentially

L 101/14

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Official Journal of the European Union

6.4.2004

and miniature circuit breakers. Lastly, final panelboards
contain miniature circuit breakers and earth leakage
switches.

nominal rating of up to 125 A; (iii) fuses; (iv) cabinets
and cabinet components, generally metal; and (v) wiring.

(90)

on

the

In practice, each type of switchboard has to be designed
specifically to meet the particular requirements of the
installation it has to protect (these are dictated by the
Its size will
the premises and their use).
layout of
depend
electrical
characteristics
installation in use downstream (electrical power, number
each
of
switchboard is a one-off design, and the combination of
components used can vary substantially from one
to another. The information provided by
contract
Schneider (22)
in a
thus suggests that a component
given final panelboard (even one of the most widely
sold) is generally used in less than one board out of five.

Consequently,

handled,

circuits

etc.).

the

of

(91) Main switchboards are situated downstream of

the
connection to the medium-voltage electricity supply,
substation. Main
generally just after a transformer
switchboards are used to control electricity distribution
mainly in large commercial buildings (more than 5 000
m²). Distribution boards are used to control electricity
distribution on a floor of a large commercial building
and are thus, within the electricity distribution system,
situated downstream from a main switchboard. Final
in an electricity
are
the
panelboards
distribution
system.
handling
protection
the level of an
Panelboards are generally situated at
individual dwelling or small group of offices. In contrast
to main switchboards and distribution boards,
final
panelboards are generally installed in such a way as to
be accessible to non-professionals and are therefore
required to meet stricter protection standards than main
switchboards and distribution boards.

stage

and

last

(94)

final panelboards

essentially consist of

Lastly,
(i)
miniature circuit breakers; (ii) earth leakage protection;
(iii) fuses; (iv) an enclosure (generally plastic), similar to
the cabinet used for distribution boards. One of their
features is that they provide for a system of fixing to the
board by clipping on to DIN (i.e. standard) rails.

(95)

The price (excluding installation and labour) of these
various types of switchboard is made up as follows:

Table 3

Name

Main
switchboards

Distribution
boards

Final
panelboards

Heavy-duty circuit
breakers

17,5 %

Moulded case circuit
breakers and fuses

Miniature circuit
breakers and fuses

Earth leakage
protection

Switchboard cabinet
and components (or
enclosures)

32,5 %

18,4 %

40,5 %

43 %

29 %

24,4 %

17,6 %

21 %

Wiring

18,6 %

17,5 %

Miscellaneous

7 %

6 %

7 %

TOTAL

100 %

100 %

100 %

(92) Main switchboards essentially consist of (i) heavy-duty
circuit breakers with a nominal rating of between 630
and 6 300 A; (ii) moulded case circuit breakers with a
nominal rating of 400 to 1 600 A; (iii) fuses (400 to
1 600 A); (iv) cabinets and cabinet components; and (v)
wiring.

(93) Distribution boards essentially consist of

(i) moulded
case circuit breakers with a nominal rating of between
100 and 250 A; (ii) miniature circuit breakers with a

(22) Schneider, reply to question 109.

(96)

(97)

This table shows that the various components account
for widely differing proportions of the overall price. In
particular,
it may be seen that circuit breakers (and,
where applicable, earth leakage protection) often play a
key role in the choice of manufacturer, since these are
the components which determine almost all of
the
performance and most (between 50 % and 70 %) of the
value of the switchboard.

The following paragraphs look at the role and use of
each type of active component (circuit breakers, earth
leakage protection,
the parameters
determining the selection of the type of component and
the performance of each component, with a view to
their integration into an electrical switchboard.

etc.)

and

at

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Two types of protection to deal with two types of
risk

be reset (i.e. the circuit breaker switch must be reset to
the normal operating position).

(98)

The type of products used (circuit breakers, fuses, earth
leakage protection, etc.)
is initially determined by the
type of protection to be provided by the switchboard. In
practice, two types of protection may be distinguished:
the protection of property, equipment and the
first,
electrical installation itself (in particular, against the risks
fire and overheating in the event of electrical
of
overcurrent (23) or
the
protection of persons (against the risk of electrocution
resulting from a leakage of current due to accidental
contact between a live conductor and a user).

short circuit); and,

second,

Protection of the system: circuit breakers or fuses

(99)

Protection against overcurrent and short circuits
is
provided either by circuit breakers or by fuses. These
two types of component cut off the current in the event
of an overcurrent or short circuit and thus perform the
same protective function. However, they do not work in
the same way. Circuit breakers are electromechanical
devices which interrupt the current by tripping a switch.
Fuses interrupt the current through the melting of a
conductor brought about by overheating due to an
abnormal increase in the electric charge passing through
it.

(100) The technology used in circuit breakers and fuses is thus
different. Furthermore, once the cause of the overload
or short circuit has been eliminated, a fuse must be
replaced (since it has melted in order to cut off the
current), whereas a circuit breaker will simply have to

(23) The electrical power of an item of equipment or an installation
depends on two parameters: the strength of the electrical current
(which characterises the rate of electrical charge flowing through
(A); and the
the relevant conductor), measured in amperes
electrical voltage (which determines the force ensuring the flow of
electric charge and hence the creation of electric current),
measured in volts (V).
Overcurrent occurs when the electric current circulating is greater
than that for which the relevant electrical circuit was designed (for
example, if the downstream installation requires more power than
was allowed for). This results in the overheating of the electrical
conductors, which may lead to the failure of the installation or
indeed to a fire. A short circuit involves a current leakage within
for example, be caused by
an installation. The leakage may,
accidental contact between a person and a live wire: in such cases,
the person will establish the electrical connection between the
wire (which the person touches) and the ground (on which the
person is standing). The potential difference between the wire and
the ground will then create an electrical current (leakage), which
will pass from the live wire to the ground through the person.

Protection of persons: earth leakage protection or circuit
breakers

(101) The risk of electrocution may result either from direct
contact between the user and a live conductor (phase
Indirect contact
conductor) or from indirect contact.
arises where the user
touches part of an electric
apparatus which is itself accidentally in contact with a
live conductor.

(102)

In the event of direct contact between a person and a
live conductor, an electric current may pass through the
person's body. The seriousness of the situation depends
both on the strength of the current and the period of
time during which the person is exposed to the current.
The greater the strength of the current, the shorter the
period of time of exposure to the current must be.

(103) Protection against electrocution is provided by devices
which detect the current leakage (i.e. the current passing
through the user's body in the event of accidental direct
contact with a live conductor) and cut off the electricity
supply immediately (generally in less than 0,1 second).
Such devices are known as earth leakage protection or
residual current devices. The principle on which they
work is to measure the difference between the strength
the current entering and leaving the installation.
of
is
Normally,
live
accidental
conductor, there is a leakage of current through the
entailing a difference
person's body. This
leakage,
between
the
installation, is detected by the earth leakage protection,
which automatically cuts off the current in order to
protect the person.

the difference
contact between a person and a

is zero. Where

entering

current

leaving

there

and

the

(104)

the

against

persons

In a low-voltage electrical installation, the use of highly
sensitive earth leakage protection is the main means of
protecting
of
accidental direct contact with a live conductor, whatever
Earth leakage
the neutral point
protection is thus an essential element in ensuring the
safety of persons. However, the conditions under which
it has to be provided are not identical
in all Member
States.

treatment used.

consequences

(105) As stated above, the risk of electrocution may also arise
through accidental indirect contact. This occurs when a

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live wire within a piece of equipment accidentally comes
into contact with an external part of the equipment
which the user can normally touch without incurring
any
electrical
equipment (for example, an oven), the person may then
transmitted
be in contact with the electrical current
indirectly by the equipment.

risk. When the user

touches

the

(106)

the

indirect contact),

the
In this second case (accidental
protection of the user is based essentially on earthing,
i.e.
connection
between the ground and the electrical device, certain
parts of the electrical installation and/or certain items of
equipment.

establishment of

an electrical

(107) Earthing requires

either

the use of earth leakage
protection (as in the case of direct contact) or the use of
circuit breakers. The choice depends on the neutral
point
the way in which the exposed
conductive parts (24) and the neutral conductor (25) are
connected to the ground.

treatment,

i.e.

The importance of neutral point treatments

(108) There are three types of neutral point

‘TT'

treatment,
depending on how the exposed conductive parts and
the neutral conductor are connected to the ground.
These types of treatment are designated by two letters,
the first indicating how the neutral conductor is earthed
and the second how the exposed conductive parts are
(exposed conductive parts and neutral
earthed:
conductor directly connected to the ground),
‘TN'
(exposed conductive parts connected to the neutral
conductor, which is itself directly connected to the
(neutral conductor connected to the
ground) and ‘IT'
ground through an impedance, exposed conductive
parts directly connected to the ground). There are also
two variants of the TN method: ‘TNC' (in which a single
conductor
is both the neutral conductor and the
protective conductor) and ‘TNS' (in which the neutral
conductor is distinct from the protective conductor).

(109) Where there is a leakage of current

(through faulty
insulation or accidental contact with a live conductor),
the neutral point treatment is of crucial
importance,
since it determines the intensity of the leakage current
the shock
(fault current), and hence the strength of
received by the person. Thus, the TT method results in
fault currents which may amount to several amps or

(24) The parts of electrical equipment with which the user can

normally come into contact without danger.

(25) Conductor which normally is not live. The neutral conductor is to
be distinguished from phase conductors, which are live.
In
single-phase current, electricity circulates normally between one
In three-phase current, electricity
phase and the neutral point.
circulates between phases.

in fault
tens of amps. The TN method may result
currents of the order of several hundreds (or indeed
thousands) of amps, since,
in this method, a fault
current produces an immediate short circuit between a
phase (26) and the neutral conductor. Lastly, under the
IT method, the fault current is weak (several tens of
milliamps), since it is limited by the impedance of the
neutral-earth connection.

(110) All this has important consequences for the design of

the electricity distribution installation.

(111) Under the TT method, an insulation fault or accidental
contact between a phase and an exposed conductive
leakage through the earth
part produces a current
electrode of
the installation. The exposed conductive
part (i.e. the external part of electrical equipment which
the user can normally touch) is then live. In order to
the user from the risk of electrocution as a
protect
result of accidental contact with the conductive part
(electrocution through indirect contact), current leakage
through the earth electrode must be detected and the
electrical power supply cut off very rapidly. This is the
the earth leakage protection described
function of
earlier. The TT method thus necessarily involves the use
of earth leakage protection in order to protect persons
against
electrocution through indirect
contact. The sensitivity of the earth leakage protection
used in the TT method to protect persons against
indirect contact varies generally between 30 milliamps
(high sensitivity) and 300 or 500 milliamps (medium
sensitivity).

risk of

the

(112) Under the TN method, an insulation fault or accidental
contact between a phase and an exposed conductive
part does not result in an actual current leakage, but in
a short circuit (between phase and neutral). The neutral
conductor then carries a very strong current. Protection
of the user against the risk of electrocution through
is provided in this situation mainly
indirect contact
through circuit breakers (and not by earth leakage
protection, except under the TNS method) with a low
tripping threshold (ensuring that
tripped
rapidly). Fuses may also be used instead of circuit
breakers.

they are

(113) Lastly, under the IT method, as stated previously, the
leakage current in the event of an insulation fault or
accidental contact between a phase and an exposed
conductive part
require the
cutting-off of the electricity supply. The IT method thus
ensures continuity of electricity supply in the event of
an initial fault. It is the preferred neutral point treatment
in applications (hospitals, airports, etc.) which require

is weak and does not

(26) I.e. a live conductor.

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such continuity of service. However, it is important that
the initial fault be detected so that it can be remedied. If
a second fault occurs,
the installation using the IT
method becomes equivalent to an installation using the
TN method (or TT, if the exposed conductive parts are
not connected with one another) and a large short
circuit (or leakage) current then occurs.

(114)

In practice, the IT method results in the use of two
types of apparatus: first, an insulation monitoring device
to detect the weak leakage current resulting from the
first fault; and, second, a circuit breaker or earth leakage
device to provide protection against the second fault.

Performance of the components

for

the most

components.

This means,
appropriate

(115) The next step is to select the size, i.e. the performance,
example,
of
the
determining
circuit breaker
technology (heavy-duty circuit breaker, moulded case
circuit breaker or miniature circuit breaker) and, within
the relevant category, selecting the most appropriate
type. Circuit breakers are characterised essentially by (i)
their nominal rating (rating beyond which the circuit
breaker is tripped and breaks the circuit); (ii) breaking
capacity (maximum current which can be withstood
without damage by the circuit breaker in the event of a
short circuit); (iii) the number of poles (i.e. the number
of
cut
simultaneously by the circuit breaker when triggered);
and (iv) their typical tripping curve (reflecting tripping
time as a function of current). All these characteristics
are directly linked to the neutral point treatment, the
power
installation and the other
equipment situated upstream or downstream.

from 1 to 4, which

carried by the

conductors,

are

used in large numbers in final panelboards, may have a
significant impact on the price of the board (and hence,
lead to a change in the
in certain particular cases,
architecture of
is
more the layout of
the installation and the need to
ensure operating safety that determine the operator's
and hence the installer's final choice.'.

the installation). However,

[…]* it

(118) The parties thus indicate that

there is generally an
optimum electrical arrangement for a given building,
apartment or industrial unit. For example, although one
can in theory conceive of a large number of different
electrical
installations for a given dwelling (with a
different circuit breaker for each room, or a circuit
breaker for two rooms, etc.), the installer's main concern
is operating safety and quality, which will prompt him
to increase the number of protective devices (in order to
isolate each circuit
in the event of a fault and thus
ensure that power continues to be supplied to all the
circuits which are not affected by the fault). In practice,
the layout is often determined using computer software,
such as the ECODIAL system provided by Schneider,
designed to guide the customer towards an arrangement
that will provide optimum service quality, i.e. one not
necessarily orientated towards the lowest
installation
cost. The parties also stress that selecting multiple
protection may also make economic sense, since it
means thinner (and less costly) electrical wiring.

(119) The arrangement decided on then directly defines the
the
each

characteristics
performance expected from the various components.

circuit,

hence

and

of

(116) The information provided by the parties suggests that
the choice of components is generally imposed by the
installation. More particularly,
the
configuration of the building or industrial unit generally
determines the electrical arrangement to be adopted by
the installer, and that the relevant arrangement will in
its turn determine the performances of the components
used in the switchboards.

it appears

that

required

exceeding

(120) These parameters subsequently determine the choice of
the most appropriate components, i.e. those which meet
the
it
performance without
unnecessarily (for reasons of cost). Although one can in
theory use higher-performance components, that would
not entail any advantage for the user while at the same
time adding significantly to costs. As Schneider points
‘one can in theory use high-breaking-capacity
out,
circuit breakers used in Segment 2 for Segment 4,
in
accordance with the saying “he who can do more can
do less”. But the cost of these items is prohibitive'.

(117) As Schneider, for example, states,

‘the increase in the
price of a 16 amp circuit breaker, such as is generally
used downstream from the installation […]* and hence

(121) Switchboards may contain the following products:

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Table 4

Name

Main
switchboards

Distribution
boards

Final
panel-
boards

Heavy-duty circuit
breakers

630-6 300 A

Moulded case circuit
breakers

Miniature circuit
breakers

Earth leakage circuit
breakers

Earth leakage
switches

400-1 600 A 100-250 A

63-125 A

6-40 A

X

X

Fuses

400-1 600 A < 250 A

6-40 A

Switchboard cabinet
and components (or
enclosures)

X

X

X

B.1.3 Definition of product markets

(122) The parties have activities which overlap in the area of
low-voltage electrical switchboards and the components
incorporated into them.

Product market definitions proposed by the parties

in low-voltage electrical

(123) The parties suggest distinguishing three product markets
amongst the systems used for protecting persons and
installations. The
equipment
parties propose that such product markets be defined by
reference to the level of electrical distribution. They thus
distinguish a market for main switchboards, a market
for
final
panelboards.

distribution boards

and a market

for

Solution markets

take place at
(which are

(124) Firstly, Schneider considers that competition between
the level of
manufacturers does not
sold by the
switchboard components
manufacturers to wholesalers, and by wholesalers to
the level of
panel builders and installers), but at
electrical distribution ‘solutions'
the switchboards
themselves) assembled on the basis of such components.
it is argued,
The various manufacturers' solutions are,
substitutable for one another, since they perform the
same functions and are subject to the same technical
requirements. By contrast, the components supplied by
argued,
the various manufacturers
substitutable for one another, either on grounds of

are not,

(i.e.

is

it

the

case

compatibility

of main
(in
technical
switchboards and distribution boards), or because the
installers are in general loyal to a brand and thus buy all
their components from one and the same manufacturer
(in the case of final panelboards). To satisfy this demand,
the manufacturers have developed a range of solutions,
which means that they must be able to offer all the
components comprising each solution. These solutions
therefore constitute, it is argued, the product market.

Three distinct markets

and

board

switchboard,

(125) Schneider also considers that each type of switchboard
(main
final
distribution
panelboard) constitutes a separate market. In the first
place, main switchboards are considered to differ in
their technical performances from distribution boards
levels
and final panelboards
in
particular) and are made up,
least, of
components which are specific to such category of
switchboard (heavy-duty circuit breakers, also known as
open
Conversely, main
breakers).
switchboards do not contain miniature circuit breakers,
which are used to a large extent in distribution boards
and final panelboards.

current
in part at

(electrical

circuit

air

(126) Secondly,

it is argued, distribution boards differ from
the latter are designed for
final panelboards in that
lower
than 125 amp) and
(less
levels of current
distribution boards contain specific components (earth
leakage protection in particular) which are not used in
final panelboards.

Commission's analysis

(127) The

is

look at

following paragraphs

switchboards
it must

competition in the markets
evident
It
switchboards.

the parameters
linked to
governing
from the
electrical
investigation that, generally speaking,
Commission's
brand.
electrical
However,
that
manufacturers of electrical equipment sell components
to wholesalers and that there is therefore competition
between manufacturers
In
conclusion,
the relevant markets to be taken as the
reference in analysing the notified transaction under
competition law are markets for components to be
incorporated into electrical switchboards.

comprise
be

acknowledged

components.

in selling

single

also

a

Switchboards are in most cases single-brand

(128) The Commission's investigation shows that

in most
cases electrical switchboards (particularly where they are

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installed) contain components from a single brand. This
is attributable to technical constraints (mainly in the
case of distribution boards) and commercial habits
(mainly in the case of final panelboards).

Te c h n i c a l c o n s t r a i n t s

based on extremely subtle features (speed of contact
opening, quantity of energy which the circuit breaker
allows to pass when the current is interrupted, etc.),
which are linked to the way in which the products are
designed and manufactured. Schneider estimates that
two circuit breakers which are identical in terms of the
relevant
standards may nevertheless have different
performances in terms of selectivity, with the result that
it is impossible to guarantee the selectivity function as
between the various manufacturers.

(129) Competition between manufacturers is based not only
on individual components considered on their own
merits, but also on the performance of switchboards
assembled
individual
components with other components. For example, a
moulded case circuit breaker is of limited use if it is not
compatible with the other protective devices (other
moulded
circuit
breakers, fuses, etc.) making up a switchboard.

breakers, miniature

combining

through

circuit

such

case

the investigation show that,

(130) However, the information provided by the parties and
the results of
in main
switchboards and distribution boards, it would not be
economically possible to ensure compatibility between
certain components of different brands. For example,
the parties state that combining components of different
brands within a single main switchboard would require
panel builders to carry out further tests in order to
the board thus assembled worked
check whether
tests would
properly. The costs of
amount
25 000
to between EUR 10 000 and EUR
depending on the guarantees to be given, which would
be prohibitive for any given switchboard.

such additional

(131) Similarly, in distribution boards, the cabinets and certain
cabinet components (fixing devices, etc.) sold by a
manufacturer are, it is reported, specifically designed for
the manufacturer's components. This is because the
manufacturers have all developed specific assembly
to assemble the
devices designed to make it easier
board.

(132) A distribution board typically contains a moulded case
circuit breaker as incomer to feed and protect a series of
outgoings, which are themselves protected and fed by a
series of miniature circuit breakers. So as to ensure that
a fault on an outgoing results in the cutting only of the
relevant outgoing and not all the outgoings connected
to the board, any fault occurring on the outgoing must
be cut by the protective device specific to that outgoing
rather than by the incomer protective device. This is
called ‘selectivity'.

(133) However,

far as
distribution boards are concerned, such selectivity is

is apparent

least as

that, at

it

the customer's

(134) Component compatibility and selectivity are of crucial
importance to the panel builder or installer, since it is
these parameters which enable the panel builder to
guarantee the performance of the final switchboard and
requirements. Since
hence to meet
compatibility and selectivity can be ensured only if a
single brand is used, panel builders
cannot mix
components of different brands and will source all the
electrical equipment required for a switchboard from
one and the same manufacturer. As one panel builder
states (27),
‘there is no mixing of products of different
brands. […]* Installation rules require one and the same
brand to be used'.

(135)

It follows that,
in main switchboards and distribution
boards, the choice of the brand of one key component,
such as the moulded case circuit breaker for distribution
boards, generally means that the same brand must be
used for all the other protective components required in
the relevant board. For example, once a panel builder
has decided on the brand of the moulded case circuit
breaker
to be used in his board he has de facto
restricted his choice as regards the other components
(cabinet, miniature circuit breakers, etc.)
in his board,
since he can then use only the brands which will ensure
compatibility with the moulded case circuit breaker
selected.

(136) Nevertheless,

all

the board components do not
necessarily have to be sourced from the same brand,
and there is some mixing of brands in the case of
certain components. This appears
to be the case
particularly for components that do not directly play a
protective role, such as cabinet components. The parties'
shares of sales can vary considerably in a given territory
between the different components put together to make
up a distribution board. Schneider's share of the French
market in circuit breakers for distribution boards is thus
said to be in the range of [50-90] % but not more than
[30-40] % in the case of cabinets. The parties consider
that these differences are explained by the variety of
solutions that can be imagined for a given type of
electrical switchboard. If that were the case, the above

(27) Spie Trindel, reply to phase I questionnaire.

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Official Journal of the European Union

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figures would show that, on average, distribution boards
sold by Schneider contained nearly twice as many
circuit breakers as those sold by its competitors. That is
unlikely to be the case, among other things in view of
the variety of Schneider's customers in France. A more
plausible explanation would be that, while the mixing of
brands is limited in the case of circuit breakers (for
reasons of compatibility and selectivity), it occurs more
frequently in the case of cabinet components, which are
not subject
to the same selectivity and compatibility
rules as circuit breakers. The same applies to earth
leakage protection devices, which are also supplied by
specialist firms: for example Baco, a Legrand subsidiary
its own
which sells earth leakage protection under
the
in the case of
brand. Lastly,
market shares as presented by the parties in terms of
component categories vary widely from one component
to another.

final panelboards,

C o m m e r c i a l h a b i t s

(137) Combining products of different brands within one and
the same final panelboard is technically possible and is
sometimes done. However, as the parties point out, final
panelboards are essentially put together and selected by
installers, who ‘are in general
to a brand and
purchase the complete kit from a single manufacturer,
for
the
matching in appearance of the products, the functioning
of the apparatus and confidence in the technical quality
of a manufacturer' (28). Thus, although there are no
technical obstacles to the mixing of components in final
their
panelboards,
components from one and the same brand.

reasons of ease of assembly of

the board,

purchase

installers

usually

loyal

all

(138) These factors also demonstrate that having a complete
range of products confers a significant competitive
advantage on a given brand within this sector. As one
manufacturer states (29),
‘given the way the market is
developing with the aim increasingly being to provide
complete installations and integrated systems, the room
available for small producers or for producers of single
components is becoming more and more restricted'.

the

various

supplies primarily from brands which provide an
assurance of safety and compatibility, whatever
the
configuration adopted, and hence whatever the choice
and assembly of
in a
switchboard. In view of the diversity of the components
which may be incorporated into a main switchboard or
distribution board (Schneider has more than 3 000
the
product
manufacturers must provide
range of
protective equipment
to be incorporated into such
switchboards.

components

distribution

the whole

boards),

types

for

(140) The importance of having full

states,

ranges and of not
significantly mixing products of different brands
is
further underlined by other features of the sector. Firstly,
‘panel builders and
as General Electric (GE)
installers normally try to purchase all their products
from a single supplier or make. This reduces their
transaction costs, gives them better access to training
and maintenance services and ensures that the various
components are technically compatible'. Secondly, some
panel builders and installers have pointed to the
availability of price reductions or
training sessions,
linked to large-scale purchases or to annual purchase
volume targets for products of one and the same make.
As the results of
is also
apparent that having a wide range of products confers a
significant advantage in access to wholesalers.

the investigation show,

it

(141) All the parties' main competitors (such as ABB, Siemens
or Hager) have complete ranges of components. Any
medium-sized manufacturers that do not produce the
full range of components must generally make up for
this by purchasing the missing type of component from
other manufacturers and then integrating it into their
own range. This is the case, for example, with Moeller
(which
from
Schneider), Gewiss (which has developed its distribution
boards around moulded case circuit breakers supplied
by ABB) and Schneider (which purchases fuse switches
from ABB and fuses from Holec and Harvey Bubble).

obtains heavy-duty

breakers

circuit

Competition between manufacturers is also component-based

(139) The need to have complete ranges stems firstly from the
fact that installers and panel builders will obtain their

(28) Form CO, p. 54.
(29) Gewiss, reply to phase I questionnaire.

(142) However, the parties' position as regards the definition
of the relevant product markets on the basis of the final
combination of components in ‘solutions' does not
the following
stand up to closer examination. As

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clear,

is
paragraphs make
invalidated by the economic facts, and, as the parties'
documents demonstrate, competitive constraints are also
component-based.

position

parties'

the

T h e e c o n o m i c f a c t s s h o w t h a t t h e m a r k e t
o p e r a t e s t h r o u g h t h e s a l e o f c o m p o n e n t s

(147)

(143)

If

that were the case,

In its decision of 30 March 2001 pursuant to Article
6(1)(c) of
the Merger Regulation (‘Article 6(1)(c)
decision'), the Commission stated that it did not rule out
the various component
the possibility that each of
categories in electrical switchboards formed a relevant
product market.
the product
markets would then have to be defined on the basis of
component categories rather than in terms of ‘solutions'.
In its Article 6(1)(c) decision, the Commission noted in
particular that many third parties had indicated that
electrical components are generally sold as such by
manufacturers, who supply them to their wholesalers or
to panel builders without
integrating them into a
(this is left to panel builders and
complete ‘solution'
installers).

(144)

In the decision, the Commission also noted that some
competitors did not seem to be able to manufacture
themselves all the components needed for the ‘solutions'
(electrical switchboards) they supplied, that the parties'
catalogues did not
seem to apply the breakdown
between main switchboards, distribution boards and
final panelboards which the parties proposed and that,
on the contrary, such catalogues divided components up
their
by range or by category on the basis of
performance.

the sale of

(145) The Commission's in-depth investigation has confirmed
that wholesalers, installers and panel builders purchase,
and manufacturers sell, components. There is strictly
integrated
speaking no such thing as
switchboards. The role of panel builders and installers is
precisely to build an electrical switchboard to meet the
technical requirements of the installation for which it is
intended. The design of a switchboard, its make-up, i.e.
in particular the circuit breakers (heavy-duty, moulded
case or miniature),
fuses and earth leakage devices
which it comprises and the choice of such components
depend primarily on the technical specifications of the
installation.

virtually unique features of the installation into which it
has to be incorporated. As Legrand states (30),
‘the
diversity of the configurations observed is very wide and
makes it very difficult to define a standard switchboard'.
The switchboard is thus designed and assembled only at
installer and/or design
the level of the panel builder,
office in contact with the end user.

In their reply to the statement of objections, the parties
do not dispute the virtual non-existence of standard
switchboards but argue that standard solutions do exist.
They stress that building a switchboard always involves
mounting the
(circuit
types of
breakers, earth leakage protection, cabinet or enclosure
components, etc.) and that customers feel the need to
obtain standard solutions, as can be seen from the
development of software packages designed to assist the
demand for which manufacturers have to cater, i.e. the
demand from installers.

component

same

existence of

(148) The Commission does not dispute these remarks, but
considers that they cannot under any circumstances be
interpreted as proving
standard
the
switchboards. The fact that all switchboards of a given
type tend to contain the same type of component shows
that all those switchboards fulfil the same purpose, but
not of course that they are all
identical. The specific
nature of each switchboard (and therefore the virtual
non-existence of standard switchboards) is furthermore
switchboard design
confirmed by the existence of
software,
to specify the
component make-up that best serves the needs of each
customer. The Commission therefore maintains that,
with the exception of a few standard final panelboards,
which relate to only a few specific configurations and
account for only a tiny share of sales, there is no such
thing as a standard switchboard, and what the parties
call a standard solution appears to have more to do
with brand cohesiveness.

the purpose of which is

(149)

In general, an electrical equipment manufacturer neither
designs nor sells switchboards, but rather sells (directly,
or indirectly through the trade)
to other companies
installers) the components which they
(panel builders,
require in order
to assemble their own customers'
electrical installations. The parties' catalogues and those
of
their competitors are moreover broken down by
component category, and not by switchboard type. The
catalogues present the detailed technical specifications of
the components, without necessarily referring to the
switchboards into which they could be incorporated.

(146) There cannot therefore be any such thing as a ‘standard
switchboard', since each switchboard has to reflect the

(30) Legrand, reply to question 65.

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Official Journal of the European Union

6.4.2004

(150)

(151)

(152)

In addition, the parties have stated that more than 80 %
low-voltage distribution board or final panelboard
of
equipment
is sold through the trade. As Schneider
states (31), ‘[each wholesaler] purchases from the parties
the components or sub-assemblies needed to maintain a
stock that will allow it to supply the various system
configurations which its own customers have to install'.
This
from
wholesalers in respect of distribution boards and final
panelboards relate to components and not to integrated
solutions.

that orders

confirms

reply

fact

the

for

and

relate

orders

boards

In reply to questions put by the Commission (32),
Schneider provided, for each EEA country, copies of the
main
final
distribution
panelboards and of the invoices relating to such orders.
It is quite clear that the orders placed by Schneider's
components,
customers
identified by their specific catalogue numbers, and not
to solutions. The few exceptions almost all relate to
direct sales to customers other
than wholesalers or
panel builders. However, as stated above, such sales are
(less than 5 % in the case of distribution
marginal
boards, and less
final
panelboards).

than 10 % in the case of

almost

always

to

It is evident from the above considerations that almost
all of the parties' sales of distribution boards and final
panelboards are in the form of components, and not
‘integrated
to their
competitors.

solutions'. The

applies

same

T h e r e a r e c o m p e t i t i v e c o n s t r a i n t s a t
c o m p o n e n t l e v e l

(153) A look at

the

reasons

(technical

constraints and
commercial habits) why switchboard components tend
to be of
the same brand shows that a hypothetical
manufacturer which, while offering the full range of
components (a necessary condition for being present on
the market), enjoyed a particularly strong position with
regard to one type of component would be able to
wield market power over that component type.

component to another. For example, the results of the
investigation show that,
certain
manufacturers, market shares can vary by a factor of
two from one component to another. Such differences
appear to show that competitive conditions are not
uniform as between different components.

case of

in the

technical

constraints

(155) As far as distribution boards are concerned, the parties,
citing
and
selectivity), argued that analysis should be based solely
on ‘solutions'. They also stress in their reply to the
statement of objections
choosing switchboard
components of the same brand enables panel builders to
make substantial time savings (between 25 % and 50 %)
when assembling the switchboard.

(compatibility

that

(156) Nevertheless, as stated earlier, there does appear to be
some mixing of brands, at least in the case of cabinet
components. Furthermore, the fact that different brands
of circuit breaker are not mixed does not rule out the
existence of different competitive conditions between
moulded case circuit breakers, key components the
choice of which will determine that of
the other
protective
components, and those other protective
components. Manufacturers will naturally tend to focus
the bulk of their R&D and promotion efforts on these
than on the others. This is
key components rather
confirmed by the figures supplied by the parties in their
reply to the statement of objections. These show that in
Italy, over the period 1998-2000, the difference between
the lowest price (corresponding to special offers) and
the highest price (no special offers) was as much as
[20-30] % in the case of moulded case circuit breakers
but did not exceed [10-20] % in the case of miniature
circuit breakers. This
special offers
traditionally play a more important role for MCCBs than
for other circuit breakers.

suggests

that

(154) As far as final panelboards are concerned, it is apparent
that the only reason for the use of components of one
and the same brand is installers' loyalty to the brand.
However, a look at the conditions of competition shows
that market shares may vary considerably from one

(31) Replies by the parties to points 68 and 113 of the questionnaire of

6 April 2001.

(32) Points 70 and 112 of the questionnaire of 6 April 2001.

(157)

Focusing the analysis on components seems all
the
more appropriate as it is generally at this level that the
value of a brand is based. This is also the level at which
the parties analyse their own position on the markets
for low-voltage electrical distribution equipment. For
example, Legrand's ‘Medium-term plans 2001-2005' for
most of the EEA countries give a breakdown of market
shares by component category (‘power circuit breakers',
‘distribution [board] circuit breakers',
‘earth leakage
switches',
the documents do
not include any breakdown by ‘solution' (i.e. by type of
low-voltage electrical switchboard).

‘enclosures'). Conversely,

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component is therefore, they argue, a scenario that is
completely divorced from the reality of the market.

that does not rule out

(162) The Commission cannot agree with that view. While the
case of a hypothetical monopoly over a single type of
component indeed does not correspond to the reality of
the market,
the existence of
competitive conditions (and therefore of possible market
power) that differ for each type of component. The fact
that all manufacturers have to offer, and installers buy,
all the components necessary for building an electrical
switchboard does not mean that the competitiveness of
the different manufacturers,
characteristics of
demand and therefore price setting are necessarily
equivalent for all components. In other words, the fact
that the hypothetical monopoly test cannot technically
(since all
be applied at
manufacturers
that a
monopoly situation probably cannot exist at the level of
a single component independently of all the others. But
this does not, in itself, rule out the existence of market
power at component level.

the level of components
sell all

the products)

shows

the

(163) The mere fact (not disputed by the parties) that there
are key components shows that certain components are
more important
than others and that competitive
conditions for those components may differ from those
prevailing for the others. Furthermore, as stated earlier,
there is some mixing of brands in the case of certain
components,
enclosure
components.

particular

cabinet

or

in

(164) This is amply confirmed by the figures supplied by
Schneider, which show substantial differences between
profit margins for the different types of component.

(158) The parties'

states (33):

internal documents also include analyses
which underline the importance of components as such.
For example, Bticino, which forms part of the Legrand
Legrand (34) has
group,
‘[…]*'.Similarly,
separate breakdowns for distribution circuit breakers
and earth leakage circuit breakers. In its three-year plan
for […]*, Schneider stresses the positive effects which it
expects the arrival of a new range of […]* will have,
providing a basis for the sale of other products. In […]*,
Schneider expects its range of […]* to strengthen its
it
position with industrial customers and, conversely,
regards its range of […]* as responsible for its weak
competitive position with customers in the residential
sector.

(in this instance,

(159) The way these documents stress the strategic role of a
component
[…]*) provides a clear
illustration of the importance of these components in
the various manufacturers' competitive strategies. The
role of
from the
manufacturers' advertising aimed at installers and panel
builders. Such advertising focuses on the performance of
the relevant components and not on the complete
solutions which may be assembled from them.

also apparent

components

is

(160) Lastly, it should be noted that […]* (35).

(161)

In their reply to the statement of objections, the parties
dispute the existence of market power at the level of
components. They take the view, among other things,
that the hypothetical monopoly test cannot be applied
to
all
of
manufacturers offer the full range of components. The
case of a hypothetical monopoly over a single type of

component,

particular

since

type

a

(33) Bticino, Medium-term plan […]*.
(34) Legrand, Medium-term plans.
(35) Schneider, European price convergence.

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Profit margins

Product

Main switchboards

Distribution boards

Final panelboards

Gross margin

Net margin

Gross margin

Net margin

Gross margin

Net margin

Heavy-duty circuit breakers

[40-60]* %

[20-40]* %

Moulded case circuit breakers

[40-60]* %

[10-30]* %

[50-70]* %

[20-40]* %

Miniature and earth leakage
circuit breakers

Switchboard cabinet and
components (or enclosures)

[50-70]* %

[20-40]* %

[50-70]* %

[20-40]* %

[20-40]* %

[0-20]* %

[50-70]* %

[20-40]* %

[20-40]* %

[0-20]* %

Source: Schneider, reply to the questionnaire of 6 April 2001.

Conclusion

that

involved

undertakings

relevant market (36),

(165) As the Commission stated in its notice on the definition
of
‘the objective of defining a
market […]* is to identify those actual competitors of
of
the
constraining those undertakings' behaviour
and of
preventing
independently of
them from behaving
effective competitive pressure'. The aim in defining the
relevant market is thus to identify the areas in which a
could exercise market
possible dominant operator
power and to provide a conceptual
framework for
analysing the conditions of supply and demand in such
areas.

capable

are

(166) The above analysis

that

shows

the manufacturers'
market power may be exercised at two levels: at the
level of the brands (and therefore the combination of all
the components to be incorporated into a switchboard)
and at
the level of each category of component
individually.

(167) The fact that customers frequently choose components
of the same brand requires manufacturers to offer a full
range of products and guarantee the (technical and
economic) performance of switchboards resulting from
the assembly of those products. Furthermore, once a
particular component (for example a circuit breaker) has
a given
been chosen,
switchboard will normally be sourced from the same
brand. This is the case particularly of the other types of
circuit breaker incorporated in distribution boards, on
selectivity
account
considerations set out above. There is therefore an initial

components of

compatibility

the other

and

the

of

(36) Commission notice on the definition of relevant market for the
purposes of Community competition law (OJ C 372, 9.12.1997,
p. 5).

competition

of

level
components (or at
components).

corresponding
the very least all

to

all
the
the protective

to another. Competitive

the competitive positions of

(168) Nevertheless, it is also clear from the foregoing that (i)
components of a single brand are not always chosen, in
the case of both final panelboards and distribution
boards; (ii) there appears to be more mixing of brands
in the case of cabinet or enclosure components than
protective components; (iii) the choice of brand is in
practice determined by that of certain key components;
and (iv)
the different
manufacturers can vary greatly from one type of
conditions are
component
therefore not uniform for each type of component. This
is broadly confirmed by the data supplied by the parties
in their reply to the statement of objections. These data
reveal the existence of special offers that are specific to
each type of component
(for example, a model of
miniature circuit breaker or a type of enclosure),
something which strongly suggests the existence of
competitive pressures differing from one component to
another. And, in the case of distribution boards, these
special offers appear to be significantly more generous
for key components (moulded case circuit breakers) and
components that can be combined with those of other
brands (cabinet components) than for miniature circuit
breakers.

(169)

In their reply to the statement of objections, the parties
dispute this analysis and argue on the contrary that the
competitive assessment should focus only on the whole
switchboard,
i.e. the group of components that go to
make up a particular type of electrical switchboard.
in particular on (i)
argument
They
considerations of a technical
(compatibility, selectivity,
etc.) and economic nature (assembly time) which restrict
the mixing of products of different brands,
the
installers and panel builders to choose
tendency of
components of the same brand and (iii) the fact that all

their

base

(ii)

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an

building

manufacturers have to offer and do indeed offer all the
components necessary
electrical
for
switchboard. They also rely on the findings of a study
they commissioned from the consultancy NERA, which
in their view demonstrates a very close correlation
between the sales volumes for each type of component.
The parties consider
sales
volumes demonstrates the existence of a single market
in components.

this correlation of

that

of

of

an

level

(170) As stated earlier, the Commission does not dispute the
existence
competition
initial
corresponding to all the components that go to make
up a particular electrical switchboard, or the fact that
such competition requires manufacturers to offer a full
range of products and guarantee the technical and
economic performance of switchboards resulting from
the assembly of
takes the view,
those products.
however, that competition occurs not only at that level
but also at the level of each type of component.

It

than

disprove

(171) The Commission also considers that the data supplied
by NERA confirm rather
the
appropriateness of a component-based analysis. First,
manufacturers run a large number of special offers
concerning an individual type of component rather than
all the components necessary for building an electrical
switchboard. In June and July 2000, Schneider is thus
said to have offered discounts of [0-20]* % on certain
[…]* and rebates of
[20-40]* % on certain […]*.
Likewise, Legrand is said to have run special offers
specific to certain types of […]* for final panelboards
and, at other times, special offers on certain […]*. The
scale of these offers and the fact that they relate to a
illustrate the existence of
single type of component
specific competition at
the level of each type of
component.

that sales promotions on components do not have a
uniform effect on all
the components necessary for
building an electrical switchboard, which again confirms
the existence of a second level of competition at
component level.

the

different

components.

(173) Third, the data supplied by NERA show that there is no
significant correlation between the variations in the
prices of
Since price
variations reflect changes in the supply and demand
this lack of
the products concerned,
conditions for
correlation once more illustrates the specific nature of
each type of component and confirms that the prices of
each type of component are set to a large extent on the
basis of considerations specific to that component type
(rather than as a result of competitive changes affecting
the switchboards into which they are incorporated).

(174) Lastly,

component

the view that

competition at

the Commission takes

the
correlation of component sales volumes as observed by
into question the existence of
NERA does not call
specific
level. NERA's
correlation calculation takes no account of the seasonal
nature of the business. Seasonal variations can, however,
occasionally be very wide, in particular during August,
when sales volumes can fall by more than 75 % from
July levels. By failing to separate out these factors, the
data
significantly
overestimate the real correlation of sales volumes. To
measure the real correlation,
the Commission has
performed its own calculations on the basis of the data
supplied by the parties. These calculations show that, if
seasonal
the
correlation drops significantly to ranges (in the region
of 0,7)
that do not allow precise conclusions to be
drawn.

by NERA therefore

separated out,

variations

supplied

sales

are

(172) Second, the data supplied by the parties also suggest
that these special offers have a very substantial impact
on sales of the items concerned by the offer, but only
the other components
limited effects on sales of
designed to be combined with the item concerned in
order to form ‘solutions'. For example, when in January
2000 Bticino offered (in Italy) a discount of [0-20]* %
on certain […]*, its sales of […]* went up by [0-20]* %
in relation to December 1999, but its sales of […]* rose
by only [0-20]* % on the previous month. The
difference is even more marked if seasonal variations in
sales are taken into account since, in that case, sales of
[…]* even fell by [0-10]* % on the previous month
(sales of […]* having risen by [20-30]* %). This suggests

(175)

It is clear that there will always be some relationship
between sales of the different types of component, since
final sales relate to finished switchboards and these are
obtained by assembling the components in question.
The Commission nevertheless takes the view that the
existence of this relationship does not make it possible
to conclude that all the components belong to a single
product market. When transposed to another sector, the
line of argument developed by NERA would be
tantamount to considering that, since there is (probably)
a relationship between sales of car tyres and engines
(sales of both these components being linked to car
sales), tyres and engines belong to the same product
market. Such a conclusion would be absurd given the
total lack of substitutability between the two products
supply side) and
(on both the demand and the

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6.4.2004

etc.).

rather

correlations

(presence of

concentration,

two sectors
level of

fundamental differences in the structure of competition
integrated
between the
manufacturers,
is,
It
furthermore, for this reason that econometric studies on
the definition of product markets are generally based on
volume
price
correlations (37). The Commission therefore considers
that this relationship does not call
into question the
existence of competitive conditions specific to each type
of component,
in view in particular of the facts and
considerations set out above. The fact that, despite the
inevitable
between
components, sales of certain components rise whereas
those of others fall confirms this analysis once more.

relationship

existence

sales

than

of

a

(179) A distinction must

also clearly be made, within
protective devices, between circuit breakers and fuses
(whose function is to protect the electrical installation
against any overcurrent or short circuit), on the one
hand, and earth leakage protection (whose function is to
protect life), on the other. For the same reasons, earth
leakage circuit breakers, which combine the functions of
earth leakage protection and circuit breakers, do not
seem to be
types of
protection.

substitutable

the other

for

(176) At all events, even if one accepts the importance of
component brands and ranges in competition, a brand's
strength rests mainly on the competitiveness of
the
various components. Since a possible monopolistic
supplier of a component could derive market power
from its position in respect of
the
competitive analysis must be carried out at the level of
each type of component.

that component,

(180) This segmentation also exists on the supply side, since,
these types of
according to the parties, each of
is produced on a distinct and specific
component
in a specific
production line (and,
impossible to switch to the
factory). This makes it
manufacture of any other component category under
acceptable economic conditions.

in most cases,

(177) The Commission therefore concludes that the analysis of
the effects of the notified merger on competition must
be carried out at two levels: both at the level of the
group of components necessary for building a particular
type of electrical
switchboard (this being the level
adopted by the parties) and at the level of the various
components to be incorporated into distribution boards
and final panelboards.

(181)

Product segmentation

Distinction by function type

(178) The Commission notes that the various categories of
components used in an electrical switchboard cannot be
substituted for one another. For example, a cabinet or
enclosure (i.e. a housing, generally metal, consisting of a
frame on which external panels and a door are
mounted) clearly cannot
in any way be regarded as
substitutable for a protective device (such as a circuit
breaker or fuse).

(182)

(37) See, for example, the seminal article ‘The extent of the market' by
Journal of Law and Economics vol. 28,

Stigler and Sherwin,
555-585, October 1985.

Distinction between circuit breakers and fuses

short

circuits

Fuses perform a similar function to circuit breakers
(protection against
and overloads).
However, the two components are technically different.
Whereas circuit breakers contain an electromagnetic
device, fuses work by breaking an electrical conductor
which melts in the event of overload or short circuit.
Consequently, fuses have to be replaced after a short
circuit or overload, in contrast to circuit breakers, which
have simply to be reset so long as the current strength
has not reached their breaking capacity. Furthermore, a
fuse must be accompanied by a disconnecting switch so
that the power can be switched off when the fuse is
replaced. Lastly, although a fuse is cheaper (to install)
than a circuit breaker,
in
particular
total costs are
for
higher. In view of these differences and of the fact that
circuit breakers are easier to use, circuit breakers are
more frequently used than fuses and are tending to
replace fuses in the long term.

it needs more maintenance,

replacements,

so that

electrical

switchboards,

In view of the technical differences between fuses and
circuit breakers, the impact this has on the maintenance
in
of
production technologies between the two types of
component,
it could possibly be necessary to draw a
distinction between the two types of product. However,
this question may be left open, since it will not affect
the competitive analysis of the transaction.

and the differences

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Distinction between types of circuit breaker

components (DIN mounting rails, copper busbars, etc.)
used for mounting and holding electrical components.

(183) Within circuit breakers, a distinction should also be
made between heavy-duty circuit breakers, moulded case
circuit breakers and miniature circuit breakers. In the
these types of circuit breaker
first place, each of
circuit
performs
breakers are circuit breakers used as incomers in main
switchboards, while moulded case circuit breakers are
used mainly as outgoings in main switchboards or as
incomers in distribution boards, and miniature circuit
breakers are used as outgoings in distribution boards or
in final panelboards.

function. Heavy-duty

a different

(184) As may be seen from Table 4, these differences in use
are attributable
in performance
to the differences
between the types of circuit breaker. The information
there are
provided by the parties also shows that
significant price differences between categories. The
transfer price within the Schneider group is between
[EUR 1 000 and EUR 5 000]* for heavy-duty circuit
breakers (38), between [EUR 1 000 and EUR 5 000]* for
moulded case circuit breakers (39), and between [0 and
EUR 50]* for miniature circuit breakers (40).

(185) Lastly,

it

should be noted that

the products are
manufactured on different production lines, so that a
producer of one type of circuit breaker could not switch
his production to other products and market them in
the short term.

are

thus

differences

(187) According to the information provided by the parties,
there
from one
important
distribution level to another. In the first place, modular
enclosures (made of plastic, with DIN rails and to a
large extent standardised) differ widely from cabinets
(made of metal, often including specific components,
etc.). Secondly, cabinets used for distribution boards
differ from cabinets used for main switchboards in that,
in contrast to main switchboard cabinets, which may
frequently comprise specific components incorporated
by panel builders, distribution board cabinets are
described as being more standardised, with the role of
panel builders being
to
(Schneider's Prisma range, Legrand's
assembling ‘kits'
Altis or MAS ranges) supplied by the manufacturers. In
addition, main switchboard cabinets have to comply
with
to
electromechanical constraints and short circuit levels) to
which distribution board cabinets are not subject.

restricted here

requirements

generally

technical

(relating

strict

(188) These differences are also reflected at supply level, since
the standardisation of distribution board cabinets and
final panelboard enclosures has generally prompted
high-capacity
manufacturers
production lines to them, whereas main switchboard
cabinets are frequently manufactured on low-volume
versatile production lines which can be adapted to the
particular requirements of each project.

specific

assign

to

Distinction between cabinets and enclosures

Mains connection circuit breakers

switchboards,

(186) The information provided by the parties indicates that a
distinction should be made between cabinet components
for main
for
distribution boards and enclosure components for final
panelboards. Cabinets and enclosures are metal or
electrical
to
plastic
components incorporated into low-voltage switchboards.
Cabinets or enclosures form the housing of the electrical
added switchboard
switchboard, and to them are

components

designed

cabinet

protect

items

the

(38) Annex, reply to point 25 of the questionnaire of 6 April 2001.
(39) Annex, replies to points 25 and 64 of the questionnaire of 6 April

2001.

(40) Annex, reply to point 64 of the questionnaire of 6 April 2001;
memo submitted by the parties on 13 March 2001-‘Definition of
product market for segments 1, 2 and 4'.

(189)

In addition to the components described above, mention
should also be made of another category of products:
mains connection circuit breakers. These are devices
required by Electricité de France (EDF) in France and by
the electricity distributor in Portugal.

(190) Mains connection circuit breakers differ from the other
components in that
they have (i) an earth leakage
is
function which, as well as protecting the user,
intended to secure the distributor against the theft of
electricity;
function (measurement of
consumption); and (iii) a multi-calibration function
which enables the electricity distributor to adjust the
circuit breaker to the customer's requirements.

(ii) a charge

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are

they

(191) Two thirds of mains connection circuit breakers are sold
to the electricity distributor and one third to installers.
Since
specific
requirements of the electricity distributor, there are not
at present any substitutable products. Furthermore,
mains connection circuit breakers are not incorporated
into electrical switchboards. These devices thus form a
separate relevant product market.

to meet

designed

the

Conclusion

B.1.4 Definition of geographic markets for

distribution boards

Geographic market definitions proposed by the
parties

are

the view that

take
switchboards

the markets
European (41).

for
(193) The parties
low-voltage
In
particular, the parties explained that transport costs are
low (less than […]* % of the cost of the equipment),
that production is generally organised on the basis of a
limited number of production plants in Europe and that
in their view, been harmonised in
standards have,
Europe.

(192)

the level of each of

In the light of the above, the relevant product markets
may be defined either at
the
components individually or at the level of the categories
of switchboard. This question may be left open since the
effects on competition are similar irrespective of the
definition adopted. The product markets may be broken
down as follows:

Commission's analysis

Table 5

Group of components
level

Components level

Main switchboards

Main switchboard
cabinets

Heavy-duty circuit breakers

Moulded case circuit breakers and/or
fuses for main switchboards

Moulded case circuit breakers and/or
fuses for distribution boards

Distribution boards

Distribution board cabinets

Miniature circuit breakers and/or fuses
for distribution boards

Miniature circuit breakers and/or fuses
for final panelboards

Final panelboards

Earth leakage protection

Enclosures

Mains connection circuit breakers

(194) The

by

out

carried

detailed

investigation

the
Commission confirms that the markets for equipment
used in distribution boards or final panelboards are
national. This conclusion is based on the following four
considerations. In the first place, there are significant
sold in the different
differences between products
Member States, mainly for
reasons to do with the
regulatory framework or standards applicable in the
Member States and national
traditions and habits.
Secondly, prices continue to be determined at national
level and certain products exhibit considerable price
differences, in some cases costing twice as much in one
Member State as in another. Thirdly, key competition
parameters, both on the supply side (positioning of
brands, access to wholesalers) and on the demand side
(customer structure and expectations) depend on factors
(such as the degree of
which are essentially national
concentration,
scope of
wholesalers, the way installers and panel builders view
brands and ranges, etc.) and vary substantially from one
country to another. Lastly, there are significant entry
and growth barriers as between countries.

the size and geographical

scale of markets

is moreover clearly
(195) The national
apparent
from the parties' own organisation. For
example, strategic documents are drawn up country by
country. The same applies to parties' presentations to

(41) It

the parties base

should be noted that

their arguments
particularly on the Commission Decision of 3 June 1999 in Case
IV/M.1434 — Schneider / Lexel, which they believe established
such a European definition for the geographic markets. However,
that Decision did not in fact reach any conclusion on the exact
size of the geographic markets.

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investors. As Legrand states (42), ‘Legrand is confronted
with different levels of competition, depending on the
market and the type of products sold. Legrand's main
competitors
include Hager and Entrelec in France,
Gewiss and Vimar in Italy, MK Electric in the United
Kingdom […]*. Some multinational companies such as
General
and
Matsushita compete with Legrand on more than one
national market'.

Electric, ABB,

Schneider

Siemens,

The products sold by manufacturers vary from one country to
another

(196) Significant differences

in products

sold may exist
between Member States. The information provided by
Schneider, Legrand and various other manufacturers
shows, for example, that the list of the five most widely
sold miniature circuit breaker models varies significantly
from one Member State to another and that one rarely
finds a product model forming part of that list in more
than three Member States. Thus,
in Schneider's list of
the five most widely sold miniature circuit breakers for
final panel boards in fifteen EEA countries,
the list
comprises forty models. Of these forty models, […]* are
sold in France, […]* in Italy, […]* in Spain, […]* in
Portugal, etc. Furthermore, only two models are sold in
[…]*
than […]*
Member States) and […]* are sold in fewer than five
countries. Similar conclusions may be drawn as regards
sales of miniature circuit breakers
for distribution
boards and sales of earth leakage switches. The same
phenomenon is evident in Legrand's sales. Schneider's
lists are often completely disjointed,
for example as
between Greece and Italy (in the case of miniature
circuit breakers for distribution boards), or as between
Spain and Belgium (in the case of earth leakage
protection). Conversely, moulded case circuit breakers
are generally sold in most of the countries (at prices
which vary considerably, as will be shown below).

(and none

in more

countries

(197) This situation is attributable mainly to differing sets of
rules or national habits, prompting installers and panel
builders
from one
country to another.

to use equipment which differs

(198)

it should be noted that there are
In the first place,
regulatory
For
example, there are ‘installation rules' which vary from

between Member

barriers

States.

one Member State to another. These rules relate in
particular to safety aspects (earthing, cutting of neutral,
earth leakage protection for specific high-risk areas,
etc.). These standards are mandatory and any electrician
who does not comply with them is liable to penal
sanctions. The application of these standards results in
differences
in the components used in low-voltage
electrical switchboards. For example, circuit breakers
sold in Germany are single-pole (cutting of the phase
only), whereas they have to be two-pole in France and
in Italy (cutting of phase plus neutral). Similarly, a
issued by the IEC (43) suggests that some
document
countries prohibit the use of earth leakage protection
that does not cut neutral, and that some Member States
the use of AC earth leakage
restrict or prohibit
protection.

(199) Secondly, it should also be noted that not all countries
use all the neutral point treatments uniformly. In view
of the differences of operation between neutral point
treatments,
the choice of a treatment will often be
determined by the application (continuity of service,
availability of a maintenance team, risk of fire) and by
the quality of the relevant earth electrodes (and hence
ground consistency). As far as residential applications
are concerned, Germany tends to favour the TN neutral
point treatment, whereas the Netherlands, Denmark and
Spain prefer the TT method and Norway the IT method.
The neutral point treatment may also be imposed by the
electricity distributor. This is particularly the case in
France, where Electricité de France requires domestic
installations to use the TT neutral point treatment.

(200) These decisions influence the choice of components in
the various countries. As stated above, the choice of
neutral point treatment determines the type of device
used for the protection of persons. The TT method will
thus require the use of earth leakage protection, while
the TN method will favour the use of circuit breakers
and the IT method will in most cases require the use of
insulation monitoring devices. However, the choice of
neutral point treatment will also have an impact on the
the circuit breakers used, and in
specifications of
particular on the number of poles and the tripping
curve: the TT approach favours the use of two- and
four-pole devices and C curve devices, whereas the TN
and
greater use of
approaches make
three-pole devices and B curve devices, while in the IT
approach, one finds only two- and four-pole devices.

single-pole

(42) Legrand, Form 20-F SEC.

(43) IEC 64/1167/CD provided by the parties further to their reply to

point 320 of the questionnaire of 6 April 2001.

L 101/30

EN

Official Journal of the European Union

6.4.2004

(201)

technical standards for
It should also be noted that
switchboards have not been fully harmonised.
In
addition to the CE marking required by the relevant
Community
Low Voltage
it is often necessary to obtain the national
Directive),
certification
quality
authority when selling a particular product in a given
Member State.

the national

issued by

directives

(notably,

label

the

(204) The large number of parameters resulting in specific
national characteristics explains why the most widely
sold products vary from one Member State to another.
These differences may also lead to the development of
products specifically designed for certain Member States.
For example,
indicate
that
internal Schneider
documents (47) indicate that in Germany ‘[…]*'.

internal Legrand documents (46)

in Austria ‘[…]*'. Similarly,

(202) The results of the Commission's investigation show that,
while the national quality label is not statutory, it is in
most cases required by installers and panel builders.
This phenomenon is moreover borne out by the fact
that, despite the cost EUR [10 000 - 15 000]* for sixty
models) and the duration (three months) of each
national certification operation, almost all of Schneider's
circuit breakers and earth leakage protection devices
bear several quality labels. This is also apparent from
the parties'
Legrand
documents (44) explain that
in Belgium ‘despite the
establishment of European standards, the CEBEC quality
label continues
to be required by installers'. These
documents also show that the main barriers to entry in
Germany are VDE (certification body) approval and the
national quality standards and label.

internal documents:

internal

(205)

(206)

(203)

that,

states

countries

in some

In addition to these ‘objective' criteria, there are also
national habits (in installation, choice and isolation of
circuits) in each Member State, and these often play an
important role in the choice of equipment. For example,
Schneider
such as
Germany, circuit breakers are often connected from the
bottom, whereas in other countries (France, Italy and
Spain), they are connected from the top. This difference
explains why products (known as Triconnect products)
have been specifically designed for German installers.
Similarly, internal Legrand documents (45) indicate that
in Belgium ‘the bulk of
is made up of
[miniature] circuit breakers with a breaking capacity of
3 kA', whereas in most other countries circuit breakers
tend to have a breaking capacity of 4,5 kA or 6 kA.
Lastly, in France the neutral is always wired to the left,
and not to the right as in most of the other Member
States. Schneider furthermore offers products specifically
tailored to that demand by marking the neutral on the
left of the appliance.

the market

(44) Legrand and Bticino, Medium-term plans.
(45) Bticino, Medium-term plan.

In conclusion, as one competitor states (48),
‘there are
local
traditions and customs and national standards.
They are significant, and they have a decisive impact on
the characteristics of the products themselves', and it is
unlikely that gradual harmonisation of standards will
produce any rapid change in market conditions. As
low-voltage
Legrand
equipment can create openings for new products, but
Legrand's management
such market
openings will develop at a slow pace'.

‘harmonisation of

states (49):

expects

that

In their reply to the statement of objections, the parties
dispute these differences between Member States. They
stress among other things that, although there are very
slight differences in product models sold as between
Member States (due in particular to different markings),
the list of the five most widely sold products varies little
from one Member State to another on the basis of
industrial designs, and a model belonging to
identical
that
the
list can frequently be found in most of
Member States. They thus argue that the 40 models of
miniature
Schneider
industrial designs, of which
correspond to [0-20]*
[0-20]* are sold in more than nine Member States, and
that the 25 models of earth leakage switch produced by
industrial
Legrand in fact constitute [0-20]* different
designs, of which [0-20]* are sold in at
least six
Member States.

breaker produced by

circuit

(207) More generally, the parties take the view that national
installation rules and quality labels do not in themselves
require any particular product modification, and they
also stress that all neutral point treatments are usually
present
in widely differing
proportions).

in all countries

(albeit

(46) Legrand and Bticino, Medium-term plans.
(47) Schneider, Three-year plan (2001-2002-2003),

country/zone:

Germany.

(48) Gewiss, reply to phase I questionnaire.
(49) Legrand, Form 20-F SEC.

6.4.2004

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Official Journal of the European Union

L 101/31

(208) The Commission acknowledges that,

from a strictly
industrial standpoint,
there may be relatively minor
differences between several models. For example, certain
miniature circuit breakers are differentiated from other
models only by the identification of the neutral (on the
left, in accordance with normal practice on the French
market) or the display of different quality labels. It also
accepts that installation rules or quality labels do not
always impact significantly on the production of the
items concerned. Schneider's and Legrand's production
facilities are integrated at European level.

(209) Nevertheless,

the Commission considers

that
these
factors do not significantly affect
the analysis. The
arguments raised by the parties relate only to the
production of items. However, production is only one
aspect of supply: as mentioned earlier, the competitive
position of manufacturers depends not only on their
production, but also on the strength and perception of
their brands, the availability of their products at the
main national wholesalers and their
investments in
relations with
promoting products and in customer
domestic installers and panel builders. By confining
themselves to a simple producer approach, the parties
are therefore overlooking essential aspects of supply.

(210)

of

that

specific

objections,

In addition, and more importantly,
the parties are
ignoring demand-related constraints. They thus do not
challenge the main thrust of this section, namely that
the existence of neutral point
treatments, national
installation habits and rules and national quality labels
creates a specific demand in each country. The parties
furthermore willingly acknowledge, in their reply to the
statement
national
characteristics lead to the choice of different models.
The fact that these specific characteristics prompt the
use of dedicated products (such as the Triconnect ranges
in Germany), the display of a national quality label or
even more simply the choice of
specific products
(single-pole and three-pole miniature and distribution
circuit breakers in Sweden and Denmark or two-pole
and four-pole devices in France and Italy) is not in itself
fundamentally important. What matters here is that
customers in each country display a specific purchasing
behaviour which severely limits the scope for shifting
demand according to differences in the prices charged
by manufacturers.

ability to establish brand loyalty amongst installers and
panel builders and, therefore, to meet their expectations;
and (ii) their access to wholesalers, at least in those
Member States in which wholesalers are sufficiently
established.

B r a n d s t r e n g t h a n d b r a n d p e r c e p t i o n v a r y
f r o m o n e c o u n t r y t o a n o t h e r

the selection criteria of

(212) The results of the investigation show that, in order to
meet
installers and panel
builders, manufacturers must offer safe, good-quality
products which are easy to fit and are always available
from wholesalers. However,
these factors depend in
most cases on national perceptions.

(213) The way products are perceived varies

from one
Member State to another. As stated above, there are
significant differences in standards and habits between
Member States. Such differences result in the choice of
different equipment. Furthermore, these choices are also
reflected in different weightings
in the assessment
it may be seen that Legrand
criteria. For example,
products are generally perceived as being of high
Internal documents (50) show
quality, but expensive.
that […]*. Installers may also differ in the importance
they
example, while
Legrand (51) considers that
this factor underpins its
competitive position in […]*,
little
importance in […]*, where there is […]*. Similarly,
internal documents (52) show that […]*.

it seems to be of

innovation.

attach

For

to

characteristics

(214) The availability of products, which plays a significant
role in customer decisions, also depends on specific
national
national
to
logistical
wholesalers and the manufacturers' national
chains). According to internal documents (53),
[…]*,
whereas the ready availability of its products seems to
be one of its strengths in […]*. Similarly, Schneider (54)
considers that
in […]* ‘logistics are a key factor in
achieving success. […]*'.

access

(i.e.

The key parameters of competition are defined on a national
basis

(215) As stated above,

to the
brand which they are in the habit of using (provided it

installers are generally loyal

(211) As stated above, the competitive position of the various
their

largely be determined by (i)

manufacturers will

(50) Legrand and Bticino, Medium-term plans.
(51) Legrand and Bticino, Medium-term plans.
(52) Schneider, Three-year plan (2001-2002-2003).
(53) Legrand and Bticino, Medium-term plans.
(54) Schneider, Three-year plan (2001-2002-2003).

L 101/32

EN

Official Journal of the European Union

6.4.2004

on

the

focusing

available

In order

and meets

immediately

relevant
is
to establish brand loyalty
requirement).
their
invest
customers, manufacturers
amongst
resources in promoting products and in
substantial
customer
the
relations,
directly
requirements of installers and panel builders. The parties
also state that their sales staff maintain contact with
customers to help them choose products and that they
maintain agency networks and sale forces
in each
country. The parties also offer a whole range of
relations
products and services reinforcing customer
with installers.
In the case of products, this includes
design and costing software for electrical installations or
technical guides; and,
in the case of services, training
sessions (Legrand), telephone assistance services, answers
to technical questions, etc. As indicated above, such
investment may amount to [0-30]* % of brand turnover.

extent

also on the

(216) The way in which a brand is perceived does not
its
therefore depend only on the positioning of
products, but
and focus of
customer-relations and promotional investment in each
country. Sales forces are organised on a national basis,
and promotional efforts are generally country-specific,
with their volume (and indeed the proportion of sales
which they represent) varying significantly from one
Member State to another. For example, the volume of
sales campaigns undertaken by Schneider in respect of
distribution boards may be up to [0-20]* times as much
in one Member State as in another, and the proportion
of turnover generated by such measures may be up to
[0-40]* times as much.

of

the

the

positions

respective

(217) Manufacturers' competitive positions thus remain to a
large
extent determined by established habits and
traditions. The structure and concentration of supply,
and
various
manufacturers, may thus vary from one Member State
to another. This phenomenon is clearly reflected in the
existence of national brands (such as Vinckier (55)
in
Belgium or Baco (56) in France) and in marked national
in manufacturers' market
variations
In
is
for
distribution
particularly strongly established in France, but remains
weak in Germany and in Austria; ABB, which has
is almost
strong positions in Sweden and Norway,

shares.
Schneider

example,

boards,

absent from the Belgian and United Kingdom markets;
and Siemens, which has significant market shares in
Germany, has only a marginal share of sales in France.
This analysis is also amply confirmed by the parties'
internal documents.

D e m a n d s t r u c t u r e a n d e x p e c t a t i o n s v a r y
f r o m o n e c o u n t r y t o a n o t h e r

(218) The different perceptions and positions of brands
between countries are also due to substantial national
variations
internal
at demand level. The parties'
documents (57) show that there are marked differences
between countries as regards training and the behaviour
of installers and panel builders. Thus, Belgian installers
seem relatively reluctant
to use higher value-added
components, whereas German installers are becoming
seem to be
‘highly technical' and Italian installers
seeking training and support services so as to adapt to
the increasingly technical nature of their job.

(219)

(220)

Furthermore, as stated above, final demand stems from
three types of application (industrial, commercial and
residential buildings), and the various manufacturers'
positions may vary from one customer category to
another. However,
the three downstream sectors are
developing differently in each country. The parties'
internal documents (58) show that Austria is expected to
enjoy strong growth in industrial demand but little or
no growth in new buildings, whereas the situation is the
reverse in the United Kingdom and Portugal, and
demand in Greece is expected to be buoyed up by
growth in the commercial sector.

It is also apparent that the behaviour and expectations
of wholesalers may vary significantly between Member
States. The investigation establishes clearly that
the
degree of wholesaler concentration differs very widely
from one country to another and that wholesalers'
purchases are nationally based. This is illustrated by
Table 6 below, which shows the levels of concentration
by Member State as estimated by the parties as regards
sales of main switchboards, distribution boards and final
panelboards.

(55) Belonging to GE.
(56) Belonging to Legrand.

(57) Legrand, Medium-term plans.
(58) Legrand, Medium-term plans.

6.4.2004

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Official Journal of the European Union

L 101/33

Schneider's estimate of the market shares of the five groups of international wholesalers on the markets for electrical
switchboards

Table 6

Germany

Austria

Belgium

Denmark

Spain

Finland

France

Ireland

Italy

Norway

Netherlands

Portugal

Sweden

United Kingdom

Rexel

[0-10]*

[30-40]*

[10-20]*

—

[0-10]*

—

Sonepar

[0-10]*

—

[10-20]*

[0-10]*

[0-10]*

[0-10]*

[40-50]*

[30-40]*

[0-10]*

[0-10]*

—

[0-10]*

[30-40]*

[10-20]*

[0-10]*

—

[0-10]*

[10-20]*

[30-40]*

[0-10]*

[10-20]*

—

Hagemeyer

[10-20]*

—

—

—

[0-10]*

[0-10]*

—

[0-10]*

—

[0-10]*

[0-10]*

—

[10-20]*

[20-30]*

Solar

[0-10]*

—

—

[0-10]*

—

[0-10]*

—

—

—

[0-10]*

[0-10]*

—

[10-20]*

Edmundson

—

—

—

—

—

—

—

[0-10]*

—

—

[0-10]*

—

—

—

[10-20]*

Source: e-mail sent by the parties on 16 July 2001.

(221) The parties' internal documents also show that the way
wholesalers are organised may have a significant impact
on how manufacturers compete with one another. For
example,
in the countries in which the
wholesale trade is the most fragmented, such as Portugal
and Spain, competition between wholesalers is resulting
in a price war whose effects are felt at manufacturer
level. As a Legrand internal document (59) states, ‘[…]*'.

it seems that,

(222)

In most cases,

In addition, the Commission's investigation has shown
that wholesalers are organised on a national, or indeed
sub-national, basis. Even the large international groups,
such as Rexel, Sonepar and Hagemeyer, have a very
largely decentralised organisation which grants a large
degree of
and local
autonomy to their national
branches.
the group's central holding
company is a lightweight structure whose centralised
functions comprise only marketing, accounting and
consolidation
and
management control. This decentralised structure goes
hand in hand with a logistical organisation which is
national and which is not designed to function on a
cross-border basis. The sales outlets in a given country
are thus supplied from national logistical channels. The
are
mainly national basis on which wholesalers

accounts

group

level

of

at

organised is also reflected in the nature of
their
relations with manufacturers. Even international groups
organise their purchasing contracts with manufacturers
on a national, or indeed local, basis.

(223) The Commission's investigation established that business
negotiations between manufacturers and wholesalers,
notably as regards the choice of suppliers, determining
the range of products to be bought and sold and the
take place almost
setting of price and rebate levels,
entirely at national or
level. As one large
wholesaler states (60),
‘to the best of [our] knowledge,
there is no price list at EEA level on the basis of which
discounts and rebates are negotiated. On the contrary,
all the terms are discussed at the level of each country'.
One manufacturer (61) also confirms
the
relevant products, prices are set and rebates granted on
a national basis'. This is also the way the parties
operate.

regional

that

‘for

(224) According to Schneider, the setting of the selling prices
of its products to wholesalers is worked out on two

(59) Legrand, Medium-term plans.

(60) Hagemeyer, reply to phase II questionnaire.
(61) GE, supplement to its reply to the phase II questionnaire.

L 101/34

EN

Official Journal of the European Union

6.4.2004

levels. First, the manufacturers issue a national price list.
Subsequently,
the manufacturers negotiate with each
wholesaler an individual rebate policy worked out on
the basis of the national price list. These rebates can
sometimes exceed [30-60]* % of the catalogue price and
are granted on individual product lines.

(225)

of

by

purchases

negotiated

It should, however, be noted that rebates on the total
volume
some
are
international manufacturers with the parent companies
of some groups of international wholesalers. However,
both the wholesalers and the manufacturers have
informed the Commission that a manufacturer wishing
to enter a national market or establish a marginal
presence on it cannot make do with negotiating
agreements with the parent company of an international
it wishes its products to be
group of wholesalers if
properly
State. The
manufacturer will also, and especially, have to persuade
the national and local branches of the group to stock its
products.

in that Member

distributed

(226) With that exception, the managements of the wholesaler
groups allow their national or local branches a very
wide margin of freedom in choosing their suppliers, the
product ranges which they stock, the implementation of
specific commercial strategies in collaboration with a
and even the negotiation of
given manufacturer,
supplementary rebates with manufacturers. Conversely,
the manufacturers conclude specific agreements with
local branches, or indeed with individual warehouses, of
the wholesalers,
laying down reciprocal commitments
with regard to the sale and purchase of products.
the increased
Contrary to what

the parties maintain,

concentration of wholesalers (which furthermore varies
significantly from one Member State to another) does
not therefore call
into question the fact that markets
operate on a national basis.

Prices are set at national level and vary widely between
countries

(227) The Commission's investigation shows that

there are
considerable price differences between Member States. A
look at Schneider's European price lists, for example,
shows that the same moulded case circuit breaker is
sold at EUR [40-80]* in […]* and EUR [130-170]* in
[…]*, and that a particular earth leakage protection
product
is sold at EUR [10-50]* in […]* and EUR
[40-80]* in […]*. Similarly, in the case of Legrand, the
same modular enclosure is sold at EUR [0-40]* in […]*
and EUR [10-50]* in […]*, while the same miniature
circuit breaker is sold at EUR [0-40]* in […]* and EUR
[0-40]* in […]*. These differences are also confirmed by
the parties' internal documents (62), which show that, in
the case of miniature circuit breakers in France, ‘average
remain very high compared with the other
prices
countries'.

(228) Tables 7 and 8 below show the average prices for
moulded case circuit breakers for distribution boards
and earth leakage switches for final panelboards. The
variations
tables
price. A
substantial
in
the other components of
comparison of prices for
distribution boards or final panelboards and of
the
prices given by the other manufacturers shows similar
results.

reveal

Relative prices (base 100 in France), as invoiced by Schneider, for moulded case circuit breakers for distribution boards

Table 7

Moulded case
circuit breakers

Ger-
many

Austria Belgium

Den-
mark

Spain

Finland

France Greece

Ireland

Italy

Nether-
lands

Norway Portugal Sweden

UK

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

***

*****

****

****

**

***

**

**

*****

***

****

***

***

**

**

**

****

***

**

***

***

***

***

***

***

***

***

**

***

**

**

***

**

**

**

**

**

**

***

**

***

**

**

**

***

**

**

**

**

**

**

**

100

100

100

100

100

100

100

100

100

**

**

**

**

**

**

**

**

**

**

**

*****

**

**

**

**

****

***

**

***

****

**

**

**

***

**

***

***

**

***

***

**

***

***

**

**

**

**

**

**

***

***

*

***

**

**

****

***

**

***

**

**

**

**

**

**

**

****

**

**

***

***

**

**

Source: e-mail sent by the parties on 24 June 2001.
[Non-confidential version: * = 0-50; ** = 50-100; *** = 100-150; etc.]*

(62) Legrand, Medium-term plans.

6.4.2004

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Official Journal of the European Union

L 101/35

Relative prices (base 100 in France), as invoiced by Schneider, for earth leakage switches for final panelboards

Table 8

RCDs

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

Ger-
many

**

-

-

-

-

-

-

-

-

***

Austria Belgium

Den-
mark

Spain

Finland

France Greece

Ireland

Italy

Nether-
lands

Norway Portugal Sweden

UK

**

**

*

**

*

*

**

***

**

**

**

***

***

***

***

***

100

100

***

**

**

**

**

**

100

100

100

100

100

100

100

100

*

**

**

*

**

***

**

***

***

*

***

**

**

*

**

**

**

**

**

**

***

***

***

***

***

***

***

***

**

***

**

**

**

**

**

***

***

**

**

**

**

**

***

***

****

Source: e-mail sent by the parties on 24 June 2001.
[Non-confidential version: * = 0-50; ** = 50-100; *** = 100-150; etc.]*

(229) The existence and persistence of these price differentials
for each of the components used in distribution boards
and final panel boards illustrates the difficulty on the
demand side of taking advantage of these differences
between Member States. The apparent difficulty of
making use of the differences in prices between Member
to the low price
States may be due in particular
sensitivity of final demand, as reflected in brand loyalty.
This difficulty also contradicts the ‘solutions' approach
proposed by the parties, since there does not seem to be
the optimum ‘solution'
any willingness to pick out
amongst
those available in the Member States. This
difficulty is also confirmed by wholesalers, who explain
that their national logistical organisation is not suited to
seeking out the best prices. Furthermore, the need to be
always able to supply installers and panel builders at
very short notice limits their scope for seeking out the
best prices, which would be risky in terms of product
sources.

(230) The parties nevertheless stress that there is a tendency
towards uniform pan-European prices.
In an internal
document (63), Schneider states that ‘the arrival of the
to
euro in 2002 […]*
harmonise European prices
and avoid differences
between countries' and that ‘[large customers] no longer
accept being treated differently in different countries'.
[…]*

is prompting [Schneider]

(231)

[…]*

(63) Schneider, European price convergence.

(232) The document, which is cited by Schneider as evidence
of the existence of Community geographic markets, thus
corroborates the extent of the price differences currently
in evidence. It also indicates that, despite the arrival of
the euro, significant differences may continue to exist
from one Member State to another until [2004-2005]*
at least. Lastly, it confirms that prices are set at national
level, since, in the document, it is ‘the countries' which
‘position their prices in relation to the [reference price]*'
and ‘adapt their price positions and rebate structures'.

(233) The parties consider that a breakdown of prices by
component is not relevant to the customer, since the
is determined on the basis of the
market, they argue,
the relevant
technical and economic performance of
‘solution'. The parties also point out
‘complete
solution' price analyses show that there is convergence,
at least if one excludes the smallest national markets,
which are those of the countries at the edge of the
European Union and/or of the countries which have
recently joined it.

that

(234) The parties' arguments are invalidated by their own
figures on the prices for average ‘solutions', as illustrated
in Tables 9 and 10 below. The tables demonstrate the
substantial price differences between Member States,
which do not seem to have narrowed over the years. It
should be noted that the price differences illustrated in
than those given as regards
the tables are smaller
components. This
is no doubt due to the parties'
accounting treatment of the initial data (the prices of
components).

L 101/36

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Official Journal of the European Union

6.4.2004

Sales (relative prices) in current francs of an ‘average solution' for distribution boards

Table 9

1994

1995

1996

1997

1998

1999

2000

Germany

Austria

Belgium

Denmark

Spain

Finland

France

Ireland

Italy

Norway

Netherlands

Portugal

Sweden

United Kingdom

**

**

**

**

**

**

**

**

**

**

***

**

**

**

**

**

***

**

**

**

**

**

**

**

**

**

**

**

Source: parties' reply to the Commission questionnaire of 28 February 2001.
[Non-confidential version: * = 0-50; ** = 50-100; *** = 100-150; etc.]*

**

**

***

**

**

**

***

**

**

**

**

**

**

**

Table 10

**

**

***

**

**

**

***

**

**

**

**

***

**

**

**

**

***

**

**

**

**

**

**

**

**

***

**

**

**

**

***

**

**

**

**

**

**

**

**

***

**

**

**

**

***

**

**

**

**

**

**

**

**

**

**

***

Sales (relative prices) in current francs of an ‘average solution' for final panelboards

1994

***

1995

***

**

**

**

**

**

***

**

**

**

***

**

**

**

**

**

**

**

**

***

**

**

**

**

**

**

**

1996

1997

1998

1999

2000

**

**

**

**

**

**

**

**

**

**

**

**

**

**

**

**

**

**

***

***

***

**

**

**

**

**

**

**

**

**

**

**

**

**

**

**

**

**

**

**

**

**

**

**

**

**

**

**

**

**

**

**

***

**

**

**

**

**

**

**

**

**

**

**

**

**

***

**

**

***

Germany

Austria

Belgium

Denmark

Spain

Finland

France

Ireland

Italy

Norway

Netherlands

Portugal

Sweden

United Kingdom

Source: parties' reply to the Commission questionnaire of 28 February 2001.
[Non-confidential version: * = 0-50; ** = 50-100; *** = 100-150; etc.]*

6.4.2004

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Official Journal of the European Union

L 101/37

if

there

(235) Accordingly, the Commission cannot subscribe to the
parties' argument that an examination of the prices of
‘solutions' demonstrates the existence of a European
market. In the first place, the Commission notes that the
parties do not deny the existence of substantial price
is any
differences and acknowledge that,
it does not apply to all Member States.
convergence,
Secondly,
the Commission considers that any price
convergence (not borne out by the facts) does not
provide a basis for concluding that there is a single
market: any reduction in price differences between the
Member States depends much more on the pace of
convergence than the mere fact that convergence exists.
However, Schneider's internal documents referred to
above indicate that, as far as components are concerned,
price convergence will take place only slowly. Lastly,
and in particular, the Commission does not share the
parties' view that analysis at component level
is not
‘solutions' depend to a large
relevant. The prices of
the components incorporated
extent on the price of
if there are differences in
It follows that,
into them.
prices
also be
between components,
differences in prices at switchboard level.

there will

(236)

In their reply to the statement of objections, the parties
do not dispute the existence of price differences for
particular components. On the other hand, in their view
the available data show that there is rapid convergence,
speeded up by the introduction of the euro and the
development of Internet portals, as demonstrated by the
gradual emergence of a European Reference Price in the
case of Schneider. They also argue that price difference
is in any event only one of the factors to be taken into
account
the purpose of defining the relevant
geographic market.

for

the

this

that

thing,

above

example

(237) The Commission cannot endorse the parties' arguments
concerning the existence of rapid price convergence. For
tables, which show price
one
differences that are considerable in some cases,
in no
the rapid appearance of convergence at
way suggest
Community level. Even taking the ‘average solution'
presented by the parties, the figures in Table 10 show
for
solution was on average
[40-60]* % more expensive in Germany than in Austria
it remained [40-60]* % costlier in
in 1994 and that
Germany than in Austria in 2000. An analysis at the
level of individual components would lead to the same
findings. For another thing, despite the emergence of a
European Reference Price in the case of Schneider, it is
clear that differences in list prices of over [0-20]* % may
persist in the medium term for the same product sold in
two neighbouring countries. These differences may be
further exacerbated by discount and rebate policies that
are specific to each country and are not concerned by
harmonisation efforts.

(238) The Commission readily accepts the parties' argument
that price difference is in any event only one of the
factors to be taken into account for the purpose of
defining the relevant geographic market. However,
in
the case in point, it regards this criterion as sufficient
on its own. How is it possible to account for the fact
that identical products, manufactured in the same plant
and distributed through the same logistical network and
for which the transport cost is minimal, can frequently
be sold for three times as much in one Member State
than in another? The existence of such differences for
similar products confirms, almost on its own, that there
is no real scope for taking advantage of price differences
between Member States. The persistence of
these
differences demonstrates that competitive conditions are
not uniform in the common market.

(239)

the Commission is convinced that the
In any event,
analysis of supply and demand, as carried out in the
other parts of
this section, confirms if need be the
national nature of the markets as found by the price
analysis.

Existence of significant entry barriers at national level

(240) The foregoing considerations indicate that

there are
significant barriers to entry between one country and
another. To secure a toehold in a particular country, it is
not enough to be able to offer ‘solutions'
in another
country; an exporter has to overcome the conservatism
of installers in order to create demand, gain access to
final panelboard
wholesalers and (in the
components) obtain national quality labels. Since access
to wholesalers depends on demand from installers,
which in turn depends on the availability of products
and therefore access to wholesalers, market entry can
require very large sunk investments, particularly where
well established brands already exist on the market.

case of

Mains connection circuit breakers

(241) Mains connection circuit breakers have to comply with
in Portugal and France. The
is

national
relevant geographic market
therefore a national one.

these products

specifications

for

Conclusion

(242)

In the light of the foregoing, the Commission comes to
for
the conclusion that

there are national markets

L 101/38

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Official Journal of the European Union

6.4.2004

circuit

standards

connection

and habits

breakers. As

First, national

distribution board and final panelboard components and
for mains
one
manufacturer argues in summing up the situation, all
market segments should be analysed on a national
basis.
differ
significantly from one country to another. Second,
given
(end
user/installer/wholesaler/manufacturer), national markets
are
a
manufacturer were able to convince a wholesaler to add
its products to the brands it already lists (and therefore,
in short, to increase the number of its suppliers), that
does not however enable the manufacturer to convince
local installers to choose its products.

stable. Consequently,

extremely

structure

vertical

their

even

if

(243)

In their reply to the statement of objections, the parties
dispute this definition, claiming in particular that the
the
Commission has not
harmonisation of standards, the low level of transport
costs
and the organisation of production on a
Community-wide basis.

taken sufficient account of

(244) The Commission readily acknowledges

these

stated

earlier,

into question its definition of

three
factors. It nevertheless maintains that they do not in any
way call
the relevant
standards
geographic markets. As
constitute only one of the factors determining demand
and furthermore do not appear to play a key role given
the overwhelming importance still attached to national
habits and quality labels. And,
the
harmonisation of standards has not led to convergence
in the prices of components, something which should
have happened if standards had constituted a significant
barrier
to trade. Neither do the organisation of
production at European level and the low level of
transport costs call into question the national nature of
markets since this is apparent instead from the specific
characteristics of demand in different countries and, on
the supply side, from the perception of brands and the
way in which prices are set.

in any event,

(247) A cable tray is a prefabricated assembly consisting of a
continuous conduit of perforated flanged sheet metal or
ladders. It is designed to support insulated aluminium or
copper conductors carrying the electric power inside a
building. The parties state that cable trays are usually
installed in the basements, metal ducts and false ceilings
of buildings. The materials generally used for producing
cable trays and ladders are steel, aluminium, PVC,
polyester and wire mesh. These products are made in a
large number of sizes ranging from 50 to 600 mm in
width, from 50 to 100 mm in depth and from 1 to 3 m
in length.

(248) The strength of the current that can be carried by cables
mounted on cable trays is directly dependent on the
technical characteristics and number of the cables. The
parties state (64) that that they have no control over the
electric power conveyed on their cable trays. Their
guarantee covers the mechanical strength and not the
amperage flowing through the cables, which may be of
thickness and weight. Cable trays may be
any type,
installed horizontally or vertically in any building,
between the main switchboard, distribution boards and
final panelboards. The higher the power distributed and
consequently the greater the weight of the cables (the
thicker the conductors), the more the solutions used
need to be robust. Metal cable ladders thus tend to be
used between the main switchboard and distribution
boards, while perforated tray systems are more often
used between the distribution boards and the final
panelboards. More
rarely, welded wire mesh or
perforated metal cable trays may be used downstream of
the final panelboard to supply a machine.

(245) The question of the definition of the geographic markets
for main switchboard components can on the other
hand be left open because, Legrand not being present in
that segment, the transaction would not have the effect
of significantly restricting competition in the EEA or in
a substantial part of it.

B.2 BUSBAR TRUNKING AND CABLE TRAYS

B.2.1 Definition of product markets

(249) Busbar

set of

trunking is

an assembly of

trunking consists of a

copper or
aluminium conductors supported by insulating spacers
and enclosed in a metal housing, usually of galvanised
steel. Busbar
several
components. A power feed unit is mounted between the
switchboard and the busbar
trunking proper. The
busbar trunking itself is installed by assembling several
modules usually between 3 and 5 metres in length.
These components comprise several superimposed layers
on which the conductors are mounted. Power tap-off
outlets are placed at regular intervals; these are designed
to receive tap-off units for feeding electric power to one
or more loads. Flexible elbow units, generally made of

(246) The parties define a product market comprising both

(64) Message dated 3 July 2001 in reply to a request for information

cable trays and busbar trunking.

made by the Commission on 2 July 2001.

6.4.2004

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Official Journal of the European Union

L 101/39

plastic, allow access for connectors and enable trunking
runs to be routed around corners in walls. Coupling
sections enable two trunking components to be joined
together. An end cover
the
trunking
trunking run. The dimensions of busbar
it conveys.
depend on the strength of
According to the parties, busbar trunking can carry
currents of between 20 and 5 000 amps (65).

is fixed to the end of

the current

the final panelboards (67). Busbar
trunking systems
already incorporate, when they are manufactured, the
conductors which convey the electric current.
In the
case of cable trays, the conductors have to be purchased
separately (68). The parties confirm that they do not
offer their customers combined supplies of cable trays
and cables (69).

(250) Busbar

can serve

commonly

the busbar

trunking systems

four different
purposes. In a heavy-duty ‘link' system, they connect the
medium voltage/low voltage transformer to the main
switchboard. This is a short configuration, less than 10
in length, which conveys current of high
metres
strength (between 1 600 and 4 000 amps). In a lighter
configuration, called a ‘power distribution' or transport
system,
trunking conveys electric power
from the main switchboard to the distribution boards.
This application is longer than the preceding one (some
30 metres) and the current conveyed is in the region of
400 - 1 600 amps. The parties nevertheless state that
trunking
the most
configurations
specific
functions: supplying power for lighting systems and
low-power electricity distribution (66).
In a lighting
distribution configuration, the busbar trunking will be
up to 30 metres long and usually conveys current of
between 16 and 40 amps. It will also be fitted with
specific connectors for supplying the light fittings. In a
low-power
the
busbar trunking will also be up to 30 metres long, but
it will carry higher currents (between 40 and 100
to wiring
amps).
accessories such as sockets and switches. To that end, it
will be fitted with connectors and fuse boxes and/or
circuit breakers in order to protect those accessories.

electricity distribution configuration,

It will serve to distribute power

correspond

used
to

busbar

other

two

(251) Cable trays and busbar

trunking thus both serve
physically to convey electric power between the main
switchboard and distribution boards. The parties state
that busbar trunking is also used downstream of the
distribution boards, in particular for supplying power to

(252) According to the parties,

cable

trays and busbar
trunking form one and the same product market. They
explain that the two types of product serve an identical
purpose, namely
the
transmission of strong electric currents, often of several
hundred amps, between the main switchboard and the
distribution boards. They conclude that busbar trunking
systems and cable trays are substitutable on the demand
side.

a medium for

to act

as

(253) The investigation has shown, however, that for these
two categories of product, substitutability is limited on
the demand side and non-existent on the supply side.

Demand-side substitutability

(254) The parties state (70)

of

and

that

each

building

configuration

the decision to use one
category of product rather than the other depends on
the
the
characteristics of
the electricity distribution network
installed therein. Busbar trunking is thus said to offer
greater flexibility than cable trays with regard to the
location of
(computers,
electric-powered equipment
machinery, etc.). Special emphasis is placed on the latter
internal document (71), which
point
states that busbar trunking is ‘more competitive than
in situations where electric power has to be
cable'
supplied to a large number of machines located in the
same
two major
advantages:
it is ‘easily modifiable: a machine can be
moved easily or a new machine added by simply
connecting to a vacant tap-off outlet' and it is ‘very
adaptable: trunking can be added or removed to meet

in a Schneider

trunking

busbar

room;

offers

(67) Form CO, p. 52.
(68) Reply dated 23 February 2001, point 6.
(69) Reply by the parties to point 9 of the questionnaire of 22 March

2001.

(65) Annex 39 to Form CO.
(66) Reply by the parties dated 21 June 2001 to a request

for

information dated 13 June 2001.

(70) Form CO, p. 52.
(71) ‘Busbar trunking — SBU presentation'. Document supplied in
reply (Annex 8) to the questionnaire of 22 March 2001, p. 10.

L 101/40

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Official Journal of the European Union

6.4.2004

internal document (72), which states

changes in layout'. A similar claim is made in another
that
Schneider
busbar trunking costs […]* times more than cable trays
but that a tap-off can be installed on it at […]* the cost.
According to the same document,
it becomes more
to use busbar trunking than cable trays
economical
once more than […]* power
tap-offs need to be
installed.

(255) A Schneider internal document (73) further states that
busbar trunking is also ‘more competitive than cable' for
‘link' applications having to carry current of over 1 600
amps and for ‘transport' applications carrying current of
over 1 000 amps.

(258) Busbar

trunking and cable trays therefore cater

for
different,
specific needs. The former are a cheaper
solution than the latter where the current to be carried
between the main switchboard and the distribution
boards exceeds 1 000 amps or where the current to be
carried between the medium voltage/low voltage
transformer and the main switchboard exceeds 1 600
amps. In a ‘distribution' configuration, busbar trunking
is a cheaper solution where more than five tap-offs need
to be installed. Busbar trunking also offers technical
features which make it particularly well suited and
irreplaceable in buildings where continuity of the power
supply is essential and a large number of tap-offs need
to be installed, such as large commercial buildings,
hospitals and airports. Buildings of
type are
that
internal document as the
presented in a Schneider
natural market for busbar trunking (78). On the other
hand, cable trays will be chosen in preference to busbar
trunking in certain economic sectors or for use in
certain specific types of atmosphere.

(256) The

technical

and operational

features of busbar
trunking and cable trays are also different. The parties
state (74) that busbar trunking is much more effective in
withstanding the strong currents generated by a short
circuit. A Schneider internal document (75) also states
in the event of a short circuit, busbar trunking
that,
offers the advantage of causing minimal disruption of
the power supply: this is explained by the fact that
‘protection devices are located within each load's tap-off
unit, so only the one load is removed from supply,
minimising
and
repair'. The same document also states (76) that busbar
trunking is 40 % lighter and twice as fast to install as
cable trays.

during maintenance

“down-time”

used

in special

environments.

(257) On the other hand, the range of materials that can be
used in the manufacture of cable trays enables them to
example,
be
aluminium cable trays are particularly resistant to damp
atmospheres, while glass fibre-reinforced plastic cable
trays can effectively withstand corrosive atmospheres.
consequently often used in the
The
agri-foodstuffs industry and the latter in the chemical
industry (77).

former

For

are

(72) Document supplied as Annex 39 to Form CO, p. 4.
(73) ‘Busbar trunking — SBU presentation', loc. cit., p. 9.
(74) Form CO, p. 52.
(75) ‘Busbar trunking — SBU presentation', loc. cit., p. 10.
(76) Loc. cit., p. 9.
(77) Reply by the parties to point 4 of the questionnaire of 22 March

2001.

(259) There

is

partial

therefore

demand-side
only
substitutability between busbar trunking and cable trays,
limited chiefly to low-power distribution, transport and
link applications. Even for each of these applications,
the characteristics of each of the two product types have
the effect of limiting their demand-side substitutability.

(260) This

that

stress

finding is borne out by a Schneider

internal
document, which states that ‘cables' are a technology
is only ‘in indirect competition' with busbar
that
trunking (79). The parties
tray
technology is in indirect competition ‘because it serves
the same basic purpose albeit without offering the same
flexibility of use' (80). A third party that answered the
questionnaire, Pogliano,
that cable trays and
states
busbar trunking genuinely compete with each other
only in geographic markets where distribution of the
latter is still limited and consumers are consequently not
yet familiar with its comparative advantages (81).

cable

(78) ‘Busbar trunking — SBU presentation', loc. cit., p. 9.
(79) ‘Presentation of
the busbar

trunking marketing

in reply (Annex 6)

approach',
to the

document supplied by Schneider
questionnaire of 22 March 2001, p. 4.

(80) Reply by the parties dated 21 June 2001 to a Commission request

for information dated 13 June 2001.
(81) Reply dated 17 February 2001, point 6.

6.4.2004

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L 101/41

Supply-side substitutability

(261) Many third parties have pointed out

than cable trays. As already mentioned,

that busbar
trunking systems are a more technically sophisticated
product
the
electrical
in busbar
trunking during manufacture, whereas cable trays are
merely designed to receive the conductors at a later
stage.

incorporated

conductors

are

the conductors they incorporate,

(262) The technical differences between busbar trunking and
cable trays are reflected in the standards with which the
products have to comply. The IEC 60439-2 and Cenelec
EN 60439-2 standards for busbar trunking systems lay
down electrical requirements relating specifically to the
dimensions of
their
insulation and the characteristics of
the connections.
Cenelec standards EN 10142 and EN 10088 for cable
lay down mechanical
trays, on the other hand,
requirements to do with the cable weight which cable
trays and their mountings must be able to withstand.
Consequently, whereas the standards for busbar trunking
lay down electrical requirements aimed at preventing
short circuits and fires (82), the standards for cable trays
establish requirements relating to the products' physical
strength. Unlike cable trays, busbar trunking is therefore
electrical equipment in the sense that electric current is
intended to pass through it.

the

electrical

equipment

(263) These technical differences are likewise reflected in
different manufacturing processes. Cable tray production
is related to metalworking or sheet metal manufacture,
whereas the production of busbar trunking is an activity
of
industry. The parties
acknowledge in Form CO (page 52) that cable trays are
usually made by sheet metal manufacturers and busbar
trunking by electrical equipment producers. The upshot
of this is that, to the Commission's knowledge, there are
that produce both types of
only two companies
product: Schneider and Hager. In both cases this is a
recent development resulting from the acquisition of
another company (Lexel by Schneider and Tehalit by
Hager). Prior to those acquisitions, Schneider and Hager
produced only busbar trunking.

(Moeller, MEM-Delta, Pogliano, Zucchini, etc.) do not
manufacture cable trays. Lastly, the parties stress that
cable tray producers are small companies specialised in
the manufacture of that type of product (83).

(265) There

is

therefore no supply-side

substitutability

between busbar trunking and cable trays.

Conclusion

(266) For the above reasons, the Commission takes the view
that cable trays and busbar trunking constitute two
separate product markets. In their reply to the statement
of objections (84),
this
conclusion.

the parties did not contest

B.2.2 Definition of the geographic markets

(267) The parties take the view that the market for the sale of
cable trays and busbar trunking is Europe-wide. They
base their position on the fact that the products sold in
the different Member States are identical; they also state
that more than […]* % of the output of Schneider and
Legrand is
than the
sold in Member States other
country of manufacture.

(268) The

has

investigation

Commission's

established,
however, that competition in the sale of
low-voltage
electrical distribution products operates essentially on a
national basis. The main points of
that analysis,
developed above (85)
for distribution boards, apply
trunking. More
likewise to cable trays and busbar
specifically,
that
analysis in the case of these product markets.

the following considerations support

(264) The fact nevertheless remains that each of the above
two groups have
in the
subsidiaries
production of one or other of the two types of product.
Within the
and
Normabarre thus manufacture busbar trunking while
the subsidiaries Wibe, Stago and Mita produce cable
trays. The main producers of busbar trunking in Europe

group, Télémécanique

specialised

Schneider

The selling price of cable trays and busbar trunking
varies greatly between Member States

(269) There are significant price differentials between EEA
countries for one and the same model, in the case of
both busbar trunking and cable trays.

(82) Reply by the parties to point 7 of the questionnaire of 22 March

2001.

(83) Form CO, p. 53.
(84) Point 472.
(85) Points 126-224.

L 101/42

EN

Official Journal of the European Union

6.4.2004

Busbar trunking

(270) The parties nevertheless supplied a price comparison for what they consider to be the two most
commonly used standard configurations. These are:
(i) the KLE 16 A two-pole lighting busbar
produced by Télémécanique and (ii) the KNA 63 A low power distribution busbar produced by
Télémécanique (86).

(271) Table 11 below gives the selling price for the […]* lighting busbar produced by Télémécanique, a

Schneider subsidiary, in different EEA countries (87):

Table 11

France

Italy

Spain

Belgium

Portugal

Greece

UK

Ireland

Price in FRF

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

Price: France base 100

100

**

**

***

***

***

****

***

Germany

Austria

Netherlands

Sweden

Denmark

Norway

Finland

Price in FRF

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

Price: France base 100

**

***

***

**

**

**

**

Source: the parties.
[Non-confidential version: * = 0-50; ** = 50-100; *** = 100-150; etc.]*

(272) Table 12 below gives the selling price for the […]* low power distribution busbar produced by

Télémécanique, a Schneider subsidiary, in different EEA countries (88):

Table 12

France

Italy

Spain

Belgium

Portugal

Greece

UK

Ireland

Price in FRF

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

Price: France base 100

100

*

**

**

**

**

***

***

Germany

Austria

Netherlands

Sweden

Denmark

Norway

Finland

Price in FRF

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

Price: France base 100

**

***

***

***

***

**

[…]*

*****

[Non-confidential version: * = 0-50; ** = 50-100; *** = 100-150; etc.]*

(86) Reply by the parties dated 21 June 2001 to a Commission request for information dated 13 June 2001.
(87) Reply of 21 June 2001 to a Commission request for information dated 13 June 2001.
(88) Reply of 21 June 2001 to a Commission request for information dated 13 June 2001.

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Official Journal of the European Union

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(273)

same busbar

It is clear from the above two tables that the price of
trunking model varies
one and the
considerably from one EEA country to another:
the
price of
the same item can differ by more than
[50-100]* % between two neighbouring countries. The
[…]* busbar is thus sold for FRF […]* in Norway and
FRF […]* in Sweden; the price of the […]* busbar is
FRF […]* in Spain and FRF […]* in France.

(276)

Cable trays

(274) Table 13 below gives the evolution in the relative selling
price of steel cable ladders manufactured by Lexel, a
Schneider subsidiary, between 1996 and 2000 in the
different EEA countries in which Lexel markets those
products:

(277)

Table 13

1996

1997

1998

1999

2000

Sweden (89)

100

***

***

***

***

Denmark

***

***

***

***

***

Finland

Germany

**

**

**

**

**

**

**

**

**

**

(278)

United Kingdom

***

***

***

***

***

Netherlands

***

***

***

***

***

Belgium

***

***

***

***

***

[Non-confidential version: * = 0-50; ** = 50-100; *** = 100-150; etc.]*

(275)

ones,

even neighbouring

It can be seen from Table 13 that the price of this
category of cable tray varies greatly between Member
States,
that price
differentials have not tended to narrow over the last five
the price differential between Sweden and
years:
Denmark, which was
stood at
the price differential
[0-50]* % in 2000. Likewise,
between Germany and the Netherlands was [0-50]* % in
1996 and rose to [50-100]* % in 2000.

[0-50]* % in 1996,

and

In their reply to the statement of objections, the parties
argued that steel cable ladders produced by Lexel were
not an appropriate choice for establishing the existence
of price differences between Member States for cable
trays generally, and that steel cable trays were more
representative of the relevant product market as a whole
since that product category accounted for around twice
the sales of steel cable ladders. They maintained that, in
any event, price differentials for steel cable ladders
between certain neighbouring Member States (such as
almost
the
non-existent.

Germany) were

Netherlands

and

It should first be pointed out that the parties' claim that
steel cable trays account for twice the sales of steel cable
is based on a mere extrapolation to the
ladders
European market of
the situation prevailing in the
United Kingdom. The parties have not provided any
information demonstrating that the breakdown of sales
between the different categories of cable tray in the
United Kingdom could be generalised to the rest of the
EEA.

that

In addition, it can be seen from documents supplied by
the parties (90)
there are also significant price
differences between Member States, even neighbouring
ones, in the case of steel cable trays. The table below
shows the trend in the relative price of steel cable trays
produced by Lexel, a Schneider subsidiary between 1998
and 1999, in the three Member States in which they are
sold by that company:

Prices for steel cable trays

1998

1999

2000

Netherlands (91)

100

[100-150]*

[100-150]*

Germany

[100-150]*

[100-150]*

[100-150]*

Belgium

[50-100]*

[50-100]*

[50-100]*

Source: the parties.

(89) Price in Sweden in 1996 = Base 100.

(90) Reply by the parties dated 19 July 2001 to point 1 of

the

questionnaire of 22 March 2001.

(91) Price in the Netherlands in 1998 = base 100.

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(279)

It is therefore clear from the above table of prices for
steel cable trays that while the price differential between
the Netherlands and Germany is small, and even tended
to narrow between 1998 and 2000,
the differential
between those two countries and Belgium was greater
than [0-50]* % in 2000 and even tended to widen over
the same period.

(280)

In their reply to the statement of objections, the parties
claimed that
the comparison of cable tray prices
between Member States made by the Commission was
distorted because it
three
exogenous factors.

failed to take account of

(281) First, according to the parties, the Commission failed to
take into account the fact that, for historical reasons,
in Sweden and Finland had a distinct
customers
preference for cable ladders rather than cable trays, with
the result that competition was stronger in the case of
the former; this partly explained why prices for those
products were lower than in the rest of Europe.

(282)

that

should first be pointed out

It
selling price
differentials for cable trays produced by Schneider are
significant not only between Sweden and Finland, on
the one hand, and the other Member States, on the
other. It can be seen, for example, from Table 13 that
the price differential between Germany and Belgium
stood at [50-100]* % in 2000. Even if Germany is also
regarded as a special case, the price differential between
Denmark and Belgium was [0-50]* %. In addition, the
fact that the share of sales represented by the different
categories of cable tray differs substantially between the
various Member
the marked
preference of national consumers for certain categories,
as claimed by the parties (92),
is a further important
argument
in favour of defining the relevant product
market on a national basis.

because of

States,

that

(283) Second, the parties state in their reply to the statement
of objections (93)
the price differences between
Member States in the case of cable ladders marketed by
in national
fluctuations
Lexel were
currencies:
the Swedish
they quote the example of
krona, which lost nearly 30 % of its value as against the
the
pound sterling,
price differential observed between Sweden and the
United Kingdom for that product category. However, it

thereby reducing, so they claim,

result of

the

the price
can be seen from Table 13 above that
differential for cable trays marketed by Lexel
in those
two Member States, which was [0-50]* % in 1996, stood
at [0-50]* % in 2000, which contradicts the claim that
prices narrowed between Sweden and the United
Kingdom. It should also be noted that the differences in
selling prices
for cable ladders marketed by Lexel
concern many EEA countries whose currencies have
remained stable in relation to each other in recent years.
Table 13 above shows,
the price
differential between Germany and the Netherlands stood
at [50-100]* % in 2000.

for example,

that

in their view, accounted for

(284) Third and last, the parties argue (94) that the selling
prices
they communicated to the Commission take
account of the discounts and volume rebates applied to
each sale; the amount of these discounts and rebates
differed from one Member State to another, a fact
which,
the differences
observed in average selling prices. It is sufficient to note
here that the parties have not supplied any document
establishing that the average level of sales volumes per
deal differs from one Member State to another. If that
were the case, it would in any event constitute a further
important piece of evidence in favour of defining the
cable tray market on a national basis.

The positions of the cable tray and busbar trunking
manufacturers vary greatly between Member States

(285) The market shares of the main players on the busbar
trunking and cable tray markets differ substantially from
one Member State to another.

Busbar trunking

(286) Table 14 below, which was supplied by the parties (95),
the main players on the

gives the market shares of
busbar trunking market in the main EEA countries:

(92) Reply to the statement of objections, point 484.
(93) Point 485 et seq.

(94) Reply to the statement of objections, point 489.
(95) E-mail message of 12 March 2001.

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Table 14

Schneider

Moeller

Zucchini

Pogliano

Others 1

Others 2

Germany

[30-40]* %

[50-60]* %

[0-10]* %

[0-10]* %

Siemens
[0-10]* %

Lanz [0-10]* %

Austria

Belgium

Denmark

Spain

France

Finland

[60-50]* %

[30-40]* %

[0-10]* %

[0-10]* %

Lanz [0-10]* %

[50-60]* %

[10-20]* %

[10-20]* %

EAE [0-10]* %

[60-50]* %

[20-30]* %

[40-50]* %

[30-40]* %

[10-20]* %

[10-20]* %

[70-80]* %

[0-10]* %

[0-10]* %

[0-10]* %

Erico [0-10]* %

[20-30]* %

[10-20]* %

United Kingdom

[10-20]* %

[30-40]* %

[10-20]* %

Greece

Ireland

Norway

[60-50]* %

[10-20]* %

[0-10]* %

[80-90]* %

[0-10]* %

[10-20]* %

[20-30]* %

[30-40]* %

[0-10]* %

MEM [30-40]* %

MEM [10-20]* %

EAE [0-10]* %

MEM [0-10]* %

Netherlands

[40-50]* %

[40-50]* %

[0-10]* %

EAE [0-10]* %

Portugal

Total EEA

[70-80]* %

[20-30]* %

[0-10]* %

[20-30]* %

[30-40]* %

[0-10]* %

[0-10]* %

(287)

It is clear from Table 14 above that the positions of the
main busbar trunking manufacturers vary significantly
from one Member State to another. Confining the
analysis to variations between neighbouring Member
the French
States, Schneider thus has [70-80]* % of
market, but a market share of [50-60]* % in Belgium,
[40-50]* % in Spain and only [30-40]* % in Germany.
Likewise, Schneider's market share is [80-90]* % in
Ireland but only [10-20]* % in the United Kingdom, and
[70-80]* % in Portugal but only [40-50]* % in Spain.
The other main player on the European market, Moeller,

has a market share of
[50-60]* % in Germany, but
[30-40]* % in Austria, [10-20]* % in Belgium and only
[0-10]* % in France.

Cable trays

(288) Table 15 below, which was supplied by the parties, gives
the market shares of the main competitors on the cable
tray market in the different EEA countries:

Table 15

Schneider

Legrand

Hager

Others 1

Others 2

Germany

[0-10]* %

[0-10]* %

[10-20]* %

OBO

Van Geel

Austria

Belgium

[0-10]* %

[0-10]* %

[0-10]* %

[10-20]* %

[0-10]* %

Vergocan

Van Geel

Denmark

[20-30]* %

[0-10]* %

[10-20]* %

RM Industrial Group

Van Geel

Spain

Finland

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

Meka

Nordic Aluminium

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Schneider

Legrand

Hager

Others 1

Others 2

France

[0-10]* %

[0-10]* %

[0-10]* %

Tolmega [30-40]* %

United Kingdom

[0-10]* %

[30-40]* %

[0-10]* %

RM Cable Tray
[0-10]* %

Métal Déployé
[20-30]* %

Unitrust [0-10]* %

Greece

Ireland

Italy

Norway

Portugal

Sweden

Total

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

RM Cable Tray

Unitrust

[0-10]* %

[20-30]* %

[0-10]* %

Sati [20-30]* %

ABB [10-20]* %

[40-50]* %

[0-10]* %

Netherlands

[30-40]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

Ögland

Van Geel

Van Geel

Gouda

Meka

Van Geel

[0-10]* %

[0-10]* %

[70-80]* %

[0-10]* %

[0-10]* %

[10-20]* %

[0-10]* %

(289)

It can be seen from the above table that Schneider is
present in only six EEA countries. It has a market share
of between [20 and 80]* % in five of them but is absent
from all the other national markets. Legrand has the
largest market share in the EEA although it is present in
only three Member States (France, Italy and the United
Kingdom) and has a significant market share in only
two of those ([20-30]* % in Italy and [30-40]* % in the
United Kingdom). With the exception of Hager, which is
active in 11 countries, all the other competitors are
present
in only one or two Member States, usually
neighbouring ones (Unitrust and RM Cable Tray in
Ireland and the United Kingdom or Meka in Sweden and
Finland). Van Geel appears to be the sole exception to
this rule as it is active in Belgium,
the Netherlands,
Germany and also Scandinavia.

relatively uniform market
shares
Member States in which it was active.

in the different

(292)

It is sufficient to note here that the fact that only three
players on the cable tray market are present in more
than one Member State is not enough to prove the
existence of competitors of a genuinely European size
vying with each other throughout the EEA. This finding
is reinforced by the fact that none of the three leading
players in the EEA, namely Schneider, Legrand and
Hager, have uniform market shares at national level.

(290) Most of

the players on the cable tray market are
therefore present in one EEA country only. Those who
are active in more than one EEA country have (i) a
particularly large market share in one country and (ii)
much smaller, fluctuating market shares in the others.

The distribution of cable trays and busbar trunking
is organised on a national basis

(293) The parties explain that on average between 75 % and
95 % of the turnover of cable tray and busbar trunking
manufacturers is generated by sales to wholesalers (97).
For example, Schneider states that its sales of cable trays
to wholesalers account for all its sales in Sweden, the
United Kingdom and the Netherlands. Schneider has not
provided other
the other Member
States (98).

information for

(291)

In their reply to the statement of objections (96), the
parties pointed out that there were several players on
the relevant product market which were present
in
they mentioned
more
Schneider, present in seven Member States, Van Geel,
present in six Member States and Hager, present in 11
Member States. They also argued that Hager had

than one Member

State:

(96) Points 506 and 509.

(294) As

explained

between
electrical distribution equipment manufacturers and
wholesalers are organised on a national or even regional

therefore,

relations

above,

(97) Form CO, p. 90.
(98) Annex to Schneider's reply to point 98 of the questionnaire of

29 June 2001.

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basis, even in the case of manufacturers and wholesalers
operating on a European scale. This applies equally to
cable trays and busbar trunking. Distributors of those
products therefore compete chiefly on a national basis.

and do not constitute a barrier to free movement within
the EEA; and there are considerable trade flows between
Member States. For example, [20-40]* % of cable trays
produced by Schneider and Legrand are sold in a
Member State other than the one in which they are
manufactured.

(295)

In their reply to the statement of objections (99), the
parties argued that a large share of the turnover of cable
tray manufacturers was generated by direct sales to end
customers; this was particularly true in the case of large
projects, for which the wholesalers themselves required
manufacturers
in their
to customers. Relations between
catalogues direct
wholesalers and manufacturers did not therefore play a
decisive role in assessing the geographic extent of the
relevant product market.

to deliver

cable

trays

the

the validity of

(299) The existence of substantial price differentials between
the players'
Member States and the unevenness of
market shares as noted above are two decisive factors
which,
least
from a factual standpoint, refute or at
severely limit
the parties' claim that
barriers to entering the cable tray market are not
significant. The Commission's investigation has shown
that access to the distribution channels is the main
barrier to entry in the cable tray market given that the
bulk of sales are made via wholesalers. Wholesalers'
tendency to reduce the number of brands they distribute
for each category of electrical equipment
to
increase barriers to entry.

tends

(296) The point should first be made here that the parties
have not supplied any information making it possible to
gauge the importance of direct sales by manufacturers
to end consumers on the cable tray market. The only
data provided by the parties, concerning their own sales,
show on the contrary that sales to wholesalers account
for the bulk of their turnover. There is no available
information suggesting that
the situation might be
different for the other market players.

Conclusion

(300) The relevant geographic markets for the sale of cable

trays and busbar trunking are national ones.

(297)

the parties' argument

In addition,
that wholesalers
request manufacturers to deliver direct to end customers
the cable trays appearing in the catalogues of products
they distribute does not in fact mean that manufacturers
sell the products in question direct to those customers.
On the contrary,
involvement with
the wholesalers'
regard to the products they have decided to include in
their sales catalogues suggests instead that they purchase
the products in question from the manufacturers and
then resell them to the end consumer without those
products physically passing through their stocks.

B.3 ELECTRICAL EQUIPMENT DOWNSTREAM OF THE

FINAL PANELBOARD

B.3.1 Definition of the product markets

Introduction

Barriers to entry

(298) The parties argued in their reply to the statement of
objections (100) that barriers to entering the cable tray
market were not significant. According to the parties,
the products concerned are homogeneous in the sense
that they require little or no adaptation in order to
satisfy local demand; transport costs are relatively low

(99) Point 523.
(100) Point 512 et seq.

(301) Electrical equipment products downstream of the final
and
panelboard (also called ‘installation products
accessories' by the parties) have in common their
position at the final, or terminal, stage of the electricity
distribution
final
panelboard.

downstream of

network,

the

(302) The parties propose defining the following markets as
separate product markets: (i) sockets and switches, (ii)
(iii) security and safety systems for
control systems,
for
security and safety systems
protecting life,
(iv)
(vi)
protecting property,
(v) data network connectors,
fixing and connecting equipment, and (vii)
trunking
equipment. Each of these categories of product, they
functions. The Commission's
say,

different

fulfils

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investigation confirmed that it is not possible to group
these different market categories into one and the same
product market. The markets
systems,
security and safety systems for protecting property, data
network connectors and trunking equipment are not
affected by the proposed transaction.

in control

(303) Each of the product market definitions proposed by the
are not mutually

comprises products

that

parties
substitutable.

(304) However, the accessory markets concerned do share a
number of characteristics which distinguish them from
the markets in switchboards and in cable trays and
busbar trunking. First of all, they primarily involve the
residential and commercial sectors, to the exclusion of
the industrial sector (except for certain categories of
product such as weatherproof wiring accessories).
In
addition, installation accessories form the visible part of
the installation. These two aspects mean that, unlike in
the case of switchboards and cable trays and busbar
trunking, the aesthetic dimension plays an important
role in the choice of product and the end user is much
choice.
more
final
Furthermore,
panelboard
via
wholesalers, while panel builders and direct sales by
manufacturers to end customers are not involved in the
distribution of these products. This means that installers
have a greater role in the choice of such products than
they do in the case of electrical switchboards or cable
trays and busbar trunking.

equipment downstream of

the
distributed

concerned to be

involved in that

exclusively

almost

is

Sockets and switches

Introduction

(305) The low-voltage sockets and switches category, as
following

comprises

the

presented by the parties,
products:

sockets for connecting the telephone, television and
data and communication systems respectively;

— switches, acting as control devices for power sources
(lighting, motors), including remote control switches
and time-lag switches;

— dimmers, for adjusting lighting levels.

(306) Furthermore, within the socket and switches segment,
the Commission's in-depth investigation identified the
existence of a product category called ‘weatherproof
wiring
accessories', designed to withstand hostile
environments (moisture, dust, impact, etc.).

since they are indissociable for

(307) According to the parties, all these products, with the
sole exception of VDI sockets, form one single product
reasons of
market,
is
design and appearance. This,
confirmed by the
supplied in
that
aesthetically homogeneous ranges. A consumer's choice
of one of these products (such as a socket) governs his
choice of another (such as a switch) since it would not
be aesthetically acceptable to have a socket and switch
of different designs in the same room.

say the parties,

they are

fact

(308) For

the reasons

set out below,

there is a market
(including

the Commission's
investigation confirmed that
in
time-lag
and switches
sockets
ordinary
switches, remote control switches and dimmers) and
that specific product markets exist for data sockets and
accessories. The question of
weatherproof wiring
whether
telephone sockets and television
sockets constitute separate product markets or whether
they form part of the ordinary sockets and switches
market can be left open, since the analysis of
the
competitive situation is the same in either case.

traditional

— basic plug and socket outlets for connecting electric

loads;

— ‘low-current' sockets: traditional telephone sockets,
image)

television sockets and ‘VDI'

(voice, data,

(309) The products in this category are very varied from the
point of view of their function, technological content
and unit value. First, the sockets and switches category
as presented by the parties includes both products with
low technological content, such as ordinary switches
and sockets, and products with electronic components,

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such as VDI sockets and dimmers controlling lighting
intensity. These products share the characteristic of
being installed in the living areas of dwellings and of
being ‘visible'.
their design and
appearance constitute an important factor in consumers'
choice.

reason,

this

For

Ordinary sockets and switches

(310) As

regards ordinary socket outlets

and switches,
including remote control switches, time-lag switches and
dimmers, the parties' argument that they form a single
product market can be endorsed.

(311) The Commission's survey of competitors, wholesalers
and installers confirmed that, as stated by the parties,
the decisive
for
for users,
the aesthetic
wholesalers,
dimension common to these products of varying
functions.

in choosing products

and therefore

factor

is

(312) All the products concerned have in common the fact
that they are visible to the user. Beyond their purely
their appearance and compatibility
functional aspect,
in users' and
with the decor are decisive factors
specifiers'
(architect, decorator, etc.) choice of a given
product. For this reason, manufacturers give them a
homogeneous finish or cover based on shared plates
and embellishments. This aspect of demand from end
to offer
users also affects wholesalers, who have
customers complete lines of sockets and switches of the
same design.
if a hypothetical
is unlikely that,
monopolist of homogeneous product ranges were to
raise the price of a specific product, demand for that
product would
single-product
manufacturer, besides which, there are no manufacturers
that produce a single product or that do not supply
homogeneous ranges. To be present on the market,
manufacturers must be in a position to offer one or
more full ranges with a common design.

towards

switch

It

a

(313) The Commission therefore concludes, for the purpose of
these proceedings, that basic plug and socket outlets and
switches,
switches,
time-lag switches and dimmers, form a single relevant
product market.

together with remote

control

Traditional telephone sockets

(314) Traditional

namely

the

telephone sockets meet a specific need,
and other

connection of

telephones

telecommunications equipment (fax or modem) to the
network. At present, these sockets are made only for the
residential market, since telecommunications equipment
in commercial buildings is usually connected via VDI
sockets, which can also be used to connect up
computers and other telecoms equipment within a local
area network. Traditional
sockets meet
specifications laid down by telecoms operators. This
distinguishes them from ordinary socket outlets and
television sockets. Unlike VDI sockets, they contain no
electronic components.

telephone

(315) However,

traditional

the parties state that

telephone
sockets require the same technologies as plug and socket
(thermoplastic moulding, cutting, machining,
outlets
etc.). They assert that these sockets form part of the
switch and socket ranges marketed by manufacturers of
‘segment 5.A.1' accessories and are often installed at the
same time by the same installer that is responsible for
installing high-current equipment. This assertion by the
parties can be endorsed only for socket and switch
manufacturers such as Schneider and Legrand, which, in
their catalogues, offer
include telephone
sockets. However, in addition to these switch and socket
there are also specialised traditional
manufacturers,
telephone socket manufacturers such as the 3M group
(Pouyet, Quante), Krone or Forgos, which do not offer a
full range of sockets and switches.

ranges that

(316) However,

it is not necessary to resolve the matter of
whether traditional telephone sockets form part of the
ordinary switch and socket market or whether they
should be considered as a separate product market. The
the competitive situation is the same in
analysis of
either case.

Television sockets

(317) Like traditional

a

telephone sockets,

specific need, namely the

television sockets
connection of
meet
television sets. They are intended exclusively for the
residential market.
with
specifications
laid down by television broadcasters,
which distinguishes them from plug and socket outlets,
telephone sockets and VDI sockets.

They must

comply

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(318) The parties argue that
as

technologies

and

that

they

plug

extent

socket

are marketed

television sockets require the
same
outlets
(thermoplastic moulding, cutting, machining, etc.). To
general
the
socket/switch manufacturers,
their
switch and socket ranges. They are often installed at the
same time by the same installer that is responsible for
installing high-current equipment. This assertion by the
parties is contradicted by the fact that television socket
manufacturers are mainly specialised firms that do not
make high-current equipment, such as Philips, Bosch
and Hirschmann.

they form part of

by

(319) However,

it is not necessary to resolve the matter of
whether television sockets form part of the ordinary
switch and socket market or whether they should be
considered as a separate product market. The analysis of
the competitive situation is the same in either case.

VDI sockets

various types (configurations) of connectors that meet
the
in
specifiers'
accordance with
requirements
standards developed by
IT
the manufacturers of
equipment (RJ 11, RJ 12, RJ 45, Twinax, Thinnet, BNC,
ACO, SUBD 9, SUBD 15, SUBD 25 and so on). VDI
sockets are installed by specialists or electricians trained
specifically in the requirements of such networks, which
need maintenance as well as frequent modifications.

(323) A number of significant participants in the VDI socket
market are specialised manufacturers such as Infra+,
Lucent, Alcatel, Tyco and others, which are not active
on the ordinary switch and socket market and thus do
not supply an aesthetically homogeneous range. The
production of VDI sockets is specific and cannot be
done on converted equipment. The Commission's
survey of third parties confirmed that a manufacturer of
ordinary plug and socket outlets or of another category
of
or
television) cannot start producing data sockets without
considerable additional cost and time. Data sockets are
therefore not substitutable on either the demand or the
supply side with ordinary socket outlets,
traditional
telephone sockets or television sockets.

low-current

(traditional

telephone

socket

(320) The parties consider that VDI sockets belong to the
market in connectors for data networks. However, they
sell VDI sockets within their socket and switch ranges
and the market data for sockets and switches supplied
by them to the Commission include VDI sockets sold as
part of these ranges.

(324) The Commission therefore concludes that data sockets
do not form part of the market in ordinary sockets and
switches.

telephony requirements

(321) VDI sockets are used for the connection of data and
communications systems. Besides their primary purpose
of data transmission (hence the name ‘data sockets'),
in a
they also handle all
commercial network, by comparison with simple,
domestic uses, as well as certain video applications
linked to data-type sources, thanks to digital technology.
They are not part of the electricity distribution system,
between
but
neighbouring workstations within a building (LAN: local
area network), primarily in commercial applications. It
follows that they meet a specific requirement that differs
from that met by other types of socket (such as plug
sockets,
traditional
and
television sockets, and so on) and are not substitutable
with them on the demand side.

socket outlets,

communication

telephone

network

the

of

Weatherproof wiring accessories

(325) The

accessories
category of weatherproof wiring
their
includes sockets and switches that, by dint of
construction or
installation, are capable of resisting
hostile environments (mainly moisture, but also dust
and impact),
for example in bathrooms, garages and
cellars, outside a building, in factories, on building sites,
and so on.

(322) Furthermore, VDI sockets use different technology from
plug and socket outlets, television sockets and traditional
telephone sockets. Their main components are the

(326) The

parties

consider
form part of

that weatherproof wiring
the sockets and switches
accessories
they perform exactly the same
market, arguing that
to the electricity
function, namely providing access
degree
source,
of
the
for
that,
strictly
are
characteristics
weatherproofing,
their
the technology and manufacturing
identical and that

except

and

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process are also the same. They also state that these
accessories are installed at the same time as ordinary
sockets and switches by the same electricians and in the
same building.

(for example in a house, where weatherproof sockets are
installed in the cellar or outside), or consist exclusively
of weatherproof wiring accessories
(for example in
industrial premises).

(327) However, weatherproof wiring accessories cater for a
specific demand and ordinary switches and sockets
cannot therefore be substituted for them on the demand
side.

(328) Neither is there any supply-side substitutability between
ordinary sockets and switches and weatherproof wiring
accessories. The parties indicated that the development
of the weatherproof casing alone accounted for around
[0-50]* % of the cost and [0-50]* % of the time required
to develop a complete line of sockets and switches from
nothing. Legrand says it spent EUR [10-60]* million and
almost [1-4]* years (including preparatory studies) on
the Plexo product line, based on existing mechanisms,
compared with EUR [20-70]* million and [3-5]* years
for a complete product line (101). According to Infra+, a
for
firm specialised in manufacturing components
computer networks, making a single water-resistant
socket requires more or less twice the investment in
tools and a development time of one year (102). The
Commission's survey of third parties also confirmed that
a manufacturer of ordinary sockets and switches cannot
begin production of weatherproof wiring accessories
without considerable additional cost and time.

(329)

In their reply to the statement of objections, the parties
challenged the Commission's analysis. They argued that
weatherproof wiring accessories complemented other
sockets and switches and that each range of sockets and
switches offered a weatherproof version with the same
design, dimensions and characteristics.

(330) However, products

that

are not

substitutable but
complementary do not as a general rule belong to the
same product market (103). Ordinary and weatherproof
sockets and switches cater for different needs, and a
particular installation may either comprise only ordinary
sockets and switches (for example in an apartment), or
use both ordinary and weatherproof wiring accessories

(101) Reply dated 10 July 2001, question 15.
(102) Reply dated 18 June 2001.
(103) In its Decision of 28 September 1992 in Case IV/M.256 —
Linde/Fiat, cited by the parties in support of their argument, the
demand-side
Commission
the
left
complementarity and supply-side substitutability, but
question of the precise definition of the product market open.

considerations

relied

on

of

(331) The parties

all

that

also assert

the well-known
sockets and switches also market
manufacturers of
weatherproof wiring
this
accessories. Although
argument is valid for the competitors mentioned by the
it does not hold true for Sarel, a Schneider
parties,
subsidiary which manufactures,
in addition to other
products (earth leakage switches, fixing and connecting
equipment), a range of weatherproof wiring accessories
and even claims in its catalogue to be ‘the weatherproof
specialist' (104). The demand can therefore be met by a
dedicated supply.

(332)

In Spain, furthermore, the market positions of the main
competitors differ widely on the ordinary sockets and
and
switches market
the weatherproof wiring
accessories market.
In ordinary sockets and switches
Legrand is only number 2, with a [10-20]* % market
share (after Simon, with [40-50]* %), but it is market
leader in weatherproof wiring accessories, with a market
share of at least [40-50]* %.

is

no

supply-side

substitutability

(333) The parties also challenge the Commission's finding that
between
there
weatherproof and ordinary wiring accessories, claiming
that the manufacture and marketing of a simple casing
placed over the socket or switch does not require any
great
the one-year lead
input and that
time needed, according to Infra+, by a manufacturer of
ordinary sockets and switches in order
to produce
weatherproof wiring accessories is much shorter than
for a normal line (two to four years).

technological

(334) Nevertheless,

it

longer

takes still

the claim that

to
develop and market a complete new line of sockets and
switches from nothing than to develop a weatherproof
line from an ordinary line cannot disprove the finding
that
substitutability. The
manufacturer of a neighbouring product cannot exert a
disciplinary effect on the competitive behaviour of the

is no supply-side

there

(104) Catalogue for 2001, p. 6.

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companies involved unless it can switch production to
the relevant products and market them in the short
term without incurring significant additional costs or
risks in response to small but permanent changes in
relative prices (105).

Security and safety systems

Introduction

(335) The lack of supply-side substitutability between ordinary
and weatherproof wiring accessories is also illustrated
by the fact that Eunea Merlin Gerin, Schneider's Spanish
subsidiary, markets both ordinary and weatherproof
ranges but itself produces only ordinary sockets and
switches, while the weatherproof wiring accessories it
sells are produced by Sarel in France.

(340) Security and safety systems are designed to protect life
and property by emitting the appropriate alarm signals
in emergencies, or by providing emergency lighting in
the event of
the mains supply. The main
applications of such systems are:

failure of

they

(336) Lastly, the parties refer to several third parties surveyed
by the Commission in the course of the investigation
view that
who,
subscribed
claim,
weatherproof wiring accessories
the
sockets and switches market. However, the third parties
cited in the parties' reply to the statement of objections
have not disputed the
the
Commission in the course of
its investigation, while
others, such as Siemens (106), have clearly stated that
there is no supply-side substitutability between these
two types of product.

to the
form part of

facts discovered by

(337) The Commission therefore concludes that weatherproof
wiring accessories constitute a separate relevant product
market.

Control systems

(338) Control systems are systems for controlling a specific
application in a particular part of a building (such as a
three main
room, office,
floor or building). The
applications concerned are heating,
lighting and air
conditioning.

(339) The Commission's in-depth investigation showed that,
the different categories of
even supposing each of
product were regarded as forming a separate product
the notified acquisition would not raise any
market,
competition concerns. The precise definition of
the
product market(s) can therefore be left open for this
category.

— the protection of life: fire detection and emergency
lighting
self-contained
(which
emergency lighting units and emergency lighting
systems operated from a central source);

systems

include

— the protection of property:
access control systems.

intruder detection and

the market

(341) According to the parties, all security systems must be
regarded as forming a single product market, since they
are all concerned with ensuring safety. The various
components of security systems have certain functions
which all serve to fulfil one of the two basic functions
(protection of life or protection of property) and they
are thus complementary. Furthermore, the cohesiveness
is largely ensured by legislation that
of
imposes the combined use of various types of security
system. In the parties' view, this product market does
not
include products designed to provide physical
protection (such as protective doors, fire doors, etc.) or
fire
suppression
(such
extinguishers). During the investigation,
the parties
nevertheless acknowledged that a distinction should be
drawn between a market in systems for the protection
of property and a market in systems for the protection
of life.

automatic

systems

as

(342) For

the reasons

the Commission's
set out below,
in-depth investigation during the second stage of the
proceedings showed that
there is a separate product
market in emergency lighting systems.

(343) As regards other categories of security system besides
emergency lighting, the precise definition of the product
market may be left open since the notified acquisition
raises no competition concerns, whatever the definition.

Emergency lighting, fire detection and other security systems

(105) Commission notice on the definition of relevant market for the

purposes of Community competition law, point 20.

(106) Reply dated 22 June 2001.

(344) Emergency lighting systems are designed to provide
emergency lighting in the event of failure of the mains

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supply so as to allow the evacuation of people where
necessary. There are two alternative emergency lighting
solutions based on different technologies:

same product market. The

same
system in the
conclusion should be drawn regarding the argument
that
they are complementary, as explained earlier in
connection with weatherproof wiring accessories.

— elf-contained emergency lighting units, with their

own batteries within their housing;

— and slave luminaires without batteries, which are

connected to a central power source.

(345) Systems

for

residential

the protection of

life (which include
emergency lighting and fire detection systems) are not
substitutable on the demand side with systems for the
protection of property, since these different systems
meet
the
fundamentally different needs. Systems for
protection of property are used in all sectors of activity,
commercial
sector
from the
buildings, and are normally optional, except in the case
of high-risk buildings (such as banks or museums). On
the other hand, according to information provided by
the parties,
fire detection and emergency lighting
systems are used in public venues and establishments
and are usually compulsory. It follows that, from the
standpoint of demand, systems for the protection of life
and systems for the protection of property cannot be
regarded as belonging to the same product market. This
view is furthermore shared by the parties.

to large

(346) Nevertheless, the parties maintain in their reply to the
statement of objections that emergency lighting systems
and fire detection systems form part of one and the
same market, namely the market in systems for the
protection of life.

(347)

It should first be noted here that emergency lighting
systems perform a different function from fire detection
systems, even if, as the parties point out, the two types
of system are ‘synergetic'
in that emergency lighting
complements a general evacuation signal emitted by the
fire detection system in the event of an emergency. They
are therefore not substitutable on the demand side.

(349)

(350)

It should also be noted that few manufacturers have
strong market positions in both emergency lighting
systems and other types of security system such as fire
detection. Although, as stated by the parties in their
reply to the statement of objections, many players are
active in both segments, their market positions often
differ widely between the two. According to an estimate
by a third party, of the five biggest manufacturers of fire
and intruder detection systems in France, only Legrand
is
five main manufacturers of
emergency lighting systems. And the leading competitor
on the fire detection market in France and the rest of
Europe, Siemens/Cerberus, is absent from the emergency
lighting business.

also among

the

In their reply to the statement of objections, the parties
argue that Schneider boosted its sales of fire detection
systems after adding emergency lighting systems to its
range, and that exactly the opposite had occurred in the
case of Cooper
example of
Siemens/Cerberus nevertheless shows that being able to
lighting
offer both fire detection and emergency
systems, while possibly constituting a
competitive
advantage,
is not essential to the extent that the two
types of system can be classed in the same product
market.

France. The

above

(351) As far as supply-side substitutability is concerned,

and

closing

devices),

fire-door

it
should be noted that the various components of fire
detection systems (smoke detectors, break glass call
points, control panels, audible alarms and message
intruder
systems,
detection systems (presence sensors, glass break and
shock detectors, door or window opening sensors,
control panels, sirens and diallers) and access control
systems
cameras,
(audio and video entry phones,
surveillance screens and coded keypads) are in no way
interchangeable with self-contained emergency lighting
units and components for central lighting systems (slave
luminaires for connection to central sources and central
supply sources).

(348)

that

argue

In their reply to the statement of objections, however,
the parties
common purpose of
the
emergency lighting and fire detection systems is to
‘protect the safety of persons' and that the two types of
system complement each other. But the existence of an
ultimate purpose such as
‘protecting the safety of
persons', which the systems in question in any case
share with a host of other products and systems, is not
justification for including the two types of
sufficient

(352)

In this connection, the parties maintain in their reply to
the statement of objections merely that all security
systems perform the basic functions of detection and
alert and that the technologies used in the manufacture
of emergency lighting systems and fire detection systems
are similar. This general assertion has not been spelled

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6.4.2004

out by the parties and is not sufficient to demonstrate
that
there is supply-side substitutability between the
systems concerned.

B.3.2 Definition of the geographic markets

(353) The Commission's

in-depth survey of

third parties
showed that a manufacturer of fire detection systems
cannot start producing emergency lighting equipment
without considerable additional cost and time. For
example, a competitor pointed out that very different
technologies are used for
fire detection and alarm
systems on the one hand and for emergency lighting
systems on the other. For a manufacturer to switch
from one to the other would require very heavy
investments and a lead time of about 18 months before
he could hope to market the first products (107).

(354) This Commission finding was not disputed by the
parties in their reply to the statement of objections.
They simply argued that 18 months should be regarded
as the normal duration of the product creation cycle.
This does not, however, create scope for supply-side
substitution with equivalent effects to those of demand
substitution
and
in
immediacy (108).

effectiveness

terms

of

(355) Emergency lighting cannot therefore be considered part
of the same relevant product market as fire detection
equipment. The Commission therefore concludes that
emergency lighting systems must be
regarded as
forming a separate product market.

Ordinary sockets and switches

Introduction

(358) According to the parties, the geographic market for the
sale of sockets and switches is national. However, they
also stated in the notification that a number of trends
on
towards
market
internationalisation.

pushing

the

are

it

(359) The national

limit

from the

to the markets

to entry that exist
to another. These barriers

is due to the
from one
considerable barriers
result
national market
primarily
and the
applicable
traditions (mainly aesthetic) of end users and specifiers.
These various factors are reflected in the way the
market currently functions in terms of the presence of
the various participants
(manufacturers, distributors,
etc.), their brands and products that are sold on the
market, together with their prices.

standards

Standards

Connection equipment for communication
networks

(360) Standards covering sockets and switches reflect a lesser
degree of harmonisation than those relating to other
electrical distribution products, such as the components
of electrical switchboards.

the parties,

(356) The communication network connection category, as
the passive
presented by
components included in a computer network at building
or floor level. This principally includes all types of data
connector (including VDI sockets), connecting cables
and wiring cabinets and their components.

comprises

(357) The Commission's in-depth investigation showed that,
the different categories of
even supposing each of
product were regarded as forming a separate product
the notified acquisition would not raise any
market,
competition concerns. The precise definition of
the
relevant product market(s) in this category can therefore
be left open.

(107) Cooper Menvier S.A.,

reply to phase

II questionnaire

for

competitors (segment 5) dated 29 June 2001.

(108) Commission notice on the definition of relevant market for the

purposes of Community competition law, point 20.

international

(361) For socket outlets, besides design standards (for example,
the
IEC 60884-1 standard and the
European HD 60884-1 standard), which cover socket
performance and safety and are included in the texts of
national standards, there are specific national standards
for pin configuration. This relates to the spacing of the
electrical connection zones. Pin configuration standards
from one Member State to another and will
differ
apparently not be harmonised at
international or
European level in the short or medium term.

(362) There are three main pin configuration systems for
ordinary plug and socket outlets within the EEA. The
‘Franco-Belgian' configuration is used in France, Belgium
and a number of border areas in Spain. The ‘Schuko'
configuration is used in Germany,
the Scandinavian
countries, Austria, Spain, Portugal, the Netherlands and
Greece, and the ‘British Standard' configuration is used

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in the United Kingdom and Ireland. Denmark and Italy
have their own standards, with Schuko socket outlets
used in Italy as polarised sockets in addition to the
Italian standard (109)

(363) Table 16 shows the pin configuration standards that

apply in the EEA countries:

Table 16

Country

Usual name

National standard

Belgium

Franco-Belgian

NBN 61112

Germany

Schuko

VDE 0624

Denmark

Danish

DK 107-2-D1

Spain

Schuko

UNE 20-315-94

France

Franco-Belgian

NF C 61-303/320

Finland

Schuko

Greece

Schuko

ELOS 294

Italy

Italian

CEI 23-16

Ireland

British

IS 180

Luxemburg

Schuko

Netherlands

Schuko

NEN 1020

Portugal

Schuko

United Kingdom British

NP 1260

BS 1363

Norway

Schuko

NEMKO 31/68

Sweden

Schuko

SEMKO 107

Source: the parties.

(365) However, the hypothesis that the existence of different
pin configuration standards within one Member State
implies a more narrow geographic segmentation of the
markets than the national division was not confirmed.
In two Member States, Spain and Italy,
two parallel
standards exist. However, in each of these two countries,
one standard is largely dominant (in Italy, the CEI 23-16
standard at 92 %;
the Schuko standard at
95 %), with the second being confined to very specific
applications (in Italy, the Schuko outlet is used as a
polarised socket throughout the country) or to border
regions (the Franco-Belgian standard in Spain).

in Spain,

(366) Like for the other low-voltage distribution products, the
marketing of sockets and switches is in practice subject
to a certificate of conformity with a national quality
label issued by the relevant national certification body at
the manufacturer's request. According to the parties, it
takes between [two and seven]* months to obtain a first
quality label
some EUR
in a country and costs
[1 000-5000]* per product. Where there is a mutual
recognition agreement between the certification bodies
concerned, quality labels in other countries are obtained
by administrative procedure without
the need for
socket outlets, however, mutual
further
recognition agreements
exist only within one pin
configuration area (e.g. the Schuko area) (110).

tests. For

Finish

(367) The

the

investigation also confirmed that

finish
(appearance and physical characteristics of the switch)
and outer design of sockets and switches varies from
one Member State to another. Since
sockets and
switches are the main parts of the electrical installation
taste have a
that are visible,
decisive influence on the choices made by users.
In
Denmark, for example, the specific finish developed by
LK (Danish subsidiary of Schneider/Lexel) has become
quasi-standard since it is considered to correspond to
national taste.

traditions in national

(364) The difference in the pin configuration standards that
apply in the different EEA countries means that socket
outlets belonging to one system cannot be used in a
country with another system.

(109) This has a different pin configuration from the standard one
which distinguishes one connection point and serves to prevent
that could introduce
the connection of certain equipment
parasites into the circuit.

Telephone and television sockets

(368) As regards traditional telephone sockets, it has already
been mentioned that they conform to the long-standing
specifications of national telecommunications operators.

(110) Reply by the parties dated 21 June 2001 to question 149.

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They therefore differ from one Member State to another
in terms of their pin configuration. Moreover, they form
part of ranges,
the design and appearance of which
(shape, colour) are designed to correspond to national
taste.

(369) Television sockets also form part of ranges designed to
tastes. Although the pin
correspond to national
configuration side of
television sockets has been
standardised by the EN 50083-1, EN 50083-4 and EN
50083-7 standards at European level, different national
standards for socket outlets exist (111).

competition conditions

(374) The fact that the same manufacturer is present on a
number of national markets does not mean, however,
that
are homogeneous. A
manufacturer is often represented by different brands,
which, for example, belonged to local firms that were
bought by an international manufacturer at a given
moment in time. Schneider's presence on the sockets
and switches market is essentially due to its subsidiary,
Lexel, bought in 1999, which in turn operates via local
subsidiaries such as Alombard (France), Eljo (Sweden),
Strömfors (Finland) and others. Legrand operates under
the Legrand brand in France, Belgium and Italy. Bticino,
an Italian subsidiary of Legrand,
is the brand under
which products are sold in Italy and, to a lesser extent,
in France and other countries. ABB uses, besides the
in Germany (BJE), Spain
local brands
ABB brand,
(Niessen) and Italy (Vimar).

Presence of participants and brands

(370) The differences in terms of pin configuration standards
and traditions relating to finish and appearance result in
significant differences in the presence of
the various
market participants and the prices of their products in
the different Member States.

(375) As regards manufacturers of television sockets which do
not make high-current accessories, information provided
by the parties also indicates that their presence on the
market varies considerably from country to country,
even if, in addition to local players, a number of firms
are present on several or most of the national markets
(e.g. Philips, Kathrein, Hirschmann and Triax).

(371) First,

the various manufacturers are present on the
market to very varying degrees in the different EEA
countries. Legrand has a strong market position in
France, Italy, Greece and Portugal and, to a lesser extent,
Ireland and the United
in Austria, Belgium, Spain,
Kingdom. However,
from the
German and Dutch markets and the Scandinavian
countries.

is practically absent

it

(376) The distribution market is even more fragmented. As
explained above, wholesalers, via which most sockets
and switches are distributed, are organised on a national
scale, or even a regional or local scale.

(372) Schneider, via its subsidiary, Lexel, has a strong position
in the Scandinavian countries, but is less strong in most
of the other Member States, mainly Austria, Belgium,
Germany, Spain, France and Greece, and is completely
absent from the Irish and Dutch markets.

Products and prices

(373) Of

the parties' main competitors, only ABB is well
positioned in most Member States (but not in Belgium,
Denmark, France, Greece, Portugal or
the United
Kingdom). Siemens is present in three Member States
(Austria, Germany and Greece). Hager has a strong
the other
position in the United Kingdom only. All
local
participants
are
manufacturers,
have
nevertheless may
considerable market shares in their own countries (such
as Niko in Belgium or Simon in Spain).

various markets

the
which

in

(111) The following standards were mentioned by the parties (reply
dated 10 July 2001, question 10): TAE in Germany, TDO in
Austria, RTT in Belgium, RITA in Portugal, RJ 12 in Spain, RJ 11
in Greece and Italy and BS in the United Kingdom.

(377) As

the information
regards products actually sold,
provided by the parties shows that
in each product
category, the most widely sold Schneider and Legrand
items vary considerably from one Member State to
another. A large proportion of what are the most widely
sold products in one Member State are not even on
offer in all or most other Member States. Schneider did
not name a single item that featured among the five
most widely sold products in more than one Member
State, and explained this fact by reference to ‘local
habits' (112). Legrand identified a total of 151 types of
socket
(including
weatherproof accessories) that are among the five most

dimmer

switch

outlet,

and

(112) See table annexed to reply to question 139 dated 21 June 2001.

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widely sold products in at least one Member State, of
which only two are among the five most widely sold
products in three different countries, and eight are
among
in two
countries (113). However, it should be noted that none of
these products is sold in France, where Legrand has its
strongest market position.

the most widely

sold products

(378) The prices of the products concerned vary considerably
from one Member State to another, as illustrated by
Table 17, which shows the averages given by the parties
for various products:

Spain

Portugal

France

Italy

United Kingdom

Table 17

100

***

****

****

Catalogue
number

Country with
the highest
price

Country with
the lowest price

Price differential
(%)

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

*

*

*

*

*

*

*

*

[Non-confidential version: * = 0-50; ** = 50-100; *** = 100-150; etc.]*

Conclusion

Spain = 100,

selling prices for 2000

[Non-confidential version: * = 0-50; ** = 50-100; *** = 100-150; etc.]*

(380) The relevant markets for the sale of sockets and switches

are therefore national in scope.

Weatherproof wiring accessories

(379) Table 17 does not take account of the fact that most
products actually sold in the various EEA countries are
not identical. None the less, comparing the prices of
products sold in a number of Member States reveals
significant price differences. For
the
Legrand socket and switch types that are among the five
most widely sold in more than one Member State, the
following differences were found between average net
prices (114):

example,

for

(381) According to the parties,

that

include weatherproof
wiring accessories in the ordinary sockets and switches
market, the geographic market is national. In fact, the
geographic market for weatherproof wiring accessories
must be considered national for much the same reasons
as for the ordinary sockets and switches market.

Table 18

Catalogue
number

Country with
the highest
price

Country with
the lowest price

Price differential
(%)

[…]*

[…]*

[…]*

[…]*

[…]*

[…]*

*

*

(113) See document entitled ‘LPR Annex' provided in reply to point 139

of the questionnaire of 6 April 2001.

(114) Source: document ‘LPR Annex' (see footnote 113).

for

(382) Furthermore, installation habits vary from one Member
State to another. For example, habits require accessories
to be either surface or flush mounted, or a different IP
rating (indicator of the degree of resistance required) to
the same
be used, depending on the country,
application. Thus, for the same type of premises, it is
customary to use IP 55 in France, IP 44 in the Schuko
area and IP 56 in the British Standard area, the highest
IP indicating the highest degree of resistance. These
different habits mean that products made for the market
of a country where a lower IP rating is accepted cannot
be sold in a country with a higher IP rating, while
products with a higher IP could be too expensive to be
marketed on a large scale in a country with a lower IP
requirement.

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(383) Products sold in the different Member States therefore
vary considerably from one pin configuration area to
another. Of the five Legrand products most widely sold
in Germany (a Schuko country), four are also among
the five most widely sold in Austria (also part of the
Schuko area), but none are among the five most widely
sold in France or the United Kingdom, which require a
considerably higher IP rating.

their prices

(384) To the extent that the same products are sold in several
countries,
For
example, for the five most widely sold Legrand products
in France, Table 19 shows the selling prices in the other
Member States where these products are also among the
five most widely sold:

can vary considerably.

Table 19

Catalogue number
(price in EUR )

B

E

F

I

IRL

L

P

[…]*
Average selling
price

[…]*
Average selling
price

[…]*
Average selling
price

[…]*
Average selling
price

[…]*
Average selling
price

*

*

*

*

*

*

*

*

*

*

*

*

*

*

information provided by the parties.

Source:
[Non-confidential version: * = 0-50; ** = 50-100; *** = 100-150; etc.]*

Emergency lighting systems

(385) According to the parties, the extent of the market in
security and safety systems is European, or even wider.
They state that the need met by such systems is present
in Europe and all developed
to the same extent
countries. Firms involved in the security business are
active in several European countries where legislation is
similar and convergent.

countries at least, imply deviations from the applicable
harmonised standards.

(387) The European standard applicable to emergency lighting
is EN 60598-2-22, based on the international standard
IEC 60598-2-22 and applicable in all EEA countries.
However,
in France there is a national deviation,
mentioned in the European standard. This derives from
the decree of 2 October 1978 regarding establishments
open to the public and relates to temperature resistance,
position in relation to other electrical equipment and
independence from supply circuits (115).

are

exist

labels

(388) Like for other items of low-voltage electrical equipment,
issued by national
quality
that
certification bodies. However, unlike with the other
products concerned, it is compulsory to obtain this label
in some Member States, including France. In France, this
entails a cost of some EUR [1 000 - 8 000]* and a
period of between [one and twelve]* months to obtain
the label, unless the product has already been certified
by the relevant body in another Member State that has
signed the Cenelec Certification Agreement (116).
In
Belgium, government buildings are granted approval by
the Buildings Department of the Home Affairs Ministry
under a specific regulation. The parties stated that
obtaining this approval costs EUR [1 000 - 5 000]* and
takes [1-12]* months (117).

(389) The parties also concede that

tastes and installation
habits with regard to emergency lighting systems vary
from one Member State to another. These variations
relate, for example, to the voltage of the supply and the
duration of the charge of the lighting units. This means
that different products are required.

in emergency

(390) Manufacturers' positions on the different national
considerably.
markets
Legrand, with its URA/Lumatic subsidiaries, has a
market
[60-70]* % in France ([70-80]* %
according to an internal sales department document),
and
[30-40]* % in Spain,
[10-20]* % in Belgium. In all other countries, Legrand's

[10-20]* % in Portugal

share of

lighting

vary

(386) However,

it must be noted that emergency lighting is
installed in public buildings. It is therefore subject to
national legislation on public buildings, which, in some

(115) Reply by the parties dated 21 June 2001 to question 187.
(116) See point 62 above.
(117) Reply by the parties dated 21 June 2001 to question 187.

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market share is below [10-20]* %. Schneider has a
significant market position only in France ([0-10]* % of
the market).

(391) The names and market shares of other competitors also
vary from country to country. Only Cooper/Menvier
in Austria, Belgium, Portugal and the UK),
(present
Zemper
(Austria,
(Spain and Portugal) and Beghelli
Belgium, Italy) are major competitors of the parties in a
number of Member States (118).

(392) Legrand sells

its emergency lighting equipment via
national

the

to

contributes
wholesalers, which
fragmentation of the markets (119).

(393) Where a manufacturer is present on different national
markets, it sells different products on those markets. Of
the five most widely sold types of
self-contained
emergency lighting unit in France, only two are among
the five most widely sold Legrand types in another
Member State of the EEA, namely catalogue numbers
[…]* in Austria and Portugal. However,
these two
products are sold at a higher price in […]* than in the
other two countries, as illustrated by the following table:

the final panelboard and upstream of
accessories.
products:

the wiring
following categories of

covers

the

It

— flush-mounting boxes, i.e. boxes fitted into the wall,
with rear and side entry for cables pulled inside the
wall. The outside of
the box is fitted with the
appropriate equipment (switches and sockets). The
parties have mentioned that boxes may differ
slightly according to the type of wall (concrete, dry
partition walls, brick walls);

— junction boxes, i.e. boxes for the protection of cable

connections;

— equipped junction boxes, i.e. the accessories used to

make cable connections;

— terminal strips, i.e. the accessories used to connect

wires and cables;

Table 20

— cable guides,

i.e. the small tubing used to protect

cable;

Catalogue number
(price in EUR )

A

F

P

[…]*
Average selling price

[…]*
Average selling price

**

**

**

**

**

**

Source: the parties.
[Non-confidential version: * = 0-50; ** = 50-100; *** = 100-150; etc.]*

(394) The Commission therefore concludes that the relevant
geographic market for the sale of emergency lighting
systems is national, at least as far as the French market
is concerned.

— cable clips, i.e. the accessories used to fix cables;

— cable ties, i.e. the accessories used to bundle cables

together or onto a mounting;

— rigid conduits, i.e. tubing that carries and protects

cable;

— tube fixing accessories, for surface mounting.

B.4 FIXING AND CONNECTING EQUIPMENT

B.4.1 Definition of the fixing and connecting

equipment product market

(395) The product market defined by the parties comprises
fixing and connecting equipment used downstream of

(396) The parties consider that these products constitute one
and the same product market as they are all used in the
wiring infrastructure of an electrical
installation, from
the final panelboard up to connection with the wiring
accessories (sockets, switches, etc.). More specifically,
these products, used in all electrical
installations, are
designed to carry, protect and join cable used in
the
electrical
products are substitutable from the standpoint of supply
and involve the same basic moulding, extrusion, cutting
and machining techniques. They could be produced in a

installations (120). The parties add that

(118) Reply by the parties dated 10 July 2001 to question 31.
(119) See points 202-210 above.

(120) Reply by the parties to points 238 and 240 of the questionnaire

of 6 April 2001.

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6.4.2004

single operation using relatively inexpensive inputs (121).
The parties claim that, owing to the similarity of the
technologies required to manufacture the various fixing
and connecting products, companies already producing
certain products
could start manufacturing other
products (122).

quality and diversity of walls and partitions (concrete,
brick, masonry, dry partition walls, etc.). The parties
state, however, that some groups of countries, such as
the Nordic countries, have adopted similar dimensions.
France, however, does not impose any dimensions for
mounting and junction boxes (124).

(397) A precise definition of the product market for the sale
of fixing and connecting equipment is not required in
the proposed operation raises
the present case as
identical competition problems however
the relevant
market is defined.

National quality labels apply alongside international
standards to several categories of connecting and
fixing equipment

B.4.2 Definition of the geographic market for fixing

and connecting equipment

the market

(398) The parties have not adopted a clear position on the
for fixing and
geographic dimension of
connecting equipment. They state in Form CO that the
geographic dimension of the market ‘cannot be regarded
as purely national'. The factors described below, as well
in
as
connection with distribution boards (123), confirm on
the
is
national.

considerations outlined above

relevant product market

contrary that

general

the

the

(400) Quality

that

labels

several

relating

categories

a guarantee

of
to
connecting and fixing equipment exist in the different
EEA countries. National quality labels are granted by
independent national certification bodies and offer
consumers
the marked product
complies with the technical requirements defined by the
standards applicable to the products in question. The
technical
from a
European standard, directly or indirectly via a national
standard transposing at domestic level the international
standard, or from a national standard that is entirely
unrelated to any international standard. Although labels
are obtained on a
the parties
acknowledge that there is clear commercial advantage in
in certain countries, notably
obtaining such labels
France, Germany and Italy (125).

requirements may

voluntary basis,

stem either

(401) The parties have thus obtained quality labels for the

following products:

National specifications as well as international
standards apply to mounting and junction boxes

— for several types of flush-mounting boxes (126): OVE

(Austria) and CEBEC (Belgium);

(399) Mounting and junction boxes are covered by standard
IEC 60 670, which lays down the ‘general requirements
for enclosures for accessories for household and similar
installations'. The parties have pointed
fixed electrical
out, however, that the standard does not specify the
dimensions of the boxes in question. The dimensions
are in fact laid down by the national standards bodies,
which leads to national differences. The bodies specify
the dimensions for mounting and junction boxes on
different bases, usually according to the particularities of
the building industry in the Member State in question;
these include the type of building materials used, the

— for terminal strip: NF (France), KEMA (Netherlands),
VDE (Germany), IMQ (Italy), AENOR (Spain), CEBEC
(Belgium) (127);

— for

rigid conduit: NF USE (France), awarded by

LCIE (128).

(124) Reply by the parties dated 11 July 2001 to a request
information made by the Commission on 6 July 2001.
(125) Reply to point 246 of the questionnaire of 6 April 2001.
(126) Annex to the parties' reply to point 66 of the questionnaire of

for

(121) Reply by the parties to point 240 of the questionnaire of 6 April

6 April 2001.

2001.

(122) Reply by the parties to point 242 of the questionnaire of 6 April

2001.

(123) Points 202-210.

(127) Reply by the parties dated 20 July 2001 to a request
information made by the Commission on 3 July 2001.
(128) Reply by the parties dated 20 July 2001 to a request
information made by the Commission on 3 July 2001.

for

for

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The most widely sold fixing and connecting
equipment varies considerably from one Member
State to another

Rigid conduit

(402) Schneider states that, as regards fixing and connecting
the five most widely sold products differ
equipment,
from one
local
country
customs (129). In addition, the different entities of the
Schneider group present on the relevant market, such as
Alombard or Sarel, usually sell these products in only
one Member State. The comparisons given below
therefore essentially concern Legrand products.

another

owing

to

to

Flush-mounting boxes

(403) The parties state that the most widely sold models vary
considerably according to the Member State (130). The
data supplied by Legrand show that the five most widely
sold mounting boxes vary considerably from one
Member State to another and that it is unusual to find
one of the products on the list in more than three
Member States. Thus, the list supplied by Legrand of the
five most widely sold mounting boxes in eleven EEA
countries in 2000 (131) contains 37 models. Of these,
three appear in four countries (and none in more than
four countries) and three appear in three countries.

Equipped junction boxes

(404) The parties explain that equipped junction boxes are
used mainly in France and in only a few other Member
States (132). According
Legrand
to
document (133), it seems that in 2000, Legrand, which is
present on the market
for connecting and fixing
products in seven Member States, sold this product in
only four Member States, i.e. France, Germany, Austria
and Ireland (134).

internal

an

(405) The parties state that rigid conduit diameters vary from
one Member State to another. As a result, the diameters
of the accessories used to fix the conduit also vary from
one country to another. The parties add that in some
Member States metal conduits are used whilst PVC is
employed in others (135).

Cable ties

(406) The data supplied by Legrand show that the list of the
five most widely sold models of cable tie varies
significantly from one Member State to another, and
that items on that list are only rarely found in more
than three Member States. Thus the list supplied by
Legrand of the five most widely sold types of cable ties
in each of the 15 EEA countries (136) consists of 39
these, only two appear in four
different models. Of
countries (and none in more than four countries), whilst
six appear in two countries.

(407) The parties also explain that, as regards cable ties, a
particular category known as Colson cable ties is used
very much more widely in certain EEA countries,
than in others. The product has
especially France,
special weather- and tear-resistance qualities due to the
fact that it is made of a stronger but also much more
expensive plastic than that used for other cable ties. Its
extensive use in France is due to the fact that it was
adopted by EDF when the latter decided that the cost of
replacing broken clips over a wide geographical area
was prohibitive and unacceptable (137).

Significant price differences between Member
States

(129) ‘General comment' on the Annex to the reply from Schneider to

point 139 of the questionnaire of 6 April 2001.

(130) Reply by the parties to point 244 of the questionnaire of 6 April

2001.

(131) Legrand annex to point 139 of the questionnaire of 6 April 2001.
(132) Reply by the parties to point 244 of the questionnaire of 6 April

2001.

(408) For

each of

the main categories of

fixing and
connecting equipment,
the Commission asked the
parties to provide it with the average selling price of

(135) Reply by the parties to point 244 of the questionnaire of 6 April

2001.

(136) Annex to Legrand's reply to point 139 of the questionnaire of

(133) Annex to Legrand's reply to point 139 of the questionnaire of

6 June 2001.

6 June 2001.

(134) Legrand annex to point 193 of the questionnaire of 6 April 2001.

(137) Reply by the parties dated 25 June 2001 to a request
information made by the Commission on 21 June 2001.

for

L 101/62

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6.4.2004

each of the five most widely sold products in all the
Member States in which the products are sold (138).
Where the same products are among the five most
widely sold products in more than one country, their
prices differ significantly.

categories of fixing and connecting equipment. They are
therefore representative of those categories of products.

Flush-mounting boxes

(409)

In any event, the products in question generate a large
those
proportion of Legrand's sales within each of

(410) Table 21 below shows the selling prices,

in euros, of
each Legrand mounting box on the list of the five types
most widely sold in at least two Member States in 1999.

Catalogue number

DE

DK

BE

FR

GR

NL

PT

ES

UK

Table 21

[…]*
Average selling price
(Relative price: FR=100)

[…]*
Average selling price
(Relative price: DE=100)

[…]*
Average selling price
(Relative price: DE=100)

[…]*
Average selling price
(Relative price: DE=100)

[…]*
Average selling price
(Relative price: DK=100)

[…]*
Average selling price
(Relative price: BE=100)

[…]*
Average selling price
(Relative price: BE=100)

[…]*
Average selling price
(Relative price: DE=100)

(100)

**

**

**

(100)

(100)

(100)

***

(100)

**

(100)

(100)

***

***

(100)

*

**

***

***

**

**

**

*

*

*

Source: the parties.
[Non-confidential version: * = 0-50; ** = 50-100; *** = 100-150; etc.]*

(411) Apart

from product No […]*,

the price disparities
of
between Member
are
flush-mounting
particularly
between
neighbouring or nearby Member States alone shows
that:

States
box marketed

for most
by

types
Legrand

A comparison

significant.

— product No […]* sells at EUR […]* in […]* and

EUR […]* in […]*, a difference of [0-50]* %;

— product No […]* sells at EUR […]* in […]* and

EUR […]* in […]*, a difference of [0-50]* %;

(138) Annex to the parties' reply to point 245 of the questionnaire of

6 April 2001.

— product No […]* sells at EUR […]* in […]* and

EUR […]* in […]*, a difference of [0-50]* %;

6.4.2004

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— product No […]* sells at EUR […]* in […]* and
EUR […]* in […]*, a difference of [50-100]* %;

Cable ties

— product No […]* sells at EUR […]* in […]* and
EUR […]* in […]*, a difference of [50-100]* %.

(412) Table 22 shows the selling price in euros of each model
of Legrand cable tie among the five most widely sold
products in at least two Member States in 2000.

Table 22

Catalogue number

AT

BE

DE

DK

ES

***

GB

GR

IR

NL

PT

FR
=100

(100)

[…]*
Average selling price

[…]*
Average selling price

[…]*
Average selling price

[…]*
Average selling price

***

****

(100)

****

***

***

**

***

***

**

**

(100)

****

****

(100)

Source: the parties.
[Non-confidential version: * = 0-50; ** = 50-100; *** = 100-150; etc.]*

(413) The price differences between Member States as regards
most of the clips sold by Legrand are considerable. The
differences
just between neighbouring or nearby
countries alone are striking:

Equipped junction boxes

— product No […]* sells at EUR […]* in […]* and

EUR […]* in […]*, a difference of [0-50]* %;

— product No […]* sells at EUR […]* in […]*, […]* in
[…]* and EUR […]* in […]*, a difference of
[0-50]* %
[0-50]* % between […]*
between […]* and […]* and [0-50]* % between
[…]* and […]*;

and […]*,

referred to below were among the

(414) According to the data supplied by Legrand (139), it sold
junction boxes in four Member States in 2000. The
products
five
products most widely sold in those Member States in
generated
that
a
category of
considerable volume of
equipped junction boxes and are thus representative of
the category as a whole.

year. These products

therefore
in the

sales

(415)

In 2000, Legrand product No […]*,
sold at an average unit price of:

listed as a ‘[…]*'

— product No […]* sells at EUR […]* in […]* and

EUR […]* in […]*, a difference of [0-50]* %;

— [90-130]* EUR in France;

— product No […]* sells at EUR […]* in […]* and

EUR […]* in […]*, a difference of [0-50]* %;

— [290-330]* EUR in Austria;

— product No […]* (not shown in Table 20) sells at
EUR […]* in […]* and EUR […]* in […]*, a
difference of [0-50]* %.

(139) Annex to Legrand's reply to point 139 of the questionnaire of

6 April 2001.

— [340-380]* EUR in Ireland.

[…]*
Average selling price

[…]*
Average selling price

[…]*
Average selling price

[…]*
Average selling price

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6.4.2004

(416)

listed as a ‘[…]*'
In 2000, Legrand product No […]*,
sold at an average unit price of EUR […]* in […]*,
whereas in […]* in the same year it sold at an average
unit price of EUR […]*, a difference of [50-100]* %.

Cable guides

(417) Lastly, in 2000, Legrand product No […]*, listed as a
‘[…]*' sold at an average unit price of EUR […]* in
[…]*
a difference of
[250-300]* %.

and EUR […]*

in […]*,

Catalogue number
(price in EUR )

DE

AUT

*****

(418) Table 23 below shows the selling price in euros of each
type of Legrand cable guide on the five most widely
sold list in at least two Member States in 1999.

Table 23

BE

9*

8*

DK

ES

FR = 100

GR

(100)

(100)

FIN

11*

11*

****

*****

******

***

****

*****

******

7*

7*

(100)

******

11*

(100)

******

7*

Source: the parties.
[Non-confidential version: * = 0-50; ** = 50-100; *** = 100-150; etc.]*

(419) The price differences between Member States as regards
most of the clips sold by Legrand are considerable. The
differences
just between neighbouring countries are
striking:

No competitors other than the parties concerned
are present in more than one Member State and the
positions of the parties in the different Member
States are asymmetrical

— product No […]* sells at EUR […]* in […]*, […]* in
[…]* and EUR […]* in […]*, a difference of
[50-100]* % between […]* and […]*, [50-100]* %
between […]* and […]* and [300-350]* % between
[…]* and […]*;

— product No […]* sells at EUR […]* in […]* and
EUR […]* in […]*, a difference of [50-100]* %;

(420)

It seems that few companies operating on the market
for fixing and connecting equipment are present
in
several Member States. The documents submitted by the
parties (140) show that only Schneider and Legrand
market these products in more than one EEA country.
Schneider is present in six EEA countries (Denmark,
Finland, France, Italy, Sweden and Norway) and Legrand
in seven (Spain, France,
Ireland, Netherlands,
Portugal and the United Kingdom). The parties' chief
competitors, Hager, Siemens, ABB and Gewiss, are
present in only one Member State despite the fact that
at least the first three companies referred to are major
groups located in a number of EEA countries.

Italy,

— product No […]* sells at EUR […]* in […]* and
EUR […]* in […]*, a difference of [50-100]* %.

(140) Annex 16 to Form CO.

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(421) Furthermore,

the market

shares announced by the
parties (141) show very different positions in the various
EEA countries in which they are present. Schneider has
a market share of
[20-30]* % in France, but only
[0-10]* % in Italy. Similarly, it has a [60-70]* % share in
Norway but only [30-40]* % in Sweden. As for Legrand,
it has a market share of [50-60]* % in France but only
[10-20]* % in Italy and [10-20]* % in Spain. The parties
also report that ‘there is often competition from small
and medium-sized firms on the domestic market, which
often have considerable shares of the local market' for
fixing and connecting equipment (142).

control

and power part of

They supply the appropriate voltages and currents to
the
automation
equipment, which, for safety reasons, must be isolated
from the main supply and often requires different
supply voltages (e.g.
lower or direct current voltages)
from the mains supply.

the

Fixing and connecting equipment is distributed on a
national basis

(426) The parties state that transformers and power supplies
belong to the same product market as they are the
result of technological choices fulfilling the same need,
which is to supply electricity to automation products.
This claim, however, does not stand up to scrutiny.

(422) The parties

state that an average of 90 % of

the
fixing and connecting

turnover of manufacturers of
equipment stems from sales to wholesalers (143).

(423) As explained above, relations between manufacturers
and wholesalers of electric distribution equipment are
organised on a national basis, even in the case of
manufacturers and wholesalers operating at European
level. This
fixing and connecting
equipment, which is also distributed on a national basis.

is also true of

Conclusion

(424) The relevant geographic market for the sale of fixing
and connecting equipment is therefore national. In their
reply to the statement of objections, the parties did not
contest this conclusion.

B.5 TRANSFORMATION AND POWER SUPPLY EQUIPMENT

B.5.1 Product markets

(427) First,

transformers and power supplies have different
functions. The former are intended for alternating
current control circuits and modify voltage and isolate
the system from the main supply. The latter make it
possible to provide direct voltages. The parties also
stated in their reply to the statement of objections that
power supplies often display a much higher level of
sophistication and functionality (protection, fail safety,
high-performance control, etc.), which, they claim,
is
reflected in their higher price as compared with
transformers.

(428) Then the choice of automation device dictates

the
transformer or power supply. The parties
choice of
explained in the course of the investigation that the
choice of one or other
technology depends on an
upstream choice relating to the automation itself. Thus,
they claim, an automation/transformer combination and
an automation/power
supply combination can be
substituted for each other. According to the argument
put
transformers and power
supplies
for automation equipment are no longer
substitutable on the demand side once the automation
device has been chosen.

forward by the parties,

(425) Transformers

and power

are utilised in
low-voltage equipment for the control and automation
of machinery used in industrial processes and buildings.

supplies

(141) Annex 16 to Form CO.
(142) Reply by the parties dated 16 July 2001 to a request
information made by the Commission on 3 July 2001.

for

(143) Form CO, p. 102.

(429) Furthermore,

of

the

two

types

devices

product

are
explain that modern
complementary. The parties
automation
isolation
an
include
usually
transformer and electronic power supplies in order to
adjust and regulate voltage levels. The technologies
than compete
concerned thus
against each other.

complement

rather

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Official Journal of the European Union

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(430)

In their reply to the statement of objections, the parties
nevertheless maintain
between
that
transformers and/or power supplies remains wide open
from one use to another even after the automation
device has been chosen.

choice

the

(434) This assertion clearly implies that

the two types of
product are not substitutable on the demand side given
their characteristics and prices (146).

(431) However,

it

is

by

this

also

disproved

assertion not only contradicts

the
explanations provided by the parties in reply to requests
for information made by the Commission during the
investigation; (144)
the
information given in the Télémécanique (Schneider)
catalogue (145), which explains in detail, in the form of a
‘selection guide', the different functions of transformers,
filtered rectified power supplies and switch mode power
supplies, and the applications (for example in terms of
control
load
sensitivity) for which these types of product are suitable.
In their reply to the statement of objections, the parties
add other
reliability, maintenance
conditions or standardisation of the automation device
components, which may dictate the choice of either a
transformer or a power supply, or even a particular type
there is only very
follows that
of power supply.
limited supply-side substitutability between transformers
and power supplies.

environment, mains

such as

circuits,

factors,

supply,

It

(435) Transformers and power supplies are furthermore very
different from a technological standpoint. The parties
stated in the course of
the investigation that power
supplies are based on ‘programmable logic' technology
and consist mainly of electronic components (even
though in most cases they comprise a transformer).
Transformers are based on ‘hardwired logic' technology
consisting of electromechanical components and have
no electronic components (147). Transformer technology
has reached a stable plateau, whereas power supplies are
a product of constantly evolving technologies (148). A
competitor explained that
transformers and supply
equipment not only involve different production tools
but also different testing and checking equipment. That
is why
a
transformer manufacturer
considerable amount of time and money in order to
start manufacturing power supplies and vice versa (149).
There
substitutability
between the two products.

therefore no supply-side

expends

is

a

(432) The prices of transformers and power supplies differ
significantly. Of the Schneider products on the list of
the five products most widely sold in each of the EEA
countries, the average price of transformers varies from
to EUR [40-80]*
EUR [10-50]* (type […]* in […]*)
(type […]* in […]*), whereas the average price of power
supplies ranges from EUR [10-50]* (type […]* in […]*)
to EUR [480-520]*
in […]*). The
(type
corresponding prices charged by Legrand vary from
EUR [0-40]* (type […]* in […]*) to EUR [180-220]*
(type […]* in […]*) for transformers and from EUR
[40-80]* (type […]* in […]*) to EUR [400-440]* (type
[…]* in […]*) for power supplies.

[…]*

(436)

In response to this argument, the parties stated in their
reply to the statement of objections that there was a
wide range of
served either by
specific functions
transformers or by power supplies and that associating
transformers with certain ‘hardwired logic'
industrial
products and power supplies with other ‘programmable
logic' products was ‘simplistic'. The parties also take the
view that switching production from transformers to
power supplies and vice versa ‘does not give rise to any
difficulties', but they do not explain in detail the time
and cost involved.

(433)

In their reply to the statement of objections, the parties
claim that
the higher
these price differentials reflect
sophistication and functionality of power
level of
supplies in comparison with transformers.

(437) Such an assertion cannot

is

no

invalidate the finding that
between
there
transformers and power supplies. However wide the
possible range of power supply solutions,
is clear
from the information supplied both by the parties and

substitutability

supply-side

it

(146) Commission notice on the definition of relevant market for the

purposes of Community competition law, point 7.

(147) Reply of 19 March 2001 to point 25 of the questionnaire of

(144) Reply of 19 March 2001 to point 25 of the questionnaire of

14 March 2001.

14 March 2001.

(145) Catalogue for 1999, p. 366/367.

(148) Supplement to Form CO of 14 March 2001, p. 12.
(149) Polylux, reply dated 9 July 2001.

6.4.2004

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Official Journal of the European Union

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by the abovementioned third parties that all power
supply variants are based on a fundamentally different
technology from that of transformers.

B.5.2 Geographic market

(438) The parties also maintained that most of the market
players sold both transformers and power supplies. It
that, although a
should nevertheless be pointed out
considerable number of manufacturers
indeed
present in both segments, of all the competitors with a
market share of more than […]* % on the combined
supplies only
market
Siemens and Cecla are active in both segments, while
the others are present only in the power supplies
segment,
any actual
they do not
competitive pressure on the parties in the transformers
segment.

in transformers

and power

so that

exert

are

greater

supplies given the market
technical

(439) The parties also argue in their reply to the statement of
objections that the use of transformers is declining in
trend
favour of power
towards
the
increasing use of electronics. This trend, so they claim,
is forcing market players to switch production from
to rectified (electromechanical) power
transformers
(electromechanical)
rectified
supplies,
power
supplies and finally to stabilised (electronic)
power supplies.

sophistication and

then filtered

(440)

it

is not

to exert

likely, however,

supply depends on the prior

If such a trend indeed exists in the medium or long
sufficient
term,
competitive pressure on transformer manufacturers. As
explained earlier, the choice of either a transformer or a
power
choice of
automation device, so that the substitution described by
the parties can operate only in terms of the choice
between an automation/transformer solution and an
automation/power supply solution. Since an automation
device is not usually chosen exclusively with a view to
the type of access to the electricity source, it is unlikely
that
transformers
would suffice on its own to convert a sufficiently
large
an
automation/transformer solution into demand for an
automation/power supply solution. This is, moreover,
illustrated by the price variations noted above.

in the prices of

an increase

proportion

demand

the

for

of

(441) The Commission therefore concludes that transformers
separate

constitute

supplies

and electronic power
product markets.

(442)

In geographic terms, the parties claim that the market
has a European dimension. They state that transformers
international
and power supplies are standardised at
level
an
international presence on the basis of a standard
catalogue and a single brandname.

the main competitors have

that

and

(443) The law applicable to transformers and power supplies
is harmonised at European level. The relevant standards
for voltage transformers are the IEC 61558 series
standards and the EN standards in the same series. The
and
thermal
standards
mechanical
transformers with a
less than 1 000 volts and power
primary voltage of
supplies
Power
such
supplies are covered by IEC standard 60950 and the
equivalent European standard bearing the same number.
There are no relevant national standards.

safety aspects of

incorporating

transformers.

deal with

electrical,

the

commission

manufacturers

(444) At the request of a customer, transformer and power
supply
independent
laboratories to certify that their products conform to
the standards applicable. As the parties have pointed
out, all the laboratories recognised by the EEA countries
are able to carry out the necessary tests and deliver a
certificate of conformity with the standard. However,
the reputation of the laboratory and its recognition by
the market are decisive factors in the choice made. The
involved in
parties estimate the time and the cost
obtaining a certificate at
[1-18]* months and FRF
[50-250]* respectively. Although such costs cannot be
regarded as prohibitive, they do nevertheless constitute
a barrier to market entry between Member States that is
far from negligible, since certification has to be obtained
for each model separately and certificates have to be
renewed at regular intervals.

(445) Analysis of the prices quoted by the parties shows that
there are substantial variations from one Member State
to another. Table 24 below shows the selling price in
euros of each type of Schneider transformer and power
supply on the five most widely sold list in at least two
Member States.

L 101/68

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Official Journal of the European Union

6.4.2004

Product
(price in EUR )

Transformer […]* Average
selling price

Transformer […]* Average
selling price

Transformer […]* Average
selling price

Power supply […]* Average
selling price

Power supply […]* Average
selling price

Power supply […]* Average
selling price

Power supply […]* Average
selling price

Power supply […]* Average
selling price

Table 24

E

*

*

*

**

B

*

*

*

**

**

D

*

*

*

DK

**

*

*

**

**

I

*

*

**

**

F

*

*

*

**

***

**

**

***

NL

UK

*

*

*

*

***

S

*

*

*

11*

**

**

N

*

*

**

Source: the parties.
[Non-confidential version: * = 0-50; ** = 50-100; *** = 100-150; etc.]*

(446)

(447)

It is clear from such price differences that supply can
raise prices in some countries without running the risk
of customers importing the products from neighbouring
countries.

In their reply to the statement of objections, the parties
argue that the variations in Schneider prices do not
provide any guidance for the purpose of defining the
geographic market since they result from the fact that
Schneider decided not to develop a Europe-wide pricing
policy given the small quantities of products concerned
and the minimal turnover generated thereby. But, in the
absence of a group-level pricing policy, the prices set by

subsidiaries

competitive

in the different countries do
Schneider
reflect
countries
conditions
concerned. The price variations observed therefore
reflect competitive conditions that differ significantly
from one country to another (150).

the

in

(448)

It should likewise be noted that there are also price
in the case of
to a lesser extent,
variations, albeit
Legrand products. Table 24a below shows the prices of
the five most widely sold transformers in France which
are also on the five most widely sold list in at least one
other Member State.

Table 24 a

Product
(price in EUR )

[…]*

[…]*

[…]*

Source: the parties.

B

D

DK

E

F

I

L

NL

N

[0-20]*

[0-20]*

[20-30]*

[20-30]*

[20-30]*

[0-20]*

[30-40]*

[40-50]*

(150) Commission notice on the definition of relevant market for the

purposes of Community competition law, point 8.

6.4.2004

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Official Journal of the European Union

L 101/69

(449) According to the parties, 60 % of

supplies

transformers and
sold by them are distributed by
power
wholesalers organised at national
level. Schneider
estimates that in France, where the overlaps between the
parties are the greatest,
its sales to wholesalers reach
[70-80]* % for transformers and [70-80]* % for power
supplies.

manufacturers and their customers (original equipment
manufacturers, or OEMs) need to maintain a close
relationship. Since both transformer manufacturers and
OEMs are often small or medium-sized enterprises that
do not have a sales or purchasing network in more than
one country, the need to maintain such a relationship
limits
from
scope
manufacturers in other countries.

to source

customers

the

for

(450)

In their reply to the statement of objections, the parties
also mention the presence at
level of
manufacturers of different sizes, including major players
such as Omron, Siemens
also
numerous SMEs.

and Phoenix, but

international

(451) However, the presence of a player in several countries
does not necessarily mean that competitive conditions
are sufficiently uniform there. The data provided by the
parties in the course of the investigation suggest that
the different players vary
the market positions of
considerably from one country to another. For example,
Legrand's share of transformer and power supply sales
exceeds [0-20]* % only in France ([20-40]* %), Belgium
([0-20]* %), the Netherlands ([0-20]* %), Italy ([0-20]* %)
and the United Kingdom ([0-20]* %). Siemens' share
varies between [0-20]* % in the United Kingdom and
[20-40]* % in Germany;
the share held by Phoenix
ranges from [0-20]* % (Austria, Finland) to [20-40]* %
(Belgium).

(452) The parties also claim that

there are a great many
exports, although without quantifying the proportion of
imported products sold in a particular country. But the
fact that products are exported does not prevent the
extent of
if other factors
supply and demand are matched on a
show that
national basis, as in the case in point.

the market being national

(453) As for the claim made by the parties in their reply to
the statement of objections that the products sold were
often the same in different countries, it is sufficient to
note that the data supplied by the parties show that the
Legrand models sold in the different Member States vary
considerably. Of the five most widely sold models in
France, for example, only one figures on the five most
widely sold list in three other countries (including the
Benelux countries) and two are found in no other
Member State. It is also clear from the price variations
observed that customers do not seek to take advantage
of differences in prices to any appreciable extent.

(455) The Commission accordingly concludes that the markets

for transformers and power supplies are both national.

B.6 CONTROL AND SIGNALLING UNITS

B.6.1 Product market

(456) The parties define a product market consisting of
control and signalling units, i.e. mechanical connection
equipment designed to operate apparatus. The product
market as defined by the parties includes the following
categories of product:

— pushbuttons,

i.e. a control switch with a device
designed to be operated by a part of the human
body, usually a finger or the palm of the hand, and
equipped with a spring return;

— selector switches,

i.e. a combination of switching
elements of the push-button type activated manually
by turning;

— pressure buttons,

i.e. a pushbutton for use in
applications where a shallow depth is required; the
electrical connection is made by a printed circuit;

— pushbutton boxes,

i.e. metal or plastic (polyester)
pre-punched enclosures designed to accommodate
the operator/machine interface. The end product
constitutes a control panel;

(454)

It should be mentioned here that the parties state in
their reply to the statement of objections that there are
standard
customised products
transformer
catalogue

in addition to the

This means

range.

that

— pushbutton keypads,

i.e. mechanical

connecting
equipment
a
connection device. A keypad consists of three main
elements:

the operation of

controls

that

L 101/70

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Official Journal of the European Union

6.4.2004

— a set of keys;

— an

electronic
transmission unit;

data

processing

and

data

— a connection interface;

— membrane keypads, a special keypad technology.
The membrane is the part
in contact with the
operator, enabling the keypad to be customised to
the needs of the end user;

— cam switches,

i.e. a control switch operated by
angular rotation which modifies the connections of
one or more electrical circuits;

— rotational switch disconnectors,

i.e. a mechanical
connection device capable of establishing, carrying
and breaking
current under normal
operating conditions. It also satisfies the isolation
requirements for disconnectors;

electrical

— master controllers, i.e. operating devices controlled

by an angular positioning toggle switch;

— pilot lamps, i.e. a signalling device composed of a
coloured head (light) designed to inform the
operator about the status of the machine. It also
includes terminal connections in the lower section
which supply power. A pilot
lamp head can be
associated with a push button to form an
illuminated push button.

(457) The different

types of product described above are
available in several cable and fixing diameters: 12 mm,
16 mm, 22 mm and 30 mm, in accordance with the
laid down by the IEC and Cenelec (151).
standards
Historically, the 30 mm diameter appeared first and was
industry. This
particularly widely used in the steel
diameter gives a solid and strong product. Gradually, the
development of production techniques and customers'
desire to reduce the size of the equipment led to the

(151) IEC and EN standards 60947-5-1.

development of smaller diameters. The parties state (152)
that, at present, the 30 mm diameter is gradually being
replaced by the 22 mm diameter. The more fragile
16 mm and 22 mm diameters are chiefly used in
electronic equipment in protected environments. Thus
the 16mm diameter is, they claim, increasingly used for
the pushbutton keypads and membrane keypads referred
to above.

i.e.

for

they provide

fulfil
interface

they all
the

(458) The parties consider that these different products form a
the same
single product market as
the
purpose,
man-machine dialogue. More specifically, the products
are designed to be incorporated into the control panels
low-power motors or automation products (153).
of
According to the parties,
the products are largely
substitutable on the demand side. All control and
signalling units could thus be used equally or replace
reason why
each other
in the machinery. The
manufacturers use one rather
type of
product is, according to the parties, essentially linked to
the priorities of the end user in terms of aesthetics,
dimensions and customs (154). The parties add that the
products are substitutable on the supply side as they are
all electromechanical products. Only the most complex
membrane keypads require screen printing skills for
button production (155).

than another

(459)

In this present case an exact definition of the market for
control
is not necessary as,
irrespective of the definition of the relevant market, the
transaction raises identical problems of competition.

and signalling units

B.6.2 Geographic market

(460) The parties consider that the geographic dimension of
the market for control and signalling units is European
or even worldwide. They rely firstly on the fact that the
products are intended to be incorporated into industrial
machinery that is sold in an identical form throughout
the world. The export of industrial machinery is also
bringing about a narrowing of the range of control and
signalling units used to the 22 mm diameter category.
The parties
for a given function,
punchout diameter and technical characteristics, there is

explained that,

(152) Reply by the parties
15 March 2001.

to point 29 of

the questionnaire of

(153) Supplement to Form CO, p. 15.
(154) Reply by the parties to point 291 of the questionnaire of 6 April

2001.

(155) Reply by the parties to point 290 of the questionnaire of 6 April

2001.

6.4.2004

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Official Journal of the European Union

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only one product on the market in Europe, as evidenced
by the fact that the same reference number is used in
the product catalogues distributed in the different
Member States (156). The parties add that the products
completely harmonised European
are
features or
standards;
quality marks.

there are no specific national

covered by

(461) The following paragraphs conclude that the geographic

dimension of those markets is national.

The prices of control and signalling units are
substantially different from one Member State to
another

(462) Analysis of the prices quoted by the parties shows that
there are substantial variations from one Member State
to another. Thus the prices of
the five control and
signalling units most widely sold in each of the EEA
countries by Schneider vary considerably, as shown in
table below compiled from data supplied by
the
Schneider (157). The
five products belong to five
different categories of control and signalling units; they
may therefore be regarded as a representative sample of
control and signalling units generally.

Table 25

Product

Country with the highest price
Average price in that country in
1999 (EUR )

Country with the lowest price
Average price in that country in
1999 (EUR )

Price differential (%)

[…]*
(push button)

[…]*
(rotating button)

[…]*
(pilot light)

[…]*
(button enclosure)

[…]*
(switch)

Ireland
[*]*

Ireland
[*]*

United Kingdom
[*]*

Ireland
[***]*

Netherlands
[**]*

Belgium
[*]*

United Kingdom
[*]*

Italy
[*]*

Germany
[**]*

Belgium
[*]*

Source: the parties.
[Non-confidential version: * = 0-50; ** = 50-100; *** = 100-150; etc.]*

[*]*

[*]*

[**]*

[**]*

[**]*

(i)

as

EEA countries,

(463) Generally speaking, the data supplied by Schneider (158)
there are substantial price disparities
show that
between
as well
between
neighbouring countries, for the same product and that
(ii) although the disparities fluctuate sharply from one
year to the next, they are nonetheless significant overall
in the period in question. Thus the price disparity in
and Germany ranged from
1999 between France
[0-40]* % (for product […]*) to [20-60]* % (for product
[…]*).
the price disparity ranged from
[0-40]* % (for product […]*) to [10-50]* % (for product
the difference between France and
[…]*). Similarly,

In 1997,

(156) Reply by the parties to point 70 of the questionnaire of 29 June

2001.

(157) Schneider annex to the reply to point 33 of the questionnaire of

15 March 2001.

(158) Schneider annex to the reply to point 33 of the questionnaire of

15 March 2001.

Spain in 1999 ranged from [0-40]* % (for product […]*)
to [10-50]* % (for product […]*).
In 1997, the price
and Spain ranged from
disparity between France
[0-40]* % (for product […]*) to [20-60]* % (for product
[…]*).

(464)

It is also interesting to note that the price disparities
increased in the period in question between other
neighbouring countries. Thus between Germany and
Belgium the price difference in 1999 ranged from
[0-30]* % (for product […]*) to [30-60]* % (for product
[…]*).
the price difference ranged from
[0-30]* % (for product […]*) to [10-40]* % (for product
[…]*).

In 1997,

(465) An identical conclusion can be drawn from an analysis
of the prices for control and signalling units sold in the

L 101/72

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Official Journal of the European Union

6.4.2004

period 1995-2000 in various EEA countries by Baco, a
Legrand subsidiary.

prices for control and signalling units quoted by the
parties are
exclusive of any
therefore net prices,
discounts and volume rebates, and are comparable.

(466)

fluctuate sharply,

considerable overall

ranged from [30-60]* % (with Belgium)

In general, the data supplied by Legrand (159) show that
(i) there are substantial price differences between EEA
countries, even between neighbouring ones, and that (ii)
they are
although the differences
nonetheless
in the period in
question. Thus in 2000 the price differences between
France and its neighbours (Germany, Belgium, Italy and
Spain)
to
[50-80]* % (with Italy). In 1995, the differences ranged
from [30-60]* % (with Belgium)
to [60-90]* % (with
Italy). It is also interesting to note that the differences
between certain neighbouring countries increased over
the period. Thus the price disparity between Spain and
Portugal rose from [0-30]* % in 1995 to [10-40]* % in
2000. Similarly, the price disparity between Germany
and Austria rose from [0-30]* % in 1995 to [0-30]* %
in 2000.

(467) The prices for control and signalling units marketed by
the parties
thus vary substantially from one EEA
country to another. The parties have not provided any
information indicating the contrary as regards their
competitors.

(468)

In their reply to the statement of objections (160), the
parties claimed that the above price differences between
Member States for control and signalling units sold by
them were not relevant because some of
the prices
incorporated the trade discounts
they offered their
customers (they were ‘net' prices) while others did not
(they were ‘gross' prices); the prices were therefore not
comparable.

(469)

by

33

the

point

questionnaire

It should first be pointed out here that the parties were
of
of
invited,
20 March 2001, to supply the ‘invoiced prices' for each
the categories of control and signalling unit they
of
market
the EEA member countries. The
parties also stated in their reply to that point in the
questionnaire that the prices quoted to the Commission
(Schneider) (161) and
were the ‘average prices charged'
(Legrand) (162). The selling
the ‘average selling prices'

in each of

(470) The parties also argue (163)

in their view,

that differences

their sales in each of

in the
the categories of
volumes of
control and signalling unit provide objective justification
for differences in prices. This argument
is implicitly
based on the idea that the amount of discounts and
volume rebates they grant on each of their sales differs
from one Member State to another and that
this
explains,
the differences observed in
average selling prices. It is sufficient to note here that
the parties have not supplied any evidence establishing
that the average level of their sales volumes per deal
differs from one Member State to another. In particular,
the parties have not proven that customers exist
in
certain Member States who generate
sales
volumes than in other Member States and that, through
the application of discounts and volume rebates, the
average net selling price of the products in question is
lower there. If that were the case, it would in any event
constitute a further
important piece of evidence in
favour of defining the relevant market on a national
basis.

larger

(471) Lastly,

sell only

small quantities

the parties argue that no conclusion can be
drawn from the differences in Baco's and Legrand's
selling prices between Member States since those two
companies
and almost
exclusively in France. The differences observed in the
prices charged by Schneider,
the undisputed market
leader in control and signalling units in the EEA, with a
market share of [20-30]* % and a presence in each of
the Member States, constitute particularly conclusive
there are significant price
evidence for finding that
differentials between Member
Furthermore,
although Legrand holds a significant market share only
in France,
it does market the products in question in
eight Member States. The fact that Legrand does not
have a Europe-wide pricing strategy, as pointed out by
objective
the
justification for the above differences in selling prices,
constitutes further evidence that the prices of control
and signalling units are set at national level.

from providing

parties (164),

States.

far

(159) Legrand annex to the reply to points 12, 3 and 40 of

the

questionnaire of 15 March 2001.

(160) Point 774.
(161) Reply by Schneider to point 33 of the questionnaire of 20 March

2001.

(472) The prices of control and signalling units are therefore
to

from one Member State

substantially different
another

(162) Page 1 of the Baco document attached to the reply by Legrand to
points 12, 34 and 40 of the questionnaire of 20 March 2001.

(163) Reply to the statement of objections, point 776.
(164) Reply to the statement of objections, point 777.

6.4.2004

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The position of manufacturers of control and signalling units varies substantially according to the Member State

(473) Table 26 below, provided by the parties, shows the position of the major manufacturers of control and signalling units in the

EEA countries in 2000.

Table 26

Schneider

Legrand

Siemens

Moeller

K&N

Rockwell

EAO

ABB

Other

Austria

[10-20]* %

[0-10]* %

[10-20]* %

[10-20]* %

[10-20]* %

[0-10]* %

[0-10]* %

[0-10]* %

Belgium

[20-30]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

Germany

[0-10]* %

[0-10]* %

[10-20]* %

[10-20]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

RAFI
[0-10]* %

RAFI
[0-10]* %
Hoffman
[0-10]* %

Denmark

[30-40]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

Spain

[30-40]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* % GE[0-10]* %

France

[50-60]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

Entrelec
[0-10]* %

Finland

[20-30]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

Greece

[10-20]* %

[0-10]* %

[10-20]* %

[10-20]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

Italy

[20-30]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* % GE[0-10]* %

Ireland

[10-20]* %

[0-10]* %

[10-20]* %

[10-20]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

Netherlands

[10-20]* %

[0-10]* %

[0-10]* %

[10-20]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

Portugal

[30-40]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

United
Kingdom

[30-40]* %

[0-10]* %

[0-10]* %

[10-20]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

Sweden

[20-30]* %

[0-10]* %

[0-10]* %

[0-10]* %

[10-20]* %

[0-10]* %

[0-10]* %

[0-10]* %

Norway

[20-30]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

Total EEA

[20-30]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

Source: the parties.

(474)

It is clear from the table above that the positions of the
manufacturers vary considerably from one Member
State to another. In general, it seems that each producer
has a significantly larger market share in one Member
State and that its position in the other Member States,
even neighbouring ones,
is (i) much weaker and (ii)
fluctuates widely. Thus Schneider's share of the French
in the neighbouring
market

is [50-60]* %, whereas

countries its share is [20-30]* % in Spain, [20-30]* % in
[20-30]* % in Italy and only [0-10]* % in
Belgium,
its share of the market is
Germany. As for Legrand,
significant only in France ([0-10]* %) and it
is not
present at all in the neighbouring countries, including
Italy, despite its particularly strong presence on other
product markets. Again, Siemens and Moeller, with
[10-20]* % and [10-20]* % respectively of the German

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6.4.2004

those

shares

in Belgium
market, have only half
([0-10]* % and [0-10]* % respectively), and a very minor
share of the French market ([0-10]* % and [0-10]* %
respectively). Kraus & Naimer, which leads the market in
Austria with a [10-20]* % share, has a much smaller
share of the German market ([0-10]* %). The same is
true of Rockwell ([0-10]* % in Austria and [0-10]* % in
Germany). Most of the other firms operating on the
market (EAO, ABB, GE, RAFI, Hoffman, Entrelec) have a
market share in excess of [0-10]* % in one country but
are only marginally or not at all present in the other
countries.

can be

turnover

all of
It

(478) According to an internal Legrand document, however,
whilst Baco achieves [40-50]* % of its sales of control
and signalling units through wholesalers, such sales
account
in those
Legrand's
for
products (168).
seen from a Schneider
document that Mafelec generates most of its turnover
through direct sales whereas [60-70]* % of non-Mafelec
Schneider products are sold via wholesalers (169).
It
should be pointed out here that Schneider has an EEA
market share of around [20-30]* % and as such is the
It can therefore be
foremost player on that market.
concluded that sales to wholesalers account for a large
share of the market in control and signalling units, a
share that can be estimated at around [50-60]* %
according to the manufacturers concerned.

(475)

In their reply to the statement of objections (165), the
parties argued that the above variations in the market
shares of the main competitors were the result either of
historical factors or of the fact that, since control and
signalling units were low-value items, the market players
were active only in those geographical areas where their
presence required little commercial effort. They also
stressed the fact that six competitors were present in
more than ten EEA member countries.

(479) As already stated, the commercial relationships between
wholesalers of electrical equipment and manufacturers is
organised on a national or even regional basis, even in
the case of manufacturers and wholesalers operating at
European level. This finding is also true of control and
signalling units. As a result, a substantial proportion of
these products is organised on a
the distribution of
national basis.

(480)

In their reply to the statement of objections (170), the
parties argued that, given the scale of direct sales by
manufacturers to end customers, notably manufacturers
of industrial machinery, the fact that distribution was
organised on a national basis did not suffice to establish
that the relevant product market was national in extent.

(476)

In any event, the finding that the positions of the main
players on the market in control and signalling units
vary considerably from one Member State to another is
not challenged by the parties (166).

relationships

(481) The fact that half the sales of control and signalling
units in the EEA are achieved through wholesalers and
that
and
the
manufacturers
are organised on a national basis
nevertheless constitutes an important piece of evidence
in favour of defining the relevant product market as
national. This situation explains, at
the
above price differentials and variations in market share.

between wholesalers

least partly,

Control and signalling units are distributed largely
on a national basis

Barriers to entry

(477) The parties explained that the manufacturers sold their
to the usual electrical
to mechanical
direct
to
breakdown of

control and signalling units
equipment wholesalers
and
engineering companies (167). They failed, however,
information on the
provide
manufacturers' sales between the two outlets.

any

(165) Point 784.
(166) Reply to the statement of objections, point 783.
(167) Supplement to Form CO, p. 17.

(482)

In their reply to the statement of objections (171), the
forward numerous arguments aimed at
parties put
demonstrating that there were no barriers to entering

(168) Medium-term plan 2001-2005 France Baco, p. 20. Document
supplied in response to point 113 of the questionnaire of 29 June
2001.
(169) Record of

the Acquisitions Committee of
17 October 1997, page 6. Document supplied in response to
point 113 of the questionnaire of 29 June 2001.

the meeting of

(170) Point 786.
(171) Points 788 and 789.

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the market in control and signalling units. In the main,
they stress product standardisation, the harmonisation
of product standards within the EEA, the absence of
national quality labels and national installation or usage
habits, the fact that the main manufacturers organise
production at European level, the low level of transport
costs,
the 22 mm punchout
diameter, and the existence of several brands that are
used worldwide.

the generalisation of

(483) First,

the existence of

substantial price differentials
between Member States and the unevenness of
the
players' market shares as noted above are two decisive
factors which, from a factual standpoint, refute or at
least severely limit the validity of the parties' claim that
barriers to entering the market in control and signalling
units are not significant.

(484) The Commission's investigation has thus revealed that
there are three types of barriers to entry to the market
in control and signalling units. Access to distribution
channels constitutes an initial barrier to entry, since
around half the sales of these products in the EEA are
made via wholesalers. Wholesalers' tendency to reduce
the number of brands they distribute for each category
of electrical equipment, as revealed by the Commission's
investigation, also tends to increase barriers to entry.
is
Significantly,
repeatedly
internal
in
document (172) as one of the key factors in achieving
success on the market.

access
presented

distribution

channels

Legrand

to

a

moreover recognised by the parties (175), who state that,
given the low value of the products, manufacturers are
active only in those geographical areas where their
presence requires little commercial effort. This trend is
furthermore exacerbated by the small size of many
the eight
manufacturers:
leading players, and the only ones identified by the
parties, hold an aggregate market share of [50-60]* %;
in Finland, the seven leading players, and the only ones
identified by the parties, hold an aggregate share of
[50-60]* % of the market.

for example,

in Germany,

(486) A third barrier to entry derives from the fact that a
large proportion of control and signalling units are not
standard products but specific items made according to
specifications drawn up by manufacturers of industrial
machinery. The parties state that for these specific items
a ‘close relationship between producer and user' needs
to
and
production (176). The parties have also added that this
close
involve
geographic proximity. The fact remains that the sale of
also requires
specific
investments in establishing this close relationship and
that such investments constitute a barrier
to entry,
particularly for the smallest manufacturers.

control and signalling units

development

relationship

established

necessarily

design,

does

not

for

be

(487) The Commission therefore concludes that the relevant
geographic market for the sale of control and signalling
units is national.

C. ANALYSIS OF THE TRANSACTION

C.1 MARKETS IN ELECTRICAL SWITCHBOARDS

(485) A second major barrier to entry is formed by the need
for a thorough knowledge of
the other marketing
channel for the products concerned, namely direct sales
to manufacturers of
industrial machinery, or original
equipment manufacturers (OEMs). A Legrand internal
document (173) thus states several times that a thorough
knowledge of ‘OEM markets' is one of the key factors
for success. The OEM market is made up of a large
number of SMEs, as demonstrated by the list of the
parties' main customers (174), so that heavy investments
need to be made in order to penetrate it. This fact is

(172) Medium-term plan 2001-2005 Baco France, pp. 34, 39, 41 and
43. Annex 4 supplied in reply to point 113 of the questionnaire
of 29 June 2001.

(173) Medium-term plan 2001-2005 Baco France, pp. 34, 39, 41 and
43. Annex 4 supplied in reply to point 113 of the questionnaire
of 29 June 2001.

(174) Annexes supplied by the parties in response to point 69 of the

C.1.1 Principal characteristics of competition in the

relevant markets

(488) The following diagram, taken from a report by Crédit
Suisse First Boston (177), summarises the characteristics
of competition in the relevant markets. The following
paragraphs expand on the main reasons behind this
description of the way the market operates. The analysis
applies mutatis mutandis to the other product markets

(175) Reply to the statement of objections, point 784.
(176) Supplement

to Form CO and reply to point 30 of

the

questionnaire of 20 March 2001.

(177) Crédit Suisse First Boston report on Legrand (11 September

questionnaire of 29 June 2001.

2000).

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6.4.2004

affected by the notified transaction, subject to specific
considerations which will be pointed out in the sections
on the products in question.

installers
could rapidly lose the trust of its traditional
and panel builders, and it would be difficult to win
them back.

Customer loyalty

(489) As

summed up in the Crédit Suisse First Boston
report (178), ‘electricians are extremely loyal to a brand.
They generally work for several years with the same
supplier and the same brand, and sometimes stay with
the same supplier for their entire career. There are two
reasons for this. First, there is an element of familiarity:
once they are used to a product
(brand, ease of
installation), it is very difficult to get them to change,
even if
they are offered lower prices. Second, an
inappropriate choice of equipment could render them
liable (once they trust the safety of products they usually
buy, they are not inclined to try cheaper brands).'

(493)

(490) Legrand also states that ‘the familiarity and trust which
electricians and project managers have in relation to
Legrand products is a key factor in maintaining and
improving the company's competitive position.
[…]*
Repeated use of Legrand products by electricians and
project managers strengthens Legrand's position and
represents an important competitive advantage (179).'

availability of products

(491) The investigation carried out by the Commission and
the data provided by the parties confirm that installers
and panel builders show a clear loyalty to their habitual
brand. However,
the Commission's investigation also
shows that this loyalty is not absolute. It is apparent
that,
for installers and panel builders, the safety and
imperative
immediate
requirements, which take precedence over the brand in
their choice of equipment. This means that, as long as a
brand guarantees satisfactory quality and availability, it
will continue to enjoy the strong loyalty of its habitual
for
It would therefore not be
customers.
competitors to win over
these customers, even by
offering them superior products and/or lower prices.
However,
the essential
requirements of installers and panel builders, or if it no
it
longer compared favourably with its competitors,

if a brand ceased to meet

easy

are

(492) The Commission's investigation also shows that

by

this

trying
often

are
loyalty,

to cultivate
keeping

the
and
main manufacturers
close
strengthen
for example by offering tools
commercial contact,
(computer software in particular)
for designing and
costing the electrical installation using the products they
their
manufacture, by facilitating the
products, by providing training sessions for installers,
etc.
relations
investments in fact often account for a significant share
of
sometimes as high as
[10-30]* % of national sales.

the turnover of brands,

assembly of

commercial

customer

These

and

that

the Commission attributes

In their reply to the statement of objections, the parties
argue that the Commission overestimates brand loyalty,
sector. They claim in
chiefly in the switchboards
to those
particular
markets
features which are more characteristic of
installation accessories and concludes that brand loyalty
is ‘almost absolute', whereas such loyalty exists, in their
view, only to a small extent. The parties maintain, on
the basis of the findings of the study carried out by the
consultancy NERA, that brand loyalty is relatively weak.

(494) The Commission denies that

it

that

that brand loyalty increases

found loyalty to be
‘almost absolute'. It is precisely the relative nature of
justify the
loyalty and the need to maintain it
considerable customer relations efforts made by the
manufacturers and highlighted by the Commission in
the statement of objections. In short, the Commission
maintains
the cost of
winning over new customers and therefore constitutes a
It also raises customers'
significant barrier
tolerance of
slightly
higher prices than the average offered by the other
players and therefore holds back the expansion or
decline of established brands in a given market. But,
given the relative nature of loyalty as stressed by the
parties, it does not allow an established player to hold
on to its positions beyond the point where its products'
technical performance and price characteristics lag too
far behind those of the other brands present on the
market.

slightly lower performance or

to entry.

(178) Crédit Suisse First Boston report on Legrand (11 September

2000).

(179) Legrand, Form 20-F SEC.

(495) The parties' view that brand loyalty is weak is
contradicted by the Commission's investigation, which
there is significant brand loyalty,
demonstrates that

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loyal

sector. Such loyalty
including in the switchboards
furthermore corresponds
to the opinion repeatedly
expressed by the parties, initially in Form CO (‘installers
are in general
to a brand and purchase the
complete kit from a single manufacturer, for reasons of
the matching in
ease of assembly of
appearance of
the
apparatus and confidence in the technical quality of a
manufacturer' (180))
to
subsequent questionnaires (‘Schneider and Legrand sell
via
[final
wholesalers. Installers are generally loyal to the brand
which they are in the habit of using' (181)).

the functioning of

the products,

panelboards]*

the board,

and later

in their

electrical

installers

replies

to

(496) The Commission also takes the view that, compared
with the outcome of the investigation, the findings of
the NERA study are insufficient to call into question the
existence of significant brand loyalty: NERA relies on
the existence of considerable promotional efforts in
order
strong price
there
that
competition between manufacturers.

to demonstrate

is

(497) The Commission notes, however,

the discounts
offered by manufacturers are often substantial (between
[10 and 30]* %). This suggests that the cost of winning
over new customers (and therefore loyalty) is likewise
substantial.

that

degree of loyalty has no repercussions on the analysis of
dominant positions: as mentioned earlier, the only effect
of
loyalty is to raise the cost of winning over new
customers and to slow the decline of a less competitive
brand. However, as will be explained later, the reasons
why the transaction would create a dominant position
have to do among other things with the fact that the
merged entity would become an indispensable supplier
and would be able to strengthen its existing positions
and weaken its competitors by redeploying its brands
and through its privileged relations with wholesalers. A
lower
loyalty would lessen the ability of
competitors to withstand competition from the merged
entity in the long run and would therefore be liable to
speed up or exacerbate the effects of the transaction.

level of

Importance of brands

(500) The

above

remarks

other major
explain
characteristics of the sector: the importance of brands
and the search for product ranges which are as wide as
possible.

two

(498) Neither does the study carried out by NERA enable
brand loyalty to be evaluated since, although it points to
strong growth in sales of the items concerned during
it does not show to what extent such
special offers,
increased sales have been won over
from other
manufacturers. Growth in sales of items on special offer
could thus be explained simply by a process of
stockpiling on the part of wholesalers (or installers loyal
to the brand purchasing the products cheaply for use at
a later stage) or by the switching of purchases from
other models produced by the same manufacturer (the
extra sales of the item on special offer being achieved at
the expense of sales of other comparable items not
promoted). These two explanations are in fact largely
[…]*. This
suggested by the figures used by NERA:
would therefore indicate the existence of very strong
brand loyalty.

(499) To sum up, the Commission therefore maintains that, in
line with the outcome of
there is
significant brand loyalty for the switchboards concerned
the
It stresses that,
by its objections.

the investigation,

in any event,

(180) Form CO, p. 54.
(181) Replies to the Article 11 questionnaire of 28 February 2001,

p. 11.

(501) The main manufacturers sell their products under one
or more brands, depending on the country and the type
of equipment concerned. The parties thus each have a
total of over a dozen brands, covering different product
areas and with different geographic scope. These brands
are shown in Annex 2.

(502) The outcome of the Commission's investigation shows
that brands are one of the main factors in competition
among manufacturers. As the parties recognise (182), the
brand is something of a guarantee for all the rest. This
may be explained by the criteria on which small and
installers and panel builders
medium-sized specifiers,
It is the brands which serve as a
base their choices.
vehicle for the relationship between manufacturers and
their customers, because it is the brands which assure
customers that each product will provide the guarantees
(of safety, ease of placing, etc.) they are accustomed to
find.

(503) The relative attractiveness of brands is the result of
commercial groundwork and promotional and customer
relations investment and R&D work carried out by

(182) Reply to questionnaire of 29 June 2001 (point 106).

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manufacturers vis-à-vis installers. The importance of
brands can therefore also be seen in the amount of this
expenditure, which can represent up to [10-30]* % of
annual sales for commercial
investment and up to
[0-20]* % of annual sales for R&D. As the internal
documents of the parties confirm, this probably explains
the proliferation and the maintenance of brands held by
the parties, since the removal of a trade name could
destroy the
established with
installers and lose the advantage of past customer
relations investment.

relationship of

trust

for distribution boards,

(504) The importance attached to brands can obviously vary
from one sector to another and from one manufacturer
to another. Their role is thus much more marked for
equipment chosen by small and medium-sized installers
and panel builders (i.e.
final
panelboards or electrical equipment downstream of final
panelboards), who are generally loyal to one brand, than
for other equipment (in particular main switchboards)
specified by project managers and supplied by large
panel builders. In the same way, manufacturers will also
invest more or less in their brands depending on the
sold and on their positioning
type of equipment
(focusing on residential or commercial applications, or
else oriented towards industrial projects).

(505) This being so,

to entry or

the Commission's
the outcome of
investigation shows that the brand is still one of the
main factors in the choices made by installers. It should
also be noted that the importance of brands constitutes
to diversification,
a significant barrier
because installers usually choose only the products of
the most well-known and widely distributed brands, and
therefore avoid the products of manufacturers they do
not know. As Legrand states (183),
‘manufacturers who
do not have sufficient reputation to supply a wide range
of quality products in the long term face significant
disadvantages, because of the reluctance on the part of
electricians and contractors to try out new products of
unknown reliability'.

(506) This lack of demand would also penalise new entrants in
their relations with wholesalers, who would tend not to
such as
list new products. Some manufacturers,
Moeller (184), have
to
wholesalers would not be possible without a recognised

indicated that

access

thus

(183) Legrand, Form 20-F SEC.
(184) Moeller, reply to phase I questionnaire.

The

reluctance

stock
brand.
little-known products further exacerbates the difficulties
of new entrants, as it reduces the availability of their
products and therefore their appeal to installers.

of wholesalers

to

(507) The Commission's investigation also shows that

the

range of products offered by

the
extent of
a
manufacturer constitutes another important factor for
success. This is also confirmed by the parties, who say
that (i) in order to be credible in distribution boards and
final panelboards, it is necessary to offer the full range
of parts (cabinets, fuses, circuit breakers, earth leakage
protection and control devices, etc.) for the boards, and
(ii) in installation accessories, manufacturers must have
complete product ranges. The large manufacturers (such
as Schneider, Legrand, ABB, Siemens and GE) thus each
offer over 2 000 product listings for components for
and over 5 000
for
distribution boards
panelboards.
product
components
catalogues
equipment
large manufacturers
downstream of final panelboards and related equipment
also contain several thousand listings.

The
of

listings

final

of

of

(508) The replies from competitors and wholesalers suggest
that manufacturers are anxious to extend their product
range for several reasons. Firstly, they are responding to
the demands of wholesalers, who wish to reduce the
number of suppliers, or at least favour manufacturers
with a very large catalogue of products in order to
optimise their costs. Secondly, an extended product
to spread more widely
range makes
manufacturers' costs on logistics (guaranteeing product
availability and minimising delivery times), promotional
or customer relations investment (training of installers,
trade fairs, etc.), uniform appearance, R&D and so on.

it possible

(509)

In the field of electrical switchboards,
the absolute
necessity of a complete range is also explained by the
in order to be able to be adapted to each
fact that,
specific installation,
the boards must satisfy a large
number of configurations. Manufacturers must therefore
offer a complete range of components (in terms of
performance, type, etc.). Even more in the case of main
components
and distribution boards,
switchboards
offered by a given manufacturer cannot always be
adapted or assembled easily on the boards of
its
competitors. Given the specific characteristics of each
brand (in terms of performance, assembly techniques,
it would be costly for panel builders and
size, etc.),

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to

invest

in
installers
manufacturers whose products do not allow them to
meet all their requirements.

training

time,

etc.)

(in

(510)

also

constitutes

In the same way as brands, this need for a wide product
range
and
a
diversification for manufacturers, as they would have to
supply their customers with a huge catalogue of
products instantly.

barrier

entry

to

Barriers to entry

(511) A new entrant to the relevant markets would have to
from scratch to create demand, gain access to
existing

pressure

resist

and

the

of

start
wholesalers
competitors.

it would
intended to branch into final panelboards),
have to carry out
to adapt or extend
investment
production tools and would not really be ready to enter
for some years.

(515) The Commission's investigation confirms that the entry
of a foreign supplier is not conceivable. In this case, the
barriers to entry are not so much on the production
side as on the demand side. As explained above, the
the new entrant would be to create
difficulty for
demand in the country and to obtain sufficient access to
wholesalers. In practice, according to the parties, a new
entrant usually begins by selling direct to panel builders
in order to create demand which enables it then to offer
its products to wholesalers, who gradually take them on.
This pattern means that such a way of entering the
market could not work for final panelboards, as these
products are basically chosen by installers loyal to their
existing brand,
availability of
requiring immediate
products (and therefore prior access to wholesalers).
This shows that, even in final panelboards, a potential
new entrant would not be in a position to exercise
significant competitive pressure for many years.

(512)

In addition to these obstacles, new entrants would have
to face a number of specific barriers. First, it seems that
a new entrant must offer a complete range of products
if it is to hope to gain the trust of a few installers and
panel builders, and even think of gaining access to
wholesalers.

(513)

In these circumstances, a new entry could only be made
by a supplier who was already established in the
country
in
distribution boards or final panelboards, or by a foreign
manufacturer with a complete range of components for
distribution boards or final panelboards.

in question and wished to diversify

(516)

(514) The Commission's investigation also shows that the first
possibility is not viable. For example, the data provided
by the parties show that in order to produce miniature
circuit breakers
circuit breakers or moulded case
competitively, an investment of
the order of EUR
[20-50]* million and a lead time of [one to five]* years
would be necessary. The difficulties seem to be even
greater in distribution boards, because of their more
technical nature. Schneider says that the preparation of
its latest moulded case circuit breaker cost around EUR
[400 - 1 200]* million in research and industrial
groundwork expenses. Even supposing that the potential
entrant already had activities in neighbouring markets
(for example if it were active in distribution boards and

the

recent

into the

entry of Gewiss

to its already well established positions

In their reply to the statement of objections, the parties
quote
final
panelboards market as a counterexample with a view to
refuting the above analysis. The Commission considers
that that example does not call into question the scale
of barriers to entry: for one thing, Gewiss expanded
thanks
in
installation accessories in Italy. Starting from an existing
customer base, and already having an extensive network
of relations with wholesalers, it therefore did not have
to overcome the bulk of the abovedescribed barriers to
entry and had the best imaginable assets for entering
the electrical switchboards market. It was also able to
free itself from design and production constraints by
sourcing certain components (notably circuit breakers)
from ABB. But despite this privileged position, Gewiss
has not accounted for more than [0-10]* % of sales of
miniature circuit breakers for distribution boards or
therefore
in Italy. This
final panelboards
confirms that, even for well established competitors, it is
substantial competitive pressure
impossible to exert
until many years have passed. The
the
in a less favourable
difficulties awaiting an entrant
position can be inferred from this.

scale of

example

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Poor price sensitivity of demand

therefore in no way affect the Commission's analysis
concerning the total elasticity of the market.

the commercial

(517) As stated in the Crédit Suisse First Boston report (185),
and as the internal documents of
the parties bear
out (186), the demand for electrical equipment depends
mainly on construction or
in
renovation projects
sector and the residential
industry,
sector. The decision to launch such projects is not
influenced by the price of electrical equipment. For one
thing, electrical
installations often only account for a
moderate share of the overall cost of the project (given
the costs of masonry, painting, plumbing, etc.). For
thing, electrical equipment often represents
another
only 20 % of
the installation (the
remaining 80 % being mainly labour costs). An overall
increase in the price of electrical equipment would
therefore have little or no effect on the demand for such
equipment.

the total costs of

(520) Neither can the Commission agree with the conclusions
drawn by the parties from the NERA study. As indicated
earlier, the fact that special offers lead to a temporary
increase in sales of the items concerned does not prove
that such sales are won over from competitors. As
stated in points 496 and 497 above, other explanations
are possible and even likely, such as a process of
stockpiling or the switching of purchases from other
models produced by the same manufacturer. The data
produced
enable
cross-elasticity between manufacturers to be estimated.

by NERA do

therefore

not

C.1.2 As a result of the merger Schneider and Legrand
would become a key player in the relevant
markets

(518)

In their reply to the statement of objections, the parties
the price sensitivity of
challenge the finding that
demand is poor. They base their argument on the
findings of the study carried out by NERA, which show
that the launch of a special offer on a given item leads
to an increase in sales of that item (at least for the
duration of the special offer).

Market shares indicating dominance

Method

an

the

the

the

extent

extent

reflects

elasticity

to which

(519) The Commission cannot endorse that analysis. It notes,
in the first place, that the parties are confusing market
elasticity (which describes
to which a
hypothetical monopolist could profitably raise prices)
(which
with cross-elasticity between manufacturers
describes
individual
manufacturer is subject to competitive pressure from
another individual manufacturer). These two elasticities
measure different types of competitive pressure: total
market
competitive pressure
exerted on all the products in the market by products
outside the market, whereas cross-elasticity measures the
pressure exerted on a product in the market by another
product in the same market. To take an example, the
market elasticity of circuit breakers measures the share
of circuit breakers that would no longer be bought if
their price were to rise by 1 %. On the other hand, the
cross-elasticity
B
measures the share of sales that would be lost by A if
the price of B's circuit breakers were to fall by 1 %. In
markets where products are differentiated, as is the case
here,
is quite possible for total elasticity to differ
widely from cross-elasticity between manufacturers. The
parties' arguments concerning substantial cross-elasticity

between manufacturers A and

it

(185) Crédit Suisse First Boston report on Legrand (11 September

2000).

(186) Legrand, Medium-term plans and Schneider, Three-year plans.

(521) The parties maintain that the transaction would not lead
to the creation or strengthening of a dominant position
in the markets linked to distribution boards and final
panelboards. In particular, according to the parties, the
share of sales of the new entity would not be more than
[15-35]* % at Community level and a maximum of
[35-55]* % at national level (in France).

(522) However, the Commission considers that the method for
calculating market shares put forward by the parties
leads to significant underestimation of the real positions
of the manufacturers in the relevant markets.

(523)

customers

to their direct

In fact, the parties have calculated the manufacturers'
market shares by dividing the amount of sales by
(basically
manufacturers
wholesalers and panel builders) by the total volume of
corresponding products purchased by electrical installers
(i.e. the customers of wholesalers and panel builders).
The denominator is therefore not consistent with the
numerator, as it includes the added value attributable to
panel builders and wholesalers, as well as the amount
corresponding to miscellaneous board components
which are not normally supplied by manufacturers but
incorporated by panel builders. As these contributions
([10-30]* % for wholesalers,
can

significant

be

6.4.2004

EN

Official Journal of the European Union

L 101/81

and [10-30]* % for
[10-30]* % for panel builders
miscellaneous components), they lead to a considerable
underestimation of manufacturers' market share and
must therefore be eliminated from the total value of the
market. This method would lead to the absurd result
that a hypothetical monopolist in the production of a
key component (for example miniature circuit breakers)
would not have a 100 % market share but would ‘share'
its market share with its customers.

included in the calculations of market shares. Thus the
internal sales provided by the firms in
figures for
question are
and would not
significantly alter the market shares calculated net of
internal sales and as presented below.

very much lower

(524) At

the request of

the Commission, the parties have
therefore provided corrected estimates of market shares
disregarding the added value and margins of
the
downstream players (wholesalers and panel builders),
and the amount corresponding to components not
supplied by the manufacturers.

the size of

(525) The parties have also suggested including sales by
certain vertically integrated manufacturers (ABB and
Siemens) as installers or panel builders for the purpose
of calculating the overall volume of the market. The
Commission does not
agree with this view and
considers that, on the contrary, such sales should not be
the
included either in the calculation of
overall market or in the market shares of the players in
question. First of all, these figures are not consistent
with the other sales and therefore reproduce the bias
introduced by the parties in their initial calculations.
The internal sales of the firms in question should have
been used. Also, even supposing that the parties had
correctly counted the internal sales of the third parties
in question, such sales correspond to products which
have not been placed on the market and for which there
was no competition. As internal sales are not subject to
real market conditions, they have no impact on the
market power of manufacturers in the ‘free' market. The
inclusion of these sales would therefore not reflect the
market power of manufacturers and would lead to an
underestimation of the market power which producers
can effectively exercise vis-à-vis their direct customers.

(527) During the hearing, a representative of Siemens stated
that that firm's internal sales accounted for less than 5 %
of its turnover in electrical switchboards. Confidential
data on internal sales supplied by other third parties in
the course of the Commission's investigation are also
consistent with a figure of 5 %. Likewise, the estimate
given by the parties of the turnover generated by their
competitors' integrated sales, namely EUR [400-1 200]*
million, corresponds to around EUR [50-100]* million
in terms of internal sales (having deducted labour costs,
the panel builder's
and distributors'
margins). The parties estimate the size of the markets in
distribution boards and final panelboards in Europe (not
including panel builders' added value and distributors'
margins) at around EUR [2 000-4 000]* million. The
proportion of internal sales as a share of market size
estimated by the parties is thus around [0-10]* %, which
is consistent with the estimate given by Siemens.

added value

(528) The findings in terms of market shares are not affected
if these internal sales are taken into account. If the very
generous assumption were made that only Schneider
and Legrand did not make any internal sales and the
other market players generated [0-10]* % of their sales
within their own group,
and incorporating these
internal sales in the overall volume of the market, the
combined market share of the merged entity in each of
the relevant markets would thus be not more than 3
points lower. This would only marginally affect the high
level of those market shares and would not materially
in
relative
alter
comparison with its competitors.

the merged entity

size of

the

(526) The Commission has also tried to verify the volume of
internal sales attributed by the parties to ABB and
Siemens in their estimate of market shares. According to
the parties these integrated sales stand at approximately
EUR [400-1 200]* million for each of these firms. These
figures should not be included in the calculation of
market shares simply as they stand, as they represent,
according to the parties, turnovers resulting from sales
at the level of installers. Labour costs (around 80 %), the
panel builder's added value (15 % of the remainder) and
the remainder) should
distributors' margin (20 % of
therefore be deducted if a consistent value is to be

(529)

In the light of the above, the Commission considers that
the market shares should be calculated solely on the
basis of the external sales of the parties and of their
competitors to their direct customers. The volume of
the market (and the corresponding sales of the players
in the market) must therefore not include either the
internal sales of vertically integrated manufacturers or
the added value or margin corresponding to the
operations (integration of board, wholesalers' services)
carried out downstream of the manufacturers. Market
shares quoted in the rest of this Decision are calculated
on this basis.

L 101/82

EN

Official Journal of the European Union

6.4.2004

Distribution boards

addition of market shares only in France,
Norway, the only countries in which Legrand is active.

Italy and

(530) For distribution boards and their components (moulded
case circuit breakers, miniature circuit breakers and
cabinet components), the transaction would create an

(531) Table 27 below gives the parties' estimates on the basis
of sales of moulded case circuit breakers, miniature
circuit breakers and cabinets.

Table 27

2000 figures

Moulded case circuit breakers
(%)

Miniature circuit breakers
(%)

Cabinets
(%)

F

IT

N

EEA

F

IT

N

EEA

F

IT

N

EEA

Schneider

[60-70]*

[30-40]*

[20-30]*

[30-40]*

[60-70]*

[20-30]*

[0-10]*

[30-40]*

[30-40]*

[20-30]*

[20-30]*

[20-30]*

Legrand

[0-10]*

[10-20]*

[0-10]*

[0-10]*

[0-10]*

[10-20]*

[0-10]*

[0-10]*

[10-20]*

[20-30]*

[0-10]*

[0-10]*

S + L

[60-70]*

[40-50]*

[20-30]*

[30-40]*

[70-80]*

[40-50]*

[0-10]*

[30-40]*

[50-60]*

[40-50]*

[20-30]*

[20-30]*

Hager

[0-10]*

[0-10]*

[0-10]*

[0-10]*

[0-10]*

[0-10]*

[0-10]*

[0-10]*

[0-10]*

[0-10]*

[0-10]*

[0-10]*

Siemens

[0-10]*

[0-10]*

[20-30]*

[10-20]*

[0-10]*

[0-10]*

[20-30]*

[10-20]*

[0-10]*

[0-10]*

[10-20]*

[0-10]*

ABB

GE

[0-10]*

[20-30]*

[30-40]*

[20-30]*

[10-20]*

[20-30]*

[50-60]*

[20-30]*

[0-10]*

[20-30]*

[50-60]*

[10-20]*

[0-10]*

[10-20]*

[0-10]*

[0-10]*

[0-10]*

[10-20]*

[0-10]*

[10-20]*

[0-10]*

[10-20]*

[0-10]*

[0-10]*

Source: e-mail sent by the parties on 25 July 2001.

(532) These figures are consistent with, although generally
lower than, the market shares of the parties estimated
on the basis of a market whose size is calculated from
the sales of third parties identified by the parties as
active in the market and provided in response to the
Commission's investigation.

would also have a leading position at European level
with market shares for moulded case and miniature
circuit breakers of slightly under [40-50]* %.

Final panelboards

(533) These market share estimates show that

the notified
transaction would give the combined entity a very
strong position in the French and Italian markets in
moulded case circuit breakers, miniature circuit breakers
and distribution board cabinets, with around [70-80]* %
and [40-50]* % of
in those countries
the markets
respectively. Apart from the competitors listed in Table
dispersed
27,
competition from panel builders. The combined entity

entity would

combined

face

the

in all

(534) The transaction would create an addition of market
shares
the
the Member
transaction would raise competition problems only in
five
Italy, Denmark, Spain and
Portugal). The market shares of the parties and their
competitors in these countries (and at Community level)
may be summarised as follows:

States. However,

countries

(France,

6.4.2004

EN

Official Journal of the European Union

L 101/83

Table 28

2000
figures

Miniature circuit breakers
(%)

Earth leakage protection
(%)

Enclosures
(%)

P

SP

F

IT

DK

EEA

P

SP

F

IT

DK

EEA

P

SP

F

IT

DK

EEA

Schneider

[30-
40]*

[40-
50]*

Legrand

[0-10]* [0-10]*

[0-10]*

[30-
40]*

[40-
50]*

[20-
30]*

[70-
80]*

[20-
30]*

[40-
50]*

[50-
60]*

[10-
20]*

[20-
30]*

[10-
20]*

[40-
50]*

[20-
30]*

[0-10]*

[10-
20]*

[0-10]*

[40-
50]*

[20-
30]*

[10-
20]*

[10-
20]*

[0-10]* [0-10]* [0-10]*

[0-10]* [0-10]*

[20-
30]*

[50-
60]*

[10-
20]*

[30-
40]*

[40-
50]*

[0-10]* [0-10]*

[40-
50]*

[20-
30]*

[70-
80]*

[20-
30]*

[10-
20]*

[40-
50]*

[50-
60]*

[10-
20]*

[50-
60]*

[10-
20]*

[0-10]* [0-10]* [0-10]*

[0-10]* [0-10]*

[20-
30]*

[0-10]*

[30-
40]*

[10-
20]*

[30-
40]*

[0-10]*

[40-
50]*

[20-
30]*

[10-
20]*

[10-
20]*

[20-
30]*

[10-
20]*

[30-
40]*

[20-
30]*

[0-10]*

[10-
20]*

[30-
40]*

[40-
50]*

[0-10]* [0-10]*

[40-
50]*

[20-
30]*

[70-
80]*

[20-
30]*

[20-
30]*

[30-
40]*

[0-10]*

[50-
60]*

[10-
20]*

[0-10]* [0-10]* [0-10]*

[0-10]* [0-10]*

[10-
20]*

[0-10]* [0-10]*

[40-
50]*

[20-
30]*

[10-
20]*

[10-
20]*

[20-
30]*

[20-
30]*

[0-10]*

[10-
20]*

[0-10]* [0-10]* [0-10]* [0-10]* [0-10]*

[0-10]* [0-10]* [0-10]* [0-10]* [0-10]*

[0-10]* [0-10]* [0-10]* [0-10]* [0-10]*

[40-
50]*

[20-
30]*

[10-
20]*

[10-
20]*

[10-
20]*

[40-
50]*

[20-
30]*

[10-
20]*

[10-
20]*

[10-
20]*

S + L

Hager

Siemens

ABB

GE

[40-
50]*

[20-
30]*

[10-
20]*

[10-
20]*

[10-
20]*

Source: estimates by the parties.

(535) These figures are consistent with, although generally
lower than, the market shares of the parties estimated
on the basis of a market whose size is calculated from
the sales of third parties identified by the parties as
active in the market and provided in response to the
Commission's investigation.

(536) This means that the notified transaction would lead to
the creation of very strong positions in the markets in
miniature circuit breakers, earth leakage switches and
enclosures
and
Denmark and would strengthen the already leading
positions of Schneider in Spain and France and Legrand
in Italy.

final panelboards

in Portugal

for

Mains connection circuit breakers

(537) As stated earlier, mains connection circuit breakers are
used for specific requirements (basically measurement of
consumption and prevention of theft of electricity) and
are required only in certain countries. In practice, the
transaction would lead to an addition of market shares
only in France and Portugal for this type of component.
These additions are shown in Table 29 below. The
shares attributed to Schlumberger are allocated to the
combined entity as the products sold by Schlumberger
are manufactured by Serd, a company controlled by
a minority
Legrand,
shareholding of [30-40]* %. Also, the products sold by

in which Schlumberger has

Hager in France seem to be bought by Hager from
Schneider (187).

Table 29

Mains connection circuit breakers

P

Schneider

[30-40]*

Legrand

—

Schlumberger

S + L

Hager

GE

[20-30]*

[60-70]*

—

[30-40]*

Source: estimates by the parties.

Analysis in terms of ‘solutions'

F

[40-50]*

[30-40]*

[10-20]*

[90-100]*

[0-10]*

—

(538) As

in terms of all
type

stated earlier, an analysis
a

the
components necessary
of
for
switchboard, i.e. in terms of ‘solutions' as described by
the findings
the parties, does not significantly alter
reached in terms of each component.
In terms of
solutions, the market shares of the parties and their
competitors may be summarised as follows:

particular

(187) E-mail sent by the parties on 28 February 2001.

L 101/84

EN

Official Journal of the European Union

6.4.2004

Table of market shares for solutions

Distribution boards

Final panelboards

F

IT

N

EEA

P

SP

F

IT

DK

EEA

Schneider

[40-50]*

[20-30]*

[10-20]*

[20-30]*

[30-40]*

[40-50]*

[40-50]*

[0-10]*

[30-40]*

[20-30]*

Legrand

[10-20]*

[10-20]*

[0-10]*

[0-10]*

[0-10]*el

[0-10]*

[20-30]*

[40-50]*

[0-10]*

[10-20]*

S + L

[50-60]*

[30-40]*

[10-20]*

[20-30]*

[40-50]*

[50-60]*

[70-80]*

[40-50]*

[40-50]*

[30-40]*

Hager

[0-10]*

[0-10]*

[0-10]*

[0-10]*

[20-30]*

[10-20]*

[20-30]*

[0-10]*

[20-30]*

[20-30]*

Siemens

[0-10]*

[0-10]*

[20-30]*

[10-20]*

[10-20]*

[0-10]*

[0-10]*

[0-10]*

[10-20]*

[0-10]*

ABB

GE

[0-10]*

[20-30]*

[40-50]*

[10-20]*

[10-20]*

[0-10]*

[0-10]*

[10-20]*

[10-20]*

[10-20]*

[0-10]*

[10-20]*

[0-10]*

[0-10]*

[10-20]*

[0-10]*

[0-10]*

[0-10]*

[0-10]*

[0-10]*

Source: the parties.

(539)

shares

the market

in mind that

should, however, be borne

In the case of final panelboards, the market shares for
solutions are equivalent to those for components; in the
for
case of distribution boards,
solutions are slightly smaller than those for components.
It
for
distribution boards, the above estimates underestimate
these figures,
the merged entity's real market share:
which were provided by the parties, are calculated on
the basis of aggregates containing components which
are not normally produced by manufacturers of
low-voltage electrical equipment. These components
represent [20-30]* % of the value (before added value)
of a board. Once this distorting factor is removed, the
market shares in terms of switchboards are consistent
with those calculated for the above components.

An unrivalled position of strength

(540) The Schneider/Legrand combined entity would acquire
an unrivalled position of
strength via the notified
transaction in terms of relative size on the relevant
markets, the removal of an incentive to competition
through the loss of the rivalry between Schneider and
Legrand in certain markets and the emergence of
leaderships in other markets, and also in terms of the
range of products, geographic cover and the number of
brands it would have.

(541) The merged entity would also inherit all the competitive
advantages of its parent companies,
in particular the
reputation of their brands, the depth of their product
ranges and the quality of their relations with national
installers and wholesalers. All these factors would serve
to reinforce further the loyalty of installers and panel

builders, making the merged entity indispensable to
them in these markets, and would constitute obstacles
to the development of competing brands and to the
entry of new manufacturers.

An entity of unrivalled size

(542) The data provided by the parties

show that

the market share of

the
combined entity would hold a very strong position in
absolute terms and relative to the size of its most direct
In the markets in circuit breakers for
competitors.
distribution boards,
the merged
entity would be seven times that of its closest rival, GE,
its market share would be almost
in France. In Italy,
the second largest manufacturer there,
twice that of
ABB.
final
panelboards,
the combined entity would be around
twice as large as the second largest manufacturer in
Portugal and Denmark, three times as large in France
and in Italy, and four times as large in Spain.

In the markets

components

for

for

(543) The market share tables above also show that, very
often, one or other of the parties already holds very
significant positions prior to the transaction. Legrand is
thus the undisputed market leader for final panelboards
in Italy, while Schneider clearly ranks number one in
final
distribution
Spain
panelboards) and in France. This situation is even more
marked in the case of final panelboards in France, where
Schneider and Legrand are respectively number one and
number two (equal with Hager) in terms of volume of
sales.

boards

(both

and

for

6.4.2004

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Official Journal of the European Union

L 101/85

(544) This means that, despite the significant overlaps between
Schneider and Legrand, the transaction should not be
seen as a merger between two players of medium size
suddenly acquiring first place in their sector, but rather
as the substantial strengthening of the existing market
(via the acquisition of additional brands and
leader
businesses)
immediate
competitor.

removal

and

the

an

of

Loss of rivalry between Schneider and Legrand and emergence
of an indisputable leader in the relevant markets

that

in the

(545) Prior to the transaction, one or other of the parties is
already the
relevant
competition reference
markets. This is especially the case for Schneider in
Denmark, Spain, Portugal and France (for distribution
boards, final panelboards and their components) and for
Legrand in Italy. It also seems that the weaker party also
it
holds significant positions in these markets,
enjoys a good reputation and has privileged access to
the main international wholesalers. This is, for example,
the case for Legrand in France, where it holds very
significant positions in markets for other low-voltage
products. This Decision thus finds that Legrand already
has dominant positions on the markets in sockets and
switches, weatherproof wiring accessories,
fixing and
connecting equipment and self-contained emergency
lighting units. The support given to Legrand's electrical
switchboard business by its positions on these markets
has enabled it to gain access to distributors and brand
recognition more easily. Conversely, Legrand notes in its
Medium-term plan for France that […]*

(546) The transaction would further reinforce these positions.
It is thus clear that by combining the activities of the
two parties, the transaction would enable the merged
entity further to intensify its hold on the market and
increase its lead over its closest competitors. The merger
of Schneider and Legrand would also remove the rivalry
between the two firms, which seems to be a central
element of competition in the countries concerned.

(547) For

the

example,

in France,

competition between
Schneider and Legrand seems to be particularly keen in
distribution boards
since,
documents (188),
according
Schneider (traditionally oriented towards the commercial

final panelboards,
Legrand

and
internal

to

these markets, all

sector and industry) is aiming to capture the residential
segment and to oust Legrand from its premier position.
Schneider and Legrand being the two main suppliers of
distribution boards and final panelboards in France, the
intensity of the competition between the two rivals to a
large extent dictates the intensity of competition in all
the more so because Legrand
of
enjoys brand recognition and privileged access
to
distributors in France thanks to its positions on the
wiring accessories markets.
example, Legrand
it has a ‘high profile among
describes the fact
installers via other products' as an ‘anchor point' (189).
The Commission's investigation shows similar effects in
Portugal: Legrand documents show […]*.

that

For

(548) At the same time,

the transaction would enable the
merged entity to gain a position as indisputable leader
in the markets in final panelboard components in
Portugal
face
considerable competition (in terms of market shares)
from other firms.

and Denmark, where

parties

the

(549) Finally, the notified transaction would strengthen the
already leading position of one or other of the firms in
the markets in distribution board components in France
and Italy and in the markets
in final panelboard
components in Spain, France and Italy.

The combined entity would have an unrivalled range of
products and geographical cover

(550) Even prior to the proposed transaction, the parties each
have a very wide range of products in the low-voltage
electrical equipment sector. In most cases they hold very
appreciable positions for some of these products and in
certain geographical areas. Thus the notified transaction
strong
would enable
in the Nordic countries as
positions of Schneider
regards
final
panelboards with those of Legrand in southern Europe.
In the same way, Schneider would bring its strong
position in all categories of electrical switchboards and
add it
strong position of Legrand in all
downstream products.

equipment downstream of

to combine

the parties

electrical

to the

the

(188) Legrand, Medium-term plans.

(189) Legrand, Three-year plans.

L 101/86

EN

Official Journal of the European Union

6.4.2004

(551) Following the notified transaction, there would be only
two EEA countries (Germany and Finland) in which the
combined entity would not occupy leading positions.
More generally,
that
Schneider claims to rank second in the world for

it should also be pointed out

low-voltage electrical equipment, while Legrand presents
itself as the world leader in electrical accessories. The
following table illustrates the strength of the combined
entity in all
in low-voltage electrical
equipment.

the markets

Table 30

Main switchbds
(HDCB)

Distrib. boards
(MCCB)

Final panelbds

Cable trays

Busbar trunking

Accessories

Fix. & connect.

Trunking

*****

*****

*

***

****

*****

*

*

***

***

****

***

Austria

Belgium

Germany

Denmark

Spain

France

Finland

Greece

Italy

Ireland

Netherlands

Portugal

United
Kingdom

Sweden

Norway

***

*****

-

****

*****

*****

***

**

*

***

-

****

*****

*****

**

**

****

****

***

***

***

*****

****

**

**

***

**

**

**

****

***

***

**

-

*

-

**

-

-

-

-

**

-

***

-

**

*****

**

*****

****

*****

****

*

*****

*****

****

**

*****

*****

***

**

**

-

-

-

-

*****

*****

*****

****

***

*

*****

*****

*****

***

*****

*****

*

-

****

*

****

****

**

-

**

-

-

-

-

***

*****

***

***

-

*

**

****

**

*

*

-

*

*****

**

*****

*****

Key:
Sources: market shares provided by the parties for 1999 in Form CO and subsequently.

one star (*) represents a share of sales between 10 and 20 % and so on up to five stars (*****), which represent sales shares of over 50 %.

(552) The parties would acquire a very strong position on all
French markets, with shares of
in excess of
[40-60]* % on all markets except cable trays and
trunking (where their share would nevertheless exceed
[40-60]* %). None of Schneider/Legrand's competitors

sales

would have such a range of products and such a
geographic spread with strong positions on the relevant
markets. Only ABB would be capable of presenting a
comparable product range and geographic cover.

6.4.2004

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(553) Of the other manufacturers, only Siemens and Hager are
present on more than one product and geographic
market in the EEA. All the other competitors are either
local players or niche players, usually in the markets in
electrical equipment downstream of final panelboards.

The combined entity would have an unrivalled array of brands

(554) The strength of either or both of the parties in each
market is usually explained by the power of its brands.
As the parties state (190), ‘we have a range of superb and
two groups have
diverse brands. Furthermore, our
shown real skill in managing several brands, always with
a view to staying close to the market, and are therefore
used to capitalising strongly on those brands.'

(555) There is no doubt as to the quality of the brand image
of Schneider and Legrand. In Italy, where the Legrand
and particularly Bticino brands are used, Legrand (191)
refers to ‘the image of the Bticino brand', ‘the synergetic
use of the Legrand and Bticino brands' and ‘the image of
the brand and [the] trust in the company and in the
In Spain,
product' as
Schneider (192) says that its Eunea Merlin Gerin brand is
already ‘a major player' in the market, and that it could
be further consolidated via ‘the brand image, backed by
Schneider'. In France, Legrand says that one of its main
strengths is its ‘reputation'. The parties' reputation and
brand image are clearly further enhanced by their
presence in most of the low-voltage electrical equipment
sector as shown by Table 30 above.

its main strengths.

three of

ease

installation,

appearance,

each of the following nine criteria, for each country:
product quality, brand, price, speed of delivery, design
advanced
and
of
technology, complete range of products and,
lastly,
technical support. The outcome of this survey was that,
with rare exceptions, Schneider was generally among
the three best suppliers for each criterion; and that in
France and Italy, Schneider and Legrand usually enjoyed
the two best reputations for all the criteria.

(558) As

above,

explained

relevant markets

are
the
distinguished by strong loyalty on the part of installers
and panel builders. The strong competitive positions of
their
the parties,
customers'
constitute
particularly solid foundations.

together with their ability to meet
needs

efficiently,

therefore

(559)

It is also clear, however, that the parties make significant
investments each year in promoting products and in
encouraging customer loyalty. The parties say that their
sales force maintains contact with customers to help
them choose products and that they maintain agency
networks and a sales force in each country. The parties
also offer a whole range of products and services tying
them closer to installers. In the case of products, this
includes design and costing software for electrical
installations or technical guides; and,
in the case of
services, training sessions (Legrand), telephone assistance
etc. As
services,
answers
to
indicated above,
[10-30]* % of turnover.

such investment may amount

to technical questions,

(556) The parties'

internal documents (193) show that

the
reputation of a brand alone can constitute a significant
competitive advantage. This appears to be particularly
true in Italy, where ‘the market is concentrated on the
three leading brands (Bticino, ABB and Merlin Gerin)',
and in France, where ‘customers have to be reassured by
the brand'.

(560) Furthermore, certain of the parties' internal documents
suggest that they make considerably more effort in this
direction than their competitors. Thus Legrand (194) says
‘Bticino is the company with the largest
that in Italy,
number of
staff on the market.' Likewise
sales
Schneider (195) states its ambition to ‘build an approach
to each customer without parallel on the French
market.' In Spain, Schneider (196) refers to ‘coverage of
the territory by the sales force' as one of
its main
competitive strengths, […]*.

(557) The Commission's investigation also shows, however,
that the strength of the Schneider and Legrand brands
rests also on their ability to satisfy the needs of installers
and panel builders. The Commission asked wholesalers
to rate manufacturers according to their ability to meet

(561) The loyalty of installers and panel builders is reinforced
by the extent of the range of products offered by the
installation accessories,
parties

(in final distribution,

(190) Information meeting Schneider Electric/Legrand, 15 January 2001.
(191) Legrand, Medium-term plans.
(192) Schneider, Three-year plan (2001-2002-2003).
(193) Legrand, Medium-term plans.

(194) Legrand, Medium-term plans.
(195) Schneider, Three-year plan.
(196) Schneider, Three-year plan.

L 101/88

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Official Journal of the European Union

6.4.2004

etc.), and by their often important competitive positions
in other products supplied by installers, as shown in
Table 30 above. This further increases the frequency of
use and the reputation of
the
familiarity of installers with these brands, and therefore
the electrical switchboards concerned. As
the use of
Legrand states (197), […]*.

the parties' products,

(562) The proposed transaction would also allow the
combined entity to exercise its market power even
further by reinforcing and focusing its brands. This
would increase the parties' indispensable nature in their
relations with wholesalers. Also, by focusing brands on
reference positions in each of
the three applications
segments of the relevant markets (industry, commercial
the parties would be better able to
and residential),
isolate the effects of their actions on their competitors.

Along the lines of what Legrand achieved following the
acquisition of Bticino, the merged entity could therefore
decide to heighten the specialisation of each of
its
brands and to concentrate the efforts of each brand on
its traditional area of excellence, in order to offer total
cover of the spectrum of demand and at the same time
provide optimal response to the needs of each customer
category. By implementing this strategy,
the merged
entity could therefore at the same time strengthen the
position of each brand and fill any gaps that each of the
parties may have. The merged entity would thus be
even more powerful than the two parties put together;
it would increase its hold on the relevant markets and
further
the ability of existing and potential
competitors to compete with it.

restrict

C.1.3 Lack of significant demand-side constraint

to extend

its negotiating power

(563) First of all, the transaction would enable the combined
entity
vis-à-vis
wholesalers to all of its brands. Following the merger,
the merged entity could thus decide to extend to
Legrand the terms of the […]* granted to […]*. This
would particularly strengthen Legrand in […]*, which
refers (198) to the limited distribution of its products,
and their limited numbers with large wholesalers as
among its main weaknesses in that country. Likewise,
Legrand could gain better access to wholesalers in […]*,
where it
that was an obstacle to its
development. Finally, Schneider could see its access to
distribution in Italy strengthened thanks to the positions
gained by Legrand in that country.

seems

that

(566) The parties often sell a large proportion of

their
products in the relevant markets through wholesalers,
some of which are large international groups (Rexel,
Sonepar and Hagemeyer).
It is therefore necessary to
assess whether wholesalers are able to exercise sufficient
buyer power over
to
constrain its competitive behaviour to any appreciable
extent. For the reasons set out below, the Commission
considers that they are not.

the merged entity in order

(564) The transaction would also enhance the reputation and
image of the brands of both parties as they would each
from the promotional and customer relations
benefit
efforts made by the other in these countries.

The merged entity would be an indispensable
partner for wholesalers

relevant markets,

(565) The Commission's investigation also shows that, while
Schneider and Legrand have traditionally engaged in
keen competition on the
they
traditionally have distinct and complementary areas of
excellence. Schneider thus seems to excel especially in
commercial and industrial applications, while Legrand
appears to be particularly established in the residential
the merged entity
sector. Following the transaction,
would therefore have a reference brand in each of the
switchboards.
three main applications

for electrical

(197) Legrand, Medium-term plans.
(198) Legrand, Medium-term plans.

(567) First,

(i)

it notes that

the merged entity would be an
indispensable partner for most wholesalers. It is clear
that
the merged entity would capture a very
appreciable proportion of wholesalers' overall turnover
(in some cases over [40-50]* % of national sales); (ii) the
merged entity would offer an unrivalled array of
the
electrical equipment, combining the ranges of
world's
low-voltage
second-ranking manufacturer of
the world leader in electrical
products and those of
accessories; (iii) the merged entity would hold important
competitive positions in almost every country (see Table
30 above). The indispensable nature of
the merged
entity would be particularly acute in France and, to a
lesser extent, in Spain, Italy and Portugal.

6.4.2004

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(568) This is very clear,

from the […]* that
for example,
Schneider has already been able to arrange with its main
wholesalers in […]*, and the privileged relations that
Legrand claims
[…]*
wholesalers in France and Italy.

secured with the

to have

indispensable players
strong preference of
their products.

in certain markets, given the
installers and panel builders for

(569)

In its internal documents (199), Legrand states that […]*.
Legrand thus claims (200) to have ‘very good relations
with distributors' in […]*, and that it ‘maintains close
relations with French distributors, some of which agree
to keep certain priority Legrand products in stock at all
times.'

(570) This

situation is even more marked for Schneider,

[…]* (201).

(571) The situation is identical

in […]*, where Schneider
draws up annual target letters with […]*. The same is
true in […]*.

(572) There are several explanations for this pattern. First, as
the parties are often

has already been pointed out,

the Commission's
the parties each account
the turnover of

investigation has
(573) More generally,
for a very
established that
the main
significant proportion of
the percentage
wholesalers. Table 31 below shows
bracket of sales (all products) of the wholesaler Rexel
accounted for by each of the large manufacturers. It is
clear that, following the merger, the combined entity
would account for nearly half of Rexel sales in France,
reflecting the very strong complementary positions of
each of the parties prior to the merger, and for a large
proportion of Rexel sales in Italy and Portugal and also
that in each of these countries the sales of its products
would be proportionally far greater than those of its
competitors. Schneider/Legrand in Spain would also be
relatively larger than its competitors. The other large
groups of wholesalers have provided the Commission
with similar data.

Schneider/
Legrand

0-10

10-20

0-10

10-20

40-50

30-40

Austria

Belgium

Germany

Spain

France

Italy

Netherlands

0-10

Portugal

United
Kingdom

30-40

0-10

Table 31

Siemens

Moeller

Gewiss

ABB

0-10

0-10

0-10

0-10

0-10

0-10

0-10

0-10

0-10

0-10

0-10

0-10

0-10

0-10

—

0-10

0-10

0-10

0-10

10-20

—

—

—

0-10

0-10

—

—

0-10

0-10

10-20

0-10

0-10

0-10

0-10

0-10

0-10

GE

—

0-10

0-10

—

0-10

0-10

0-10

0-10

0-10

Hager

Others

0-10

0-10

10-20

0-10

0-10

0-10

0-10

0-10

0-10

> 70

> 70

> 50

> 70

> 40

> 50

> 80

> 50

> 80

Sweden

10-20

0-10

0-10

—

0-10

0-10

0-10

> 80

Source: Rexel, reply to phase II questionnaire.

(199) Legrand, Medium-term plans.
(200) Legrand, Medium-term plans and Form 20-F SEC.
(201) Schneider, Convergence guidelines.

L 101/90

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Official Journal of the European Union

6.4.2004

(574) This is explained by the fact that the parties each offer a
very wide range of
low-voltage electrical equipment
distributed by these wholesalers, and that they usually
hold very appreciable positions
these
products (see Table 30 above). Table 31 above illustrates
the
the
the
low-voltage electrical equipment markets.

combined entity in all

for each of

strength of

(578)

(575) The parties

also enjoy other

advantages vis-à-vis
the Commission's
indicated above,
wholesalers. As
investigation has shown that wholesalers now tend to
favour manufacturers capable of supplying them with
extensive product ranges. The parties therefore have a
significant advantage in this respect. Wholesalers who
chose to do so would even be able to offer
their
customers several different brands,
in different price
brackets, for many of those products. Also, wholesalers
depend on the demand created by manufacturers and
brands known to installers and end users. They are
therefore obliged to keep in stock frequently requested
products, which in practice are those marketed under
well-known brands.

France,
further weaken the other manufacturers.

Italy and Portugal); conversely,

they would

that,

In their reply to the statement of objections, the parties
stress
in the countries concerned, wholesalers
currently distribute a large number of brands. Far from
mitigating the impact of the transaction, this situation is
liable on the contrary to reinforce the effects of the
above process. The more the wholesalers with which
secured privileged relations
the merged entity has
distribute
those
the more
brands,
competitors are liable to be weakened by less favourable
treatment on the part of the wholesalers concerned.

competing

Structure of competition at wholesaler level

(576)

that

It is also clear that these privileged relations are likewise
the result of real effort on the part of Schneider and
Legrand in relation to wholesalers. Legrand (202) says
that it offers express delivery services to wholesalers in
it keeps its own emergency stocks of
France,
products with a low turnover and that it invests in new
storage
logistical
In its agreements
performance vis-à-vis wholesalers.
with wholesalers, Schneider (203)
[…]*. According to
Schneider (204),
to
meet a growing demand on the part of installers for
other
in
addition to a simple logistical service.

these services enable wholesalers

to improve

in order

technical

support,

services

(advice,

sites

etc.)

its

encourage

(577) The proposed merger would allow the creation or
development of privileged relations maintained by the
parties with their principal wholesalers, and it would
partnership
also
agreements similar to […]*. […]*, they would further
reinforce the positions of the merged entity in all the
markets affected by the transaction (and particularly the
markets relating to distribution boards in France and in
in Denmark, Spain,
Italy and to final panelboards

proliferation

the

of

(202) Legrand, Form 20-F SEC.
(203) Schneider, documents provided in reply to question 311.
(204) Reply by Schneider to Hagemeyer questionnaire.

(579) Secondly,

the degree of concentration (see Table 6
above) among wholesalers, and therefore the buyer
power of each individual wholesaler, varies significantly
from one Member State to another. Concentration is
particularly strong in France, and seems to be much
is therefore highly unlikely that
weaker in Spain.
Spanish wholesalers would each have sufficient buyer
power to constrain the competitive behaviour of the
merged entity to any appreciable extent.

It

(580)

In their reply to the statement of objections, the parties
challenge the finding that small wholesalers have no
in
buyer power. They stress among other things that,
certain
is
trade
there is strong
fragmented (e.g. Spain and Portugal),
price competition between wholesalers,
resulting in
pressure on prices offered by manufacturers.

countries where

the wholesale

(581) The Commission does not deny this fact, which it has
itself repeatedly mentioned. That said, on the one hand,
the parties also stress the increasing concentration of
distributors in certain countries,
in particular Portugal
(where Rexel and Sonepar now account for 40 % of
sales of switchboard components). This will probably
dampen price competition between wholesalers, as has
happened in countries where distribution is already
more concentrated. On the other hand, and in any
event, the existence of competition between wholesalers
does not mean that each wholesaler has buyer power.
the Commission maintains that,
On the contrary,
in
countries where
each
distribution is
individual wholesaler is unable to withstand pressure
from an indispensable supplier who occupies leading

fragmented,

6.4.2004

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Official Journal of the European Union

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since

wholesalers,

is weakened still
between

positions in a large number of products distributed.
further by price
Buyer power
competition
such
competition threatens the viability of those wholesalers
and makes it even more vital for them to list the brands
in greatest demand. The existence, despite the keen
competition between wholesalers in Spain and Portugal,
of partnership agreements between Schneider and those
distributors already bears witness to this. Following the
transaction, the merged entity would therefore be able
to impose the
to use its market power
contractual conditions of
its choice on any reluctant
wholesalers by threatening to favour their competitors.

in order

the parties (207)
three main
categories of discount:
(ii)
‘target' or ‘growth' discounts and (iii) ‘volume' discounts.

are
‘partnership' discounts,

show that

there

(i)

(585) Partnership discounts are granted by the manufacturers
to wholesalers who distribute their products in exchange
for various commercial and marketing services. Usually
this means specific measures to promote sales of their
products or marketing feedback on the position of their
products. The parties' documents
such
‘partnership' discounts can account for up to [0-30]* %
of the pre-tax turnover made with wholesalers.

show that

(582) Lastly, even a high level of concentration among
great
wholesalers does not, however, mean any
downward pressure on prices. In fact, internal Legrand
documents (205) show that, in some countries (such as
[…]*), one of the reasons why wholesalers appreciate
Legrand products is that, because of their relatively high
they allow wholesalers a good profit margin.
price,
[…]*, simply the price level of Legrand products allows
wholesalers to make a larger profit on each sale than
they could from cheaper products.
Internal Legrand
documents (206) also show that, despite concentrated
distribution in France, the prices paid by wholesalers are
on average substantially higher
than the European
average (see also price indications in Tables 7 to 10
above); and that any downward pressure on prices does
from the
rather
not
competition between Schneider and Legrand.

stem from wholesalers but

(586)

‘Growth' discounts are linked to targets for growth in
the turnover made by manufacturers with wholesalers.
The turnover used for these purposes may either be the
overall turnover generated by the sale of all the products
in the manufacturer's
turnover
generated by the sale of certain specific product lines. A
manufacturer will very often grant this type of discount
on new products. For Schneider and Legrand it seems
that
for up to
[0-30]* % of
the pre-tax turnover generated by the
wholesaler.

these ‘target' discounts can account

catalogue, or

the

(583) This apparent indifference on the part of wholesalers as
to price levels seems to be explained mainly by the lack
of price
electrical
the demand for
indicated above,
equipment. As
electrical equipment depends mainly on factors external
to the electrical equipment industry.

in the demand for

elasticity

Contractual relations between Schneider/Legrand
and wholesalers would help to maintain the
position of the combined entity

(587) The final category of discount, known as

electrical products,

switchboard components but

is calculated on the basis of

‘volume'
discount,
the overall
amount purchased by wholesalers from manufacturers.
The base is
therefore the turnover achieved by a
manufacturer with a wholesaler not only through the
also other
sale of
low-voltage
equipment
downstream of the final panelboard. The amount of the
discount, or reduction coefficient, is determined by the
annual level of turnover. Usually, the contract between
the wholesaler and the manufacturer
turnover
thresholds corresponding to a percentage discount. The
higher the turnover, the higher the percentage discount,
which boosts the final amount of the discount. These
‘volume' discounts represent up to [0-30]* % of
the
pre-tax turnover achieved by the manufacturer with a
wholesaler.

such as

sets

(584) Commercial

relations

and
wholesalers of
the relevant products feature complex
commercial discount schemes. Documents provided by

between manufacturers

(588)

In addition to these discounts, manufacturers also grant
wholesalers rebates on the resale price of their products.
These rebates are particularly important as they can be

(205) Legrand, Medium-term plans.
(206) Legrand, Medium-term plans.

(207) Reply by the parties to point 148 of the questionnaire of 6 April

2001.

L 101/92

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6.4.2004

up to [30-70]* % of the product resale price. While all
wholesalers
amount varies
according to the volume of turnover they achieve with
each manufacturer.

are given rebates,

the

(589) By their very nature,

of wholesalers, who

these different schemes favour
manufacturers which have extensive product ranges and
generate a large proportion of wholesalers' turnover. In
fact, such manufacturers account for a large part of the
purchases
substantial
discounts from manufacturers. The discounts, which can
be up to [0-30]* % of
their
purchases, represent a substantial proportion of their
profit margin. Wholesalers
therefore naturally
encouraged to concentrate their sales, and therefore
their purchases, on the products of a few suppliers who
account for a large part of their purchases.

the total amount of

enjoy

are

(590) The proposed transaction would alter

the

inter alia in France. This means

relative
balance that exists between manufacturers. It would lead
to the creation of a group which, in many low-voltage
electrical
the main
equipment markets, would be
supplier to wholesalers, some way ahead of the second
largest supplier. As explained above, this would be the
case
that most
wholesalers would be largely dependent on the new
group as regards the overall amount of discounts and
from manufacturers, which
rebates
their profit margin.
determine a large proportion of
Any
with
Schneider/Legrand products would thus lead to a fall in
the level of discounts and rebates granted by the group,
which would not be offset by an increase in the
the
turnover
percentage of the discount increases according to the
level of turnover achieved.

achieved with other

suppliers,

turnover

achieved

obtain

since

they

the

fall

in

products or product
distribute previously. […]* (208).

ranges which they did not

Conclusion

(592) As explained above, there are very large numbers of
installers and panel builders in the countries concerned.
Given its fragmented nature and its loyalty to brands,
this section of demand does not appear to be in a
position to exercise significant buyer power on the
merged entity.

(593) Only wholesalers, and the largest of

these, might
possibly try to oppose any attempt on the part of
Schneider/Legrand to increase prices. However,
they
would have little incentive to resist, principally for the
following reasons:

(i) an increase in the selling prices of the new group
would not lead to a drop in their profit margins. On
the contrary, a price increase would lead to an
increase in the turnover wholesalers would achieve
with Schneider/Legrand, which in turn would lead
to an increase in their volume discounts;

(ii) wholesalers would be largely dependent on the new
group, which could to a great extent determine the
amount of their profit margins via the discount and
rebate schemes. Consequently, wholesalers would be
taking a risk if
they attempted to oppose a
Schneider/Legrand price increase by shifting part of
the demand towards other manufacturers;

towards

demand

Installers attach great

(iii) any attempt by wholesalers to shift a proportion of
the products of other
the
manufacturers would mean, at least in the short to
medium term, an increase in their storage and
transport costs.
importance
not only to the brand but also to the immediate or
near-immediate availability of products. Wholesalers
wishing
of
the
competitors would therefore
Schneider/Legrand's
have
the
competitor's products, before being in a position to
market them.

to begin by

stocks of

increasing

develop

sales

one

to

of

that

their
at

(591) Wholesalers would therefore have an extra incentive to
ensure
the
from
level of
Schneider/Legrand
same.
remained
the complex schemes of discounts and
Furthermore,
rebates coupled with the significant weight of the new
group
give
Schneider/Legrand an important means of exerting
pressure on wholesalers. In particular, Schneider/Legrand
would be able to force wholesalers to distribute its new

purchases
the

in wholesalers'

purchases

would

least

(594)

it can be seen from the above that
In conclusion,
neither the parties' direct customers (wholesalers) nor

(208) Medium-term plan Spain Bticino, page marked PMT2C'4.
Document supplied in response to point 315 of the questionnaire
of 6 April 2001.

6.4.2004

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L 101/93

their indirect customers (installers and panel builders)
would be able to oppose any price increase imposed by
the merged entity. For one thing,
installers and panel
builders are too fragmented to exercise significant buyer
the merged entity. The same goes for
power over
For
Spanish, Danish and Portuguese wholesalers.
another, a price increase would not necessarily go
against the interests of wholesalers, as high prices assure
them a higher income at constant volume (and therefore
constant cost). The merged entity would achieve such a
level of power in the countries concerned (both because
of its very strong competitive positions and because of
the extent of its range of activity) that it would further
reinforce
indispensable partner, which
wholesalers would prefer to ally themselves with than to
oppose.

role

its

as

C.1.4 Lack of significant competition-side constraint

(595) The outcome of the Commission's investigation shows
that it would be difficult for existing competitors to
exert any significant constraint on the behaviour of the
merged entity.

(596)

In the first place, the parties' internal documents show
that even prior to the transaction, it would be difficult
for existing competitors to challenge the pre-eminence
of
relevant markets.
in
Legrand (209) thus explains that, in distribution boards
and final panelboards in France, […]*.

leader

brand

the

the

(597)

In distribution boards and final panelboards in Italy,
Legrand (210) also explains that […]*.

(598) Lastly,

for

final panelboards in Spain, Legrand also

anticipated that […]*.

(599) The constraints on competitors would increase with the
notified concentration. They could first appear at the
the
level of wholesalers. As
transaction would allow the merged entity to reinforce
its position as an indispensable and privileged partner of
wholesalers in the countries in question. This situation
would allow the merged entity to create or develop its
alliances with wholesalers ([…]*). Since such alliances
would […]*, they would further enhance the perception

just explained above,

(209) Legrand, Medium-term plans.
(210) Legrand, Medium-term plans.

service and,
of product availability and quality of
conversely,
further check the development of other
brands. This process would be particularly extensive
because, as
the wholesalers
concerned currently distribute a large number of other
brands.

the parties point out,

and

(600) This pattern would further accentuate the existing
imbalance between the merged entity and its principal
competitors,
these
would
manufacturer's attempts to expand. As wholesalers wish
to reduce the number of brands they sell and favour
manufacturers with extensive product
this
situation could even lead to the marginalisation of
manufacturers in weak positions and/or with limited
ranges (such as […]* in Italy or […]* in France and
Spain).

compromise

ranges,

(601) The second difficulty would arise at

thing,

For one

and panel builders.

the level of
installers
the
Commission's investigations show that, in the countries
concerned, what competitors have to offer (in terms of
quality, brand, price, speed of delivery, etc.)
is often
already less well perceived than what the parties offer.
Also, as explained above, this difference in reputation
the
could increase after
probable strengthening of each of the brands held by
the merged entity and the growing difficulties of
competitors with regard to distribution.

the merger as a result of

(602) This means that competitors would have increasing
difficulty in prising customers away from Schneider and
Legrand and could be content with the status of
also-rans on the relevant markets. Conversely,
the
strengthening of the parties and the weakening of their
competitors could help the merged entity to win over
new customers. This
if other
manufacturers' products were no longer immediately
available
(which
through the principal wholesalers
would rule them out with installers, who do not keep
stocks). Such a trend would be even more marked if, as
the parties now maintain, customer loyalty were weaker
than shown by the outcome of the investigation.

could be

case

the

(603) The transaction could also lead to a reduction in the
promotion and public relations measures carried out by
manufacturers with installers and panel builders. The
outcome
such
investigation
investment can represent an appreciable proportion (up
to [10-20]* %) of the turnover of manufacturers in a
given country for the products concerned. Also, these

shows

that

the

of

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sums correspond to a large extent to ongoing activities
or services (training of
installers, technical assistance,
etc.). The reports by various investment banks (211)
indicate that,
in the low-voltage electrical equipment
sector, the profit margin of brands increases with their
share. The strengthening of Schneider and
market
Legrand brands and conversely the probable weakening
of
affect
competitors' ability to keep up their marketing efforts
effectively in the countries concerned, and so to
preserve the quality of their links with installers and
panel builders.

their main competitors

could therefore

(607)

It should also be noted that the integrated activities of
the competitors of Schneider and Legrand would not be
able to exert effective competitive pressure on the
merged entity. As noted earlier, the integrated activities
of
in the countries
concerned. Furthermore, in the absence of a substantial
presence among wholesalers,
they could not rely on
their integrated sales alone in order to bring effective
competition to bear.

those competitors are marginal

(604)

and

above,

following

industrial) while,

It should be noted that each competitor usually relies
only on one or two applications segments (residential,
commercial
the
transaction, the merged entity would have full cover of
If, as
these segments and a reference brand in each.
explained
to
the merged
concentrate the efforts of each of its brands on specific
areas of excellence,
it would be able to take action
specifically targeted against each of its competitors. The
internal documents of the parties show that this strategy
has already been used in the past. According to
Legrand (212), Schneider, which holds very
strong
positions
in Portugal,
especially for industrial and commercial applications,
[…]*.

in miniature circuit breakers

decided

entity

(605) Furthermore, the fact that the combined entity would
have a very wide range of products in each of
the
territories concerned (see Table 30 above) would give it
the means to take targeted retaliation measures against
for example by using the policy of
its competitors,
offering wholesalers appropriate rebates in order
to
weaken a competitor's product line.

(608)

this conclusion applies

follows from the above that

It
the parties' existing
competitors would not be able to exert enough pressure
to constrain the behaviour of the merged entity. As has
just been explained,
to the
parties' principal competitors in the relevant markets,
i.e. groups (such as ABB, Siemens or GE) with a
complete range of products on the relevant markets. It
also applies a fortiori to manufacturers with a more
limited product range (such as Hager, J Müller or Geyer).
These producers, often already marginalised, could even
lose
following
wholesalers
to
implementation of the notified transaction.

access

their

the parties.

(609) Lastly, as stated earlier, entry to the relevant markets
seems to be all the more unlikely since any potential
to tackle the formidable
entrant would have first
competitive strength of
If, as indicated
earlier, the parties' existing competitors were to end up
weaker as a result of the transaction, there is no doubt
that a new entrant would have considerable difficulty in
gaining any toehold in the relevant markets. This
conclusion is borne out by the history of the parties. As
Schneider
as
diversified and powerful as Schneider was unable,
despite several attempts, to gain a significant position in
a market which is less concentrated than the markets
which concern us here, what would be the chances of a
new entrant?

explains (213),

company

[…]*.

If

a

(606)

strengths of

the
from the

In the light of the above, it is clear that the transaction
would, on the one hand, lead to the establishment of a
group combining
the
companies,
competition between
freed
Schneider and Legrand; but, on the other hand, it would
also lead to the strengthening of each of the parties in
their
traditional areas of excellence and allow the
establishment of a group holding reference brands in
each of
the three applications categories (residential,
commercial and industrial) for the relevant markets.

each of

(211) Crédit Suisse First Boston report on Legrand (11 September
2000), Dresdner Kleinwort Wasserstein report on Schneider (18
January 2001).

(212) Legrand, Medium-term plans.

(610)

impossible

to imagine developing a

In conclusion, as one manufacturer has said (214),
‘it is
range
almost
the countries
comparable to the new entity in all
concerned.
for each
It would mean an investment
country of the order of EUR 5 to 10 million and more
than ten years of R&D work. The only partially credible
response would be to acquire existing ranges already in
the catalogues of accessible companies.'

(213) Schneider, reply to question 84.
(214) Hager, reply to phase I questionnaire.

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C.1.5 Conclusion regarding electrical switchboards

(611)

a

tangible

follows from the above that

the notified merger
It
would have
impact on conditions of
competition on the French and Italian markets for
moulded-case circuit breakers, miniature circuit breakers
and distribution board cabinets, on the French and
Portuguese markets
connection circuit
for mains
for miniature circuit
breakers and on the markets
breakers,
enclosure
earth leakage protection and
components for final panelboards in Denmark, Spain,
France,
also alter
competitive conditions on the markets for distribution
boards in France and Italy and the markets for final
Italy and
in Denmark, Spain, France,
panelboards
Portugal.
from the above, and in
particular its large market shares, the reputation of its
brands and its privileged relations with wholesalers, that
prior
to the merger Schneider enjoyed a dominant
position on all the French markets concerned, with the
exception of
in mains connection circuit
breakers.

It also follows

the market

It would

Portugal.

Italy

and

final
earth leakage protection and enclosures
panelboards. The conclusions are identical as regards the
markets for distribution boards in France and Italy and
the markets for final panelboards in Denmark, Spain,
France, Italy and Portugal.

for

C.2 CABLE TRAY MARKET

[10-20]* % (Schneider

(614) The merged Schneider/Legrand entity would be the main
player on the European cable tray market, with a market
share of
[0-10]* %, Legrand
[10-20]* %). Its main competitor would be Hager, with
of
an
[0-10]* %.
Schneider/Legrand would be
in nine EEA
countries, while Hager would be active in eleven. The
proposed transaction would lead to an addition of
market shares in only one national market, the United
Kingdom.

EEA-wide

market

active

share

the

relevant markets,
the other
rivalry between Schneider

(612) The merger could have a particularly significant impact
on prices for the equipment
in question. As stated
above, demand for this equipment is characterised by
low elasticity. The creation of an indispensable supplier
the weakening
on
or
competitors and the
marginalisation of
elimination of
and
the
Legrand (which was one of
the main driving forces
behind,
if not the primary source of, competition on
certain relevant markets, particularly in France) would
therefore be reflected in very significant price increases
for this equipment, both at the level of installers and
panel builders
level. This
final
conclusion is reinforced by the existence of significant
price disparities between Member States and the high
level of prices in the most concentrated markets.

customer

and at

(613) The Commission therefore concludes that the notified
merger would lead to the creation of a dominant
position on the Italian market for moulded-case circuit
breakers, miniature circuit breakers and cabinets for
distribution boards, on the French and Portuguese
markets for mains connection circuit breakers and on
the markets for miniature circuit breakers, earth leakage
in
protection and enclosures
Denmark, Spain,
Italy and Portugal. The transaction
would also strengthen the dominant position held by
Schneider on the French markets for moulded-case
circuit breakers, miniature circuit breakers and cabinets
for distribution boards and miniature circuit breakers,

final panelboards

for

C.2.1 The merged entity would have much larger
market shares than its competitors on the
United Kingdom market

(615) Table 32 below, which is based on data provided by the
parties (215),
the main
shows the market shares of
competitors on the United Kingdom cable tray market
in 2000.

Table 32

Competitors

Market shares (%)

Legrand

Schneider

RM Cable Tray

Unitrust

Unitrunk

Ackermann

Others

Source: the parties.

[30-40]*

[0-10]*

[0-10]*

[0-10]*

[0-10]*

[0-10]*

[30-40]*

(616)

In their reply to the statement of objections (216), the
parties claimed that the initial estimate of market shares
they had supplied to the Commission was incorrect.

(215) Reply by the parties dated 22 June 2001 to a request
information made by the Commission on 19 June 2001.

for

(216) Points 500 and 533.

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that

their

initial

stated

estimate

included
They
equipment for conveying electric power downstream of
final panelboards which therefore belonged to a separate
product market (trunking). Once that error had been
corrected, the market shares of the main manufacturers
present on the United Kingdom market were, according
to the parties, as follows:

Table of United Kingdom cable tray market shares (according to the
parties)

Legrand (Wiremold brand)

Schneider (Mita and Thorsman
brands)

Schneider + Legrand

Unitrust/Tyco

RM Cable Tray

Vantrunk

Metsec

Source: the parties.

[20-30]* %

[0-10]* %

[30-40]* %

[20-30]* %

[10-20]* %

[0-10]* %

[0-10]* %

(619) Neither does the parties' second estimate take account
of
the market share held by Schneider through the
Wibe brand. It is clear from information supplied by the
parties (217)
the
market.

that Wibe has a [0-10]* % share of

(620) Accordingly, in the light of the checks carried out by
the main
the market

the Commission,
competitors are approximately as follows:

shares of

Table of United Kingdom cable tray market shares

Legrand

Schneider (Wibe, Thorsman
and Mita brands)

Schneider + Legrand

Unitrust/Tyco

RM Cable Tray

Source: Commission investigation.

[20-30]* %

[10-20]* %

[40-50]* %

[10-20]* %

[10-20]* %

(617) The second estimate provided by the parties differs from
the first one chiefly as regards Unitrust/Tyco, whose
market share is [20-30]* % in the former as against only
[0-10]* % in the latter.

(621) Following

the proposed merger, Schneider/Legrand
would have a market share of around [30-40]* %, four
times greater than that of its nearest competitors, RM
Cable Tray and Unitrust/Tyco. The relevant market
would thus be characterised, in terms of market shares,
by the presence of a clearly dominant leader and a
number of also-rans.

(618) The checks carried out by the Commission have
the second estimate
nevertheless clearly shown that
provided by the parties greatly overestimates
the
position of Unitrust/Tyco, which stands at [5-15]* %,
very close to the parties' initial estimate.

(622)

shares

In addition, Schneider/Legrand would have even larger
market
the United
Kingdom cable tray market, as shown in the following
table, which is based on data provided by the
parties (218).

segments of

in several

Table 33

Steel cable trays

Steel cable ladders

Steel wire cable trays

Plastic cable trays

Glass fibre-reinforced
plastic cable trays and
ladders

Schneider/Legrand

[50-60]* %

[60-70]* %

[50-60]* %

[60-70]* %

[80-90]* %

RM Cable Tray

[20-30]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

Unitrust

Unitrunk

Others

[0-10]* %
(Perfast/Cablok)

[10-20]* %
(Vantrunk)

[20-30]* %
(Obo Bettermann)

[10-20]* %
(Marshall Tufflex)

[10-20]* %
(various)

(217) E-mail sent by the parties on 30 July 2001 in reply to a request
for information made by the Commission on 20 July 2001.
(218) Reply by the parties dated 19 July 2001 to a request
information made by the Commission on 12 July 2001.

for

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(623) Following the merger,

then, Schneider/Legrand would
not just be by far the leading group on the United
Kingdom cable tray market in general, but in addition it
would have particularly strong positions on virtually all
the relevant market. The only segment
segments of
the steel
where
strut-channel support system, where it would have a
market share of [0-10]* %, behind Unitrust ([40-50]* %
market share) and Metsec ([10-20]* %).

its position would be weaker

is

through the

(624) Thus the notified merger would have the effect of
reinforcing Schneider
addition (i) of
Legrand's market shares in the steel cable tray market
segments in which it is already dominant and (ii) of
glass
Legrand's
fibre-reinforced plastic cable tray market segments from
which it is absent.

positions

plastic

and

the

in

(625)

(626)

In their reply to the statement of objections, the parties
stated that [a large proportion]* of cable trays sold by
Mita were in fact welded wire mesh cable trays
produced by a third party (Métal Déployé). They also
stated that Mita was about to lose that contract with
Métal Déployé, which related both to the distribution by
Mita of Métal Déployé products and to the use of the
Cablofil brand owned by Métal Déployé.
[…]*.
According to the parties, the welded wire mesh cable
trays supplied by Métal Déployé to Mita and sold under
the Cablofil brand accounted for a [0-10]* % share of
the United Kingdom market, which reduced Schneider's
share to [0-10]* %,
including Thorsmann. They also
argued that Métal Déployé would shortly become a
the
serious
subsidiary it intended to create on the United Kingdom
market would, under the agreement
terminating the
supply contract, take over the sales force built up by
Mita for welded wire mesh cable trays and benefit from
the reputation of the Cablofil brand on that market.

competitor on the

relevant market:

It should first be noted that the supply contract between
Mita and Métal Déployé has not yet been actually
the contract was in fact
[…]*. And if
terminated,
terminated, Mita could easily source
the products
concerned from Wiremold,
the Legrand subsidiary
which markets the same products. The parties also
stated that Wiremold has a supply contract with
themselves
as
PEMSA.
acknowledge, steel sheet cable trays, steel wire cable
trays and steel cable ladders are fully substitutable.
Lastly, Mita's loss of the Cablofil brand would be offset
by the fact that it was coupled with the Mita brand (as
can be seen from Mita's product catalogues). For these

Furthermore,

parties

the

reasons, Mita would not be significantly weakened by
possible termination of the supply and brand licensing
contract linking it hitherto to Métal Déployé.

(627) As to the second argument put forward by the parties,
namely that Métal Déployé was shortly to enter the
United Kingdom market, it should first of all be noted
that such market entry is for the time being not certain
but merely an intention on the part of
the firm
concerned. In any event, even if Métal Déployé were to
enter that market, it would not automatically take over
the market shares which Mita held by reselling its
products. This is because,
first, as already explained
above,
the Cablofil brand was hitherto used in
conjunction with (and under the umbrella of) the Mita
brand:
the Cablofil brand on its own would not
therefore benefit from all the strength and reputation
enjoyed by Mita Cablofil. Second, Métal Déployé would
have
to
entering the cable tray market. Those barriers to entry
would even be
the United
Kingdom market in particular, by the strength of the
merged entity (as analysed below).

abovedescribed barriers

reinforced, as

to overcome

regards

the

C.2.2 The merged entity would have a broader product

range than its competitors

(628) Overall, Schneider/Legrand would be present

in all
segments of
the United Kingdom cable tray market.
None of its competitors has a product range covering all
segments of that market. In particular, none of its main
competitors has a range comprising plastic cable ladders
and glass fibre-reinforced plastic cable trays.

(629) Prior to the merger, only Legrand is present

in the
plastic and glass
fibre-reinforced plastic cable tray
segments, with products marketed under the Legrand
brand name. These segments, which are worth much
less than the other market segments, can be regarded as
niche markets that have been abandoned by the major
operators. Thus, Schneider, operating under the brand
names Mita, Wibe and Thorsman, and Wiremold, a
group purchased by Legrand in 2000, are present only
on the various segments of the steel cable tray market.
Accordingly,
in the
emergence of an operator with a unique position on the
relevant market.

the notified merger would result

(630) Details of the product range of the main operators on
the relevant market in 2000 are given in the following
table.

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Table 34

Steel strut-channel
systems

Steel cable trays

Steel cable ladders

Steel wire cable trays

Plastic cable trays

Glass fibre-reinforced
plastic cable trays

Schneider/Legrand

Present

Present

Present

Present

Present

Present

RM Cable Tray

Present

Present

Present

Present

Absent

Absent

Unitrust

Present

Present

Present

Present

Absent

Absent

Unitrunk

Absent

Present

Absent

Present

Absent

Absent

Vantrunk

Present

Present

Present

Present

Absent

Absent

Obo Bettermann

Absent

Present

Absent

Present

Absent

Absent

Metsec

Present

Present

Absent

Absent

Absent

Absent

Perfast/Cablok

Absent

Present

Present

Absent

Absent

Absent

from a demand perspective,

(631) As explained above, glass fibre-reinforced plastic cable
trays have technical characteristics which make them
particularly suitable for use in corrosive atmospheres.
these products
As such,
cannot be replaced by other
types of cable tray
produced using other materials. The Schneider/Legrand
merged entity would therefore face two types of
competitor on the relevant market: (i) relatively major
groups which are present on the main segments of the
relevant market, i.e. the various types of steel cable tray
and (ii) more specialist groups which operate only in
the plastic and glass fibre-reinforced plastic cable trays
segment
in certain
segments of the steel cable tray market.

(such as Marshall Tufflex) or

(632) This would enable Schneider/Legrand to resist any
attempts by those competitors
to strengthen their
positions to its detriment, because it would be able to
use its positions on market segments in which they are
not present, where the merged entity could apply higher
their offensive on other market
prices,
segments by engaging in price-cutting.
its
unique market position,
coupled with its other
advantages, would allow Schneider/Legrand successfully
to attack the positions of both categories of competitor.

to counter

Indeed,

C.2.3 The merged entity would have an unrivalled

array of brands

(633) Schneider/Legrand would have five brand names on the
United Kingdom cable tray market. The Thorsman, Mita
and Wibe brands owned by the Schneider group since
takeover of Lexel would be complemented by
its
Legrand's
and Wiremold.
Wiremold enjoys a high profile on the United Kingdom
cable tray market as one of the brands generating the
sales (219). To the Commission's
highest volume of
knowledge, no competitor can offer an array of brands
comparable in quantity or quality.

Legrand

names

brand

each

(634) As such, the new group would be able to implement a
multi-brand sales policy and thus fine-tune its response
to
particular,
Schneider/Legrand would be able to focus some of its
such as glass
brands on specific product
fibre-reinforced plastic cable trays, and use its other
brands for top-selling goods such as steel cable ladders.

segment.

demand

types,

In

(219) Reply by the parties dated 19 July 2001 to a request
information made by the Commission on 12 July 2001.

for

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(635) Schneider/Legrand's broad product range, coupled with
its array of brands, means that it would be able to
operate on both general and specialist markets more
successfully than any of its competitors, at least in the
short term. This would enable it to compete directly
with its competitors on their core market while using its
other brands,
at higher prices, on other market
segments where it is less affected by competition.

C.2.5 The merged entity would be the only player on

the market offering both cable trays and busbar
trunking

C.2.4 The merged entity would have privileged access

to the distribution network

(636) The parties have stated that, on average, electrical
for between 75 % and 95 % of

wholesalers account
cable tray manufacturers' turnover on cable trays (220).

(637) Schneider/Legrand would thus benefit from its strong
position on other
electrical distribution products
markets in the United Kingdom and, correlatively, from
the volume of wholesalers' sales of its products. The
new group would thus account for between 10 % and
20 % of the sales of one of the largest United Kingdom
wholesalers. By way of comparison, that wholesaler's
second-largest supplier accounts for less than [0-10]* %
of its sales.

(638)

In view of the importance of Schneider/Legrand to their
sales and the effects of discount and rebate schemes
operated by manufacturers, there would be a significant
it mildly — for wholesalers to
incentive — to put
maintain the turnover achieved with all the products of
the merged entity.

low-voltage electrical equipment

(639) Schneider/Legrand would also benefit from the tendency
of wholesalers to reduce the number of their suppliers
in each category.
of
Logically, this trend can be expected to be particularly
marked for products which have a low unit value and
take up a lot of space. As the market leader, with a
its
market share significantly higher than that of all
competitors, all segments taken together,
the merged
entity would be the privileged supplier of wholesalers
accounting for the bulk of manufacturers' sales.

(220) Form CO, p. 90.

(640) Schneider/Legrand would be the only player on the
United Kingdom market offering both cable trays and
busbar trunking. None of its competitors is present on
both of those product markets. Although demand-side
substitutability between cable trays and busbar trunking
is limited,
from this
the new group would benefit
unique position. It would be well placed to compete
with other operators on the cable tray market, both
from within the market, with its range of cable trays,
and from outside the market, with its busbar trunking
for power transport and distribution applications where
there is a certain degree of substitutability between the
two product categories.

C.2.6 Conclusion: the merged entity would be able to
raise the price of its products to its own benefit

(641) Schneider/Legrand would

have

several

its competitors,

In addition to a market

significant
advantages over its competitors on the United Kingdom
share
cable tray market.
substantially larger than that of
the
merged entity would have particularly strong positions
on several market segments, an unparalleled array of
brands, privileged access to wholesalers and a product
It
range combining cable trays and busbar trunking.
would therefore be able to raise the price of
the
products in question without suffering losses in market
share which would make such increases unprofitable. In
particular, Schneider/Legrand would be able to raise the
price of products marketed under some of its brands
only so that at least part of the demand which normally
would switch to different brands would shift to other
Schneider/Legrand brands for which prices stayed the
same. For the reasons set out above, neither competitors
nor wholesalers would be able to counter such a price
increase initiated by the new group. The Commission
therefore concludes that
the notified merger would
create a dominant position for Schneider/Legrand on the
cable tray market in the United Kingdom.

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C.3 ANALYSIS OF THE MERGER'S IMPACT ON MARKETS IN
ELECTRICAL EQUIPMENT DOWNSTREAM OF FINAL
PANELBOARDS

Role of the different players on the markets in
electrical equipment downstream of final
panelboards, and relations between them

C.3.1 Introduction

Manufacturers

(642) By combining two of the three main competitors at
European level, the notified merger would strengthen or
create a dominant position in several product markets
and
equipment
national markets
downstream of final panelboards.

electrical

in

(643) The electrical equipment
goods with
of
content

that

very

different

and prices. However,

in question covers a wide
functions,
variety
technological
these
products share the characteristic of being installed in an
electrical network downstream of the final panelboard
and are therefore also referred to as ‘wiring accessories'.
This means
they are powered by low-current
electricity, usually below 40 amps, or are not in contact
with electricity at all. The products in question do not
therefore use the same technologies as the other types
low-voltage electrical equipment described above.
of
Furthermore,
these products, unlike other
electrical equipment, are installed in the inhabited parts
of residential and commercial buildings, where they are
visible. On account of these two characteristics, the way
in which the markets for products downstream of the
final panelboard operate differs partly from that of the
product markets evaluated previously.

some of

(644)

In the markets for electrical equipment downstream of
final panelboards, the main European manufacturers are
currently Legrand, ABB and Schneider. Only those three
manufacturers are present on most or all of the relevant
product markets and national markets.

(645) Of the other manufacturers, only Siemens and Hager are
present on more than one product market and national
market in the EEA. All the other competitors are either
local operators with a strong presence in only one
country, such as Niko in Belgium (sockets and switches),
or
firms specialising in just one or more product
groups, such as Cooper (emergency lighting systems).

(646) The following table shows the presence of the main
manufacturers in the different segments defined by the
parties (i.e. segments which are sometimes broader than
the product markets defined for the purposes of this
Decision) and in the various Member States (*** =
market share in excess of 50 %; ** = market share of
20-50 %; * = market share of 5-20 %):

Table 35

Legrand

ABB

Schneider

Siemens

Hager

Sockets and
switches

*** F, EL, I
** A, P
* B, E, IRL, UK

** A, D, E, FIN, I, NL
* IRL, S

*** DK
** FIN, S, N
* B, D, F, GR

* A, D, GR

* UK

Control systems

Security systems

Components for
communication
networks

Fixing and
connecting
equipment

Trunking
equipment

** F
* E, I, P

* F, I

*** F
* E, IRL, NL, P

** FIN

*** P
** A, B, E, F
* GR, IRL

* DK

* D, FIN

* FIN, S, N

** DK, N
* FIN, NL, S

*** DK, N
** F, FIN, S
* I

*** S, N
** FIN, UK
* DK, NL

** D, FIN
* S

* D

* D

*** DK
** D
* B, F, FIN, NL, P, S, N

6.4.2004

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(647) Manufacturers

of

in their

products

downstream of

final
panelboards rely on the reputation of their brands and
the trust that installers and end users place in them.
They attempt to gain privileged access to wholesalers
mainly by offering substantial discounts and rebates but
shops.
also through promotion campaigns
Lastly, manufacturers maintain direct
relations with
installers, this being essential to stimulate demand for
their products. To that end, manufacturers provide
installers with training sessions, supply software to help
them design electrical installations and choose products
from their range, implement promotion campaigns on
the ground and provide technical assistance. Thus
Legrand's total commercial and marketing expenditure
represents roughly [0-10]* % of its turnover in France,
i.e. an amount of almost FRF [100-800]* million (221).

Wholesalers

for

the

role

downstream of

(648) Wholesalers play a particularly important
products

in
markets
final
panelboard, because most of those products are sold via
them. The Commission's investigations have shown that,
as a rule, the parties and their competitors sell 90 % or
more of their wiring accessories to wholesalers. The few
exceptions to the rule concern specific product types
(such as telephone sockets or control systems) and/or
certain countries. Wholesalers depend on the demand
created by manufacturers and brands known to installers
and final customers. They are therefore obliged to keep
in stock frequently requested products, which in practice
are those marketed under well-known brands.

(649)

a

rationalisation.

the number of

In addition, wholesalers are cutting the number of their
suppliers with
The
view to
Commission's investigations showed that, as a rule,
wholesalers attempt
their
to restrict
suppliers to three or four for each product category.
This focusing of wholesalers' purchases on a limited
number of
is also the result of various
discounts and rebates granted to them by the major
manufacturers, which may
than
[30-60]* % of
price. This
encourages
them to concentrate mainly on selling
products of manufacturers and brands which are already
well established and have a substantial market share.

represent more

products'

suppliers

selling

the

(221) Medium-term plan 2001-2005 Legrand SNC France. Document
annexed to Legrand's reply to point 315 of the questionnaire of 6
April 2001.

low-voltage

is of particular

Conversely, there is little incentive for wholesalers to
make major efforts to help a small brand or a new
entrant to grow or develop its market position. This
factor, which applies
electrical
to all
equipment,
importance for products
downstream of the final panelboard, because they are
produced
independent
manufacturers specialising in one type of equipment and
operating in a small number of Member States. These
small manufacturers have the most to lose from the
process of rationalisation and focusing of wholesalers'
purchases.

numerous

small,

by

(650) Lastly,

that

business

relations
of

including choice of

and manufacturers

the Commission's investigations demonstrated
between
unambiguously
equipment
wholesalers
downstream of the final panelboard are organised on a
national or local basis. This is true for all commercial
aspects,
selection of
ranges purchased and sold, price and discount setting
and implementation of specific promotion campaigns.
Lastly, wholesalers are relatively indifferent to the prices
of the products they purchase and are more concerned
with the trade discounts and rebates granted to them by
manufacturers, which generate a significant percentage
of their profit margin.

suppliers,

Installers

(651)

for

for

are

responsible

installing low-voltage
Installers
final customers. As already
electrical equipment
explained above,
they are generally conservative and
extremely attached to the brands which they are familiar
with and trust. For products downstream of the final
panelboard, installers are often brand specifiers. Project
managers (architects, engineering consultants, etc.) are
very rarely involved in such decisions, except as regards
control and security systems and components
for
communication networks which are usually installed
only in large commercial buildings. The installers'
influence in terms of brand choice is, however, limited
by any wishes expressed by their customers, prompted
essentially by aesthetic
considerations. This applies
mainly to sockets and switches, rarely to other products.

(652) The factors determining an installer's decision to choose
a particular brand are safety, which from the installer's
perspective is guaranteed by a well-known brand which
he trusts, ease of assembly and product availability in
the shop of his local wholesaler. Price is a more

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6.4.2004

marginal consideration, because any savings made by
buying products cheaply are generally less important to
the installer than the time he takes to familiarise himself
with a new product. In addition, since the installer is
not the final consumer, he passes on the cost of the
products he installs to his customers.

systems,

group, fixing and connecting equipment and trunking
equipment directly linked to those products, as well as
and
control
security and safety systems
the
connectors for data networks. Although each of
parties already has a broad product range,
it can be
compared with that of other non-specialist groups such
as ABB and Siemens and, to a lesser extent, Hager and
GE.

Final customers

(656)

for

the

not

complete

(653) Final customers are mainly interested in the overall
result, i.e. the complete electrical installation. The only
price quoted to them is
final
installation, the bulk of which consists of payment for
the installation work. In practice, final customers are not
informed of the price of each product installed and they
are
such
interested
obtaining
information. But
they tend to be more
interested in the choice of equipment downstream of
located
the
upstream. Products downstream of the final panelboard,
are visible
sockets and switches,
in particular
in
residential or
and therefore
commercial buildings,
personal aesthetic preferences may come into play at
that point.

final panelboard than in equipment

in general

normally

in

The Schneider/Legrand merged entity would be a
major player on most European markets for
electrical equipment downstream of the final
panelboard

systems.

If Legrand were merged with Schneider, a product range
of unparalleled breadth would be created. For example,
Legrand would bring into the new group its range of
self-contained emergency lighting units and its access
Schneider would
control
For
complement Legrand's
selection of
heating and lighting control systems. Lastly, the merger
of
and
components for communication networks would result
in the creation of a comprehensive range of VDI
products.

its part,
range with its

range of data

two groups'

sockets

the

(657) Schneider/Legrand would have a broader product range
than the other non-specialist groups. For example, ABB
is virtually absent
from the fixing and connecting
equipment market and the security and protection
systems market (222). Siemens is not active on the
market for VDI products and trunking systems (223). GE
is absent from the market for security systems and VDI
products (224). Hager does not operate on the markets
for security systems, VDI products, and fixing and
connecting equipment (225).

The merged entity would have a significantly broader product
range and geographic cover than any of its competitors

(658)

In terms of its geographic position, Schneider/Legrand
would also have unmatched coverage of European
territory.

for

electrical

all markets

(654) The merged entity would have a complete product range
covering
equipment
downstream of the final panelboard. It would also have
the EEA. The
comprehensive cover of
the role that Schneider/Legrand would
assessment of
from invalidating the
play at European level,
definition of
as
national, forms an integral part of the analysis of the
effects of
the product and
national markets affected.

the merger on each of

geographic markets

the whole of

relevant

the

far

(655) As regards product ranges,

it should be noted that
Schneider and Legrand are already two of
the main
non-specialist groups on the relevant product and
limited to
geographic markets. Their
for each
sockets and switches, but also comprises,

range is not

(659) Legrand has an especially strong presence in the
southern states of
It has very significant
the EEA.
positions on the sockets and switches market in France
([50-60]* %)
Italy ([60-70]* %), Portugal
([80-90]* %),
and Greece
is
([40-50]* %). Conversely, Schneider
particularly well established in the northern states of the
EEA, especially in Scandinavia, since its takeover of
is very well positioned on the sockets and
Lexel.
It
in Denmark ([70-80]* %), Finland
switches market

(222) Reply from ABB dated 7 March 2001.
(223) Reply from Siemens dated 28 February 2001.
(224) Reply from GE dated 26 February 2001.
(225) Reply from Hager dated 6 March 2001.

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Sweden

([40-50]* %)

and Norway
([30-40]* %),
([50-60]* %). The proposed merger would result in the
significant market shares held by Schneider in northern
Europe being combined with those of Legrand in
southern Europe.

(664)

the

equipment

downstream of

In their reply to the statement of objections (226), the
parties challenge this analysis, basing their
line of
argument on a calculation of the positions of the main
competitors on a hypothetical EEA-wide market in all
electrical
final
panelboard. If the market were defined in this way, the
merged entity would have a [10-20]* % share, as against
[10-20]* % for Siemens. It is clear, however, from the
table supplied by the parties in their reply, as well as
from Table 35 above,
this
hypothetical market derives mainly from its relatively
strong position in only two segments: control systems
and security and safety systems. Siemens' business in
those two segments is furthermore concentrated chiefly
in one Member State, Germany.

that Siemens'

share of

ranges of

certain products

(665) The parties also argued (227) that certain specialists, such
as Lucent, Pouyet, 3M, AMP, Quante, Alcatel and BICC,
had wider
than the
non-specialists. The names of the firms mentioned by
the parties in support of their arguments suggest that
this applies only to components for communication
networks. In any event, even if those specialists' product
ranges were wider than those of the parties and other
non-specialists, they are confined to a small number of
product categories. Such a situation cannot therefore
call
into question the finding that the merged entity
would have a wider range of wiring accessories than
specialist or
its competitors, whether
those of all
non-specialist.

(660) The merger would also significantly reinforce

the
presence of both parties on the various national markets
in which Schneider and Legrand did not previously have
a dominant position. On the Spanish sockets and
switches market,
the merger would
instance,
combine Schneider's [10-20]* % market share in 2000
with Legrand's [10-20]* %. The merged entity would
therefore be significantly strengthened and in a better
position to face competition from the leader, Simon,
which holds a market share of [40-50]* %.

for

(661) The only countries where the merged entity would not
have large market shares on any of the markets for
equipment downstream of the final panelboard would
be Germany and, to a lesser extent,
Ireland and the
Netherlands.

(662) Lastly, the merger would result in the creation of a
particularly powerful group on all French wiring and
electrical accessories markets.
the new
entity would have a near-monopoly on the sockets and
switches market and would control [80-90]* % of the
market for fixing and connecting equipment, [50-60]* %
of the emergency lighting market and [90-100]* % of
the weatherproof wiring accessories market.

In particular,

(666) Schneider/Legrand would therefore have a significantly
broader product range and geographic cover than any
of its competitors.

(663) The merged entity would thus have geographic cover
extending across the whole of the EEA and a product
its direct
range considerably broader
than that of
i.e. ABB,
competitors with a European presence,
Siemens, GE and Hager. In particular, Schneider/Legrand
would enjoy strong positions on several national
markets and on the sockets and switches market. These
strong positions would be a lever whereby the new
group could reinforce its positions on other product
markets or other national markets. It would also be able
to use its substantial presence on most geographic and
to undermine any attempt by its
product markets
to strengthen their own presence on
competitors
markets in which it has a leading position.

The merged entity would have an array of brands unmatched
by its competitors

(667) As the following table shows, Schneider/Legrand would
have an unprecedented array of brands, in terms of both
their number
for
and reputation,
equipment downstream of the final panelboard.

in the market

(226) Point 569.
(227) Reply to the statement of objections, point 573.

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Table 36

Manufacturers

Brands

Categories of wiring accessory for which the brand is used

Countries in which the brand is used

Schneider

Alombard

Sockets and switches, fixing and connecting equipment

France

Dalcotech

Security systems

Denmark

Eljo

Sockets and switches, fixing and connecting equipment

Sweden

Elko

Elso

Sockets and switches, control systems, fixing and connecting
equipment, VD products

Sweden, Finland, Greece

Sockets and switches, control systems, fixing and connecting
equipment

Germany, Greece

Esmi

Security systems

Finland, Sweden, Denmark, Germany

Eunea-Merlin
Gérin

Sockets and switches, fixing and connecting equipment

Spain, Portugal

Jojo

Control systems

Denmark, United Kingdom, France,
Sweden, Finland

Lexel

Control systems, VDI products

Sweden, Denmark, Finland

LK

Sockets and switches, control systems, VDI products, fixing
and connecting equipment

Denmark

Merlin Gérin

Control systems, security systems

France

Mita

Trunking systems

United Kingdom, Belgium, Ireland

Multisignal

Security systems

Sweden

Sarel

Sockets and switches, fixing and connecting equipment

France, Italy, Austria, Belgium

Schyller

Sockets and switches

Italy

Strömfors

Sockets and switches, fixing and connecting equipment

Denmark, Sweden, Finland, Germany

Telesafe

Components for data networks

Sweden, Germany, Netherlands

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Manufacturers

Brands

Categories of wiring accessory for which the brand is used

Countries in which the brand is used

Thorsman

Fixing and connecting equipment, trunking systems

Legrand

Legrand

Sockets and switches, control systems, security systems, VDI
products, fixing and connecting equipment, trunking systems

Denmark, Finland, Sweden, United
Kingdom, Belgium, Ireland, Netherlands,
Germany

France, Italy, Spain, Portugal, Greece,
United Kingdom, Sweden, Belgium,
Netherlands, Austria, Germany,
Luxembourg, Denmark, Finland, Norway

Arnould

Arnould

France

Bticino

Sockets and switches, control systems, VDI products, fixing
and connecting equipment

Italy, Spain, Portugal, Germany, Belgium,
Austria, France, Netherlands

Quintela

Trunking systems

Spain, Portugal, Germany, Belgium

Tegui

Tenby

Security systems

Sockets and switches, VDI products, fixing and connecting
equipment

Spain, Portugal

United Kingdom, Ireland

Ortronics

VDI products

Planet-Wat-
thom

Trunking systems

Ura/Lumatic

Security systems

ABB

ABB

Sockets and switches, control systems, VDI products

France, Italy, United Kingdom

France, Netherlands, Austria, Denmark,
Sweden, Finland, Germany

France, Spain, Belgium, Sweden

Germany, Austria, Netherlands, Belgium,
Luxembourg, France, Italy, Spain,
Netherlands, United Kingdom, Ireland,
Sweden, Norway, Denmark, Finland,
Greece

Busch-Jäger/
BJE

Sockets and switches, control systems

Germany, Austria, Netherlands, Greece

Niessen

Sockets and switches

Vimar

Sockets and switches, security and control systems, security
systems, VDI products, fixing and connecting equipment

Spain

Italy

GE

GE

Control systems

AEG

Sockets and switches

Lemag

Sockets and switches

Graesslin

Sockets and switches

Siemens

Siemens/Cer-
berus

Control and security systems

Source: the parties and third parties.

Germany, Netherlands, Belgium, France,
Italy, Spain, Netherlands, United Kingdom

Germany, Norway, Denmark, Sweden,
Italy

Spain, Portugal

Germany

Germany, Austria, Belgium, Luxembourg,
France, Italy, Spain, Netherlands, United
Kingdom, Ireland, Sweden, Norway,
Denmark, Finland, Greece, Portugal,
Luxembourg, Norway

L 101/106

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In

of

would

one
to

segments.

the market

enable
group
within
together
differentiated,
Schneider/Legrand
conduct
complementary commercial policies
for each brand.
Thanks to such policies, the new group would be able
to fine-tune its response to demand and competition in
particular,
each
Schneider/Legrand would be able to position brands to
appeal specifically to the upper, middle and lower end
of the market. Almost all the other operators on the
market
final
panelboard have only one brand per product group
and/or national market. It would be impossible, at least
in the short and medium term, for them to counter
comparable
Schneider/Legrand
such,
As
multi-brand
Schneider/Legrand would be able to compete directly
with their products in the segment which forms their
core market by using a specific brand, while using other
brands in other market segments.

by
commercial

downstream of

developing

equipment

strategy.

the

for

a

(672) Legrand has already established a commercial strategy
along the lines described above in countries where it
has several brands, and is already reaping the benefits.
As is explained in a Legrand internal document on
Italy (230),
‘synergetic' use of the Legrand and Bticino
brands is one of Legrand's strengths in that country. The
Bticino brand is positioned at the top of the range,
whereas the products sold under the Legrand brand are
in a lower price bracket. The rewards of a multi-brand
strategy are set out in an internal Legrand document on
Portugal (231), a country in which Legrand has three
brands: Legrand, Bticino and Quintela. This document
examines the ‘position, role and ambitions assigned to
each brand'. For example, it states that […]*.

(668) Each of the parties already has a very wide range of
brands which are particularly well established on several
national markets. The proposed merger would bring
together in a single group the brands of Schneider,
which are especially well established in the north of the
EEA (e.g. Elso, Elko, Thorsmann) and of Legrand, which
are especially well positioned in the south of the EEA
(e.g. Bticino and Legrand). Schneider/Legrand would
own the Legrand brand which, together with ABB,
is
the only truly European brand covering a broad range
of equipment downstream of the final panelboard.

(669)

In their reply to the statement of objections (228), the
parties argue that in each Member State the number of
main competing brands would be greater
than the
number of brands held by the new entity. However, the
parties are here comparing the number of brands held
by the merged entity with all the brands held by all
their competitors in each country, including the brands
of specialist manufacturers which produce only very
narrow product ranges, and not all the brands held by
each of their competitors.

(670) The number and quality of Schneider/Legrand's brands
would give the new group a significant competitive edge
given their role and importance to the functioning of
the relevant product markets. Brands are a crucial factor
in the choice of equipment downstream of the final
panelboard, particularly for small installers, who are the
largest group of purchasers of those products. Small
installers are used to working with a limited number of
different brands
an in-depth
knowledge of the technical characteristics of products.
This enables them to be fully conversant with the
installation process and thus save time. Manufacturers
themselves encourage this by organising training for
small
installation
design software. Many European manufacturers and
wholesalers have confirmed that,
in most national
markets, brands play a more important role than price
as far as that customer group is concerned (229).

installers and distributing electrical

they have

so that

(671)

In addition, the fact that several high-profile brands used
to market the same types of product would be brought

(673)

Indeed, one of Legrand's priorities is to develop a
coherent multi-brand strategy wherever possible. Thus
an internal Legrand document on France (232) states that
‘reinforcing an alternative position to the Legrand range
of wiring accessories' is a strategic priority objective for
the (Legrand Group) Arnould brand and company on
the wiring accessories market (sockets and switches) in
that country.

(228) Point 577.
(229) See inter alia the reply from Rexel dated 25 June 2001.

(230) Medium-term plan Italy Bticino, page marked Annex 4.
(231) Medium-term plan Legrand Portugal, page marked PMT 8.
(232) On the page marked (PMT 7).

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(674) The

a

internal

existence of

coherent Legrand multi-brand
strategy, and its purpose, are also highlighted by
Schneider. A Schneider
on
Spain (233) states that the Legrand and Bticino brands
are ‘complementary' and ‘differentiated' in that country.
the Bticino brand is
that
In particular,
positioned in the ‘upmarket'
the
segment, whereas
Legrand brand is targeted more specifically on the ‘large
projects' market.

it explains

document

(675)

is clear

from the foregoing that

It
the competitive
advantages deriving from the array of brands held by
Schneider/Legrand would far outweigh the additional
costs, mentioned by the parties in their reply to the
statement of objections (234),
they would incur
through the need to maintain a corresponding variety of
models, catalogues or packagings. Significantly, both
Schneider
the brands of
companies active on the wiring accessories markets
which they have acquired in recent years, as shown by
Table 36 above.

and Legrand have kept

that

(678) Wholesalers would be strongly encouraged to ensure
that the level of their purchases from Schneider/Legrand
at least remained constant. In addition, these complex
discount and rebate schemes, coupled with the new
group's predominant share of wholesaler purchases,
would give Schneider/Legrand a major lever vis-à-vis
those wholesalers.
Schneider/Legrand
In particular,
would be able to force wholesalers to distribute its new
products or product
ranges which they did not
distribute previously. To an extent, this is already the
case in countries where either one of the two groups is
already powerful. For example, […]* (236).

The Schneider/Legrand merger would eliminate a major factor
of competition on several markets

The merged entity would have privileged access to the
distribution network

(679) To date, the rivalry between Schneider and Legrand has
been a major factor of competition on several wiring
accessories markets. This assessment applies mainly to
national markets
is
in which one of
dominant and the other
is an actual or potential
challenger.

the groups

and

of
for

(676) As explained above, thanks to the breadth of its product
brands,
high
its
range
profile
the
significant
a
Schneider/Legrand would account
proportion of wholesalers'
turnover and, as a result,
would have a substantial share of their total purchases
in most EEA countries (see Table 31). As such, the new
group would
for
it would be possible for
wholesalers.
range of
wholesalers
comprehensive
equipment
panelboard
exclusively from Schneider/Legrand. Wholesalers who
chose to do so would even be able to offer their
customers several different brands,
in different price
brackets, for many of those products.

In particular,
to obtain a
downstream of

indispensable

partner

final

the

an

be

(677) Business relations between the manufacturers of

the
in question and wholesalers have been
products
described above (235) as part of
the
impact of
the notified merger on competition in
switchboard component markets. The same incentive
schemes for wholesalers as those described above exist
for the products in question.

the analysis of

(233) Eunea's 1996 Three-year strategic plan, p. 3.
(234) Point 580.
(235) See points 495 to 502.

(680) As already explained, Schneider is dominant in many
wiring accessories markets in northern Europe, whereas
Legrand has a similar position in many national markets
in southern Europe.

(681)

the

product markets

in
in
Scandinavia
In
which Schneider is the market
leader, Legrand is a
potential competitor on the brink of entering the
cases. Geographically
market
speaking,
in most
in the region (in […]*) but on
Legrand is present
In addition to switchboard
other product markets.
components,
emergency
lighting units. By its own estimates, Legrand controls
[10-20]* % of the market for such units (237).
It also
that Legrand's
states

same document (238)

self-contained

it markets

in the

(236) Medium-term plan […]* Bticino, page marked PMT2C'4.
Document supplied in response to point 315 of the questionnaire
of 6 April 2001.

(237) Medium-term plan Legrand, 2001-2005 […]*, pages marked LRP
3 (next). Document supplied in response to point 315 of the
questionnaire of 6 April 2001.

(238) Page marked LRP 7.

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priority objective is […]* (239). It therefore seems that
Legrand […]* and that
it anticipated a significant
response from Schneider. The proposed merger would
eliminate this competition factor, at least on the […]*
market.

The merged entity would be in a position to force its
competitors into a race to renew product ranges

(682) As regards national markets where Legrand is market
leader
in one or more wiring accessory product
markets, namely France, but also to a lesser extent
Spain, Italy, Portugal and Greece, Schneider is a direct
and dangerous competitor.

on

the

in wiring

is greater than [80-90]* %, explains that

(683) Thus a Legrand internal document on France (240),
where the group's share of the sockets and switches
market
the
main risk facing the group is ‘the creation by Schneider
Electric of an alternative competing with the Legrand
brand
of
accessories
Alombard-Sarel-Infra +'. It is stated on the same page of
that document that […]*. The product ranges offered by
Alombard, Sarel and Infra + cover a very large share of
wiring accessories product markets. Alombard and Sarel
sell sockets, switches, fixing and connecting equipment
and trunking systems. Infra +, for its part, specialises in
data sockets. It should also be noted that the Schneider
range in France is complemented by the Lexel product
range. The proposed merger would therefore prevent
the creation of a credible competitor to Legrand in the
country in which it has a dominant position.

basis

(684) Similarly, a Legrand internal document on Greece (241),
the

where Legrand controls almost
sockets and switches market, states that […]*.

[40-50]* % of

(685)

for

present

on markets

In Italy, Spain and Portugal, Schneider is absent or
marginally
equipment
downstream of final panelboards. However, it does have
a
significant presence on switchboard component
markets. It should be relatively easy for it to launch its
they are
ranges of wiring accessories given that
distributed by the
electrical
as
switchboard components […]* (242).

same wholesalers

(686) Regular renewal of product ranges downstream of final
panelboards is a way for well positioned manufacturers
to attack smaller manufacturers while also maintaining
or improving the image of
their brands. A Legrand
internal document on Italy (243) states that the renewal
rate of the range is one of the group's strengths in that
country.
equipment
The
purpose
final panelboards is to adapt visual
downstream of
aspects of the products to meet consumer demand and
also to enhance those products with new functions,
including electronic functions such as detection and
remote control.

renewing

of

(687) The purpose — and effect — of this constant renewal
of product ranges is to reduce the lifetime of products
the resources of smaller competitors
and to exhaust
if
with a view to ejecting them from the market
internal document (244) on
possible. A Schneider
Alombard states that a shorter life cycle of sockets and
switches […]*.

Conclusion

the EEA.

It would result

(688) The Schneider/Legrand merger would radically alter the
structure of competition on wiring accessories markets
in a large part of
in the
creation of a group with several major advantages over
its competitors, in particular the breadth of its product
its array of
range, the extent of its geographic cover,
brands
the
If
fragmentation of demand from installers and their
loyalty to high-profile brands are also taken into
account, the new group would be able to impose price
increases without suffering corresponding market losses.
The assessment of incentives for wholesalers suggests
that
line with
to
Schneider/Legrand's policy (245).

relations with wholesalers.

they would

and its

tend

fall

in

(239) Page marked Annex 3.
(240) Medium-term plan Arnould, page marked Annex 3.
(241) Medium-term plan Legrand, page marked PMT2C'4.
(242) Medium-term plan Spain Bticino, page marked PMT2C'4.
Document supplied in response to point 315 of the questionnaire
of 6 April 2001.

(243) Medium-term plan 2001-2005 Legrand Italy, page marked

Annex 4.

(244) Alombard product/market

strategy. Document

supplied in

response to point 113 of the questionnaire of 29 June 2001.

(245) See points 495 to 502.

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C.3.2 Sockets and switches

(689)

In the sockets and switches market, the market shares of the parties and their main competitors are as follows (246):

Table 37

Segment : 5A1 Wiring accessories (market shares in 2000)

Schneider

Legrand

Hager

Siemens

ABB

[0-10]* %

[20-30]* %

[10-20]* %

[20-30]* %

[0-10]* %

[20-30]* %

[0-10]* %

[0-10]* %

[10-20]* %

[30-40]* %

[70-80]* %

[10-20]* %

[10-20]* %

[10-20]* %

[0-10]* %

[80-90]* %

[30-40]* %

[0-10]* %

[40-50]* %

[10-20]* %

[0-10]* %

[60-70]* %

[10-20]* %

[30-40]* %

[20-30]* %

[0-10]* %

[0-10]* %

[30-40]* %

Austria

Belgium

Germany

Denmark

Spain

France

Finland

Greece

Italy

Ireland

Luxembourg

Netherlands

Portugal

[0-10]* %

[50-60]* %

United Kingdom

[0-10]* %

[10-20]* %

[0-10]* %

Sweden

EC

Norway

EEA

[40-50]* %

[10-20]* %

[10-20]* %

[30-40]* %

[0-10]* %

[0-10]* %

[10-20]* %

[50-60]* %

[10-20]* %

[10-20]* %

[20-30]* %

[0-10]* %

[0-10]* %

[10-20]* %

Source: estimates supplied by the parties.

(246) The data provided by the parties refer to ‘segment 5.A.1' and
therefore include telephone and television sockets, weatherproof
wiring accessories and VDI sockets sold as part of the range of
sockets and switches. However,
the parties have stated that
market shares do not vary significantly if telephone, television
are
and VDI
excluded.

sockets and weatherproof wiring accessories

L 101/110

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(690) The above data show that,

in France, Legrand already
enjoys a near-monopoly, with a market
share of
[80-90]* %. In the light of that dominant position, and
given the virtual absence of ABB and Siemens from the
French market, Schneider, with a market
share of
[0-10]* %, is the only competitor which could currently
pose a credible threat
its
freedom of action.

to Legrand and restrict

Indeed,

(691) This is because Schneider has two widely known brands,
Alombard and Sarel. Alombard is
especially well
entrenched at the upper end of the market. As the third
player on the European market, with strong positions in
northern Europe and, at the same time, a major player
in the other low-voltage electrical distribution markets
in France, with privileged access to the large wholesaler
groups, Schneider has the potential to stabilise and even
improve its position on the sockets and switches market
this is acknowledged in Legrand
in France.
internal documents, which refer on several occasions to
the competitive threat posed by Schneider (247). The
notified merger would eliminate that threat. Only one
to develop on the
other operator has the potential
French sockets and switches market, having mastered
the Franco-Belgian technology: Niko ([0-10]* % market
share in 1999) (248). However, […]*, which reduces the
likelihood of strong competitive pressure between the
two brands. By putting an end to competition from
Schneider and providing the merged entity with a
[90-100]* % market share, the planned merger would
consolidate
Legrand's
existing dominant position in France.

significantly

strengthen

and

(692)

that

In the statement of objections, the Commission pointed
out
the notified merger would also create or
strengthen dominant positions in Italy, Portugal and
Greece.

(693)

In their reply, the parties dispute this analysis and argue
that, despite Legrand's strong positions on those three
markets,
an
transaction would
anticompetitive effect given Schneider's relatively small
market
larger
competitors.

and the presence of other

shares

have

not

the

(247) See above quotations, footnote 210.
(248) The market shares of all competitors in the sockets and switches
market not featured in Table 37 reflect data for 1999 provided by
the parties in Form CO.

(694) The parties' reasoning can be accepted for the Italian
and Portuguese markets; in the case of Greece, however,
the finding set out in the statement of objections must
be maintained.

(695)

In the first place, as explained earlier, Schneider is the
only competitor able to exert competitive pressure on
Legrand in the sockets and switches market at European
level. Schneider's occasionally weak existing position on
certain national markets does not therefore necessarily
reflect its competitive potential. It is only if Schneider's
in comparison
starting position is genuinely marginal
with that of the other competitors that negative effects
of the transaction concerned on competition cannot be
proven.

(696)

In Italy, Legrand currently has a dominant position, with
a market share of [60-70]* % and two solidly positioned
brands, Bticino and Legrand. Schneider, on the other
hand, currently has only a [0-10]* % share of
the
market, whereas other players such as ABB (via its
subsidiary Vimar), with [20-30]* %, and Gewiss, with
[10-20]* %, are much better placed. Even taking into
account the elimination of potential competition from
Schneider,
the overlap between market shares is not
significant enough for it to be established with sufficient
the notified transaction would alter
certainty that
competitive
Italian sockets and
switches market to the extent that Legrand's existing
dominant position would be strengthened.

conditions on the

(697) The same is true in Portugal, where Legrand currently
has a very strong position, with a market share of
[50-60]* % and four well established brands, Legrand,
Bticino, Quintela and Terraneo, while Schneider has
only a 1 % market share. Legrand's main competitors
are General Electric (GE), Elapel and JSL, with market
[0-10]* %
shares
of
respectively.
cannot be
established with sufficient certainty that the elimination
of actual and potential competition from Schneider
would lead to the creation or
strengthening of a
dominant position.

[20-30]* %,
In these

[10-20]* % and

circumstances,

it

(698) The situation is different

in Greece, however. With
[40-50]* % of the Greek market, Legrand also has a
large market share which gives it a considerable advance
on its main competitors, Siemens ([10-20]* %), Berker
([10-20]* %) and Jung ([10-20]* %), but does not place it
in a dominant position comparable to the one it enjoys
in Italy or Portugal, for example. Schneider, through its
share
is only fourth in terms of market
brand,

6.4.2004

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([0-10]* %), but Legrand regards it as one of its main
competitors (249). The planned merger would eliminate
this competitor and create a market leader with a share
of [40-50]* %, three times the market share held by
Siemens and three and a half times that of the next two
players. Alongside the merged entity, Siemens would be
the only competitor with a significant presence on other
product and geographic markets; Berker and Jung, on
the other hand, are German SMEs
specialised in
equipment downstream of the final panelboard.

(699) To sum up, in view of (i) Legrand's existing strong but
not yet clearly dominant position, (ii) the contribution
that Schneider's not insignificant share would make to
the remaining
that position and (iii)
competitors, who would
in
comparison, it is clear that the planned merger would
alter competitive conditions considerably on the sockets
and switches market in Greece and lead to the creation
of a dominant position for the merged entity.

be much weaker

the position of

(700) Accordingly, the Commission concludes that the notified
merger would strengthen a dominant position on the
sockets and switches market in France and would create
a dominant position on that market in Greece.

C.3.3 Weatherproof wiring accessories

(701) On the weatherproof wiring accessories market, there is
overlap between the parties' market shares in Germany,
Spain, France and Greece. Although this overlap is not
likely to give rise to competition problems in Germany
(where, according to the parties, Legrand has a market
share of [0-10]* % and Schneider [0-10]* %) or Greece
(according to the parties, Legrand has a market share of
[20-30]* % and Schneider [0-10]* %), the parties' market
shares are significantly higher in France and Spain.

(702)

for 2000,
the parties have indicated that,
In France,
Legrand's market share is [80-90]* % and Schneider's
[0-10]* %. This information broadly tallies with the
estimates contained in Legrand's Medium-term plan
2001-05 France, according to which Legrand (including
Arnould) has a market share of
[90-100]* %, while
Schneider has [0-10]* %. Both sets of estimates see
for
Legrand as dominant on the

French market

(249) Medium-term plan Legrand Greece, referred to in footnote 211.

weatherproof wiring accessories. The planned merger
would eliminate any remaining competition on the
market and reinforce Legrand's dominant position.

(703)

for 2000 at

In Spain, the parties have estimated Legrand's market
share
[30-40]* % and Schneider's at
[0-10]* %, on the basis of an estimated market volume
of EUR [10-30]* million. However, the Medium-term
plan 2001-2005 Bticino Spain estimates the size of the
market at ESP [1 000-3 000 ]* million, or EUR [0-10]*
million; according to the same document, Legrand
(including Bticino) has a market share of [60-70]* %,
while Schneider, Simon and Gewiss have [0-10]* % each.

(704) Legrand has explained that

and

from wholesalers

the data featured in the
Medium-term plans are estimates by the sales forces
working in the respective countries based mainly on
data
to
underestimate the overall size of the market. However,
the bulk of weatherproof
Legrand has accepted that
wiring accessories is distributed through wholesalers
and that, as a result,
the
market should be roughly correct (250). Legrand has not
indicated that it sells weatherproof wiring accessories
via channels other than wholesalers (251).

the overall assessment of

therefore

tend

(705) According to Schneider, Legrand's market

share is
[40-50]* %, Schneider's is [0-10]* % and the overall
market is worth ESP [1 000-3 000]* million,
i.e. EUR
[0-10]* million.

(706) A third party has provided market share estimates of
between [50 and 80]* % for Legrand and below
[0-10]* % for Schneider; according to that third party,
the overall market volume is EUR [0-10]* million (252).

estimates of

accessories market,

the present proceedings

the
(707) Having compared these different
the Spanish weatherproof
volume and structure of
wiring
has
the Commission
concluded that the estimates provided by the parties as
part of
are bound to
overestimate the overall market volume and, as a result,
underestimate Legrand's market share. However,
the
estimates featured in the Medium-term plan Legrand
Spain are very close to the estimates provided by the
aforementioned third party and also to the estimates
supplied by Schneider, at
regards market
volume.

least as

(250) Reply dated 10 July 2001, question 21, referring to the replies to

questions 20 and 4.

(251) Reply dated 10 July 2001, question 19.
(252) Reply from Simon to the phase II questionnaire for competitors

(segment 5).

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(708) Accordingly, the Commission concludes that the volume
of the weatherproof wiring accessories market in Spain
is not significantly larger than EUR [0-20]* million. If a
[10-20]* % safety margin is added in favour of
the
parties,
the market can thus be estimated at EUR
[0-20]* million. On that assumption, and on the basis
of
turnover data provided by the parties themselves
(Legrand: EUR [0-10]* million, Schneider: EUR [0-10]*
million), Legrand's market share should represent at
least [40-50]* % and Schneider's at least [0-10]* %.

(714)

position in comparison with the main competitors,
Simon [0-10]* %) and ABB/Niessen ([0-10]* %) (254),
particularly bearing in mind that Simon leads
the
market in ordinary sockets and switches in Spain with a
[40-50]* % share.

on

the

rapid

success

Schneider's

In reply to the second argument, it has to be recognised
Spanish
that
weatherproof wiring accessories market, compared with
the relative weakness of competitors such as Simon and
ABB/Niessen (despite their strength on the ordinary
sockets and switches market), is much more a reflection
of Schneider's competitive strength than of an alleged
absence of barriers to entry. It should be stressed here
that Schneider is far from being a new entrant in the
low-voltage electrical equipment markets in Spain: it has
a well established position in the markets for electrical
switchboard components in that country. It also has a
already
range of weatherproof wiring
successfully marketed in France,
the
weatherproof accessories sold in Spain under the Eunea
brand are in fact imported. There is no other competitor
who is both strongly established on other product
markets in Spain and has a recognised brand and a full
range of weatherproof wiring accessories.

from where

accessories

(715) Accordingly, the Commission concludes that the notified
merger would strengthen a dominant position on the
weatherproof wiring accessories market in France and
would create a dominant position on that market in
Spain.

C.3.4 Emergency lighting/self-contained emergency

lighting units

has

[0-10]* %.

(716) On the market for emergency lighting systems, there is
a significant degree of overlap between the parties'
activities
in France, where Legrand (including its
subsidiaries URA and Lumatic) has a market share of
[50-60]* %, while
If
Schneider
self-contained emergency lighting units alone are taken
into account,
the market shares are [60-70]* % for
Legrand and [0-10]* % for Schneider. While Legrand
makes
them
(mainly from Kaufel for the French market). The parties'
main competitors are Cooper (Luminox: [10-20]* %) and
the other competitors have
Chubb ([0-10]* %); all
market
than [0-10]* %. Legrand is
less
therefore already the undisputed leader on the market
with a market share almost four times larger than its
nearest competitor. In the light of this, it can be argued
that Legrand has a dominant position on the market. In

itself, Schneider buys

these products

shares of

(709) On the basis of those data, Legrand is clearly already the
market
leader, with a considerable gap between its
market share and that of its main competitors (Simon,
Gewiss), each of which is estimated at [0-10]* % by the
Medium-term plan Legrand (253). This already strong
position would be reinforced by Schneider's share if the
notified merger were to proceed. Although Schneider's
the Spanish weatherproof wiring
current
share of
accessories market
the
is small,
company's full competitive potential on that market,
given that it did not enter it until 1999. Indeed, the fact
that Schneider has been able to conquer a market share
of at least [0-10]* % in just two years, and that in a
from which it had previously been absent,
market
suggests that
is well placed to bring significant
competitive pressure to bear on Legrand. In eliminating
this competition between Schneider and Legrand, the
planned transaction would probably
in a
dominant position for the merged entity.

it does not reflect

result

it

(710)

In their reply to the statement of objections, the parties
used two arguments to challenge the Commission's
analysis:

(711)

First, the addition of Schneider's market share would
only marginally strengthen Legrand's position and
would not therefore have any anticompetitive effect.

(712) Second, Schneider's

relatively rapid success on the
accessories market
Spanish weatherproof wiring
demonstrates that that market is wide open and can be
easily penetrated by any new competitor.

(713) However, the [0-10]* % market share currently held by
Schneider is far from negligible. As explained earlier, it
reflects considerable growth potential given Schneider's
relatively recent entry into the market. Furthermore,
Schneider's market share already represents a significant

(253) The parties have not provided estimates of the market shares of
those competitors for the purpose of the present proceedings.

(254) Market shares according to the parties' reply to the statement of

objections, point 659.

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comparison, Schneider entered the French emergency
lighting market only recently and had a market share of
only [0-10]* % in 1997, when Legrand still controlled
[70-80]* % of the market. This shows that, in the space
of
just a few years, Schneider has become a serious
competitor for Legrand. It has succeeded in capturing a
significant market share from the market leader, and is
now able to constrain Legrand's behaviour
to an
appreciable extent. This is confirmed by an internal
document of URA, a Legrand subsidiary, which refers to
the ‘difficulty of maintaining prices in the face of wider
product availability and Schneider's two-pronged attack:
pressure on prices in general […]* and pressure on the
“mix”, given that Schneider's attack focuses on “basic”
products' (255).

share of almost

(717) The Schneider/Legrand merger would put an end to this
competitive pressure and give the merged entity a
market
[50-60]* % in emergency
lighting as a whole and of more than [60-70]* % in the
market for self-contained emergency lighting units. As a
result, the merged entity's dominant position would be
the other
strengthened to such an extent
competitors,
Schneider's
specialist
resources and access to wholesalers, or potential market
entrants, would be even less able to check its market
third party has observed (256),
behaviour. As
Schneider's discount calculation system would not allow
competitors to be competitive.

that
lacking

firms

a

(718)

In their reply to the statement of objections, the parties
did not dispute this analysis as such, but simply argued
that the transaction would not have any adverse effect
in
on competition, taking a broader product market
security and safety systems for protecting life (covering
both emergency
and fire detection). As
demonstrated earlier, this argument does not stand up.

lighting

C.3.5 Analysis of the impact of the merger on
competition on the markets in fixing and
connecting equipment

at European level.

(720) The Schneider/Legrand combined entity would be the
main player on the market in fixing and connecting
equipment
an
aggregate EEA market share of [20-30]* % and would be
present in 11 Member States. The parties state that their
main competitor at European level would be Hager,
with a market share of [10-20]* % but a presence in
only one Member State, Germany. Hager nevertheless
stated that it is not active in this product market (257).

It would have

(721) The planned merger would lead to an addition of very
substantial market shares on the French market in fixing
and connecting equipment.

The merged entity would have a particularly large
share of the French market

(722) Schneider/Legrand would have a share of [70-80]* % of
the French market in fixing and connecting equipment.
Legrand has a [50-60]* % share of this market, to which
would be added the [20-30]* % market share held by
Schneider (2000 figures). The parties were unable to
identify other players on this market.

(723) What

French market

is more, Schneider/Legrand would have even
larger market shares for certain categories of fixing and
connecting equipment. Schneider thus has a [20-30]* %
share and Legrand a [40-50]* % share (2000 figures) of
the
and
junction boxes (258). The parties were unable to identify
their competitors for flush-mounting boxes and junction
this product category
boxes. Legrand explains
that
relevant
total
for
accounts
market (259).

in flush-mounting boxes

around 40 % of

the

(719) The Commission therefore concludes that the notified
merger would strengthen a dominant position in the
emergency lighting market or in a potentially narrower
market for self-contained emergency lighting units in
France.

(724) The proposed transaction would therefore have the
effect of combining the market shares of the two main
players on the relevant market.

(257) Reply by Hager dated 6 March 2001.
(258) Reply by the parties to point 239 of the questionnaire of 6 April

2001.

(255) SAFT URA — Medium-term plan 2001-2005.
(256) Kaufel, e-mail of 3 July 2001.

(259) Annex supplied by Legrand in reply to point 239 of

the

questionnaire of 6 April 2001.

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The merged entity would have an unrivalled array
of brands

(725) Schneider/Legrand would operate on the French fixing
and connecting equipment market with four brands, all
enjoying considerable goodwill. The Alombard and Sarel
brands owned by Schneider would thus be pooled with
the Legrand brands Legrand and Arnould. These brands
are well known by installers since they account for the
bulk of sales of sockets and switches in France.

(726) This would enable

the new group to develop a
multi-brand commercial strategy in order to fine-tune its
response to each demand segment. Sarel already caters
more specifically for demand from industry, while
Alombard has an upmarket brand image; Legrand and
Arnould, for their part, enjoy an excellent reputation in
the residential
sector. The Schneider/Legrand entity
would therefore be in a position to counter moves by
its competitors by focusing one of its brands on its core
market while using its other brands to serve the other
market segments.

are

products

junction boxes

all
these
In particular,

of the final panelboard in order to defend or strengthen
its position on the fixing and connecting equipment
highly
market
since
complementary.
and
flush-mounting boxes are designed to receive or to be
used in conjunction with other wiring accessories. In a
Legrand catalogue, for example, sockets and switches,
trunking, and fixing and connecting products are
presented in combination (261). Likewise, an Arnould
catalogue explains which lines of sockets and switches
can be installed on the Igloo line of flush-mounting
boxes (262).

The merged entity would have privileged access to
wholesalers

(730) The parties explain that, on average, [90-100]* % of
is marketed via
fixing and connecting equipment
wholesalers (263).
have
privileged access to distribution channels for its fixing
and connecting products: the new group would be an
essential supplier at
the main wholesalers
operating in France.

Schneider/Legrand

would

least

for

The merged entity would have strong positions on
all the French markets in products downstream of
the final panelboard

(731) Rexel, the leading distributor of electrical equipment in
France, with an estimated share of [40-50]* % of the
French market, thus states that Schneider/Legrand would
account for between [40-50]* % of its sales (264)
(see
Table 31 above).

(727) Schneider/Legrand would be particularly strong in
France on all the markets in products downstream of
the final panelboard. In particular, the new group would
have more than an [80-90]* % share of the sockets and
switches market. It would also have a [40-50]* % share
of the trunking market (based on 1999 figures).

(732) The new group would therefore enjoy a unique position
as regards the distribution of its products. Given what
has been explained above concerning the systems of
discounts and rebates, wholesalers would be inclined at
least to maintain their sales of the new group's fixing
and connecting equipment.

(728) Fixing and connecting equipment is marketed via the
same distribution channels as other electrical equipment
downstream of the final panelboard, and demand for
these products is chiefly from installers. The parties
explain that manufacturers generate [90-100]* % of their
turnover
final
to wholesalers and that
panelboard through sales
from
installers account
wholesalers (260).

[90-100]* % of orders

downstream of

products

the

for

in

(729) The new group could therefore use its strength on all
the French markets in electrical equipment downstream

(260) Form CO, p. 102.

The merged entity would have a full range of fixing
and connecting equipment (barrier to entry)

(733) The fixing and connecting equipment market covers a
large number of product types. These exist in an even

(261) Legrand catalogue for 2001, p. 206 et seq.
(262) Arnould general catalogue for 2001.
(263) Form CO, p. 102. See also the Annex supplied by Legrand in

reply to point 132 of the questionnaire of 6 April 2001.
(264) Reply by Rexel to the Commission's phase II questionnaire.

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larger number of versions. Being able to offer a full
range of products constitutes a major competitive
advantage on two counts.

least

the bulk of

(734) First, it is simpler and quicker for an installer to buy all
the fixing and connecting
or at
equipment he needs from one and the same supplier.
An installer opting to source from different suppliers
would
different
manufacturer's catalogues or visit wholesalers' shelves
both
displaying
time-consuming tasks that would not be justified by the
low cost of the products in question.

each manufacturer's

products,

consult

several

either

have

to

(735) Second, a manufacturer with a full range of products
benefits from their high level of complementarity. For
example, a Sarel catalogue explains that the junction
boxes of the Murabox range ‘can be easily fitted with
the Sarel terminal strip' and with ‘the Sarel terminal
block' (265).

(736) Lastly, a manufacturer that is able to offer a full range of
products makes users accustomed to using its products.

would bring together the undisputed top two players on
that market. The merged entity would have all
the
necessary levers for controlling the French fixing and
connecting equipment market. It would in particular be
able to impose its prices on the market. Given its
weight in the distribution system, wholesalers would not
be able to oppose any such price increases (see above).
The notified transaction would therefore lead to the
creation of a dominant position on the French market
in the sale of fixing and connecting equipment. In their
reply to the statement of objections, the parties did not
contest this conclusion.

C.3.6 Analysis of the impact of the merger on

competition on the markets in transformation
equipment

(738) The parties' activities on these markets overlap chiefly in
France,
its
sales
own-manufactured products and sales by Schneider of
products
from a German manufacturer,
Murrelektronic.

through

Legrand

sourced

by

of

Conclusion

(737) The proposed transaction would have the effect of
eliminating the essential basis for competition on the
French market in fixing and connecting equipment. It

(739)

In their reply to the statement of objections, the parties
supplied the following table showing their own and
their main
the
on
competitors' market
transformer and power supplies markets in France:

shares

Table of transformer and power supplies market shares

FRANCE

Transformers and power supplies

Transformers

Power supplies

LEGRAND

[20-30]* %

[30-40]* %

[10-20]* %

SCHNEIDER

[0-10]* %

[0-10]* %

[0-10]* %

SCHNEIDER+LEGRAND

[20-30]* %

[40-50]* %

[10-20]* %

SIEMENS

CECLA

ELC

LAMBDA

LUTZE

[0-10]* %

[0-10]* %

[10-20]* %

[0-10]*

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[10-20]* %

[10-20]* %

[10-20]* %

(265) Sarel general catalogue for 2001, pp. 448-449.

L 101/116

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6.4.2004

FRANCE

Transformers and power supplies

Transformers

Power supplies

MURRELEKTRONIC

OMRON

MENG

MARY

RAE

PALMIERI ROBIN

AEM

[10-20]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

[0-10]* %

OTHERS (approx. 50)

[20-30]* %

(740)

the

leader

on the

large as

undisputed

It can be seen from the above data that Legrand is
French
currently
transformer market, with a market share five times as
large as its nearest rival, Siemens, and six or seven times
the third and fourth ranking players,
as
the market,
Schneider and Cecla. The remainder of
is fragmented,
accounting for [40-50]* % of the total,
with no other competitor holding a market share in
[0-10]* %. The notified transaction would
excess of
therefore
sole
eliminate
competitors whose market share is not insignificant; it
would also increase the merged entity's lead on its
nearest competitors, giving it a market share six times
as large as Siemens and eight times as large as Cecla.

Legrand's

one of

three

(742)

In their reply to the statement of objections, the parties
argue that, despite this market structure, the transaction
would not create or strengthen a dominant position.

(743) First,

they stress

is present on the
that Schneider
transformer market only through the resale of products
manufactured by a competitor. But that does not change
the market analysis,
share
reflects its own competitive strength and not that of
another manufacturer.

since Schneider's market

are

concerned

direct
indeed
to end customers. Nevertheless,

(741) To the new entity's market share would be added its
privileged access to the distribution network. This factor
is less crucial to the analysis of the relevant market
given the fact that the end users are industrial customers
who are able to obtain supplies other than through
wholesalers: a substantial proportion ([30-70]* %) of the
by
products
manufacturers
the
replies given by competitors during the investigation
show that access to wholesalers does have an impact on
competition in the transformer market. According to
one
gaining
control over the wholesale distribution network, making
to find distribution
it
channels (266). According to another third party,
the
merger would enable the merged entity to eject
its
competitors first from the market in sales to wholesalers
and then from the market in general.

impossible for other brands

increasingly

competitor,

Schneider

sold

is

(266) Polylux, reply dated 9 July 2001.

(744) Likewise,

that

the parties' argument

the transformer
market as such is contracting as a result of the gradual
substitution of power supplies for transformers does not
rule out the possibility of the creation or strengthening
of a dominant position on that market or the need,
from the standpoint of merger control, for a sufficient
degree of competition to be maintained as long as the
market exists.

(745) The parties also maintain that, even after the planned
merger, the existence of a large number of competitors
of various sizes, ranging from large groups such as
Siemens, Moeller, Omron or Phoenix, offering a full
level,
range of products, to small competitors at local
sufficient competitive pressure on the
would exert
merged entity. The same would apply to at
least
potential competition from manufacturers of power
supplies.

(746) However, with the exception of Siemens,

the large
groups mentioned are absent from or only marginally
transformer market. By
present

on the

French

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eliminating one of the competitors of significant size,
the notified transaction would furthermore considerably
reduce the ability of
the remaining competitors, and
particularly of the many small local manufacturers, to
restrict the merged entity's freedom of action. As for
substitute competition from the neighbouring power
supplies market it has to be recognised that, of the main
power supplies manufacturers active on the French
market, three (ELC, Lambda and Lutze), each of which
has a [0-10]* % share of the power supplies market, are
transformer market.
from the
completely
Schneider/Legrand would moreover as a result of the
notified transaction also become the market leader in
power supplies, with a market share of [10-20]* %.

absent

(747) The Commission therefore comes to the conclusion that
the transaction in question would create a dominant
position on the French transformer market.

C.4 ANALYSIS OF THE IMPACT OF THE MERGER ON

COMPETITION ON THE MARKETS IN CONTROL AND
SIGNALLING UNITS

(748) Schneider/Legrand would be the main player on the
European market in control and signalling units, with a
market share of [20-30]* % (Schneider [20-30]* % and
Its main competitors would be
Legrand [0-10]* %).
Moeller and Siemens, with EEA market
shares of
[0-10]* % and [0-10]* % respectively. Like its two main
competitors, Schneider/Legrand would be present in all
the EEA countries.

(749) The planned merger would lead to additions of very
in

substantial market shares on the French market
control and signalling units.

Table 38

Schneider

Legrand

Siemens

Moeller

K&N

Entrelec

[50-60]* % [0-10]* % [0-10]* % [0-10]* % [0-10]* % [0-10]* %

Source: the parties.

(751) The

therefore

proposed

bring
transaction would
together the two market leaders in terms of shares of
the French market;
it would lead to the creation of a
player with a market share of [60-70]* %, far ahead of
its
two main competitors, K&N and Moeller, with
respective market shares of [0-10]* %.

C.4.2 The merged entity would have an unrivalled

array of brands

in control and signalling units under

(752) Schneider/Legrand would do business on the French
market
four
brands. Schneider owns the Télémécanique and Mafelec
brands, while Legrand markets the products in question
under the Baco and Legrand brands.

(753) This array of brands would enable the new group to
cover each market segment in a particularly exhaustive
manner. The advantage of segmenting demand in this
way is underlined in a Schneider internal document,
which explains that in the case of ‘conventional product
lines, segmentation makes it possible to combine growth
and
in
The
particular
enables
differentiated product mix and pricing policies to be
pursued for each of the brands. It also explains that
having several brands makes it possible to ‘exploit a
two-pronged multispecialist/specialist approach'. Baco
presents itself as the leader on the cam switches market
with a market share of over [10-20]* % (268).

profitability' (267).
that

document

owning

several

brands

shows

C.4.1 The merged entity would have a particularly

large market share

(754) The merged entity could thus reproduce what Schneider
achieved through the acquisition of Mafelec. It should,
however, be stressed that the beneficial effects for the
new group of adding the Legrand and Baco brands to

(750) As

can

be

seen

Schneider/Legrand would have
market
market in control and signalling units.

from the

table,
larger
than its competitors on the French

following
significantly

shares

(267) Record of

the meeting of

the Acquisitions Committee of 17
October 1997. Document supplied in response to point 113 of
the questionnaire of 29 June 2001.

(268) Medium-term plan 2001-2005 France Baco, p. 9. Document
supplied in response to point 113 of the questionnaire of 29 June
2001.

(755)

(756)

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and Mafelec brands would be
the Télémécanique
significantly larger than the benefits which Schneider
derived from the acquisition of Mafelec, for two main
reasons.
four
brands, enabling it to pursue an even more sophisticated
multi-brand strategy; second, the competitors remaining
on the market would have a significantly smaller
presence.

First, Schneider/Legrand would have

by

a
Schneider would
held
competitive advantage on the merged entity.

confer

6.4.2004

substantial

to

its

and

In their reply to the statement of objections (269), the
the effect of adding Baco to
parties argued that
Schneider,
subsidiary
particular
in
Télémécanique, would be negligible. The commercial
strength of the Télémécanique brand, which is present
on several continents, would not, they claim, be in any
way enhanced by the Baco brand, whose reputation and
field of activity are basically limited to France. The
products marketed by Baco are,
argue,
furthermore conventional, standardised and harmonised
and would therefore add nothing to Schneider's product
range.

so they

C.4.3 The proposed transaction would eliminate the
essential basis for competition on the French
market

(759) The proposed transaction would have the effect of
eliminating competition between the undisputed top
two players on the French market
in control and
signalling units. Rivalry between the Schneider and
Legrand groups provided the essential basis for
the
competitive structure of
that market. This finding is
borne out by internal documents of both parties.

its

among

unrivalled

competitors.

It should first be noted that the parties do not challenge
the finding that
the merged entity would enjoy a
competitive advantage through having a wide array of
is
brands,
significant in this connection that Schneider held on to
the Mafelec brand after acquiring control of
the
company in 1997 (270). It is true that the Télémécanique
brand enjoys a reputation and a geographic coverage far
outstripping those of the Baco and Legrand brands as
far as control and signalling units are concerned; but
Baco and Legrand have a good reputation in France
which would directly benefit
the merged entity and
strengthen its array of brands.

It

(757) Secondly,

it

the different
is common ground that
categories of control and signalling unit marketed by
the Legrand group are also marketed by Schneider. The
fact remains that the planned merger would lead to a
significant strengthening of Schneider's positions in at
least one product category: cam switches, in which Baco
has a market share in excess of [20-30]* %.

(760)

(761)

is,

for most of

that Schneider

It
for example, clear from an internal document
drawn up by Baco (271), a Legrand subsidiary which is
the group's control and
the vehicle
signalling units business,
is its main
competitor on that market. The document states that ‘in
the traditionally difficult
control and signalling units,
competitive position with regard to Schneider will
remain so in the short/medium term as a result of their
introduction of a new product line' (272). It explains that
Baco will
retain a ‘defensive stance until our new
product line is rolled out in 2003, to compete with
Schneider's Harmony line' (273). The document
lastly
points out that Schneider is ‘extremely aggressive in all
the industrial product customer segments (distribution
— panel
equipment
builders — original
manufacturers)'; (274) this includes control and signalling
units.

a

is

also

indicated

Schneider

It
internal
in
document (275) that Schneider's acquisition of Mafelec
was motivated by its desire to counter Baco on the
market in question. The document thus states that the
aim pursued by Schneider through that acquisition was
‘to capture the repetitive machines segment' and ‘to
prevent
repetitive machines
from the
segment penetrating the markets in industrial machines
and special machines'. Baco is presented, alongside

competitors

(758)

In conclusion, the addition of the Baco and Legrand
brands to the Télémécanique and Mafelec brands already

(269) Point 798 et seq.
(270) Schneider internal document supplied in response to point 113 of
the questionnaire of 10 July 2001. Record of the meeting of
Schneider's Acquisitions Committee of 17 October 2001, p. 5.

(271) Medium-term plan 2001-2005 France Baco. Document supplied
in response to point 113 of the questionnaire of 29 June 2001.

(272) Page 11.
(273) Page 9.
(274) Page 5.
(275) Record of

the meeting of

the Acquisitions Committee of
17 October 1997. Document supplied in response to point 113 of
the questionnaire of 29 June 2001.

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Omron, as a specialist on the repetitive machines
market. It is also significant to note that Baco's name is
highlighted in bold type, unlike Omron. Schneider's
acquisition of Mafelec was
intended to
strengthen its position on the repetitive machines
market with a view to competing with Baco on its core
market and thereby preventing the latter challenging its
positions on the related markets in industrial machines
and special machines.

therefore

if not

fundamental,

a matter of

vital,
therefore
importance for Baco, and this places it
in a special
position of direct competition with Schneider. K&N and
Moeller have strong positions outside France, where
they make only a small share of
the
products in question (278). They therefore do not have
the same competitive incentives as Baco in relation to
Schneider on the French market.

their sales of

(762)

disputed

In their reply to the statement of objections (276), the
proposed
finding
parties
transaction would eliminate the essential basis
for
competition on the French market
for control and
signalling units.

that

the

the

(763) They began by arguing that Legrand's market share
([0-10]* %) was both relatively small and similar
to
those held by K&N ([0-10]* %) and Moeller ([0-10]* %).
Furthermore, given its size ([50-60]* %), Schneider's
share of the relevant market would be only marginally
strengthened by the proposed transaction. The parties
then went on to claim that the reference in a Baco
internal document to Schneider as its ‘main competitor'
meant nothing in so far as Schneider was the European
leader on the relevant market and any player therefore
had to refer to Schneider in its analyses of competition
argued that
on the market. Thirdly,
Schneider's acquisition of Mafelec was not intended to
counter Baco on the French market
for control and
signalling units but to enter a niche market from which
it was absent, the market in membrane keypads.

the parties

(764) The parties'

line of argument does not stand up to
It should first be noted that Legrand is the
scrutiny.
second player, after Schneider, on the French market for
control and signalling units, even if its market share
only slightly exceeds that of K&N and Moeller. The
proposed transaction would therefore bring together the
two top players on the relevant market.

(765)

In addition, Baco differs from K&N and Moeller on three
main counts.

(766)

In the first place, Baco, unlike K&N and Moeller,
from the products
generates most of
concerned in France (277).
In contrast with K&N and
share in France is
Moeller, maintaining its market

turnover

its

(276) Point 801 et seq.
(277) See Table 26 above and reply to the statement of objections,

point 799.

(767) Secondly, Baco can rely on the strength of the Legrand
group as regards access to distribution channels in
France, a competitive advantage available to neither
Moeller nor K&N, which account, all product categories
taken together, for only a tiny share of the turnover of
wholesalers established in France. A Legrand internal
document (279) thus states several times that access to
distribution channels is one of Baco's ‘anchor points'.

(768) Thirdly, Baco has a brand with a high profile in France
and a leading position (more than [10-20]* % market
share) in the cam switches segment. A Legrand internal
document (280) thus repeatedly states that Baco has ‘a
sound reputation based on its long-standing presence,
know-how and experience in the field'. Baco can
therefore use this strong position in cam switches as a
lever to develop its sales of other products in its range:
a Legrand internal document (281) states repeatedly that
synergies between different categories of control and
signalling units is one of Baco's strong points.

(769) For all these reasons, Baco can therefore be seen as
Schneider's most active and most dangerous rival on the
French market in control and signalling units.

(770) Analysis of Schneider's internal documents leads to the
same conclusion. For example, a confidential Schneider
document (282) states that the group's second priority
for the period 2000-2003 is […]*. Baco fits that twin
description perfectly, since it generates the bulk of its

(278) See Table 26 above.
(279) Medium-term plan 2001-2005 Baco France, pp. 39 and 41.
Document supplied in response to point 113 of the questionnaire
of 10 July 2001.

(280) Medium-term plan 2001-2005 Baco France, pp. 39, 41 and 43.
Document supplied in response to point 113 of the questionnaire
of 10 July 2001.

(281) Medium-term plan 2001-2005 France Baco, pp. 39, 41 and 43.
Document supplied in response to point 113 of the questionnaire
of 29 June 2001.

(282) Products/services supply plan 2000 Electromechanical dialogue.
Annex 8 supplied in reply to point 40 of the questionnaire of 20
March 2001.

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segment:

cam switches. And,

turnover in France and is particularly well placed in one
market
in another
confidential Schneider document (283), Baco is presented
as a specialist. From this standpoint, irrespective of the
reasons behind Schneider's
acquisition of Mafelec,
Schneider's strategy on the French market for the years
ahead was indeed to attack Baco as a matter of priority.

(775) Direct sales are made chiefly to original equipment
manufacturers (OEMs) and to a lesser extent to panel
builders and installers (287). These consumers would not
be
of
Schneider/Legrand on the French market, for two sets of
reasons.

counterbalance

strength

able

the

to

(771) For all the above reasons, the rivalry between Schneider
and Legrand is the essential basis for competition on the
French market in control and signalling units.

(776)

that one or more of

First, the parties have not given any indication to the
effect
those consumers would
represent a large enough fraction of the market to be
regarded as wielding genuine buyer power. Even if the
parties' direct customers include a few large industrial
groups, most of them are large SMEs specialised in the
manufacture of industrial machinery.

C.4.4 The organisation of the market would not allow

buyer power to emerge that could
counterbalance the strength of the merged entity

(772) Manufacturers of control and signalling units market
their products through two main channels: wholesalers
and direct sales.

through wholesalers,

(773) According to an internal Legrand document, whilst Baco
achieves [40-50]* % of its sales of control and signalling
for
units
[90-100]* %
those
products (284).
seen from a Schneider
document
its
turnover through direct sales whereas [50-60]* % of
Schneider products are sold via wholesalers (285).

Legrand's
can be
that Mafelec generates

such sales account

[50-60]* % of

turnover

of
It

in

(777) Second, it could be argued that those consumers could
fairly easily change suppliers and therefore stimulate
keener competition between them. Assuming that it is
easy in practice to change to a different supplier of
control and signalling units, the fact remains that the
main European producers of control and signalling units
(Moeller and Siemens) are already present on the French
that market are
market and that
particularly small. All the signs are that the strategy
adopted by those manufacturers is to benefit from the
high prices applied in France by the parties (see above)
rather than trying to win market shares from the two
dominant players. There are no indications that those
in future reshape their strategy and
competitors will
pricing policy in order
to become genuinely active
competitors on the market.

shares of

their

(774) The parties explain that control and signalling units are
distributed by the same wholesalers as
the other
electrical equipment concerned by the transaction (286).
The strength of the new group on the other French
in particular
electrical equipment markets (see above,
Table 30) would therefore place it
in a privileged
position with regard to sales through wholesalers.

(778)

(283) Record of

the meeting of

the Acquisitions Committee of
17 October 1997, p. 2. Document supplied in response to point
113 of the questionnaire of 29 June 2001.

(284) Medium-term plan 2001-2005 France Baco, p. 20. Document
supplied in response to point 113 of the questionnaire of 29 June
2001.
(285) Record of

the Acquisitions Committee of
17 October 1997, p. 6. Document supplied in response to point
113 of the questionnaire of 29 June 2001.

the meeting of

(286) Reply by the parties to point 13 of the questionnaire of 15 March

2001.

In their reply to the statement of objections (288), the
parties argue that there is no reason to believe that the
parties' direct customers would remain loyal
to the
merged entity if it were to decide to raise its selling
prices. They claim that Schneider and Legrand are
currently subject
to actual and potential competition
from rivals whose products are present in France and
neighbouring Member States, and the new entity would
in future be exposed to such competition. They also
argue that there is no evidence to suggest that in future
those rivals would not try to gain market shares, even if
they are content at present
to take their cue from
Schneider. Thus, according to the parties, Moeller
mounted a significant attack on a specific market

(287) Reply by the parties dated 20 July 2001 to a request
information made by the Commission on 10 July 2001.

for

(288) Point 806 et seq.

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segment, control and signalling units for agricultural
machinery, by
the
products more closely to customers' needs.

reducing prices

and tailoring

(779) The above line of argument developed by the parties is
implicitly based on the idea that barriers to entering the
relevant market are not significant and that the parties'
rivals would in future be able to exert sufficient actual
or potential competitive pressure to prevent the parties
initiating profitable price increases. But, as has already
been explained earlier, there are significant barriers to
entering the market in control and signalling units, in
particular access to distribution channels and the need
to maintain a close relationship with end customers.
The existence of these barriers to entry, as far as the
is reflected in the small
French market is concerned,
market shares held by Siemens and Moeller and the
high level of prices for the products concerned, which is
not disputed by the parties (289). There are therefore
structural factors limiting the intensity of competition
and signalling units,
control
on the market
independently of the behaviour of end customers.

for

(780) All

the above considerations are in line with the
statement made in a Legrand internal document (290)
that this market is […]*.

transaction would
relevant market. The
therefore lead to the creation of a dominant position on
the French market in the sale of control and signalling
units.

notified

D. OVERALL CONCLUSION

(782) For the reasons set out above,

the Commission has
come to the conclusion that
the notified transaction
would create a dominant position with the effect of
significantly restricting effective competition on the
following markets:

— the markets
miniature
distribution boards in Italy;

circuit

breakers

in moulded case

circuit breakers,
for
cabinets

and

— the markets in miniature circuit breakers, earth
leakage
final
and
panelboards in Denmark, Spain, Italy and Portugal;

enclosures

protection

for

— the markets in mains connection circuit breakers in

France and Portugal;

— the market in cable trays in the United Kingdom;

— the market in sockets and switches in Greece;

C.4.5 Conclusion

— the market in weatherproof wiring accessories in

Spain;

(781) Schneider/Legrand would enjoy substantial advantages
to control
over its competitors that would enable it
competition on the French market
in control and
signalling units. The new group would consequently be
in a position to increase the prices of
its products
this leading to losses of market share that
without
would make such price increases unprofitable:
faced
with such a situation, competitors would be likely to
follow the price increase initiated by the market leader
rather than trying to gain market shares. It would also
be possible for the new group to increase the prices of
products sold under only some of its brands so that the
fraction of demand that was shifted would switch to its
other brands. Lastly, no buyer power would be likely to
counterbalance the strength of Schneider/Legrand on the

(289) Reply to the statement of objections, point 807.
(290) Medium-term plan 2001-2005 France Baco, p. 34. Document
supplied in response to point 113 of the questionnaire of 29 June
2001.

— the market in fixing and connecting equipment in

France;

— the market in transformation equipment in France;

— the market in control and signalling units in France.

(783) For the reasons set out above, the Commission has also
come to the conclusion that
the notified transaction
would strengthen a dominant position with the effect of
significantly restricting effective competition on the
following markets:

— the markets
breakers
circuit
miniature
distribution boards in France;

in moulded case

circuit breakers,
for
cabinets

and

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— the markets in miniature circuit breakers, earth
final
and

enclosures

for

leakage
panelboards in France;

protection

— the market in sockets and switches in France;

— the market in weatherproof wiring accessories in

France;

commitments must be submitted in sufficient time to
allow Member States to be consulted).

(787) As explained below,

proposed alternative commitments do not
conditions
remedies.

in point 43 of

the
the Commission finds that
fulfil
the
the notice on

set out

— the market

in emergency lighting systems or

self-contained emergency lighting units in France.

B. ANALYSIS

VI. REMEDIES

A. PROCEDURE

The markets in distribution boards and final panelboards and
components thereof in Denmark, Spain, France, Italy and
Portugal

T h e i n i t i a l l y p r o p o s e d c o m m i t m e n t s w e r e
i n s u f f i c i e n t

(784) On 14 September 2001 the notifying party offered the
‘initially
Commission commitments
proposed commitments'). These relate to each of the
markets referred to in points 782 and 783 above. The
Commission carried out a survey among the parties and
third parties with a view to assessing those proposed
commitments.

(hereinafter

the

(785) The Commission's

that

revealed

the
assessment
commitments offered by the parties on 14 September
were insufficient. The Commission accordingly informed
the parties, which in reply
submitted alternative
commitments on 24 September. This new text is entitled
dated
‘Schneider
14 September 2001, clarified with alternative solutions
on 24 September 2001'
the ‘proposed
alternative commitments').

commitments

(hereinafter

Electric

Phase

II

(786) These proposed alternative commitments are to be
examined in the light of point 43 of the notice on
remedies (291), which lays down stringent conditions for
the acceptance of such commitments, in terms of both
substance (the Commission must be able to clearly
determine, without the need for any other market test,
the
that
competition problems identified) and form (the modified

the modified commitments will

resolve

units:

business

‘Legrand

(final panelboards

(788) The initially proposed commitments concerned the
Puissance'
following
(distribution boards in France, Legrand group),
‘Bticino
Puissance' (distribution boards in Italy, Legrand group),
in France, Spain,
‘Legrand Lexic'
Portugal and Denmark, Legrand group),
‘Multi 9' (final
panelboards in Italy, Schneider group) and the Baco
company (earth leakage protection, Legrand group). The
parties proposed (i) to transfer brand names in Europe
and the Sarel and Saip brands in Italy; (ii) to offer an
option for the temporary use (for three years) of the
Legrand Puissance, Bticino Puissance, Legrand Lexic and
Merlin Gerin Modulaire brands; (iii) to transfer the plant
manufacturing the key products for distribution boards
(moulded case circuit breakers), a plant producing
distribution board cabinets for the Italian market, a
plant producing miniature circuit breakers located in
[…]* and a plant to be set up in the region of […]* to
produce enclosures and other components for
final
panelboards (the latter not being intended for the Italian
(iv) to share the use of
market in final panelboards);
intellectual and industrial property rights; and (v)
to
offer sales forces and sales contracts with wholesalers,
such marketing rights being exclusive in the territories
in respect of which objections were
raised and
non-exclusive for
the rest of Europe as far as the
Legrand Puissance, Bticino Puissance and Legrand Lexic
proposals were concerned.

(291) Commission notice on remedies

acceptable under Council
Regulation (EEC) No 4064/89 and under Commission Regulation
(EC) No 447/98 (OJ C 68, 2.3.2001, p. 3).

(789) The Commission's assessment showed that this proposal
raised serious doubts as to the autonomy and ability to
compete of the entities which the parties had proposed

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to divest: those doubts were largely due to the fact that
most of the entities proposed for divestiture did not
previously operate on a stand-alone basis.

In the first place, Schneider/Legrand would have at least
partly retained ownership of and access to all
the
technologies used by the proposed entities. This was no
doubt justified in its view by the fact that it was to
retain both the same businesses based on the same
technologies outside Europe and the Bticino brand final
panelboard and final panelboard components business
in Europe, as well as the Merlin Gerin business outside
Italy. The parties undertook not to compete with the
divested entity on the relevant markets concerned by
offering the same products. However, in the absence of
any definition of what constituted the ‘same products',
all Schneider/Legrand would have needed to do was to
develop Legrand's initial technology in order to be able
to offer products in competition with those divested.
The divested entity would furthermore have immediately
had
identical
competition
Schneider/Legrand products on the European markets in
respect of which no objections were raised by the
Commission. The brand image and competitiveness of
the divested businesses would consequently have been
weakened by the supply of ‘clones', and this would have
the divested
threatened the viability of
businesses.

some of

from

face

to

(793) On the other hand,

plants would

the divested production plants
would have had to continue supplying substantial
quantities to Schneider/Legrand to enable it to continue
selling the products concerned on the markets on which
it kept marketing rights
(both within Europe and
elsewhere). Between [20 and 60]* % of the output of
those
to
thus
Schneider/Legrand and their viability would therefore
have depended largely on sales to Schneider/Legrand.
Conversely, the purchaser of the proposed entity would
have had to continue sourcing supplies from plants kept
by Schneider/Legrand (in particular a plant in Naples)
until production lines had been relocated among those
different plants.

been

have

sold

(794) Lastly, the parties proposed to hive off separately the
company Baco, which has a production plant
that
would have had to supply (with earth leakage switches)
the purchaser of
the Legrand Puissance, Bticino
Puissance and Legrand Lexic businesses and provide it
with components so that one of the divested plants
could continue
circuit
breakers. Here,
fulfilment of the commitments would
therefore have depended on the good will of a third
party.

earth leakage

to produce

(795) As regards the proposal concerning final panelboards in
Italy, the majority of the third parties surveyed voiced
serious doubts as to the intrinsic merits of the offer. In
the first place, apart from the Sarel and Saip brands, this
commitment clearly fell far short of the (insufficient)
proposal concerning the other
switchboard markets
described above. The proposal therefore gave rise to the
same doubts as those set out above, with additional
handicaps.

(790)

(791)

In addition, the fact that Schneider/Legrand was to keep
businesses based on identical products to those divested
would have given rise to major problems, with special
reference
the
production plants which the parties proposed to divest.

economic competitiveness of

to the

(796)

It should be stressed that Schneider/Legrand would have
remained present on the distribution board market in
Italy, via the Merlin Gerin brand.
In addition to the
confusion of brand image and the need to coordinate
marketing strategies on very closely neighbouring
markets, distribution boards account for 78 % of sales of
these
products in the Multi 9 range. Since sales of
products
driven
circuit
commercially by sales of moulded case circuit breakers
(remaining in the hands of Merlin Gérin), the bulk of
the purchaser's sales would therefore have been entirely
dependent on Schneider/Legrand.

(miniature

breakers)

are

(797) The additional handicaps also have to do with the fact
that no production capacity or intellectual and industrial
property rights would have been transferred: Schneider

(792) On the one hand, the parties proposed to retain plants
manufacturing identical products
to those divested.
Since production had been optimised at European level
by Legrand,
reorganising
that would have meant
production between the divested plants and those that
were to remain within Schneider/Legrand. According to
the parties, such a reorganisation would have cost […]*
and taken over […]*. Plants […]* manufacturing other
items as well as the products in question would also
have had to be reorganised; according to the parties,
such a reorganisation […]*.

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would have continued to sell identical products outside
Italy using the Merlin Gerin brand and the Multi 9
range name and would have been entirely free to
develop those products as it wished, without
taking
account of the purchaser's specific needs. In addition,
the scope of the non-competition clause did not clearly
rule out possible further development of the products
hived off, which could have allowed earlier market
re-entry. The result would have been that the purchaser
would have in a way been a reseller of Schneider
products over which it had no production or
technological
the purchaser wished to
establish a long-term independent position on the
market, it would therefore have had to produce its own
switchboards. Since the barriers to entry are too high,
the purchaser could therefore only have been a player
already present on the market. Such a player would
consequently have had in a short space of time to (i)
change
capacities
adjust
earmarked for the Italian market; and (iii) persuade the
market that the change of brand and technology did not
jeopardise the reliability and quality of its products.

production

control.

brands;

(ii)

If

in France

sockets and switches business

(798) The proposals concerning Sarel and Saip raised specific
problems too. The Sarel brand, which in fact markets
the Multi 9 product range, would have been shared
between the purchaser of this business, the purchaser of
the
and
Schneider/Legrand as regards the all-purpose cabinets
created
below). That would
business
uncertainty concerning the value of the brand. The Saip
brand exists, as far as final panelboards are concerned,
only for enclosures; it is apparently also used on other
low-voltage product markets
in Italy. The parties
proposed transferring production equipment without
transferring a plant:
that would have created further
uncertainties
regarding the need to set up a new
production plant.

have

(see

(799)

In terms of market access, the parties' initial proposal
raised numerous uncertainties.

(800) First of all, whereas strong brand loyalty is a feature of
all the relevant markets, the proposed remedy did not
involve the transfer of any brand but rather the transfer
of names of product ranges together with the possibility
of displaying the Legrand brand on the products sold
for a limited period of time. The purchaser of these
businesses would therefore have had not only to cope
with the technical uncertainty (with the associated time
and cost) of modifying
the production facilities
transferred, but also to bear the substantial costs of
changing the brand of its products while endeavouring
these simultaneous
to reassure the market
changes would not affect the quality and reliability of its

that all

product range. The Commission's assessment confirmed
that it was a disadvantage not to have one's own brand
from the outset and revealed that a purchaser would
need a lengthy period of time (around seven years) in
the proposed brand
order successfully to implement
also
Commission's
The
changeover.
demonstrated that a purchaser would have had to be
protected by clauses preventing re-entry into the
relevant markets under the initial brand for a period of
more than 10 years.

assessment

(801) Secondly,

(such as

the parties' proposal

suffered from the
centralisation of
sales,
certain functions
marketing and logistics) within the Legrand group. The
initially proposed commitments did not cover marketing
functions and included a very small
and logistics
number of sales forces […]*. No specific proposal was
made with regard to Legrand Lexic's sales forces outside
France. The numbers involved included ‘dedicated' sales
staff and employees partly in charge of such sales, and
the selection criteria were not spelled out. Since the
proposal did not concern all sales staff, Legrand and
Schneider would have retained a link with customers.
That
link would have been particularly strong on
markets where Legrand also sells wiring accessories
(sockets, etc.) and holds strong positions. This would
therefore have enabled the merged entity to redirect its
customers
remaining
within the perimeter of Schneider/Legrand. As far as the
central functions (and related information systems) are
concerned, the Commission's assessment showed that a
transfer without
feasible but
involved significant risks.

switchboard products

such functions was

towards

For

to wholesalers

sufficient access

(802) Thirdly, the parties offered to transfer sales contracts
with wholesalers. The Commission's assessment called
into question the ability of purchasers to take advantage
of
(i.e. access on
terms to those previously enjoyed by the
equivalent
the parties offer
entities).
hived-off
these
discounts
[…]*. According
discounts amount
is by no
means certain that a purchaser would have been able to
match those discounts given that in relative terms it
would have been much smaller than Schneider/Legrand.
If
terms, wholesalers
would then have been able to choose to continue to
from the preferential conditions they already
benefit
obtained from Schneider and Legrand. This would not

it was unable to offer similar

to around [0-10]* %.

to the parties,

example,

It

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necessarily have ruled out any purchasers but rather
called into question their ability to restore competitive
conditions equivalent to those enjoyed by the divested
entity when it belonged to Schneider or Legrand.

[…]*. The proposal also involved temporary
divest
transfer of the […]* brand throughout Europe, the sale
of an additional production plant […]* and additional
relocations of production plants […]*. In other words,
the parties offered to divest […]*.

and Legrand is

the combination of

(with shares of around [40-70]* % of

(803) This problem was particularly acute in France, where
is already dominant on the switchboard
Schneider
markets
the
distribution board market and around [40-70]* % of the
final panelboard market)
already
dominant on most of the other low-voltage equipment
markets (with, for example, a [70-100]* % share of the
sockets and switches market). As explained in the
statement of objections (a finding which the parties did
not dispute),
the two companies
would place them in a preponderant position with
regard to wholesalers since they would account
for
between [30 and 60]* % of the latter's total purchases in
France. The proposed commitments would admittedly
have weakened that combined position with regard to
wholesalers but the new entity would have remained
dominant on most of the relevant markets and would
have retained its preponderant position. Being an
indispensable partner for wholesalers, Schneider/Legrand
would then have been in a position to control
the
access to wholesalers of the purchaser of the Legrand
Puissance,
Lexic
businesses, for example by ensuring that such access did
not enable the purchaser to exert active competitive
to that previously exerted by
pressure
Legrand.

equivalent

Puissance

Legrand

Bticino

and

(804) To sum up as

regards

and components

final panelboards

the proposed commitments
relating to the markets for distribution boards and
components thereof in France and Italy and the markets
in
for
Denmark, Spain, France, Italy and Portugal, the remedy
proposed by the parties could be regarded as a mixture
of businesses resulting from uncertain divestitures from
their original group, whose ability to operate on a
stand-alone basis and as a competitive force capable of
restoring the initial competitive conditions raised serious
doubts.

thereof

(806) This

of

offered

proposal

advantage

clearly
the
eliminating […]* overlaps between businesses on all the
markets where the notified transaction would lead to the
creation or
strengthening of dominant positions;
it did not resolve a number of doubts and
however,
risks to do with the fact that the proposed entity would
not have been fully functional and able to operate on a
stand-alone basis.

[…]* as

(807) First, this alternative proposal raised the same issues of
exhaustivity and separation of
the initial
proposals. As explained above, certain central functions
(marketing, sales support, relations with distributors,
logistics, etc.) would not have been transferred in their
entirety. Also,
like the initial proposal, the alternative
proposal did not cover all the sales forces concerned,
and the problems to do with sharing of
the brand
remained.

(808) Second,

the

the alternative proposal

[…]* production lines were

involved relocating
production activities between plants. For example, […]*.
Likewise,
to be
transferred to the production plant at […]*. And, as
before, […]* were to be grouped together […]* in one
or two units. These relocations raised doubts as to the
continuity of the operations concerned, both because of
the industrial uncertainties inherent
in such transfers
the losses of know-how […]*.
and on account of
Furthermore, the Commission was not in a position to
assess whether the receiving plants were able to host the
new activities concerned in a competitive manner (space
available, production costs, availability of supplies, etc.).

T h e p r o p o s e d a l t e r n a t i v e c o m m i t m e n t s
s u b m i t t e d o n 24 S e p t e m b e r 2 0 01

(805)

raised by the
In response to the serious doubts
initially
Commission concerning the
proposed commitments, the notifying party offered to

effect of

the

their

(809) Third, the alternative proposal was confined to Europe,
although the industrial sites concerned generated a […]*
share of
turnover from exports from Europe.
Under the proposed remedies those sales outside Europe
would remain in the hands of Schneider/Legrand. The
parties thus drew the Commission's attention to the fact
that, out of total sales of EUR [300-500]* million, the
proposed entity currently generated turnover amounting
to EUR [50-250]* million outside Europe. This meant
that all the production plants proposed for divestiture

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In either case,

the output of

to supply Schneider/Legrand with
would continue
quantities corresponding on average to around a quarter
of their current output. Such dependence would, for
example, be particularly marked in the case of the […]*
plant, more than [40-70]* % of whose output is thought
to be sold outside Europe. To overcome this problem,
the parties proposed […]*.
the effect
would be either immediately or in the long run to
concerned and
restrict
consequently to increase their unit costs;
such an
increase in unit costs would harm their competitiveness
in terms of profit margins. The effects of a loss of
competitiveness among the production plants of
the
divested entity would vary from one country to another:
is already
on the French markets where Schneider
dominant the impact would be serious, while on the
Italian market
the
market shares divested would be such that the loss of
competitiveness could be made up.

for final panelboards the size of

the plants

In addition to the problems discussed above,
the
alternative proposal did not solve the market access
difficulties
that had been identified, particularly in
France. The market access conditions which Legrand
enjoyed before the transaction reflected not only its
standing in the switchboard stakes (relatively modest in
comparison with Schneider, particularly in the case of
distribution boards), but also its considerable strength
on the markets in wiring accessories (sockets, switches,
etc.). The Commission's assessment established that no
other operator on the market
to offer
wholesalers conditions comparable to those granted by
the
Legrand (dominant
in
final
panelboard)
switchboards).
the
business would not have been able to benefit from the
terms granted by the wholesalers […]* for the products
concerned, a fact which (according to the Commission's
assessment)
the
purchaser's competitiveness. This risk would have been
particularly acute in view of
that once the
merger had gone ahead the purchaser would have had
to face an entity combining the strengths of Schneider
and Legrand.

in equipment downstream of
(dominant
and
the purchaser of

follows that

could have

significantly

Schneider

the fact

affected

able

is

It

distributors as a result of the addition of Legrand's sales
and leading position in equipment downstream of the
final panelboard. As explained above, the purchaser of
the proposed business would be far from being able to
reproduce
the competitive pressure which Legrand
exerted on Schneider (all the more so with regard to a
new combined Schneider/Legrand entity).
In these
circumstances, the proposed commitments would not
eliminate the anticompetitive effects of the transaction
on the markets concerned.

effectiveness of

(812) To sum up, the notifying party's alternative proposal
would not eliminate all the risks created by the initial
proposal (some of which could on their own jeopardise
and would not
the
overcome the objections raised with regard to the
markets in switchboards and switchboard components
in France. In any event, the proposal did not allow the
the
Commission
of
test
commitments offered without a further market
(ruled out at that stage in the procedure).

acceptability

remedy)

assess

the

the

to

The markets in mains connection circuit breakers in France
and Portugal

(813) The initially proposed commitment was to divest the
company Baco in its entirety, including all its tangible
and intangible assets, employees and sales contracts.
Baco is also active in the earth leakage switches and
its products are marketed under
control units sectors;
the Baco and Legrand brands and they are manufactured
in a plant in Strasbourg.

lead

the
the Commission has concluded that
In France,
of
transaction would
strengthening
to the
Schneider's dominant position on the markets
for
distribution boards and final panelboards. As set out
above in the sections dealing with the competitive
the proposed merger, such strengthening
analysis of
would be the result of two factors in particular: the
addition of Legrand's market shares to Schneider's (an
addition that would have been eliminated under the
of
and
alternative
Schneider's position with respect to electrical equipment

strengthening

proposal)

the

(814) The

a

eliminate

proposed

the
commitment would
competitive overlap with the Schneider group on the
mains connection circuit breaker markets. Baco is
furthermore
fully functional undertaking which
operates on a stand-alone basis. However, as stated
earlier, part of Baco's production is interdependent with
In particular, a
Legrand's other switchboard business.
quarter of Baco's
generated through
subcontracting for the rest of the Legrand group. The
therefore demonstrated that
Commission's assessment
Baco should be sold along with Legrand's switchboard

turnover

is

(810)

(811)

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business. It also revealed that, subject to that condition,
the parties' proposal enabled the competition difficulties
on the French and Portuguese mains connection circuit
breaker markets to be overcome.

(819)

the product

sold by
In the first place, of
Alombard, its own ranges are regarded as obsolete by
the market; the other ranges were developed by other
entities belonging to the Schneider group (which would
not be transferred).

ranges

(815) The parties' alternative proposal was to cut off Baco's
supplies to the remainder of Legrand under […]* and
left open the possibility of divesting it together with
[…]*. The fact remains that any sale of Baco should go
hand-in-hand with the
the
switchboard
proposal was
the
business,
consequently unacceptable as it stood.

sale of
and

rest of

the

The market in control and signalling units in France

(816) The proposed commitment was to divest Baco. The
proposed commitment would eliminate the competitive
overlap with the Schneider group on the French control
and signalling units market. The above comments on
Baco apply here too.

The market in sockets and switches in France

T h e i n i t i a l l y p r o p o s e d c o m m i t m e n t s w e r e
i n s u f f i c i e n t

(817) The initial proposal was to divest the Alombard and
Scanelec companies, both of which are Schneider
subsidiaries. Alombard is specialised in the manufacture
of sockets and switches, but is also present on the fixing
and connecting equipment market;
its own
production and R&D facilities in Orléans. The proposed
commitment related to all of Alombard's tangible and
the sale of
intangible assets. Scanelec's business
equipment downstream of
the final panelboard to
hypermarkets. The proposed commitment related to all
of Scanelec's tangible and intangible assets.

it has

is

(818) The Commission's assessment revealed that this proposal
effective

to restore

would not have been likely
competition on the relevant markets.

the

it was

autonomy of

group. Alombard sources most of

(820) These divestiture proposals furthermore raised serious
two entities
doubts as
to the
integration into the
concerned given their current
its
Schneider
components from other companies in the Schneider
group. Unless
to remain dependent on
Schneider/Legrand, a purchaser would therefore have
had to launch new product lines in order to integrate
Alombard into its structure, which would have taken
between one and two years and required substantial
investments. Alombard's sales forces and a number of its
central
functions were furthermore to be […]*. A
purchaser would therefore also have had to re-establish
the sales forces and replace its central functions.

(821) Scanelec sources exclusively from the Schneider group,
sells products under the Schneider brands and […]* of
is
its workforce is under contract with Schneider.
difficult to imagine the company surviving without the
backing of the Schneider group for a substantial period
of time; however, Scanelec and Alombard would have to
be
for
[10-30]* % of the other's business. The Commission's
assessment confirmed this analysis.

sold together because

they each account

It

In the

(822) Lastly, Alombard and Scanelec account for only a small
share of the French sockets and switches market (around
[0-10]* %), as against around [80-100]* % for
the
merged entity.
light of Schneider/Legrand's
leading position with regard to French wholesalers on
all the markets in low-voltage electrical equipment,
it
was highly unlikely that the divested entity would have
been able to exert competitive pressure comparable to
that brought to bear by the Schneider group (which
could use its strength in the switchboards sector in
its sockets and
order to encourage wholesalers to sell
switches).

(823)

In conclusion, the proposed commitment involving the
divestiture of Scanelec and Alombard would not have
enabled the initial competitive conditions to be restored.

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T h e p r o p o s e d a l t e r n a t i v e c o m m i t m e n t s
s u b m i t t e d o n 24 S e p t e m b e r 2 0 01

(824) The alternative commitments involved […]*. According

to the information supplied to the Commission […]*.

(825) The effect of the alternative proposal would therefore
have been to eliminate more than the competitive
overlap between Schneider and Legrand; however,
it
raised two important issues.

a

[…]* generates

(826) The first issue relates to the competitiveness […]*. In
particular,
significant proportion
(20-30 %) of its turnover from supplies of components
to other branches […]*. The parties proposed hiving off
this supply business before divesting […]*, but doubts
remained as to the impact of such a separation on
[…]*'s profitability and on the competitiveness of its
range. A precise analysis of these questions would have
required a new market test.

(827) Furthermore, before

the

access

transaction, Legrand was
dominant on the French sockets and switches market
(with a total market share of [80-90]* % […]*). Its main
competitor was Alombard (0-10]* %), which had the
the Schneider group (both in terms of
backing of
products, via Lexel,
to
and in terms of
wholesalers). After the merger and the fulfilment of the
commitment, the situation would be […]*. The new
entity would be unlikely to be able to hold on to those
market shares. First, Schneider states in its internal
documents that it was aiming for a market share of
around [10-20]* % for […]*; the effect of the merger
Second,
would
Schneider/Legrand would be able to achieve the same
brand differentiation effect […]* as it previously exerted
on the market and confine […]*. Consequently, in view
of the size of Legrand's dominant position prior to the
merger, the fact that the merged entity would continue
to hold two main brands (Legrand and […]*) and the
the new entity would be an indispensable
fact
partner
the question is whether
for wholesalers,
divesting […]* would make it possible to restore a
to the
situation comparable to that obtaining prior
transaction.

impetus.

remove

that

that

be

to

(828) The Commission considers that, […]*, that would not
be the case. For one thing, as stated in connection with
it is not certain that the purchaser
final panelboards,
to distributors on conditions
could obtain access

could significantly affect

comparable to those enjoyed by […]*. This problem
would be particularly acute because once the merger
went ahead, Legrand's strengths would be added to
Schneider's, and this
the
competitive strength that could be wielded by […]* after
[…]* would be
the merger.
confronted by the merged entity, which would have a
range of wiring accessories at least comparable to its
own and would benefit from the combination of the
two brands (Legrand and […]*). This could enable the
merged entity to undertake specific measures against
[…]*.

another

thing,

For

(829)

In conclusion, the Commission has serious doubts as to
the ability of the alternative proposal to reproduce the
competitive pressure existing prior to the merger and
eliminate its anticompetitive effects on this market. In
any event,
the new
the Commission cannot accept
proposal without a further market test (ruled out at this
stage in the procedure).

The market in sockets and switches in Greece

T h e i n i t i a l l y p r o p o s e d c o m m i t m e n t s w e r e
i n s u f f i c i e n t

(830) The initial proposal was to transfer to Alombard (see
above) the exclusive distribution contract concluded by
Elko, a Schneider subsidiary, with the Greek company
[…]* for importing sockets and switches into Greece.

(831) The Commission's assessment shows that

the actual
feasibility of such a transfer is uncertain both legally and
from a technical and commercial standpoint. The socket
and switch standard used in Greece (Schuko) differs
from the one used in France (the Franco-Belgian
standard), where Alombard makes nearly all its sales; the
Alombard brand is currently unknown in Greece, and
the third parties surveyed expressed serious doubts as to
its ability to restore the competitive pressure previously
exerted by Elko; and,
there is no evidence to
lastly,
suggest that the Greek importer would agree to such a
transfer.

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T h e p r o p o s e d a l t e r n a t i v e c o m m i t m e n t s
s u b m i t t e d o n 24 S e p t e m b e r 2 0 01

concerning switchboards in France or the sockets and
switches markets with regard to the purchaser's ability
to restore the competitive conditions obtaining prior to
the merger.

(832) The alternative proposal was to […]* and to allow […]*
the possibility of using the […]* brand in Greece. This
proposal raises the same uncertainties as the initial offer,
however. In particular, […]*. It is by no means certain
in a
the purchaser […]* would wish to invest
that
production line for manufacturing Schuko sockets for
which it could be offered only a modest outlet (Greece).

(833) The Commission therefore takes the view that

these
commitments do not resolve the competition difficulties
identified on the Greek sockets and switches market. In
the new
the Commission cannot accept
any event,
proposal without a further market test (ruled out at this
stage in the procedure).

The market in weatherproof wiring accessories in France

(834) The proposed commitment was

to divest Sarel's
‘installation products' business. Sarel has a division
automation
producing
for
equipment
‘installation
products' (weatherproof sockets and switches and fixing
and connecting equipment). […]*.

industrial
division producing

enclosures
a
and

The market in weatherproof wiring accessories in Spain

to transfer

(838) The proposed commitment (which was not modified)
‘installation products'
to Sarel's
was
manufacturing business (which was also to be divested
— see above) the Estanca 55 brand used in Spain by the
Schneider subsidiary Eunea Merlin Gerin for marketing
weatherproof wiring accessories. Eunéa Merlin Gerin
accounts for the whole of Schneider's business on the
relevant market.

(839) The

to

only

commitment
the
relates
proposed
manufacture of
the products and the specific brand
name (Estanca 55) under which they are sold in Spain.
On the other hand, it does not comprise the transfer of
goodwill (sales forces not specified and which do not
appear […]*) or of the umbrella brand (Eunea Merlin
Gerin), which could therefore be re-used by the merged
entity in order to market a new range of products of
Legrand origin. The assessment showed clearly that,
without the backing of a group of comparable weight to
Schneider in Spain, this product range would not be
able to secure access
to distribution channels on
competitive terms.

(835) The proposed commitment

tangible and intangible assets

involved divesting all of
Sarel's
linked to its
‘installation products' business and transferring the Sarel
brand for that product category. The merged entity
would retain Sarel's enclosures business and ownership
of the ‘Sarel enclosures' brand.

(836) Sarel's ‘installation products' business accounts for […]*
of Schneider's turnover on the French weatherproof
wiring accessories market. The proposed commitment
would therefore eliminate all the competitive overlap on
that market.

The market in fixing and connecting equipment in France

(840) The proposed commitment was to divest separately
[…]* and Sarel's ‘installation products' business. These
divestitures would completely eliminate the competitive
overlap on the French fixing and connecting equipment
market, on which Legrand had a dominant position.
for any
This proposed commitment does not call
comments other than those set out above in connection
with the French sockets and switches market.

(837) The results of the Commission's assessment were mixed
as to the sharing of the Sarel brand and the hiving-off
of this business (splitting off the production plants and
more generally the all-purpose enclosures business,
which would remain within Schneider, from the wiring
accessories business, which would be transferred). In any
event, this proposal raises the same difficulties as those

The market in emergency lighting systems in France

(841) The proposed commitment was to transfer Schneider's
emergency lighting business to the entity purchasing
Sarel's ‘installation products' business (which was the
subject of another proposed commitment — see above).

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Schneider does not have any plant manufacturing
products of this type, which it sources from a third
party. The supply contract would also be transferred to
the purchaser. Emergency lighting systems are marketed
by Schneider under the Merlin Gerin brand. The Sarel
brand is not currently used to market products of this
type.

involved maintaining
already present

the Murelektronic
therefore
products
sales
catalogue but marketing them under the Murelektronic
brandname.

in Télémécanique's

business.

products'

(842) The parties also offered to transfer Lumatic's goodwill,
including the Lumatic brand, to the purchaser of Sarel's
‘installation
an
independent company marketing its products under that
brand and now belongs
to a Legrand subsidiary,
URA/Lumatic, specialised in emergency lighting systems.
The withdrawal of the Lumatic brand in the course of
2001 and its replacement by the URA brand was,
however, decided by the Legrand group back in 2000.

Lumatic was

the initial proposal showed that
(843) The assessment of
replacement of
the Merlin Gerin brand by the Sarel
brand (non-existent on this market) and/or the Lumatic
brand (being phased out) would not enable the initial
competitive conditions to be restored on this market (on
which Legrand enjoys a dominant position with a
market share of over [40-60]* %).

(844)

In the proposed alternative commitments, the notifying
party offered to transfer to […]* the marketing of the
self-contained emergency lighting units currently sold by
Merlin Gerin. […]*, the Commission has serious doubts
as to this proposal: the questions concerning access to
distribution channels
to restore
conditions of effective competition are identical to those
set out above for the other switchboard and accessories
in France. Neither would such a remedy
markets
provide any guarantee as to the incentives for
the
purchaser […]* to develop competition on the relevant
market. In any event, the Commission cannot accept
this proposal without a further market test (ruled out at
this stage in the procedure).

ability

and

the

The market in low-voltage transformers in France

(845) The proposal contained two alternatives. The parties
first offered to transfer
the goodwill of Schneider's
low-voltage transformer business to its existing supplier,
Murelektronic. Schneider markets these products under
the Télémécanique brand. The proposed commitment

(846) Alternatively, the notifying party offered to transfer the
supply contract between Schneider and Murelektronic to
Baco (which was
the subject of another proposed
commitment — see above).

the

the

first

regards

(847) The increase in market share would not be eliminated
second
by
alternative. As
alternative, while transferring the distribution contract
to Baco would have the advantage of eliminating the
increase in market share, it would nevertheless require a
new brand to be launched, which raises uncertainties as
to the viability and ability to restore competitive
conditions of the proposed commitments. It is likewise
doubtful whether Murelektronic could act independently
of Schneider, which markets most of
its production,
given that, by the parties' own admission, Murelektronic
would disappear if Schneider stopped distributing its
products. Neither would such a remedy provide any
guarantee as to the incentives for Baco's purchaser to
develop competition on the relevant market.

The market in cable trays in the United Kingdom

(848) The proposed commitment

involved, as part of

the
termination of the sales contract whereby Métal Déployé
supplied Cablofil products to Mita, transferring to Métal
Déployé the goodwill and sales forces which Mita, a
Schneider
those
products. The notifying party would also undertake not
to begin marketing this category of products again for a
period of
five years. The sale of Cablofil products
accounts for around [50-70]* % of Schneider's turnover
on the relevant market.

subsidiary, assigned to the sale of

(849) Given the

generally moderate positions held by
is
Schneider and Legrand in the United Kingdom,
likely that
the significant reduction in market share
together with a non-competition clause could resolve
the competition problem identified on this market.

it

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C. CONCLUSION

(850) The assessment clearly demonstrated that

in Greece,

the market

and switches

therefore be accepted as

the initial
proposal was
insufficient, both with regard to the
question whether the proposed entities would be fully
functional and able to operate on a stand-alone basis
and in terms of
the risks threatening the divested
entities' access to the market. The parties' proposed
alternative commitments go only a small way towards
eliminating the risks raised by the initial proposal; they
cannot
they stand. The
proposed alternative commitments (i) are still signally
insufficient on certain markets, such as the market in
in
sockets
weatherproof wiring accessories in Spain, the market in
low-voltage transformers in France and the market in
emergency lighting (or self-contained emergency lighting
units) in France; (ii) raise a significant number of serious
doubts as to the viability of the divested entities; and
(iii) do not allay serious doubts as to those entities'
ability to maintain their current position and restore
conditions of effective competition on the relevant
markets. The last two points apply to all the relevant
the United Kingdom
markets, with the exception of
cable tray market. In addition, the new commitments
offered in the proposed alternative commitments (in
particular those relating to switchboards and ordinary
sockets and switches) cannot in any event be accepted
test,
by the Commission without a further market
something which is ruled out by point 43 of
the
Commission notice on remedies.

VII. OVERALL CONCLUSION

(851) For

the reasons set out above,

the notified merger
would lead to the creation or strengthening of dominant

significantly restricting
positions with the effect of
effective competition. The proposed commitments do
not allow the Commission to find that they would make
the merger compatible with the common market and
the functioning of the EEA Agreement. The Commission
is
that
accordingly
incompatible with the
and the
functioning of the EEA Agreement.

common market

notified merger

finds

the

HAS ADOPTED THIS DECISION:

Article 1

The concentration notified to the Commission by Schneider on
16 February 2001, which would enable it
to acquire sole
control of Legrand, is hereby declared incompatible with the
common market and the functioning of the EEA Agreement.

Article 2

This Decision is addressed to:

SCHNEIDER ELECTRIC S.A.
43-45, boulevard Franklin Roosevelt
F 92500 Rueil-Malmaison
France

Done at Brussels, 10 October 2001.

For the Commission

Mario MONTI

Member of the Commission

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ANNEX 1

GENERAL LAYOUT OF ELECTRICITY DISTRIBUTION EQUIPMENT

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L 101/133

ANNEX 2

BRANDS OWNED BY THE PARTIES

Make

Alombard

Boige&Vignal

Dalcotech

Eljo

Elko

Elso

ESMI

Eunea

Gardy

SCHNEIDER

Territories

F

F

DK

S

S-FIN-GR

D-GR

FIN-S-DK-D

E-P

F-B

JoJo (in large DIY outlets)

DK-UK-S-FIN-F
(under the Jo brand)

Make

Arnould

Bticino

Legrand

Ortronics

LEGRAND

Territories

F

F-E-P-D-B-A-F-NL

All countries

I-UK-F

Planet-Watthom

F-NL-A-DK-S-FIN-D

Quintela

Tenby

Tegui

Terraneo

URA

E-P-D-B

UK-IR

I-E-P-D-B-A-F-NL

F-E-B-S

Lexel

LK

May&Steffen

Merlin-Gerin

Mita

Multisignal

Normabarre

Sarel

Schyller

Square D

Stago

Strömfors

Télémécanique

Telesafe

Thorsman

Wibe

S-FIN-EL

Wiremold

UK

DK

D

All countries

UK-B-IRL

S

F-I

F-I-A-B

All countries except
Luxembourg

UK

NL-B

FIN-D-S-DK

All countries

S-D-NL

S-FIN-DK-UK-IRL-D-NL-B

S-FIN-DK-UK-B-A-P