2003/215/ECSC: Commission Decision of 21 November 2001 authorising the merger between Arbed SA, Aceralia Corporación Siderúrgica SA and Usinor SA into Newco Steel (Case COMP/ECSC.1351 - USINOR/ARBED/ACERALIA) (notified under document number C(2001) 3696)
Date: 2001-11-21
Institutions: European Commission
Subjects: competition law, economic concentration, international merger, iron and steel industry, merger control

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 21 November 2001

authorising the merger between Arbed SA, Aceralia Corporaci(cid:243)n Siderœrgica SA and Usinor SA
into Newco Steel

(Case COMP/ECSC.1351 (cid:150) USINOR/ARBED/ACERALIA)

(notified under document number C(2001) 3696)

(Only the English text is authentic)

(2003/215/ECSC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Coal
and Steel Community, and in particular Article 66(2) thereof,

Having regard to the Notice concerning the alignment of
procedures for processing mergers under the ECSC and EC
Treaties (1),

Having regard to the notification submitted by the parties
dated 18 June 2001 and to subsequent information,

Having regard to the Commission letter of 19 July 2001
communicating to the parties
serious
concerns,

the Commission’s

Having given the companies concerned the opportunity to
reply to the Commission’s objections,

Having regard to the final report of the Hearing Officer in this
case (2),

Corporaci(cid:243)n

SA (Arbed),

incorporated
Siderœrgica

in Luxembourg,
Arbed
SA (Aceralia),
Aceralia
incorporated in Spain, which is controlled by Arbed (3),
and Usinor SA (Usinor), incorporated in France, merge
into a new entity, provisionally named Newco Steel
(Newco), to be incorporated in Luxembourg, by way of
a public offer to exchange the shares of Aceralia, Arbed
and Usinor with those of the new entity.

(2)

After examining the notification, the Commission has
come to the conclusion that the proposed concentration
falls within the scope of Article 66 of the ECSC Treaty,
read in conjunction with Article 80 thereof. In so far as
the proposed concentration concerns products or
markets which do not fall within the scope of the ECSC
tailored blanks, construction profiles,
Treaty (namely,
sandwich panels and steel
tubes), Council Regulation
(EEC) No 4064/89 of 21 December 1989 on the
control of concentrations between undertakings (4), as
last amended by Regulation (EC) No 1310/97 (5)
applies (6). This Decision concerns only those parts of
the proposed concentration which fall within the scope
of the ECSC Treaty.

Whereas:

I. THE PARTIES

(1)

On 18 June 2001,
the Commission received a
notification, under Article 66 of the ECSC Treaty, of a
the undertakings
proposed

concentration whereby

(3)

Aceralia is a company incorporated as a sociedad
anonima under Spanish law. It is controlled by Arbed. It

(1) Commission Notice concerning the alignment of procedures for
processing mergers under the ECSC and EC Treaties (OJ C 66,
2.3.1998, p. 36).
(2) OJ C 81 of 4.4.2003.

(3) Cases No. IV/M.0980 and IV/ECSC.1237 (cid:151) Arbed/Aceralia.
(4) OJ L 395, 30.12.1989 p. 1; corrected version in OJ L 257,

21.9.1990, p. 13.

(5) OJ L 180, 9.7.1997, p. 1.
(6) Cf. Case No COMP/M.2382 (cid:151) Usinor/Arbed/Aceralia.

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(4)

(5)

(6)

is the largest steel producer in Spain and manufactures
long steel products
and distributes flat steel products,
and processed steel products. These activities fall under
the ECSC Treaty. It also produces certain types of small
carbon welded tubes and products for the construction
transformation activities.
industry and it carries out
These latter activities fall under the EC Treaty.

Arbed is a company incorporated as a sociØtØ anonyme
under the laws of Luxembourg. It is a major European
steel producer with important operations in Belgium,
Germany, Italy, Brazil and the United States of America.
In particular, its main activities are the production and
distribution of steel products (including heavy and light
long products, flat products and stainless steel products),
the trade of scrap and the distribution of some raw
materials for the steel
industry (especially ferro-alloys
and non-ferrous metal). Arbed also has certain other
activities in the engineering sector. These activities fall
in part under the ECSC Treaty and in part under the EC
Treaty. Aceralia
controlling
together with
undertaking Arbed achieved a worldwide turnover of
EUR 13 232 million in the year 2000.

its

Usinor is a company incorporated as a sociØtØ anonyme
under French law. It is one of the largest steel producers
in the Community and has operations in Belgium,
Germany, Italy, Spain and the United States of America.
It manufactures processes and distributes steel products
(in particular, flat carbon steel products, stainless steel
and other alloy steel products). These activities fall
in
part under the ECSC Treaty and in part under the EC
Treaty. In 2000, Usinor generated a worldwide turnover
of EUR 15 733 million.

II. THE OPERATION

The proposed concentration is a full legal merger with
the complete amalgamation of all of the businesses of
Aceralia, Arbed and Usinor. For this purpose, a new
single corporate entity called Newco Steel (Newco) will
be created, which will be structured as a fully integrated
group. Newco, which will be incorporated as a sociØtØ
anonyme under the laws of Luxembourg, has been
established with the purpose of making an exchange
offer of its shares for the entire issued share capital of
each of the parties. It will simultaneously launch three
separate conditional exchange offers on all ordinary
shares of Aceralia, Arbed and Usinor outstanding at the
time of the offers. All three offers will be conditioned
upon an acceptance of at least 75 % of the issued shares
in Aceralia, Arbed and Usinor. On completion of the
offers, Aceralia’s shareholders will hold approximately
20,1 % of Newco, Arbed’s 23,4 % and Usinor’s
shareholders will hold the remaining 56,5 %.

(7)

(8)

(9)

III. THE CONCENTRATION

Because of their activities in the manufacture and sale of
steel products,
the notifying parties are undertakings
within the meaning of Article 80 of the ECSC Treaty.
Therefore,
a
concentration within the meaning of Article 66(1) of
the ECSC Treaty.

transaction

constitutes

notified

the

IV. PROCEDURE

On 19 July 2001, the Commission decided to initiate an
in-depth investigation into the proposed concentration,
as far as the ECSC products are concerned, inasmuch as
the operation gives rise to serious concerns of giving
the parties the power to hinder effective competition or
to evade the rules of competition instituted under the
ECSC Treaty. The parties were advised of this further
investigation by letter of 19 July.

On 28 September 2001,
the Commission adopted a
Statement of Objections, pursuant to Article 66 of the
ECSC Treaty and paragraph 4 of the Notice concerning
the alignment of procedures for processing mergers
under
the ECSC and EC Treaties. The Commission
arrived at the preliminary conclusion that the proposed
concentration would give the parties the power
to
hinder effective competition or to evade the rules of
competition instituted under the ECSC Treaty.

(10)

Regarding the non-ECSC products covered by the
proposed concentration, the Commission decided on 19
July 2001 that the transaction does not raise serious
doubts as to its compatibility with the common market
or with the functioning of the EEA Agreement (7).

V. ASSESSMENT UNDER ARTICLE 66(2)

A. BACKGROUND: THE STEEL INDUSTRY

1. PRODUCTION PROCESS

(11)

Before discussing in detail the relevant product markets
it will be useful
to establish the framework within
which the industry operates. Steel is one of the most
important materials used in our society. It is present in
the buildings in which we live and work, the transport
in the production and
we use and it

is essential

(7) Case No COMP/M.2382 (cid:151) Usinor/Arbed/Aceralia.

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distribution of
consume.
Furthermore it is a raw material that is essential to the
vast majority, if not all, other manufacturing industries.

food and drink we

the

barriers. Vertical

Steel production is very capital intensive. The minimum
economic scale is high, and the investments in this
sector are very specific. As a result there are very high
integration is, with few
entry
exceptions,
an
important part of the production chain and many are
integrated downstream into steel distribution and first
tubes, panels and
transformation products
profiles.

rule. Most producers

such as

control

the

The first important differentiation in the steel industry is
one based essentially on the chemistry of
the steel.
Three main types of steel can be distinguished, carbon
steel, stainless steel and special or alloy steels. For the
purposes of this decision there is no need to treat the
alloy steels any further as no issues arise in relation to
these steels.

Carbon steel is the most familiar to us and is used in a
very wide range of applications including car bodies,
beverage cans, beams and reinforcing materials for the
construction industry, and so on. Stainless steel contains
significant proportions of chrome and nickel and is
therefore much more expensive than carbon steel.
Therefore it
is primarily used in applications which
require resistance to corrosion and/or resistance to high
temperatures.

The physical properties of steels can be modified by
changes in the chemical analysis or by the treatment
they receive during their production or during the
subsequent manufacturing processes. For example both
beverage cans which require a very ductile material and
knives which require a very hard material (to keep their
sharpness) are made from different carbon steels.

Today there are two steel making processes that account
for nearly all the world’s steel production, the integrated
route and the electric arc furnace (EAF) route. The
integrated route is
intensive and
involves the production of liquid iron from iron ore,
coke and limestone. The liquid iron is subsequently
transformed into steel in an oxygen convertor. At this
chemical
stage or

in a separate vessel

the most capital

final

the

(12)

(13)

(14)

(15)

(16)

the steel

composition of
is adjusted. The alternative
the EAF in which scrap (and
production route is
sometimes directly reduced iron or pig iron) is melted.
Additions are then made to obtain the desired chemical
specification The liquid steel is then continuously cast
into semi-finished products which are further processed
by rolling into the various steel products.

(17) Generally the flat carbon steel products that give rise to
the competition problems outlined in this Decision are
produced by the integrated route as this can produce
steel without the tramp elements that are contained in
scrap. Lower quality flat products can be produced by
the EAF route but for applications where the steel must
be free from tramp elements the integrated route is
obligatory.

(18) Whichever route is used, the steel is continuously cast
into semi-finished products, billets and blooms for long
products and slabs for flat products. The slabs are
subsequently hot rolled into quarto plate and strip (on
either wide or narrow strip mills). Wide strip may be
subsequently slit to produce narrower widths and/or cut
to length to produce sheets. Virtually all quarto plate,
hot rolled narrow strip and steel sheets are sold in this
transformed by the steel
state and are not
producer.

further

(19)

Some of the hot rolled wide strip is sold directly to
customers, including steel service centres, who may cut
or slit it. A large part of the hot rolled wide strip that is
produced is further processed to produce cold rolled
strip, which is thinner and has a superior surface finish.
Again some of the cold rolled material is sold at this
stage but a significant proportion is metallically coated,
with tin or chrome for the can industry or with zinc.
Zinc protects the steel
from corrosion and may be
applied by passing the steel strip through a bath of
molten zinc (hot dip galvanised strip) or electrolytically
(electro-galvanised
for
galvanised strip are the automobile and construction
industries. With the exception of some, predominantly
hot dip, galvanised material which is organically coated,
most of the coated material is sold as packaging steel,
hot dip or electro-galvanised strip.

The main

outlets

strip).

(20)

EAF based plants are usually located near sources of
scrap. Among the integrated plants a distinction can be
made between the generally more modern coastal plants
and inland plants. The inland plants were based on the
local availability of iron ore and coal. Today in Europe

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nearly all the coal and iron ore used in steel making is
to coastal
imported. This gives certain advantages
plants, particularly those with deep water ports.

2. STEEL MANUFACTURERS

(23)

(24)

(25)

(26)

(21) Within the production tree,

it clearly appears

that
products do not bring the same levels of value-added.
This is then translated into differing profitability levels.
In fact, downstream products prove
to be more
value-added and to have appreciably higher levels of
earning before tax, depreciation and amortisation, as is
apparent from Graphic 1.

GRAPHIC 1

Indicative price levels (hot-rolled strip = 100)

[GRAPHIC DELETED]* (*)

Source: Parties.

(22)

Community sales of flat products in 2000 are shown in
Table 1.

TABLE 1

Community sales of flat products in 2000

(Million tonnes)

Product

Hot rolled wide strip

Hot rolled narrow strip

Hot rolled sheets

All hot rolled strip products

Quarto plate

Cold rolled strip

Steel for packaging

Galvanised steel

Organically coated

Source: Parties.

Sales

23,9

2,9

2,5

29,3

7,8

13,1

4,3

21,1

4,1

74,6

Total

(*) Parts of

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

are

the

last

seen a
five

ten years have
Today
Usinor,

The parties claim that the European steel industry is not
very concentrated. While this may have been true in the
significant
past,
steel
there
consolidation.
companies:
and
TKS,
Arbed/Aceralia. They are followed by a number of
producers including Voest-Alpine, Rautaruuki, Salzgitter,
Duferco and SSAB which are considerably smaller.
Depending on the product market considered, the sales
of the five largest producers account for between 50 %
and 85 % of total consumption.

large
Riva

Corus,

of

and Usinor produce

The first group of steel manufacturers is made of large,
integrated companies manufacturing steel products at all
production levels. All of them produce flat products and
TKS, Arbed/Aceralia
stainless
(Corus has an interest in the stainless producer Avesta
Polarit). In addition Corus and Arbed/Aceralia have very
substantial long product operations. All of them are the
result
acquired
Cockerill Sambre which had itself acquired Ekostahl.
TKS is
in
Germany notably Krupp and Hoesch and then the
merger with Thyssen. Corus is the result of a merger
between British Steel and Hoogovens. Arbed acquired
Stahlwerke Bremen and then took a controlling interest
in Aceralia which has since acquired Ucin and Aristrain.
Riva acquired the privatised ILVA.

successive concentrations

concentrations. Usinor

the result of

recent

These large producers operate from a number of sites in
several different European and third countries. They
have integrated sites where steel from coal and iron ore
is produced and further processed. They are capable of
providing a very wide range of flat products. Most of
them produce stainless and long products as well. They
are also active in steel distribution and in downstream
products. For instance, Riva, the smallest in the group,
has 44 production sites of various sizes including the
massive Taranto integrated steel works.

product

The second group of
steel manufacturers concerns
smaller European producers, which do not have the
same scale nor product range as the leading players, but
focus on niche markets (products and/or regions). This
group of second ranked players includes the following
flat
plants:
Voest-Alpine, Rautaruukki, SSAB, and Salzgitter. As
the
stated by one of
Commission’s questionnaires (cid:145)the Group regards itself
not as a bulk producer of steel but rather as a specialist
manufacturer
steel
products(cid:146). There are also a substantial number of long
producers mainly based on the EAF route.

and processor of high-quality

these companies

producers with

in one of

integrated

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(27)

The proposed operation would create Europe’s and the
world’s largest steel company. Graphic 2 gives an idea
the main European steel
of

the relative sizes of

producers on the basis of their sales of all carbon steel
the concerns
flat products, which are the subject of
dealt with in this Decision.

GRAPHIC 2

Total sales of carbon steel flat products (year 2000)

(Thousand tonnes)

30 000

25 000

20 000

15 000

10 000

5 000

0

Rautaruukki

SSAB

Salzgitter

Voest Alpine

Riva

Corus

TKS

Newco

Source: Parties.

B. THE RELEVANT PRODUCT MARKETS

market from stainless steel products and highly alloyed
steel products.

1. PRELIMINARY REMARKS

(28)

the proposed concentration is

The object of
the
production of carbon steel and stainless steel products,
the further processing of both into hot-rolled flat
products, subsequent processing by way of cold-rolling
and the production of metallic and organic coated
products, electrical steel sheets and steel for packaging.
Furthermore, Newco will also be active in the field of
steel distribution,
through a network of steel service
centres, stockholding centres and oxycutting centres.

(30)

(31)

2. STEEL PRODUCTS

(a) The distinction between carbon steel products,
highly alloyed steel products and stainless steel
products

(29) According

previous Commission Decisions (8),
carbon steel products constitute a different product

to

Carbon steel products cannot be substituted by highly
alloyed steel products because of 1.
their different
their significantly different
chemical composition, 2.
fields of application (9).
prices, and 3.
Furthermore, carbon steel products are produced in
plants which are not equipped for the manufacturing of
highly alloyed steel products.

their different

steel

and other

and heat-resistant

In turn, carbon steel products are a separate market
from stainless steel products,
in particular because of
the different chemical composition of non-alloy steel,
alloy
stainless
steels (10). Stainless steel is an alloy containing 10,5 %
or more of chromium, with or without other alloy
elements, and less than 1,2 % of carbon (11). Production
of stainless steel differs from production of carbon steel
through the addition of chrome, nickel and other
alloying elements to the steel melting process in order
to achieve metallurgical differences in the end product
as compared to normal steel (12).

(8) Case No IV/ECSC.1268 (cid:151) Usinor/Cockerill Sambre. Case No
IV/ECSC.1243 (cid:151) Krupp
No
COMP/ECSC.1342 (cid:151) Outokumpu/Avesta Sheffield. Case No
IV/M.239 (cid:151) Avesta/British Steel/NCC/AGA/Axel Johnson. Case No
IV/M.484 (cid:151) Krupp/Thyssen/Riva/Falck/Tadfin/AST.

Hoesch/Thyssen.

Case

(9) Case No IV/ECSC.1268 (cid:151) Usinor/Cockerill Sambre.
(10) Case No IV/ECSC.1243 (cid:151) Krupp Hoesch/Thyssen. See also Case

No COMP/ECSC.1342 (cid:151) Outokumpu/Avesta Sheffield.

(11) Case No IV/M.239 (cid:151) Avesta/British Steel/NCC/AGA/Axel Johnson.
(12) Case No IV/M.484 (cid:151) Krupp/Thyssen/Riva/Falck/Tadfin/AST.

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(32)

(33)

(b) Flat carbon steel products are a separate product

market from long carbon steel products

The Commission has concluded on a number of
form a separate
steel products
occasions
product market from long steel products (13).

that

flat

be

into

Steel produced in a steelworks is cast into shape and
further processed by subsequent
forming into the
consumers. Rolled steel
products desired by final
products may
flat products
subdivided
(hot-rolled wide strips, hot-rolled narrow steel, quarto
plates and sheets) and long products (sections and steel
beams, permanent way material, merchant bars and
wide rods). Flat
steel and long steel products are
produced on different rolling mills and are bought for
different purposes. Most rolling mills are purpose built
for a particular end product and are hardly ever
converted to other uses (14). Furthermore,
there are
significant differences in the applications and prices of
flat and long products. The markets
steel
products can therefore be differentiated from those for
long steel products.

flat

for

(c) Carbon steel flat products: the distinction between

hot-rolled and cold-rolled products

(34)

The Commission has found in previous Decisions that
hot-rolled carbon steel
flat products and cold-rolled
carbon steel
flat products constitute separate product
markets (15).

(35) Only a limited proportion of hot-rolled flat products are
sold for use as such. More than half is further processed
by cold-rolling. Subsequent cold-rolling results
in a
considerable reduction in thickness, greater dimensional
accuracy, a smoother
following work
hardening, greater strength (16). Hot rolled products do
not have the same surface characteristics as cold-rolled
products (17). The value added by cold rolling is
substantial, in the region of 25 % to 30 %.

surface and,

(36) A modern hot-rolled wide strip mill can roll

to
minimum thicknesses of 1,5 mm. Thinner strips and

(13) Case No IV/ECSC.1269 (cid:151) Sollac/Aceralia/Solmed. Case No
IV/ECSC.1243 (cid:151) Krupp Hoesch/Thyssen. Case No IV/ECSC.1268
(cid:151) Usinor/Cockerill
IV/ECSC.1237 (cid:151)
Sambre. Case No
Arbed/Aceralia. Case No IV/ECSC.1264 (cid:151) Aceralia/Aristrain.

(14) Case No IV/ECSC.1243 (cid:151) Krupp Hoesch/Thyssen.
(15) Case No IV/ECSC.1269 (cid:151) Sollac/Aceralia/Solmed. Case No
IV/ECSC.1243 (cid:151) Krupp Hoesch/Thyssen. Case No IV/ECSC.1268
(cid:151) Usinor/Cockerill Sambre. Case No IV/ECSC.1237 (cid:151) Arbed/
Aceralia. Case No IV/M.484 (cid:151) Krupp/Thyssen/Riva/Falck/Tadfin/
AST.

(16) Case No IV/ECSC.1269 (cid:151) Sollac/Aceralia/Solmed.
(17) Case No IV/M.484 (cid:151) Krupp/Thyssen/Riva/Falck/Tadfin/AST.

sheets, which are used especially by the motor industry
and after coating by the packaging and construction
industries, require subsequent further processing in cold
rolling mills, where minimum thicknesses
of
0,12/0,15 mm can be achieved (18).

(37) Within the segment of carbon steel

flat products, a
distinction can therefore be made between hot-rolled
and cold-rolled flat products.

(i) Hot-rolled carbon steel flat products

(38) Within the market

flat
products, the parties distinguish the following products:

for hot-rolled carbon steel

(cid:151) hot-rolled wide strips, that are first rolled on wide

strip mills and then coiled,

(cid:151) hot-rolled sheets, of square or rectangular shape,

that result from the cutting to length of strip,

(cid:151) hot-rolled narrow strip, that have a width less than
600 mm after finishing and which can be produced
on specialised mills or by slitting wide strip to the
desired width,

(cid:151) quarto

plates,

non-coiled

whose
dimensions,
in particular their thickness, are very
different from those of all other hot-rolled carbon
steel flat products.

products

(39)

The parties submit that there is a single relevant market
for all hot-rolled carbon steel flat products, with the
exception of quarto plates, which have different physical
properties in terms of shape, thickness and width and
are produced with different equipment and processes,
and therefore constitute a separate market.

(40) Quarto plate is plate (19) made on special quarto plate
mills with four rolls (four high mills) which, because of
its thickness, cannot be rolled up (20). As the parties
describe in the Form CO, quarto plates have specific

(18) Case No IV/ECSC.1269 (cid:151) Sollac/Aceralia/Solmed.
(19) Plates, known according to their thickness as heavy plates or
medium plates, are rolled square or rectangular pieces made by
cutting hot-rolled wide strip. Universal plates are hot-rolled flat
products cut into pieces between 150 and 1 250 mm wide and
more than 4 mm thick.

(20) Case No IV/ECSC.1243 (cid:151) Krupp Hoesch/Thyssen. Case No

IV/ECSC.1237 (cid:151) Arbed/Aceralia.

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(a)

flat products:

can reach 400 mm,

physical properties:
they are not coiled and their
dimensions are very different from the dimensions of all
other hot-rolled carbon steel
their
thickness
as opposed to a
maximum of 25 mm for hot-rolled coils; (b) their width
can reach 5 000 mm, as opposed to a maximum of
2 200 mm for hot-rolled coils. Furthermore, quarto
plates are used in applications that differ from those for
thin flat steel products,
in particular in the industrial
equipment, mechanical, energy, nuclear, chemical and
shipyard, metalwork,
treatment,
petrochemical, gas
boiler-making and tool making industries. In all these
fields,
significant
economical advantage to the steel users (compared with,
for instance, narrow flat steel products). On the basis of
the Commission
the aforementioned considerations,
concludes
that quarto plates constitute a separate
market.

dimensions

quarto

plates

offer

a

strip constitutes

(41) As far as the other hot-rolled carbon steel flat products
are concerned, the question arises whether hot-rolled
wide
separate product market.
Hot-rolled wide strip is strip more than 600 mm in
width produced from slabs in automated hot-rolled strip
mills and rolled up into coils (21). Wide strip represents
approximately 82 % of the sales of all hot-rolled flat
carbon steel products (excluding quarto plates). In view
of
supply side substitutability
between hot-rolled wide strip, narrow strip and sheets,
it
is concluded that all hot-rolled flat carbon steel
products (excluding quarto plates) form part of the same
relevant product market. Hence, unless otherwise
specified, any subsequent reference in this Decision to
hot-rolled flat carbon steel products is to be understood
as comprising all hot-rolled flat carbon steel products
excluding quarto plates (i.e., wide strip, narrow strip and
sheets).

the high degree of

(ii) Cold-rolled carbon steel flat products

(42)

Cold-rolled carbon steel
flat products constitute a
separate product market from hot-rolled carbon steel
flat products. The parties submit that within the market
no
for
differentiation should be made between either coils and
sheets. This
in line with previous
submission is
Commission’s Decisions (22).

cold-rolled

products

carbon

steel

flat

(43)

Further, according to Annex I
to the ECSC Treaty,
cold-rolled flat products less than 500 mm in width do

conditions,

and supply

not come under the ECSC Treaty, but under the EC
Treaty. However, against the background of present-day
production processes
this
distinction is no longer relevant when it comes to
assessing mergers from a competition point of view.
Cold-rolled flat products both less and more than
500 mm in width are nowadays produced on the same
rolling mills. Sheets of less than 500 mm in width can,
moreover, be obtained by slitting wide
In
accordance with earlier Commission Decisions (23),
there can therefore be assumed to be, for the purpose of
assessing the effects of
the proposed concentration,
uniform product markets irrespective of the products’
width, not only for
flat
products, but also for products in downstream markets
resulting from further processing, such as the different
types of coated flat products.

cold-rolled carbon steel

strip.

(44)

are mostly
flat products
Cold-rolled carbon steel
intended for
further processing by the producers
themselves, in particular into coated products, and thus
used internally. For instance, approximately 70 % to
flat products
80 % of
manufactured by the notifying parties is supplied within
the group for further processing. The Commission has
found in previous decisions that (uncoated) cold-rolled
carbon steel flat products are likewise a separate market
from the market for coated products.

the cold-rolled carbon steel

(45)

(46)

(d) Electrical steel sheets

In line with a previous Commission decision (24), the
parties submit that electrical steel sheets constitute a
separate product market from cold-rolled carbon steel
sheets,
their electro-magnetic properties
(conductivity and electrical resistance) and applications
(the construction of transformers, electric motors, series
and switching units and power plant generators).

in view of

steel

sheets

In addition, the parties distinguish between non-grain
oriented electrical
and grain oriented
electrical steel sheets, due to differences both in the
demand side and in the supply side. The Commission
has concluded in the past that grain-oriented and non
grain-oriented
separate
markets (25). Both products are pickled and cold-rolled;
however, they differ in the annealing process, by which
the material
to the required electromagnetic
properties. In particular, the installations needed for the
manufacturing of these two types of products are very

constitute

electrical

sheets

set

is

(21) Case No IV/ECSC.1243 (cid:151) Krupp Hoesch/Thyssen. Case No
IV/ECSC.1237 (cid:151) Arbed/Aceralia. In turn, narrow strip (or band
steel), including slit strip, is produced either directly in widths of
less than 600 mm or by slitting hot-rolled wide strip.

(22) Case No IV/ECSC.1268 (cid:151) Usinor/Cockerill Sambre.

(23) Case No IV/ECSC.1237 (cid:151) Arbed/Aceralia. Case No IV/M.239 (cid:151)
Avesta/British Steel/NCC/AGA/Axel
Johnson. Case No IV/M.484
(cid:151) Krupp/Thyssen/Riva/Falck/Tadfin/AST. Case No IV/ECSC.1268
(cid:151) Usinor/Cockerill Sambre.

(24) Case No IV/M.484 (cid:151) Krupp/Thyssen/Riva/Falck/Tadfin/AST.
(25) Ibidem.

L 88/8

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4.4.2003

there

and therefore

different,
side
is no supply
there are demand side
substitutability. Furthermore,
differences: grain oriented is used almost exclusively for
large transformers while the principal uses of non-grain
oriented are motors, generators and small transformers.

products, in view of their different characteristics and, in
the significantly higher price of organic
particular,
coating (30). Furthermore,
the
relevant market may be wider than organic coated steel
and include a variety of competing products (31),
in
particular organic coated aluminium.

the parties argue that

(e) Further processing of flat carbon steel: coated
products are a separate market from uncoated
products

(51)

The proposed delineation of organic and metallic
coating as separate markets is in line with previous
Commission’s decisions (32). The market
investigation
has not confirmed, however, the existence of a wider
market comprising organic coated steel and organic
coated aluminium.

(47)

is

that

a production process

Coating
intervenes
subsequently to hot-rolling or cold-rolling. In particular,
it is applied to more than two thirds of all cold-rolled
carbon steel flat products produced in the Community,
which are provided with a coating tailored to its end
use. The Commission has established that coated and
uncoated
products
carbon
constitute separate product markets, according to the
differences that exist between their respective properties,
prices and applications (26).

cold-rolled

steel

flat

(48) Uncoated

has

quite

cold-rolled

different
strip
characteristics from coated cold-rolled strip as regards
surface finish and resistance to corrosion. Moreover, the
value added by the coating is very substantial, though it
varies for the various coating procedures, from [20 % to
30 %]* (hot dip galvanised sheet) to [75 % to 85 %]*
(organically coated sheet), hence approximately 35 % on
average (27).

(i) The distinction between metallic coated and

organic coated products

(ii) Tinplate and galvanised products

(52) Metallic coated strip can be divided into two different
broad classes: 1. steel for packaging (tinplate and ECCS);
and 2. galvanised steel (hot-dip and electro-galvanised,
including coatings of zinc alloys).

(53)

These groups of products have very different prices and
applications. Steel for packaging is used almost entirely
for
food and beverage cans. On the other hand,
galvanised steel strip is widely used in the automobile,
construction and engineering industries, where the zinc
the steel substrate and
coating impedes corrosion of
thereby increases its life. These two groups of products
can therefore be clearly distinguished.

(iii) Galvanised products: hot-dip galvanised and

electro-galvanised

(49) As

the parties

explain in their notification,

the
corrosion-resistance of flat carbon steel can be increased
by coating it with zinc, tin or another metal (28) and/or
by applying an organic topcoat (29).

(54)

are

There
galvanising: hot-dip galvanising and electro-galvanising.

two different production processes

for

(50)

The parties
constitute a separate market

submit

that organic

coated products
from metallically coated

(55) Hot-dip-galvanised products

are

dipping hot-rolled or cold-rolled steel

obtained

through
into a bath of

(26) Case No IV/ECSC.1243 (cid:151) Krupp Hoesch/Thyssen. Case No
IV/ECSC.1269 (cid:151) Sollac/Aceralia/Solmed. Case No IV/ECSC.1237
(cid:151) Arbed/Aceralia. Case No IV/ECSC.1268 (cid:151) Usinor/Cockerill
Sambre.

(27) Case No IV/ECSC.1243 (cid:151) Krupp Hoesch/Thyssen.
(28) Aluminium or zinc alloys (i.e., zinc/aluminium, zinc/nickel, etc).
(29) Paint, thin organic coatings (TOC), laminate film.

(30) Organic coating entails an added-value of 15 % to 35 % on the

raw material used, depending on the exact application.

(31) Organic coated aluminium, non-coated flat carbon steel products

and various other metallic and non-metallic materials.

(32) Case No IV/ECSC.1268 (cid:151) Usinor/Cockerill Sambre. Case No

IV/ECSC.1269 (cid:151) Sollac/Aceralia/Solmed.

4.4.2003

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zinc at 460oC, coating all exposed surfaces with
zinc (33). Electro-galvanised products,
result
from the application of an electrolytic coating to one or
both sides of the strip, with either pure zinc or an alloy
of zinc and nickel.

in turn,

submit

that hot-dip galvanised
form part of

and
The parties
electro-galvanised products
the same
market, namely that of galvanised products (though they
claim that the market might be even wider if account
were to be taken of products competing with metallic
coated steel) (34). They argue that
from a demand
perspective both types of products are substitutable, and
that,
in particular, substitutability has been improved
recently due to improvements in the appearance and
in
performance of hot-dip galvanised products; hence,
all major applications (automotive, domestic appliances
and metal furniture) both hot-dip and electro-galvanised
can be used interchangeably, subject only to minor
restrict
which
process
substitutability.
resistance,
surface quality and prices are comparable.

Furthermore,

adaptations

corrosion

not

do

has

that

suggested

Commission

previous
in
The
decisions (35)
and
galvanised
electro-galvanised may
separate product
markets, in view of their different product characteristics
and prices, but has left open the precise segmentation of
galvanised products.

hot-dip
constitute

(56)

(57)

(58) However,

appear

the market

to exist. Customers have

investigation in this case has
improvements in hot-dip
shown that due to recent
in particular corrosion resistance,
galvanised products,
appearance and performance,
substantial differences
between hot-dip and electro-galvanised characteristics
largely
do not
confirmed that they regard both product categories as
of
technically
applications.
industry,
which represents the largest customer group of both
hot-dip and electro-galvanised products, uses both
products
including the
manufacturing of external body parts, which in the past
were exclusively made of electro-galvanised steel.

interchangeable
Particularly,

in its production processes,

the majority

automotive

the

for

(59)

in

For

and

products
1993,

This can be illustrated by the evolution of demand for
the
electro-galvanised
hot-dip
Community.
70 % of
in
instance,
electro-galvanised steel was
sold to the automotive
industry, compared to only 27 % of hot dip galvanised
strip. However, by 2000, 44 % of hot-dip was used in
the automobile industry. In 1999, of the total tonnage
of metallic coated products used by the automotive
industry, approximately 60 % was hot-dip and 40 %
electro-galvanised. Table 2 analyses the evolution of
demand for hot-dip and electro-galvanised steel by
sectors. According to the forecasts of the industry, the
use of hot-dip galvanised steel by the automotive
industry will further increase in the coming years.

Estimated evolution of Community demand for hot-dip and electro-galvanised steel

TABLE 2

Hot-dip galvanised steel

Electro-galvanised steel

1999

2005

1999

2005

Volume
(thousand
tonnes)

% of
demand

Volume
(thousand
tonnes)

% of
demand

Volume
(thousand
tonnes)

% of
demand

Volume
(thousand
tonnes)

% of
demand

Automotive

Construction

Domestic
appliances

Industrial

Mechanical

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

41

39

3

10

7

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

75

11

4

7

3

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

Total

13 388

100

[(cid:133)]*

100

4 963

100

[(cid:133)]*

100

Source: Parties.

(33) In some cases, the metal is then given a further treatment which
converts the coating to a zinc/iron alloy (8 % to 12 % iron),
facilitating welding at the customer’s premises (galvannealed).
(34) Such as aluminium, plastic, composite materials, glass and even
other steel products (stainless steel, cold rolled steel, organic
coated).

(35) Case No IV/ECSC.1237 (cid:151) Arbed/Aceralia. Case No IV/ECSC.1243
IV/ECSC.1268 (cid:151)

Case No

(cid:151) Krupp Hoesch/Thyssen.
Usinor/Cockerill Sambre.

L 88/10

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4.4.2003

prices

largely

(60) With regard to prices of hot-dip galvanised steel and
electro-galvanised steel, the market investigation shows
that
particular
depend
specifications (in particular the thickness and chemical
composition of
the coating, and thickness, width,
chemical specification rigidity etc., of the steel support)
and applications of either product. Therefore,
is
difficult to determine comparable average or standard

the

on

it

representative of

prices
hot-dip and electro-galvanised products.

the whole range of either

(61)

In any event, according to official price-lists of the main
producers of galvanised sheet (see Table 3) the average
price differentials in the Community between these
products are below 5 %. The market investigation has
confirmed that the range of price differentials between
hot-dip and electro-galvanised are not substantial.

Price differences between hot dip and electro-galvanised by Member States

TABLE 3

Hot-dip

Electro

Difference

Germany

Belgium

France

525

500

25

5 %

600

600

0

0 %

600

600

0

0 %

Spain

550

550

0

0 %

Italy

550

525

25

UK

877

794

83

Austria

Average

575

550

25

611

588

23

5 %

10 %

5 %

4 %

Source: Official price lists of producers located in the countries mentioned.

(62) Accordingly,

the Commission has concluded that the
relevant product market encompasses all galvanised
and
products,
electro-galvanised steel.

galvanised

hot-dip

namely

steel

(f) Steel for packaging: the distinction between steel

for beverage packaging and steel for non-beverage
packaging

(63)

for

and

steel

packaging

Steel
for packaging consists of very thin (0,13 to
0,49 mm) flat carbon steel coils or sheets which are
electrolytically coated with a fine layer of tin (in the
case of tinplate) or chromium (in the case of electrolytic
(ECCS) or tin-free steel
chromium coated steel
(TFS)).
Two distinct
for packaging can be
steel
types of
distinguished according to their applications: steel for
non-beverage
beverage
packaging. This distinction is based on the following
factors: 1. the quality standards for beverage cans are
much higher than those for non-beverage packaging
(tolerance to stresses during processing, quality of metal
in relation to porosity, etc.); 2. the tinning lines have to
be wider
can
production lines (1,2 m instead of a maximum 1,0 m),
and 3. steel
intended for beverage must be de-gassed
under vacuum in order to produce ultra-low carbon
steel. While production routes for the manufacture of
steel packaging for beverage cans could theoretically be
used for the manufacture of steel cans for non-beverage
packaging, it would be uneconomic to do so.

the optimisation of

to allow for

(64)

The parties submit that the relevant product market for
metal for beverage cans should include not only steel
but also aluminium, since both materials are used to

are

traditional

configured

produce beverage
cans. According to the parties,
European customers have a free choice as to whether to
use steel or aluminium for cans since, while aluminium
is more expensive as a raw material, less processing is
to beverage-can grade. Prices of
required to bring it
for packaging would therefore
aluminium and steel
can-making
interact. Moreover, while
production-lines
either
aluminium or steel for packaging, they can be converted
to use the other material (the parties calculate a cost of
EUR [(cid:133)]* million from steel to aluminium and of EUR
furthermore,
[(cid:133)]* million from aluminium to steel);
modern installations consist of swing-lines which enable
steel
and aluminium to be used
interchangeably. Likewise, the parties submit that the
customers, being large
can
and
producers, have
aluminium dedicated lines to quickly adapt to changes
in demand and switch between the two materials.

concentrated beverage
steel

sufficient numbers of

for packaging

using

to

(65)

The Commission has concluded in the past that steel for
packaging is a separate product market (36). However,
the Commission has not determined yet whether the
market should be segmented more narrowly, namely
whether steel (or metal) for beverage packaging and for
non beverage packaging constitute separate markets.
The exact delineation may also be left open for the
purposes of the assessment of the notified operation,
since it does not affect substantially the competitive
assessment.

(36) Case No IV/ECSC.1268 (cid:151) Usinor/Cockerill Sambre.

4.4.2003

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L 88/11

for beverage packaging,

(66) As regards the submission of the parties that steel and
aluminium would constitute part of the same relevant
market
the Commission
and aluminium for
concluded recently that
packaging
relevant
markets (37). While the end products are similar in both
cases, there are significant differences in the both the
prices of the two materials and the price developments.
The Commission’s market investigation in this case does
not confirm a combined aluminium and steel
for
beverage cans market.

steel
constitute

in general

separate

(67)

(68)

(69)

including competing materials,

Finally, the parties submit that in addition to aluminium
and steel the market for beverage packaging could be
even wider,
such as
plastic and glass. These competing materials do not
constitute part of the same market as either steel or
aluminium on the basis of
totally different
the very different
the materials,
characteristics of
equipment needed to fill glass or plastic bottles and
their different prices.

the

(g) Stainless steel flat products: the distinction
between hot-rolled and cold-rolled products

Stainless steel can be distinguished from carbon steel
and from alloy steels by its physical and chemical
characteristics, particularly by its resistance to corrosion
and high temperatures. This makes it uniquely suitable
for
engineering,
automobile engineering, hygiene products and cutlery,
among others (38).

applications

process

certain

in

In previous Decisions, the Commission has identified
separate relevant product markets for hot-rolled stainless
flat products and cold-rolled stainless flat products (39).
The parties point out
the differences between
that
hot-rolled and cold-rolled stainless steel products tend to
fade due to technical evolutions undertaken by the
overall stainless steel business, but they recognise that
the zone of overlap between hot-rolled and cold-rolled
stainless steel still remains limited to date.

wide strip, narrow strip and sheets, all hot-rolled flat
stainless steel products (excluding quarto plates) form
part of the same relevant product market.

(ii) Cold-rolled stainless steel flat products

(71)

(72)

Cold-rolled stainless flat products (strip and sheet) are
made by cold-rolling hot-rolled strip. They constitute a
separate relevant product market because they differ
from hot-rolled flat products
in terms of product
characteristics (particularly the surface finish), uses and
prices (40). Cold-rolled stainless flat products are used in
a
following
requirements (41): 1. resistance to heat, rust and acids
(corrosion); 2. the basic structural quality of steel such
as deep drawing suitability/weldability; and 3. a surface
to provide for
which is highly developed in order
smoothness and good appearance.

industries with the

variety of

large

In addition, cold rolled strip below 500 mm falls under
the EC Treaty, while cold rolled strip above 500 mm.
falls under the ECSC Treaty (42). This distinction is
however no longer meaningful as modern cold-rolling
mills are capable of producing a wide range of widths
both above and below 500 mm, and narrower widths
can likewise be obtained by slitting wider material. The
Commission therefore considers that the distinction is
artificial and that all cold-rolled stainless steel strip
belongs to a single market (43).

(h) Conclusions

(73)

The Commission therefore concludes that the following
categories constitute the relevant product markets which
will have to be taken into account for the competitive
assessment of the notified operation:

(1) hot-rolled flat carbon steel products;

(2) quarto plates;

(3) cold-rolled carbon steel flat products;

(i) Hot-rolled stainless steel flat products

(4) non grain-oriented electrical steel sheets;

(70) As in the case of hot-rolled flat carbon steel products,
the Commission has concluded that, in view of the high
degree of supply side substitutability between hot-rolled

(37) Case No COMP/M.1663 (cid:151) Alcan/Alussuisse.
(38) Case No COMP/ECSC.1342 (cid:151) Outokumpu/Avesta Sheffield.
(39) Case No IV/M.239 (cid:151) Avesta

I. Case No IV/M.484 (cid:151)
Krupp/Thyssen/Riva/Falck/Tadfin/AST. Case No COMP/ECSC.1342
(cid:151) Outokumpu/Avesta Sheffield.

(5) galvanised steel;

(40) Case No COMP/ECSC.1342 (cid:151) Outokumpu/Avesta Sheffield. Case
No IV/M.239 (cid:151) Avesta/British Steel/NCC/AGA/Axel Johnson.

(41) Case No IV/M.484 (cid:151) Krupp/Thyssen/Riva/Falck/Tadfin/AST.
(42) Annex I of the ECSC Treaty.
(43) Case No COMP/ECSC.1342 (cid:151) Outokumpu/Avesta Sheffield. Case
No IV/M.239 (cid:151) Avesta/British Steel/NCC/AGA/Axel
Johnson.
Case No IV/M.484 (cid:151) Krupp/Thyssen/Riva/Falck/Tadfin/AST. Case
No IV/M.1203 (cid:151) Usinor/Finaverdi.

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(6) organic coated carbon steel;

(7) steel

for packaging or,

separate
markets for either (a) steel for beverage packaging
or (b) steel for non-beverage packaging;

alternatively,

(8) hot-rolled stainless steel flat products;

(9) cold-rolled stainless steel flat products.

3. STEEL DISTRIBUTION

(a) The distinction between steel distribution and

production and direct sales of steel

(74)

The parties consider that steel distribution is a separate
market from production of steel and from direct sales
by steel producers to consumers. The Commission has
held in previous cases that steel distribution activities
constitute a distinct product market (44). Steel products’
distribution can be differentiated from the production
and direct sales of steel products by a number of
factors (45):

(1) the diversity of its customers: customers for steel
products through distribution channels are normally
different customers, with different needs, when
compared to the types of customers for direct sales;

(2) the smaller size of orders: while sales from mills are
typically measured in tens of tonnes, steel service
centres’
and
stockholder sales are typically measured in hundreds
of kilograms;

are measured

tonnes

sales

in

(3) the ability of distributors to respond rapidly to
customer requirements: delivery times from steel
mills are usually measured in weeks if not months,
while stockholders work in hours or days; steel
service centres offer normally on-time deliveries,
with commitment on a day or even sometimes a
time slot;

(44) Case No IV/ECSC.1268 (cid:151) Usinor/Cockerill Sambre. Case No
IV/ECSC.1264 (cid:151) Aceralia/Aristrain. Case No IV/ECSC.1243 (cid:151)
Krupp Hoesch/Thyssen. Case No IV/ECSC.1237 (cid:151) Arbed/Aceralia.
Case No COMP/ECSC.1342 (cid:151) Outokumpu/Avesta Sheffield. Case
No IV/M.73 (cid:151) Usinor/ASD. Case No IV/M.239 (cid:151) Avesta/British
Steel/NCC/AGA/Axel
Johnson. Case No IV/M.0503 (cid:151) British
Steel/Svensk Stal/NSD. Case No IV/M.578 (cid:151) Hoogovens/Kl(cid:246)ckner
& Co. Case No IV/M.971 (cid:151) Kl(cid:246)ckner/Comercial de Laminados.
Case No IV/M.918 (cid:151) Kl(cid:246)ckner/ODS. Case No IV/M.484 (cid:151)
Krupp/Thyssen/Riva/Falck/Tadfin/AST. Case No IV/M.1329 (cid:151)
Usinor/Cockerill Sambre. Case No IV/M.504 (cid:151) Avesta (III).

(45) Case No IV/M.971 (cid:151) Kl(cid:246)ckner/Comercial de Laminados. Case No

IV/M.918 (cid:151) Kl(cid:246)ckner/ODS.

(4) the local nature of its business: distribution outlets
generally serve customers within a limited distance
from their location; and

(5) the large number of companies involved in the
business: from integrated distributors owned by steel
companies to small independent firms.

the Commission has

Furthermore,
concluded that
distribution operations have full function characteristics
and are not sales agencies (46), which is also evidenced
by the fact that there is a large number of independent
(non-integrated)
steel distributors operating in the
In effect, although many steel producers
Community.
have wholly or partially owned steel distribution
operations, there is an independent sector consisting of
a large number of companies of varying size and
financial strength ranging from small family companies
to subsidiaries of large industrial companies (47).

(b) The distinction among different steel distribution

channels

The parties submit that steel distribution shall be further
subdivided in three different markets: 1. steel service
centres; 2.
stockholding centres; and 3. oxycutting
centres. These market definitions are in line with
previous Commission decisions (48) and have been
investigation. These
largely confirmed by the market
subdivided
further
be
distributions
according to the groups of products sold.

channels will

(i) Steel service centres

Steel service centres purchase strip mill products from
the
the steel producers and afterwards slit and cut
requirements (49).
material
Their
such as
consumers,
customers
the
automobile
manufacturers,
goods
stockholders and customers of all sizes.

customers’
to
include major
white

and

(75)

(76)

(77)

(78)

Steel service centres are only active in the sector of flat
steel products, both carbon and stainless. In line with
previous Commission Decisions (50), this Decision will
differentiate between the markets for the distribution of

(46) Case No IV/M.578 (cid:151) Hoogovens/Kl(cid:246)ckner & Co.
(47) Case No IV/M.971 (cid:151) Kl(cid:246)ckner/Comercial de Laminados. Case No

IV/M.918 (cid:151) Kl(cid:246)ckner/ODS.

(48) Case No IV/M.918 (cid:151) Kl(cid:246)ckner/ODS. Case No IV/M.1329 (cid:151)
IV/M.0971 (cid:151)

Sambre.

Case

No

Usinor/Cockerill
Kl(cid:246)ckner/Comercial de Laminados.

(49) Case No IV/M.971 (cid:151) Kl(cid:246)ckner/Comercial de Laminados.
(50) Case No

IV/ECSC.1268 (cid:151) Usinor/Cockerill

Sambre. The
distribution of stainless steel products has been analysed by the
in the following Decisions: Case No
Commission,
Case
COMP/ECSC.1342 (cid:151) Outokumpu/Avesta
IV/M.504 (cid:151) Avesta
IV/M.484 (cid:151)
No.
Krupp/Thyssen/Riva/Falck/Tadfin/AST; Case No IV/M.239 (cid:151)
Avesta/British Steel/NCC/AGA/Axel Johnson.

inter alia,

Sheffield;

Case

(III);

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carbon steel and stainless steel products. This distinction
has been confirmed by the notifying parties, which have
submitted that the distribution channels for carbon and
stainless flat steel products are different. The parties’
activities overlap only with regards to carbon steel
in
products and not
Germany, where
is
[< 15 %]*).

stainless products
combined market

(except
share

for
their

(ii) Stockholding centres

(79)

(80)

(81)

in

In

smaller

perform the

quantities (51).

Stockholders
traditional wholesaling
function of buying in bulk from the manufacturers and
reselling
particular,
stockholding activity consists of holding a wide variety
of steel products at convenient locations to supply the
needs mainly, but not exclusively, of small and medium
sized clients, with quantities of steel that are not large
enough to warrant dealing directly with the steel
producers or with steel service centres (52). Furthermore,
stockists have steel available for direct delivery and can
therefore provide a service not available from steel
also developed their
producers. Stockholders have
in-house processing facilities in order to add value and
improve their service to customers (53). Such processing
includes
and
polishing.

to length,

shearing

slitting,

cutting

steel

in the case of

Stockholding activities cover almost the full range of
steel products (54). As
service
centres, a segmentation will be made between the
distribution of carbon steel and stainless steel products,
the parties’ overlapping operations
relating only to
carbon steel products. Furthermore, for the purposes of
the assessment, this Decision will distinguish between
the two product categories of carbon steel products,
namely,
long products. This
distinction by types of products distributed is in line
with a previous Commission Decision (55).

(a) flat products and (b)

In their reply to the Statement of Objections, the parties
contest the segmentation of the relevant product market
into the stockholding of flat carbon products and long
carbon products. The parties submit that the relevant
market is the overall market for stockholding, without
distinction between flat and long products, on the basis
of
stockholding is a
characterised by a very
customer-oriented service,

the following arguments: 1.

(51) Case No IV/M.503 (cid:151) British Steel/Svensk Stal/NSD.
(52) Case No IV/M.971 (cid:151) Kl(cid:246)ckner/Comercial de Laminados. Case No

IV/M.918 (cid:151) Kl(cid:246)ckner/ODS.

(53) Case No

IV/M.239 (cid:151) Avesta/British

Steel/NCC/AGA/Axel

Johnson.

the demand of

fragmented customer base, and therefore,
in order to
their customers, many steel
answer
stockholders would have to carry most steel product
groups; and 2.
there is a high level of supply-side
substitutability and no barriers preventing a stockholder
involved in flat products from supplying long products
and vice-versa.

(82) Notwithstanding the parties’ submission,

in particular
the fact that a number of stockholders are active both in
the market for flat carbon products and in the market
for long carbon products, the delineation of the relevant
product markets must take into account the different
characteristics of demand for every type of product and
the
In
particular, flat carbon products have different customers
long carbon products, and also have
from those of
particular characteristics
regarding their distribution
service centres only deal with flat
(steel
channels
products and not with long products).

differences between their

average prices.

(83) Accordingly, the Commission considers as relevant the
following product markets: 1. distribution of flat carbon
activities; 2.
through stockholding
steel products
distribution of
through
long carbon steel products
stockholding activities; and 3. distribution of stainless
steel products through stockholding activities.

(iii) Oxycutting centres

(84) Oxycutting centres handle a particular product, quarto
plates with a thickness of 8 mm to 600 mm, which
(oxyhydrogen
tool
finishing
requires
is very precise and powerful (56).
blowtorch)
Oxycutting centres work in close relation with their
clients and deal with small quantities of steel which are
cut to the customers’ requirements.

specific

that

a

(85)

The Commission has
that
oxycutting activities constitute a separate market (57).
largely
the market
Moreover,
confirmed this conclusion.

concluded in the past

investigation

has

(c) Conclusion

(86)

The Commission therefore concludes that the following
categories constitute the relevant product markets which
will have to be taken into account for the competitive
assessment of the notified operation:

(1) distribution of carbon steel

flat products through

steel service centres;

(54) Case No IV/M.73 (cid:151) Usinor/ASD.
(55) Case No IV/ECSC.1268 (cid:151) Usinor/Cockerill Sambre.

(56) Case No IV/M.1329 (cid:151) Usinor/Cockerill Sambre.
(57) Case No IV/M.1329 (cid:151) Usinor/Cockerill Sambre.

L 88/14

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4.4.2003

(2) distribution of stainless steel flat products through

(b) Cold-rolled carbon steel flat products

steel service centres,

(3) distribution of

flat carbon steel products through

(90)

stockholding activities,

(4) distribution of long carbon steel products through

stockholding activities,

(5) distribution of

stainless

steel products

through

stockholding activities,

(6) distribution of quarto plates

through oxycutting

centres.

C. THE RELEVANT GEOGRAPHIC MARKETS

(91)

1. STEEL PRODUCTS

(a) Hot-rolled carbon steel flat products

The parties submit that the relevant geographic market
for all hot-rolled carbon steel flat products (including
quarto plates) is at least a Community-wide market, but
they suggest that it might even be wider.

to one

(national)

the production capacities

In previous decisions the Commission found that the
relevant market for hot-rolled carbon steel flat products
comprises at least the territory of the Community (58).
Though in the past
for
hot-rolled steel products belonged in most Member
steel undertaking, which
States
accounted as a rule for the highest shares of supply in
its home market, steel producers have long penetrated
their competitors’ home markets, achieving sizeable
market shares (59). Nowadays, the big steel producers
are active in almost every Member State both through
direct supplies to final customers and through affiliated
distribution centres. Furthermore, transport costs within
the Community are not significant, custom or other
barriers to entry do not exist and customer preferences
are not an important factor since the majority of the
products are homogeneous (commodities).

The exact market delineation can be left open for the
purposes of this Decision, since even on the basis of the
narrowest geographic market definition the proposed
concentration does not
competition
concerns in this market.

serious

raise

(87)

(88)

(89)

(58) Case No IV/ECSC.1264 (cid:151) Aceralia/Aristrain. Case No IV/M.1329
(cid:151) Usinor/Cockerill Sambre. Case No IV/ECSC.1243 (cid:151) Krupp
Hoesch/Thyssen.

(59) Case No IV/ECSC.1243 (cid:151) Krupp Hoesch/Thyssen.

that

is at

least Western Europe,

The parties claim that the relevant geographic market
the production of cold-rolled carbon steel
for
flat
the
is
products
Community and EFTA, again suggesting that it could
even be wider. The parties point to the level of imports
of cold-rolled carbon steel flat products in 2000 (almost
18 % according to the parties) and to the findings of a
report provided by the parties’ economic consultants,
which purports to show, using econometric analysis,
that the relative price of imports significantly affects the
import penetration in the Community.

In previous cases, the Commission has determined that
the relevant geographical market for cold-rolled carbon
steel flat products was at least Western Europe, that is
the Community and EFTA (60). The enquiries in the
present case tend to indicate that the dimension of the
market is not wider than Western Europe. In any event,
the precise delineation of the market can be left open,
since the proposed concentration will not give the
merging
effective
power
entity
to evade the rules of competition
competition or
instituted under the ECSC Treaty irrespective of
the
exact definition of the geographic market.

hinder

the

to

(c) Non grain-oriented electrical steel sheets

(92)

The parties submit that the relevant geographic market
for non-grain oriented electrical steel sheets is Western
Europe. The proposed delineation is
in line with
previous Commission’s Decisions (61) and has been
largely confirmed by the market investigation.

(d) Coated carbon steel products

(93)

The parties submit that the relevant geographic market
for galvanised and organic coated steel
least
Community-wide, if not broader. The Commission has
the markets for hot-dip
that
concluded in the past
are
other
galvanised
and
Community-wide (62).
the
Transport
they
significant
Community are not
less than 5 % of the end value of organic
represent

coated products
costs within
instance,
(for

is at

steel

(60) Due to the lack of figures about Western Europe, the analysis has
been conducted using EU data. This would not anyway change the
result of the investigation, given the low impact of EFTA countries
on the total Western European market.

(61) Case No IV/M.484 (cid:151) Krupp/Thyssen/Riva/Falck/Tadfin/AST.
(62) Case No IV/ECSC.1269 (cid:151) Sollac/Aceralia/Solmed. Case No
No

Sambre.

IV/CECA.1268 (cid:151) Usinor/Cockerill
IV/ECSC.1237 (cid:151) Arbed/Aceralia.

Case

4.4.2003

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Official Journal of the European Union

L 88/15

(94)

(95)

(96)

(97)

coated steel), and a substantial part of galvanised coated
(over
(40 % to 50 %) and organic coated steel
steel
30 %) is traded cross-border within the EU.

The relevant geographic market does not however
extend beyond the Community. The parties have stated
that imports from third countries have increased during
recent years. Nevertheless, third countries’ imports still
represent relatively low volumes and vary substantially
between the different products: 6 % to 9 % for
galvanised steel and 6 % for organic coated steel
in
1999-2000.
investigation has
indicated that a number of customers believe that steel
producers outside the Community are not currently in a
position to meet the requirements of customers in the
Communityin terms of quality, reliability and service.
The Commission therefore concludes,
in line with its
previous decisions, that the markets for coated carbon
steel products comprise the territory of the Community.

the market

Further,

still represent less than 8 % for hot-rolled stainless steel
flat products and 6 % for cold-rolled stainless steel flat
products. In any event, the question may be left open,
since the operation does not give raise to serious
competition concerns even on the basis of the narrower
possible market definition.

2. STEEL DISTRIBUTION

(99)

The parties submit that the geographic markets for steel
distribution are national or regional, and that they have
to be determined on a case by case basis, taking into
account, inter alia, the following factors: 1. value of the
material handled; 2. value added by the relevant service;
3.
location of competitors; 4. delivery time; and 5.
relevant transportation costs.

(e) Steel for packaging

(100)

In particular, the parties consider as relevant markets for
the purposes of this operation:

The parties submit that the relevant geographic market
for steel for packaging is at least Community-wide. The
Commission has concluded in the past that the market
has a Community dimension (63).
Intra-Community
trade flows are important (around 40 %) and transport
cost are not particularly high (3 % to 4 %).

(1) France;

(2) Benelux and the neighbouring north-western part of

Germany (North Rhineland-Westphalia);

The market investigation has confirmed likewise that the
relevant market
Imports in 2000
is the Community.
represented around 10 % for all steel for packaging, the
vast majority
for
non-beverage packaging (there were virtually no imports
of steel for beverage packaging).

of which

consisted

steel

of

(f) Stainless steel flat products

(101)

i.e.,

least Western Europe,

The parties submit that the relevant geographic market
for hot-rolled and cold-rolled stainless steel flat products
is at
that comprises the
Community and EFTA. However, they claim that the
market is developing into a world-wide market, due to
the importance of transcontinental flows of trade, the
levelling
conditions
world-wide, the existence of a global trend with respect
to prices and the absence of significant transport costs.

competition

trade

and

of

(3) Spain and Portugal; and

(4) the United Kingdom and Ireland.

depot

determined

stockholding

decisions (65),

the Commission

has
previous
In
the geographic area serviced by an
concluded that
individual
by
is
transport costs and delivery times. The value added by
steel distribution operations is comparatively low, so
transport costs are an important constraint on the
ability of a distribution operation to compete over long
distances (66).
investigation
shows that distribution outlets generally serve customers
within a radius of approximately 200 to 250 kms.
Distribution is therefore essentially a regional business.
Whether this region includes one or more Member
States depends upon a number of factors, including the
size of the Member State, the type and value of the
products sold and the location of competitors (67).

In particular,

the market

(98)

The Commission has defined as relevant in the past the
market comprising Western Europe (64). While imports
from third countries have increased in recent years, they

(102) Hence,

the Commission has established in previous
the activities of steel distributors are
decisions that
normally confined to an individual member State and

(63) Case No IV/CECA.1268 (cid:151) Usinor/Cockerill Sambre.
(64) Case No IV/M.484 (cid:151) Krupp/Thyssen/Riva/Falck/Tadfin/AST. Case
No IV/M.239 (cid:151) Avesta/British Steel/NCC/AGA/Axel Johnson.

(65) Case IV/M.503 (cid:151) British Steel/Svensk Stal/NSD.
(66) Case No IV/M.760 (cid:151) Kl(cid:246)ckner/ARUS.
(67) Case No IV/M.0918 (cid:151) Kl(cid:246)ckner/ODS.

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cross-border transactions by stockholders, steel service
centres and oxycutting centres are limited (68). The
Commission’s investigation in this case shows that there
exist some cross-border flows between neighbouring
areas, but a large number of sales are made in the
country of location of both the distribution centre and
the customer.

The relevant geographic market appears therefore to be
the Iberian Peninsula. In any event, the exact delineation
of the relevant geographic market
the existence
either of a single market for these two countries or
rather of separate markets) can be left open, since the
competitive concerns raised by the assessment of the
notified operation would remain irrespective of
the
existing alternative geographic definitions.

(i.e.,

(103) As the parties set out

steel distribution by steel

in the Form CO, France has
already been considered the relevant geographic market
for
service centres and
stockholding centres (69) and oxycutting centres (70).
The market investigation has confirmed that there exist
only limited cross-border sales between France and its
neighbouring countries.

of

the

part

western

relevant

Germany

identified as

existence of

In the past,

and 3.
flows of products.

(104) The parties consider as a relevant geographic market the
area comprising the Benelux and the neighbouring
north
(North
Rhineland-Westphalia), on the basis of 1. the absence of
trade barriers; 2. the similarity of prices charged within
significant
the
region,
cross-border
the
Commission has
the market
comprising the Netherlands, Belgium and the north-
western area of Germany (71). The market investigation
has confirmed the existence of important cross border
trade flows in the considered area.
In particular, the
different distribution networks supply to customers in
the area on the basis of the location of their distribution
outlets. For instance, the parties have concentrated their
principal steel service centres in this area in Belgium,
and from there they can effectively and economically
supply to customers in Luxembourg, the Netherlands
and the relevant part of Germany. In effect, a significant
proportion of sales made by the parties’ Belgian steel
service centres was made to customers located in the
aforementioned countries. Furthermore, with regards to
stockholding activities, [20 % to 30 %]* of the parties’
sales to Belgian customers were made by their Dutch
stockholders, while [30 % to 40 %]* of stockholding
sales to Dutch customers were made by the parties’
[40 % to
Belgian stockholders; on the other hand,
to North
stockholding sales
50 %]* of
Rhineland-Westphalia
Benelux
by
were made
stockholders. Finally, the market investigation confirms
that prices charged throughout
this region are very
similar.

the parties’

steel

service

(106) Finally, the parties submit that the United Kingdom and
Ireland constitute a single relevant geographic market.
Transportation costs, which are an important constraint
for
centres, would substantially limit
imports from outside this area. The exact delineation of
the relevant geographic market can, however, also be
left open since under any alternative definition (i.e.,
separate national markets for the United Kingdom and
Ireland)
competitive
concerns.

the operation does not

raise

(107) The Commission therefore concludes that the relevant
geographic markets for the assessment of the notified
operation are:

(1) France;

(2) Benelux and the neighbouring north-western part of

Germany (North Rhineland-Westphalia);

(3) the

area

comprising
alternatively each country as
markets; and

Spain and

Portugal or,
relevant

separate

(4) the area comprising the United Kingdom and
Ireland or, alternatively, each country as separate
relevant markets.

D. COMPETITIVE ASSESSMENT

1. STEEL PRODUCTS

1. Hot-rolled carbon steel flat products

(105)

the parties submit

In turn,
that Spain and Portugal
together constitute a relevant geographic market. The
market
investigation, has confirmed the existence of
cross border sales, normally from Spain into Portugal.

(68) Case No IV/M.760 (cid:151) Kl(cid:246)ckner/ARUS. Case No IV/M.1329 (cid:151)

Usinor/Cockerill Sambre.

(69) Case No IV/CECA.1268 (cid:151) Usinor/Cockerill Sambre. Case No

IV/M.1329 (cid:151) Usinor/Cockerill Sambre.

(70) Case No IV/M.1329 (cid:151) Usinor/Cockerill Sambre.
(71) Case IV/M.578 (cid:151) Hoogovens/Klockner.

(108) As mentioned in the

the production of hot-rolled carbon steel

section on product market
definition, only a limited part of
the hot-rolled flat
carbon steel produced is sold for use as such: more than
half of
is
further processed by cold-rolling. As is shown by Table
4,
the production of hot-rolled in the Community
amounts approximately to 75 million tonnes of which
only 29 million tonnes is sold in the form of hot-rolled
wide strip, hot-rolled sheets or hot-rolled narrow strip
(quarto plates will be dealt with separately).

4.4.2003

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Official Journal of the European Union

L 88/17

TABLE 4

Production and sales of hot-rolled flat carbon in the
Community

(1 000 tonnes)

Year

Total production

Total sales

2000

1999

1998

1997

Source: Parties.

NA

74 934

73 751

74 746

29 269

29 064

28 457

27 105

(109) Newco will have an important share of the production
capacity of hot-rolled in the Community ([35 % to
40 %]* in 1997-1999). However, due to its integrated
nature, a substantial part of
this production is used
in-house in downstream production.

Market structure

(110) On the basis of the narrowest possible definition of the
relevant market for hot-rolled carbon steel flat products,
namely
parties
combined market share both in terms of total sales and
merchant sales (sales to third parties) have accounted for
between [25 % to 35 %]* during the years 1997-2000
(see Table 5).

a Community-wide market,

the

TABLE 5

Parties’ combined sales of hot-rolled carbon steel flat
products

Total sales

Merchant sales

Thou-
sand
tonnes

%

Thou-
sand
tonnes

%

[(cid:133)]*

[25(cid:151)30]*

[(cid:133)]*

NA

[(cid:133)]*

[30(cid:151)35]*

[(cid:133)]*

[25(cid:151)30]*

[(cid:133)]*

[25(cid:151)30]*

[(cid:133)]*

[25(cid:151)30]*

[(cid:133)]*

[25(cid:151)30]*

[(cid:133)]*

[25(cid:151)30]*

2000

1999

1998

1997

Source: Parties

(112) As far as merchant sales are concerned, Usinor totalled
[(cid:133)]* million in 2000 while Arbed/Aceralia accounted
for [(cid:133)]* million. As is clear from Table 6, in 1999, the
notifying parties’ merchant sales totalled [(cid:133)]* and [(cid:133)]*
million
a
combined market share of [25 % to 30 %]* ([10 % to
15 %]* + [10 % to 15 %]*).

respectively, which

represents

tonnes

TABLE 6

Share of Community sales of hot-rolled carbon steel flat
products in 1999

Total sales

Merchant sales

Company

Thou-
sand
tonnes

%

Thou-
sand
tonnes

%

Usinor

[(cid:133)]*

[15(cid:151)20]*

[(cid:133)]*

[10(cid:151)15]*

Arbed/Aceralia

[(cid:133)]*

[10(cid:151)15]*

[(cid:133)]*

[10(cid:151)15]*

Newco

Corus

TKS

Riva

Voest-Alpine

Salzgitter

SSAB

Rautaruukki

Others

Third country
imports

[(cid:133)]*

[30(cid:151)35]*

[(cid:133)]*

[25(cid:151)30]*

[(cid:133)]*

[10(cid:151)15]*

[(cid:133)]*

[10(cid:151)15]*

[(cid:133)]*

[10(cid:151)15]*

[(cid:133)]*

[15(cid:151)20]*

[(cid:133)]*

[< 10]*

[(cid:133)]*

[< 10]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[< 5]*

[< 5]*

[< 5]*

[< 5]*

[< 5]*

4 009

13,8

[(cid:133)]*

[< 40]*

Total 29 064

100

[(cid:133)]*

100

Source: Parties.

(113) The three main competitors of Newco in the market for
hot-rolled carbon steel flat products are Corus (market
share of [10 % to 15 %]* in total sales in 1999 and
[10 % to 15 %]* in merchant sales in the said year), TKS
([10 % to 15 %]* and [15 % to 20 %]* respectively) and
Riva (< 10 % and < 10 %). The second-tier European
producers are active as well in this market: Voest-Alpine
(< 5 % in total sales), Salzgitter (< 5 %), SSAB (< 5 %)
and Rautaruukki (< 5 %). Imports from third countries
have
representing
around [15 % to 20 %]* in 2000.

increased during the

last years,

(111)

In particular, the Community market for hot-rolled flat
products totalled 29,2 million tonnes in 2000, with
Usinor’s total sales amounting to [(cid:133)]* million tonnes
([15 % to 20 %]* of the market) and Arbed/Aceralia’s to
[(cid:133)]* million ([10 % to 15 %]*). The combined figure
([(cid:133)]* million tonnes) represents [25 % to 30 %]* of
total sales in the Community in 2000.
In 1999, the
parties’ combined share of the Community market in
terms of total sales amounted to [30 % to 35 %]*.

(114) This market structure does not give rise to serious
competition concerns after
the merger either of 1.
Newco unilaterally hindering effective competition or
evading competition rules or 2. parallel anticompetitive
behaviour by the main producers. In particular, Newco
is not
likely to be in a position to raise prices
unilaterally across the whole range of hot-rolled flat
products.

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Imports

Capacity utilisation

(115) The market for hot-rolled carbon steel is characterised
by a high level of imports: 16,3 % in 2000, 13,8 % in
1999 and 17,5 % in 1998. The vast majority of
consumed in the EEA is
hot-rolled carbon steel
imports from third
commodity-grade steel;
countries do not
from quality
disadvantages.

to suffer

therefore,

appear

(119) The Community capacity utilisation rate in 1999 was
68 %. This suggests that competitors would also have
enough spare capacity to increase their production and
sales should Newco decide to raise prices unilaterally.
They can therefore act as credible alternative suppliers
thus constraining Newc(cid:242)s market behaviour.

Conclusion

Market entries

(116)

In view of those considerations, the Commission has
concluded that the notified operation will not give the
parties the power to hinder effective competition or to
evade the rules of competition instituted under the
ECSC Treaty with regard to the market for hot-rolled
carbon steel flat products.

(120) The parties have identified three new entrants to the
market in the last five years:
(a) Vitkowice, a Czech
hot-roller, as an importer; (b) Duferco, with a planned
capacity of 950 000 tonnes; and (c) Marcegaglia.

2. Quarto plates

Market structure

(117)

In 2000 the total market for quarto plates totalled 7.8
million tonnes. Usinor’s share in terms of total sales
(including captive sales) amounted to [(cid:133)]* million
tonnes ([15 % to 20 %]*)
in 2000. In the same year,
Arbed/Aceralia’s share was [(cid:133)]* million tonnes ([5 % to
10 %]*) giving a combined market share of [20 % to
25 %]*. This
increase on the
a
combined market share from [20 % to 25 %]* in 1999.
As is clear from Table 7,
the
merchant market (sales to third parties) amounted to
[20 % to 25 %]* in 1999 (Usinor: [15 % to 20 %]*;
Arbed/Aceralia: [5 % to 10 %]*), which approximately
corresponds to the market share in total sales of that
year ([20 % to 25 %]*).

the parties’ share of

represents

slight

Imports

(121)

Import levels in this market represented 14,6 % of sales
in 2000 and 19,5 % in 1999. These comparatively high
penetration rates further decreases the scope for Newco
to act independently of its competitors.

Conclusion

(122) On the basis of that analysis, the Commission concludes
that the notified operation will not give the parties the
power to hinder effective competition or to evade the
rules of competition instituted under the ECSC Treaty in
the market for quarto plates.

TABLE 7

Parties’ combined sales of quarto plates

(123)

Total sales

Merchant sales

Thou-
sand
tonnes

%

Thou-
sand
tonnes

%

[(cid:133)]*

[20(cid:151)25]*

[(cid:133)]*

NA

[(cid:133)]*

[20(cid:151)25]*

[(cid:133)]*

[20(cid:151)25]*

[(cid:133)]*

[15(cid:151)20]*

[(cid:133)]*

[20(cid:151)25]*

[(cid:133)]*

[20(cid:151)25]*

[(cid:133)]*

[20(cid:151)25]*

2000

1999

1998

1997

Source: Parties.

3. Cold-rolled carbon steel flat products

the

indicating that

assessment,
since

In a previous section (recitals 90 and 91), the exact
geographic market definition for cold-rolled carbon steel
flat products was
the
left open,
narrowest possible definition was Western Europe. For
the
the purposes of
Community will be used,
data
regarding an overall Western European market is not
available. In any event, the global assessment would not
for Western Europe were
change
considered, since the weight of
the other countries
(Norway, Switzerland, Liechtenstein, Iceland) is so small
in relative terms that
the overall Western European
situation would not be substantially different from that
of the Community.

figures
for
exhaustive

figures

the

if

(118) Corus held a market share of [5 % to 10 %]* in terms of
total sales in 1999, Rautaruuki [5 % to 10 %]*, Riva
[5 % to 10 %]*, Salzgitter [5 % to 10 %]* and TKS [5 %
to 10 %]*. Although there is a considerable distance
between Newco and its competitors, the total amount of
Newc(cid:242)s market share is still moderate covering only
about one-fifth of the market.

(124)

the Community market

In 2000,
for cold-rolled flat
products totalled 13,1 million tonnes. Usinor’s total
sales amounted to [(cid:133)]* million tonnes ([15 % to 20 %]*
of
the market) and Arbed/Aceralia’s to [(cid:133)]* million
([15 % to 20 %]*). The combined figure ([(cid:133)]* million
tonnes) represented [35 % to 40 %]* of total sales in the
In 1999, the parties’ combined
Community in 2000.

4.4.2003

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Official Journal of the European Union

L 88/19

share of the Community market in terms of total sales
amounted to 40 % (see Table 8).

TABLE 8

Parties’ combined sales of cold-rolled carbon steel flat
products

(126) With regard to the likely evolution of the market, the
forecast made by an independent consultant giving
the merger
advice to the parties on the effects of
outlined that Newco’s share of
for
cold-rolled carbon steel flat products would be about
[35 % to 40 %]* in 2006.

the total market

Total sales

Merchant sales

(127)

Thou-
sand
tonnes

%

Thou-
sand
tonnes

%

[(cid:133)]*

[35(cid:151)40]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[35(cid:151)40]*

[(cid:133)]*

[35(cid:151)40]*

[(cid:133)]*

[35(cid:151)40]*

[(cid:133)]*

[35(cid:151)40]*

[(cid:133)]*

[40(cid:151)45]*

[(cid:133)]*

[40(cid:151)45]*

2000

1999

1998

1997

Source: Parties.

In the Statement of Objections, the Commission took
the preliminary view that the notified operation would
give the parties the power to unilaterally raise prices.
The Commission came to this conclusion on the basis
of (a) the particularly high combined market shares of
the parties to the transaction and the great distance to
the limited extent of
their closest competitors;
planned new capacity in the forthcoming years; (c) the
absence of
unlikeliness of new entries;
competitive pressure
(e)
stemming from
insufficient
constraints
imports;
(f) the inability of especially the automotive
industry to change suppliers in the short and medium
term; and (g) the strong position of Newco in up- and
downstream markets.

the
alternative materials;

competitive

(b)

(d)

by

(125) Approximately [(cid:133)]* tonnes of the referred [(cid:133)]* million
of total sales were sold to other companies within the
Usinor and Arbed’s groups. Newco’s market share in
terms of merchant sales (sales to third parties) was
[35 % to 40 %]* in 1999. Table 9 illustrates the parties’
and competitors’
shares regarding
sales and market
either total sales and the merchant market in 1999.

TABLE 9

Share of Community sales of cold-rolled carbon steel flat
products in 1999

Total sales

Merchant sales

Company

Thou-
sand
tonnes

%

Thou-
sand
tonnes

%

Usinor

[(cid:133)]*

[15(cid:151)20]*

[(cid:133)]*

[15(cid:151)20]*

Arbed/Aceralia

[(cid:133)]*

[20(cid:151)25]*

[(cid:133)]*

[20(cid:151)25]*

Newco

Corus

TKS

Riva

Voest-Alpine

SSAB

Salzgitter

Others

Third country
imports

[(cid:133)]*

[35(cid:151)40]*

[(cid:133)]*

[35(cid:151)40]*

[(cid:133)]*

[10(cid:151)15]*

[(cid:133)]*

[10(cid:151)15]*

[(cid:133)]*

[10(cid:151)15]*

[(cid:133)]*

[10(cid:151)15]*

[(cid:133)]*

[10(cid:151)15]*

[(cid:133)]*

[10(cid:151)15]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

< 5

< 5

< 5

[(cid:133)]*

[5(cid:151)10]*

1 304

10,7

[(cid:133)]*

[20(cid:151)25]*

Total 12 170

100

[(cid:133)]*

100

Source: Parties.

(128)

In their response, the parties contest the findings of the
Commission. In essence, the parties argue as follows:

(cid:151) the parties have lost substantial market share in the
last few years and have arrived at [30 % to 35 %]*
in terms of total sales in the year 2000 (starting
form [40 % to 45 %]* in 1997),

(cid:151) there is substantial spare capacity in the market,
spare capacity which is expected to grow in the
future. In addition, based on the results of a report
provided by the parties’ economic consultants, the
parties claim, that (cid:151) due to the high fixed costs (cid:151)
steel producers are under high pressure to sell the
(cid:145)marginal(cid:146)
the threat of
customers switching even small volumes away from
suppliers is sufficient
to exert considerable price
pressure,

tonne. Because of

this,

(cid:151) the market

for cold rolled flat products

faces
substantial imports, the bulk of which (68 %) stems
from central and eastern Europe, Turkey and the
CIS. Spare capacity in these countries will not be
absorbed by domestic demand in the short or
medium term,

(cid:151) imports from the countries mentioned do not suffer
from quality disadvantages, as the vast majority of
the cold rolled flat products consumed in the EEA is
commodity-grade steel,

(cid:151) imports exercise a real, lasting competitive restraint
on the behaviour of domestic producers, even

L 88/20

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Official Journal of the European Union

4.4.2003

without
distribution networks,

long-term sales

commitments

or

(cid:151) the customers (cid:151) being highly concentrated (cid:151) are

in a position to exert substantial buyer power,

(cid:151) vertical

integration does not privilege Newco as
competitors are equally integrated and customer
bases differ in the distinct markets.

In sum, the parties’ argue that market conditions in the
market for cold rolled flat products are such as to assure
effective competition also post-merger.

(129) The Commission has carefully examined the arguments
raised by the parties, considering in particular several
decisive elements for the maintenance of competition
such as (a) a high rate of imports and (b) spare capacity
in the market under consideration.

(130)

close

under

in Table 10,

In the first place, as set out
imports
amounted to almost 18 % in the year 2000 starting
from 9,8 % in 1997. This represents the highest import-
and import growth rate of all steel markets which have
been
current
proceedings. The increase of market shares appears to
expense of parties, whose
have occurred at
combined market share decreased from [40 % to 45 %]*
in 1997 to [30 % to 35 %]* in terms of total sales. The
market shares of the other players in the market have
remained stable.

consideration

the

the

in

TABLE 10

Import rates in the market for cold rolled products

2000

1999

1998

17,9 %

10,7 %

14,4 %

1997

9,8 %

Source: Form CO.

(131) As the parties point out, these imports originate mainly
from Eastern European countries, so transport costs are
unlikely to differ
substantially from transport costs
within the Community. In any event, the high level of
imports as well as their high growth during the past
years appears
that cold rolled flat steel
products from third country-suppliers are not hampered
by competitive disadvantages regarding quality, price or
logistics which would prevent them from entering the
Western European market.

to suggest

for cold rolled flat products has one of

(132) Moreover, as can be seen from Tables 11 and 12, the
the
market
highest rates of spare capacity amongst
the markets
which have been under close examination in the current
proceedings.

TABLE 11

Capacity utilisation in 1999 (%)

(%)

Usinor

Arbed
Aceralia

Industry-wide

Hot rolled

[> 90]*

[> 90]*

Quarto plates

[70(cid:151)80]*

[70(cid:151)80]*

Cold rolled

[80(cid:151)90]*

[80(cid:151)90]*

Galvanised steel

[> 90]*

[80(cid:151)90]*

Organic coated

[80(cid:151)90]*

[80(cid:151)90]*

Hot rolled stainless

[> 90]*

[> 90]*

Cold rolled stainless

[> 90]*

[80(cid:151)90]*

Source: Parties’ notification.

90

68

76

86

75

94

89

TABLE 12

Evolution of capacity utilisation rates in cold-rolled
products

(%)

Company

1999

1998

1997

Usinor

[80(cid:151)90]*

[80(cid:151)90]*

[80(cid:151)90]*

Arbed/Aceralia

[80(cid:151)90]*

[70(cid:151)80]*

[80(cid:151)90]*

Newco

[80(cid:151)90]*

[80(cid:151)90]*

[80(cid:151)90]*

Industry-wide

79

79

78

Source: Parties and EU-Data.

for merchant

(133) The spare capacity in the market is not expected to be
absorbed by additional demand in the forthcoming
years. In fact, the market for total sales of cold rolled
products has grown only modestly during the past four
years (less than 4 % between 1997 and 2000). The
sales has even decreased as
market
customers have
shifted their demand to hot dip
galvanised sheet. In consequence, the current capacity
utilisation rate gives competitors in the Community
sufficient scope to react on price increases by Newco by
an extension of production thus exercising competitive
pressure on Newco. This is all the more true, as the
industry-wide capacity utilisation rate is lower
than
Newco’s. Additional spare-capacity also exists in Eastern
Europe, the main source of imports of cold rolled flat
products.

4.4.2003

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Official Journal of the European Union

L 88/21

(134)

In sum, the Commission concludes that although the
market structure post-merger suggests that Newco could
have the power to act independently of its competitors,
Newco will face the competitive pressure exerted by the
high level of imports into the Community and will also
have to take into account the existence of a substantial
spare capacity in the industry when planning its
strategic
competitors
(including importers) will be in a position to effectively
constrain Newco’s market behaviour.

remaining

decisions.

The

Conclusion

(135) Those considerations have led the Commission to the
the proposed concentration will not
conclusion that
effective
give
to evade the rules of competition
competition or
instituted under ECSC-Treaty with regard to the market
for cold-rolled carbon steel flat products.

the parties

the power

to hinder

4. Non grain-oriented electrical steel sheets

Market structure

(136)

steel

sheets were 1,4 million tonnes

In 2000, total sales in the market for non grain-oriented
electrical
in
Western Europe (the available data correspond to the
Community, Norway and Switzerland). Parties’
sales
totalled [(cid:133)]* million tonnes, comprising Usinor with
[(cid:133)]* million tonnes and Arbed/Aceralia with [(cid:133)]*
million (including captive sales). This represents a share
of
the market of [15 % to 20 %]* (Usinor [10 % to
15 %]*; Arbed/Aceralia [5 % to 10 %]*), down from
[20 % to 25 %]* in 1999.

TABLE 13

Parties’ combined share of non grain-oriented electrical
steel sheets in the Community + Norway and Switzerland

Total sales

Merchant sales

Thousand
tonnes

%

Thousand
tonnes

[(cid:133)]*

[15(cid:151)20]*

[(cid:133)]*

[(cid:133)]*

[20(cid:151)25]*

[(cid:133)]*

[(cid:133)]*

[20(cid:151)25]*

[(cid:133)]*

[(cid:133)]*

[20(cid:151)25]*

[(cid:133)]*

%

NA

NA

NA

NA

2000

1999

1998

1997

Source: Parties.

the strong position of
the risk of
Newco unilaterally hindering effective competition or
evading competition rules can be excluded.

the competitors,

(138) Moreover,

clear

the Commission has concluded that

the
proposed concentration does not create or strengthen
the risk of parallel anticompetitive behaviour in this
market. Market shares are not symmetric but spread in
a range of more than 20 percentage points
thus
suggesting a lack of common economic interest. TKS is
the
its
competitors. Voest-Alpine has been very active and its
market shares increased by almost 30 % in the last years
(from [10 % to 15 %]* in 1997 to [10 % to 15 %]*
1999).
Imports represented a market share of about
10 %. The parties have suggested that this figure is likely
to increase in the future as transport costs fall relative to
the total product price.

the market, well

leader of

above

Conclusion

(139) On that basis,

the Commission believes

the
proposed concentration will not give rise to competition
concerns in the market for non grain-oriented electrical
steel sheets.

that

5. Galvanised steel

(140)

In 2000, the Community market for galvanised steel
totalled 21,1 million tonnes. The market has grown
significantly during the last years: the average annual
growth rate since 1997 has been 9 % to 10 % (see Table
14).

TABLE 14

Sales of galvanised steel in the Community

Year

Total sales in
Thousand tonnes

Merchant sales in
Thousand tonnes

2000

1999

1998

1997

Source: Parties.

21 136

18 492

17 840

15 850

NA

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

(137) TKS will remain the market leader with a market share
of [35 % to 40 %]* in 1999. Corus ([15 % to 20 %]*
market share) and Voest-Alpine ([10 % to 15 %]* market
share) also hold strong positions in the market. Due to

(141)

In 2000 the parties sold [(cid:133)]* million tonnes (Usinor
[(cid:133)]* million tonnes, Arbed/Aceralia
[(cid:133)]* million
tonnes) or approximately [40 % to 45 %]* of the total
market. However some [(cid:133)]* million tonnes of this total
was sold to other companies within the Usinor and
the merchant
Arbed groups. The parties’

share of

L 88/22

EN

Official Journal of the European Union

4.4.2003

market (sales to third parties) in 1999 (figures are not
available for 2000) was around [40 % to 45 %]* (Usinor
[25 % to 30 %]* and Arbed/Aceralia [10 % to 15 %]*).

have diverted their purchases. It should be noted that
second largest
is currently Usinor’s
Arbed/Aceralia,
competitor (after TKS). In sum, customers are not likely
to be able to find economical alternative sources of
supply, as explained below.

Market leader

the undisputed leader of

(142) As a result of the proposed concentration, Newco will
the Community
become
market for metallic coated products. In this position it
will be able to unilaterally raise prices. Other producers
will not have an incentive to compete strongly nor will
they be able to do so.

(143)

In effect, the structure of the market will allow Newco
to act unilaterally. As can be seen from Table 15, the
parties will be more than double the size of their largest
competitor, TKS, and will be very much larger than any
of the other players (four times larger than Corus and
five times larger than Riva).
In fact, Newco will be
bigger than its four main competitors combined.

TABLE 15

Share of Community sales of galvanised steel in 1999

Total sales

Merchant sales

Company

Thousand
tonnes

%

Thousand
tonnes

%

Usinor

[(cid:133)]*

[30(cid:151)35]*

[(cid:133)]*

[25(cid:151)30]*

Arbed/Aceralia

[(cid:133)]*

[10(cid:151)15]*

[(cid:133)]*

[10(cid:151)15]*

Newco

TKS

Corus

Riva

Voest-Alpine

Salzgitter

Others

Third country
imports

[(cid:133)]*

[40(cid:151)45]*

[(cid:133)]*

[35(cid:151)40]*

[(cid:133)]*

[15(cid:151)20]*

[(cid:133)]*

[10(cid:151)15]*

[(cid:133)]*

[< 10]*

[(cid:133)]*

[(cid:133)]*

[< 5]*

[< 5]*

[(cid:133)]*

[< 10]*

1 152

6,2

[(cid:133)]*

[55(cid:151)60]*

Total

18 492

100

[(cid:133)]*

100

Source: Parties.

(144) This

large difference between the market

share of
Newco and the market shares of its competitors makes
it more difficult for the other players to respond to
Newco’s price increases and/or output reductions in
such a way as to make the unilateral action of the
merged firm unprofitable. The merger will provide
Newco with a larger base of sales on which to enjoy the
resulting price rise while eliminating a competitor
to which customers otherwise might
(Arbed/Aceralia)

Constraint of existing capacity

(145)

In general capacity utilisation rates are high (86 %
average Community capacity utilisation rate in 1999) in
particular in the segment of hot-dip galvanised (90 %
average in 1999) so the competing producers will have
only limited spare capacity for the supply of Newco’s
customers.

Planned new capacity

(146) The parties,

in their

response to the Commission’s
Statement of Objections, argue that in the future there
will be significant spare capacity in galvanised steel in
the Community, because of capacity increases in hot-dip
galvanised steel between 2001 and 2004 (hot dip
galvanised steel represented 76 % of the total market in
2000 and is foreseen to represent over 80 % in 2003).
they have produced data
To support
about new hot-dip capacities under construction or
formally announced in Europe and the European
periphery, as well as forecasts of growth in the demand,
as estimated by Eurofer for the 2000-2005 period. They
in 2004 cumulated demand will have
conclude that
against
grown
[> 2 000]*
[> 5 000]*
cumulative
capacity (72).

thousand
for

the argument,

tonnes
the

thousand

tonnes

by

(147) During the investigation,

the Commission has been
confronted with different figures -from different sources-
regarding the evolution of capacity and demand for the
next years. On the basis of these different figures, it is
difficult to predict the future development of capacity.
According to the Commission’s investment survey, third
parties plan an additional 1,6 million tonnes of capacity
between now and 2004. This is lower than the [(cid:133)]*
million identified by the parties in the Form CO (73) and
than the 2,6 million tonnes forecast for 2001 to 2004
in the Eurofer survey. In turn, the latest forecast of the
parties in their response to the Statement of Objections
predicted an increase of [(cid:133)]* million tonnes.

(148) There are also different estimates of demand growth
during this period. The growth rate was estimated at
[(cid:133)]* % per year in the form CO. This figure is low

(72) Reply to the Commission’s Statement of Objections p. 21.
(73) Volume II, Annex 4(1)(4) p. 26.

4.4.2003

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Official Journal of the European Union

L 88/23

compared to previous growth during the last years (over
10 % per year between 1997 and 2000). The last
forecast of the parties in their response to the Statement
of Objections result in an average annual growth rate of
[(cid:133)]* % only, as illustrated in Table 16.

Evolution of Community demand for hot-dip galvanised

TABLE 16

Community demand
(kt)

Annual growth rate
(%)

2000

2001

2002

2003

2004

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

Average

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

Source: Reply to the Commission’s Statement of Objections, p. 21.

(149)

In any event, the parties have calculated the increase of
capacity on a wider basis (including Eastern Europe and
Turkey) than the relevant geographic market. Moreover,
the parties have not taken into account the growth of
demand in those countries. This
the
foreseen spare capacity may be lower than the parties’
prediction. Table 17 summarises the data provided by
the parties, in terms of capacity increase.

suggests

that

TABLE 17

Forecast of capacity increases in hot-dip galvanised

Community

2001/2004

Community
periphery

2001/2004

Severstal

400

Arvedi (Newco)

Gonvarri
(Barcelona)

250

165

Bancolor (Bilbao)

200

Total

3 315

2 660

Total
Community +
Community
periphery

3 315 + 2 660 = 5 975

Source: Reply to the Commission’s Statement of Objections, p. 20.

is possible to predict

(150) On the basis of the forecast of the respective evolution
of Community capacity and demand submitted by the
parties,
the capacity
it
that
utilisation rate is
likely to remain relatively high.
Furthermore, according again to the parties’ own
estimates, Newco will account for a high share of the
installed Community production capacity ([40 % to
45 %]* for all galvanised steel and [40 % to 45 %]* for
hot-dip galvanised steel by 2004) and therefore the
spare capacity controlled by
combined amount of
Newco’s
relatively small with
regards to Newco’s capacity and production figures.

competitors will be

increase in demand in these countries,
substantially affect

(151) As to the increase of capacity in the periphery of the
Community, and even without taking into account the
this
eventual
the
additional capacity will not
competitive situation in the Community in the short to
medium term, since deliveries from these countries do
not appear to meet the necessary quality requirements
of the automotive industry, which constitutes the main
customer group of hot-dip galvanised steel.

Community

2001/2004

Community
periphery

2001/2004

New entry

TKS (Bochum)

Riva (Taranto)

Salzgitter

Voest (Linz)

Duferco
(La LouviŁre)

400

400

400

300

Erdemir (Turkey)

Teczan Izmir
(Turkey) with
Corus

US Steel Kosice

Eko Stahl
(Poland)

400

300

250

210

300

Galvex (Estonia)

400

Wupperman
(Mperdjick/JV with
Corus and Voest)

Marcegaglia
(Ravenna)

500

Novolipesk with
TKS

300

400

Ispat Karmet

400

due

some

constraints

supplementary

(152) New entry is also unlikely to provide competitive
constraints. Even though capital cost and technology
licences may not be significant barriers to entry, there
are
to the
specificity of the galvanised steel product market. First
of all, galvanised steel being a down-stream product,
any company willing to enter the market needs to be
able to secure its supply of cold-rolled carbon steel. And
the steel quality required tends to be speciality grades
to meet
(high or ultra-high resistance,
customers’
commodity products.
requirements) which are not
Secondly,
and in particular
to customers,
automobile ones, is a difficult process whereby, as will
be explained later,
the company has to go through
some homologation process. As underlined in a report
provided by the parties in response the Commission’s

access

L 88/24

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Official Journal of the European Union

4.4.2003

Statement of Objection,
the
homologation process implies high time costs and quite
considerable
steel
suppliers(cid:146) (74).

administrative

expenses

evident

that

the

for

(cid:145)it

is

(153) Moreover, new entries in a growing market are not
likely to produce a major competitive impact. There
have been three examples of new entry into the hot dip
in 1999
galvanised segment
(700 000 tonnes a year capacity), Bancolor in 2001
(200 000 tonnes a year) and a planned line for Duferco
in 2002 (350 000 tonnes a year). The scale of these
new entries is such that even taken together they would
result only in an increase in capacity of less than 5 %.

recently. Marcegaglia

(154) Furthermore all of these increases were planned before
the Newco project was announced and have been dealt
with in the discussion above (recitals 146 to 151). The
situation for potential market entrants will become less
favourable with the creation of Newco. This undertaking
will have the power to selectively target the (potential)
clients of any newcomer, since it is the largest supplier
of the automotive and construction sectors.

(158)

(155) As far as electro-galvanised steel

is concerned, new
entries are unlikely to occur either, given the decline in
demand for electro-galvanised strip.

Alternative materials

explain that

The parties
(cid:145)aluminium usage was
traditionally focused on a specific niche market for cars
with a price premium(cid:146) (75) and do not contradict that it
is still the case today: car makers using aluminium to
substantial
in the upper segment (Audi,
Jaguar). In practice aluminium and plastic cost between
two and four times as much as steel for a given part
and could not be used to counter price increases for
steel. Consequently,
threatening to use aluminium or
plastics is not an option either.

levels are all

Imports

the

imports,

industry,

In particular,

Imports have represented between 3 % and 9 % of total
sales of galvanised products in the Community during
the last four years. Imports do not appear to represent a
serious competitive constraint for Community producers
in this market.
largely being
commodity-grade steel, are not an alternative for the
qualities of metallically coated material required by the
automobile
group
representing 51 % of galvanised steel demand in 1999.
Few non-Community producers can actually provide
these qualities. Only the Far Eastern suppliers, Japan and
Korea can supply to the necessary quality standards.
However, prices are higher than those in Europe and
this additional cost together with the costs of transport
and the special packaging result in a delivered price
nearly double than that of material produced in Europe.
These market conditions being such despite the difficult
situation of the steel industry in the Far East.

customer

largest

(156)

In general, alternative materials will not be able to
replace galvanised steel. Once the choice of material has
been made, be it in an industrial building components
or a car or white goods parts, the die is cast. In the case
of cars and white goods it is extremely difficult if not
to another
impossible to change from one material
product. Automobile
of
during
life
manufacturers
set up their production equipment,
welding/assembly and painting in particular for specified
material for each part. They cannot in nearly all cases
credibly threaten to use an alternative material as this
to the production
would involve major
processes.

changes

the

the

(157) The parties,

in their

reply to the Commission’s
Statement of Objections, argue that competition would
exist in the long-term, in particular between steel and
aluminium, and at the moment of the conception of a
new car. However, even after taking into consideration
the points raised by the parties, it appears that steel and
aluminium are not used in competition as substitutes.

a

is

that

there

differentials)

(159) The existing price differences have not substantially
been disputed by the parties.
In their reply to the
Statement of objections, they have, however, expressed
the view that prices in the Community and the Far East
move very closely together (notwithstanding the existing
clear
price
and
cross-sensitiveness between Community -prices
and
third country imports. Again it must be noted that
imports concern mainly commodity-grade steel. Imports
of high-quality steel, as requested by the automotive
industry, appear to be very limited. According to the
parties FIAT recently purchased 200 000 tonnes of hot
dip steel from Baosteel and PSA bought 50 000 tonnes
of hot dip steel purchased by PSA from Posco. As can
be seen from these figures, imports do not amount to a
level which could exercise considerable constraining
effects on the important high-end of the product market
[(cid:133)]*.

(160) Consequently, imports do not represent a credible threat
against the possibility for Newco to unilaterally increase
price or reduce output.

(74) The parties’ economic consultants’ report (cid:145)Steel products for the

(75) The parties’ economic consultants’ report (cid:145)Steel products for the

automotive sector(cid:146), 10 October 2001, p. 9.

automotive sector(cid:146), 10 October 2001, p. 29.

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Buying power

(161) Outside the automobile industry no customer will
account for more than [0 % to 5 %]* % of Newco’s sales
and most of them will be very much smaller than 1 %.
None of these customers will be able to exercise any
pressure on Usinor as the importance of their individual
requirements will
form only an insignificant part of
Newco’s sales.

(164) Therefore automobile companies cannot easily switch
suppliers and in any case there is a limited number of
potential candidates. For these potential suppliers there
are considerable risks and costs involved in supplying
test materials, setting up the necessary technical support
teams and the infrastructure necessary to supply just in
time. Considerable time and effort must be expended
with no guarantee
sufficient orders will be
that
forthcoming to offset the initial and on-going costs.

(165) This difficulty
to find economical
likelihood of
alternatives of
unilateral action by the merged firm, whether by raising
prices or suppressing output.

for
customers
supply reinforces

the

(166)

industry.

from the

automobile

(162) About 50 % of the current demand for galvanised strip
originates
In the
automobile industry the largest customer would account
for about [5 % to 15 %]* of the combined companies’
sales. However this automobile manufacturer currently
sources a large majority of its requirements from either
Usinor or Arbed. The second largest company accounts
for less than 10 % of Newco’s sales but it is likewise
dependent on either Usinor or Arbed for a large part of
its requirements. Given the long time scale necessary to
introduce new suppliers,
limited number of
alternative suppliers and the limited available capacity at
these suppliers it appears unlikely that either of these
companies would be able to exercise any form of buyer
power in the short term. Other automobile customers
are less dependent on Usinor and Arbed but account for
even smaller proportion of these companies’ sales.

the

for

right

automobile

industry has

the
special
(163) Furthermore,
including just-in-time delivery, quality
requirements,
control
through the
safety-critical parts
production process (including an audit trail) and specific
physical and chemical characteristics set out in detail in
the product specifications which may be unique to a
given customer. Thus to service the automobile industry
a steel producer must make a considerable investment
in establishing quality control systems acceptable to the
potential client and in providing the infrastructure
necessary for just-in-time delivery. Stocks of steel at the
automobile manufacturers plants are minimal: one
major manufacturer holds an average of
three days’
supply. Each car part is specified in a particular material
and then allocated to a specific supplier. The choice of
supplier is very limited and the manufacturer must be
certain that the steel maker will be able to consistently
meet the specification. There is therefore a long process
of testing and trials before a new supplier is accredited.
In one case this took five years before the supplier was
fully accepted. Other automobile manufacturers have
indicated that the periods last from three months to one
year and that the process involves quite considerable
expenses.

in

the

since

volumes

short-term,

In their
reply to the Commission’s Statement of
Objections the parties contested those findings of the
Commission. They pointed to the following elements: 1.
the automotive industry has considerable buying power
given that it is highly concentrated, with the top five
manufacturers having a combined market share of 77 %
in the Community; 2. vehicle manufacturers can and do
switch
they
(cid:145)homologate(cid:146) more suppliers than they purchase from;
3. given that even a loss of small volumes has a
disproportionate impact on the parties’ profitability, the
threat of car manufacturers to switch even smaller
volumes
to competitors within homologated firms
would constrain the parties in their ability to increase
prices. The parties have used a report prepared by their
economic consultant to argue that, due to the high fixed
costs, there are strong incentives in the steel industry to
sell the last tonne, even for downstream products such
as metallic coated carbon steel. The idea is that selling
increases
larger
capacity utilisation upstream and in particular at the
level of the blast furnace; this subsequently reduces the
cost of production per tonne, due to economies of scale.
For instance,
increasing capacity utilisation from 90 %
to 100 % in an integrated blast furnace -would result in
a cost
tonne of
producing electro-galvanised steel.

amounts of downstream products

saving of 35 % on the cost per

(167) After

these

carefully

sufficient

arguments,

considering

the
Commission maintains its view that buyer power will
not be
to prevent Newco from acting
unilaterally in the market for metallic coated products.
As regards point 1.
the
five galvanised steel
automotive industry,
share of
suppliers will have
[> 80 %]* post-merger, thus reaching a higher level of
concentration than the automotive industry (which is
not
individual
customer-group).
automotive manufacturers source a very substantial part
of their demand ([> 50 %]*) from the merging parties

the concentration level of
the first
a

combined market

their only

Some

L 88/26

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Official Journal of the European Union

4.4.2003

whereas Newco’s biggest customer would only account
It is
its galvanised steel sales.
for [5 % to 15 %]* of
therefore doubtful
their degree of concentration
that
will be sufficient to balance Newco’s market power.

(168) Regarding point 2.

even a highly

there are credible alternatives to shift

concentrated
customer-group can exercise considerable buying power
only if
their
demand to. This, however, is not the case. The threat to
larger volumes is not appropriate to discipline
shift
Newco’s market
capacity
behaviour. As
utilisation in the industry is high and will remain at a
high level
in the foreseeable future so that alternative
suppliers would not be able to serve considerable
additional demand.

stated,

furnaces

(169) As far as point 3. is concerned, the threat to shift small
volumes (the last tonne) of demand in the short term is
not a sufficient means to control Newco’s bargaining
power. Blast
in Europe generally already
operate at high levels of capacity utilisation (significantly
over 90 %). The shift of small amounts of a customers’
demand would not considerably impact the cost curve
of Newco. This can be illustrated as follows: the parties
produced 40 million tonnes of crude steel and about
in 1999.
[5-10]* million tonnes of galvanised steel
Newco’s biggest customer
the parties
combined galvanised production) accounted for about
[(cid:133)]* million tonnes of galvanised steel. Even if
this
customer shifted its total demand of galvanised steel,
that would only represent about [< 5 %]* of Newco’s
crude steel production. This proportion show that
customers shifting only small amounts of their demand
are not able to effectively constrain Newco’s market
behaviour.

([5-15]* % of

Conclusion

(170) On that basis, the Commission has concluded that the
proposed concentration will give the parties the power
to hinder effective competition or to evade the rules of
competition under the ECSC Treaty with regard to the
market
including hot-dip
for galvanised products,
galvanised steel and electro-galvanised steel.

6. Organic coated carbon steel

amounted to [30 % to 35 %]* with [(cid:133)]* million tonnes
and Arbed/Aceralia’s share was [5 % to 10 %]* with
[(cid:133)]* million tonnes, giving a combined market share of
[35 % to 40 %]*. In terms of merchant sales the parties
aggregate market share in 1999 was [25 % to 30 %]*
[5 % to
[15 % to 20 %]*; Arbed/Aceralia:
(Usinor
10 %]*).

(172) Newco’s closest competitors will be Corus, which held a
market share in 1999 of [20 % to 25 %]* of total sales
([20 % to 25 %]* of merchant sales), and TKS with a
market share of [10 % to 15 %]* in terms of total sales
([< 10 %]* of merchant sales) in 1999 (see Table 18).

TABLE 18

Parties’ combined market shares of organic coated carbon
steel

Total sales

Merchant sales

Thousand
tonnes

%

Thousand
tonnes

[(cid:133)]*

[35(cid:151)40]*

[(cid:133)]*

%

NA

[(cid:133)]*

[35(cid:151)40]*

[(cid:133)]*

[25(cid:151)30]*

[(cid:133)]*

[35(cid:151)40]*

[(cid:133)]*

[20(cid:151)25]*

[(cid:133)]*

[35(cid:151)40]*

[(cid:133)]*

[20(cid:151)25]*

2000

1999

1998

1997

Source: Parties.

independently of

(173) After the merger, Newco will be the clear market leader
in terms of total sales with a market share amounting to
[35 % to 40 %]*. The high combined market share
figures may give rise to concerns as to whether Newco
its
would be in a position to act
competitors. However, the combined market share of
the parties in the merchant market
(sales to third
parties) is only [25 % to 30 %]*. The difference is due to
integration in this sector,
the high degree of vertical
with both Usinor and Arbed/Aceralia using a large part
of
their production in further processing activities
carried out by companies owned or controlled by their
respective groups. The Commission has not identified
any competition concerns in these downstream markets.
Furthermore, Newco will
competition from
important producers such as Corus and TKS, both with
substantial spare capacity in this market.

face

No risk of unilaterally hindering effective
competition or evading competition rules

No risk of parallel anticompetitive behaviour

(171) The total value of the market for organic coated carbon
steel in 2000 was 4,13 million tonnes. Usinor’s share

(174) Equally, market characteristics are not conducive to
parallel anticompetitive behaviour. The combined share
of the three main players in terms of merchant sales

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Official Journal of the European Union

L 88/27

represents less than 60 % of the total market. Further,
capacity utilisation rates are not symmetric. Usinor and
comparatively high at
Arbed/Aceralia utilisation is
[> 80 %]*, while
average Community capacity
utilisation rate for the total sector is 75 %. Finally, a
number of second-tier producers are very active in this
market, such as SSAB, Rautaruukki, Voest-Alpine and
Salzgitter.

the

(a) S t e e l f o r b e v e r a g e - p a c k a g i n g

Market structure

Market growth

(175) The market has been characterised by significant growth
with supply increasing by 41 % in the last three years
(which can be partly explained by substitution of
standard cold-rolled flat carbon steel and galvanised steel
by organic coated steel products). This
trend may
continue in the future.

Conclusion

(176) For those reasons, the Commission does not find that
the merged entity will be in a position to hinder
rules of
effective
competition under the ECSC Treaty in the market for
organic coated carbon steel.

competition or

to evade

the

7. Steel for packaging

(177) The exact product market definition has been left open
between either
for
(a) an overall market
packaging or (b) narrower separate markets for (i) steel
for beverage packaging and (ii) steel for non-beverage
packaging.
the different possible market
segmentation, the market share allocation are as set out
in Table 19.

In each of

steel

for

TABLE 19

Market shares of steel for packaging in 1999

(in %)

Company

Steel for
beverage
packaging

Steel for
non-beverage
packaging

Steel for
packaging
(overall)

Usinor

[30(cid:151)35]*

[20(cid:151)25]*

[20(cid:151)25]*

Arbed/Aceralia

[5(cid:151)10]*

[10(cid:151)15]*

[10(cid:151)15]*

Newco

[35(cid:151)40]*

[35(cid:151)40]*

[35(cid:151)40]*

(178) The market size amounted to 0,6 million tonnes in
2000 and in 1999.
In 2000 the parties’ combined
market share amounted to [40 % to 45 %]* (Usinor
[35 % to 40 %]*; Arbed/Aceralia [5 % to 10 %]*). Corus’s
market share in 1999 was [30 % to 35 %]* and TKS
held [25 % to 30 %]* in the same year.

No risk of unilaterally hindering effective
competition or evading competition rules

(179) Due to the strong position of the competitors in the
market,
the creation or
is possible to rule out
strengthening of a position where Newco could act
independently of the other producers.

it

No risk of parallel anticompetitive behaviour

(180) The Commission has
transaction

to

steel

also examined whether
lead
would

the
proposed
parallel
anti-competitive behaviour by the main European
producers. First, the transaction increases the asymmetry
the three
between the producers. More importantly,
players will be faced with only few multinational
customers from the packaging manufacture industry. In
the sector of
for beverage packaging, Usinor
generates its turnover with only [(cid:133)]* customers ([(cid:133)]*).
Arbed/Aceralia has only [(cid:133)]* customers ([(cid:133)]*). These
undertakings are, in turn, under intense pressure from
the international bottlers (such as Coca Cola, Pepsi Cola
and the
In addition,
although the Commission still considers that steel and
aluminium (as well as other materials) for beverage cans
are separate markets, it is nonetheless true that steel is
under competitive pressure from aluminium and PET.

concentrating beer

industry)

(181) This situation does not leave much scope for the three
steel producers to raise prices in a parallel action.
Moreover, the capacity utilisation rate in the market is
rather low (75 % on average in the overall Community
market (steel for beverage and non-beverage packaging).
This significant spare capacity provides incentives to
(cid:145)cheat(cid:146) on agreed prices, thus further destabilising tacit
collusion.

Corus

TKS

Source: Parties.

[30(cid:151)35]*

[25(cid:151)30]*

[25(cid:151)30]*

[25(cid:151)30]*

[10(cid:151)15]*

[10(cid:151)15]*

(182) Therefore,

the Commission has concluded that

the
lead to parallel
the main European

proposed concentration will not
anti-competitive behaviour of
producers.

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4.4.2003

(b) S t e e l f o r n o n - b e v e r a g e p a c k a g i n g

(183) The market size amounted to 3,8 million tonnes in the
year 2000 and 3,5 million tonnes in the year 1999. In a
possible market for steel for non-beverage packing the
parties’ combined market share amounted to [35 % to
40 %]* (Usinor [20 % to 25 %]*, Arbed/Aceralia [10 %
to 15 %]*) in the year 2000. In 1999, Corus’s market
share was [25 % to 30 %]*, and TKS and Riva held
[10 % to 15 %]* and [10 % to 15 %]* respectively, with
others producers accounting for [15 % to 20 %]*.

No risk of unilaterally hindering effective
competition or evading competition rules

(184)

In view of the strong position of the competitors in the
market,
the creation or
strengthening of a position where Newco could act
independently of the other producers.

is possible to rule out

it

No risk of parallel anticompetitive behaviour

(185) The Commission has
transaction

to

would

also examined whether
lead

the
proposed
parallel
anti-competitive behaviour by the main European
producers in the market for steel for non-beverage cans.
The proposed transaction will also in this market
increase the asymmetry between the market shares of
the main players. The demand side is very concentrated
and represents a strong countervailing element. Three
of
undertakings
Community-consumption.
largest
customer and accounts for [20 % to 25 %]* of its sales
sales.
and
Arbed/Aceralias biggest client [(cid:133)]* represents [20 % to
25 %]* of Arbed/Aceralia’s
in the relevant
market.

of Arbed/Aceralia’s

[15 % to 20 %]*

account
[(cid:133)]*

is Usinor’s

turnover

([(cid:133)]*)

50 %

for

(186) As in the case of steel for beverage packaging, further
competitive pressure stems from alternative materials
for packaging (plastic, composite materials, aluminium,
glass). For instance, in the field of foodstuff packaging,
the new conservation methods,
freezing,
vacuum packing and controlled atmosphere cooking,
composite materials.
and
tend
Therefore,
steel
interest of
in the
manufacturers to raise prices and thus put at risk the
competitiveness of their product.

to favour plastic

such as

is not

the

it

(187) Another hurdle for tacit collusion is imports from third
countries which represent [15 % to 20 %]* of total sales.
appears
As
a
for non-beverage use
standardised commodity product,
this rate could be
increased in the case of unreasonable pricing of the
European suppliers.

to be

steel

(188) Finally the significant spare capacity in the market, as
is also an incentive for the
mentioned in recital 181,
competitors to undercut a supracompetitive price level
for steel for non-beverage cans.

(189) Therefore,
proposed
anti-competitive behaviour of
producers.

the Commission has concluded that
transaction will

the
parallel
to
the main European

lead

not

(c) O v e r a l l m a r k e t : s t e e l f o r p a c k a g i n g

(190) The market size amounted to 4,3 million tonnes in the
year 2000 and 4,1 million in the year 1999. Newco’s
market share was [35 % to 40 %]* (Usinor [25 % to
30 %]*; Arbed/Aceralia [10 % to 15 %]*)
in the year
1999. Competitors’ market shares amounted to [25 % to
30 %]* for Corus, [10 % to 15 %]* for TKS, [< 10 %]*
for Riva and [10 % to 15 %]* for other producers. The
figures do not differ very much from those observed in
for non-beverage packaging segment. This
the steel
for non-beverage
stems
steel
fact
packaging accounted for almost 90 % of
the overall
market. Therefore, the results of the investigation of that
market also apply here. In addition, the Commission did
not
smaller
alternative market for steel for beverage packaging. In
sum, also in a hypothetical overall market, the proposed
transaction does not give rise to competition concerns.

identify competition problems

from the

in the

that

Conclusion

(191) For those reasons, the Commission concludes that the
proposed concentration would not hinder effective
competition or
the
allow the parties
competition rules under the ECSC Treaty in the market
or markets for steel for packaging.

to evade

8. Stainless steel flat products

(192) Stainless steel flat products include hot-rolled stainless
and cold-rolled stainless products. As in a previous
Commission decision in these markets (76), the effect of
the proposed merger must be examined on two levels,
to see whether 1. after the operation Newco would be
able to determine prices or prevent competition on its
own, and 2.
the operation would create conditions
which would make tacit collusion between the limited
number of European stainless steel producers possible
and effective.

(76) See Decision of 4 December 2000 in Case COMP/ECSC.1342 (cid:150)

Outokumpu/Avesta Sheffield.

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No risk of unilaterally hindering effective
competition or evading competition rules

(i) H o t r o l l e d s t a i n l e s s s t e e l p r o d u c t s

(193) Regarding hot rolled stainless steel products, Table 20
gives the shares for hot rolled stainless steel products in
terms of total sales in the Community + Norway and
Switzerland. On this basis the parties’ combined market
share was [25 % to 30 %]* in 2000 and [25 % to 30 %]*
in
from
AvestaPolarit ([30 % to 35 %]* in 1999), TKS ([20 % to
25 %]*) and Acerinox ([10 % to 15 %]*).

They would

competition

1999.

face

TABLE 20

Market shares in 1999 in the Community + Norway and
Switzerland (total sales)

Company

Total sales
(thousand tonnes)

Market share (%)

Usinor

Arbed/Aceralia

Usinor/Arbed/Aceralia

Avesta Polarit

TKS

Acerinox

Boehler

Imports

Source: Parties.

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[10(cid:151)15]*

[15(cid:151)20]*

[25(cid:151)30]*

[30(cid:151)35]*

[20(cid:151)25]*

[10(cid:151)15]*

[< 5]*

[< 10]*

(194)

In the market for stainless steel hot-rolled flat products,
the merged entity would therefore not be the European
leader. Moreover, Newco would not be able to benefit
from its size and degree of integration, since, according
to the parties, its competitors also belong to vertically
integrated groups: AvestaPolarit
joint-venture
between Outokumpu Steel and Avesta Sheffield; Krupp
Thyssen Stainless belongs to TKS, Acerinox controls the
American undertaking North American Stainless, and
one of its main shareholders is Nisshin Steel,
Japan’s
largest stainless steel producer.
In this situation the
possibility that the proposed merger would enable the
to unilaterally determine prices or prevent
parties
effective competition can be ruled out.

is

a

(ii) C o l d r o l l e d s t a i n l e s s s t e e l p r o d u c t s

In terms of merchant

21. The parties’ combined share in terms of total sales
[20 % to
(including captive sales) would be about
25 %]* in 2000 and [20 % to 25 %]* in 1999 (well
behind TKS which has a share of about [35 % to 40 %]*
in 1999).
the parties’
sales,
to [15 % to
combined market share would amount
20 %]*. Newco would also face competition from
AvestaPolarit and Acerinox ([20 % to 25 %]* and [10 %
to 15 %]* in terms of total sales respectively). Similarly
strong
and the
the market
that
out
competitors
Usinor/Arbed/Aceralia would be able to unilaterally
determine prices or prevent effective competition.

existence of
possibility

shares
rule

the

TABLE 21

Market shares in 1999 in the Community + Norway and
Switzerland (total sales)

Company

Total sales
(thousand tonnes)

Market share (%)

Usinor

Arbed/Aceralia

Usinor/Arbed/Aceralia

TKS

Avesta Polarit

Acerinox

Imports

Source: Parties.

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[15(cid:151)20]*

[5(cid:151)10]*

[20(cid:151)25]*

[35(cid:151)40]*

[20(cid:151)25]*

[10(cid:151)15]*

[< 5]*

No risk of parallel anticompetitive behaviour

(i) H o t r o l l e d s t a i n l e s s s t e e l p r o d u c t s

(196) After completion of the proposed concentration, there
will only be five suppliers of stainless steel hot rolled
products. The top three players will have > 80 % of the
market
for hot rolled stainless steel respectively (see
Table 22).

TABLE 22

Market shares in 1999 in the Community + Norway and
Switzerland (total sales)

Usinor/
Arbed/
Aceralia

Avesta
Polarit

TKS

(in %)

Acerinox

Three
largest
competi-
tors

Hot rolled
stainless
steel

[25(cid:151)30]* [30(cid:151)35]* [20(cid:151)25]* [> 80]* [10(cid:151)15]*

(195) The parties’ and their competitors’ shares of the market
for cold rolled stainless steel products are given in Table

Source: Parties.

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to

parallel

(197) The Commission examined whether the merger may
The
anticompetitive
lead
Commission concluded that, for the following reasons,
the operation is not likely to lead the stainless steel
producers collectively to raise prices and/or
restrict
production or distribution or otherwise evade the ECSC
competition rules.

behaviour.

Market growth

(198)

to almost all other sectors in the steel
In contrast
industry, stainless steel products enjoy a growth rate of
at least 6 % per annum. This rate of increase is expected
to continue for at least the next four years. There are
therefore incentives for existing players to compete for
shares by investing continuously. Significant
market
capacity extensions have been announced recently by
Avesta-Polarit
(700 000 tonnes in Tornio) and ALZ
(600 000 tonnes by 2003).

Increase in capacity

(199) While it is possible to increase capacity by eliminating
bottlenecks, these possibilities are becoming rarer and
investments in new plants are required to meet demand.
The optimum scale of these investments is very large in
the Community market.
proportion to the size of
Avesta Polarit’s (the result of
the merger of Avesta
Sheffiels and Outokuumpu) new steel plant in Finland
has a capacity of 1 million tonnes a year (700 000
tonnes a year of hot rolled and 300 000 tonnes a year
of cold rolled) and AST’s new capacity is for 600 000
tonnes a year. This is to be compared with the total
capacity of hot-rolled stainless steel
(6,7 million in
2000). As new capacity comes on stream, the owner
has to compete vigorously to load the new plant.

Cost structures

supporting this

(200) The competitors present on the market have very
different cost structures, as a result of a number of
factors, including differences in terms of access to raw
materials. Evidence
conclusion has
already been given in the Outokumpu/Avesta Sheffield
Commission decision of December 2000 (recitals 31 to
35), where differences of up to 40 % in the conversion
costs of Community producers were noticed. The parties
also explained that alloying elements such as nickel and
chrome account on average for some 30 % of the price
of hot-rolled stainless
steel. Some competitors are
vertically integrated into mining activities, such as for
instance Outokumpu Steel, Columbus (a large part of its
shareholders are chromium producers), or a number of
links with
Japanese competitors

that have financial

By

and

facilities

nickel
contrast,
chromium producers.
Arbed/Aceralia and Usinor have no mining activities
relevant to this sector. Differences of costs structures
location of
from differences in terms of
also result
production
different
in
that
transportation costs. Transportation costs are low in
absolute terms, but can make the difference between
loss and profitability. Internal transportation costs are
very limited for some competitors (e.g. Acerinox and
Outokumpu) and very significant for other competitors
(AvestaSheffield). The parties’ transportation costs range
between these extremes.

result

(ii) C o l d r o l l e d s t a i n l e s s s t e e l p r o d u c t s

(201) After completion of the proposed concentration, there
will only be five suppliers of stainless steel cold rolled
products. The top three players will have [> 80 %]* of
the market for cold rolled stainless steel, as shown in
Table 23. However, even after the merger, TKS will
have a notably larger market share than the merged
entity.

TABLE 23

Market shares in 1999 in the Community + Norway and
Switzerland (total sales)

Usinor/-
Arbed/
Aceralia

Avesta
Polarit

TKS

(in %)

Acerinox

Three
largest
competi-
tors

Cold
rolled
stainless
steel

[20(cid:151)25]* [20(cid:151)25]* [35(cid:151)40]* [> 80]* [10(cid:151)15]*

Source: Parties.

(202) The Commission examined whether

the proposed
concentration may lead to parallel anticompetitive
for the
behaviour. The Commission concluded that,
the
same
reasons as
operation is not
steel
restrict
producers collectively to raise prices and/or
production or distribution or otherwise evade the ECSC
competition rules.

in hot-rolled stainless
steel,
likely to lead the stainless

Conclusion

(203)

In conclusion, the Commission’s investigation concluded
that the proposed merger would not give rise to any
competitive concerns as regards either stainless steel
hot-rolled or cold-rolled flat products.

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2. STEEL DISTRIBUTION

1. Vertically integrated distributors/independent

distributors

(204) Steel distribution constitutes a very important part of
the global commercial policy of the vertically integrated
roughly
steel producers. Arbed/Aceralia submit
40 % of the steel consumption in Europe goes through
the different distribution channels.

that

(205) The main European steel producers all have their own
networks of distribution centres, covering generally a
substantial part of the European territory, in particular,
the major
of
areas.
common
normally
distribution
commercial policy or sales strategy, are coordinated
centrally or operate under one business management
structure or a central sales department,
though each
centre has a certain degree of independence.

industrial
centres

networks
a

These
share

(206)

In addition to these integrated distributors, there is an
independent sector consisting of a large number of
In
companies of varying size and financial strength.
1999 the proportion of sales by the independent sector
through steel service centres was as set out in Table 24.

TABLE 24

Share sales through steel service centres of independent
distributors in 1999

Germany (except North Rhineland Westphalia)

Italy

United Kingdom

Spain and Portugal

Benelux and North Rhineland Westphalia

France

Source: Parties.

(in %)

60

49

45

40

31

26

(207)

Independent distributors can in theory supply the same
services as integrated distributors, provided that
they
have invested in the necessary equipment. Nevertheless,
a large part of their supplies come necessarily from the
mills of the European steel producers, whose integrated
distributors are their competitors in the distribution
sector. In particular, the possibility of securing all the
necessary supplies or the extended validity of prices will
depend entirely on the individual relationships between
independent distributors and producers.
It should be
noted that, with regard to the steel service centre’s
activities, the price of wide coils supplied by the mills
determines in a high degree the slit coil price, as the
parties have outlined.

(208) Moreover,

independent

in its reply to one of

the Commission’s
questionnaires, one independent distributor pointed out
that in difficult times integrated distributors fix prices
for end customers that are substantially to the same as
those that the producers charge for the same products
another
distributors.
to
independent distributor, after affirming that large steel
producers show clear preference for their integrated
distributors, claimed that some of the pricing positions
adopted by integrated steel service centres are not based
the
on the need to achieve full cost
processing and logistics concerned.

recovery of

Likewise,

(209) Further

to

their

spread

integration

throughout

location of

distributors,

upstream in

those with different production sites

and who have one decision centre

the
manufacturing of
the relevant products, distributors
owned by steel producers have several other advantages
with respect to independent distributors. In particular,
the different centres of
the geographical
integrated
Europe,
allows them to conclude global contracts with large
in
customers,
for
Europe
purchasing. In effect, while individual negotiations take
sales
place
the
organisation of each steel
large
for
customers global
are negotiated,
the
normally on a European basis, and afterwards
products and services are delivered through the most
the
convenient distribution centre on the basis of
location of
is
sites. This practice
customers’
particularly common in the automotive sector and in
the domestic appliance industry.

service centre,
contracts

customers

between

supply

small

and

the

(210) The market

investigation confirms that a number of
independent competitors have serious concerns about
the operation. In particular, even if a small number of
competitors believe that the proposed merger will bring
the merging parties and
about more efficiency for
therefore more stable markets, others fear that steel
distribution will be further dominated by producers, to
the detriment of small
independent distributors. This
could result in a reduction in the number of suppliers to
in prices. Some
the distributors and an increase
independent distributors submitted that
the proposed
concentration could bring about the disappearance of
their supply sources, particularly taking into account
that in the past they have faced serious uncertainties of
continuity of supply from manufacturers outside the
Community.

(211) Therefore,

in

previous

line with

Commission
Decisions (77), it should be concluded that, though steel
distribution is
in
evaluating the impact of the merger in the distribution
sector account should be taken of the implication of the
steel manufacturers on the
vertical

regional or national

integration of

service,

a

(77) Case No IV/M.484 (cid:151) Krupp/Thyssen/Riva/Falck/Tadfin/AST.

L 88/32

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4.4.2003

competition between distributors,
the
supply of steel products to distributors at a European
level.

in particular

2. Assessment of the different distribution markets

(212) The proposed operation will bring about particularly

high market shares in the following markets:

(a) steel service centres in France;

(b) steel service centres in Spain/Portugal;

(c) stockholding activity in France; and

(d) oxycutting centres in France.

(217)

(213) Other affected markets for the purposes of this Decision

are:

(a) steel

centres
service
Rhineland-Westphalia;

in Benelux

and North

in 1999 represented

the upstream market for the production and direct sales
of carbon steel flat products, both at the EEA level and
in France. The parties’ production of hot-rolled carbon
[40 % to 45 %]* of
steel
Community production, while
their production of
cold-rolled carbon steel flat products represented [45 %
to 50 %]* of Community production. Moreover,
the
investigation outlines that some independent
market
distributors
distribution
competing with Usinor’s
network in France rely strongly from Arbed/Aceralia’s
the
operation will
supplies;
disappearance of this alternative source of supply.
In
sum, the new entity will be in a position, after the
merger,
reduce
distribution or to hinder effective competition.

to determine prices,

to control or

about

bring

the

the parties

In view of those considerations, the Commission has
arrived at the conclusion that the notified operation will
effective
give
competition or to evade the rules of competition under
the ECSC Treaty with regard to the market
for the
distribution of carbon steel flat products through steel
service centres in France.

the power

to hinder

(b) steel service centres in the United Kingdom and

Ireland; and

(b) Steel service centres in Spain/Portugal

(c) stockholding

activity
Rhineland-Westphalia.

in

Benelux

and North

(218)

(a) Steel service centres in France

flat

supplies of

(214) The total quantities of carbon flat products sold in
France in 2000 by steel service centres amounted to 3.9
million tonnes (which represented about 41 % of the
total
carbon products), of which
approximately [(cid:133)]* million tonnes were sold by Usinor
and [(cid:133)]* million tonnes by Arbed/Aceralia. The parties’
combined market share was [40 % to 45 %]* in 2000
([40 % to 45 %]* in 1999), the proposed concentration
bringing about an aggregation of [5 % to 10 %]* ([5 %
to 10 %]* in 1999). Their main competitors’ market
shares in 1999 were [5 % to 10 %]* (Corus), [5 % to
10 %]* (Riva) and [5 % to 10 %]* (TKS).

almost double

French market,

the market share of

(215) After the merger, Newco’s market share will be almost
five times bigger than that of its principal competitor in
the
the
and will
combined market share of its three main competitors.
Furthermore,
independent steel
service centres in France is quite low if compared with
other neighbouring countries. Independent steel service
centres only account
in
France, while they account for [> 50 %]* in Germany
(excluding North Rhineland Westphalia), [> 40 %]* in
Italy and [> 40 %]* in the United Kingdom. Moreover,
this independent sector is highly fragmented into a large
number of small suppliers.

for [< 30 %]* of

the market

(216) Account should also be taken of the parties’ vertical
integration and, in particular, of Newco’s strong share in

In the Iberian Peninsula, steel service centres account for
about 44 % of the total supplies of flat carbon products,
supply
stockholding and oxycutting centres
whilst
aproximately 10 %. In particular, the total quantities of
carbon flat products sold in Spain and Portugal in 2000
by steel service centres amounted to 4,2 million tonnes,
of which approximately [(cid:133)]* million tonnes were sold
by Usinor and [(cid:133)]* million tonnes by Arbed/Aceralia.
[45 % to
The parties’ combined market
50 %]*
the
proposed concentration bringing about an aggregation
of [10 % to 15 %]* ([10 % to 15 %]* as well in 1999).
Their main competitors’ market shares in 1999 were
[10 % to 15 %]* (Grupo Ros), [5 % to 10 %]* (Gutser)
and [5 % to 10 %]* (A. Gallardo).

in 2000 ([50 % to 55 %]*

share was

in 1999),

(219) Further,

separate

geographic markets,

if Spain and Portugal were considered to
constitute
serious
competition concerns would arise in both countries.
Newco’s share would have represented [40 % to 45 %]*
([30 % to 35 %]* + [10 % to 15 %]*) in Spain in 1999,
and [65 % to 70 %]* ([65 % to 70 %]* + [< 5 %]*)
in
Portugal.

(220) Again, the difference post-merger between Newco and
its main competitors will be very substantial. Newco
will be more than four times bigger than its nearest
competitor. Newco’s main competitors, moreover, will
be independent distributors
than integrated
distributors of other steel producers), which will depend
to a large extent on the notifying parties for their
supplies of steel products. Further, Newco will enjoy a
particularly strong position in the distribution of carbon

(rather

4.4.2003

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Official Journal of the European Union

L 88/33

steel flat products through both steel service centres and
stockholding centres in France, the closest market to the
Iberian
for
alternative
Portuguese
customers.

the
Spanish and

reducing
for

possibilities

Peninsula,

suppliers

(221)

(222)

In their reply to the Statement of Objections, the parties
submit however that, on the basis of national markets,
there would be no material overlap in Portugal, since
Arbed/Aceralia’s market share is [< 5 %]*. Nonetheless,
given the particular high market share of Usinor in
Portugal ([65 % to 70 %]*) and the level of cross-border
sales between Portugal
and Spain, Arbed/Aceralia
represent, through their operations in Spain, the main
source of potential competition in the Portuguese
market.
the
Portuguese and Spanish markets, Arbed/Aceralia’s sales
of carbon flat products through steel service centres in
Spain ([(cid:133)]* kilotonnes in 1999) while representing only
[10 % to 15 %]* of the Spanish market are substantially
higher than the overall Portuguese market for the sales
of carbon flat products through steel service centres
(399 000 tonnes in 1999).

In particular, given the different size of

the parties

In view of those considerations, the Commission has
arrived at the conclusion that the notified operation will
give
effective
competition or to evade the rules of competition under
the ECSC Treaty with regard to the market
for the
distribution of carbon steel flat products through steel
service centres in Spain and Portugal.

the power

to hinder

(c) Stockholding activities in France

(223) The parties’ combined market share for the distribution
of all carbon steel products was [25 % to 30 %]* in
2000 ([20 % to 25 %]* + [5 % to 10 %]*) and in 1999
([15 % to 20 %]* + [5 % to 10 %]*). Their main
competitors were KDI, whose market share in 1999 was
[25 % to 30 %]*, and Descours et Cabaud, with [15 % to
20 %]*.

(224) However, Newco would have a substantially higher
market share regarding the distribution of carbon steel
flat products ([35 % to 40 %]* in 1999). Newco would
be much bigger than its main competitors in the sector
of the distribution of flat products, namely KDI (10 % to
15 %) and Descours et Cabaud (5 % to 10 %). The
remainder stockholding market is extremely fragmented,
with over 500 small
suppliers. The
customer base is fragmented as well, with the main
customers being small and medium-sized enterprises.

independent

(225)

In addition, it should be noted that Newco would not
the distribution of
only have a substantial share of

in

flat

steel

France

carbon
through
products
stockholding centres, but a dominant position also on
the distribution of carbon steel flat products in France
through steel service centres (with a market share above
40 %). Moreover, Newco, being vertically integrated,
would also enjoy a strong position in the upstream
market for the production of carbon steel flat products
in Europe (for instance, [45 % to 50 %]* of production
of
in the
Community in 1999).

cold-rolled carbon steel

flat products

(226)

In their reply to the Statement of Objections, the parties
contest the Commission assessment, on the basis that
the relevant market should include the stockholding of
all carbon steel products, where the parties’ combined
market share represents [25 % to 30 %]* of the overall
market, as mentioned in recital 223. However, this issue
has been dealt with in the section on product market
definition.

(227)

the parties

In view of those considerations, the Commission has
arrived at the conclusion that the notified operation will
give
effective
competition or to evade the rules of competition under
for the
the ECSC Treaty with regard to the market
distribution of
through
flat products
carbon steel
stockholding centres in France.

the power

to hinder

(d) Oxycutting centres in France

(228) The

total quantities

sold in France

in 2000 by
oxycutting centres amounted to 200 000 tonnes, of
which approximately [(cid:133)]* were sold by Usinor and
[(cid:133)]* by Arbed/Aceralia. The parties’ combined market
share was [35 % to 40 %]* in 2000 ([30 % to 35 %]* in
1999), the proposed concentration bringing about an
aggregation of [5 % to 10 %]* ([5 % to 10 %]* as well in
1999). Their main competitors’ market shares in 1999
were [5 % to 10 %]*
[5 % to 10 %]*
(Devillers) and [5 % to 10 %]* (Oxycentre).

(Oxymetal),

(229) Newco’s market share will be considerably bigger than
that of its main competitors: Newco will be five times
larger than its closest rival. An important part of the
market (34 %) is highly fragmented, with more than a
hundred players active. The customer base is quite
fragmented as well: most of the actors are small and
medium enterprises with a low plate consumption and
little or no buying power. Imports from outside the EEA
are
competitive
constraint. Further, oxycutting is a market in decline,
due to the arrival of new technologies such as laser
cutting and water
jet, which renders unlikely the
possibility of substantial new entrants in the market, as

insignificant

represent

and

no

L 88/34

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Official Journal of the European Union

4.4.2003

is evidenced by the fact that no significant entries have
taken place during the last five years.

(230)

In their reply to the Statement of Objections, the parties
disagree with the Commission’s conclusions, on the
basis of the following arguments: 1. Arbed’s sales are
small; and 2. Usinor’s position includes 100 % of
Eurodecoupe’s output whereas Eurodecoupe is in fact a
DHS subsidiary over which Usinor does not have sole
control.

(231) As far as the first argument is concerned, Arbed’s sales
account for [5 % to 10 %]* of the market for oxycutting
centres in France, Arbed being currently the second
main competitor of Usinor on the basis of the volume
of sales, slightly behind the first one (Oxymetal with
[5 % to 10 %]* market share in 1999) and above the
(Devillers, Oxycentre, Savoy
other market players
Decoupe, Bretagne Oxy and UF Acier). With regard to
the second argument,
themselves have
confirmed that Usinor does have joint control over
sales of
Eurodecoupe,
and therefore
the
for
Eurodecoupe must be taken into account
purposes
proposed
of
concentration.

the parties

assessment

all of

the

the

the

of

If national markets were

(2) Steel service centres in the United Kingdom and
Ireland, where the parties’ combined market share in
2000 was [15 % to 20 %]* ([5 % to 10 %]* + [10 %
to 15 %]*).
to be
considered, Newco’s market share would be [20 %
to 25 %]* in the United Kingdom ([5 % to 10 %]* +
[10 % to 15 %]*) and < 5 % ([< 5 %]* + [< 5 %]*) in
Ireland.
the
distribution of carbon flat products in the United
Kingdom and Ireland, the parties’ market share is
clearly smaller than that of Corus ([30 % to 35 %]*).

in the market

In any event,

for

(3) Stockholding activities in the Benelux and North
Rhineland-Westphalia, where the parties’ combined
market share for carbon steel products in 2000 was
[15 % to 20 %]* ([10 % to 15 %]* + [5 % to 10 %]*).
In none of
subdivisions,
the alternative further
whether by product markets (flat/long products) or
by geographic markets (national markets), would the
parties’ combined market shares, taking into account
those of the other market operators, raise serious
competition concerns.

(234) The operation,

serious
therefore, does not
competition concerns in the affected markets described
in this section.

raise

(232)

the parties

In view of those considerations, the Commission has
arrived at the conclusion that the notified operation will
give
effective
competition or to evade the rules of competition under
for the
the ECSC Treaty with regard to the market
distribution of quarto plates through oxycutting service
centres in France.

the power

to hinder

(e) Other affected markets

(233) For the purposes of the assessment of the proposed
concentration, other affected markets in the distribution
sector are the following:

(1) Steel

service

centres

in Benelux

and North
Rhineland-Westphalia, where the parties’ combined
share in the market for the distribution of carbon
flat products in 2000 was [20 % to 25 %]* ([10 % to
15 %]* + [10 % to 15 %]*). Their main competitors
are Corus, whose market share is [20 % to 25 %]*,
and TKS, which also has a [20 % to 25 %]* market
share.

that

to be

regional market were

further
If
subdivided, Newco’s market shares in 1999 would
have been [20 % to 25 %]* in the area comprising
Belgium and Luxembourg, [25 % to 30 %]* in the
Netherlands and [15 % to 20 %]*
in a global
(including North Rhineland-
German market
Westphalia). In all three markets Newco would face
competitors of comparable or even bigger
size:
Corus
in Belgium and Luxembourg ([25 % to
30 %]*) and in the Netherlands ([25 % to 30 %]*)
and TKS in Germany ([15 % to 20 %]*).

VI. UNDERTAKINGS SUBMITTED BY THE PARTIES

1. SUMMARY OF THE COMMITMENTS

1. Proposed divestitures

(235)

In order to remedy the competition concerns identified
by the Commission, the parties have offered to divest a
number of undertakings and businesses in the sectors of
steel production and steel distribution.

(a) Steel production markets

(236) The parties will divest

their shares in the following

undertakings:

(1) Finarvedi: Usinor agrees to divest, or procure to
divest, its interest in the hot-dip production line of
ISP Arvedi.

(2) Galmed: Aceralia and Usinor agree to divest, or
procure to divest, their shares in Galvanizaciones del
Mediterraneo, SA (51 % and 24,5 % of Galmed’s
capital,
respectively). Galmed produces hot dip
galvanised steel.

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Official Journal of the European Union

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(3) Lusosider: Usinor agrees to divest, or procure to
divest, its shares in Lusosider Projectos Siderurgicos
SA (50 % of the capital). Lusosider produces cold
rolled steel, hot dip galvanised steel and tinplate.

(4) Segal: Arbed’s Sidmar and Usinor’s Cockerill Sambre
agree to divest, or procure to divest, their shares
(each 33,33 % of the capital) in SociØtØ EuropØenne
de Galvanisation SA Segal produces hot dip
galvanised steel.

situated at Chailloue, France, and Surfa(cid:231)age de
Normandie, situated also at Chailloue.

shares

2. Bamesa: Usinor agrees to divest, or procure to
in Bamesa Aceros, SL, or
its
divest, all
alternatively to transfer
the remaining minority
stake, if any, to an independent trustee, until such
time as the shares can be sold (currently, Usinor
owns directly and indirectly 49 % of Bamesa’s
capital, over which it has joint control).

(237) Further, the parties will divest, or procure to divest, the

following businesses:

2. Related commitments and procedure

(1) Beautor: Usinor agrees to divest, or procure to
divest, its Beautor at La Fere, France. Beautor houses
a cold rolling mill and an elecro-galvanised steel
line.

(2) Dudelange: Arbed agrees to divest, or procure to
at Dudelange,

the hot-dip steel plant

divest,
Luxembourg.

to

full

designed

obligations
the

(241) The parties have committed to comply with a number
the
of
related
and
preservation of
competitiveness of
the divested businesses, which
include the appointment of a trustee responsible for the
monitoring of the implementation of the commitments.
the
Moreover,
divestment procedure. The full text of the commitments
is set out in the Annex to this Decision.

the commitments

ensure
viability

economic

in detail

set out

(3) Stra(cid:223)burg: Usinor agrees to divest, or procure to
its site at Strasbourg, France (hot-dip steel

divest,
and organically coated steel).

2. ASSESSMENT OF THE UNDERTAKINGS

(238) The divestiture of the latter businesses will include all
tangible and intangible tangible assets and the transfer
of personnel currently employed at the plants.

(242)

cold-rolling

the request of
feedstock

(239) Where the production lines referred to in recitals 236
and 237 are not integrated with cold-rolling lines, the
the purchaser,
parties will offer, at
corresponding
or,
in accordance with
alternatively, offer
toll-rolling,
normal market conditions. At
the
the request of
transitional services/supply agreements will
purchaser,
be offered. The units Galmed, Beautor and Strasbourg
will be offered as a package, subject
to the existing
pre-emption right with regard to Galmed.

capacity

(b) Distribution markets

(240)

In the field of
steel distribution,
submitted the following undertakings:

the parties have

(1) Cofrafer: Arbed agrees to divest, or procure to
divest, Cofrafer SA, a wholly-owned subsidiary,
including its subsidiaries Flaberga DØcoupe, situated
at Barberey St. Sulpice, France, Orn’oxycoupage,

1. Galvanised products

the divestments offered
In terms of market shares,
would bring Newco appreciably closer to the level of
Usinor in the pre-merger situation.
In 1999 and in
terms of total sales, Usinor had a market share of [30 %
to 35 %]* in galvanised steel, against [10 % to 15 %]*
the combined
for Arbed/Aceralia. After divestments,
market share of Usinor, Arbed and Aceralia would fall
from [40 % to 45 %]* before divestment to [35 % to
40 %]*. More than [5 % to 10 %]* market share would
be divested by the parties, which would correct their
position in the market. The figures for 2000 are quite
similar, as shown in Table 25.

TABLE 25

Newco’s sales and proposed divestments

Galvanised steel

Newco’s sales

Proposed divestments

Sales after divestments

Total sales

(Thousand tonnes)

1999

[(cid:133)]*

2000

[(cid:133)]*

[40(cid:151)45]* % [40(cid:151)45]* %

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

Newco after divestitures

[35(cid:151)40]* % [35(cid:151)40]* %

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Official Journal of the European Union

4.4.2003

(243) As

is

far

capacity

as
the proposed
down
divestments would
Newco’s market share, from [40 % to 45 %]* to [35 %
to 40 %]* in 2002-2003, as Table 26 illustrates.

also substantially bring

concerned,

TABLE 26

Newco’s capacities and proposed divestments

Galvanised steel

Newco’s capacity

Proposed divestments

Capacity after divestments

Market capacity

(Thousand tonnes)

2002

[(cid:133)]*

2003

[(cid:133)]*

[40(cid:151)45]* % [40(cid:151)45]* %

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

[(cid:133)]*

Newco after divestitures

[35(cid:151)40]* % [35(cid:151)40]* %

(244) With such market shares, the proposition that Newco
could unilaterally increase prices and reduce output
would become less
realistic, especially due to the
potential improvement in the competitive position of its
direct competitors after the divestments.

(245) The proposed divestments will

the plants,

improve the market
structure in two ways. If larger competitors like TKS or
Corus were to buy some of
this would
reduce the gap in terms of size between themselves and
(like Salzgitter or
Newco.
competitors
that
the plants,
Voest-Alpine) were to buy some of
would create a new competitive force with around [5 %
to 10 %]* market shares. This would create a competitor
of the same order of magnitude as Arbed/Aceralia.

smaller

If

(246) Moreover, the proposed divestments would resolve the
problems identified in the Statement of Objections with
regard to the automobile industry. More than 65 % of
the divestments relate to this industry. The investigation
showed that the accreditation process operates at the
plant level. Potential buyers would therefore also gain
access to some automobile customers, by buying the
the parties
supplying these
plants
explained in their reply,
to the
automobile sector is effectively a competitive bidding
process. With the divestments proposed, automobile
customers will be in a position to find alternative
sources of supply to Newco, because new competitors
or stronger competitors will be able to take part in the
bidding process.

customers. As
the supply of steel

(247) Furthermore, following the divestments, joint ownership
by the largest Community steel manufacturers would
largely disappear in the market
for galvanised steel
products. This would diminish the incentives and

possibilities for competitors to potentially co-ordinate
their behaviour.

(248) Finally, since the divestments take place in the (cid:145)home
territory(cid:146) of
the merging firms (the area comprising
France, Spain and Portugal and Benelux), it would also
reduce incentives to develop subcontinental geographic
markets for these products.

(249) Those considerations have been borne out by the
market test of the proposed remedies undertaken by the
Commission.

2. Steel distribution

(250) The

divestments would

proposed
the
identified by the Commission
competition concerns
with regard to several distribution markets in France
and Spain/Portugal.

eliminate

(251)

(252)

of

flat

In France, the divestment of Cofrafer would bring the
total market share of Newco down from around [40 %
to 45 %]* to around [35 % to 40 %]* in the market for
steel service centres in 2000. As far as the markets for
stockholding
and
carbon
oxycutting are concerned, Newco’s market shares after
divestments will amount to around [30 % to 35 %]*.
the divestment will eliminate the
More importantly,
overlaps
centres,
stockholding and oxycutting in France, since it includes
all Arbed/Aceralia’s steel distribution operations in these
markets.

in the markets

products

service

steel

steel

for

of

the

addition,

Bamesa would
divestment
In
appreciably reduce the market shares of Newco in the
market for steel service centres in Spain/Portugal. On
the basis of market shares in 2000, Newco’s share in
Bamesa represents around [15 % to 20 %]* of
the
market. After divestment, Newco would go from having
[45 % to 50 %]* share of the market to [25 % to 30 %]*.
This compares to [10 % to 15 %]* for Grupo Ros, [5 %
to 10 %]* for Gutser and [5 % to 10 %]* for A. Gallardo.
If national markets were to be considered, Newco’s
market share in Spain would be reduced from [40 % to
45 %]* to [25 % to 30 %]*, and from [65 % to 70 %]* to
[30 % to 35 %]*
in Portugal. The divestment will
therefore enable a competitor to appreciably increase its
market share, outweighing the imbalance created by the
merger between Usinor Arbed and Aceralia.

(253) Those considerations have been borne out by the
market test of the proposed remedies undertaken by the
Commission.

3. Conclusion

(254) The

therefore

Commission

the
undertakings
competition
concerns identified by the Commission both in the
markets for galvanised steel and steel distribution.

considers
the

satisfactorily

address

that

4.4.2003

EN

Official Journal of the European Union

L 88/37

VII. CONCLUSION

(255)

In the light of all those considerations, the Commission
has reached the conclusion that, provided that
the
undertakings set out in the Annex to this Decision are
fully respected, the proposed concentration would not
give rise to competition problems and that in particular
it would not give Newco Steel the power:

(cid:151) to determine prices, to control or restrict production
or distribution or to hinder effective competition in
a substantial part of
for the relevant
products; or

the market

(cid:151) to evade the rules of competition under the ECSC
in particular by establishing an artificially
Treaty,
privileged position involving a substantial advantage
in access to supplies or markets.

(256) Since the requirements of Article 66(2) of the ECSC
Treaty are thus met, the proposed merger should be
authorised, on condition that the parties fully comply
with the following commitments (subject to any change
pursuant to the review clause set out in the Annex and):

[(cid:133)]* (See non-confidential version of commitments in
Annex).

(257) Those

of

the

aspects

commitments

constitute
conditions, since only by fulfilling them (subject to any
change pursuant to the review clause), can the structural
change on the relevant markets be achieved. The
remaining aspects of the commitments, concerning the
implementing steps which are necessary to achieve the

structural change that is sought, constitute obligations
within the meaning of the fifth subparagraph of Article
66(5) of the ECSC Treaty.

HAS ADOPTED THIS DECISION:

Article 1

The operation whereby the undertakings Arbed SA, Aceralia
Corporaci(cid:243)n Siderœrgica SA and Usinor SA merge into the
company Newco Steel is hereby authorised under Article 66(2)
of
to full compliance with the
commitments set out in the Annex and in particular with the
following conditions:

the ECSC Treaty, subject

[(cid:133)]* (See non-confidential version of commitments in Annex).

Article 2

This Decision is addressed to the notifying parties.

Done at Brussels, 21 November 2001.

For the Commission

Mario MONTI

Member of the Commission

L 88/38

EN

Official Journal of the European Union

4.4.2003

ANNEX

The full original text of the conditions and obligations referred to in Article 1 may be consulted on the following
Commission website:

http://europa.eu.int/comm/competition/index_en.html