2004/103/EC: Commission Decision of 30 January 2002 setting out measures in order to restore conditions of effective competition pursuant to Article 8(4) of Council Regulation (EEC) No 4064/89 (Case COMP/M. 2416 — Tetra Laval/Sidel) (notified under document number C(2002) 359) (Text with EEA relevance)
Date: 2002-01-30
Institutions: European Commission
Subjects: competition law, economic concentration, infringement of EU law, merger control, packaging product, preparation for market

10.2.2004

EN

Official Journal of the European Union

L 38/1

II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 30 January 2002

setting out measures in order to restore conditions of effective competition pursuant to Article
8(4) of Council Regulation (EEC) No 4064/89

(Case COMP/M. 2416 — Tetra Laval/Sidel)

(notified under document number C(2002) 359)

(Only the English text is authentic)

(Text with EEA relevance)

(2004/103/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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

Having regard to the Treaty establishing the European
Community,

Whereas:

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

I. THE FACTS

Having regard to Council Regulation (EEC) No 4064/89 of 21
December 1989 on the control of concentrations between
undertakings (1), as
last amended by Regulation (EC) No
1310/97 (2), and in particular Article 8(4) thereof,

Having regard to the Commission's decision of 30 October
2001 pursuant to Article 8(3) of Regulation (EEC) No 4064/89
declaring the concentration between Sidel SA and Tetra Laval
BV incompatible with the common market and the functioning
of the EEA Agreement,

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

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

(1) OJ L 395, 30.12.1989, p. 1; corrected version OJ L 257, 21.9.1990,

p. 13.

(2) OJ L 180, 9.7.1997, p. 1.
(3) OJ C 36, 10.2.2004.

The implemented concentration

(1)

(2)

Tetra

Laval

the Commission received

On 18 May 2001,
a
notification pursuant to Article 4 of Regulation (EEC)
No 4064/89 (the Merger Regulation) of a proposed
concentration whereby
France,
belonging to Tetra Laval BV (Tetra), the Netherlands, a
holding company within the Tetra Laval Group which is
a privately held group of companies, proposed to
acquire within the meaning of Article 3(1)(b) of the
Merger Regulation control of the French company Sidel
SA (Sidel) by way of a public bid announced on 27
March 2001. In accordance with French law, the bid
was unconditional.

SA,

the Merger Regulation allows

Article 7(3) of
the
implementation of a public bid which has been notified
to the Commission in accordance with Article 4(1) of
that Regulation provided that
the acquirer does not
exercise the voting rights attached to the securities in
to the bid, approximately 27,1
question. Pursuant

(4) OJ C 36, 10.2.2004.

L 38/2

EN

Official Journal of the European Union

10.2.2004

Laval

shares, Tetra

million shares, representing 81,3 % of outstanding Sidel
shares were tendered to Tetra Laval SA. In addition to
those
also acquired
approximately 3.5 million shares in Sidel either on the
open market or in individual purchases from major
shareholders. As a result Tetra currently holds just over
95 % (5) of Sidel's shares and has implemented the
proposed concentration.

SA has

(3)

(4)

(5)

(6)

The Decision pursuant to Article 8(3) of the Merger
Regulation

to Article 8(3) of

On 30 October 2001 the Commission adopted a
decision pursuant
the Merger
Regulation declaring the concentration between Sidel
and Tetra incompatible with the common market and
the functioning of the EEA Agreement (the Prohibition
Decision).

terephthalate)

For the reasons set out in the Prohibition Decision, the
Commission concluded that the notified concentration
would have created a dominant position in the market
(polyethylene
for
packaging
PET
equipment,
in particular SBM (Stretch Blow Moulding)
machines used for the sensitive product segments (liquid
juices and nectars, fruit flavoured still
dairy products,
drinks and tea/coffee drinks,
the sensitive
together
products), and would have strengthened a dominant
position in aseptic carton packaging equipment and
aseptic cartons in the EEA as a result of which effective
competition would have been significantly impeded in
the common market and in the EEA.

The procedure under Article 8(4) of the Merger
Regulation

Since the concentration was effected by virtue of a
public bid, Tetra has already acquired just over 95 % of
Sidel's shares. This concentration has been declared
incompatible with the
and the
functioning of the EEA Agreement pursuant to Article
8(3) of the Merger Regulation. As a result, Tetra has
already implemented a concentration which has been
declared incompatible with the common market and the
functioning of the EEA Agreement.

common market

Consequently, the Commission on 19 November 2001
sent Tetra a Statement of Objections pursuant to Article
18 of
the Merger Regulation and Article 13(2) of
Commission Regulation (EC) No 3384/94 of 21
December 1994 on the notifications, time limits and
hearings provided for in Council Regulation (EEC) No
4064/89 on the control of concentrations between
undertakings (6).
the
Commission considered it appropriate by virtue of
the
Article 8(4) of

the Merger Regulation to order

In the Statement of Objections,

(7)

(8)

(9)

(10)

(11)

the

two undertakings

through the
separation of
divestiture of Tetra's shareholding in Sidel, and to adopt
measures necessary to restore conditions of effective
competition pending the full separation of
the two
undertakings.

Tetra replied to the Statement of Objections in writing
on 3 December 2001. Both Tetra and Sidel presented
their views at an Oral Hearing which was held on 14
December 2001.

II. ANALYSIS UNDER ARTICLE 8(4) OF THE MERGER
REGULATION

Pursuant to the exception provided for in Article 7(3) of
the Merger Regulation from the suspensory obligation
provided for in Article 7(1), Tetra has already acquired
just over 95 % of Sidel's shares through the public bid
launched on 27 March 2001 and subsequent share
purchases. Tetra has therefore already implemented the
concentration. This concentration has been declared
incompatible with the
and the
functioning of the EEA Agreement by the Commission's
Decision of 30 October 2001 pursuant to Article 8(3)
of the Merger Regulation.

common market

Tetra has thus already implemented a concentration
which has been declared incompatible with the
common market and the functioning of
the EEA
Agreement.

This Decision is a consequence of and gives effect to the
Prohibition Decision which found that
the notified
concentration would create and strengthen dominant
positions as a result of which effective competition
would be significantly impeded in the common market
and declared the concentration incompatible with the
common market. Where concentrations prohibited by
the Commission have already been implemented, the
Commission may, pursuant to Article 8(4) of the Merger
Regulation,
‘require the undertakings or assets brought
together to be separated (…) or any other action that
may be appropriate in order to restore conditions of
effective competition'.

structural

Restoration of conditions of effective competition is the
primary concern in proceedings pursuant to Article 8(4)
of the Merger Regulation. Both the text and the scheme
of the Merger Regulation indicate that this requires the
removal of any residual
to
effective competition on the relevant markets arising
from the prohibited concentration (7). Article 8(4)
envisages
concentrations
in situations where
prohibited by the Commission have already been
implemented,
the restoration of effective competition
must, in principle, be effected by means of a separation
of the undertakings or assets brought together through
the prohibited transaction.

impediments

that,

(5) […]*.
(6) OJ L 377, 31.12.1994, p. 1.

(7) See the seventh and ninth recitals in the preamble to the Merger

Regulation.

10.2.2004

EN

Official Journal of the European Union

L 38/3

(12)

to

the

has

regard

In applying Article 8(4) of the Merger Regulation the
Commission
of
proportionality. This principle dictates that, when the
Commission is faced with different possible options,
such as divestiture structures, which could restore
required by
conditions of effective competition as
Article 8(4), the Commission should allow a choice or
should adopt the least restrictive option.

principle

the Commission
(13) Having regard to proportionality,
the undertakings
considers the legitimate interests of
concerned, when pursuing the primary Community
interest of restoring conditions of effective competition
by giving effect to its prohibition decision. This should
include not only
acquiring
undertaking, Tetra, which naturally wants to preserve as
much of the value of its investment as possible, but also
the acquired undertaking, Sidel, which wants to
of
minimise the period of uncertainty it
faces and to
continue its operations as an independent entity without
imposition of unduly disruptive or onerous
the
measures (8).

interests of

the

the

(14)

it

the above and in order

In the light of
to restore
conditions of effective competition pursuant to Article
the Merger Regulation, under the particular
8(4) of
circumstances of
is necessary to
the present case,
order the separation of Tetra and Sidel on the basis of
the following principles: 1. the separation should be by
means of an effective and final divestiture of such part
of Tetra's shareholding in Sidel as will ensure that
conditions of effective competition are restored by
retaining Sidel as an independent and viable competitor;
2. the divestiture should result in Sidel regaining its full
independence from Tetra and Tetra not retaining any
minority stake or interest in Sidel which could impede
the restoration of conditions of effective competition; 3.
the divestiture should take place promptly within a
period of not more than […] (*) in order to safeguard
Sidel's viability and effectiveness and thus to ensure the
restoration of conditions of effective competition; 4.
during the transitional period pending divestiture Tetra
should appoint a Trustee to monitor the divestiture
process and minimise Tetra's influence in Sidel.

(8) It is important to note in this respect that not only Tetra but also
Sidel
is an undertaking concerned by these proceedings with
specific rights granted under the Merger Regulation and Regulation
(EC) No 447/98 (the Implementing Regulation). For example, Sidel
is an ‘involved party' within the meaning of Article 13 of the
Implementing Regulation. This
imposes an obligation on the
Commission to inform Sidel of the content of these proceedings
and to allow Sidel to express its views in writing and orally. In this
respect, the management of Sidel has a specific right to be heard
by the Commission pursuant
the Merger
Regulation.

to Article 18(4) of

(*) 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.

(15)

(16)

(17)

(18)

1. Need to separate Tetra from Sidel through an

effective and final divestiture of Tetra's
shareholding in Sidel

In the Prohibition Decision the Commission found that
the notified concentration would create and strengthen
dominant positions as a result of which effective
competition would be significantly impeded in the
common market and the EEA and therefore declared
that
incompatible with the
common market and the EEA Agreement.

the concentration was

As the concentration has already been implemented, the
Commission has concluded that it is necessary to order
the separation of the two undertakings brought together
through the prohibited transaction in order to restore
conditions of effective competition pursuant to Article
8(4) of the Merger Regulation.

Harm to conditions of competition

Participation by Tetra in Sidel would impede the
restoration of conditions of effective competition. The
divestiture of Tetra's shareholding in Sidel would ensure
that conditions of effective competition were restored by
removing the direct structural/financial
link between
Tetra and Sidel. If Tetra maintained a shareholding in
its competitive behaviour would be influenced;
Sidel,
conditions
two
undertakings and on the markets on which they are
active would not be effective. Moreover, any presence of
Tetra in Sidel's capital would hinder the development of
Sidel on the markets in question. Tetra's decisions as a
shareholder with a participation in Sidel would be
influenced by its own competitive position on the
markets in question.

competition

between

the

of

inter alia, on the basis that,

there are therefore no concerns

Tetra does not dispute the need for the separation of the
two undertakings. However, Tetra disputes the need for
a prompt divestiture,
in
Tetra's view, there is no immediate competitive harm.
Tetra argues that ‘there is virtually no competition at
present between the two businesses' as there are very
few horizontal overlaps between the parties. In Tetra's
justifying a
view,
prompt divestiture. Tetra claims
the
Commission's concerns were of a ‘conglomerate' nature
and that hence there must be a direct link between the
to lead to anti-competitive results.
two companies
According to Tetra, such a link could be effectively
removed through the imposition of a hold-separate
trustee. This would ensure there was no harm to
competition.

that most of

(19)

The Commission cannot
view. The
Prohibition Decision found serious and immediate
in the Prohibition
competitive concerns. As set out

share Tetra's

L 38/4

EN

Official Journal of the European Union

10.2.2004

the

areas

parties:

In these

the parties

low-capacity

there are three core areas of horizontal
Decision,
overlap
SBM
between
machines; barrier technology; and aseptic PET filling
machines.
are direct
competitors. The Prohibition Decision also found
significant vertical links between the parties as Sidel is a
supplier of SBM machines and other PET equipment
and, as considered in recital 38, Tetra is potentially a
buyer of such equipment which it can use in its
downstream converter activities. Tetra has not yet
divested its SBM machine business or preforms business
and, although it has expressed its desire to divest these
businesses, there is no formally binding commitment to
do so.
In any event, even if such a divestiture took
place, Tetra would retain significant activities in barrier
technologies and PET aseptic filling equipment, key areas
for the penetration of PET in the sensitive product
markets where Sidel
is a direct competitor. Despite
Tetra's contention, there are therefore both horizontal
and, potentially, vertical competitive relations between
the two companies.

(20) Moreover,

are

and Sidel

investing heavily

the Commission's concerns relating to the
interplay between the
carton and PET packaging
equipment markets which have been set out in detail in
the Prohibition Decision were serious and immediate.
The Commission's analysis in this respect was based on
events that are taking place today. It is now that both
Tetra
in barrier
technologies and PET aseptic technologies to promote
the growth of PET in the future. Because of strategic
decisions taken today, Tetra's carton business already
faces and will continue to face increasing competitive
pressure from Sidel's activities in a neighbouring, closely
related antagonistic market. Indeed, Sidel's strategy as
stated in the company's press releases is to contribute
significantly to the rapid growth of PET in aseptic
packaging for fruit juices and liquid dairy products and
to erode the lead of
the still predominant carton
packaging in this market segment.

(21)

Those competition concerns are serious and immediate
and as such require the effective,
final and prompt
separation of Tetra and Sidel as necessary remedial
action pursuant to Article 8(4) of the Merger Regulation
in order to restore conditions of effective competition.
The existence of a hold-separate trustee is, as Tetra
suggests in its Reply to the Statement of Objections,
appropriate for a short transitional period but it cannot
be
structural measure designed to
guarantee the restoration of conditions of effective
competition in a final manner in the long term.

regarded as a

Need to sell Sidel as a going concern

(22) An effective and final divestiture should consist of the
sale of Sidel as a going concern without any change in
its status, or
its
activities, which might weaken its
and
effectiveness as a competitor on the markets in question.

in the scope or current range of

viability

(23)

Supervision of the manner in which Sidel is disposed of
is necessary to ensure restoration of conditions of
effective competition. If Sidel's core activities could be
split and sold separately or retained by Tetra, Sidel
would not be restored as an independent, viable and
effective competitor in the market place. Thus, non-core
activities should not be split, sold separately or retained
by Tetra without the Commission's prior approval. Such
activities and assets may be necessary for Sidel's viability
and effectiveness (9).

Method of divestiture and suitable buyer(s)

(24) With regard to the principle of proportionality and
Tetra's request for flexibility, the Commission considers
that Tetra should be allowed to choose in principle how
and to whom to divest its shareholding in Sidel as long
as the divestiture ensures, in a permanent manner, that
conditions of effective competition are restored. The
method of divestiture chosen should therefore ensure
that Tetra and Sidel are separated in a permanent and
final manner and should not impede the restoration of
conditions of effective competition. This could arise, in
particular, through the maintenance or creation of direct
or indirect structural or financial links between the two
companies.

(25)

Therefore, as long as the restoration of conditions of
effective competition is not impeded, Tetra may choose
any method of divestiture. Thus, Tetra may wish to
refloat Sidel's shares, to sell the shares to an industrial
buyer, most likely a company active in the packaging
sector, or buyers or to a financial institution. Tetra may
decide to sell the shares in a different way subject to the
Commission's prior assessment and approval. In order
to maximise the chances for a successful outcome of the
divestiture process in the shortest period of time, Tetra
the divestiture process, structures
should ensure that

(9) This principle is established in the Commission's Notice on
remedies acceptable under Council Regulation (EEC) No 4064/89
and under Commission Regulation (EC) No 447/98 (the Remedies
Notice), OJ C 68, 2.3.2001, page 3, paragraph 17.

10.2.2004

EN

Official Journal of the European Union

L 38/5

and methods chosen remain open to all types of buyers,
for example industrial buyers and financial institutions,
and that no preconditions are set limiting the potential
number of buyers.

undertakings and that this separation should take place
by means of an effective and final divestiture of Tetra's
shareholding in Sidel which will ensure that conditions
of effective competition are restored by maintaining
Sidel as an independent and viable competitor.

(26)

(27)

The divestiture of Tetra's shareholding in Sidel should be
made to an independent and viable buyer or buyers
subject to the Commission's approval unless the sale is
by way of a stock exchange flotation to third parties
independent of and unconnected to Tetra or any directly
or indirectly affiliated member of its group resulting in
each of these third parties holding no more than 5 % of
Sidel's shares. The buyer or buyers should fulfil
the
in the Remedies Notice
‘purchaser standards' set out
(paragraph 49).
In particular, the buyer should be a
viable entity independent of and unconnected to Tetra,
possessing all the financial resources, proven expertise
and having the incentive to maintain and develop Sidel
as an active competitive force.

Need for the divestiture to be final

an

final

Thus,

Sidel's

during

behaviour

appropriate

competitive

competition in a

In principle, a divestiture has to restore conditions of
and permanent
effective
manner (10).
divestiture
mechanism should not contain artificial legal structures
enabling Tetra to buy back the shares at a later point in
time dependent on the eventual outcome of litigation.
No company could function effectively with such
uncertainty as to the eventual owner of 95 % of
its
shares. A non-final divestiture structure enabling Tetra
to regain control of Sidel at a later point in time, would
the
distort
transitional period. Sidel would be unable to make
strategic decisions
investments or
significant acquisitions without taking into account the
fact that, at a later point in time, Tetra might regain
control of
in effect, be
removed from the market place as an independent
player for the duration of the transitional period. Sidel
would be managed with a view to maximising value in
than taking long-term views
the short
which only a buyer with unfettered freedom of action
could take. Sidel would also, in effect, be removed from
the market as a target of acquisitions. For instance, no
industrial buyer could buy the Sidel shares during the
transitional period with restrictions allowing Tetra to
regain control. This was confirmed by Tetra at the Oral
Hearing.

the company. Sidel would,

such as major

term rather

(29)

(30)

(31)

The divestiture should consist of a sale of the whole of
Sidel as a going concern without any change in the
the
status,
company, which might weaken its
and
effectiveness as a competitor in the markets in question.

range of activities of
viability

scope or current

Tetra should be allowed to choose in principle how and
to whom to divest its shareholding in Sidel as long as
in a final and permanent
the divestiture ensures,
that conditions of effective competition are
manner,
restored (11).
divestiture
mechanism should not contain mechanisms,
legal or
other, enabling Tetra to buy back the shares.

appropriate

Thus,

an

2. Need to ensure that Tetra does not retain a

minority shareholding or other financial interest
in Sidel which would impede the restoration of
conditions of effective competition

that

Tetra

it would

Tetra maintains that it should be allowed to retain a
minority shareholding in Sidel as this would not confer
on it decisive influence over Sidel nor would it lead to a
co-ordination of competitive behaviour between the two
undertakings.
be
believes
disproportionate to prevent it from retaining a minority
shareholding since normally it could do so without any
need to notify the
the Merger
Regulation and as such the Commission does not have
jurisdiction under Article 8(4) to prevent Tetra from
retaining a minority stake in Sidel. In Tetra's view, the
retention of a minority stake would not lead to any
anti-competitive effects given that the concerns of the
Commission were not of a horizontal nature. The
retention of a minority shareholding would, according
to Tetra, allow it to maintain the value of some of its
investment.

transaction under

Conclusion

(28)

In the light of
the Commission has
concluded that it should order the separation of the two

the foregoing,

(32)

The Commission considers that Tetra's view has to be
assessed in the light of the primary concern of Article
8(4) of
the Merger Regulation, which is to restore
conditions of effective competition. The Commission
considers, in the particular circumstances of the present
the information currently
case and on the basis of
retention of a minority
the
to it,
available

that

(10) See Remedies Notice, paragraph 6.

(11) See Remedies Notice, paragraph 6.

L 38/6

EN

Official Journal of the European Union

10.2.2004

of
impede
shareholding would
conditions of effective competition and would have
disproportionate effects on the target company.

restoration

the

Minority shareholding would hinder prospect of sale and
would impede the restoration of conditions of effective
competition

restoring conditions of

The objective of
effective
competition dictates that Tetra should not be allowed to
retain any level of shareholding that might hinder Sidel's
saleability, independence, effectiveness or viability in the
market and hence impede the restoration of conditions
of effective competition.

to influence the management of

The existence of a minority shareholding would allow
Tetra to enjoy minority protection rights. According to
French law, any shareholding above 33 % would give
Tetra the right
the
company directly. Even a stake above 5 % would give
Tetra legal rights, for example to prevent a change in
the status of Sidel as a public company. A minority
‘squeeze-out' (the forced purchase of the remaining 5 %
of the shares which under French law is possible, if the
majority shareholder has at the end of the public bid
obtained 95 % of both capital and voting rights) would
be beneficial for the smooth management and further
sale of Sidel. This has been confirmed by Sidel. The
benefits which could be derived from a squeeze-out are
mainly that the shares could be de-listed and placed
outside the influence of the stock market, the owner
would be able to restructure Sidel without reporting and
justifying its strategy to the financial market and to raise
finance as it sees fit. If Tetra retains more than 5 % such
a squeeze-out would not be possible. Given the fact that
there
already a minority shareholding of 5 %
belonging to a dispersed number of buyers which are
apparently unwilling to sell their shares, the retention of
any minority stake by Tetra would rule out
the
possibility of a squeeze-out for the eventual owner of
Sidel.

is

the prospects of

Therefore, the existence of any minority shareholding by
Tetra could make Sidel less attractive as an acquisition
target and may thus hinder
the
divestiture or of further resale. Indeed, Sidel emphasised
this at the Hearing. In the view of Sidel, the retention
by Tetra of a minority stake may make a sale of the
remaining shares held by Tetra more difficult. A
potential buyer, and in particular a trade buyer, may
understandably not want
to acquire the shares with
Tetra present as a minority shareholder. A sale of 95 %
to say the full
or more of Sidel's

shares,

that

is

(33)

(34)

(35)

the shares to ‘squeeze-out'
it

shareholding of Tetra in Sidel, would be more attractive
than a sale of less than 95 % of the shares as it would
the
enable the buyer of
remaining dispersed minority shareholders
so
wishes. If Tetra was allowed to retain a minority stake,
the potential number of buyers could be limited by
excluding
the
of
Commission would, at this stage, require Tetra to refrain
from setting any precondition for the sale of Sidel's
shares, which could deter any potential buyers, by
limiting the post-sale options of a squeeze-out.

Therefore,

number

buyers.

if

a

(36) Moreover,

if

it

jointly

control

outcome

is important

to recognise that,

the
divestiture results in a situation where there is no
majority shareholder, larger minority shareholders such
as Tetra might have disproportionate influence as a
result of superior ability to form voting coalitions that
could
at General
the
Assemblies. In particular if Tetra were to float the shares
whilst keeping a minority shareholding it is possible
that it would hold the largest proportion of shares and
would thus influence the company disproportionately to
its
its shareholding.
shares to a financial buyer or several financial buyers,
who were buying purely for investment purposes, Tetra
would be the only shareholder with in-depth market
knowledge. Again the potential influence of Tetra could
be greater than its actual shareholding.

if Tetra were to sell

In addition,

(37)

The incentives of Tetra as a minority shareholder would
change as a result of Tetra's financial interests in Sidel.
Such financial
interest would give Tetra the right to
receive a proportion of the profit stream generated by
Sidel from its operations and investment. In the absence
of any shareholding in Sidel, Tetra would seek a profit
maximising outcome solely on the basis of the expected
profit
stream generated by its own operations. By
retaining a stake in Sidel, Tetra would be likely to take
into account its expected revenue stream generated by
interests in Sidel and would therefore be
its financial
likely to consider how its actions would affect Sidel's
profit stream. The incentives of Tetra to compete would
therefore be changed as a result of
the minority
shareholding. For example, it might be in Tetra's interest
to increase/not to decrease its carton prices although
induce increased switching to PET by
this might
customers,
if Tetra could capture both the increased
carton profits from retained customers and compensate
the loss of carton profits from switching customers by
benefiting from a proportion of the increase in Sidel's
profits
resulting from increased demand for PET,
whereas such a strategy would not be attractive in the
absence of a shareholding in Sidel. The high levels of
concentration in the closely related markets for carton
and PET equipment, with Tetra and Sidel enjoying,

10.2.2004

EN

Official Journal of the European Union

L 38/7

respectively, dominance and a very strong position,
facilitates such a strategy.

If Tetra were

Sidel machines

the purchase of

(38) A minority holding may also give rise to vertical
concerns. Tetra is already a converter of HDPE bottles
through ‘hole-through-the-wall' arrangements, whereby
Tetra supplies customers with bottles produced in an
adjacent location directly into the customers' production
line and using its experience in carton and HDPE, could
provide similar services producing PET bottles. Tetra is
therefore a potential client of Sidel SBM high capacity
machinery. This would enable Tetra to supply customers
for sensitive products through a hole-through-the-wall
to hold a minority
arrangement.
it would have an incentive to
shareholding in Sidel
favour
its
hole-through-the-wall activities. Given Tetra's position
with carton customers,
PET
customers for sensitive products, it is likely that it could
also become a major player as a converter
in the
provision of PET bottles through hole-through-the-wall
arrangements to producers of sensitive products. If it
were to purchase only from Sidel, it could significantly
boost Sidel's sales whilst at the same time foreclosing
Sidel's competitors from supplying Tetra with SBM
machines. This would increase Sidel's already strong
position substantially and could raise its market position
to the point of dominance. SBM competitors would
therefore be
in
particular, and if Tetra were successful
in capturing a
significant number of its original carton customers for
hole-through-the-wall operations a substantial part of
the market could become foreclosed.

foreclosed from supplying Tetra,

thus potential

and

for

(39)

effects

arising

is not

In this context, Tetra's contention that
there are no
possible horizontal or vertical competitive relations
between the two companies and hence no possible
from minority
anti-competitive
shareholdings
In addition to the
correct.
horizontal concerns and leveraging concerns arising
from the interplay between carton and PET, Tetra
continues to retain PET and HDPE activities which make
it a direct horizontal competitor of Sidel and provide
possibilities for a vertical relationship with Sidel. Tetra
still retains its low capacity SBM machine business and
preforms business (even though it is apparently ready to
commit to a divestiture no such divestiture has been
In addition, Tetra will retain other plastics
effected).
activities such as aseptic PET filling machines, PET
barrier technologies, and HDPE activities.

Conclusion

(40) On the basis of factual information currently available, it
is concluded that Tetra should not be allowed to retain a

to impede

restoration of

minority shareholding in Sidel. Such a retention would
be
effective
the
likely
competition as
the prospect of a
successful divestiture and would allow Tetra to retain
economic incentives to refrain from competition with
Sidel and to engage in exclusive vertical relations with
Sidel.

it could hinder

3. Need for prompt divestiture within a period

of […]*

(41)

time period for

The Commission considers that Tetra should divest its
in a prompt and final manner
shareholding in Sidel
which ensures the restoration of effective competition.
In setting a
the
the divestiture
Commission has particular
regard to the primary
Community interest of restoring effective competition
pursuant to Article 8(4) of the Merger Regulation. The
Commission has
in
minimising a potential financial loss which could arise
from a speedy divestiture of Sidel's shares given the
in
current market conditions and to Sidel's interest
avoiding unduly disruptive and onerous measures.

regard also to Tetra's

interest

(42)

Statement of Objections,

In its
the Commission
considered that a period of six months was necessary
given the negative effects on competition and the fact
that prolonged periods of uncertainty might cause
irreparable harm to Sidel as an effective and viable
competitor.

(43)

(a)

that:

Tetra contests the need for a prompt divestiture within a
period of six months as set out in the Statement of
Objections. Tetra argues
the Commission's
proposal is disproportionate and goes against precedent;
the Commission should have regard to Tetra's
(b)
investment and should not penalise Tetra for complying
with French law; (c) the Commission should also have
regard to Tetra's right of appeal against the Prohibition
Decision which,
the
Tetra's
Commission from imposing a final divestiture before
Tetra's appeal has been decided; and, finally, (d) Tetra's
proposed
restore
competition effectively and are more proportionate than
the Commission's proposal and should therefore be
preferred.

alternative

divestiture

structures

prevents

view,

in

L 38/8

EN

Official Journal of the European Union

10.2.2004

(44)

(45)

(46)

(a) Commission's proposal for a prompt divestiture within a
period of […]* is appropriate, proportionate and in
accordance with relevant precedents

The harm to conditions of effective competition and
hence the need for a prompt restoration of conditions
of effective competition has been discussed above. The
that a prompt divestiture is
Commission considers
necessary to prevent irreparable damage to conditions
of effective competition.

(48)

competition. Under

the structural/financial

Long-term interim structures, such as the ones proposed
by Tetra, would not be sufficient to guarantee Sidel's
effectiveness and viability and would hence result in a
significant weakening of
long
transitional structures such as the ones proposed by
Tetra, and in addition to the anti-competitive effects
link existing
arising out of
between Tetra and Side, Sidel would have to function
with 95 % of its shares in the hands of a trustee. It
would face uncertainty as to its eventual owner.
It
would have to operate under tight controls under the
supervision of a trustee and the Commission. It would
be unable to have access to the capital market in an
unfettered way, to make significant acquisitions or to
become a target of acquisitions. Sidel would be tied in
long-term legal structure which could not
an artificial
the company's
inspire confidence and would distort
future
Structures with
hold-separate trustees and constant monitoring are
inherently suitable only for short transitional periods
pending a clear and final divestiture.

behaviour.

decisions

and

that

there are
The Commission therefore considers
strong reasons why a divestiture should take place in a
final and prompt manner in order to prevent irreparable
damage to conditions of effective competition. Having
considered Tetra's request
for a longer period which
its
to preserve better
would allow it
investment and having considered Sidel's position as to
the need
transitional period of
a
uncertainty, it is concluded that a period of divestiture
is necessary to ensure
of not more
restoration of conditions of effective competition.

the value of

to minimise

than […]*

(47) Despite this, Tetra maintains that it should be allowed at
the
than three years]* period for
least a [more
divestiture (12).
Tetra
on
argument
its
and the need to preserve Tetra's
proportionality
investment. According to Tetra, the Commission should
take into account the current market conditions which
would result in a destruction of Tetra's investment if a

bases

quick sale was ordered. As noted, the primary concern
under Article 8(4) of
the Merger Regulation is
restoration of competition following an incompatibility
decision. Minimising Tetra's losses which arise from
factors
an
the Commission's
important but secondary consideration.

beyond

control

is

have

proposed

remediesand for

the viability of

remedies which

such as
the preference for structural
remedies

Tetra maintains that the Commission should not confuse
divestitures under
the Remedies Notice which are
voluntary and orders for divestiture under Article 8(4)
of
the Merger Regulation. The principles established
over the years through the Commission's experience in
assessing
been
encapsulated in the Remedies Notice are, to a certain
in the context of proceedings under
extent, relevant
the Merger Regulation. Established
Article 8(4) of
the proposed
principles
than
purchaser,
behavioural
restore
competition in a final and permanent manner are
the
In any event,
evidently relevant.
Commission has not less but more extensive powers
under Article 8(4) of the Merger Regulation than in the
context of Article 8(3) proceedings where its role is
limited to discussing the acceptability of remedies with
that, as Tetra claims, remedies
the parties. The fact
divestitures cover secondary assets is an argument in
favour of more not less decisive measures under Article
8(4) decisions. By definition,
in Article 8(4) decisions
there is a greater urgency to restore conditions of
effective competition which have already been impeded
because of the prohibited transaction.

rather
that

is clear that

it

(49)

commitments:

Tetra further claims that a [more than three years]*
divestiture period is in line with Commission practice.
Tetra refers to three cases which were cleared by the
Guinness/Grand
Commission with
Metropolitan (M.938) (13), Alcan/Alusuisse (M.1663) (14)
and KNP/Buhrmann (M.291) (15).
In Guinness/Grand
Metropolitan, the Commission allowed 15 months for
the divestiture of two whisky brands. In Alcan/Alusuisse,
the Commission allowed nine months
(with two
three months each) and in
possible extensions of
(with two possible
KNP/Buhrmann eight months
the
In Tetra's view,
extensions of six months each).

(13) Commission Decision of 15 October 1997, OJ L 288, 27.10.1998,

p. 24.

(14) Commission Decision of 14 March 2000, not yet published in the

OJ.

(12) Tetra's Reply at paragraphs 103—116.

(15) Commission Decision of 4 May 1993, OJ L 217, 27.8.1993, p. 35.

10.2.2004

EN

Official Journal of the European Union

L 38/9

closest precedent is Volvo/RVI (M.1980) (16) where the
Commission allowed Volvo […]* to divest a minority
shareholding
in
the competitive concerns were horizontal
Volvo/RVI
whereas
looser
is
current
the
conglomerate concerns.

in Scania. Tetra maintains

based

case

that

on

(50)

the

business

It is evident that none of the above precedents, which
concern minority shareholdings in clearance decisions
sanctioned a divestiture period of
[more than three
years]* as proposed by Tetra. Furthermore, in the special
circumstances of an Article 8(4) decision following the
prohibition of an implemented public bid, there should
the
be no special obstacles
to speedy disposal of
acquired undertaking as a going concern as it
is a
free-standing entity and, by virtue of Article 7(3) of
the Merger Regulation has normally not been integrated
into
acquiring
operations
undertaking. The closest precedents, which Tetra has not
discussed in its Reply are other divestiture orders
to Article 8(4). There are only two such
pursuant
cases, Blokker/Toys ‘r' us (M.890) (17) and Kesko/Tuko
(M.784) (18).
In these cases divestiture periods ranged
from six to nine months. Tetra has not provided any
exceptional reasons as to why the Commission should
depart from this practice in this case. Periods of the
length
the
Commission's Prohibition Decision from its effet utile and
cause harm to Sidel and competition. Tetra's assertion
that the Commission's initial proposal for a six month
in conformity with
is not
period for divestiture
precedents is therefore not correct.

Tetra would

proposed

deprive

the

by

of

(b) Preservation of the value of Tetra's EUR 1,7 billion

investment in Sidel

(51)

Tetra maintains that the Commission's proposal in the
Statement of Objections for a divestiture of Tetra's entire
shareholding in Sidel within six months, would destroy
Tetra's investment in Sidel. According to Tetra, this is
due to the current unfavourable markets conditions and
Sidel's weak economic performance. In Tetra's view,
if
the Commission ordered a quick divestiture destroying
most of Tetra's investment, the Commission would in
essence ‘penalise' Tetra for complying with the French
rules which obliged it to launch an unconditional bid.
Tetra maintains that
the French rules which do not
allow the possibility of a conditional bid create a
conflict with the requirements of the Merger Regulation

(16) Commission Decision of 1 September 2000.
(17) Commission Decision of 26 June 1997, OJ L 316, 25.11.1998, p. 1.
(18) Commission Decision of 19 February 1997, OJ L 174, 2.7.1997,

p. 47.

for which Tetra should not be penalised. In Tetra's view,
even though the Merger Regulation does not explicitly
deal with such situations in Article 8(4), there is an
analogy to be drawn with Article 7(3) of that Regulation
which recognises that a party to a transaction should be
able to maintain the full value of its investments while
that transaction is being reviewed. Under Article 8(4) of
the Merger Regulation the Commission should also take
into
causing
objective
unnecessary and unreasonable losses to the affected
party.

account

avoid

and

this

(52)

(53)

In order to show the extent of the potential loss it may
face, Tetra has used the firm of auditors Ernst & Young
to calculate Sidel's current value. Ernst & Young made a
presentation at
the Oral Hearing which was kept
confidential from Sidel. Ernst & Young calculated, on
the basis of publicly available
information, Sidel's
present value at around […]* per share giving a total
value for Tetra's shareholding of less than […]*. Tetra's
bid was for EUR 50 per share and cost in total in excess
of EUR 1,7 billion. As a result, Tetra claims that a
forced sale within a period of six months would destroy
most of
in Sidel. However, Tetra
the Hearing that Ernst & Young's
acknowledged at
valuation was a worst case scenario and that it was
probable that Tetra would be able to obtain a higher
price for Sidel in a private sale.

investment

its

The Commission has examined the valuation provided
by Ernst & Young and has concluded that it appears to
be overly pessimistic. Considering the valuation, in the
light of
the more appropriate discounted cash flow
calculation carried out by Tetra's financial advisers' prior
to the public bid, and with all the customary prudence
associated with the interpretation of the outcome of a
forward-looking exercise such as a financial valuation,
the Commission has concluded that, in the absence of
the interim
dramatic changes
period of less than a year, the fair value of Sidel on a
stand-alone basis for an investor could reasonably be
estimated at around […]* per share, within a value
range of […]* per share.

in the industry over

(54)

The Commission has however paid particular attention
to Tetra's arguments regarding the preservation of the
value of Tetra's investment in Sidel. The Commission,
the primary concern under
however, considers that
Article 8(4) of the Merger Regulation is the Community
interest in restoring conditions of effective competition.
Tetra's interest in avoiding financial loss is also of great
importance but cannot override the primary objective of
Article 8(4).

L 38/10

EN

Official Journal of the European Union

10.2.2004

(55)

(56)

for

and

rule of

investigation

the Commission's
circumstances,

The flexibility provided for in Article 7(3) of the Merger
Regulation recognises that in the short period of time
pending
in
an exception from the
exceptional
general
all merger
suspensory effect
transactions may be necessary to preserve the value of
the acquirer's investment. These considerations cannot
be applied automatically to the period following the
Commission's
concentration
incompatible with the common market. Article 8(4)
the merged
simply envisages
undertakings or other appropriate action may be
required when a merger has been implemented and has
not been declared compatible with the common market
in order to restore conditions of effective competition.

that a separation of

declaring

decision

a

that

affects

natural

uncertainty

The fact that, in circumstances such as those faced by
Tetra, some financial loss may be suffered is inherent to
the
all merger
transactions. Such natural uncertainty is part of any
preventive merger control system. Before launching its
bid, Tetra was aware of the French rules and of the
Community rules and was thus aware of the risk that a
loss.
prohibition decision might expose it to financial
This is made clear in Tetra's internal documentation
which discussed the possibility of a prohibition decision
by the Commission. In addition, Tetra was not obliged
into the transaction in the precise way it
to enter
is to say, by launching an
that
decided to follow,
unconditional public bid. Article 7(3) of
the Merger
Regulation allows for this possibility by providing an
exception to the general suspensory rule in Article 7(1).
However,
consequences,
including financial ones, of such transactions remains
entirely with the undertaking concerned.
In essence,
Article 7(3) merely gives companies wishing to acquire
listed
an
possibility
unconditional public bid. It does not oblige companies
to follow this route. Whilst the French rules may be
seen by Tetra as unnecessarily rigid in not allowing the
launching of a conditional public bid, Tetra could have
explored other legal structures in order to minimise
potential risks.

responsibility for

launching

targets

the

the

the

of

(57)

shares. Member States at
that

In addition, Tetra entered into the transaction in full
awareness of the uncertainty and risks and, on its own
independent calculations decided to pay a substantial
premium for Sidel's
the
Hearing pointed out
there has been a general
slow-down in the economy which has impacted on
Sidel's valuation as well as that of other companies. It
was also not clear why Tetra has paid such a substantial
premium (Sidel shares were trading at EUR 30 prior to
the public bid and Tetra offered EUR 50) for Sidel's
shares. In any event, it was Tetra's own decision to pay
shares when it
a substantial premium for Sidel's
launched its public bid in March 2001.

(58)

The fact that Tetra decided to enter into the transaction
with the uncertainty and risks that this entailed should
not therefore prevent
the Commission from carrying
out its duties under the Merger Regulation to review
transactions as to their compatibility with the common
in cases where they are found to be
market and,
incompatible,
to take the necessary remedial action
pursuant to Article 8(4).

(59)

loss of

it is not clear that Tetra would suffer a
Furthermore,
financial
is claiming. The
the magnitude it
Commission has conducted its own valuation of Sidel
and is of the view that Tetra could achieve a much
higher price for Sidel within the next […]* than that
presented to the Commission at the Oral Hearing.

to allow Tetra to preserve as much of

the Commission has been particularly
(60) Nonetheless,
careful
its
investment as possible. The Commission considers that
a period of divestiture of […]* will allow Tetra to find a
suitable buyer for Sidel at a reasonable price.

(c) An action for annulment should not prevent the

Commission from seeking an effective remedy under
Article 8(4) of the Merger Regulation

(61)

(62)

competition in a

final
Tetra maintains

In principle, a divestiture has to restore conditions of
and permanent
effective
manner (19). However,
the
that
Commission does not have the power to impose a final
and prompt divestiture because this would pre-empt
Tetra's right to seek the annulment of the Prohibition
Decision and would prejudge the outcome of
the
annulment action. If the action were successful, Tetra
would have divested the shares, would have lost most of
the value it invested and would be unable to buy back
the shares. This would cause Tetra irreparable harm. As
a result, Tetra is suggesting that the Commission should
be prevented from ordering Tetra to divest the shares in
a final manner.

to Article 8(4) of

The Commission does not share Tetra's view. A decision
pursuant
the Merger Regulation
ordering a prompt divestiture would not affect Tetra's
right to seek the annulment of the Prohibition Decision
in any way. Tetra could still attack the decision and the
judgement would be
the
Commission's decision pursuant to Article 8(4). If Tetra
believed that
the Commission's Article 8(4) decision
would cause it irreparable harm and would pre-empt
the outcome of its action against the 8(3) decision, Tetra
would have the right
the
Article 8(4) decision as well and ask the Court of Justice

to seek the annulment of

rendered regardless of

(19) See Remedies Notice, paragraph 6.

10.2.2004

EN

Official Journal of the European Union

L 38/11

to suspend its effects. The arguments that Tetra makes
are therefore arguments urging the Court to suspend a
forthcoming Article 8(4) decision and not
valid
arguments against the Commission's right and duty to
adopt an Article 8(4) decision in the first place in order
In this
to restore conditions of effective competition.
it must be observed that the damage, which
context,
will
largely or
exclusively financial and does not threaten the solvency
of Tetra. Pure financial damage, not likely to lead to
insolvency, is not considered as constituting irreparable
harm.

suffered by Tetra

allegedly be

is

a

appeals

if Tetra's position was accepted, this would
(63) Moreover,
against
situation where
in
result
incompatibility decisions of implemented concentrations
would deprive incompatibility decisions of
their effet
utile by preventing the Commission from taking actions
necessary to restore conditions of effective competition
pursuant to Article 8(4) of the Merger Regulation. In
annulment of decisions
this way,
for
declaring
be
concentrations
incompatible would automatically have a suspensory
effect. This, however, is contrary to the general principle
of Article 242 of the Treaty which clearly states that,
generally,
‘actions brought before the Court of Justice
shall not have suspensory effect'.

all
actions
implemented

to

(64)

in an
In addition, Tetra's position would result
unjustified discrimination between implemented public
bids and other concentrations. In implemented public
bids the acquiring companies would benefit by being
allowed to preserve the shares pending an appeal.

(65)

Finally,
if Tetra's view were accepted, the interests of
target companies would be penalised by having to face a
long period of uncertainty pending an appeal. Indeed, if
Tetra's view were accepted, it would distort competition
and cause Sidel
irreversible harm by extending the
uncertainty Sidel faces over a long period of time. Such
harm to Sidel would also cause irreparable distortion of
the Commission's
competition and would circumvent
Prohibition Decision.

(69)

to restore conditions of effective competition
order
pursuant to Article 8(4) of the Merger Regulation and in
particular
the order of a final divestiture of Tetra's
shareholding in Sidel.

(d) Tetra's proposals will not restore conditions of effective

competition and cannot be accepted

(67)

argues
for a speedy divestiture is not

the Commission's
In its Reply, Tetra
proposal
justified as
Tetra's own ‘divestiture' proposals restore conditions of
effective competition and are more proportionate (20).

that

(68)

Tetra essentially proposes the following:

(a) Tetra should be allowed to divest its shareholding in
Sidel in [more than three years]* so that its appeal
can be decided and in order for the value of its
investment to be preserved. Tetra should,
in any
event, be allowed to retain a minority shareholding.

to put

(b) Tetra should be allowed a first transitional period of
[…]* during which it can still hold on to the shares
in order
into place the four proposed
structures which will result in a second transitional
period of [more than three years]*. During this time
a
Sidel's
trustee would
independence.

hold-separate

ensure

(c)

In the long transitional period of [more than three
years]* pending final divestiture, Tetra proposes four
structures designed, according to Tetra,
to ensure
Sidel's viability and independence and hence the
restoration of conditions of effective competition in
accordance with Article 8(4) of
the Merger
Regulation.

(d) After [more than three years]*, Tetra will either
divest the shares to an independent third party or
will exercise call options to recover the shares in
case its appeal is successful.

I n i t i a l [ … ] * t r a n s i t i o n a l p e r i o d —
a p p o i n t m e n t o f a h o l d s e p a r a t e t r u s t e e

following,

the
or
Immediately
Commission's Article 8(4) decision, Tetra proposes to
trustee. The hold separate
appoint a ‘hold-separate'
run effectively and
trustee would ensure Sidel

prior

even

to

is

(66)

It is therefore concluded that Tetra's right
to appeal
against the Prohibition Decision should not prevent the
Commission from adopting the necessary measures in

(20) Reply, paragraphs 64 to 102.

L 38/12

EN

Official Journal of the European Union

10.2.2004

independently from Tetra. Tetra would not have the
to exercise voting rights and to interfere with
right
Sidel's operations in any way.
In Tetra's view, Sidel
already has a strong and independent management team
which will ensure Sidel
functions effectively pending
divestiture. During this initial […]* period Tetra would
be allowed to legally hold the shares with no need to
transfer them to a trustee.

S u b s e q u e n t [ m o r e t h a n t h r e e y e a r s ] *
t r a n s i t i o n a l p e r i o d — t h e f o u r ‘ d i v e s t i t u r e '
o p t i o n s

(70)

Tetra proposes to enter into one of four ‘divestiture'
options within […]*. These
structures would be
transitional and would last for [more than three years]*
pending final divestiture to an independent third party.
Tetra would retain the right to buy back the shares
under call options if
is successful. These
its appeal
structures were presented to the Commission in further
detail at the Oral Hearing by Tetra's financial advisers,
Rothschild (21).

(i) […]*

(71)

[…]*.

(ii) […]*

(72)

[…]*.

(iii) […]*

(73)

[…]*.

(iv) […]*

(74)

[…]*.

Te t r a ' s p r o p o s a l d o e s n o t r e s t o r e
c o n d i t i o n s o f e f f e c t i v e c o m p e t i t i o n

(76)

(77)

(75)

Tetra maintains
‘divestiture'
structures would meet in full the requirements of Article

that any of

four

the

(21) It is to be noted that, at a meeting between the Commission
services and representatives of Tetra held on 24 January 2002, i.e.
following the discussion of
the Advisory
Committee of 22 January 2002, Tetra proposed orally and
subsequently in writing that it was willing to remove the ‘call
option' element from the four proposed structures.

the Decision at

its operations or

the Merger Regulation and would be more
8(4) of
proportionate than the Commission's proposal
for a
prompt and final divestiture. According to Tetra, all four
‘divestiture' structures would legally remove the ability
to control Sidel from Tetra. Tetra would not control or
own the Sidel shares during the transitional period.
Sidel would still have the same amount of capital as
before for
its expansion and the
structures would not interfere with Sidel's ability to raise
funds. Tetra's investment in Sidel would thus be better
in particular […]*, would
preserved. The structures,
offer
to grow. The
for Sidel
incentives
Commission would have the right to approve the final
purchaser
The
years]*.
compatible with
‘divestiture'
Commission precedents which show that parties can
control the divestiture process and that structures such
as […]* are acceptable in principle.

after
structures would be

sufficient

[more

three

than

of

through

appointment

that Sidel could remain
In addition, Tetra argues
independent
a
the
hold-separate trustee or other similar structures and
could function effectively on the market place without
influence or interference by Tetra. Tetra maintains that
Sidel has an independent management, which will
ensure Sidel's effectiveness in the market. Finally, Sidel
has sufficient resources to fund its business. As a result,
even a long transitional period would not result
in
uncertainty and would not hinder Sidel's development.

if

Sidel does not share Tetra's view. Sidel has confirmed in
writing and at the Oral Hearing that a long transitional
period necessarily entails uncertainty and would hinder
its proper development. Sidel's customers have already
voiced concerns over the company's future. According
to Sidel uncertainty is the single greatest cause of
damage to Sidel's ability to compete effectively. Sidel
also confirmed that transitional arrangements involving
trustees and uncertainty as to the eventual owner of
95 % of the company are complex and would damage
stated that
Sidel
unforeseen
complexity
increased
problems,
to misunderstanding by Sidel's
customers and provides greater scope for competitors to
disseminate damaging rumours about Sidel's stability.
Sidel
interim
impede restoration of
arrangements that are invasive,
Sidel's position or impair Sidel's flexibility in financing
or ability to dispose of non-core assets. Sidel also urged
the Commission to allow the shortest possible period
within which an appropriate buyer could be found. In
Sidel's view six months may not be sufficient to find an

allowed for
carries
lends itself

too long. Sidel
of

the Commission

urged

avoid

risk

to

10.2.2004

EN

Official Journal of the European Union

L 38/13

appropriate buyer. Sidel thinks that 12 months would
be appropriate and that it could not consider any period
of more than 18 months as being appropriate.

(78)

(79)

The Commission has paid particular attention to and
has studied carefully the four
‘divestiture' structures
proposed by Tetra especially in the light of Tetra's
argument that these structures would enable Tetra to
the
preserve the value of
Commission
as
considers
proposed (22), cannot
restore conditions of effective
competition.

its investment. However,
structures,

these

that

and

investment

of Tetra's

preservation

It is evident that the ‘divestiture' structures are not real
divestitures but merely transitional arrangements akin to
a trustee arrangement including a legal transfer of shares
to the trustee. The main purpose of all four structures is
the
the
preservation of Tetra's right to regain control of Sidel at
an unspecified point
in time should its appeal be
successful. Indeed, under all four structures, Tetra would
retain the right to buy back Sidel's shares under ‘call
options' should its appeal be successful. Tetra would be
the beneficial owner of the shares and/or would have a
stake in Sidel's future financial performance. In addition,
the call-option would enable Tetra to have a continued
presence in Sidel by having the right to become Sidel's
eventual owner at an indeterminate point in the future.
Tetra confirmed at the Hearing that the only purpose of
the call-options was to enable it to buy back the shares
in case its appeal is successful.

kind of uncertainty that Sidel has confirmed would
cause it irreparable harm. Sidel would have to operate
for a long transitional period [more than three years]*
without knowing who the ultimate shareholder of 95 %
of its shares would be. Sidel would have to operate
under tight controls under the supervision of a trustee
and the Commission. Sidel would be tied to an artificial
inspire confidence and
legal structure which cannot
would distort
future decisions and
the company's
behaviour. Such structures with hold-separate trustees
and constant monitoring are inherently suitable only for
short
transitional periods pending a clear and final
divestiture. In addition, the fact that Tetra would still
retain an important
in Sidel's
performance would have distortive effects on Tetra's
competitive behaviour.

financial

interest

the

not

The

that

relevant.

precedent

transitional

(82) Moreover, the precedents that Tetra uses to support its
argument
divestiture
above
structures are in accordance with Commission practice,
are
in
Vivendi/Seagram/Canal+ (M.2050) (23) that Tetra relies
on is not relevant except that a similar structure to
Tetra's proposed […]* structure was used. In that case,
however, there had not been an incompatibility decision
and the
a minority
shareholding. Tetra has not referred to any precedent
supporting its view for a long [more than three years]*
transitional period involving call options giving the
‘divesting' company the right to buy back the shares.
Indeed, Tetra acknowledges that ‘it is clear that there is
no real precedent in the Commission's practice for the
type of divestment proposals
that Tetra Laval has
outlined' (24).

to be divested was

interest

(80) During the proposed long transitional periods

shares,

the
‘owners' of Sidel's
for example, a financial
institution, would not have unfettered freedom of
action. They would not be able to on-sell the shares due
to Tetra's call option and complex financial mechanisms
preventing a free sale. Rothschilds, Tetra's
financial
[statement relating to the likelihood of divestiture to
industrial buyers during the transitional period]*.

(83)

(81) Other than the anti-competitive effects outlined above,
the transitional structures would create precisely the

the

‘call option'

(22) At a meeting between the Commission services and representatives
of Tetra held on 24 January 2002, i.e. following the discussion of
the Decision at the Advisory Committee of 22 January 2002, Tetra
proposed orally and subsequently in writing that it was willing to
remove
four proposed
element
structures. The Commission considers that the removal of the call
option from the structures is desirable as it removes one of the
Commission's objections to the proposals as
in the
following paragraphs of this Decision. However, the Commission's
concerns such as the uncertainty and limitations which Sidel
might face under some of the structures and the fact that Tetra
legal or
would, under most of
beneficial interest in Sidel remain valid.

the options, retain an indirect

from the

set out

Conclusion

are

They

entail

uncertainty

In addition,

adequately restore

in
precedents.

conditions of
great

The four ‘divestiture' proposals as put forward by Tetra
effective
do not
and
competition.
complexity and would hinder Sidel's development and
the
functioning as a viable competitor.
relevant
proposals
not
Commission
no
justification for Tetra's proposed [more than three
structures. The
years]* period for
Commission also considers
arguments
regarding its right of appeal and preservation of the
value of
its investment do not override the primary
concern of restoring conditions of effective competition.
Such restoration must in principle take place promptly.

accordance with
There

that Tetra's

transitional

therefore

the

is

(84) Having considered Tetra's request for a longer period
which would allow it to preserve better the value of its

(23) Commission Decision of 13 October 2000.
(24) Reply at paragraph 91.

L 38/14

EN

Official Journal of the European Union

10.2.2004

investment and having considered Sidel's position as to
the necessity to minimise a transitional period of
uncertainty, the Commission considers that a period of
[…]* would in the circumstances be appropriate.

(85)

The Commission would also be prepared to allow,
subject to its prior approval, structures enabling Tetra to
preserve the value of its investment to the extent that
impede the restoration of
such structures do not
conditions of effective competition. Such structures
could include for example some form of limited credit
or financial arrangements or other payment structures
which would enable Tetra to preserve as far as possible
the value of its investment provided that such structures
would not
impede the restoration of conditions of
effective competition by jeopardising Sidel's viability and
effectiveness or through the maintenance or creation of
direct or indirect structural or financial
links between
the two companies. Such structures should, in principle
be of a limited duration.

4. Need to appoint independent trustee during the

transitional period

(86)

The Commission considers that the separation of the
two undertakings should take place in a way that
ensures that conditions of effective competition are
restored in the long term and that any disruption of
conditions of effective competition is minimised during
the […]* transitional period pending the divestiture.

No further implementation of the prohibited concentration
during the transitional period

(89)

(90)

(91)

(87) During the transitional period which precedes

effective

conditions of

the
restoration of
competition
following an Article 8(4) decision, no measure should
be taken to implement the concentration such as for
example exercising the voting rights attached to the
shares or acquiring additional shares without prior
approval of the Commission. Pending the divestiture,
Tetra should refrain from any action or omission that
viability,
would not preserve
marketability and competitiveness of Sidel. In particular,
Tetra should not carry out any act which may be of
such a nature as to alter the legal status, nature, scope
the industrial or commercial
or
strategy or the investment policy of Sidel.

range of activities,

economic

full

the

to

the

prior

subject

approval

decision and pending the divestiture, during which
period Tetra will continue to maintain a shareholding in
Sidel, Tetra should appoint an independent trustee, such
as an investment bank, management consultant or
auditor,
the
Commission. The Trustee should be appointed promptly
and in any event within 10 days following the adoption
of this Decision. The Trustee should be independent of
Tetra or any directly or indirectly affiliated member of
its group, possess the necessary qualifications to carry
out the task and should not be, or become, exposed to a
should also be
conflict of
remunerated in such a way as not
to impede its
independence and effectiveness in fulfilling its mandate.

interest. The Trustee

of

should be

The Trustee's mandate
to the
Commission's approval to ensure the independence and
effectiveness of the Trustee. The mandate should include
all provisions necessary to enable the Trustee to fulfil its
duties.

subject

Essentially, the mandate should provide the Trustee with
all the necessary powers and independence to monitor
the divestiture of Tetra's shareholding in Sidel to an
independent and viable buyer or buyers subject to the
Commission's approval unless the sale is by way of a
stock exchange flotation to third parties independent of
and unconnected to Tetra or any directly or indirectly
affiliated member of its group resulting to each of these
third parties holding no more than 5 % of the Sidel's
shares. The Trustee's mandate should include a power
for the Trustee to sell the shares at no minimum price
after the period of divestiture […]* has expired.

The Trustee should be able to exercise the voting rights
attached to Tetra's shareholding in Sidel subject to the
prior approval of the Commission. The Trustee should
also have the power
to manage effectively Tetra's
shareholding in Sidel and to ensure that Sidel operates
as an effective competitor on the relevant markets. The
Trustee should ensure in particular that the status and
range of activities of Sidel is not altered in a way that
weakens Sidel's competitive position on the markets in
question. The Trustee should provide written reports to
the Commission informing the Commission on progress
in the divestiture process as well as the monitoring of
the operation and management of Sidel.

Appointment of independent Trustee

Transfer of shares to the Trustee

(88)

In order to restore conditions of effective competition
during the transitional period following the Article 8(4)

(92)

Tetra does not contest the Commission's proposal to
appoint an independent trustee with powers to monitor

10.2.2004

EN

Official Journal of the European Union

L 38/15

independence and viability and exercise the
Sidel's
voting rights attached to the shares. Tetra acknowledges
that a Trustee should be appointed as soon as possible
and proposes
a hold-separate Trustee
immediately following this Decision or even prior to the
decision (25).

to appoint

(97)

(93) However, Tetra maintains that an immediate transfer of
the shares to a Trustee is not necessary. It considers that
a sale constituting a final divestiture will have taken
place after the passing of the time limit set out in its
proposal (26). Tetra refers to the Article 8(4) decisions in
Blokker and Kesko/Tuko and the Remedies Notice to
support the argument that the party required to divest
can perform the divestiture itself. In both Blokker and
Kesko/Tuko the transitional divestiture periods were
limited to six or nine months. A divestiture trustee was
not appointed but a monitoring trustee was appointed
in Kesko/Tuko. The Remedies Notice does not envisage
divestiture trustees in the first divestiture period but
does envisage them after the initial period expires.

(94) A transfer of shares to a Trustee is likely to contribute
to the restoration of conditions of effective competition
by minimising Tetra's influence during the transitional
period. A transfer of shares would result
in better
monitoring during the transitional period, in more fluid
and independent management in Sidel and possibly in
more flexibility with issues such as voting of the shares
and exercising other rights attached to the shares.

(95) A transfer of shares to a Trustee does not appear to
entail harm to Tetra or Sidel and Tetra has not provided
any arguments as to why such a transfer would be
problematic. There is no reason why Tetra should not
be able to enter into a suitable agreement to transfer the
shares to a trustee pending final divestiture. In addition,
most of
the four ‘divestiture' proposals suggested by
Tetra include a transfer of shares.

(98)

(99)

(96)

The Commission therefore considers that it would be
preferable for Tetra to transfer the shares to the Trustee
as soon as practically possible.

(25) Reply, paragraph 47.
(26) Reply, paragraph 52.

Conclusion

to

the

prior

approval

subject
It

is also concluded that

In the light of the foregoing, the Commission considers
it necessary for Tetra to appoint an independent trustee
such as an investment bank, management consultant or
auditor,
the
of
it would be
Commission.
preferable for Tetra to transfer the shares to the Trustee
as soon as practically possible. The Trustee's mandate
to
should be subject
ensure
the
the
Trustee. The mandate should include all provisions
necessary to enable the Trustee to fulfil
its duties of
monitoring Sidel's independence, managing effectively
Tetra's
that Sidel
operates as an effective competitor on the relevant
and conducting the divestiture of Tetra's
markets
shareholding in Sidel.

to the Commission's approval

shareholding in Sidel,

and effectiveness of

independence

ensuring

III. CONCLUSION

In the light of the fact that the concentration between
Sidel and Tetra, which was declared incompatible with
the common market and the functioning of the EEA
Agreement on 30 October 2001, has already been
implemented and in the light of the reasons set out
above, it is concluded that it is necessary to order Tetra
to separate itself from Sidel by divesting its shareholding
in Sidel and to take additional appropriate measures in
order
to restore conditions of effective competition
pursuant to Article 8(4) of the Merger Regulation as set
out in the Annex to this Decision.

In particular, it is necessary to order the separation of
Tetra and Sidel on the basis of the following principles:
1. the separation should be by means of an effective and
final divestiture of Tetra's shareholding in Sidel ensuring
that conditions of effective competition are restored by
retaining Sidel as an independent and viable competitor;
2. the divestiture should result in Sidel regaining its full
independence from Tetra and Tetra not retaining any
minority stake in Sidel or any interest in Sidel which
could impede the restoration of conditions of effective
competition; 3.
should take place
promptly within a period of not more than nine
to safeguard Sidel's viability and
months
to ensure the restoration of
effectiveness and thus
conditions of effective
competition; 4. during the
transitional period pending divestiture Tetra should
appoint a Trustee to monitor Sidel's independence,
ensure Sidel's viability and effectiveness and conduct the
divestiture process.

the divestiture

in order

L 38/16

EN

Official Journal of the European Union

10.2.2004

(100)

In ordering the measures set out in this Decision the
Commission has paid particular regard to the principle
of proportionality, to Tetra's request for flexibility and
for measures allowing the preservation of as much of
the value of Tetra's investment as possible as well as to
Sidel's request for measures, such as the appointment of
Trustees, that are not unduly onerous or disruptive to
the extent that such measures achieve effectively the
objective sought pursuant to Article 8(4) of the Merger
Regulation, namely the restoration of conditions of
effective competition,

Article 2

This decision is addressed to:

Tetra Laval BV
Amsteldijk 166
1071 LH Amsterdam
The Netherlands

HAS ADOPTED THIS DECISION:

Article 1

In order to restore conditions of effective competition, Tetra
Laval BV is hereby ordered to separate itself from Sidel SA in
accordance with the provisions of the Annex to this Decision.

Done at Brussels, 30 January 2002.

For the Commission

Mario MONTI

Member of the Commission

10.2.2004

EN

Official Journal of the European Union

L 38/17

ANNEX I

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