Opinion of the Advisory Committee on concentrations given at its 140th meeting on 26 June 2006 concerning a draft decision relating to Case COMP/M.4000 — Inco/Falconbridge (Text with EEA relevance)
Date: 2006-06-26
Institutions: Advisory Committee on Restrictive Practices and Dominant Positions
Subjects: cobalt, competition, economic concentration, merger control, mining industry, nickel

13.3.2007

EN

Official Journal of the European Union

C 58/9

Opinion of the Advisory Committee on concentrations given at its 140th meeting on 26 June 2006
concerning a draft decision relating to Case COMP/M.4000 — Inco/Falconbridge

(Text with EEA relevance)

(2007/C 58/03)

1. The Advisory Committee agrees with the Commission that the notified operation constitutes a concen-
tration within the meaning of Article 1(3) and 3(1)(b) of the Merger Regulation and that it has a Com-
munity dimension as defined by the Merger Regulation.

2. The Advisory Committee agrees with the Commission that for the purpose of assessing the present

operation, the relevant product markets are:

a) The supply of nickel products to the plating and electroforming industry;

b) The supply of high purity nickel for the production of super alloys/super alloys used in safety critical

parts; and

c) The supply of high purity cobalt for the production of super alloys used in safety critical parts.

3. The Advisory Committee agrees with the Commission that for the purpose of assessing the present
operation, the relevant geographic market is EEA-wide for the market for the supply of nickel products
to the plating and electroforming industry.

4. The Advisory Committee agrees with the Commission that for the purpose of assessing the present

operation, the relevant geographic markets are worldwide for the following markets:

a) The supply of high purity nickel for the production of super alloys/super alloys used in safety critical

parts; and

b) The supply of high purity cobalt for the production of super alloys used in safety critical parts.

5. The Advisory Committee agrees with the Commission that the proposed concentration is likely to
significantly impede effective competition in the common market or in a substantial part of it and the
EEA, in particular as a result of the creation of a dominant position, for the following markets:

a) The supply of nickel to the plating and electroforming industry in the EEA;

b) The supply of high purity nickel for the production of super alloys/super alloys used in safety critical

parts worldwide; and

c) The supply of high purity cobalt for the production of super alloys used in safety critical parts

worldwide.

6. The Advisory Committee agrees that, following the proposed concentration, Inco/Falconbridge will not
have the ability or incentive to influence London Metal Exchange (LME) nickel prices by delaying part
of their nickel mining projects.

7. The Advisory Committee agrees that the parties have neither demonstrated convincingly enough that
the efficiencies could not have been achieved by another means nor would they benefit directly consu-
mers.

8. The Advisory Committee agrees that vertical integration (over the whole chain consisting in mining,
industry
processing and refining activities) is currently the prevailing business model
offering significant competitive advantages, both in terms of access to suitable feed in sufficient quanti-
ties and over the long-term and in terms of ability to compete on the relevant markets.

in the nickel

9. The Advisory Committee agrees that a significant degree of vertical integration is not necessary in order

to ensure access to sufficient and suitable feed in the cobalt industry.

C 58/10

EN

Official Journal of the European Union

13.3.2007

10. The Advisory Committee agrees with the Commission that the undertakings consisting in the divest-
ment of Falconbridge's Nikkelverk refinery and related assets to a purchaser active in metals mining
and/or processing with access to sufficient feed to sustain the viability of the divested business, along
with the offer to enter with the purchaser into a 10-year flexible feed supply agreement covering a
substantial part of Nikkelverk's feed requirements, are sufficient to remove the significant impediment
to competition, and will ensure the presence of a viable competitor in the three relevant markets:

a) The supply of nickel to the plating and electroforming industry in the EEA;

b) The supply of high purity nickel for the production of super alloys/super alloys used in safety critical

parts worldwide; and

c) The supply of high purity cobalt for the production of super alloys used in safety critical parts

worldwide.

11. The Advisory Committee agrees that LionOre is a suitable purchaser for the divested business and that
it will ensure the independence, viability, and competitiveness of the divested business in the long term.

12. The Advisory Committee agrees with the Commission that, subject to full compliance with the under-
takings offered by the parties, and considered all undertakings together, the proposed concentration
does not significantly impede effective competition in the common market or in a substantial part of it,
in particular as a result of the creation or strengthening of a dominant position, within the meaning of
Article 2(2) of the Merger Regulation and that the proposed concentration is therefore to be declared
compatible with Article 2(2) and 8(2) of the Merger Regulation and Article 57 of the EEA Agreement.

13. The Advisory Committee asks the Commission to take into account all the other points raised during

the discussion.