2007/687/EC: Commission Decision of 18 August 2006 declaring a concentration compatible with the common market and the functioning of the EEA Agreement (Case COMP/M.3848 — Sea-Invest/EMO-EKOM) (notified under document number C(2006) 3710) (Text with EEA relevance)
Date: 2006-08-18
Institutions: European Commission
Subjects: coal, economic concentration, freight rate, iron ore, logistics, merger control, restriction on competition, service

26.10.2007

EN

Official Journal of the European Union

L 282/47

COMMISSION DECISION

of 18 August 2006

declaring a concentration compatible with the common market and the functioning of the EEA
Agreement
(Case COMP/M.3848 — Sea-Invest/EMO-EKOM)

(notified under document number C(2006) 3710)

(Only the English text is authentic)

(Text with EEA relevance)

(2007/687/EC)

On 18 August 2006 the Commission adopted a Decision in a merger case under Council Regulation
(EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the
EC Merger Regulation) (1), and in particular Article 8(2) of that Regulation. A non-confidential version
of the full Decision can be found in the authentic language of the case on the website of the Directorate-
General for Competition, at the following address: http://ec.europa.eu/comm/competiton/index_en.html

(1)

(2)

(3)

(4)

I. SUMMARY

Sea-Invest NV (Sea-Invest) is a privately owned company
providing terminal services in a number of ports in
Its core
Belgium, France, Germany and South Africa.
business is the handling of dry bulk and other non-
containerised cargo. Sea-Invest controls among others
the following terminals handling coal,
iron ore and
other dry bulk: ABT in Antwerp, GCT and CBM in
Ghent and Sea-Bulk in Dunkirk.

(EMO-EKOM)

Europees Massagoed-Overslagbedrijf BV and Erts- en
provides
BV
Kolen Overslagbedrijf
terminal services for coal and iron ore in Rotterdam.
EMO is operating the terminal while EKOM owns the
facilities. The existing shareholders in EMO-EKOM are
ThyssenKrupp Veerhaven BV (TKV), RAG Logistic
GmbH (RAG), HES Beheer NV (HES) and Manufrance
BV (Manufrance).

TKV is the seaport forwarder for ThyssenKrupp Steel for
the ports of Amsterdam, Rotterdam and Antwerp.
It
operates push boat and barge services via the river
Rhine to the group’s blast furnaces in Duisburg. TKV
in the port
also operates a coal and iron ore terminal
of Rotterdam, entirely dedicated to the ThyssenKrupp
group.

HES holds, apart from its shareholding in EMO-EKOM,
stakes in other companies which handle dry bulk in the
ports of Rotterdam, Amsterdam and Zeeland.
Its
iron ore and other dry
subsidiary EBS handles coal,
bulk in Rotterdam. It has also joint control in the RBT
terminal
iron ore, coal and other dry bulk in
Rotterdam and the OBA terminal handling coal and

for

(1) OJ L 24, 29.1.2004, p. 1.

(5)

(6)

(7)

(8)

other dry bulk in Amsterdam. Further, it holds a non-
controlling stake in the OVET terminal handling coal,
iron ore and other dry bulk in Zeeland.

Manufrance holds, apart from its shareholding in EMO-
EKOM, controlling interests in OVET and OBA. It is a
subsidiary of ATIC Services, a joint venture between the
Total, EDF and Arcelor groups (however, none of these
shareholders
controlling ATIC Services). ATIC
Services holds interests in companies offering services
related to coal
logistics,
maritime transportation and quality control of coal and
iron ore cargoes.

inland-waterways

trading,

are

Pursuant to the proposed transaction, Sea-Invest acquires
joint control of EMO-EKOM by means of a purchase of
shares in a pure holding company SNV from the current
shareholder RAG. After the transaction, EMO-EKOM will
be jointly controlled by Sea-Invest, TKV, HES and Manu-
france.

The Commission’s market investigation has revealed that
that the proposed concentration will not give raise to any
competition concerns as a result of which effective
competition would be significantly impeded in the
Common Market or in a substantial part of it.

II. EXPLANATORY MEMORANDUM

1. THE RELEVANT PRODUCT MARKETS

for

terminal

the
The Commission has in the past suggested that
market
(cargo handling and
services
storage in ports) could be subdivided according to the
three main types of cargo: (i) parcel goods (in particular
liquid bulk
(ii) dry bulk goods and (iii)
containers),

L 282/48

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Official Journal of the European Union

26.10.2007

further

to the

the
goods. A previous decision also suggested that
market for terminal services for dry bulk cargo could
type of
be
subdivided according
commodity handled. Dry bulk is usually split
into
several categories: coal and iron ore, agri-bulk (e.g.
grains or cereals) and other dry bulk (1). Since terminals
for agri-bulk do not compete, mainly due to food safety
reasons, with terminals handling the two other types of
dry bulk,
the investigation focused on determining
whether handling coal and iron ore on the one hand
and other dry bulk on the other hand form separate
product markets.

(9)

are

able

Coal and iron ore are major bulk products handled in
large quantities for which speed of discharging is crucial
while handling and storage does not require special
attention. Terminal
to switch
companies
between handling coal and iron ore and many of them
do handle both products with the same equipment. Both
iron ore and coal are stored in the open air and basically
in the same area, only in separate stockpiles. Further, the
customers for handling coal and iron ore are in both
cases usually the end users of these commodities,
i.e.
large steel companies and electricity companies. Both
these commodities are also transported in larger sea-
inland
going vessels
transport are in particular barges and to a lower extent
rail.

and the preferred means of

(10) On the other hand, other dry bulk commodities require a
different handling as they are often more fragile than coal
and iron ore, cannot be handled by the high-speed
conveyor belts used for coal and iron ore and may
sometimes require a covered storage. Other dry bulk is
also transported and handled in significantly smaller
volumes. Much smaller sea-going vessels are used for
other dry bulk than for coal and iron ore which are
able to enter into more draught restricted ports. As the
volumes are smaller, the inland transportation of other
dry bulk products is more flexible. Also the customers
for other dry bulk are different and traders and logistics
companies play a greater role.

(11)

Even though some smaller terminals do switch between
handling coal and iron ore on the one hand and other
dry bulk on the other hand,
there are substantial
differences between handling these two categories of
products which limit effective and immediate supply-
coal
side
ore
Important
customers also confirmed that
they do not consider
other dry bulk terminals as a viable alternative because
of the lack of storage capacity and the inability to quickly
load and unload large volumes of cargo.

substitution.

iron

and

(12)

(13)

(14)

(15)

the above,

that
In view of
handling of coal and iron ore represents a separate
market from handling of other dry bulk.

the decision concludes

Further, the Commission has in the past distinguished
between the markets for terminal services for hinterland
traffic (2) on the one hand and transhipment traffic (3) on
the other hand. This distinction was confirmed also in
the main
this case. Therefore,
affected product market
for
hinterland traffic for coal and iron ore which are
distinct from terminal services for transhipment traffic
for coal and iron ore.

the decision defines

terminal

services

as

2. THE RELEVANT GEOGRAPHIC MARKETS

including Zeeland) or

In the Art 6(1)(c) decision the Commission stated that
the relevant geographic market could either extend to all
in the ARA range (i.e. Antwerp, Rotterdam,
ports
Amsterdam,
could solely be
limited to the port of Antwerp on the one hand and
to the Dutch ports (Rotterdam, Amsterdam, Zeeland)
on the other hand. The in-depth market investigation
thus focused on the substitutability between the Sea-
Invest’s ABT terminal
its
terminals in Ghent and Dunkirk) and EMO-EKOM as
well as other terminals in the Dutch ports.

in Antwerp (as well as

The coal and iron ore terminals have three main groups
of customers: steel producers, electricity producers and
traders. When deciding on the use of the terminal, the
customer has
to take into consideration the whole
logistic
logistic chain in order to optimise the total
costs connected with importing coal and iron ore. The
market investigation showed that this imposes significant
constraints on its ultimate choice for a specific terminal.
The most important cost elements of the logistic chain
besides terminal handling and storage are sea freight and
inland transport. Terminal handling and storage fees
logistic
represent only around 10-15 % of
costs. The relatively low importance of
fees
makes switching in response to 10 % or even 15 %
increase in the terminal tariffs unlikely, as the selection
of the port and terminal of discharge is driven rather by
the more important cost elements — sea freight costs
and inland transport costs — as well as other factors
specific to each customer.

the total

terminal

(16)

The decision therefore first analyses the most important
logistic costs for importing coal and
parts of the total
iron ore. Further, the decision summarises the results of
the in-depth investigation as regards the possibilities of
individual customers of Sea-Invest, EMO-EKOM and
other terminals to switch between Antwerp (or even
Ghent and Dunkirk) on the one hand and Rotterdam
and other Dutch ports on the other hand.

(1) A wide range of various commodities such as zinc concentrates and
other non-ferrous concentrates, cement clinkers, pig iron, kaolin,
phosphates and other minerals, cokes, pet-cokes, anthracites, etc.

(2) I.e. from deep-sea ship directly to inland barge, train or truck.
(3) I.e. from deep-sea ship to relay/feeder vessel.

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Official Journal of the European Union

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(17)

(18)

(19)

the ports. The market

The sea freight costs are for the majority of customers
the most important factor influencing the choice of a
particular terminal. It is in general more economical to
use as large vessels as possible for the maritime leg of the
transport of coal and even more so of iron ore. However,
the choice for a vessel of a particular size is limited by
the draught of
investigation
confirmed that Antwerp is more draught restricted than
Rotterdam and other ports in the ARA range and that
therefore large vessels (exceeding around 140 000 dwt)
cannot enter the port of Antwerp fully loaded. To the
contrary, these large vessels bring 79 % of coal and even
93 % of iron ore discharged in the port of Rotterdam.
The quantitative analysis of
the sea transport costs
confirmed the importance of draught and the relative
significance of
the
ABT terminal as compared to the EMO-EKOM terminal.
In case of coal transported from non-draught restricted
coal
origins
discharged in the ARA range), the sea transport costs
difference between Antwerp and Rotterdam amounts in
average to around 50 % of the handling tariff. This in
itself makes
switching in reaction to a 10 % price
increase unlikely.

the resulting cost disadvantage of

(representing more

than 70 % of

all

for different

The inland transport costs may have a significant effect
as well on the choice of a particular terminal, depending
on the location of the customers. The comparison of
regions
average inland transport costs
from Antwerp and Rotterdam shows that Antwerp is
significantly cheaper in particular for Belgium and to
for Northern France. Rotterdam, on the
some extent
for Germany — Ruhrgebiet,
other hand,
is cheaper
Germany — Saarland, Southern Germany and to some
extent for the Netherlands. The cost difference between
ranges
Antwerp and Rotterdam for
between 20 % and 50 % of the average terminal
fee.
This limits the economic incentive of customers to
switch between Antwerp and Rotterdam in reaction to
a 10 % increase in the terminal fee. It is also in line with
statements of Sea-Invest and respondents in the investi-
gation that Antwerp and Rotterdam to a large extent
the choice of a
serve different hinterlands and that
terminal
is significantly predetermined by the location
of the customer.

regions

these

the terminal

(20) As to the specific situation for each of the customer
the decision summarises the
groups identified above,
terminals used by individual groups of
customers
located in different areas and their real possibilities to
switch between terminals. This analysis is based on
replies of
the customers to detailed questionnaires as
well as on interviews conducted with a number of
customers. All customers emphasised that their choice
of
is very much determined by the sea
freight costs and the inland transport costs. Further,
there are many other factors determining and limiting
the choice of the terminals for each customer, such as
the participation in part cargo services (1), additional
services and storage capacity of
risk of
congestions, the number and location of the customer’s
plants, accessibility to and suitability of barge or train
connection, the security of supply (e.g.
in the periods
low water in the river Rhine) or the existence of
of
the inland
long-term contracts with the providers of
transport.

terminals,

(21)

This analysis confirmed that the scope for substitution
between the ABT terminal and the EMO-EKOM terminal
is very limited. Based on the market investigation, the
decision quantifies the actual possibilities of substitution:
the volumes for which ABT can substitute EMO-EKOM
in relation to EMO-EKOM’s total volume
are marginal
(less than 5 %). These volumes do not put competitive
pressure on EMO-EKOM,
the most
intend to switch. The
important customers do not
volumes for which EMO-EKOM can substitute ABT are
also small in relation to ABT’s volume (less than 10 %).
These volumes only put very limited competitive pressure
in particular because ABT’s most
on ABT,
important
customers do not intend to switch.

in particular as

(22) All this supports the conclusion that Rotterdam/Amster-
dam/Zeeland is a separate geographic market
from
Antwerp/Ghent/Dunkirk (2). Conditions of competition
are not the same in these two areas. However, there is
these
some
geographic markets. This
fringe competition mainly
targets volumes of traders.

competition

between

limited

fringe

Further,
terminal
the decision analyses the prices of
services at ABT and EMO-EKOM that are paid by
customers located in different geographic areas. This
showed both for ABT and EMO-EKOM that there are
no specific regions where customers pay significantly
lower or higher prices as compared to other regions.
there are no particular
This seems to indicate that
regions where
between
terminals would be particularly strong. The analysis of
terminal prices also showed that prices differ significantly
between individual customers of both ABT and EMO-
EKOM.

competitive

pressure

the

(23) On the other hand, as regards the transhipment traffic
for coal and iron ore, the relevant geographic would be
in the
covering all main deep-sea ports
broader,
Gothenburg — Le Havre range including UK and Irish
deep-sea ports.

(1) Also called ‘parcel services’. A part cargo service carries cargo of
several customers who do not import sufficient quantities to make
it economical to charter a vessel independently.

(2) It can be left open whether the ports of Ghent and Dunkirk are in
the same geographic market as Antwerp or form a separate market
(which is in any case different to the Dutch ports). Under both
alternatives, the transaction does not lead to competition concerns.

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Official Journal of the European Union

26.10.2007

3. COMPETITIVE ASSESSMENT

1. Terminals services for hinterland traffic for coal and

iron ore

(a) Unilateral effects

(i) Strengthening of ABT’s dominance in Antwerp

Such unilateral effect would be possible if pre-merger (i)
Sea-Invest represented competitive constraints for EMO-
EKOM preventing it from increasing its prices and (ii) the
concentration eliminated or substantially weakened these
competitive constraints on EMO-EKOM. The in-depth
market
these
investigation demonstrated that none of
two conditions is fulfilled.

(24) ABT is dominant on the Antwerp market (market share
100 %) for terminal services for hinterland traffic for coal
and iron ore (1) where it is only facing fringe compe-
tition. The decision analyses whether Sea-Invest may
have the possibilities and incentives to use its joint
control
in EMO-EKOM to restrict or eliminate this
in EMO-EKOM
fringe competition. This joint control
will provide Sea-Invest it with a possibility to veto (but
not actively determine) strategic decisions,
in particular
concerning the business plan and budget, appointment of
management or major investments. Its participation in
the board also provides it with some general information
about
strategic
planning.

EMO-EKOM’s business policy

and

(28)

(25) However,

identified other

these powers cannot strengthen Sea-Invest’s
position because the fringe customers can switch to alter-
native terminals. The in-depth investigation confirmed
that none of the fringe customers of ABT would solely
depend on EMO-EKOM. On the contrary, most of these
customers
terminals, e.g. OBA and
Rietlanden in Amsterdam and RBT in Rotterdam, as
the best possible alternatives to ABT. Similarly,
the
fringe customers which are able to switch volumes
from EMO-EKOM to ABT confirmed to have more and
better
in
Rotterdam and Amsterdam. Given the limited volumes
of the fringe customers, these terminals would also have
necessary available capacities to absorb their tonnages.

in particular other

alternatives,

terminals

any

and

are
possible

in different
First, EMO-EKOM and Sea-Invest
constraints
geographic markets
exercised by Sea-Invest
terminals on EMO-EKOM are
limited only to the less than 5 % of the total volumes
handled by EMO-EKOM. Further, customers of EMO-
EKOM identified most often as possible substitutes
other terminals in Rotterdam or Amsterdam, in particular
OBA or Rietlanden. Second, even if
there were any
terminals on
constraints by Sea-Invest
competitive
EMO-EKOM, it is highly unlikely that the acquisition of
a co-controlling stake would substantially weaken these
constraints. Sea-Invest would have no incentive to relax
ABT’s competition vis-à-vis EMO-EKOM as it will need to
attract tonnages to Antwerp as it will not, contrary to
Rotterdam, profit
in any significant way from the
increased imports of coal to Germany.

(29)

The transaction thus does not lead to any competition
concerns due to unilateral effects
strengthening the
dominance of Sea-Invest or enabling a price increase by
EMO-EKOM.

(b) Coordinated effects

(30)

(26)

Further, the investigation showed that Sea-Invest would
not have any incentive to use its veto powers to block
important decisions in order to try to further decrease
from EMO-EKOM.
the
limited competitive pressure
fringe customers
Considering the limited volumes of
and focus of EMO-EKOM on the
increasing coal
imports to Germany, the costs of such veto for Sea-
Invest would not be outweighed by its benefits.

(ii) Unilateral price increase of EMO-EKOM

(27) Another possible theory of harm concerns the unilateral
effect of
the transaction which might provide EMO-
EKOM with the ability and incentive to increase prices.

(31)

(1) Sea-Invest is also dominant if the ports of Ghent and Dunkirk were
included in the geographic market as the terminals handling coal
and iron ore for non-captive customers are controlled by Sea-Invest.
The following analysis would be the same if Ghent and Dunkirk
were in the same market as Antwerp.

The Art 6(1)(c) decision identified as a possible compe-
coordination of behaviour
tition concern also the
between Sea-Invest and EMO-EKOM as well as other
terminals (OBA, EBS, RBT, OVET) controlled by the
shareholders of EMO-EKOM due to the structural
links
created between Sea-Invest and EMO-EKOM, HES and
the
Manufrance. However,
geographic markets defined above, terminals controlled
by Sea-Invest on the one hand, and EMO-EKOM and
other terminals controlled by HES and Manufrance on
the other hand are active on separate markets. Therefore,
anti-competitive coordination of their behaviour due to
the transaction is unlikely considering the limited compe-
titive constraints between them.

account

taking

into

that

To the extent
there is some fringe competition
between ABT and other terminals in the ARA range,
the in-depth investigation brought no evidence that the
transaction might lead to coordinated effects. The inves-
tigation showed that the management of the terminals is
running of
rather
terminals,
individual
pricing
customers or expansion plans. Any coordination is also

independent
including

in the operational

policy

for

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Official Journal of the European Union

L 282/51

less likely due to the fact that the shareholders of EMO-
EKOM would still be rather heterogeneous as regards
their scope of activities and vertical
integration. The
transparency of the market as regard price conditions
agreed upon in negotiations with individual customers
is limited. Due to particularities of each customer in
particular
the
terminal services cannot be regarded as homogenous.
Further, the in-depth investigation did not provide any
evidence of a credible deterrent mechanism. Finally, both
other competitors (in particular Rietlanden) as well as
large customers represent important constraints able to
jeopardise the outcome expected form the coordination.

geographic

location,

regards

its

as

(32)

Taking into account the above, the transaction does not
lead to competition concerns due to coordinated effects
between Sea-Invest, EMO-EKOM, HES and Manufrance.

(c) Article 2(4)

(33)

The market investigation also confirmed that the trans-
action will not lead to any coordination between Sea-
Invest, HES and Manufrance in the market for terminal
services for other dry bulk. There are no indications that
the entry of Sea-Invest as a shareholder in the coal and
iron ore terminal EMO-EKOM could lead to coordination
with HES and Manufrance in other dry bulk. Further,

there are a number of independent terminals handling
other dry bulk in the ARA range.

2. Terminals services for transhipment traffic for coal

and iron ore

The decision concludes that the transaction does not lead
to any competition concerns in the market for terminal
services for transhipment traffic for coal and iron ore
considering the limited transhipment volumes of Sea-
Invest and EMO-EKOM and the presence of multiple
alternatives terminals.

4. CONCLUSION

The Decision concludes that the proposed concentration
will not give rise to any competition concerns as a result
of which effective competition would be significantly
impeded in the Common Market or in a substantial
part of it.

the notified
the Commission declares
Consequently,
transaction compatible with the Common Market and
the EEA Agreement, in accordance with Article 8(1) of
the Merger Regulation and Article 57 of
the EEA
Agreement.

(34)

(35)

(36)