Summary of Commission Decision — COMP/M.8674 — BASF/Solvay Polyamide Business
Date: 2019-01-18
Institutions: Directorate-General for Competition, European Commission
Subjects: chemical product, economic concentration, merger control, plastics industry








C_2019325EN.01000601.xml










30.9.2019   


EN


Official Journal of the European Union


C 325/6






Summary of Commission Decision
COMP/M.8674 — BASF/Solvay Polyamide Business
(2019/C 325/05)

INTRODUCTION









1.


The Decision declares the acquisition of Solvay's worldwide polyamide activities, (‘the Business’ Belgium) by BASF SE (‘BASF’, Germany) compatible with the internal market and the functioning of the EEA Agreement, in accordance with Articles 2(2) and Article 8(2) of the Merger Regulation and Article 57 of the EEA Agreement.





PROCEDURE









2.


On 22 May 2018, the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004 (the ‘Merger Regulation’) by which BASF SE intends to acquire within the meaning of Article 3(1)(b) of the Merger Regulation sole control of the Business, by way of purchase of shares (‘the Transaction’).












3.


BASF is designated hereinafter as ‘the Notifying Party’ and together with the Business as ‘the Parties’ or, in particular when assessing the post-Transaction scenario, the ‘Merged Entity’.












4.


After a preliminary examination of the notification and based on the Phase I market investigation, the Commission decided on 26 June 2018 to initiate proceedings under Article 6(1)(c) of the Merger Regulation.












5.


On 15 October 2018, the Parties formally submitted a set of commitments (the ‘Initial Commitments’). The Initial Commitments were market tested by the Commission on 16 October 2018. The results of the market test identified risks on the viability and competitiveness of the Divestment Business as set out in the Initial Commitments. The Parties submitted an amended set of commitments on 31 October 2018 and a final set of commitments on 11 December 2018 (‘the Final Commitments’).












6.


The Commission consulted Member States during the Advisory Committee on Concentrations on 17 December 2018, which provided a favourable opinion. The Hearing Officer provided its favourable opinion on the proceedings in his report, which was submitted on 8 January 2019.





THE CONCERNS IN THE DECISION OPENING PROCEEDINGS









7.


The main nexus of the Transaction are polyamide (also known as nylon) products (‘PA 6’ and ‘PA 6.6’). PA 6 and PA 6.6 are produced from oil derivatives through a number of chemical and physical reactions, illustrated in figure 1 below. The production process results in PA 6 BP and PA 6.6 BP (where BP stands for base polymer), which are then compounded into PA 6 EP and PA 6.6 EP (where EP stands for engineering plastics) or transformed into Performance Fibres.
Figure 1: Polyamide value chain













8.


PA 6 EP and PA 6.6 EP are used in a wide number of end use applications in the automotive, electronics, construction, clothing and food industries. They are found for example in automobiles, electrical and electronic appliances, windows frames, film for food packaging. PA 6 Performance Fibres and PA 6.6 Performance Fibres are used for example for carpets and clothing applications.












9.


The Transaction gives rise to horizontal non-coordinated effects in the EEA markets ADN, HMD, Adipic Acid, AH Salt, PA 6.6 BP, PA 6 3D Printing Powders and PA 6.6 EP, as well as of vertical input foreclosure effects in the EEA markets for ADN, HMD, Adipic Acid, AH Salt and PA 6.6 BP.





THE IN-DEPTH INVESTIGATION

1.   Horizontal non-coordinated effects









10.


The Decision concludes that the Transaction will lead to a significant impediment of effective competition as a result of horizontal non-coordinated effects in the in the EEA markets ADN, HMD, Adipic Acid, AH Salt, PA 6.6 BP, PA 6 3D printing powders and PA 6.6 EP.




2.   Vertical non-coordinated effects









11.


The Decision concludes that the Transaction will lead to a significant impediment of effective competition as a result of vertical non-coordinated effects in relation to vertical input foreclosure effects in the EEA markets for ADN, HMD, Adipic Acid, AH Salt and PA 6.6 BP upstream and the respective vertically related markets downstream.




3.   Commitments









12.


The Final Commitments consist in the divestiture of a business (the ‘Divestment Business’), which is composed of:






a.


the Business' entire facilities at Belle-Etoile, France, Gorzow, Poland, Blanes, Spain and Valence, France. In these facilities, the Business currently produces HMD, AH Salt, PA 6 BP, PA T4E BP, PA 6.6 BP, PA 6 3D printing powder, performance fibres and PA 6.6 EP;










b.


a 49 % interest in a production joint venture (the ‘Chalampé JV’) to which the entirety of the assets owned by the Business on the Chalampé site in France will be transferred including the production facilities of KA Oil, Nitric Acid, AA and AH Salt. The Purchaser will have the right to offtake 49 % of the products manufactured by the Chalampé JV. BASF will have the right to offtake 51 %. The rights of the Divestment Business on the governance of the Chalampé JV are guaranteed. The Divestment Business does not include the Business' shares in a JV with Invista for the production of ADN at HMD at the Chalampé site, which will be transferred to BASF;










c.


all tangible and intangible assets (including the use by the Divestment Business of intellectual property rights, patents and know-how) and personnel that contribute to its current operation or are necessary to ensure its viability and competitiveness. It also includes licences, permits and authorisations, as well as all contracts, leases, commitments and customer orders of the Divestment Business, all customer credit and other records of the Divestment Business;










d.


three supply agreements for ADN, one for the duration of […] years, one for the duration of up to […] years and one for […], if the closing of the Divestment occurs in 2019.










e.


the benefit, for a transitional period after Closing and on terms and conditions equivalent to those at present afforded to the Divestment Business, of all current arrangements under which Solvay or its Affiliated Undertakings supply products or services to the Divestment Business;










f.


transitional supply agreements pursuant to which the Divestment Business will offer to BASF for a period of […] years a number of products.;










g.


an upfront buyer clause and clauses to the effect that the Divestment Business be sold to a purchaser with an established presence in the production and sale of chemical products. In particular, it is required that the Purchaser has to be able to compete for global customers and to the key category of automotive customers.
















13.


The Decision concludes that the Final Commitments are sufficient in scope and suitable to remove entirely the significant impediments to effective competition to which the Transaction would otherwise have given rise and that, therefore, the Final Commitments render the concentration brought about by the Transaction compatible with the internal market and the EEA Agreement. The Commission therefore finds that, following modification in accordance with the Final Commitments, the concentration brought about by the Transaction would not significantly impede effective competition in the internal market or within the territory covered by the EEA Agreement, or in a substantial part of them.





CONCLUSION









14.


The Decision concludes that, subject to full compliance with the Final Commitments of 11 December 2018, the Transaction will not significantly impede effective competition in the internal market or in a substantial part of it. Consequently, the Commission proposes to declare the Transaction compatible with the internal market and the EEA Agreement, in accordance with Articles 2(2) and Article 8(2) of the Merger Regulation and Article 57 of the EEA Agreement.