Competition merger brief. Issue 1/2021.
Date: 2021-12-17
Institutions: Directorate-General for Competition
Subjects: competition policy, merger, merger control, serial publication

Competition merger brief  

Issue 1/2021 

More briefs: 
http://ec.europa.eu/ 
competition/publications/ 
cpn/ 

In this issue: 

Page 1: M.9409 

Aurubis / Metallo 

Following an in-depth investigation, the Commission 
unconditionally cleared the acquisition of Metallo by Aurubis. The 
Parties are the two largest European copper scrap refiners. 

Page 5: M.9660 

Google / Fitbit 

Following an in-depth investigation, the Commission approved 
the acquisition of Fitbit by Google, subject to commitments.  This 
is the first case that the Commission has accepted a so-called 
“data silo” commitment. 

Page 9: M.9569   

EssilorLuxottica / GrandVision 

Following an in-depth investigation, the Commission conditionally 
cleared the acquisition of GrandVision by EssilorLuxottica. The 
transaction constituted a further step in the progressive 
consolidation of the optical industry. 

Page 13: M.10047  

 Schwarz Group / Suez Waste Management Companie 

Following an in-depth investigation, the Commission approved, 
with conditions, the acquisition by Schwarz Group (“Schwarz”) of 
several waste management companies from Suez located in 
Germany, Luxembourg, the Netherlands and Poland. 

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Competition merger briefs are 
written by the staff of the 
Competition Directorate-
General and provide 
background to policy 
discussions. They represent the 
authors’ view on the matter 
and do not bind the 
Commission in any way. 

© European Union, 2021  
Reproduction is authorised 
provided the source is 
acknowledged. 

KD-AL-21-001-EN-N 
doi 10.2763/800584 
ISBN 978-92-76-42379-9 
ISSN 2363-2534 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Competition Merger Brief 2021 Edition – Article 1 

Competition merger brief 

Aurubis/Metallo and the assessment of 
buyer power in EU merger control  

Roberto Bove, Liliane Karlinger, Andreas Sowa, Marek Zila 

Introduction 

On  4  May  2020,  following  an  in-depth  investigation,  the 
Commission cleared unconditionally the acquisition of Metallo by 
Aurubis  (referred  to  below  respectively  as  the  ‘Transaction’  and 
the ‘Parties’). Metallo, based in Belgium, is active in the recycling, 
processing  and  trading  of  non-ferrous  metals.  In  particular, 
Metallo  refines  copper  scrap  to  produce  copper  anodes,  copper 
cathodes but also tin, lead and other by-products of the refining 
process. Aurubis, based in Germany, is a supplier of non-ferrous 
metals  and  the  largest  integrated  European  copper  producer. 
Aurubis notably processes copper concentrates and copper scrap 
and  produces  copper  cathodes  and  by-products  of  the  copper 
refining process.  

The Parties’ activities mainly overlapped in the refining of copper 
scrap.  Copper  scrap  refiners  such  as  the  Parties  recover  copper 
from copper scrap, which is then used for downstream production 
of  copper-containing  products.  Some  copper  refiners  are  also 
able  to  recover  other  metals  (such  as  tin)  that  are  contained  in 
some  copper  scrap  batches.  Aurubis  and  Metallo  are  the  two 
largest European copper scrap refiners, and Metallo, the target, is 
technologically advanced and focused on the recovery of copper 
and tin from complex scrap that contains many impurities. 

The  in-depth  investigation  in  this  case  sought  to  establish 
whether, as a consequence of the Transaction, the merged entity 
would  have  increased  its  buyer  power  and  been  able  to  impose 
lower  prices  for  copper  scrap  purchases  (in  particular  via  an 
increase  in  the  so-called  ‘refining  charges’,  as  explained  below). 
Such  lower  prices  could  potentially  harm  industrial  suppliers  of 
copper  scrap  in  the  EEA  when  selling  scrap  as  a  by-product  of 
their  production  process.  In  such  cases,  being  paid  less  for  the 
scrap  that  is  unavoidably  being  created  through  the  production 
process is equivalent to facing higher marginal production costs. 
This, in turn, can potentially lead to the  final products becoming 
more expensive. Moreover, the incentives and ability of collectors 
of  copper  scrap  to  invest  and  collect  could  be  reduced  if  they 
were faced with lower offtake prices. 

The content of this article does not necessarily reflect the 
official position of the European Commission. Responsibility 
for the information and views expressed lies entirely with 
the authors. 

relevant  copper 

The 
scrap markets 

Fundamental  aspects  of 
the  copper  scrap  recycling 
industry 

of 

Copper is a metal widely used 
in 
of 
the  manufacture 
requiring 
products 
transmission 
electricity 
such as, electric cables, smart 
phones,  TVs,  and  electronic 
consumer goods in general. To 
a  lesser  extent,  copper  is  also 
used 
for  manufacturing 
industrial  products 
certain 
(e.g.,  heat  exchangers)  or  in 
the 
construction 
industry (e.g., for roofing). 

building 

Copper  is  a  widely  recycled 
metal  for  which  a  circular 
economy is well established in 
Europe and worldwide. Copper 
manufactured 
from  copper 
scrap  covers  roughly  45%  of 
European demand for copper. 

Copper scrap can be classified 
in different ways according to, 
for  example,  the  process  that 
generates 
the 
scrap 
process required to recycle the 
scrap. 

or 

In a nutshell 

an 

in-depth 
Following 
investigation, 
the 
Commission  unconditionally 
cleared  the  acquisition  of 
Metallo  by  Aurubis.  The 
Parties  are  the  two  largest 
European 
scrap 
refiners. 

copper 

constitutes 
Aurubis/Metallo 
the  most  recent  case  where 
the 
has 
Commission 
performed  a  comprehensive 
assessment  of  buyer-power. 
As  such,  it  illustrates  the 
balancing  exercise  that  the 
Commission 
conducts 
between  the  positive  and 
negative  effects  that  might 
occur  on  upstream  and/or 
downstream  markets  as  a 
result  of  the  reinforcement 
of  buyer-power.  The  case 
also  provides  a 
topical 
illustration  of  how  such 
effects  may  be  assessed  in 
markets 
the 
integral 
circular economy.  

to 

With  respect  to  the  process  that  generates  scrap,  one  can 
distinguish  between  copper  scrap  generated  by 
industrial 
processes  (i.e.,  the  by-products  of  industrial  processes,  such  as 
manufacturing)  or  copper  scrap  recovered  at  the  end  of  a 
product’s  useful  life  (e.g.,  scrap  recovered  from  old  consumer 
goods,  cars,  or  from  dismantled  buildings).  From  a  supply-chain 
point  of  view,  a  main  difference  between  these  two  types  of 
scrap is that end-of-life scrap is typically collected and traded by 
companies  with  particular  skills  and  know-how  for  extracting 
copper  scrap  from  e.g.,  building materials,  consumer goods,  etc., 
these 
while 
intermediaries.  

industrial  scrap  would 

typically  not 

require 

 
 
  
 
 
 
 
 
 
 
 
       
 
 
 
M.9409 Aurubis / Metallo  |  Competition Merger Brief 2021 Edition 

With  respect  to  the  process  required  for  recycling  scrap,  a 
distinction  can  be  made  between  scrap  that  can  be  directly 
recycled  by  melting  it  (referred  to  as  ‘direct  melt  scrap’),  and 
scrap that requires refining prior to melting. 

Definition of the relevant markets 

The Commission found that, within scrap requiring refining, three 
separate relevant product markets can be distinguished, namely: 
(i)  so-called  ‘Standard  Copper  scrap  no.2,’  which  has  a  high 
copper content, is widely traded and does not require assaying;1 
(ii)  so-called  ‘electronic  scrap’  (‘e-scrap’),  which  requires  special 
refining  equipment,  is  widely  traded  and  requires  somewhat 
limited  assaying  compared  to  other  types  of  scrap;  and  (iii)  the 
heterogeneous  category  of  all  remaining  non-standard  scrap 
usually  requiring  assaying,  which  the  Commission  called  ‘copper 
scrap  for  smelting  and  refining’  (‘CSSR’).  The  present  case 
primarily  concerns  CSSR,  as  the  Parties are  particularly  active  in 
this type of copper scrap. 

In practice, copper refiners such as the Parties purchase batches 
of CSSR that are highly differentiated in their copper content, but 
also in multiple other dimensions – for example, one batch may 
contain both  tin and fragments of hazardous material (including 
liquid), while another may contain nickel and be dusty. Different 
types  of  CSSR  may  require  specific  treatment  (and  therefore 
investment  in  equipment)  and/or  assaying  for  determining  the 
composition  of  the  scrap,  and  the  economic  margins  that  the 
Parties or their competitors can earn also varies accordingly. 

With  respect  to  the  geographic  scope,  while  CSSR  is  exported 
globally,  several  types  of  CSSR  face  significant  regulatory  and 
economic barriers to export.  These barriers include, for example, 
hazardous  waste  regulations,  economic  risks  linked  to  assaying, 
and transport costs. In addition, the Commission found that there 
is no functioning price arbitrage between the EEA and other parts 
of  the  world  with  respect  to  CSSR,  even  for  the  more 
standardized and traded Standard Copper scrap no 2. Hence, the 
Commission  found  that  the  relevant  markets  were  likely  EEA-
wide in scope. 

The key economic features of the CSSR market 

Refiners  such  as  the  Parties  typically  purchase  CSSR  at  a  price 
that  reflects  the  copper  content  (e.g.,  for  Europe,  the  so-called 
‘LME price of copper’) minus a fee reflecting the costs associated 
with  refining  (‘refining  charges’).  While  refiners  do  not  have  any 
influence on the London  Metal Exchange (‘LME’) price of copper, 
they have a certain leeway in setting the refining charges, which 
represent  the  compensation  that  refiners  receive  for  the  service 
(value-added) they provide.  

CSSR is not a conventional industrial ‘product’ but a ‘waste’, as it 
is  not  purposefully  produced  but  rather  generated  as  a  by-
product  of  industrial  production,  or  ‘re-appears’  as  end-of-life 
scrap. As a ‘waste’, its generation is only partially affected by the 
price ultimately paid for the copper scrap. 

The supply of end-of-life scrap is somewhat elastic to the copper 
LME  price  (as  reflected  in  variations  in  the  recycling  rate  of 
certain scrap  that  would  otherwise  be uneconomical  to  recover). 
The supply of scrap from industrial processes is largely inelastic 
to any price changes (LME or refiners’ refining charges) and even 
end-of-life  scrap  supply  is  likely  largely  inelastic  in  relation  to 
copper  refiners'  refining  charges  (i.e.,  the  part  of  the  price  that 
would be affected by the Transaction). 

The  supply  side  for  the  procurement  of  copper  scrap  is  very 
fragmented  with  hundreds  of  possible  sources  of  supply. 
However,  these  suppliers  have  often  made  investments  in  the 
treatment of specific types of copper scrap and therefore cannot 
easily  switch  between  supplying  different  scrap  types.  Industrial 
suppliers  in  any  case  cannot  switch  the  type  of  scrap  they  are 
supplying.  Concentration  on  the  demand  side  by  contrast  is 
significantly higher than on the supply side. 

Legal framework and theory of harm 

Legal framework for the assessment of buyer power 

indiscriminately 

It  is  well-established  case  law  and  practice  that  the  Merger 
concentrations 
Regulation  applies 
regardless of whether they affect the selling or the buying side of 
the  market.  Paragraph  8  of  the  Horizontal  Merger  Guidelines2 
acknowledges  for  instance  that  ‘both  suppliers  and  buyers  can 
have market power’. 

to  all 

In  relation  to  possible  anti-competitive  effects  of  horizontal 
mergers,  paragraph  61  of  the  Horizontal  Merger  Guidelines 
explains  that  concentrations  creating  or  strengthening  buyer 
power 
impede 
in  upstream  markets  may  significantly 
competition, in particular by creating or strengthening a dominant 
in  which  such 
position.  Paragraph  61  also 

lists  ways 

1   As  the  content  of  copper  and  of  other  materials  might  vary 
significantly, depending on the origin of the scrap and on the process to 
recover  it,  purchasers  of  copper  scrap  like  the  Parties  undertake  the 
assaying  (i.e.  testing  in  a  laboratory)  of  copper  scrap  batches  to 
determine their composition. 

2 Guidelines on the assessment of horizontal mergers under the Council 
Regulation on the control of concentrations between undertakings 
OJ C 31, 5.2.2004, p. 5–18  

2 

 
 
 
                                                             
                                                             
 
M.9409 Aurubis / Metallo  |  Competition Merger Brief 2021 Edition 

concentrations  may  harm  competition,  for  example  by  reducing 
the purchase of inputs and, in turn, by reducing output in the final 
product  market,  or  by  using  buyer  power  vis-à-vis  suppliers  to 
foreclose  rivals  in  the  markets  downstream  of  the  purchasing 
market. While the two examples included in the guidelines entail 
harm  on  the  downstream  market,  the  guidelines  do  not indicate 
that  buyer  power  cases  can  only  lead  to  a  SIEC  if  they  harm 
downstream  consumers.  Likewise,  no  case  law  or  Commission 
precedent suggest such limitation. 

The  Horizontal  Merger  Guidelines  however  acknowledge  that 
increased  buyer  power  may  also  benefit  competition.  Paragraph 
62  of  the  Horizontal  Merger  Guidelines  provides  that,  if  buyer 
input  costs  without  restricting  downstream 
power 
competition or total output, then a proportion of this reduction is 
likely to be passed on to consumers in the form of lower prices.  

lowers 

To  assess  whether  a  merger  that  creates  or  strengthens  buyer 
power  would  significantly 
impede  effective  competition, 
paragraph  63  of  the  Horizontal  Merger  Guidelines  requires  the 
Commission  to  analyse  the  competitive  conditions 
in  the 
upstream  markets  and  to  evaluate  the  possible  positive  and 
negative  effects  of  the  merger.  As  a  result,  the  Commission 
assesses the competitive conditions in the upstream markets and 
balances  of  the  various  positive  and  negative  effects  of  the 
transaction in both the upstream and downstream markets. 

The theory of harm  

Based  on  the  legal  framework  and  taking  into  account  the 
economic aspects relevant to the assessment of buyer power, the 
theory of harm against which the Commission assessed the facts 
of the case can be summarised as follows: 

• 

The  Transaction  may 
lead  to  the  elimination  of 
important  competitive  constraints  between  the  Parties 
in  the  EEA  market  for  the  purchase  of  CSSR,  which  in 
turn  may  result  in  a  significant  increase  in  the  buyer 
power of the combined entity on the EEA CSSR market. 
Since the supply of copper scrap for refining tends to be 
largely inelastic, such increase in buyer power may lead 
to  significant  price  effects  harming  suppliers  of  CSSR 
whereas the supply may be reduced only moderately.  

•  While  the  reduction  in  revenues  (or  profitability)  of 
suppliers  may  not  be  sufficient  to  give  rise  to  a 
significant impediment to effective competition, copper 
in  particular  collectors  and  pre-
scrap  suppliers, 
processors,  could  be  faced  in  the  medium  term  with 
reduced incentives to collect copper scrap and invest in 
the equipment or innovation required for the collection, 
preparation and/or sorting of scrap. This may ultimately 
harm the European copper scrap collection system.  

• 

In  addition,  an  increase  in  buyer  power  could  have 
direct  marginal  cost  increasing  effects in  particular  for 
industrial suppliers that pay refining charges to refiners 
for the law-compliant disposal of their by-products, and 
thus  eventually  harm  their  customers,  analogously  to 

increase 

(1-for-1) 

the  mechanism  at  play  in  a  case  of  seller  power. 
Because the copper scrap output of industrial players is 
proportionally fixed to the output of their final products, 
a post-merger increase in refining charges (resulting in 
a  decreased  selling  price  of  copper  scraps  to  the 
Parties)  would  effectively 
the 
marginal  costs  of  production  of  the  copper-containing 
products. Refining charges can be seen as a production 
cost like any other. As in seller power cases, an increase 
in  such  a  marginal  cost  can  be  expected  to  translate 
into  an  increase  in  the  output  price  of  companies 
generating  copper  scrap  as  a  by-product.  These  price 
increases would likely be spread out over a large variety 
of  different  industries  and  thereby  ultimately  over  a 
variety of final consumers downstream of copper using 
manufacturing companies. 

• 

Finally,  the  concentration  is  unlikely  to  lead  to  more 
output  or  consumer  benefits  downstream.  While  the 
exercise of buyer power can sometimes lead to positive 
effects for the customers of the merging parties, in this 
case the merged entity would be unlikely to pass on the 
benefits  of  lower  input  prices  to  its  downstream 
customers,  i.e.,  purchasers  of  copper  cathodes  or 
commodity tin products. The reason is that the markets 
for  copper  cathodes  and  commodity  tin  are  worldwide 
commodity  markets  where  large  volumes  of  copper 
cathodes  from  both  primary  and  secondary  production 
are  exchanged.  It  would  be  unlikely  that  the  combined 
entity  would  materially  increase  its  volume  of  output 
because  the  Parties  already  operate  at  full  capacity 
before  the  merger.  The  lack  of  prospect  of  increased 
sales would not incentivise the combined entity to lower 
the prices of its downstream copper products. Moreover, 
even if it were to sell slightly more copper (quod non), 
prices in the worldwide commodity market would not be 
materially affected. 

Outcome of the assessment 

The Commission’s preliminary view, as set out in a Statement of 
Objections,  was  that  the  Transaction  would  risk  significantly 
impeding effective competition in the market for the purchase of 
CSSR in the EEA due to  the removal of an important competitor 
and  the  creation  of  a  dominant  position.  In  particular,  the 
Commission  preliminarily  concluded  that  the  Transaction  would 
have  led  to  a  high  degree  of  concentration  with  the  combined 
entity  holding  large  purchasing,  refining3 and  capacity  shares  of 
CSSR in the EEA. Further, the Parties were considered to compete 
closely  in  the  EEA  purchasing  market  for  CSSR.  Therefore,  the 
the  Transaction  would 
Commission  was  concerned 
significantly increase the merged entity’s upstream buyer power. 

that 

3   Refining shares refer to the purchases of CSSR made by EEA refineries 
and  therefore,  contrary  to  purchasing  shares,  do  not  include  exports 
outside of the EEA.  

3 

 
 
                                                             
M.9409 Aurubis / Metallo  |  Competition Merger Brief 2021 Edition 

parties based on market shares, closeness, alternatives, reaction 
of competitors, fragmentation of the supply side, etc.). However, 
it is not sufficient to show that the concentration merely leads to 
rent shifting towards the merging parties, at the expense of their 
suppliers:  it  must  be  established  that  beyond  the  mere  revenue 
loss  for  suppliers  there  is  a  genuine  welfare  harm,  for  example 
through a reduction of incentives to innovate and invest. 

in  the  ongoing  debate  about  the 

Another  important  aspect  of  the  Aurubis/Metallo  case  is  its 
contribution  to  the  assessment  of  circular  economy/waste 
treatment/recycling  cases.  Such  cases  have  received  renewed 
attention 
‘greening  of 
competition policy’. The Aurubis/Metallo case shows that recycling 
and  waste  treatment  cases  may  present  service  elements: 
depending  on  the  features  of  the  recycling  industry  in  question, 
such  cases  may  therefore  be  best  analysed  as  markets  for  the 
provision of recycling services with recyclers on the supply side of 
the market.  

Another  peculiarity  of  circular  economy  cases  is  that  the 
boundaries  between  ‘upstream’  and  ‘downstream’  players  is 
blurred: as the example of industrial suppliers of copper scrap in 
the  Aurubis/Metallo  case  demonstrates,  some  players  may  be 
both  downstream  customers  of  the  combined  entity  and 
upstream suppliers of an input that they wish or need to dispose 
of.  In  such  a  situation,  increased  buyer  power  can  lead  to  an 
increase  in  marginal  costs  for  the  industrial  suppliers  of  the 
waste  in  question  that  will  harm  consumers  when  this  marginal 
cost  increase  is  passed  on  through  higher  prices  of  the  end-
product(s) containing the recycled material. 

Finally,  concentrations 
increasing  buyer  power  may  create 
efficiencies that need to be taken into account in the assessment 
under the rules on the treatment of efficiencies in the Horizontal 
Merger  Guidelines,  also  applied  by  analogy  to  standard  seller 
power cases. 

However,  upon  further  investigations  in  particular  on  the  role  of 
exports,  the  Commission  concluded  that  the  Transaction  would 
only lead to a moderate combined purchasing share for CSSR in 
the EEA of 20-30%. In turn, while the Transaction would lead to 
large combined refining (60-70%) and capacity shares (50-60%) 
in  the  EEA,  these  could  not  be  considered  in  themselves  to  be 
indicative  of  market  power  in  this  particular  case,  notably 
because  suppliers  of  CSSR  in  the  EEA  can  and  do  export 
significant  amounts  of  CSSR  to  purchasers  outside  the  EEA. 
Furthermore,  while  the  Parties  appeared  to  compete  closely  in 
certain segments of the purchasing market for CSSR in the EEA, 
further  assessment  carried  out  by  the  Commission  revealed  a 
greater  degree  of  complementarity  in  the  Parties’  activities  in 
these  segments.  In  particular,  the  Commission  found  that  there 
are  significant  differences  in  the  Parties’  supplier  bases  and 
metal recovery capabilities.  

As  a  result,  the  Commission  ultimately  concluded  that  the 
Transaction  would  not  likely  lead  to  a  significant  increase  in 
buyer power and, therefore, that it was unlikely that price effects 
(in particular an increase in refining charges) were to materialize 
to a significant extent.  

Moreover,  the  Commission  found  that  such  price  effects  could 
possibly  be  compensated  by  positive  technological  synergies 
associated  with  the  Transaction  (in  particular  improved  metal 
extraction capabilities of the merged entity, the benefits of which 
may  in  part  be  passed  on  to  CSSR  suppliers).  On  balance,  the 
Commission therefore considered that the Transaction would not 
result in a significant impediment to effective competition on the 
market for the purchase of CSSR in the EEA. 

Conclusion 

The Aurubis/Metallo case sheds light on a number of issues that 
may be relevant for future buyer power and recycling cases.  

One important aspect is the legal framework for the assessment 
of  buyer  power  cases:  the  Horizontal  Merger  Guidelines  do  not 
advocate  a  symmetrical  application  of  seller  power  rules,  but 
require  a  case-by-case  approach  balancing  the  positive  and 
negative  effects 
that  might  occur  on  upstream  and/or 
downstream markets.  

The Horizontal Merger Guidelines explicitly mention the potential 
for increased buyer power to generate consumer benefits to the 
extent that the lower input prices enjoyed by the combined entity 
as  a  result  of  its  increased  buyer  power  are  passed  on  to 
consumers.  In  carrying  out  the  balancing  exercise  envisaged  in 
the  Horizontal  Merger  Guidelines,  it  is  therefore  necessary  to 
establish why such pass-on cannot be expected (as was the case 
in  Aurubis/Metallo)  or,  if  such  positive  downstream  effects  are 
instead likely, to take them into account in the balancing exercise. 

Where no such consumer benefits or lack of consumer harm can 
be  expected,  it  is  still  possible  to  establish  a  SIEC.  The 
assessment  of  upstream  harm  can  be  done  by  applying  by 
analogy the principles for non-coordinated effects in seller cases 
(elimination  of  important  competitive  constraints  between  the 

4 

 
 
 
Competition Merger Brief 2021 Edition – Article 2 

Competition merger brief 

Google/Fitbit: Preserving healthy 
competition in digital markets 

Leonie Hass, Benedikt Herz, Fabio Polverino, João Vareda 

Introduction  

in-depth 

investigation,  the 
On  17  December  2020,  following  an 
Commission  conditionally  approved  the  acquisition  of  Fitbit  by  Google. 
Fitbit is active in the development, manufacturing and distribution of wrist-
worn wearable devices (smartwatches and fitness trackers, referred to as 
“wearable  devices”  in  this  article),  connected  scales  as  well  as  related 
software and services. Google is globally active in a wide range of product 
areas  including  online  advertising  technology,  internet  search,  cloud 
computing,  software,  and  hardware.  Notably,  Google  develops  licensable 
operating  systems  (“OS”)  for  smartphones  and  smartwatches,  as  well  as 
applications,  including  health  and  fitness  applications.  The  company  also 
offers  IT  and  information/research  services  for  the  healthcare  industry. 
Google derives most of its revenues from online advertising via its internet 
search engine. 

Google/Fitbit is the most recent case where the Commission has performed 
a  comprehensive  assessment  of  data-related  issues  in  the  analysis  of  a 
merger, and the first one where the Commission accepted a so-called “data 
silo”  commitment. The case also raised important questions in relation to 
the assessment of interoperability issues.  

It  is  important  to  note,  at  the  outset,  that  this  transaction  does  not 
constitute  a  so-called  killer  acquisition.1 Fitbit  was  a  pioneer  in  wearable 
devices and launched its first fitness tracker model already in 2009, while 
Google  was  not  active  in  this  market  with  its  own  devices  before  the 
transaction.  Moreover,  in  recent  years,  Fitbit’s  market  share  declined 
significantly,  both  globally  and  in  the  EEA.  Fitbit’s  position  is  particularly 
small in the growing smartwatches segment. 

Concerns related to data 

The importance of Fitbit’s data 

Fitbit  collects  a  wide  variety  of  data  types  from  its  users,  ranging  from 
relatively  basic  information  such  as  the  user’s  weight,  number  of  steps 
taken in a day or calories burnt to information on heart rate, sleep, or blood 
oxygen  saturation.  Fitbit  collects  this  data  through  various  sources.  Some 

data,  such  as  height,  is  manually 
inputted by users in the Fitbit apps. 
Other,  such  as  the  heart  rate  or 
the number of steps taken in a day 
is  collected  by  the  Fitbit  device’s 
sensors.  Finally,  some  data 
is 
produced  by  ‘inference’,  that  is,  it 
the  user's 
from 
is  generated 
interaction  with  Fitbit’s  services 
and/or calculated from other types 
of  data.  Fitbit  also 
routinely 
collects geolocation data, based on 
GPS  signals,  Wi-Fi  access  points, 
and IDs of cell towers received by 
the  Fitbit  device  or  the  tethered 
smartphone. 

In a nutshell 

Google/Fitbit  constitutes  the 
most  recent  case  where  the 
Commission  performed  a 
comprehensive  assessment 
of  data-related  concerns  in 
the analysis of a merger. It is 
also the first case where the 
Commission  accepted  a  so-
silo” 
“data 
called 
commitment. 

in 

on 

transaction 

The 
also 
Commission 
assessed potential effects of 
the 
the 
interoperability  of  Android 
OS with third-party wearable 
devices. These concerns were 
addressed  by  a  far-reaching 
“interoperability” 
commitment. 

question 
the 
A 
crucial 
Commission’s 
investigation  was 
whether  the  data  collected  by 
important 
Fitbit  constituted  an 
increment 
to  Google’s  existing 
data.  To  assess  this,  following  its 
the  Apple/Shazam 
approach 
decision 2
the  Commission 
analysed the data based on its volume, variety, velocity and value, a metric 
combination that is usually referred to as the “4Vs”. 

in 
, 

The  Commission  found  that  Fitbit  holds  a  database  that  covers  a 
significant number of monthly active users in the EEA and contains a large 
diversity  of  data  types.  Moreover,  Fitbit  data  is  collected  with  a  high 
frequency and it is valuable for both online advertising and the provision of 
health-related services.  

However, to understand the competitive advantage this data would bring to 
Google,  it  was  key  to  comprehend  how  unique  Fitbit’s  data  was.  The 
Commission therefore sent a data request to competing wearable OEMs to 
assess the richness of their databases also based on the “4Vs” metric. The 
results  of  this  exercise  confirmed  that  several  other  wearable  OEMs  also 
collect a significant amount of data, and those with a market share higher 
than  that  of  Fitbit  collect  even  more  data.  These  wearable  OEMs  also 
collect data with a similar variety and frequency as Fitbit. 

1   A  “killer  acquisition”  is  the  acquisition  by  an  incumbent  of  a  competitor  that 
threatens to launch a product that would undermine its own products, with a view 
to shutting it down. 

2   M.8788  –  Apple/Shazam  (2018).  See  Competition  Merger  Brief  issue  1/2019, 
Apple/Shazam: A remix of your favourite tunes of data issues in merger control. 

The content of this article does not necessarily reflect the 
official position of the European Commission. Responsibility 
for the information and views expressed lies entirely with 
the authors. 

 
 
  
 
 
 
 
 
 
 
 
       
 
 
 
                                                             
                                                             
M.9660 Google / Fitbit | Competition Merger Brief 2021 Edition 

The  Commission  therefore  concluded  that  the  Fitbit  data,  although  being 
valuable, in particular for online advertising services, is not “unique” when 
compared to the databases of other players.  

Raising barriers to entry in online advertising markets 

Since Google is a dominant player in different online advertising markets in 
almost  all  European  Member  States,  the  Commission  first  assessed 
whether  Google  could  combine  its  vast  database  with  Fitbit’s  health  and 
location  data  in  order  to  entrench  its  dominant  position  further  in  these 
markets. 

A first challenge was that -- while such a concern is certainly intuitive -- it 
is  not  explicitly  captured  by  the  Commission’s  merger  guidelines.  It  does 
not  constitute  a  classical  “vertical”  concern,  since  Fitbit’s  data  was  not 
traded and could therefore not be regarded as an input for a firm active in 
online advertising. Moreover, Fitbit was not active on any online advertising 
market,  and  thus  the  transaction  did  not  present a  traditional  ‘horizontal’ 
concern.  However,  according  to  paragraph  36  in  the  Horizontal  Merger 
Guidelines3, a merger can significantly impede effective competition if the 
merged entity gains such a degree of control over an asset that expansion 
or entry by rival firms may be more difficult. This was the case here: The 
acquisition  of  Fitbit  by  Google  would  allow  it  to  combine its  already  very 
prominent  datasets  with  those  of  Fitbit,  thus  strengthening  its  ability  to 
supply  services  in  online  advertising  markets  and  foreclose  competitors’ 
entry and ability to expand in such markets. 

In the context of the “4Vs” assessment, the Commission also analysed the 
relative  value  of  Fitbit’s  data  for  different  segments  of  the  online 
advertising  market.  Fitbit’s  data  is  relevant  for  online  search  advertising, 
where Google holds a quasi-monopolistic position. While the ads shown to 
users  are  mostly  selected  based  on  a  user’s  specific  search  query,  user 
profile information (e.g. concerning health, lifestyle and location) can help 
to further refine the targeting of ads, in particular in the context of health-
related  services  and  products.  For  example,  a  company  advertising  high-
performance  triathlon  clothing  that  is  bidding  on  key  words  such  as 
“triathlon” and "gear" could further tailor its ads by only having ads shown 
to  users  who  seem  to  be  triathletes  based  on  their  Fitbit's  data.  The 
relevance  of  Fitbit’s  data  for  ads  targeting  is  higher  for  online  display 
advertising.  Online  display  advertising  consists  in  graphic  advertising  on 
Internet  websites,  apps  or  social  media.  In  online  display  advertising,  no 
search query is available, and thus the selection of ads shown to the user 
is  mostly  based  on  profile  information.  This  could  be  enhanced  using 
Fitbit’s data. However, Google’s market power in online display advertising, 
and  display  advertising  intermediation,  is  lower  than  in  online  search 
advertising. 

A relevant element for the Commission’s assessment was the weight of the 
contribution of Fitbit’s data to Google’s total advertising revenues. Although 
Fitbit’s  database  is  sizeable,  the  overlap  between  the  number  of  Fitbit’s 
users and Google’s online advertising users, on which Google could enhance 
its  profiling,  is  not  particularly  significant.  On  top  of  that,  only  a  limited 
share  of  Google’s  advertising  revenues  are  related  to  health  or  wellness 

3 Guidelines  on  the  assessment  of  horizontal  mergers  under  the  Council 
Regulation  on  the  control  of  concentrations  between  undertakings 
OJ C 31, 05.02.2004, p. 5-18 

services  and  products.  Nevertheless,  it  could  not  be  excluded  that  Google 
could make inferences about profiling for advertising purposes for groups 
of individuals larger than the number of users for which Fitbit today, and 
Google  post-transaction,  collect  data.  This  implies  that  the  impact  on 
Google of the increment in data and data collection capabilities brought by 
the acquisition of Fitbit would go beyond the mere number of Fitbit’s active 
users.  Google’s  acquisition  of  Fitbit’s  data  and  data  collection  capabilities 
thus  created  the  possibility  of  raising  barriers  to  entry  or  expansion  for 
competitors.  This  is  because,  thanks to  the  data increment,  Google  would 
be able to marginalise even further its fringe competitors in online search 
advertising.  In  fact,  despite  Fitbit’s  data  not  being  unique  or  particularly 
valuable as compared with other datasets, Fitbit’s rivals do not make this 
data  available  for  advertising  providers.  In  relation  to  online  display 
advertising  markets  and  the  supply  of  intermediation  services,  despite 
Google’s market shares being lower, the Commission could not exclude that 
the transaction would reduce the ability of rivals to compete with Google.  

Finally, it is important to note that, while the quality of Google’s services 
could increase in the short-term because of better ads targeting, this would 
be accompanied by an increase in barriers to entry and expansion. In the 
long-term, given the lack of contestability in these markets, Google would 
likely  raise  its  prices  to  both  advertisers  and  publishers  and  reduce  its 
innovation efforts. This would have a detrimental effect on advertisers and 
publishers, which would likely more than compensate the short-term gains 
of better ads targeting. 

A different story in health-related markets 

The  Commission  also  assessed  whether  Google  could  use  Fitbit’s  data  to 
strengthen its market position in the digital healthcare sector. 

In  this  case,  and  contrary  to  online  advertising  markets,  the  Commission 
concluded  that  the  combination  of  Fitbit’s  database  and  data  collection 
capabilities with those already held by Google would not lead to any risk to 
competition. 

Two main reasons justified the different conclusion. First, Google’s position 
in digital healthcare markets is much smaller than in online advertising. In 
addition, firms with expertise in health markets as well as large technology 
players, some of which also have access to large user health and wellness 
databases, are currently entering digital healthcare markets and launching 
a  plethora  of  new  services.  These  developments  contributed  to  dispel 
concerns  as  to  the  possible  restriction  on  potential  competition  based  on 
the control of user health data.  

Second, health  data, including  Fitbit’s  data,  although not  currently  traded, 
can  be  accessed  by  other  players  in  the  digital  health  sector  as  a 
consequence of the users’ decisions to actively share that data with third 
parties  (apps  and  websites)  that  offer  value  added  services  to  them.  In 
addition,  there  are  alternative  data  providers  available:  (i)  health  data  is 
collected  by  other  smartphone  providers  and  can  be  shared  with  and 
accessed  via  health  and  fitness  apps;  (ii)  “aggregation  services”  use 
platforms  to  connect  multiple  individuals  to  mine  and  collect  their  health 
data;  (iii)  health  data  can  be  collected  through  corporate  wellness 
programmes  (data  from  health  risk  assessment,  exercise  data,  lifestyle 
data,  etc.);  and  (iv)  electronic  health  records  are  aggregated  and  used  to 
provide analytics services. 

6 

 
 
                                                             
M.9660 Google / Fitbit | Competition Merger Brief 2021 Edition 

The market investigation also revealed that access to Fitbit’s data, through 
a  Web  API,  allows  a  number  of  players  active  in  digital  healthcare  to 
provide  services  to  Fitbit’s  users  and  obtain  their  data  in  return.  The 
Commission  found  that,  following  the  transaction,  Google  might  restrict 
competitors' access to Fitbit’s Web API. Such a strategy would particularly 
harm start-ups in the nascent European digital healthcare space. Therefore, 
the Commission accepted a specific commitment from Google to preserve 
such data access, subject to users’ consent, after Fitbit’s acquisition. 

The interplay between privacy and competition 

The announcement of Google’s plans to acquire Fitbit ignited a debate on 
the interplay between data protection rules and competition rules. Concerns 
were raised about Google’s use (and exploitation) of Fitbit’s data. Another 
concern  related  to  Google’s  incentives  to  adopt  practices  that  could 
degrade  users’  privacy  and  the  possibility  of  Google  obtaining  consent  to 
data usage more easily. 

In its assessment, the Commission took into account the functioning of the 
General Data Protection Regulation (“GDPR”)4, which entered into force on 
25  May  2018.  The  GDPR  provides  the  regulatory  framework  for  the 
processing of personal data and is designed to enhance transparency over 
data  processing,  accountability  by  data  controllers  and,  ultimately,  users’ 
control over their data. Any potential privacy-related competition between 
Google, Fitbit, and their competitors may therefore only take place within 
the boundaries set forth by the GDPR. 

In  past  cases,  such  as  Microsoft/LinkedIn 5  and  Apple/Shazam,  the 
Commission  already  investigated  concerns  that  the  transaction  could 
degrade  the  level  of  privacy  protection  enjoyed  by  users  (for  example, 
through the marginalisation of players offering higher privacy standards).  

In Google/Fitbit, there was no evidence that users consider privacy a quality 
aspect  of  wearable  devices.  It  would  therefore  be  difficult  to  argue  that 
consumers  would  be  harmed  as  a  consequence  of  a  reduction  of  data 
protection  standards,  even  if  such  a  degradation  would  be  permissible 
under  the  GDPR.  Moreover,  since  there  are  many  alternatives  to  Fitbit’s 
devices to which users could switch to, it is very unlikely that Google would 
engage in any such degradation in the first place. In addition, Google was 
not  active  in  the  market  for  wearable  devices  before  the  transaction. 
Therefore,  even  considering  privacy  as  a  parameter  of  competition,  the 
transaction did not lead to the elimination of an actual competitor in that 
respect.  

In it assessment, which was conducted in close cooperation throughout the 
procedure  with  the  European  Data  Protection  Board,  the  regulatory  body 
gathering all EU national data protection authorities, the Commission made 
clear that a data protection aspect of a merger case can only trigger the 
Commission’s  intervention  if  it  has  a  clear  impact  on  competition  and 
relate to a concern pertinent to the transaction. 

Data silo commitments 

An  important  aspect  of  this  case  relates  to  the  structure  of  the 
commitment submitted by Google to address the concerns related to online 

4 Regulation (EU) 2016/679 OJ L 119, 4.5.2016, p. 1–88 
5  M.8124 – Microsoft/LinkedIn (2016). 

advertising.  Although,  strictly  speaking,  it  does  not  correspond  to  a 
structural divestiture, it has inherent structural elements. Google committed 
to  maintain  the  health  data  collected  from  wearable  devices  and  other 
Fitbit devices6 in a “data silo” which will be technically separated from any 
other Google data that is used for online advertising. This guarantees that 
that data is not used in any ads-related business, including online search 
advertising,  online  display  advertising,  and  advertising  intermediation 
products.  Any  access  to  this  “data  silo”  is  subject  to  an  access 
permissioning  system  which  applies  to  both  individuals  and  Google 
services,  and  that  will  be  monitored  by  a  trustee  with  the  support  of  a 
technical  expert  on  cybersecurity,  data  governance  and  IT  systems.  This 
commitment, despite being limited in time, may extend to a duration of up 
to 20 years. This is particularly extensive in the context of the fast-evolving 
nature of the markets involved. 

Interoperability with Android OS 

The case also raised conglomerate concerns. Google and Fitbit are active in 
the closely related markets for licensable OS for smart mobile devices and 
for wearable devices. Wearable devices typically connect to smartphones to 
interact with the apps installed on the paired smartphone (for example, to 
display calls and SMS notifications), to download apps and to transfer data 
from the wearable device to health and wellness apps on the smartphone.  

In this context, the Commission investigated whether Google could impede 
the  interoperability  between  the  Android  OS  for  smartphones  and  rival 
wearable  devices  by  degrading  the  relevant  application  programming 
interfaces  (APIs)  that  enable  the  Android  OS  to  interact  with  wearable 
devices or by degrading its technical support for rival wearable OEMs. 

This concern was raised by  several  market participants who also pointed, 
as a representative example of their concern, to Apple’s current approach 
to make access to Bluetooth or other relevant APIs conditional on devices 
being  certified  by  Apple  while  refusing  such  certification  to  competing 
wearable devices. 

The  Commission  analysed  Google’s  ability  to  engage  in  a  foreclosure 
strategy  with  regard  to  the  Android  OS.  It  considered  that  Google  would 
have  such ability  for  the  following  reasons.  First,  there is  a  large  pool  of 
common  customers  of  Android  smartphones  and  Android-compatible 
wearable  devices.  Second,  Google  controls  Android  and  has  a  dominant 
market  position  in  the  supply  of  licensable  OS  for  smart  mobile  devices. 
Third,  while  a  degradation  does  not  seem  possible  under  the  current 
Android business model, Google controls Android and could freely change 
its  business  model.  Fourth,  Google  has  the  technical  ability  to  degrade 
interoperability with Android by degrading the relevant APIs that enable the 
Android OS to interact with wearable devices.7 Fifth, Google could prevent 
attempts of Android smartphone OEMs to circumvent such a degradation. 

The  Commission  also  assessed  Google’s  incentives  to  engage  in  such 
foreclosure strategy. One the one hand, the Commission was faced with a 
number  of  qualitative  arguments  that  seemed  to  support  Google’s  claim 

6  This refers also to data collected via sensors (including GPS) as well as manually 

inserted data. 

7  This could be achieved by Google either by keeping the relevant APIs proprietary 
for use by Fitbit and only providing a degraded version as part of Android Open 
Source Project (AOSP) releases, or by continuing to include current functionalities 
in AOSP while, however, withholding any future developments from AOSP. 

7 

 
 
                                                             
                                                             
M.9660 Google / Fitbit | Competition Merger Brief 2021 Edition 

Conclusion 

The Google/Fitbit case demonstrates the Commission’s intense scrutiny of 
mergers  between  companies  with  exhaustive  data  collection  capabilities. 
The  case  makes  clear  that,  because  control  over  data  might  make 
expansion or entry by rival firms more difficult, in such cases competition 
concerns can arise, even if the respective companies are neither competing 
in the same market nor in markets which are vertically related. 

Following  its  approach  in  Apple/Shazam,  the  Commission  assessed  the 
extent  of  the  data  collection  by  Fitbit  and  its  rivals  based  on  the  “4Vs” 
metrics. The Commission’s finding that Google’s acquisition of Fitbit’s data 
was a concern for online advertising markets but not for digital healthcare 
service reflects Google’s very different positions in these markets. 

Ultimately,  the  commitments  undertaken  by  Google  are  very  long  lasting, 
which, in the context of the fast-evolving nature of the markets involved, 
gives  them  a  quasi-structural  aspect.  As  a  result,  the  Commission’s 
intervention  in  this  case  provided  long  term  guarantees  that  the 
competition concerns at the core of the merger would not materialize. 

that it would not have an incentive to degrade interoperability, such as its 
continued reliance on the cooperation with Android smartphone OEMs. On 
the  other  hand,  several  factors  indicated  that  Google  may  have  an 
incentive  to  degrade  interoperability  of  rival  wearable  devices  with  the 
Android OS. First, Google would not necessarily incur reputational damage 
as  a  result  of  a  degradation  strategy:  any  subtle  degradation  to 
interoperability, implemented over time, would not be directly detectable by 
users or even rival wearable OEMs. Second, the quantification submitted by 
Google,  based  on  a  standard  vertical  arithmetic  framework,  did  not 
convincingly  show  that  a  degradation  strategy  would  be  unprofitable  for 
Google.  

Finally, the implementation of a degradation strategy by Google could have 
significant effects on competition by reducing the sales prospects of Fitbit’s 
wearable competitors and leading to a reduction in their ability to compete. 
In  fact,  the  investigation  showed  that  a  smooth  connection  between  the 
respective OSs of the smartphone and the wearable device is essential for 
wearable  devices’  proper  functioning  as  well  as  for  a  positive  user 
experience.  

Interoperability commitment 

The Commission received a comprehensive interoperability commitment to 
address these concerns. For a duration of 10 years, Google will continue to 
offer  a  royalty-free  license  to  Android  OEMs  with  respect  to those  public 
APIs covering all current core functionalities that wearable devices need to 
interoperate  with  an  Android  smartphone.  To  avoid  circumvention,  Google 
also  committed  to  keep  the  functionalities  provided  by  the  core 
interoperability  APIs,  including  any  improvements,  in  open-source  code  in 
the future. To ensure that wearable device OEMs also have access to future 
functionalities, Google will grant these OEMs access to all Android APIs that 
it will make available to Android smartphone app developers. This includes 
those  APIs  that  are  part  of  Google  Mobile  Services,  a  collection  of 
proprietary Google apps that is not a part of the AOSP. Other provisions of 
the commitment also exclude circumvention via the use of error messages 
or discriminatory access to the Google Play Store. 

Importantly,  Google’s  commitment  covers  all  core  functionalities  that 
wearable  devices  may  use  to  interoperate  with  a  smartphone.  Such  core 
functionalities include connecting via Bluetooth to an Android smartphone 
and  accessing  the  smartphone's  camera  or  its  GPS.  To  ensure  that  this 
commitment is future-proof, any improvements of those functionalities and 
relevant  updates  are also  covered.  Beyond  these  core functionalities,  it is 
not important to cover each and every functionality in order to leave some 
space  for  differentiation  between  devices  –  what  counts  are  the  main 
functionalities which drive user experience. 

8 

 
 
Competition Merger Brief 2021 Edition – Article 3 

Competition merger brief 

EssilorLuxottica/GrandVision – keeping 
a close eye on vertical integration in the 
optical industry 

Guillaume  Débarbat,  Karolina  Gutowska,  David  Kovo,  Enrico 
Lorenzon,  Jean-Christophe  Mauger,  Zsolt  Vertessy  –  with  thanks 
to Daniele Calisti and Hans Zenger 

Introduction 

On  23  March  2021,  the  European  Commission  conditionally 
cleared  the  acquisition  of  GrandVision  by  EssilorLuxottica.  The 
transaction  constituted  a  further  step 
in  the  progressive 
consolidation of the optical industry. It followed the prior merger 
between  Essilor,  the  leading  optical  lens  manufacturer,  and 
Luxottica,  the  leading  frames  manufacturer,  which  had  been 
approved by the Commission in 2018.  

EssilorLuxottica  is  the  worldwide  leader  in  the  supply  of  optical 
products. Thanks to the aforementioned merger, the company is 
active  in  every  phase  of  the  development  of  ophthalmic  lenses 
(from design to manufacture to wholesale) as well as the design, 
manufacture and distribution of eyewear, i.e. optical frames and 
sunglasses. In addition, EssilorLuxottica also sells optical products 
at  retail  level,  via  its  global  network  of  approximately  11,000 
stores (including franchisees) in 2019.1 

GrandVision  is  the  largest  optical  retailer  in  the  European 
Economic Area (“EEA”). It sells a full range of optical products, e.g. 
prescription  glasses  (including  frames  and  lenses),  sunglasses 
and  contact  lenses,  and  provides  eye  care  services  such  as  eye 
tests.  GrandVision  operates  over  7,000  stores  in  more  than  40 
different  countries  across  Europe,  North  and  Latin  America  and 
Asia. 

The acquisition of GrandVision by EssilorLuxottica was one of the 
largest  retail  acquisitions  ever  reviewed  by  the  European 
Commission  as,  typically,  acquisitions  in  the  retail  sector  are 
rather  assessed  by  National  Competition  Authorities  in  the 
affected  Member  States.  In  part,  this  is  because  retail  mergers 
are  more  common  at  national  level  than  EU-wide;  but  it  is  also 
due  to  the  fact  that  retail  mergers  often  involve  sub-national 
markets in one (or a couple of) Member State(s) so that it may be 

1   https://www.essilorluxottica.com/sites/default/files/documents/2020-

05/ESSI_DEU_2019_UK_29052020_MEL.pdf, page 6 

The content of this article does not necessarily reflect the 
official position of the European Commission. Responsibility 
for the information and views expressed lies entirely with 
the authors. 

by 

reviewed 

In a nutshell 

to 

appropriate  for  a  referral  to 
relevant 
be  made 
the 
Member  State(s). 
the 
In 
present  case,  however,  the 
pan-European  nature  of  the 
parties’ activities resulted in a 
vast  number  of 
relevant 
markets  to  analyse  across 
Member  States,  which  meant 
the  Commission  was 
that 
ultimately  best  placed 
to 
review the deal.  

The  acquisition  of  optical 
retail  giant  GrandVision  by 
leading  eyewear  and  lenses 
maker EssilorLuxottica is one 
of  the  largest  retail  mergers 
ever 
the 
European  Commission.  The 
unparalleled  brand  portfolio 
of  EssilorLuxottica  and  its 
importance for retailers gave 
it significant market power in 
several  countries  and  led  to 
input 
the 
foreclosure  concerns.  The 
complex 
and 
horizontal  links  in  this  case 
integrated 
meant  that  an 
approach  to  assessing  the 
impact  on  competition  was 
necessary  – 
just 
looking  at  its  vertical  and 
horizontal 
in 
also 
isolation, 
considering 
their  mutually 
reinforcing effects. 

This case was also marked by 
the 
unprecedented 
circumstances  of  the  COVID-
result 
19  outbreak.  As  a 
optical  shops  were  closed  for 
several  weeks.  Moreover; 
review, 
during 
the  merger 
initiated 
EssilorLuxottica 
litigation  against  the  takeover 
target  relating  to  its  handling 
its  business  during  the 
of 
GrandVision 
pandemic. 
reacted  by  launching  parallel 
arbitration 
proceedings. 
Finally, challenges in obtaining 
necessary  information  during 
the  pandemic  meant  that  the 
Commission’s  assessment  of 
the  transaction  was  suspended  on  three  separate  occasions 
following  the  parties’  failure  to  respond  to  requests  for 
information.   

impact 
but 

i.e.,  not 

vertical 

finding 

of 

the 

how 

explains 

Commission 

This  Brief 
evaluated 
EssilorLuxottica’s upstream market power. It then describes how 
an assessment of  the impact  on retail markets at national level 
was  most  appropriate  despite  indications  that  markets  have 
considerable 
local  features.  Finally,  the  note  explains  the 
importance  of  an  integrated  evaluation  of  the  horizontal  and 
vertical effects of  this transaction to grasp the full extent  of its 
competitive impact, and describes the key tools that were used to 
assess it.  

 
 
 
 
 
 
 
 
       
 
 
                                                             
M.9569 EssilorLuxoticca / GrandVision  |  Competition Merger Brief 2021 Edition 

EssilorLuxottica’s  portfolio,  in  particular  Ray-Ban,  was  important 
to  attract  consumers  into  their store. These  elements  suggested 
that, as a supplier, EssilorLuxottica’s market power was far more 
significant than its market shares implied. 

As  explained  in  more  detail  below,  the  Commission  went  on  to 
find that the merged entity would likely have an incentive to use 
this  market  power  post-merger  to  raise  rival  retailers’  costs  by 
increasing wholesale prices or advantaging GrandVision stores in 
terms  of  product  supplies.  In  particular,  the  Commission  found 
that  the  “diversion  ratio”  between  GrandVision  and  competing 
retailers  was  significant.  As  a  result,  partial  foreclosure –  e.g.,  a 
wholesale price increase targeted at rival retailers – would likely 
have  led  to  a  considerable  number  of  customers  switching  to 
GrandVision, which would have appreciably increased the merged 
entity’s profits.   

Assessing retail-level competition: can’t see  the 
forest for the trees 

In  terms  of  market  definition,  EssilorLuxottica/GrandVision 
illustrates  the  importance  of  looking  at  the  bigger  picture  when 
assessing  foreclosure  risks  and  the  transaction’s  impact  on 
competition. The market investigation indicated that the relevant 
market  for  the  retail  sale  of  optical  products  in  optical  stores 
would  be  local  in  scope  as  consumers  do  not  generally  travel 
great  distances  to  buy  eyewear  or  lenses.  As  a  result,  from  a 
demand-side perspective, optical stores compete with their rivals 
within a local catchment area to win customers. Even so, from a 
supply-side perspective, the specific characteristics of the parties 
implied  that  a  purely  local  analysis  would  risk  missing  the 
broader  impact  of  the  acquisition,  as  regards  horizontal  and 
vertical effects. 

GrandVision  operates  several  retail  chains  within  different 
Member States, as does EssilorLuxottica in Italy and the UK. The 
Commission  found  that  there  was  significant  differentiation 
between such large optical retail chains and independent stores – 
both  in  terms  of  consumer  perception  and  product  positioning. 
Independents set their commercial strategy at a local level (as, by 
definition, they only operate one or at most a few stores). Retail 
chains,  on  the  other  hand,  set  their  competitive  strategies 
(including  prices,  promotions,  marketing 
campaigns  and 
procurement) at national level. Moreover, retail chains benchmark 
themselves against other national chains and often target similar 
commercial areas. The market positioning and strategy of a chain 
typically  does  not  significantly  vary  at  local  level.  Therefore,  for 
GrandVision  and  its  main  competitors  (including  EssilorLuxottica 
in  Italy  and  the  UK,  where  it  had  an  optical  retail  presence)  the 
conditions  of  competition  are  determined  at  national  level.  The 
retail 
Commission 

it  appropriate 

to  assess 

found 

thus 

The 
power 
unparalleled portfolio 

of 

brands: 

EssilorLuxottica’s 

industry 

involving  vertical 

What  sets  this  case  aside  from  previous  transactions  in  the 
integration  between  a 
optical 
manufacturer  and  a  retailer  is  EssilorLuxottica’s  brand  portfolio. 
While  many  manufacturers  can  and  do  produce  frames  and 
sunglasses,  only  EssilorLuxottica  offers  Ray-Ban,  the  strongest 
eyewear  consumer  brand  in  Europe  Most  consumers  view 
eyewear  not  merely  as  a  medical  device  but  also  as  a  fashion 
item.  The  Commission’s  assessment  therefore  centred  on 
EssilorLuxottica’s  unparalleled  brand  portfolio.  Access  to  this 
portfolio  is  important  for  retailers  to  be  able  to  appeal  to 
consumers’ 
compete. 
EssilorLuxottica’s  unique  upstream  position  was  particularly 
important  for  the  competitive  assessment  given  that  it  was 
acquiring the largest European optical retailer.  

requirements, 

tastes  and 

i.e. 

to 

The Commission had previously assessed EssilorLuxottica’s broad 
portfolio  when  reviewing  the  Essilor/Luxottica  merger. 2  The 
context  of that case was different, however, as it concerned the 
potential  leverage  of  market  power  between  closely  related 
markets (or “conglomerate effects”). The ability of a company to 
foreclose  its  rivals  should  be  assessed  in  light  of  the  specific 
strategy  that  may  potentially  arise  from  a  given  merger.  When 
reviewing  the  Essilor/Luxottica  merger,  the  Commission  focused 
on the effects  on competition of combining Essilor’s lenses with 
Luxottica’s  frames.  Specifically, 
the  Commission  assessed 
whether the merged entity would have the ability and incentive to 
force opticians that buy its frames to also buy its lenses, with a 
view 
In 
EssilorLuxottica/GrandVision, the question instead stemmed from 
the vertical relationship arising from the merger, that is whether 
the  merged  entity  would  have  the  ability  and  incentive  to 
disadvantage rival opticians (who are customers for eyewear and 
lenses but post-merger also competitors at retail level) to benefit 
the merger partner GrandVision. 

lense  manufacturers. 

foreclosing 

rival 

to 

The  investigation  showed  that  EssilorLuxottica  would  have  had 
the  ability  to  foreclose  rivals  in  several  Member  States,  even 
though  its  market  shares  were moderate  in  some  cases. Market 
shares  alone,  however,  strongly  understated  EssilorLuxottica’s 
market  power.  Crucially,  both  the  markets  for  frames  and 
sunglasses are strongly differentiated markets, with brands being 
the key driver of pricing power. EssilorLuxottica was consistently 
seen  by  market  participants  as  the  most  important  eyewear 
supplier  because  it  had  the  widest  selection  of  leading  brands 
and  the  strongest  brand  portfolio.  In  particular,  the  Ray-Ban 
brand  is  unrivalled  in  terms  of  customers’  brand  awareness.  It 
also  has  a  high  penetration  rate  in  a  number  of  countries,  i.e. 
Ray-Ban  products  were  present  in  a  large  proportion  of  stores 
(indeed,  in  a  higher  proportion  of  stores  than  EssilorLuxottica’s 
market  shares  alone  would  suggest).  Retailers  indicated  that 

2   Case  COMP/M.8394  Essilor/Luxottica,  Commission  decision  of  1  March 

2018 

10 

 
                                                             
M.9569 EssilorLuxoticca / GrandVision  |  Competition Merger Brief 2021 Edition 

competition  at  national  level,  while  taking  into  account  local 
conditions where relevant.3 

would  be  able  to  benefit  from  softened  competitive  pressure 
after the transaction).4  

investigation  showed 

level.  The  Commission’s 

Second, input foreclosure would increase the competitive harm at 
that 
retail 
EssilorLuxottica  would  have  had  the  ability  and  incentive  to 
target  rival  retailers  with  strategies  aimed  to  reduce  their 
competitiveness. This could have included withholding or delaying 
supplies of its eyewear, granting preferential access to the most 
in-demand  models  to  GrandVision,  or  raising  wholesale  prices. 
The  investigation  showed  that  this  would  harm  rivals  and 
consumers. For example, it appeared highly likely that wholesale 
price  increases  would  in  large  part  be  passed  on  to  consumers, 
leading  an  appreciable  portion  of  them  to  switch  to  the  merged 
entity.  The  Commission  therefore  found  that  the  merged  entity 
had  an  incentive  to  raise  rivals’  costs  of  distribution.  While  a 
vertical  merger  can  in  theory  lead  to  efficiencies  by  eliminating 
double  marginalisation,  in  this  particular  case  the  efficiencies 
were  quantitatively  calibrated  by  the  Commission  and  found  to 
be  insufficient  to  offset  the  incentives  of  the  merged  entity  to 
raise retail prices.   

Finally,  the  risk  of  retail  price increases was exacerbated  by  the 
‘diagonal’  aspect  of  the  transaction.  EssilorLuxottica’s  highly 
valued branded products were particularly prevalent in the large 
number  of  independent  optical  stores  in  Italy.  This  had  a 
significant  impact  on  GrandVision’s  pricing  incentives  after  the 
transaction. Pre-merger, if GrandVision lost a customer following 
a  price  increase,  it  would  lose  the  profits  on  that  sale  entirely. 
Post-merger,  however,  if  a  customer  turned  away  from  a 
GrandVision  store  because  it  considers  its  prices  too  high,  there 
would be a reasonable chance that the customer would purchase 
an  EssilorLuxottica  product  in  a  rival  store.  Thus,  the  negative 
impact  for  GrandVision  of  losing  a  customer  was  dampened, 
since  the  “diagonal”  link  implied  that  it  would  have  recaptured 
some  lost  retail  sales  by  earning  additional  upstream  margins. 
Since  GrandVision  is  one  of  the  largest  retailers  in  Italy,  this 
vertical  effect  was  likely  to  be  appreciable  and  exacerbated  its 
incentive to increase retail prices increases following the merger.  

The following figure illustrates the three effects described above: 

A further reason for this approach was the finding that upstream 
suppliers’ terms of supply did not vary at the local level. Rather, 
procurement  conditions  were  determined  at  national  (or  even 
wider) level. This meant that the impact of a potential foreclosure 
strategy  by  EssilorLuxottica,  for  example  a  decision  to  increase 
prices  or  restrict  access  to  certain  brands,  could  be  expected  to 
affect 
these 
circumstances, the Commission assessed EssilorLuxottica’s ability 
and incentive to engage in input foreclosure strategies, as well as 
the competitive impact that this may have, at national level. 

retailers  across 

the  country. 

light  of 

In 

integrated  approach  to  the 

An 
competition: a bird’s eye view 

impact  on 

Due to the multitude of horizontal and vertical links in this case, 
the  Commission’s  assessment factored  in  the  interplay  between 
EssilorLuxottica’s  role  as  the  largest  supplier,  its  existing  wide 
footprint  as  a  retailer,  and  GrandVision’s  unique  position  as  the 
largest retail chain in Europe. To capture the overall effects of a 
transaction  in  such  circumstances,  it  is  important  to  assess  the 
impact  of  the  various  links  on  competition  in  an  integrated 
manner.  Indeed,  limiting  the  assessment  to  a  separate  analysis 
of  horizontal  and  vertical  effects  would  otherwise  have  risked 
ignoring the mutually reinforcing impact of vertical and horizontal 
effects. This aspect of the case was particularly important for the 
combination of the parties’ operations in Italy – where the merger 
caused  not  only  an  important  vertical  link,  but  also  a  significant 
horizontal  overlap  downstream  on  account  of  EssilorLuxottica’s 
strong retail presence. 

First, the transaction had a horizontal impact on the retail market. 
EssilorLuxottica  and  GrandVision  operate  some  of  the  largest 
optical retail chains in Italy, with several hundred stores between 
them.  Rival  chains  were  substantially  smaller.  Instead,  most  of 
the remaining market was accounted for by independent retailers 
who,  as  described  above, were far  less  significant  in  influencing 
the  country-wide  price  competition  between  retail  chains.  The 
Commission’s  investigation  found  that  the  Parties’  chains  were 
important  competitive  constraints  for  each  other.  Moreover, 
GrandVision  was  an  important  competitive  force  in  the  Italian 
optical  retail  market,  in  particular  vis-à-vis  other  optical  chains. 
As barriers to expansion are significant, it appeared unlikely that 
a  competing  chain  could  develop  organically  to  replace  the  lost 
constraint  on  the  merged  entity  within  a  reasonable  time.  As  a 
result,  competition  would  be  lost  between  the  Parties’  chains  in 
the optical retail market in Italy, which would likely lead to price 
increases  in  the  parties’  stores  (as  well  as  those  of  rivals,  who 

3   E.g., when evaluating the closeness of competition of EssilorLuxottica’s 
and  GrandVision’s  stores  in  the  context  of  the  horizontal  assessment, 
among  other  things  the  Commission  took  into  account  similarities  in 
their stores’ geographic location at local level. 

4   Paragraph  24  of  the  Guidelines  on  the  assessment  of  horizontal 
mergers under the Council Regulation on the control of concentrations 
between  undertakings  (‘Horizontal  Merger  Guidelines’),  OJ  C  31, 
5.2.2004. 

11 

 
                                                             
                                                             
M.9569 EssilorLuxoticca / GrandVision  |  Competition Merger Brief 2021 Edition 

Ultimately,  these  three  interlinked  effects  on  the  retail  market 
pointed to the conclusion that a optical retail consumers in Italy 
would  likely  be  significantly  worse  off  after  the  merger.  These 
vertical  and  horizontal  effects  risked  occurring  simultaneously 
and were therefore mutually reinforcing. In particular, the effect 
of losing horizontal competition between the two largest market 
players was amplified by the fact that GrandVision had even less 
incentive to compete due to the diagonal link (as it can recapture 
a significant portion of lost sales). Moreover, the natural incentive 
of rivals to follow price increases when competition is weakened 
was  amplified  in  this  case  by  the  higher  input  costs  they  would 
likely have faced as a result of input foreclosure. The Commission 
therefore  found  that  the  transaction  would  have  led  to  a 
significant  impediment  to  effective  competition  not  just  from 
horizontal  unilateral  effects,  diagonal  effects  and 
input 
foreclosure,  but  also  as  a  cumulative  result  of  these  three 
effects.  

To evaluate the overall incentive for post-merger price increases, 
the Commission also conducted a quantitative assessment of the 
interlinked effects described above. Specifically, the Commission 
calibrated the price pressure resulting from the transaction. Gross 
upward  pricing  pressure  indices  (“GUPPI”)  are  routinely  used  in 
horizontal  mergers  to  assess  merging  parties’  incentives  to 
increase prices post-transaction. The EssilorLuxottica/GrandVision 
transaction,  however,  was  the  first  time  that  such  indices  were 
applied  by  the  Commission  to  assess  vertical incentives  to  raise 
prices (“vGUPPI”), both at the wholesale and retail level.  

the  Commission  computed 

First, 
the  so-called  vGUPPId 
(downstream) index to analyse the incentives GrandVision would 
have to raise retail prices after being acquired by EssilorLuxottica. 
This  index  captures  the  incentive  for  GrandVision  to  increase 
prices  due  to  the  recoupment  of  the  wholesale  margin  at  rival 
stores  (the  “diagonal”  effect  described  above).  In  countries  with 
horizontal  overlaps  (e.g.,.  in  Italy),  the  Commission  also  included 
the ordinary horizontal price pressure in this quantification, which 
increased the merged entity’s incentive to raise prices. Moreover, 
the  Commission  also  included  an  estimation  of  the  potential 
downward  price-pressure  following  the  elimination  of  double 
marginalisation in this calculation. As noted above, however, this 
potential  efficiency  turned  out  to  be  relatively  modest  in  the 
current transaction.  

Second, the Commission analysed EssilorLuxottica’s incentives to 
raise  the  price  of  frames  and  sunglasses  to  rival  retailers  using 
the  so-called  vGUPPIu  (upstream)  index.  This  analysis  was 
relatively complicated in this case due to the possibility of input 
substitution upstream: when faced with a potential price increase 
of  EssilorLuxottica  frames  or  sunglasses  in  stores  that  are 
subject  to  foreclosure,  consumers  have  the  possibility  of 
switching to the parties’ own stores or switching to an alternative 
eyewear brand within a store that is not subject to foreclosure. As 
a  result,  the  Commission  found  that  the  conjunction  of  intra-
brand  and  inter-brand  competition  reduced  the  merged  entity’s 
ability and incentive to raise prices to rival stores.  

To  capture  this  possibility,  the  Commission  presented  vGUPPIu 
results  in  terms  of  “critical  intra-brand  diversion  ratios”.  I.e.,  the 
Commission  calibrated  the  proportion  of  customers  needed  to 
switch  to  the  parties’  stores  to  render  a  10%  increase  in  the 
wholesale price of these products profitable. These ratios turned 
out  to  be  particularly  low  for  frames  in  several  Member  States: 
e.g., fewer than 1 in 10 customers would need to switch to make 
a 10% increase in the wholesale price of EssilorLuxottica frames 
profitable. This indicated that partial input foreclosure for frames 
would likely be a profitable strategy for the merged entity despite 
the  fact  that  price  increases  would  induce  some  customers  to 
switch to a rival brand.  

This  conclusion  was  further  substantiated  by  the  numerous 
responses  to  a questionnaire  that  the  Commission  addressed  to 
rival  retailers. 5 In  this  questionnaire,  the  Commission  asked 
retailers  to  estimate  the  proportion  of  customers  that  would 
rather  switch  to  a  different  store  than  to  a  different  eyewear 
brand if the price of EssilorLuxottica’s products increased in their 
outlet.  The  estimates  obtained  from  opticians  turned  out  to  be 
substantially  larger  than  the  critical  diversion  ratios  needed  for 
an  incentive  to  raise  prices.  This  provided  additional  support  to 
the Commission’s competition concerns.  

A sight for sore eyes: conclusion and remedies 

In  light  of  the  foregoing,  the  Commission  found  that  the 
transaction  would  significantly  impede  effective  competition  in 
Belgium  and  the  Netherlands  due  to  a  risk  of  input  foreclosure, 
and in Italy due to input foreclosure combined with the integrated 
horizontal  and  vertical  effects  described  above.  EssilorLuxottica 
proposed to remedy this “sight for sore eyes” by divesting a large 
number  of  retail  stores  in  each  of  these  countries.  After  careful 
evaluation,  and  ensuring  that  there  are  robust  safeguards  in 
place,  the  Commission  concluded  that  this  remedy  would  be 
sufficient  to  eliminate  its  concerns,  as  the  remedy  would 
considerably  reduce  the  merged  entity’s  downstream  footprint, 
thus limiting EssilorLuxottica’s incentive to engage in foreclosure 
strategies,  while  creating  or  strengthening  a  competing  national 
optical retail chain in these countries.  

5   The Commission received more than 4,300 responses. 

12 

 
 
                                                             
Competition Merger Brief 2021 Edition – Article 4 

Competition merger brief 

Schwarz Group/Suez Waste 
Management Companies – a greener 
House of Orange 

Simon  Genevaz,  Luis  Moscoso  del  Prado,  Pierre  Pecheux,  Eline 
Vanhollebeke 

Introduction  

located 

On 14 April 2021, the Commission approved, with conditions, the 
acquisition  by  Schwarz  Group  (“Schwarz”)  of  several  waste 
management  companies  from  Suez 
in  Germany, 
Luxembourg,  the  Netherlands  and  Poland  (together,  the  “Suez 
target  companies”).  Schwarz  owns  the  Lidl  and  Kaufland  retail 
chains,  as  well  as  waste  management  companies,  under  its 
PreZero  division.  PreZero  is  active  in  Austria,  Belgium,  Germany, 
Italy, the Netherlands, Poland, Sweden and the US. Both Schwarz 
and  the  Suez  target  companies  are  active  across  the  waste 
management chain and notably leaders in lightweight packaging 
(“LWP”) sorting services in the Netherlands. 

The  case  is  particularly  topical.  In  the  context  of  the  European 
Green Deal and the priority given to making EU economies more 
sustainable,  the  Commission  has  a  role  as  a  competition  law 
enforcer to protect competition in markets involved in the circular 
economy.  As  a  result,  the  Commission  exercises  strict  scrutiny 
over mergers in key circular sectors, such as waste management.  

On  4  February  2021,  the  Commission  hosted  a  Conference  on 
“Competition  Policy  Contributing  to  the  European  Green  Deal”.  A 
recent  Policy  Brief  on  Competition  Policy  in  Support  of  Europe’s 
Green Ambition analyses the contributions and key takeaways of 
the event.1 

With respect to merger control, the Brief emphasized that “[i]n its 
enforcement practice, the Commission already takes into account 
consumer  preferences  for  sustainable  products,  either  in  market 
definition,  to  identify  in  and  out-of-market  constraints  and/or  in 
the  competitive  assessment  as  a  parameter  of  differentiation 
which affects closeness of competition.” The Brief forecasts that 
relevant  as 
these  elements  will  become 

increasingly 

1 Competition  Policy  in  Support  of  Europe’s  Green  Ambition,  Competition 
Policy 
at: 
https://op.europa.eu/en/publication-detail/-/publication/63c4944f-1698-
11ec-b4fe-01aa75ed71a1/language-en/format-PDF. 

September 

2021-01, 

available 

2021, 

Brief, 

The content of this article does not necessarily reflect the 
official position of the European Commission. Responsibility 
for the information and views expressed lies entirely with 
the authors. 

sustainability  gains  a  central 
role  in  the  characteristics  of 
demand  or  the  functioning  of 
certain markets. 

The 
case 
Schwarz/Suez 
illustrates  this  trend.  In  its 
decision, the Commission took 
into  account  environmental 
aspects 
customer 
and 
preference  for  sustainability 
services in order to define the 
relevant  geographic  market 
and to conduct its competitive 
assessment,  making  this  case 
a  perfect  example  of  how  the 
enforcement of merger control 
rules  can  also  contribute  to 
the Green Deal’s objective. 

The Parties’ role in the 
recycling 
of 
lightweight  packaging 
in the Netherlands 

In a nutshell 

for 

The  Schwartz/Suez  decision 
illustrates  the  manner 
in 
which  merger  control  can 
environmental 
integrate 
factors  in  its  assessment, 
and  how  these  factors  can 
affect  the  outcome  of  the 
review.  In  markets  involved 
in  the  recycling  process,  the 
protection  of  competition  is 
crucial 
the  efficient 
functioning  of  a  circular 
economy. 
In  those  cases, 
environmental factors, driven 
by  demand-side  preference 
and  regulatory  targets,  are 
likely  to  play  a  significant 
role 
competitive 
assessment. The Commission 
strict 
therefore  exercises 
scrutiny  over  such  cases, 
encompassing  all 
relevant 
evidence  of  competitive  risk, 
including  from  the  point  of 
the 
view  of 
competitive 
of 
sustainable services.  

  protecting 
provision 

the 

in 

The  waste  management 
process 
several 
comprises 
stages,  from  the  collection  of 
different  types  of  waste,  to 
their sorting and treatment, to 
waste 
valuable 
recover 
as 
for 
fractions 
secondary raw material or for disposal (at incineration plants and 
landfill  sites).  The  case  concerned  the  management  of  LWP,  a 
non-hazardous  waste  comprising  plastics,  aluminium,  tinplate 
and  other  composites.  The  Parties  were  market  leaders  in  the 
sorting of LWP 2 in the Netherlands. 

sale 

Collected  LWP  is  brought  to  LWP  sorting  plants,  where  different 
LWP  fractions  are  recovered.  LWP  sorting  plants  use  different 

2  LWP sorting consists in separating different types of LWP fractions (i.e., 
beverage  cartons,  polyethylene,  polypropylene  (“PP”),  (iv)  polyethylene 
terephthalate  (‘PET’),  (v)  polystyrene  (‘PS’),  (vi)  mixed  plastics,  (vii) 
residue (baled and fines), (viii) tin-plate, and (ix) aluminium. 

 
 
  
 
 
 
 
 
 
 
       
 
 
 
                                                             
                                                             
M.10047 SCHWARZ / SUEZ  |  Competition Merger Brief 2021 Edition 

infrared 
techniques,  such  as  optical  or  magnetic  sorting, 
technology and compressed air, to separate these fractions. The 
extracted  materials  are  then  compressed  into  bales,  which  are 
sold to recyclers. 

The markets for the collection, sorting and recycling of LWP in the 
Netherlands  are 
regulatory 
structured  around 
requirements. 

specific 

First, the demand for LWP sorting services in the Netherlands is 
organised  under  an  ‘extended  producer  responsibility’  system 
whereby  organisations  to  which  producers  and  importers  of 
packaged  products  –  which  are  legally  responsible  for  the 
prevention,  collection  and  recycling  of  packaging  waste  –  have 
delegated their responsibilities. Sorting services for the different 
areas  are 
through 
competitive  processes  in  which  the  different  sorting  entities 
submit bids on the basis of the available capacity at their sorting 
plants.  

these  organisations 

tendered  out  by 

Second, the European Union Directive 94/62/EC of 20  December 
1994  on  packaging  and  packaging  waste  (the  “Packaging 
Directive”)  requires  Member  States  to  take  necessary  measures 
to ensure that systems are set up for the collection and recycling 
of  packaging  waste.  It  aims  at  harmonising  national  waste 
management  measures  and  to  reduce  the  impact  of  packaging 
and  packaging  waste  on  the  environment.  Notably,  the  Directive 
contains measures designed to promote the re-use, recycling and 
other alternatives to final disposal, including  recycling targets. It 
thus  requires  that  Member  States  take  the  necessary  measures 
to  ensure  that  at  least  65%  (by  weight)  of  all  packaging  waste 
(50%  for  plastic)  will  be  recycled  by  31  December  2025.  By  31 
December  2030,  this  target  will  rise  to  70%  (55%  for  plastic). 
These  regulatory  targets  imply  that  demand  is  expected  to  be 
relatively  inelastic,  and  that  therefore  price  increases  would  not 
be expected to lead to decreases in demand. 

Before  the  transaction,  there  were  five  competitors  with  sorting 
plants  in  the  Netherlands  providing  LWP  sorting  services.  The 
Suez  targets  and  Schwarz  (PreZero)  were,  respectively,  the  first 
and  second  largest  sorters,  with  a  combined  market  share  (by 
capacity) in excess of 50%. No remaining competitor individually 
held more than 20% of the capacity in the Netherlands. 

Against  this  background,  the  Commission  examined  the  size  of 
the  relevant  market,  which  the  Parties  deemed  larger  than  the 
Netherlands,  and  the  nature  of  the  competitive  relationship 
between  them.  Given  the  nature  of  the  services  involved  and  of 
the  demand,  environmental  objectives  and  preference  for 
sustainable  services  played  a  key  role  in  the  Commission’s 
assessment. 

A “green” approach to market definition 

In  this  case,  the  Commission  confirmed  its  previous  practice  of 
considering  a  relevant  product  market  for  the  sorting  of  LWP, 
separate from the sorting of other waste fractions, leaving open 

whether  different  markets  for  the  sorting  of  commercial  and 
household LWP should be considered. 

The  determination  of  the  geographic  scope  of  the  market 
required  a  more  detailed  analysis.  The  geographic  scope  of  a 
relevant market covers the area where conditions of competition 
are  sufficiently  homogeneous,  in  the  sense  that  it  “can  be 
distinguished from neighbouring areas because the conditions of 
competition are appreciably different in those areas.”3 

When  considering  the  geographic  scope  for  the  sorting  of  LWP 
collected  in  the  Netherlands,  the  Notifying  Party  submitted  that 
the  market  went  beyond  national  borders,  including  portions  of 
the  territory  of  West  Germany, where  German-based  companies 
sort  Dutch  LWP  waste.  It  argued  that  LWP  can  easily  be 
transported  across  borders  for  sorting  due  to  low  technical, 
economic  and  regulatory  barriers.  In  its  investigation,  the 
Commission  did  find  that  one  third  of  Dutch  LWP  was  sorted  in 
Germany  in  2020.  However,  this  did  not  suffice  to  support  the 
Notifying  Party’s  argument  that  the  relevant  market  was  wider 
than national.  

The Commission thus considered a national market. Although its 
conclusion  rested  on  several  elements,  environmental  factors 
played a key role in the Commission’s view. 

the 

regime,  and 

composition  and 

Concretely, in its market investigation, the Commission found that 
demand  for  LWP  sorting  services  was  national.  The  sorting  and 
recycling chains in the Netherlands are organised under a specific 
traceability 
national 
requirements  of  LWP  in  the  Netherlands  varied  from  those  in 
force  in  other  Member  States.  This  resulted  in  some  technical 
barriers for sorters based in neighbouring Member States to sort 
Dutch LWP. As a consequence, the Commission found that Dutch 
customers  first  turn  to  local  capacity,  while  German  sorters  are 
used to adjust for Dutch capacity constraints and therefore serve 
the  demand  not  served  domestically,  as  illustrated  by  the  fact 
that increases in capacity in Dutch plants over the last years had 
led to a decline in the LWP sent for sorting in Germany. 

In  particular,  environmental  factors  played  a  significant  role  in 
explaining  demand-side  preference 
for  domestic  service 
suppliers. The Commission’s investigation showed that customers 
awarded  tenders  for  LWP  sorting  based,  inter  alia,  on  the 
environmental costs associated to each bidder, with the intent of 
minimizing  the  service’s  carbon  footprint.  Notably,  in  calls  for 
tenders,  bidders  were  frequently  awarded  qualitative  points  for 
‘sustainable  transport’.  Vice  versa,  LWP  sorters  located  too  far 
away  were  often  found  to  be  penalised,  through  a  correction  of 
the price quoted or through negative points for quality. This was 
due to higher transport costs facing those service providers as a 
result  of  the  larger  distance,  but  also  to  environmental  reasons 
related  to  increased  CO2  emissions  associated  with  longer 

3   Commission  Notice  on  the  definition  of  the  relevant  market  for  the 

purposes of competition law, paragraph 8. 

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transport.  In  other  instances,  customers’  attention  to  the  waste 
management  sector’s  circularity  also  transpired  in  the  decisive 
criteria  for  awarding  contracts.  Thus,  in  an  important  2019 
tender,  the  Notifying  party’s  Dutch  facility,  a  new  plant  that 
PreZero committed to build in Zwolle, was selected precisely due 
to the fact that “the new installation (in the Netherlands) creates 
clear  added  value  for  the  circular  economy,”4 despite  otherwise 
offering  less  attractive  pricing.  The  Commission  found  that  the 
fact that Schwarz decided to  build a new plant in Zwolle to sort 
the Dutch LWP under this contract when it could have continued 
to  sort  Dutch  LWP  from  its  sorting  plant  in  Germany  was 
indicative  of  a  clear  advantage  for  sorting  Dutch  LWP  in  plants 
closer to the collection point. As a result, together with transport 
costs,  technical  and  administrative  barriers,  environmental 
considerations  were  a  significant  factor  to  explain  Dutch 
customers’  strong  preference  for  Dutch  sorters,  while  German 
ones  only  intervened  when  national  capacity  constraints  were 
exceeded.  

to  minimise  the  carbon  footprint  of 

In  conclusion,  it  was  clear  that  LWP  sorting  customers  made 
the  waste 
efforts 
management chain, and this green aspect was one of the factors 
that the Commission relied on to define the relevant geographic 
market. 

Although competition conditions thus did not appear homogenous 
outside  of  the  Netherlands,  the  Commission  recognized  that 
certain  German  plants,  located  within  an  economically  viable 
distance, received a large portion of Dutch volumes at the time of 
the  decision.  The  Commission  therefore  considered  that  such 
plants exercised an “out-of-market” constraint that should not be 
ignored in the competitive assessment. 

Environmental  factors  and 
assessment  

the  competitive 

Environmental  aspects  were  also  important  features  of  the 
Commission’s competitive assessment. 

In the Netherlands, the Parties’ combined position represented a 
60-70%  share  of  volume,  the  rest  of  the  market  being  in  the 
hands of three competitors, none of which held more than about 
10-20%  of  the  market.  However,  when  taking into  account  LWP 
volumes sorted by German plants that handled Dutch waste, the 
Parties’ combined position fell to 30-40%. 

the 

intensity  of  competition 
The  Commission  assessed 
attributable  to  German  LWP  sorters.  This  exercise  aimed  at 
understanding  whether  volume  share  estimates  were  truly 
representative  of  the  prevailing  competitive  interactions,  such 
that  competition  from  German  sorters  would  have  sufficiently 
constrained  the  merger  entity  in  the  Netherlands  after  the 
Transaction. Green elements played a key role in this assessment. 

The  Parties  owned  the  largest  LWP  sorting  plants  in  the 
Netherlands,  both  centrally  located  around  the  most  populated 
areas  of  the  country.  The  Notifying  Party  nevertheless  argued 
that German LWP sorters should be considered as competitors in 
the market with the same degree of intensity as the Parties did 
pre-merger or as any other Dutch player did.  

that 

However, 
the 
the  Commission  ultimately  concluded 
constraint  posed  by  German  LWP  sorters  cannot  be  considered 
comparable  to  the  constraint  that  the  Dutch  LWP  sorting  plants 
of  Schwarz  and  Suez  exert  on  each  other,  or  that  other  Dutch 
LWP  sorters  exert  on  Schwarz’s  and  Suez’s  Dutch  LWP  sorting 
plants.  Examining  the  degree  of  closeness  of  competition 
between  different  suppliers,  the  Commission  found  that,  for 
Dutch customers, sending LWP for sorting to plants in Germany is 
not  considered  equivalent  to  resorting  to  a  sorting  plant  in  the 
Netherlands.  This  is  not  merely  due  to  higher  transport  costs: 
Dutch  customers,  all  of  which  are  public  or  highly  regulated 
private bodies attach  great importance to disposing of waste in 
the least environmentally harmful manner available, and sending 
LWP  to  sites  hundreds  of  kilometres  away  by  truck  generated 
higher  CO2  emissions.  As  a  result,  while  it  was  necessary  for 
these  customers  to  send  LWP  to  Germany  because  of  capacity 
constraints  in  the  Netherlands,  this  was  generally  seen  as  the 
worst  option.  This  also  explained  why  the  Notifying  party,  which 
held  sorting  capacity  in  Germany,  nevertheless  decided  to  build 
an LWP sorting plant in the Netherlands to sort Dutch LWP when 
it  had  capacity  to  do  so  in  its  German  plant,  and  why  the 
proportion  of  LWP  sorted  in  Germany  has  been  decreasing  as 
new capacity has been built in the Netherlands in the last years.5 

Therefore,  although  the  Commission  acknowledged  that  German 
sorters could and did compete for the sorting of Dutch LWP, they 
were perceived by customers as less efficient –both economically 
and  environmentally  –  and  thus  less  close  to  the  Parties  than 
they are to each other. Consequently, the Commission concluded 
that German sorters could not be deemed to compensate the loss 
of competition brought about by the transaction. 

Moreover,  the  Commission  found  that  the  Parties’  combined 
spare  capacity  represented  70-80%  of  spare  capacity  of  all 
Dutch plants. This would mean that, for any new contracts where 
the customers would prefer – for the reasons explained above – 
the LWP to be sorted in the Netherlands, the merged entity would 
become an unavoidable trading partner.   

These  factors  significantly  contributed  to  the  Commission’s 
ultimate finding that the Transaction raised serious doubts as to 
its compatibility with the internal market. 

4   Decision  of  14  April  2021  in  case  M.10047  –  Schwarz  Group/Suez 
Waste  Management  Companies  (“Decision  in  case  M.10047”),  at 
paragraph 62. 

5   Decision in case M.10047, at paragraph 115. 

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Conclusion 

In  the  end,  the  Transaction  received  a  green  light,  after 
commitments  were  offered  by  Schwarz  in  the  form  of  a 
divestment  of  the  LWP  sorting  plant  in  Rotterdam  originally 
owned by Suez. Consistent with the Commission’s preference for 
structural  commitments  to  remedy  horizontal  anticompetitive 
effects,  the  Notifying  party’s  commitment  removed  the  entire 
overlap brought about by the Transaction in the Dutch market for 
LWP  sorting  services.  Ultimately,  the  present  case  is  not 
unprecedented  as  the  Commission  has  had  the  opportunity  to 
take  environmental  factors  into  account  in  its  assessment.6 This 
is  generally  so  when  such  factors  translate  into  customer 
preferences  and  thereby  affect  the  dynamics  of  competition. 
However,  rarely  has  the  Commission  assessed  environmental 
aspects so systematically as in Schwarz/Suez. The increasing role 
of  environmental  concerns  and  objectives  should  lead  to  the 
development of the Commission’s decisional practice in this area. 

6   See, e.g., the Commission’s decision of 5 May 2015 in case M.7292 – 

DEMB/Mondelez/Charger Opco, at pargraph 55 et seq. 

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