CELEX: 32014M7249
Language: en
Date: 2014-06-13 00:00:00
Title: Commission Decision of 13/06/2014 declaring a concentration to be compatible with the common market (Case No COMP/M.7249 - CVC / PAREXGROUP) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

                                        Brussels, 13.06.2014
                                        C(2014) 4047 final

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|                                                                       |                                                                       |                                                                       |By e-mail: e-mail address                                              |
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Dear Madam, Dear Sirs
Subject:    Case M.7249 - CVC/ PAREXGROUP
         Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/2004[1]

    1) On 8 May 2014, the European Commission received a notification of a proposed concentration pursuant to Article 4 of the Merger  Regulation
       by which the undertaking CVC Capital Partners SICAV-FIS S.A. ("CVC" or "Notifying  Party",  Luxembourg)  intends  to  acquire  within  the
       meaning of Article 3(1)(b) of the Merger Regulation control of the whole of the undertaking ParexGroup Participations  SAS  ("ParexGroup",
       France) and certain affiliated companies (collectively the "Target") by way of purchase of shares.[2] CVC and the Target are  collectively
       referred to as the "Parties".

       THE PARTIES AND THE TRANSACTION

    2) The Target is the specialty dry mix solutions business of the Materis group and is active mainly in the production  and  commercialisation
       of mortar products used in the construction industry. Target's products fall mainly into three business lines: (i) façade  protection  and
       decoration (comprising renders and insulation systems), (ii) ceramic tile setting  materials  (such  as  tile  adhesives,  self  levelling
       compounds or grouts) and (iii) concrete repair and waterproofing systems (technical products used on existing concrete works).

    3) CVC advises and manages investment funds which hold interests in companies active in various industries  including  chemicals,  utilities,
       manufacturing, retailing and distribution. One of the portfolio companies of CVC[3] is Univar, a company active  in  the  distribution  of
       commodity and specialty chemicals.

    4) On 26 March 2014 Financière Santec S.A. ("Bidco"), a special purpose vehicle controlled by CVC funds, entered into an  Offer  Letter  with
       Materis Corporate Services S.A.S. and Materis Holding Luxembourg (jointly referred to as the "Seller"). The Offer  Letter  granted  a  put
       option to the Seller allowing it, upon completion of a works council consultation process, to sell to Bidco  the  shares  of  the  various
       companies which together constitute the Target in accordance with the terms and conditions of an agreed form sale and  purchase  agreement
       ("SPA") attached to the Offer Letter. The works council consultation process was completed on 29 April 2014 and on  5  May  2014  the  put
       option was exercised resulting in the Seller's commitment to sell the Target and confirmation of Bidco's commitment to acquire the  Target
       subject to the SPA conditions.

    5) As a result of the proposed Transaction CVC will solely control[4] the Target, within  the  meaning  of  Article  3(1)(b)  of  the  Merger
       Regulation.

       EU DIMENSION

    6) The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 000 million [CONFIDENTIAL]. Each of  them  has
       an EU-wide turnover in excess of EUR 250 million [CONFIDENTIAL] but they do not achieve more than two-thirds of  their  aggregate  EU-wide
       turnover within one and the same Member State. The notified Transaction therefore has an EU dimension.

       RELEVANT MARKETS AND COMPETITIVE ASSESSMENT

    7) The proposed Transaction does not give rise to any horizontal overlaps as neither CVC nor any of its portfolio companies is active in  the
       same market as the Target. The proposed Transaction does however give rise to a vertical link between the activities  of  the  Target  and
       Univar (one of CVC's portfolio companies), which is active in the distribution of commodity and specialty chemicals,  including  chemicals
       used as input in the production of mortars.

1 Product and geographic market definitions (upstream)

1 Relevant product market

    8) The Commission[5] has in the past distinguished between three categories within the distribution of chemicals, excluding direct  sales  by
       the manufacturers: (i) the distribution of commodity chemicals; (ii) the distribution of specialty chemicals and (iii) the  chemical  bulk
       business.

    9) The Notifying Party submits in view of the minor vertical overlap between the activities of the Target and Univar,  which  does  not  give
       rise to any competition concerns, that the product market definitions for Univar's activity can ultimately be left open.

   10) All of the respondents to the Commission's requests for information confirmed that  the  above-mentioned  segmentation  of  the  chemicals
       distribution market remains valid[6]. However, the results of the market investigation are inconclusive as to whether  only  specialty  or
       only commodity or both categories of chemicals are used as input in the production of mortars.[7]

   11) In any case the exact market delineation of the relevant product market(s) can be left open as the notified  Transaction  does  not  raise
       doubts as to its compatibility with the internal market under any plausible market definition.

2 Relevant geographic market

   12) In previous Commission decisions, the markets for the distribution of commodity chemicals and specialty chemicals were held to be at least
       national in scope.[8]

   13) The Notifying Party submits that due to the minor vertical overlap between the activities of the Target and Univar, which  does  not  give
       rise to any competition concerns, the geographic scope of the market for Univar's activity can ultimately be left open.

   14) The competitors of Univar which responded to the Commission's requests for information stated that they supply chemicals  at  least  on  a
       national basis.[9]

   15) However, the exact market geographic scope of the relevant market(s) can be left open as the notified Transaction does not raise doubts as
       to its compatibility with the internal market under any plausible market definition.

       Product and geographic market definitions (downstream)

1 Relevant product market

   16) Mortar is a building material obtained from the mixture of a binding material (cement and/or lime), sand and  water.  It  is  used,  among
       other things, for bonding bricks and stones, rendering and plastering. The Notifying Party submits that mortars  have  various  levels  of
       sophistication depending on the number of ingredients involved (in  the  Target's  case,  this  generally  ranges  from  around  4  to  20
       ingredients, although the most basic mortar is simply cement and sand).[10]

   17) The Commission has in the past[11] identified three broad ranges of mortar applications (i) construction,  (ii)  façade  and  (iii)  tile-
       fixing mortars. On the basis of the production technique a distinction was drawn between (i) on-site mortars  and  (ii)  pre-mix  mortars.
       Finally, within the pre-mix mortars a further distinction was made between (i) dry mortars, (ii) wet mortars and (iii) ready-to-use paste.

   18) The market investigation did not contradict the Commission's previous findings. A respondent in the market  investigation  confirmed  that
       while the components of the various types of mortars are indeed similar (such as cement, sand and  additives)  the  proportions  in  which
       these components are added as well as the particular types of additives impact the characteristics of the mortar and influence  its  final
       use.[12] This could confirm the segmentation of the relevant product market based on the  final  use  as  mentioned  in  the  Commission's
       precedents.

   19) However, the exact definition market of the relevant market(s) can be left open as the notified Transaction does not raise  doubts  as  to
       its compatibility with the internal market under any plausible market definition.

1 Relevant geographic market

   20) In previous decisions, the Commission has considered the relevant geographic market for mortar to be regional based on a radius of 120  km
       around the relevant production plant.[13] The Commission has also envisaged a wider scope for higher value products such  as  ready-to-use
       paste mortars for tile-fixing or façade renderers.[14]

   21) The Notifying Party submits that the relevant geographic scope should be far wider than 120 km around each  production  facility  and  has
       provided market shares at a national level.

   22) In the course of the market investigation one of the Target's competitors noted that they  in  fact  deliver  products  throughout  entire
       France,[15] while the customers stated that they purchase mortars from within at least 300  km  and  at  most  nationally  or  even  cross
       border.[16]

   23) However, the exact market geographic scope of the relevant market(s) can be left open as the notified Transaction does not raise doubts as
       to its compatibility with the internal market under any plausible market definition.

3 Competitive assessment

   24) According to the Notifying Party the proposed Transaction does not give rise to competition concerns because (i) there are  no  horizontal
       overlaps between the Parties and (ii) the vertical link between the activities of the Target and Univar is only potential, as  the  Target
       is not a current customer of Univar in France and in the  countries  where  it  does  purchase  commodity  and  specialty  chemicals  from
       distributors, is a minor, not significant purchaser. In the EEA, the Target is active in (i) pre-mix dry façade mortars, (ii) pre-mix  dry
       construction mortars and (iii) pre-mix dry tile fixing mortars in Belgium, Spain, the United Kingdom and France.  It  is  also  active  in
       France only in ready-to-use paste mortars used for façades, construction and tile fixing. In all  of  these  markets  Target's  shares  of
       supply are below 30%,[17] with the exception of the market for pre-mix dry façade mortars in France, where it amounts to [30-40]%[18]

   25) Univar is active in commodity and specialty chemicals, which are used as input into the production of  pre-mix  dry  façade  mortars.  Its
       market share in France for commodity chemicals amounts to [5-10]% and in specialty chemicals [5-10]%.[19] Due to the  fact  that  Target's
       market share in the downstream market for pre-mix dry façade mortars in France is above  30%  there  are  vertically  affected  markets  -
       upstream for the distribution of commodity and specialty chemicals and downstream for pre-mix dry façade mortars in France.  However  this
       vertical relation does not give rise to foreclosure concerns.

       1 Input foreclosure

   26) It is unlikely that the Merged Entity would be able to foreclose the Target's competitors  in  France  given  that  alternative  suppliers
       exist. Univar's market share for the distribution of commodity chemicals is limited  (below  [5-10]%)  and  other  competitors  in  France
       include Brenntag [10-20]%, Helm [0-5%], Quaron [0-5]% and PC Loos [0-5]%. In the market  for  the  distribution  of  specialty  chemicals,
       Univar's share is only [5-10]% and other competitors are present such as Azelis [5-10]%, IMCD [5-10]%, Unipex [5-10]% and Safic Alcan  [0-
       5]%. It is therefore unlikely that the Merged Entity would be in a position  to  foreclose  its  downstream  competitors  from  access  to
       chemicals since it would be unlikely to benefit from such behaviour. Furthermore,  there  appear  to  be  various  sources  of  supply  of
       chemicals used in the production of pre-mix dry façade mortars in France, namely not only distributors but also manufacturers. The  Target
       itself purchases specialty chemicals directly from the manufacturers such as Dow, BASF and Elotex (typically from Germany) and not through
       independent chemical distributors such as Univar. Finally, the Targets' competitors did not raise any specific concerns in the  course  of
       the market investigation.[20]

2 Customer foreclosure

   27) Given the fact that a number of alternative customers exist for Univar's competitors in France, it seems unlikely that the  Merged  Entity
       would be able to engage in customer foreclosure. The Target's main competitors in the supply of pre-mix dry façade mortars in  France  are
       Weber [30-40]%, PRB [20-30]%, VPI [5-10]%, Cantillana [5-10]%, and CESA [5-10]%.

   28) In the course of the market investigation none of Univar's competitors claimed that following  the  Transaction  they  would  not  have  a
       sufficient number of customers for the chemicals used in the production of pre-mix dry façade mortars.[21]

3 Conclusion

   29) In the light of the above and of the available evidence, the Commission considers that the proposed Transaction  does  not  give  rise  to
       serious doubts as to its compatibility with the internal market since it is unlikely to result in the Merged Entity being able  or  having
       the incentive to engage in input and/or customer foreclosure. Therefore, it is unlikely that the Transaction would lead to  a  significant
       impediment to effective competition.

       CONCLUSION

   30) For the above reasons, the European Commission has decided not to oppose the notified operation and to  declare  it  compatible  with  the
       internal market and with the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of the Merger Regulation.

                                        For the Commission

                                        (signed)

                                        Maroš ŠEFČOVIČ
                                        Vice-President

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[1]   OJ L 24, 29.1.2004, p. 1 ('the Merger Regulation'). With effect from 1 December 2009, the Treaty on the Functioning of the  European  Union
      ('TFEU')      has      introduced      certain      changes,      such      as      the      replacement      of       'Community'       by
      '湕潩❮愠摮✠潣浭湯洠牡敫❴戠⁹椧瑮牥慮⁬慭歲瑥⸧吠敨琠牥業潮潬Union' and 'common market' by 'internal market'. The terminology of the  TFEU  will
      be used throughout this decision.

[2]   Publication in the Official Journal of the European Union No C 150, 17.5.2014, p. 7.

[3]   CVC holds [CONFIDENTIAL] shares of Univar, while the remaining [CONFIDENTIAL] is held by Clayton, Dubilier & Rice, LLC. These  two  private
      equity investment groups jointly control Univar (see Case M.6012 - CD&R/CVC/Univar).

[4]   For the sake of completeness, with respect to one of the companies constituting the Target [CONFIDENTIAL] it will after the Transaction  be
      held (indirectly) [CONFIDENTIAL]% by CVC and [CONFIDENTIAL]% by a Thai individual. This structure results from the provisions of  Thai  law
      that prohibit foreign entities from holding a majority shareholding in Thai companies. However CVC will exercise de facto sole control over
      [CONFIDENTIAL] as [CONFIDENTIAL] day-to-day management, as well as the approval of its business  plan,  budget,  and  the  appointment  and
      removal of its senior managers requires the approval of a simple majority of [CONFIDENTIAL] board of directors. This board is  composed  of
      four members, three of which are appointed by representatives of the holding company belonging to the Target (and  thus  CVC  will  control
      these appointments).

[5]   M.2244 -Royal Vopak/Ellis& Everard

[6]   Responses to question 4 of the Questionnaire Q3 – Competitors commodity and specialty chemicals for pre-mix dry façade mortars.

[7]   Responses to question 5 of the Questionnaire Q3 – Competitors commodity and specialty chemicals for pre-mix dry façade mortars.

[8]   M.2244 -Royal Vopak/Ellis& Everard

[9]   Responses to question 6 of the Questionnaire Q3 – Competitors commodity and specialty chemicals for pre-mix dry façade mortars.

[10]  Form CO, par. 39.

[11]  M.4719 – Heidelberg Cement/Hanson, M.1779 – Anglo American/Tarmac and M.4898 – Saint Gobain/Maxit.

[12]  Response to question 5.2 of the Questionnaire Q1 – Competitors pre-mix dry façade mortars.

[13]  M.1779 – Anglo American/Tarmac, M.4719 – Heidelberg Cement/Hanson and M.4898 – Saint Gobain/Maxit.

[14]  M.4898 – Saint Gobain/Maxit.

[15]  Response to question 11.1 of the Questionnaire Q1 – Competitors pre-mix dry façade mortars.

[16]  Response to question 9 of the Questionnaire Q2 – Customers pre-mix dry façade mortars.

[17]  And at most reach [20-30]% in the market for pre-mix dry construction mortars in France.

[18]  According to the Notifying Party Target's market shares at regional/local level would not  differ  significantly  from  those  at  national
      level.

[19]  The Notifying Party confirmed that, even under a narrower market definition, Univar would not have a market share in any particular  region
      in France exceeding 10%.

[20]  Response to question 12 of the Questionnaire Q1 – Competitors pre-mix dry façade mortars.

[21]  Responses to questions 8 and 9 of the Questionnaire Q3 – Competitors commodity and specialty chemicals for pre-mix dry façade mortars.

-----------------------
 In the published version of this decision, some information has  been  omitted  pursuant  to  Article  17(2)  of  Council  Regulation  (EC)  No
 139/2004[pic]!,.045@ABCZ[\]^_`wxyz{|}’“”õñãßÛßÕÏÉÏÃ½µ±µ£›µ’Š†ŠxpŠß±f_X concerning non-disclosure of business  secrets  and  other  confidential
 information. The omissions are shown thus […]. Where possible the information omitted has been replaced by  ranges  of  figures  or  a  general
 description.

                                                                  PUBLIC VERSION

                                                                 MERGER PROCEDURE