CELEX: 32015M7703
Language: en
Date: 2015-08-20 00:00:00
Title: Commission Decision of 20/08/2015 declaring a concentration to be compatible with the common market (Case No COMP/M.7703 - PONTMEYER / DBS) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

Brussels, 20.8.2015
C(2015) 5947 final

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|                                                                       |To the notifying party:                                                |

Dear Sirs,

Subject:    Case M.7703 – PontMeyer / DBS

Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/2004[1] and Article 57 of the Agreement  on  the  European  Economic
Area[2]

    1) On 15 July 2015, the European Commission received notification of a proposed concentration pursuant to Article 4 of the Merger  Regulation
       by which the undertaking PontMeyer N.V. ('PontMeyer', the Netherlands), controlled by HAL Investments B.V. (‘HAL’),  acquires  within  the
       meaning of Article 3(1)(b) of the Merger Regulation control of the whole of the  undertaking  Deli  Building  Supplies  B.V.  ('DBS',  the
       Netherlands) by way of purchase of shares[3]. (PontMeyer is designated hereinafter as the 'Notifying Party' while PontMeyer  and  DBS  are
       designated as the ‘Parties’.)

       THE PARTIES

    2) PontMeyer is active in distribution of timber and building materials in  the  Netherlands  through  its  chain  of  45  general  builders'
       merchants trading under the brand PontMeyer. Furthermore, PontMeyer owns three wholesalers of wood and wood-based panels  (Centrop,  Trima
       and Van Dam) and one manufacturer of wooden products (Houtindustrie Opmeer) in the Netherlands. PontMeyer is ultimately controlled by  HAL
       Investments B.V. (‘HAL’).

    3) DBS is a holding company for several suppliers of timber and  building  materials  in  the  Netherlands.  Its  subsidiary  Jongeneel  B.V.
       ('Jongeneel') operates 46 general builders' merchants throughout the Netherlands. Heuvelman Hout and RET Bouwproducten, part of Jongeneel,
       are active in the wholesale of wood and wood-based panels. Astrimex B.V., another Jongeneel  company,  is  a  wholesaler  of  ceiling  and
       partitioning products.

       THE OPERATION AND THE CONCENTRATION

    4) According to the agreed share sale and purchase agreement (‘SPA’), PontMeyer will acquire all the issued and outstanding shares in DBS and
       thus acquire sole control of DBS. The SPA will be signed after the completion of consultation procedures with the relevant works  councils
       in accordance with the Dutch law as provided in the signing protocol entered into by PontMeyer and N.V.  Deli  Maatschappij,  the  current
       owner of DBS, on 22 June 2015.

    5) The proposed transaction therefore constitutes a concentration within the meaning of Article 3(1)(b) of the Merger Regulation.

       UNION DIMENSION

    6) The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 000 million[4] (HAL: 7 007 million; DBS: […]).
       Each of them has a Union-wide turnover in excess of EUR 250 million (HAL: […]; DBS: […]), but they do not achieve more than two-thirds  of
       their aggregate Union-wide turnover within one and the same Member State. The notified operation therefore has a Union dimension.

       MARKET DEFINITIONS

1 Introduction

    7) The Parties are active on several manufacturing, wholesale and retail markets concerning different building and wood products.

2 Relevant product markets

1 Distribution of building products

    8) The Parties' activities overlap in the distribution of building products, both at wholesale and  at  retail  level,  particularly  through
       builders' merchants.

    9) The Commission has previously considered that the distribution of building products could be segmented according to the type of  customers
       into (i) wholesale to retailers, (ii) retail sales to professional customers (primarily through  builders’  merchants)  and  (iii)  retail
       sales to non-professional customers (primarily through do-it-yourself shops) but has ultimately left the exact market definition  open.[5]
       Concerning the market for the retail sale of building products to professional customers, the Commission has  also  considered  a  further
       segmentation between specialist and generalist retailers.[6]

   10) The Notifying Party submits that there is one overall market for  the  distribution  of  building  materials,  irrespective  of  level  of
       distribution channel and also without further  distinction  between  specialists  and  generalists.  The  Notifying  Party  explains  that
       professional customers increasingly source building materials not only from builders’ merchants but also  directly  from  wholesalers  and
       manufacturers as well as from do-it-yourself shops, which have in turn introduced services specifically aimed at small  professional  end-
       users. The Notifying Party submits that customers can also source many types of products, such as wood products, both from specialists and
       generalists. That would further be evidenced by the Parties having  themselves  evolved  from  specialists  in  timber  distribution  into
       generalists. The Notifying Party, however, provided separate market information for the narrowest plausible markets on which  the  Parties
       are active: (i) wholesale of hardwood, (ii) wholesale of softwood, (iii) wholesale of wood-based panels and (iv) retail sale  of  building
       materials to professional customers by generalists.

   11) Market participants who responded to the market investigation confirmed to some extent  that  they  increasingly  consider  do-it-yourself
       stores and wholesalers to be at least partial alternatives to builders’ merchants,  with  do-it-yourself  stores  also  offering  services
       targeted at professionals' needs.[7] This view was not, however, shared by all respondents including customers[8].  Moreover,  respondents
       considered that the distinction between retail sales to professional customers and retail sales to  non-professional  customers  is  still
       valid even if some considered that no distinction should be made between generalists and specialists.[9]

   12) For the purposes of the present case, it is not necessary to conclude on the exact product market definition as regards  the  distribution
       of building products since the proposed transaction does not give rise to serious doubts as to its compatibility with the internal  market
       under any plausible market definition.

2 Production of decorative laminate

   13) Two of HAL’s subsidiaries (other than PontMeyer) produce decorative high-pressure laminate ('HPL').  The  activities  of  these  companies
       vertically relate to the activities of DBS in the downstream distribution of building products.

   14) The Commission has in previous decisions found indications that the relevant product market likely consists of  all  types  of  decorative
       laminates without a subsegmentation between, for instance HPL and  continuous  pressure  laminate  ('CPL'),  but  has  left  the  question
       ultimately open[10].

   15) The Notifying Party submits that the relevant market consist of all decorative laminates, including both HPL and CPL. In  particular,  the
       Notifying Party submits that suppliers are normally able to produce or switch production between different types of  decorative  laminates
       without incurring significant obstacles (supply-side substitutability).

   16) For the purposes of the present case, it is not necessary to conclude on  the  exact  product  market  definition  as  regards  decorative
       laminates since the proposed transaction does not give rise to serious doubts as to its compatibility with the internal market even  under
       the narrowest product market definition.

3 Relevant geographic markets

1 Distribution of building products

   17) The Commission has previously considered that the relevant geographic market for the wholesale of building products is at  least  national
       and possibly even wider but has left the question ultimately open.[11]

   18) For the retail sale of building materials to professional customers by generalists, the Commission  has  previously  considered  that  the
       relevant markets can be national, regional (smaller than national) or local but has left the question ultimately open.[12]

   19) The Notifying Party submits that the distribution (regardless of whether  wholesale  or  retail)  of  building  products  to  professional
       customers is national (the Netherlands). According to the Notifying Party, market participants – including the Parties – have  a  national
       presence in the Netherlands and they offer deliveries for free or against a modest fee throughout the country. Moreover,  many  deliveries
       would come directly from the manufacturers even if sold by a builders’ merchant. Moreover, there would be a chain substitution  effect  as
       the local catchment areas overlap continuously over the Netherlands.

   20) Without prejudice to its position on the geographic market definition, the Notifying Party has  nonetheless  provided  market  information
       both on the national and local level for the retail sale of building products to professional customers in the Netherlands.

   21) While the results of the market investigation include indications that even the retail level could be national in  the  Netherlands,  some
       market participants nonetheless submitted that the markets are rather local because, for instance customers are not willing to travel long
       distances for the products and because each outlet can price the products individually  at  least  within  some  boundaries.[13]  For  the
       purposes of the assessment, the Commission will consider, in accordance with  its  previous  decisional  practice[14],  local  markets  as
       corresponding to the catchment area with a radius of 30 km from a store's location, as this distance is broadly in line with the  findings
       of the market investigation.[15]

   22) For the purposes of the present case, it is not  necessary  to  conclude  on  the  exact  geographic  market  definition  as  regards  the
       distribution of building products since the proposed transaction does not give rise to serious doubts as to  its  compatibility  with  the
       internal market under any plausible market definition.

2 Production of decorative laminate

   23) The Commission has previously considered the relevant geographic market for decorative laminates to be EEA-wide in scope[16].

   24) The Notifying Party submits that the relevant geographic market is EEA-wide.

   25) For the purposes of the present case, it is not necessary to conclude on the exact  geograpic  market  definition  as  regards  decorative
       laminates since the proposed transaction does not give rise to serious doubts as to its compatibility with the internal market  under  any
       plausible market definition.

       COMPETITIVE ASSESSMENT

1 Horizontally affected markets

   26) The proposed transaction does not give rise to horizontally affected markets in the distribution of building materials if  no  distinction
       is made according to the sales channel. However, when considering narrower plausible markets, the transaction would result in an  affected
       market for the retail sale of building products to professional customers by generalist retailers in the Netherlands at national level, as
       well as in a number of potential local markets.

1 Retail sale of building materials via builders' merchants to professional customers

   27) The combined market shares of the Parties at national level would amount to 20%. The Parties’ and  their  competitors’  market  shares  at
       national level are provided in Table 1.

       Table 1 - National market shares in the Netherlands, generalist builders' merchants[17]

|Builders’ merchant                     |Number of outlets     |Market              |
|                                       |                      |share               |
|PontMeyer                              |[…]                   |[5–10]%             |
|DBS                                    |[…]                   |[10–20]%            |
|Combined                               |[…]                   |[20–30]%            |
|Bouwcenter                             |[…]                   |[10–20]%            |
|CRH                                    |[…]                   |[10–20]%            |
|Bouwmaat                               |[…]                   |[10–20]%            |
|Raab Karcher                           |[…]                   |[5–10]%             |
|BPG                                    |[…]                   |[5–10]%             |
|Stiho                                  |[…]                   |[0–5]%              |
|Other                                  |[…]                   |[10–20]%            |
|Total                                  |[…]                   |100%                |

           Source. The Notifying Party

   28) In the potential local markets around DBS’ outlets, as outlined above at paragraph (21), the Parties’ combined market shares reach 20%  in
       a number of locations as shown in Table 2.

       Table 2 – Affected potential local markets in the Netherlands, generalist builders’ merchants

|Location                     |Total outlets   |Outlets Pont Meyer|Outlets DBS     |Outlets             |Joint market    |
|                             |                |                  |                |Parties combined[18]|share           |
|Amsterdam                    |[…]             |[…]               |[…]             |[…]                 |[20–30]%        |
|Apeldoorn                    |[…]             |[…]               |[…]             |[…]                 |[20–30]%        |
|Arnhem                       |[…]             |[…]               |[…]             |[…]                 |[20–30]%        |
|Bergen op Zoom               |[…]             |[…]               |[…]             |[…]                 |[20–30]%        |
|Breda                        |[…]             |[…]               |[…]             |[…]                 |[20–30]%        |
|Den Haag (Binckhorst)        |[…]             |[…]               |[…]             |[…]                 |[20–30]%        |
|Den Haag (De Werf)           |[…]             |[…]               |[…]             |[…]                 |[20–30]%        |
|Den Helder                   |[…]             |[…]               |[…]             |[…]                 |[20–30]%        |
|Deventer                     |[…]             |[…]               |[…]             |[…]                 |[20–30]%        |
|Dordrecht                    |[…]             |[…]               |[…]             |[…]                 |[30–40]%        |
|Groningen                    |[…]             |[…]               |[…]             |[…]                 |[20–30]%        |
|Haarlem                      |[…]             |[…]               |[…]             |[…]                 |[20–30]%        |
|Moerdijk                     |[…]             |[…]               |[…]             |[…]                 |[30–40]%        |
|Nijmegen                     |[…]             |[…]               |[…]             |[…]                 |[30–40]%        |
|Oss                          |[…]             |[…]               |[…]             |[…]                 |[20–30]%        |
|Poeldijk                     |[…]             |[…]               |[…]             |[…]                 |[20–30]%        |
|Rotterdam (Waalhaven)        |[…]             |[…]               |[…]             |[…]                 |[20–30]%        |
|Rotterdam (Noord West)       |[…]             |[…]               |[…]             |[…]                 |[20–30]%        |
|Schiedam                     |[…]             |[…]               |[…]             |[…]                 |[30–40]%        |
|Den Bosch                    |[…]             |[…]               |[…]             |[…]                 |[20–30]%        |
|Sittard                      |[…]             |[…]               |[…]             |[…]                 |[20–30]%        |
|Sneek                        |[…]             |[…]               |[…]             |[…]                 |[30–40]%        |
|Spankeren                    |[…]             |[…]               |[…]             |[…]                 |[20–30]%        |
|Terneuzen                    |[…]             |[…]               |[…]             |[…]                 |[40–50]%        |
|Tilburg                      |[…]             |[…]               |[…]             |[…]                 |[20–30]%        |
|Utrecht (Het Houten Hart)    |[…]             |[…]               |[…]             |[…]                 |[20–30]%        |
|Utrecht (Lage Weide)         |[…]             |[…]               |[…]             |[…]                 |[20–30]%        |
|Woerden                      |[…]             |[…]               |[…]             |[…]                 |[20–30]%        |
|Zaandam                      |[…]             |[…]               |[…]             |[…]                 |[20–30]%        |
|Zoetermeer                   |[…]             |[…]               |[…]             |[…]                 |[20–30]%        |
|Zwaagdijk                    |[…]             |[…]               |[…]             |[…]                 |[20–30]%        |
|Zwolle                       |[…]             |[…]               |[…]             |[…]                 |[20–30]%        |

      Source: The Notifying Party

   29) First, the combined market shares in the affected markets are generally  modest  both  at  national  and  local  level.  Even  considering
       individual catchment areas, a number of competitors will remain active in all of them. It is therefore unlikely  that  the  merged  entity
       would be able to increase prices or otherwise exercise market power.

   30) Second, the Commission has further assessed the physical locations of the Parties’ and their competitors’ outlets  in  those  local  areas
       where the merged entity would achieve a combined market share of [30–40]% or more (Dordrecht,  Moerdijk,  Nijmegen,  Schiedam,  Sneek  and
       Terneuzen) based on the information provided by the Notifying Party. The assessment shows that even within the  local  areas,  the  merged
       entity’s outlets would continue to be challenged by competitors’ outlets nearby. Particularly concerning the area of Terneuzen,  in  which
       the merged entity would achieve its highest local market share, [40–50]%, the assessment shows that competitors’ outlets are closer to the
       Parties’ outlets than the Parties’ outlets are to each other: the closest outlet to DBS’ outlet in Terneuzen  is  Bouwcenter’s  while  the
       closest outlet to PontMeyer’s outlet is that of BPG’s.

   31) Third, the results of the market investigation support the absence of competition concerns related to horizontal effects.  In  particular,
       market participants did not consider the parties to generally be each others’  closest  competitors  in  the  Netherlands  but  they  most
       frequently named competitors such as Stiho and Bouwmaat as the Parties' closest competitors.[19] Market participants, including customers,
       also did not expect the proposed transaction to give rise to negative effects such  as  price  increases  as  adequate  competition  would
       remain.[20]

   32) Therefore, the Commission finds that the proposed transaction is unlikely to give rise to serious doubts as to its compatibility with  the
       internal market in respect to national and local markets for the retail sale of  building  materials  to  professional  customers  through
       builders' merchants in the Netherlands.

2 Vertically affected markets

   33) There are a number of vertical links between the Parties’ activities in (i) the retail sale of building products to professional customers
       and (ii) their activities in the wholesale of various building products (softwood, hardwood and wood-based  panels)  as  well  as  between
       those activities and (iii) HAL’s production and sale of certain laminates.

   34) The Parties’ combined market shares on all of the potential upstream markets of wholesale and production of building products  range  from
       [5–10]% in the wholesale of hardwood in the Netherlands to [20–30]%  in  the  wholesale  of  ceiling  and  partitioning  products  in  the
       Netherlands[21].

   35) Therefore, the proposed transaction does not give rise to vertically affected markets in as much as the retail markets are also considered
       national.

   36) Even if those potential local markets where the Parties reach 30% in the retail sale of building products to professional  customers  were
       considered (see Table 2), the the proposed transaction would not give rise to anti-competitive vertical effects.

       Input foreclosure

   37) As set out in paragraph (34), the Parties’ market shares on all of the potential upstream markets of wholesale and production of  building
       products remain modest. Therefore, the Commisison considers that the merged entity would lack the ability to engage into input foreclosure
       due to its modest market position in the upstream markets. In its assessment, the Commission has also taken into account the fact that the
       Parties have some exclusive distribution agreements with regard to certain wooden products. However, in light of the results of the market
       investigation, the Commission considers that customers could likely switch to alternative products if the merged entity tried to foreclose
       access to those products for which they hold exclusive rights.[22]

       Customer foreclosure

   38) As to customer foreclosure, the demand for building materials in any of the local markets within the Netherlands is only a fraction of the
       total demand in the country and it is not feasible that the merged entity would have the ability to meaningfully  foreclose  its  upstream
       competitors or customers. Moreover, end-customers would continue to have access to a number of alternative retailers in all of  the  local
       markets within the Netherlands and they would therefore not be significantly deprived of choice should the merged entity stop distributing
       the products of its upstream competitors.

   39) Therefore, the Commission concludes that the proposed transaction is unlikely to give rise to non-horizontal competition concerns.

       CONCLUSION

   40) 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  and
       Article 57 of the EEA Agreement.

For the Commission
(Signed)
Miguel ARIAS CAÑETE
Member of the Commission

-----------------------
[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 'Union' and 'common market' by 'internal  market'.  The
       terminology of the TFEU will be used throughout this decision.

[2]   OJ L 1, 3.1.1994, p.3 (‘the EEA Agreement’).

[3]   Publication in the Official Journal of the European Union No C 241, 23 July 2015, p. 5.

       [4]  Turnover calculated in accordance with Article 5 of the Merger Regulation.

[5]   M.3407 – Saint Gobain / Dahl, paragraphs 12 and 16; and M.3142 – CVC / Danske Traeplast, paragraphs  11–3.  See  also  M.7107  –  Cordes  &
       Graefe / Pompac / Comafranc, paragraph 15; and M.4050 – Goldman Sachs / Cinven /Ahlsell, paragraph 9, for installation products.

[6]   M.7107 – Cordes & Graefe / Pompac / Comafranc, paragraphs 17–8; M.3184 – Wolseley / Pinault Bois & Materiaux,  paragraphs  12–7;  M.1974  –
       Compagnie de Saint-Gobain / Raab Karcher, paragraph  8.  See  also  Goldman  Sachs  /  Cinven  /Ahlsell  where  the  Commission  discussed
       installation products (as opposed to all building products), M.4050 – Goldman Sachs / Cinven /Ahlsell, paragraph 9.

[7]   See for instance minutes of a call with a competitor, 28 July 2015 'Customers' behaviour has been  changing.  Clients  prefer  distributors
       who offer a number of services from the retail sale, through transport to installing.  Therefore,  builders'  merchants  like  [competitor
       name] need to cooperate also with installers. It is to be noted that DIY stores offer these kinds of services'.

[8]   Q1 – Questionnaire to competitors, question 7, and Q2 – Questionnaire to customers, question  7. See also confirmed minutes of a call  with
       a competitor, 28 July 2015.

[9]   Q1 – Questionnaire to competitors, question 6, and Q2 – Questionnaire to customers, question 6.

[10]  M.4525 – Kronospan / Constantia, paragraph 19; and M.4165 – Sanae Industria / Hornitex, paragraph 11.

[11]  M.3142 – CVC / Danske Traeplast, paragraphs 14–16.

[12]  M.3184 – Wolseley / Pinault Bois & Materiaux, paragraphs 19–22; M.3142 – CVC / Danske Traeplast, paragraphs 14–6; and  M.1974  –  Compagnie
       de Saint-Gobain / Raab Karcher, paragraphs 12. See also M.3407 – Saint Gobain / Dahl, paragraphs 19–20.

[13]  Q1 – Questionnaire to competitors, questions 8–10, and Q2 – Questionnaire to customers, questions 8–12.

[14]  M.3184 – Wolseley / Pinault Bois & Materiaux, paragraphs 19–22.

[15]  The radus indicated by the respondents to the market investigation ranges between 10 and 50 km. See  replies  to   Q1  –  Questionnaire  to
       competitors, questions 8–9; Q2 – Questionnaire to customers, question 8. See also minutes of a conference call with a competitor, 28  July
       2015; minutes of a conference call with a customer, 29 July 2015.

[16]  M.4525 – Kronospan / Constantia, paragraph 37. See also Sonea Industria / Hornitex where the market was considered to be  at  least  cross-
       border regional but the question was ultimately left open, M.4165 – Sonea Industria / Hornitex, paragraph 14.

[17]  Market shares are the Parties' best estimates calculated on the number of outlets, which is also the basis the  Parties  use  for  internal
       competitive analyses.

[18]  Since the catchment areas around the DBS’ builders' merchants show overlap, some outlets of the Parties appear more than once.  The  number
       of outlets shown is therefore larger than the total number of outlets of the Parties in the Netherlands.

[19]  See replies to Q1 – Questionnaire to competitors, questions 14.1 and 14.2; and replies to Q2 – Questionnaire  to  customers,  questions  16
       and 17; see also minutes of a call with a customer, 29 July 2015 'Stiho is the closest competitor  to  Jongenheel,  i.e.  [customer  name]
       would seek a quote from it to compare prices from Jongenheel'.

[20]  Q1 – Questionnaire to competitors, questions 11–20 ; Q2 – Questionnaire to customers, questions 14–21. See  also  confirmed  minutes  of  a
       call with a competitor, 28 July 2015, and confirmed minutes of a call with a customer, 29 July 2015.

[21]  The potential market for the wholesale of ceiling and partitioning products in the Netherlands is not horizontally affected as only DBS  is
       active there.

[22]  Confirmed minutes of a call with a competitor, 28 July 2015.

-----------------------
 In the published version of this decision, some information has been omitted pursuant to Article 17(2) of Council Regulation (EC)  No  139/2004
 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

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