CELEX: 32015M7457
Language: en
Date: 2015-02-12 00:00:00
Title: Commission Decision of 12/02/2015 declaring a concentration to be compatible with the common market (Case No COMP/M.7457 - CVC / PAROC) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

Brussels, 12.2.2015
C(2015) 901 final

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To the notifying party:

Dear Sirs,

Subject:    Case M.7457 – CVC/ Paroc
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 8 January 2015, the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EC)  No
       139/2004[3] by which the undertaking CVC Capital Partners SICAV-FIS S.A. (‘CVC’, Luxembourg),  acquires  within  the  meaning  of  Article
       3(1)(b) of the Merger Regulation indirect sole control of the whole of Paroc Group (‘Paroc’, Finland), by way of  purchase  of  shares  in
       Safari Finco 1 Oy, the holding company of Paroc. CVC is hereinafter referred to as ‘the Notifying Party’ while CVC and Paroc together  are
       referred to as ‘the Parties’.

       THE PARTIES

    2) Paroc is a Finnish-headquartered company active in the production and supply of  mineral  wool  insulation  materials  for  technical  and
       building applications.

    3) CVC is part of the CVC Group whose activities include the provision of investment advice to and/or managing of investments  on  behalf  of
       certain investment funds (‘CVC Funds’). Three of CVC  Funds’  portfolio  companies  are  relevant  for  the  assessment  of  the  proposed
       transaction, namely Univar, Parex and Ahlsell. Univar (upstream of Paroc) is  active  in  the  distribution  of  commodity  and  specialty
       chemicals some of which are used in the production of mineral wool insulation products; Ahlsell (downstream of Paroc)  is  active  in  the
       distribution of installation products, including insulation products; and Parex (downstream of Paroc) is active  in  the  manufacture  and
       supply of insulated facade systems.

       THE OPERATION AND THE CONCENTRATION

    4) […] entered into a share purchase agreement (‘SPA’) on 22 October 2014. According to the SPA, a special purpose vehicle (Parry  1  Holding
       AB) will acquire the entire issued share capital of Paroc’s holding company Safari Finco 1 Oy. While some of the present owners  of  Paroc
       will ultimately acquire a minority shareholding of 14% in aggregate in Parry 1 Holding AB, 86% of the shares  in  it  will  ultimately  be
       indirectly controlled by CVC through another special purpose vehicle (Luxco 1) that is wholly owned by CVC Funds.

    5) The shareholders’ agreement between […] and the minority shareholders does not provide the latter any veto or other rights that  would  go
       further than those typically granted to protect minority shareholders. In particular, the minority shareholders will not be able to  block
       decisions that concern Paroc’s strategic commercial behaviour.

    6) Consequently, CVC will acquire indirect sole control of Paroc and the operation constitutes a concentration within the meaning of  Article
       3(1)(b) of the Merger Regulation.

       UNION DIMENSION

    7) The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 000  million[4]  (CVC:  EUR  […],  Paroc:  433
       million). Each of them has a Union-wide turnover in excess of EUR 250 million (CVC: EUR […], Paroc: […]), 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 pursuant to Article 1(2) of the Merger Regulation.

       COMPETITIVE ASSESSMENT

1 Introduction

    8) Paroc is active in the production and supply of mineral wool insulation materials for  technical  and  building  applications.  Paroc  has
       manufacturing facilities in Finland, Lithuania, Poland and Sweden, and it operates primarily in the Nordic and Eastern European countries.

    9) The transaction does not give rise to horizontal overlaps. However, there are vertical links between the activities of Paroc and three  of
       CVC Funds' portfolio companies, namely Univar, Ahlsell and Parex. Of those entities, Univar is active upstream of Paroc while Ahlsell  and
       Parex are active downstream.

   10) Univar is active in the distribution of commodity and specialty chemicals, some of which could be used as  inputs  in  the  production  of
       insulation materials. The Commission has in previous cases considered (i) commodity chemicals; and (ii) speciality chemicals to constitute
       distinct markets with at least a national geographic span, though leaving the exact market definition open.[5] The link between Univar and
       Paroc gives rise to vertically affected markets in Finland, Sweden and Poland due to Paroc’s market position in the downstream markets  in
       the production of insulation products.[6] Even on the narrowest  plausible  market  definitions  for  commodity  and  specialty  chemicals
       considered by the Commission in previous cases, Univar’s market shares are modest, varying between [0–20]%  in  the  affected  markets.[7]
       Only [0–5]% of Univar’s total EEA sales are made to insulation  manufacturers.  During  the  market  investigation,  Univar’s  competitors
       indicated that they are not dependent on Paroc as a customer[8], and Paroc’s competitors indicated that they are not dependent  on  Univar
       for their supplies[9].[10] In light of the above and on the basis of the evidence available to the Commission, the vertical  link  between
       Univar and Paroc does not give rise to serious doubts as to its compatibility with the internal market. Therefore,  it  is  not  discussed
       further in this decision.

   11) The vertical link between Paroc and Parex does not give rise to any affected markets. Parex  is  active  in  the  production  of  external
       insulation and finishing systems, which is a market the Commission has previously considered to  be  national  in  scope.[11]  Parex  uses
       insulation materials as an input to that production. However, because  of  the  geographic  complementarity  between  Paroc’s  and  Parex’
       activities, France is the only EEA country where both Parties are meaningfully present. Their market shares remain considerably below  30%
       on both upstream and downstream in France as well as at EEA-level. The vertical link between Paroc and Parex does not therefore give  rise
       to any affected markets and is not discussed further in this decision.

   12) The vertical link between Paroc and Ahlsell gives rise to vertically affected markets. Approximately […]% of Paroc’s  building  insulation
       (‘BI’) product output and over […]% of  its  technical  insulation  (‘TI’)  product  output  is  sold  to  distributors  (wholesale/retail
       distributors such as Ahlsell, independent retailers and do-it-yourself stores), although the  figures  vary  by  country.[12]  Ahlsell  is
       active in the wholesale and retail distribution of installation products, including insulation products.

   13) On the narrowest plausible geographic basis, which is national, vertically affected markets are found in Finland, Estonia and Sweden.   In
       addition, the wider regional markets consisting of the Nordic or the Baltic countries would also be  affected.  Ahlsell  has  an  existing
       commercial relationship with Paroc regarding the sale of technical insulation products in Finland and Estonia.

2 Relevant markets

1 Upstream market: Production and supply of insulation materials

1 Product market definition

   14) Insulation products reduce the thermal and acoustic exchange through a wall, roof or duct on which  they  are  placed.  They  are  usually
       produced either from foams or mineral wools and may take many forms, such as rigid panels for walls or elastic mats for the insulation  of
       pipes. The Commission has previously found that insulation products constitutes a separate market from other building products.[13]

   15) The Commission has previously considered that insulation materials may be segmented by their application, between BI and TI  products  but
       has ultimately left the market definition open.[14] The present case concerns both TI  and  BI  products,  and  the  Notifying  Party  has
       provided market information for them separately.

   16) The Commission has previously considered the possible further sub-segmentation of insulation products by insulation material, between  (i)
       foams and (ii) mineral wools but has left the market definition open.[15] Although Paroc is only active in mineral  wools,  the  Notifying
       Party submits that such sub-segmentation is not warranted because of demand-side substitutability.

   17) The results of the market investigation support the view that BI and TI products belong to separate markets, as well  as  a  further  sub-
       segmentation between foams and mineral wools. On the demand side, market participants referred to different uses of the  products  and  to
       differing technical characteristics between mineral wools and foams, mineral wools having better fire protection qualities while foams are
       better at handling moisture. On the supply side, market participants noted that the production processes of mineral wools  and  foams  are
       totally different and that switching production between them was not feasible.[16]

   18) Therefore, the Commission considers it is likely that mineral wool BI and mineral wool TI constitute distinct product markets. However, it
       is not necessary to conclude on the exact product market definition as the proposed transaction does not give rise to serious doubts as to
       its compatibility with the internal market under any alternative product market definition.

2 Geographic market definition

   19) The Commission has previously considered that the production and supply of insulation materials is at least national in scope.[17] In some
       decisions, the Commission has also indicated that the market could be wider, e.g. the  Nordic  region[18]  or  European-wide[19]  but  has
       ultimately left the exact market definition open.

   20) The Notifying Party submits that the relevant geographic market for BI is at least national and for TI wider than national. The  Notifying
       Party supports its submission by referring to, e.g. significant cross-border trade and the homogeneity of BI and TI products sold  in  the
       Nordic and Baltic countries. The Notifying Party further suggests that since TI products  are  more  valuable  than  BI  products,  it  is
       economically more viable to transport TI products over longer distances as  the  proportional  transport  costs  are  lower  than  for  BI
       products. However, the Notifying Party acknowledges that […].

   21) The results of the market investigation include some indications that the BI and TI markets could be national. In particular, even if  the
       market participants considered the products to be generally similar across the different Nordic and Baltic countries, price-setting is  in
       many cases national and distributors’ sourcing patterns tend to be national as well.[20]

   22) However, it is not necessary to conclude on the exact geographic market definition as the proposed  transaction  does  not  give  rise  to
       serious doubts as to its compatibility with the internal market under any alternative geographic market definition.

2 Downstream market: Distribution of installation products

1 Product market definition

   23) The Commission has previously considered that the distribution of installation materials could be  segmented  according  to  the  type  of
       customers into: (i) wholesale to retailers; (ii) retail sales to professional  customers;  and  (iii)  retail  sales  to  non-professional
       customers, but has ultimately left the exact market definition open.[21] The  results  of  the  market  investigation  support  the  above
       potential segmentation[22], however, in the present case, only retail sales to professional customers are  relevant  as  Ahlsell  is  only
       active in that segment[23].

   24) The Notifying Party has provided Ahlsell’s market share in relation to retail sales to professional customers of all installation products
       as well as for the narrower markets of TI and BI products, notwithstanding the fact  that  the  Notifying  Party  does  not  consider  the
       distribution of each of TI and BI products to professional customers to constitute distinct markets. Moreover,  the  Notifying  Party  has
       identified one possible further sub-category of  installation  products,  namely  specialist  installation  products  for  HVAC  (heating,
       ventilating and air conditioning), and has provided Ahlsell’s market shares separately for that potential sub-segment.

   25) However, it is not necessary to conclude on the exact product market definition as the proposed transaction does not give rise to  serious
       doubts as to its compatibility with the internal market under even the narrowest plausible product market definition.

2 Geographic market definition

   26) The Commission has previously considered that the relevant distribution markets are national, although it has ultimately  left  the  exact
       market definition open.[24]

   27) In the present case, the Commission notes that market participants’ market shares and their relative market positions  vary  significantly
       between different Nordic and Baltic countries, suggesting that the markets are likely to be national. Replies to the market  investigation
       also support this view in that, for instance, distributors generally set their prices on a national basis.[25]

   28) However, it is not necessary to conclude on the exact geographic market definition as the proposed  transaction  does  not  give  rise  to
       serious doubts as to its compatibility with the internal market under any alternative geographic market definition.

3 Vertical effects

1 Competition effects of a vertical merger

   29) A vertical merger may potentially give rise, in  particular,  to  two  types  of  competition  effects:  input  foreclosure  and  customer
       foreclosure.

   30) Input foreclosure arises where, post-merger, the new entity would be likely to restrict access to the products or services that  it  would
       have otherwise supplied absent the merger, thereby raising its downstream rivals' costs by making it harder for them to obtain supplies of
       the input under similar prices and conditions as absent the merger.[26] Customer foreclosure may occur when a supplier integrates with  an
       important customer in the downstream market. Because of this downstream presence, the merged entity may foreclose access to  a  sufficient
       customer base to its actual or potential rivals in the upstream market (the input  market)  and  reduce  their  ability  or  incentive  to
       compete. In turn, this may raise downstream rivals' costs by making it harder for them to obtain  supplies  of  the  input  under  similar
       prices and conditions as absent the merger.[27]

   31) In order for input or customer foreclosure to be a concern, three conditions need to be met post-merger: (i) the merged  entity  needs  to
       have the ability to foreclose its rivals; (ii) the merged entity needs to have the incentive  to  foreclose  its  rivals;  and  (iii)  the
       foreclosure strategy needs to have a significant detrimental effect on competition on the downstream  market  (input  foreclosure)  or  on
       consumers (customer foreclosure). In practice, these factors are often examined together since they are closely intertwined.[28]

2 Affected markets and the Parties’ market shares

   32) The proposed transaction gives rise to vertically affected markets with respect to the vertical link between: (i) Paroc’s  production  and
       sale of BI products and Ahlsell’s distribution activities in Sweden; and (ii) Paroc’s production and sale of  TI  products  and  Ahlsell’s
       distribution activities in Finland, Estonia, Sweden and Poland. The latter vertical link would give rise to affected markets even if wider
       regional markets consisting of either the four continental Nordic countries (Finland, Sweden, Denmark and Norway) or the Baltic  countries
       (Estonia, Latvia and Lithuania) were considered.

   33) The Parties’ market shares in the vertically affected markets are given in the table below.

         Table 1 - Vertically affected markets (Paroc – Ahlsell)

|Geography           |Upstream (Paroc)                                      |Downstream (Ahlsell, plausible alternative market definitions)  |
|Finland             |Mineral wool TI products: [70–80]%                    |Retail sales of all installation products to professional       |
|                    |                                                      |customers: [10–20]%                                             |
|                    |                                                      |Retail sales of mineral wool TI products to professional        |
|                    |                                                      |customers:  [20–30]%                                            |
|Estonia             |Mineral wool TI products: [40–50]%                    |Retail sales of all installation products to professional       |
|                    |                                                      |customers: [10–20]%                                             |
|                    |                                                      |Retail sales of mineral wool TI products to professional        |
|                    |                                                      |customers : [20–30]%                                            |
|Sweden[29]          |Mineral wool TI products: [50–60]%                    |Retail sales of all installation products to professional       |
|                    |                                                      |customers: [30–40]%                                             |
|                    |                                                      |Retail sales of mineral wool TI products to professional        |
|                    |                                                      |customers: [20–30]%                                             |
|                    |                                                      |Retail sales of HVAC installation products to professional      |
|                    |                                                      |customers: [30–40]%                                             |
|                    |Mineral wool BI products: [30–40]%                    |Retail sales of all installation products to professional       |
|                    |                                                      |customers : [30–40]%                                            |
|                    |                                                      |Retail sales of BI products to professional customers: [0–5]%   |
|                    |                                                      |Retail sales of HVAC installation products to professional      |
|                    |                                                      |customers [30–40]%                                              |
|Poland              |Mineral wool TI products: [30–40]%                    |Retail sales of all installation products to professional       |
|                    |                                                      |customers: [0–5]%                                               |
|                    |                                                      |Retail sales of TI products to professional customers: [0–5]%   |
|Nordics[30]         |Mineral wool TI products: [40–50]%                    |Retail sales of TI products to professional customers: [10–20]% |
|Baltics[31]         |Mineral wool TI products: [40–50]%                    |Retail sales of TI products to professional customers:          |
|                    |                                                      |[10–20]%[32]                                                    |

       Source: The Notifying Party

4 Input foreclosure

   34) The Notifying Party submits that the proposed transaction does not give rise to input foreclosure concerns on the distribution market  for
       installation products, given that the merged entity would neither have the ability nor the incentive to foreclose  Ahlsell’s  rivals.  The
       Notifying Party further submits that insulation material manufacturers are incentivised to use as many sales channels as possible  and  to
       have their products available in as many distribution outlets as possible.

   35) According to the Notifying Party, Ahlsell’s rivals will retain access to sufficient and credible alternative insulation manufacturers post-
       transaction on all of the affected markets. With regard to TI competitors, Paroc faced competition in 2013  (i)  in  Finland  from  Saint-
       Gobain Isover ([10–20]%) and Rockwool ([10–-20]%); (ii) in Estonia from Saint-Gobain Isover ([20–30]%) and Rockwool ([20–30]%); and  (iii)
       in Sweden from Saint-Gobain Isover ([20–30]%) and Rockwool ([20–30%).  As to BI in Sweden, Paroc’s main competitors in  2013  were  Saint-
       Gobain Isover ([30–40]%), Rockwool ([10–20]%) and Knauf ([5–10]%).

   36) The Notifying Party explains that in all of the above mentioned markets, Saint-Gobain Isover and Rockwool  offer  comparable  products  to
       Paroc and have the capacity to supply all the customers, including Finnish customers,  from  production  facilities  in  the  Nordics  and
       potentially further away. As regards specifically Finland, almost […]%) of Ahlsell’s sales of  TI  are  generated  by  brands  other  than
       Paroc’s.

   37) According to the Notifying Party, the merged entity would  not  have  the  incentive  to  foreclose  its  downstream  competitors  because
       manufacturers are incentivised to spread their sales through as wide a range of sales channels as possible  to  maximise  their  sales  to
       professional customers. In addition the Notifying Party submits that given Paroc’s production capacity and Ahlsell's distribution coverage
       in each of the markets above, Paroc will not be able to rely solely on direct sales and distribution through Ahlsell   for  any  of  these
       markets if it is to continue to operate profitably.

   38) In its assessment, the Commission has taken into account not only the  possibility  of  of  a  total  refusal  to  supply,  but  also  the
       possibility that the merged entity could discriminate against Ahlsell's competitors by  offering  them  Paroc's  products  at  prices  and
       conditions significantly worse than those offered to Ahlsell.

   39) The Commission notes that the Parties’ market shares on the upstream markets are high, particularly with respect to TI products in Finland
       where Paroc achieved a [70–80]% market share in 2013. Some respondents also mentioned during the market investigation  that  Paroc  has  a
       particularly strong brand in Finland and that Paroc’s products are, or at least are thought by customers to be,  of  higher  quality  than
       some of their competitors. The comments appeared to be specific to TI products in Finland and may partly stem from the fact that Paroc  is
       an old Finnish brand and company.[33] Nonetheless, the  overall  results  of  the  market  investigation  support  the  Notifying  Party’s
       submission that alternative suppliers, such as Rockwool and Saint-Gobain Isover are available and offer  suitable  products  to  meet  the
       demands of the ultimate customers in all geographies and products discussed, including  TI  products  in  Finland.[34]  Distributors  that
       responded to the market investigation also suggested that their ultimate customers could switch to the products of  alternative  suppliers
       if the prices of Paroc’s products increased in their outlets, which could also  affect  the  distributors’  choice  of  product  portfolio
       available in their outlets.[35]

   40) The Commission therefore considers it unlikely that the merged entity would have the ability to foreclose its downstream rivals on any  of
       the affected markets.

   41) Moreover, even if the merged entity had the ability to foreclose its downstream rivals, it would be unlikely to have the incentive  to  do
       so. In order to benefit from any input foreclosure, the merged entity would have to shift volumes from other distributors  to  Ahlsell  to
       offset lost upstream sales. The foreclosure would only be beneficial if the gains made on the downstream level would likely  outweigh  the
       possible losses suffered on the upstream level through customers switching to competitors’ products.

   42) For the following reasons, the Commission considers it unlikely that the merged entity could achieve  adequate  gains  on  the  downstream
       level to outweigh the possible losses suffered on the upstream level.

   43) First, the difference between the merged entity’s upstream and downstream profit margins suggests that the merged  entity  would  need  to
       shift significant volumes to Ahlsell to cover any losses on the upstream level. According to the Notifying Party, in 2014, Paroc’s average
       gross margin[36] in the sale of TI products to distributors in Finland was […]% while Ahlsell’s average gross margin[37] in  the  sale  of
       Paroc’s TI products to professional customers in Finland was […]%.[38] Ahlsell’s margin has […]. The  figures  suggest  that  even  modest
       customer leakage to products of alternative TI products supplied  by  other  distributors  would  likely  render  a  foreclosure  strategy
       unprofitable for Paroc.

   44) Second, significant volume shifts of either BI or TI products seem unlikely to take place in the present case. In particular,  it  appears
       that a single product group is not the driver for the vast majority of customers to choose the distributor they use, and smaller customers
       in particular see distributors as ‘one-stop-shops’ for all their needs. Moreover, customers may buy certain  products  –  particularly  TI
       products – as add-ons to other installation products, such as pipes, with the choice of the ‘main’ products being the decisive factor  for
       customers.[39] Statements made during the market investigation also support the view that significant customer switching would be unlikely
       and that it would be risky for Paroc to try to favour Ahlsell as a  distribution  channel.[40]  One  distributor  also  noted  that  other
       insulation material suppliers currently supplying suitable products were interested in increasing their market share.[41]

   45) Third, Ahlsell’s market presence on the downstream markets is relatively modest, which speaks against it being able to capture significant
       additional volumes as a result of a foreclosure strategy relating to one product it sells  amongst  others.  For  instance,  Ahlsell  only
       achieved an [10–20]% market share in the sale of installation products to professional customers in Finland in 2013. If only looking at TI
       products, Ahlsell had a [20–30]% market share in the sale of such products to  professional  customers  in  Finland  in  2013  while,  for
       instance Onninen and Dahl achieved market shares of [40–50]% and [20–30]% respectively.[42] Ahlsell’s market shares are generally somewhat
       higher in Sweden but lower in Estonia and Finland. As to Paroc’s own sales of insulation products via distributors, Ahlsell is only one of
       Paroc’s routes to the market, representing for instance […]% of the distributor sales of TI products in Finland while Onninen  […]  Kespet
       ([…]%) and Dahl ([…]%) also distributed Paroc’s TI products in Finland.

   46) Fourth, the results of the market investigation support the Notifying Party’s submission that insulation manufacturers tend to  distribute
       their products through as many  distributors  as  possible.[43]  The  results  of  the  market  investigation  indicate  that  even  those
       manufacturers who offer a significant portfolio of other building and installation materials and  could  potentially  benefit,  given  the
       customers' preference for ‘one-stop-shop’ service, from an input foreclosure, still choose  to  supply  their  products  through  multiple
       distributors including those outside their own group of companies. In this respect, the Commission notes  that  this  appears  to  be  the
       strategy also adopted by one major market participant, Saint-Gobain, that is already vertically integrated in the Nordic  countries  since
       it produces and sells mineral wool insulation materials under the brand Isover and also controls the distribution chain Dahl, known as LVI-
       Dahl in Finland.

   47) In light of the above and on the basis of the evidence available to the Commission, the proposed transaction does not give rise to serious
       doubts as to its compatibility with the internal market as regards input foreclosure for TI or BI products.

5 Customer foreclosure

   48) The Notifying Party submits that the proposed transaction does not give rise to customer foreclosure concerns on the  distribution  market
       for installation products given that the merged entity would have no ability or incentive to foreclose Paroc’s rivals.  According  to  the
       Notifying Party, Paroc’s rivals will continue to have access  to  professional  customers  through  a  sufficient  choice  of  alternative
       distributors, including Onninen, Dahl and Profisol, as reflected in Ahlsell’s relatively modest or low shares for the supply of BI and  TI
       products in the affected markets.

   49) As explained in Table 1 above, Ahlsell achieved its highest relevant market shares in Sweden where it has a [30–40]% share of  the  retail
       sales to professional customers of all installation products (including both BI and TI products) in 2013. If one  considers  the  possible
       sub-segments, Ahlsell's market shares amounted to [20–30]% in TI, [0–5]% in BI and [30–40]% in HVAC installation  products  in  Sweden  in
       2013. In Estonia, Finland and Poland, Ahlsell's market shares were below [20–30]% in all cases.

   50) Regarding TI products, Ahlsell faced competition in Sweden from Dahl/Bevego ([40–50]%), Profisol ([10–20]%) and Lindab ([5–10]%) while  in
       Finland the competitors were Onninen ([40–50]%) and Dahl/Bevego ([20–30]%). Considering the possible HVAC subsegment, Ahlsell  would  face
       competition in Sweden from Dahl ([30–40]%), Onninen ([5–10]%), Solar ([5–10]%) and Lundagrossisten ([5–10]%).[44]

   51) Given Ahlsell’s limited market presence on the downstream markets for the retail sales to professional customers of installation  products
       (and any of their potential sub-segments), the Commission considers that it is unlikely that the merged entity would  be  able  to  engage
       into customer foreclosure.

   52) As regards any incentive to foreclose upstream competitors, the Notifying Party argues that the main feature of Ahlsell’s business is that
       it keeps a wide and diverse range of products in stock (approximately 125 000 items), only a fraction of which  are  insulation  products.
       Ahlsell (and its competitors) stock multiple brands of insulation products to satisfy customer demands, and  single-branding  is  rare.  A
       customer foreclosure strategy risks making Ahlsell less attractive to its customers by reducing the range of products and brands it offers
       and would be self-defeating.

   53) As explained in paragraph (44) above, customers indeed may prefer  distributors  that  can  offer  a  ‘one-stop-shop’  service  for  them.
       Excluding products from the portfolio could therefore potentially be risky for the distributor.

   54) The vast majority of the producers that responded to the market investigation confirmed that they have a sufficient choice of  alternative
       distributors in all of the relevant geographic markets considered in this decision should they not be able to distribute  through  Ahlsell
       following completion of the proposed transaction.[45]

   55) In light of the above and on the basis of the evidence available to the Commission, the proposed transaction does not give rise to serious
       doubts as to its compatibility with the internal market as regards customer  foreclosure  on  the  distribution  market  for  installation
       products.

       CONCLUSION

   56) 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)
Margrethe VESTAGER
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]   OJ L 24, 29.1.2004, p. 1 (the ‘Merger Regulation’).

[4]   Turnover calculated in accordance with Article 5(1) of the Merger Regulation and the Commission Consolidated Jurisdictional Notice.

[5]   See, e.g. M.4836 – CVC / Univar, paragraphs 14 and 18; M.3344 – Bain Capital / Interfer / Brenntag, paragraphs 11 and 13–6; M.2244 –  Royal
    Vopak / Ellis & Everard, paragraphs 11 and 16–7. In M.2244, the Commission also found indications that the Nordic countries could constitute
    a single regional market.

[6]   For more details about Paroc’s activities and detailed market definition, see paragraphs (14)–(22).

[7]   Univar’s market shares in the distribution of commodity/specialty chemicals respectively: Finland [5–10]% /  [10–20]%;  Sweden  [10–20]%  /
    [10–20]%; and Poland [0–5]% / [0–5]%.

[8]   Replies to the Commission’s questions to Univar’s competitors on 16 January 2015.

[9]   Replies to Q2 – Questionnaire to insulation material manufacturers, question 27.

[10]  According to the Notifying Party, Univar is jointly controlled by CVC, Clayton, Dubilier and Rice LLC. Therefore, any  attempt  by  CVC  to
    implement a foreclosure strategy which might be harmful to Univar would be blocked by Univar’s other parent.

[11]  M.4898 – Compagnie De Saint-Gobain / Maxit, paragraphs 144 and 145.

[12]  For instance in Finland, […]% of Paroc’s sales of TI products are made to distributors.

[13]     M.3407 – Saint Gobain / Dahl, paragraphs 8 and 9; M.1974 – Compagnie  de  Saint-Gobain  /  Raab  Karcher,  paragraph  9;  and  M.1873  –
    Compagnie de Saint-Gobain / Meyer International, paragraphs 9 and 10. See also M.6871 – Mohawk Industries / Spano Invest, paragraphs 28  and
    29.

[14]  M.3943 – Saint Gobain / BPB, paragraph 29; and M.3407 – Saint Gobain / Dahl, paragraphs 9 and 10.

[15]  M.3943 – Saint Gobain / BPB, paragraph 28; M.3578 – BP / Nova Chemicals / JV, paragraphs 19 and 20; and M.1078 – BP / Hüls, paragraph 8.

[16]  Replies to Q1 – Questionnaire to insulation material distributors, questions 5 and 6; Q2 – Questionnaire to insulation material  suppliers,
    questions 7 and 8 ; and Q3 – Questionnaire to insulation material customers, questions  5 and 6.

[17]  M.3943 – Saint Gobain / BPB, paragraph 30; M.3407 – Saint Gobain / Dahl, paragraphs 17 and 18. See  also  M.1974  –  Saint  Gobain  /  Raab
    Karcher, paragraph 13, where the question whether building product markets, including insulation products,  were  national  or  European  in
    scope was left open.

[18]  M.3407 – Saint Gobain / Dahl, paragraph 18. See also Mohawk Industries / Spano Invest where  the  Commission  found  indications  that  the
    market in the Benelux-countries could be at least cross-border regional, M.6871 – Mohawk Industries / Spano Invest, paragraph 52.

[19]  M.3142 – CVC / Danske Traelast, paragraphs 14–16.

[20]  Replies to Q1 – Questionnaire to insulation material distributors, questions 11–4; Q2 – Questionnaire  to  insulation  material  suppliers,
    questions 13–18; and Q3 – Questionnaire to insulation material customers, questions  10–3.

[21]  M.4050 – Goldman Sachs / Cinven / Ahlsell, paragraph 9 (concerning installation materials). Similarly  with  respect  to  various  building
    materials, e.g. M.3407 – Saint Gobain / Dahl, paragraphs 12 and 16; and M.3142 – CVC / Danske Traelast, paragraphs 11–13.

[22]  Replies to Q1 – Questionnaire to insulation material distributors, questions 8 and Q2 – Questionnaire  to  insulation  material  suppliers,
    questions 10.

[23]  While Ahlsell makes sales to other retailers, the products sold do not include insulation  products  but  mainly  electrical,  heating  and
    plumbing products.

[24]  M.4050 – Goldman Sachs / Cinven / Ahlsell, paragraph 9.

[25]  Replies to Q1 – Questionnaire to insulation material distributors, question 15.

[26]  See, for instance Guidelines on the assessment of non-horizontal mergers under the Council Regulation  on  the  control  of  concentrations
    between undertakings, OJ C 265, 18.10.2008, p. 6 (‘Non-Horizontal Guidelines’), paragraph 31.

[27]  See, for instance Non-Horizontal Guidelines, paragraph 58.

[28]  See, for instance Non-Horizontal Guidelines, paragraphs 32 and 59.

[29]  The data for Sweden concerning (i) all installation products and (ii) HVAC installation products exclude sales  to  professional  customers
by DIY stores and independent retailers and therefore might overstate Ahlsell’s market share.

[30]  Denmark, Finland, Norway and Sweden. The Notifying Party has not been able to provide a figure for Iceland.  However,  […],  and  the  fact
that Ahlsell does not sell into Iceland at all, the Parties’ shares of supply for the Nordics would either be the same as, or lower than  current
estimates for both Paroc and Ahlsell if data for Iceland were included.

[31]  Estonia, Lithuania and Latvia.

[32]  The figure given is that of Ahlsell’s share of supplies in Estonia. The Notifying Party has not been able to provide a  figure  for  Latvia
or Lithuania. However, given the fact that within the Baltics, Ahlsell only has sales into Estonia its share in the Baltics as a  whole  will  be
lower than its share in Estonia.

[33]  Replies to Q1 – Questionnaire to insulation material distributors, questions  21–26.  See  also  the  response  of  a  distributor  to  the
Commission’s request for information of 23.1.2015.

[34]  Replies to Q1 – Questionnaire to insulation material distributors, questions 21 and 22; and replies to Q3  –  Questionnaire  to  insulation
material customers, questions 21 and 22. See also the confirmed minutes of  a  call  with  a  distributor,  28.1.2015,  and  the  response  of  a
distributor to the Commission’s request for information,  23.1.2015.

[35]  Replies to Q1 – Questionnaire to insulation material distibutors, questions 23–26.

[36]  Turnover generated by sale of goods, minus variable costs.

[37]  Turnover generated by sale of goods, less […].

[38]  The Parties’ response to the Commission’s request for information of 23.1.2015.

[39]  See, e.g. confirmed minutes of a call with a distributor, 25.1.2015.

[40]  Confirmed minutes of a call with a distributor, 25.1.2015.

[41]  A distributor’s response to the Commission’s request for information of 23.1.2015.

[42]  Market shares are the Notifying Party’s best estimates.

[43]  Replies to Q1 – Questionnaire to insulation material [distibutors]* distributors, question 28; replies to Q2 – Questionnaire to  insulation
material manufacturers, question 26; and replies to Q3 – Questionnaire to insulation material customers, question 24.

[44]  The market shares are the Notifying Party’s best estimates.

[45]  Replies to Q2 – Questionnaire to insulation material manufacturers, question 24.

-----------------------
 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

                                                                 MERGER PROCEDURE