CELEX: 32018M8766
Language: en
Date: 2018-05-03 00:00:00
Title: Commission Decision of 03/05/2018 declaring a concentration to be compatible with the common market (Case No COMP/M.8766 - LKQ Corporation / Stahlgruber GmbH) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                 Brussels, 3.5.2018
                                                                 C(2018) 2841 final
  In the published version of this decision, some
  information has been omitted pursuant to                                PUBLIC VERSION
  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  has been replaced by ranges of figures or a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.
                                                                 To the Notifying party
Subject:             Case M.8766 - LKQ/Stahlgruber
                     Commission decision pursuant to Article 6(1)(b) of Council
                     Regulation No 139/20041 and Article 57 of the Agreement on the
                     European Economic Area2
Dear Sir or Madam,
(1)       On 9 March 2018, the European Commission received notification of a proposed
          concentration pursuant to Article 4 of the Merger Regulation by which LKQ
          Corporation ("LKQ", USA) acquires within the meaning of Article 3(1)(b) of the
          Merger Regulation sole control of Stahlgruber GmbH ("Stahlgruber", Germany)
          (the "Transaction")3 . LKQ and Stahlgruber are collectively referred to hereinafter
          as the "Parties", and LKQ individually as "the Notifying Party".
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 103, 19.3.2018, p. 7.
Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE
Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË
Tel: +32 229-91111. Fax: +32 229-64301. E-mail: COMP-MERGER-REGISTRY@ec.europa.eu.
 ---pagebreak--- 1.  THE PARTIES
(2) LKQ is a distributor of automotive spare parts used in the repair and maintenance
    of passenger cars and light commercial vehicles and to a lesser extent of heavy
    commercial vehicles and specialty vehicle products and accessories. LKQ sells
    automotive spare parts in the EEA principally in Belgium, the Netherlands,
    Luxembourg, Bulgaria, the Czech Republic, France, Hungary, Ireland, Italy,
    Poland, Romania, Slovakia, and the United Kingdom.
(3) Stahlgruber is a wholly-owned subsidiary of Stahlgruber Otto Gruber AG and a
    distributor of automotive spare parts used in the repair and maintenance of
    passenger cars and light commercial vehicles and to a very small extent of heavy
    commercial vehicles and specialty vehicle products and accessories. Stahlgruber's
    wholesale distribution activities are concentrated mostly in Germany, but also in
    Austria and the Czech Republic and to a lesser extent in Italy, Slovenia, Croatia,
    Belgium and the Netherlands.
(4) In addition, both Parties have upstream activities in the area of manufacturing of
    automotive spare parts under private labels. These markets are however not
    affected markets and, therefore, they are not assessed further in the present
    decision.
2.  THE OPERATION
(5) Under the terms of the Sale and Purchase Agreement dated 10 December 2017
    (“SPA”), LKQ will acquire 100% of the share capital of Stahlgruber GmbH, the
    holding company of Stahlgruber. LKQ will therefore acquire sole control over
    Stahlgruber (the "Transaction").
(6) The operation therefore constitutes a concentration pursuant to Article 3(1)(b) of
    the Merger Regulation.
3.  EU DIMENSION
(7) The undertakings concerned have a combined aggregate world-wide turnover of
    more than EUR 5 000 million (LKQ EUR 8 385 million, Stahlgruber EUR […]).
    Each of them has an EU-wide turnover in excess of EUR 250 million (LKQ EUR
    […], Stahlgruber EUR […]), but they do not achieve more than two-thirds of
    their aggregate EU-wide turnover within one and the same Member State.
(8) The notified operation therefore has an EU dimension pursuant to Article 1(2) of
    the Merger Regulation
4.  REFERRAL TO THE CZECH REPUBLIC
(9) By letter dated 4 April 2018 the Office for Protection of Competition of the Czech
    Republic (the "Office"), on behalf of the Czech Republic, requested the
    Transaction to be partially referred to the Office with a view to assessing the
    effects of the Transaction in the Czech Republic under national law pursuant to
    Article 9(2)(a) of the Merger Regulation.
                                             2
 ---pagebreak--- (10)     The Commission has adopted a decision partially referring the case to the Czech
         Republic for the aspects relating to the impact of the Transaction in the market
         for the wholesale supply of IAM automotive spare parts in the Czech Republic.
(11)     Therefore, only the remainder of the competition effects of the Transaction will
         be assessed by the Commission in the present decision.
(12)     This decision is without prejudice to the outcome of the proceedings conducted
         by the Office in regard to the assessment of the effects of the Transaction on the
         relevant market in the Czech Republic.
5.       COMPETITIVE ASSESSMENT
(13)     Both Parties are active in the manufacturing and sale and in the wholesale supply
         of various automotive components for the independent after-market ("IAM"). The
         Parties are also active to a lesser extent in the retail sale of IAM spare parts.
         However, the geographic footprint of the Parties is vastly complementary and the
         Transaction gives rise to only two affected markets: the wholesale supply of IAM
         automotive spare parts in the Czech Republic, which has been the object of
         referral to the Czech Republic, and in the Netherlands.
  5.1.   Market definition
5.1.1. Product market definition
(14)     In past decisions, the Commission has defined the wholesale distribution of
         automotive spare parts as a separate product market. In the Commission' practice,
         this market comprises the sales of spare parts to workshops/garages and other
         retailers.4 Wholesalers also make sales to other wholesalers, so called "Arbitrage
         Sales". The Notifying Party submit that these sales should not form part of the
         wholesale market, and the Commission considers that in this case it is not
         necessary to conclude on this issue as the Transaction does not raise serious
         doubts as to its compatibility with the internal market irrespective of whether
         Arbitrage Sales are considered part of the wholesale distribution market or not.
(15)     In its decisional practice, the Commission considered a further distinction
         between the market for (i) original equipment spare parts manufactured and or
         sold under the car manufacturer's brands (OES) and the independent spare parts
         (IAM).5 The Commission further considered a distinction between spare parts for
         light vehicles and those for heavy vehicles.6
4    Case M.7401 – Blackstone/Alliance BV/Alliance Automotive; Case M.6718 − Toyota Tshusho
     Corporation/CFAO
5    Case M.8198 – Alliance Automotive Group/FPS Distribution.
6    Case M.8198 – Alliance Automotive Group/FPS Distribution; Case M.6319 − Triton/Europart.
                                                    3
 ---pagebreak--- (16)    Finally, in the Commission's past practice the market for the wholesale
        distribution of replacement tyres was considered to be separate from that of
        automotive spare parts.7
(17)    The Parties partially agree with the above decisional practice and submit that
        there are additional competitive relations which are not yet sufficiently reflected.
        Particularly, the Parties claim that:
        (a)      there is an intensive competition between IAM and OES suppliers;
        (b)      wholesalers compete with their complete product portfolio including
                 tyres; and,
        (c)      in some EU Member States, especially in Italy, there is an additional
                 distribution level comprising local distributors/ricambisti.
(18)    For the purpose of this decision, the exact product market definition with regard
        to the wholesale of automotive spare parts to the IAM can be ultimately left open
        as the Transaction does not raise serious doubts as to its compatibility with the
        internal market under any alternative product market definition.
5.1.2. Geographic market definition
(19)    In past decisions, the Commission considered the markets for the wholesale
        supply of automotive spare parts to be regional, national or even EEA-wide in
        scope. The ultimate market definition was left open, but the Commission focused
        its further competitive assessment mainly on national markets.
(20)    The Parties partially agree with the Commission's past practice, however claim
        that for some Member States (like Italy) the geographic scope of the market may
        be different.
(21)    For the purpose of this decision, the geographic market with regard to the
        wholesale of automotive spare parts to the IAM is likely national or narrower, but
        the exact geographic market definition can be ultimately left open as the
        Transaction does not raise serious doubts as to its compatibility with the internal
        market under any alternative geographic market definition.
5.2.    Competitive       assessment:    Horizontal    non-coordinated       effects in  the
        Netherlands
5.2.1. Methodological introduction on market shares calculation
(22)    In order to provide a fully transparent overview of the market structure, LKQ has
        submitted different set of market shares using different calculation
        methodologies. In particular, the different calculation methodologies differ in
        what is included in the overall market.
7   Case M.6063 − Itochu/Speedy.
                                                  4
 ---pagebreak--- (23)   More precisely, the Notifying Party has submitted the following set of market
       share for the IAM markets:
       (a)      The IAM sales including sales of tyres, of garage equipment and arbitrage
                sales;
       (b)      The IAM sales excluding sales of tyres, but including sales of garage
                equipment and arbitrage sales;
       (c)      The IAM sales including sales of tyres and arbitrage sales, but excluding
                sales of garage equipment;
       (d)      The IAM sales including arbitrage sales, but excluding both sales of tyres
                and of garage equipment;
       (e)      The IAM sales excluding arbitrage sales, sales of tyres and of garage
                equipment;
       (f)      The IAM sales excluding arbitrage sales and garage equipment.
(24)   "Arbitrage Sales” are sales made by wholesalers to other distributors
       (wholesalers) in the same or other EEA Member. According to the Notifying
       Party these sales are very common at the wholesale level, however LKQ submits
       that by including them a significant number of sales would be double counted and
       therefore the Parties' shares significantly overstated.
(25)   In addition to sales of components, as a special service for the garages, the Parties
       sell a full portfolio of tools and equipment for garages, if the garages wish so.
       Such “add-on” equipment sales can be large “one-off” pieces of equipment such
       as hydraulic lifts (used for vehicle inspection), rollingroads (used for brake
       testing) and air compressors (used for powering air tools) or smaller pieces of
       equipment, which may also include hand tools such as single screwdrivers or
       wrenches, worth a few EUR a piece.
(26)   The Parties estimated the market size on the basis of data provided by
       Datamonitor. However, the sales of workshop tools and equipment are not
       included in Datamonitor's data, because Datamonitor only provides data at retail /
       consumer level which does not include products not sold to consumers like garage
       equipment and tools. Therefore, the Notifying Party also submitted market share
       calculations with the aim to correct for the sales of workshop tools and equipment
       in the total market size.
5.2.2. Competitive assessment
(27)   The market for the wholesale supply of automotive components for the IAM in
       the Netherlands is the only affected market in addition to the Czech Republic. For
       the reasons set out below, the Commission takes the view that the Transaction
       will not result in a significant impediment to effective competition on the market
       for the wholesale supply of automotive components for the IAM in the
       Netherlands.
(28)   First, the Transaction will only give rise to an affected market in the Netherlands
       if arbitrage sales are included in the calculation. If not, the combined market
                                                  5
 ---pagebreak---       shares of the Parties will be below [10-20]%, irrespective of whether garage
      equipment and tyres are included or not in the calculation.
(29)  Second, even if the arbitrage sales of the Parties are included, their combined
      market share will be just above [20-30]%, and below [20-30]%, irrespective of
      how the market shares are calculated.
(30)  Third, the increment brought about by the Transaction is limited. Stahlgruber
      generated a turnover with garages of only EUR […] in the Netherlands in 2016.
      Also if Stahlgruber's arbitrage sales are included, its turnover in the Netherlands
      amounts to EUR […]. Even the most conservative estimate for the market size of
      the wholesale market in the Netherlands is over EUR 1.5 billion (excluding tyres
      and adjustment for garage equipment). This leads to a market share for
      Stahlgruber of below [0-5]%. Any horizontal overlap with LKQ is therefore not
      appreciable and the Transaction will not change the structure of the Dutch market.
6.   CONCLUSION
(31)  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 with regard to the markets other than the wholesale supply of
      IAM automotive spare parts in the Czech Republic. 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
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