CELEX: 32019M9317
Language: en
Date: 2019-03-28 00:00:00
Title: Commission Decision of 28/03/2019 declaring a concentration to be compatible with the common market (Case No COMP/M.9317 - ArcelorMittal S.A. / C.L.N. Group – Coils Lamiere Nastri S.p.A. / Ilva SSCs) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                 Brussels, 28.03.2019
                                                                 C(2019) 2564 final
                                                                               PUBLIC VERSION
                                                                  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                                                                  information omitted has been replaced by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.
                                                                 To the notifying parties
Subject:            Case M.9317 — ArcelorMittal/CLN/Ilva SSCs
                    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 21 February 2019, the European Commission received a notification of a
            proposed concentration (the ‘Transaction’) pursuant to Article 4 of Council
            Regulation (EC) No 139/2004 by which ArcelorMittal SA (‘ArcelorMittal’) and
            Coils Lamiere Nastri SpA (‘CLN’) acquire joint control over Ilva’s steel service
            centres in Legarno and Paderno (the ‘Ilva SSCs’).3
1.          THE PARTIES AND THE OPERATION
(2)         ArcelorMittal is a global steel and mining company, whose principal business is
            the production, distribution, marketing, and sale of steel products. It produces a
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 83, 05.03.2019, p. 11.
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---       range of steel semi-finished and finished products, including flat carbon steel
      products. It supplies steel for various applications including automotive,
      construction, household appliances, and packaging.
(3)   CLN is an Italian steel processing company, active in the (i) distribution of flat
      carbon steel products through steel service centres (‘SSCs’) (the SSC Division);
      and (ii) production of steel automotive components and steel wheels for cars and
      commercial vehicles. ArcelorMittal and CLN are referred to as the ‘Notifying
      Parties’ or ‘Parties’.
(4)   AMCLN is a full-function joint-venture jointly controlled by ArcelorMittal and
      CLN. AMCLN carries out an activity of steel distribution through SSCs. The
      Commission cleared the creation of AMCLN in the case M.7461 – AMDS
      Italia/CLN/JV in 2015.
(5)   The Ilva SSCs are two flat carbon steel service centres located in Italy.
2.    THE CONCENTRATION
2.1.  Background
(6)   The Commission approved ArcelorMittal’s proposed acquisition of Ilva S.p.A.
      and a number of its subsidiaries in the case M.8444 – ArcelorMittal/Ilva. The
      Commission’s approval was conditional upon ArcelorMittal divesting certain of
      its businesses, including […] SSCs of […].4
(7)   AMCLN is jointly controlled by ArcelorMittal and CLN.5 [Background of the
      transaction].
(8)   While ArcelorMittal has sole control over the Ilva assets including the Ilva SSCs
      before the Transaction, it does not currently own them but leases them from the
      Ilva Group. [Details on the parties’ control structure].
(9)   The acquisition of the Ilva SSCs, among others, by ArcelorMittal under the said
      arrangements were cleared by the Commission in the case M.8444 –
      ArcelorMittal/Ilva.
2.2.  The operation and the concentration
(10)  [Background of the transaction], ArcelorMittal and AMCLN have signed a letter
      of intent to transfer the assets.
(11)  Based on this letter of intent, the operation is to take place in three steps.
      [Details on transaction structure].6 [Details on transaction structure].
(12)  [Details on transaction structure].
(13)  [Details on transaction structure].
4
     [Background of the transaction].
5
     M.7461 – AMDS Italia/CLN/JV.
6
     [Details on transaction structure].
                                              2
 ---pagebreak---                     Figure 1 – [Details on transaction structure]
                                             […]
(14)  [Details on transaction structure].
                    Figure 2 – [Details on transaction structure]
                                             […]
(15)  [Details on transaction structure].
(16)  Therefore, the operation will, […] constitute a concentration. […].7
(17)  […].
      (1)    […].
      (2)    […].
(18)  Nonetheless, it is not necessary for the Commission to conclude on the matter
      for the purposes of the present decision. This is because the final stages of the
      operation ([...]) would each constitute a concentration even if the intermediary
      step(s) before them would not take place.
(19)  The question whether […] is part of the same transaction with the latter stages
      of the operation or constitutes a concentration on its own is not relevant in this
      context. The question would be relevant if the Commission was called to assess
      whether the concentration was implemented in contravention to the suspension
      obligation arising from Article 7 of the Merger Regulation. However, that is not
      the subject of the present decision, and […].
2.3.  Full-functionality
(20)  The Ilva SSCs each are full-functional and will continue to operate on the
      market as a going concern business with their own resources.
(21)  First, they already operate as market-facing businesses with their own resources
      and staff. [Commercial information].
(22)  Second, their activities will extend beyond one function of the parents. This is in
      line with the Commission’s decisional practice regarding full-functionality of
      AMCLN.8 In particular, the Ilva SSCs will both be active in the processing of
      steel as well as in the sale and distribution thereof to third-party customers.
(23)  Third, the Ilva SSCs will deal with their parents at an arms’ length basis.
      [Commercial information].
7
     See the Commission Consolidated Jurisdictional Notice under Council Regulation (EC)
     No 139/2004 on the control of concentration between undertakings, OJ C 95, 16.4.2008, page 1,
     paragraph 18.
8
     M.7461 – AMDS Italia/CLN/JV.
                                                  3
 ---pagebreak--- (24)  Fourth, the Ilva SSCs will operate on a lasting basis as part of AMCLN,
      intended to operate indefinitely.
3.    UNION DIMENSION
(25)  ArcelorMittal and CLN have a combined aggregate world-wide turnover of
      more than EUR 5 000 million9. Each of them has a Union-wide turnover in
      excess of EUR 250 million, 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.
4.    COMPETITIVE ASSESSMENT
(26)  In previous cases, the Commission has considered separate markets for the
      distribution of carbon steel products through SSCs, separate from ex-mill sales
      of steel and from distribution through stockholding centres (SCs) or oxy-cutting
      centres. While markets for ex-mill sales have been considered not wider than
      EEA, markets for distribution are national or at most cross-border regional.10
(27)  ArcelorMittal, CLN, the Ilva SSCs and AMCLN are active in the distribution of
      carbon steel through SSCs. ArcelorMittal is also active upstream in the
      production and supply of carbon steel, while CLN is active downstream in the
      manufacturing of automotive components and steel wheels.11
4.1.  Horizontal effects
(28)  The Ilva SSCs are predominantly active in Italy, where ArcelorMittal and CLN
      have no distribution activities other than those contributed in the AMCLN joint
      venture. The sales market share of the Parties (including AMCLN) in Italy post-
      Transaction amounts to [10-20]%, where the Ilva SSCs represent a market share
      of <[0-5]%. While the Parties will remain the biggest player, there are numerous
      other distributors on the market (including Gabrielli with [10-20]% and
      Marcegaglia with [10-20]% market share).
(29)  In other countries, the Parties (including AMCLN) achieve the highest
      combined market share in Germany where the share reached [10-20]% and the
      Ilva SSCs account for less than <[0-5]%.
(30)  Therefore, there are no affected markets as the Parties’ combined market share
      under any plausible market definition would remain below 20%.
4.2.  Vertical effects
(31)  Vertically affected markets arise between (i) ArcelorMittal’s upstream supply of
      flat carbon steel in the EEA, and (ii) the Parties’ distribution of flat carbon steel.
9
     Turnover calculated in accordance with Article 5 of the Merger Regulation.
10
     See for instance M.8444 – ArcelorMittal/Ilva.
11
     The Commission has considered the market for the production and supply of automotive
     components to be at least EEA-wide in the case M.7461 – AMDS Italia/CLN/JV.
                                                    4
 ---pagebreak--- (32) ArcelorMittal is active upstream in the production and supply of flat carbon
     steel with substantial sales market shares in hot-rolled ([30-40]%),
     cold-rolled ([30-40]%), galvanised ([30-40]%), tinplate ([30-40]%) and organic
     coated ([30-40]%) flat carbon steel.
(33) The Commission considers that the Transaction is unlikely to give rise to
     competition concerns related to vertical effects because ArcelorMittal is pre-
     Transaction already exercising sole control over the Ilva SSCs, as assessed in
     M.8444 – ArcelorMittal/Ilva, and the vertical link between ArcelorMittal’s
     upstream production and supply of flat carbon steel, and the downstream
     distribution of such steel through SSCs also exists already prior to the
     Transaction. At the downstream level, this applies to both the (i) Ilva SSCs
     solely controlled by ArcelorMittal and (ii) the SSCs currently operated by
     AMCLN over which ArcelorMittal has joint control with CLN.
(34) In practice, the Transaction is de-concentrative in nature in that ArcelorMittal’s
     sole control over the Ilva SSCs is replaced with joint control by ArcelorMittal
     and CLN. Therefore, to the extent that there would have been any incentive for
     ArcelorMittal to engage in input foreclosure prior to the Transaction, such
     incentive would diminish post-Transaction, as ArcelorMittal would suffer any
     upstream losses alone while having to share the downstream gains from such
     foreclosure practices with CLN.
(35) CLN is active in the production and supply of steel automotive components and
     steel wheels, which is downstream of the activities of the Ilva SSCs. No affected
     markets however arise as its sales market share in the EEA is below 10% under
     any plausible market definition. [Commercial information].
5.   CONCLUSION
(36) 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
                                            5