CELEX: 32018M8963
Language: en
Date: 2018-08-01 00:00:00
Title: Commission Decision of 01/08/2018 declaring a concentration to be compatible with the common market (Case No COMP/M.8963 - Eurocar Italia / Bonaldi) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
In the published version of this decision, some                 Brussels, 01.08.2018
information has been omitted pursuant to Article                C(2018) 5306 final
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omitted has been replaced by ranges of figures or a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
                                                                To the Notifying Party
Subject:            Case M.8963 – EUROCAR / BONALDI
                    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 28 June 2018, the European Commission received notification of a proposed
          concentration pursuant to Article 4 of the Merger Regulation by which Eurocar
          Italia S.r.l. ("Eurocar"), controlled by Volkswagen AG ("VW", Germany)
          acquires sole control over the whole of Bonaldi Motori S.p.A. and Bonaldi Tech
          S.p.A. (together, "Bonaldi", Italy), within the meaning of Article 3(1)(b) of the
          Merger Regulation, by way of a purchase of shares (the "Proposed Transaction").3
          Eurocar and Bonaldi are designated hereinafter as the 'Parties'.
1.        THE PARTIES
(2)       Eurocar is active in the retail distribution of new and used passenger cars and
          light commercial vehicles of VW brands in Italy, related repair activities and the
          sale of original equipment ("OE") spare parts. The main regional focus is Friuli
          Venezia Giulia in North-Eastern Italy and Tuscany in Central Italy.
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 235, 06.07.2018, p. 8.
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--- (3)    Bonaldi is active in the retail distribution of new and used passenger cars and
       light commercial vehicles of VW brands in Italy, related repair activities and the
       sale of OE spare parts. The main regional focus is Lombardia in North-Western
       Italy.
2.     THE CONCENTRATION
(4)    Pursuant to a share sale and purchase agreement signed on 1 June 2018, Eurocar
       will acquire shares representing 100% of the total voting rights of Bonaldi.
       Bonaldi will therefore be solely controlled by Eurocar.
(5)    The Proposed Transaction therefore constitutes a concentration pursuant to
       Article 3(1)(b) of the Merger Regulation.
3.     EU DIMENSION
(6)    The undertakings concerned have a combined aggregate world-wide turnover of
       more than EUR 5 000 million (VW: EUR 230 682 million; Bonaldi: EUR […]).4
       Each of them has an EU-wide turnover in excess of EUR 250 million (VW:
       EUR […]; Bonaldi: EUR […]), but they do not achieve more than two-thirds of
       their aggregate EU-wide turnover within one and the same Member State. The
       notified operation therefore has an EU dimension pursuant to Article 1(2) of the
       Merger Regulation.
4.     MARKET DEFINITION
(7)    The Parties' activities horizontally overlap in a number of markets in Italy,
       namely (i) retail distribution of new passenger cars; (ii) retail distribution of new
       light commercial vehicles ("LCVs")5; (iii) retail distribution of used motor
       vehicles6; (iv) retail distribution of OE spare parts for passenger cars and LCVs7;
       (v) retail distribution of non-OE spare parts for passenger cars and LCVs8; and
       (vi) car repair and maintenance of motor vehicles9. However, the only market
       affected by the Proposed Transaction is the retail distribution of VW-branded OE
       spare parts for passenger cars and LCVs.
(8)    The Proposed Transaction also gives rise to four vertical relationships in Italy,
       namely: (i) wholesale distribution of new passenger cars and retail distribution of
       new passenger cars; (ii) wholesale distribution of LCVs and retail distribution of
       LCVs; (iii) wholesale distribution of used motor vehicles and retail distribution of
       used motor vehicles; and (iv) wholesale distribution of OE spare parts for
       passenger cars and LCVs and retail distribution of OE spare parts for passenger
4   Turnover calculated in accordance with Article 5 of the Merger Regulation.
5   Cases COMP/M.7747 – PGA/MSA; COMP/M.5061 – Renault/Russian Technologies/AvtoVaz;
    COMP/M.2832 – General Motors/Daewoo Motors.
6   Case COMP/M.6958 – Cd&R/We Buy Any Car.
7   Cases COMP/M.5709 – Volkswagen/MAHAG; COMP/M.5250 – Porsche/Volkswagen;
    COMP/M.3198 – VW-Audi/VW-Audi Sales Centres
8   Idem.
9   Cases COMP/M.6063 – Itochu/Speedy; COMP/M.2948 – CVC/Kwik-Fit; COMP/M.2087 – Feu
    Vert/Carrefour/Autocenter Delauto.
                                                       2
 ---pagebreak---         cars and LCVs. However, only one of those vertical relationships involves
        affected markets: VW is active on the upstream market for the wholesale
        distribution of VW-branded OE spare parts for passenger cars and LCVs and
        Bonaldi is active on the downstream market for the retail of such parts.
     4.1.    Product market definition
     4.1.1.    Wholesale distribution of OE spare parts for passenger cars and LCVs
(9)     In its previous decisional practice, the Commission found that there are separate
        markets for the wholesale distribution of OE spare parts and of non-OE spare
        parts. In particular, according to the Commission, the wholesale distribution of
        OE spare parts is brand-specific; therefore the relevant product markets are
        determined by the brand of the OE spare parts which are distributed. 10 The
        Commission further considered a distinction of the market between categories of
        vehicles, i.e. light vehicles (passenger cars and LCVs) and heavy vehicles11, but
        without any sub-distinction by product.12
(10)    The Notifying Party does not contest the above market definition, which will be
        retained for the purposes of this case. In any event, there is no need to close the
        market definition as the Proposed Transaction will not lead to serious doubts
        under any alternative market definition.
     4.1.2.    Retail distribution of OE spare parts for passenger cars and LCVs
(11)    In previous decisions, the Commission has distinguished between the distribution
        of OE spare parts and non-OE spare parts. As at the wholesale level, the
        Commission found that the retail distribution of OE spare parts is brand-specific,
        thus defining the market according to the brand of a given spare part, and
        distinguished between light vehicles and heavy vehicles.13
(12)    The Notifying Party does not contest the above market definition, which will be
        retained for the purposes of this case. In any event, there is no need to close the
        market definition as the Proposed Transaction will not lead to serious doubts
        under any alternative market definition.
10   Cases COMP/M.6063 – Itochu/Speedy; COMP/M.5250 – Porsche/Volkswagen; COMP/M.3198 –
     VW-Audi/VW-Audi Sales Centres.
11   Cases COMP/M.8198 – Alliance Automotive Group/FPS Distribution; COMP/M.7401 –
     Blackstone/Alliance BV/Alliance Automotive Group; COMP/M.5250 – Porsche/Volkswagen.
12   Case COMP/M.8198 – Alliance Automotive Group/FPS Distribution.
13   Cases COMP/M.5709 – VW/MAHAG; COMP/M.5250 – Porsche/Volkswagen; COMP/M.3198 – VW-
     Audi/VW-Audi Sales Centres.
                                                     3
 ---pagebreak---       4.2. Geographic market definition
     4.2.1.     Wholesale and retail distribution of OE spare parts for passenger cars and
                LCVs
(13)    In previous decisions, the Commission has considered that the wholesale
        distribution of OE and non-OE spare parts could be either EEA-wide or national,
        but ultimately left open the exact definition.14
(14)    In previous decisions, the Commission has considered that the retail distribution
        of OE and non-OE spare parts could be either EEA-wide, national or regional, but
        ultimately left open the exact definition.15
(15)    The Notifying Party submits that the exact product market definition can be left
        open as the Proposed Transaction cannot raise any doubts as to its compatibility
        with the internal market under any plausible market definition.
(16)    The Commission considers that, in any event, there is no need to close the market
        definition as the Proposed Transaction will not lead to serious doubts under any
        alternative market definition.
5.      COMPETITIVE ASSESSMENT
      5.1. Horizontal non-coordinated effects
     5.1.1.     Introduction
(17)    Based on the narrowest possible geographic market, being provinces in Italy, the
        Parties overlap in relation to the following markets: (i) retail distribution of new
        passenger cars; (ii) retail distribution of new LCVs; (iii) retail distribution of used
        motor vehicles; (iv) retail distribution of OE spare parts for passenger cars and
        LCVs; (v) retail distribution of non-OE spare parts for passenger cars and LCVs;
        and (vi) car repair and maintenance of motor vehicles.
(18)    Nevertheless, the only market where the Parties have a combined market share of
        more than 20% is in the retail distribution of OE spare parts for passenger cars
        and LCVs in the Province of Florence.16
     5.1.2.     Retail distribution of OE spare parts for passenger cars and LCVs in the
                Province of Florence
(19)    In this market, the combined market share of the Parties is [30-40]%. However,
        the increment brought about by Bonaldi is only [0-5]%.
14   Cases COMP/M.7401 – Blackstone/Alliance BV/Alliance Automotive Group; COMP/M.6718 –
     Toyota Tsusho Corporation/CFAO; COMP/M.5250 – Porsche/ Volkswagen.
15   Cases COMP/M.7401 – Blackstone/Alliance BV/Alliance Automotive Group; COMP/M.6718 –
     Toyota Tsusho Corporation/CFAO; COMP/M.5250 – Porsche/ Volkswagen.
16   This is also confirmed for 2015 and 2016.
                                                   4
 ---pagebreak---  ---pagebreak---  ---pagebreak---                 foreclosure behaviour would not constitute a commercially viable or
                sensible strategy;
        (d)     [Independent repair shops have ways to access VW's-branded spare parts],
                and therefore it has no incentive to engage in a foreclosure strategy.
(30)    The market shares of Bonaldi in Bergamo and Sondrio for the downstream retail
        distribution of VW-branded OE spare parts are high. However, the Commission
        understands that the contract in force between the VW group and each of the
        "service partners" provides [VW's distribution strategy]. In light of this
        contractual structure, the Commission takes the view that a foreclosure strategy
        limited to a few specific regions would likely fail as competitors of the merged
        entity in the geographic markets affected downstream will retain the ability to
        source spare parts from "service partners" located in other regions (even in
        neighbouring regions where Bonaldi is not present).
(31)    The information provided by the Parties concerning the sourcing preferences of
        service partners in the provinces of Bergamo and Sondrio, further support the
        conclusion that service partners do source from entities other than VW (via VGI).
        In the province of Florence, the downstream position of the merged entity is [30-
        40]%, however, the increment brought about by Bonaldi is only [0-5]%. In light
        of the largely pre-existent vertical relationship and the minimal change in the
        market structure in 2017, the Commission takes the view that the Transaction will
        not bring about a change in the incentive to foreclose downstream competitors
        from access to OE VW branded spare parts.
(32)    The above conclusion is further supported by the low market share of the Parties
        in the downstream market on a national level (less than [5-10]% combined),
        which indicates that downstream competitors of the merged entity will continue
        to have access to a significant number of other suppliers (notably, the remaining
        [90-100]% of the market as other service partners can also cross sell).
(33)    The market investigation also supported this conclusion. A competitor of Bonaldi
        in fact indicated that it does not expect to have difficulties in obtaining access to
        VW-branded OE spare parts. That competitor indicated that it does not expect any
        change in VW's behaviour on the wholesale market. That respondent further
        explained that, to his knowledge, where VW is already integrated into the retail
        level, no such foreclosure has happened in the past.
        Overall likely impact on effective competition
(34)    Therefore, in view of the lack of incentive to foreclose downstream competitors,
        the Commission considers that the Proposed Transaction is unlikely to reduce
        effective competition in the market for the retail distribution of VW-branded OE
        spare parts for passenger cars and LCVs in these Italian provinces.
     5.2.3.    Conclusion
(35)    Given the lack of incentive to foreclose downstream competitors, the Commission
        considers that the Proposed Transaction does not raise serious doubts as to its
        compatibility with the internal market as a result of non-horizontal effects.
                                                  7
 ---pagebreak--- 6.   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
                                             8