CELEX: 32021M10047
Language: en
Date: 2021-04-14 00:00:00
Title: Commission Decision of 14/04/2021 declaring a concentration to be compatible with the common market (Case No COMP/M.10047 - SCHWARZ GROUP / SUEZ WASTE MANAGEMENT COMPANIES) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                 Brussels, 14.04.2021
                                                                 C(2021) 2689 final
                                                                                   PUBLIC VERSION
                                                                 SB PreZero GmbH & Co. KG
                                                                 PreZero International GmbH
                                                                 SB Dienstleistung KG
                                                                 Stiftsbergstraße 1
                                                                 74172 Neckarsulm
                                                                 Germany
Subject:             Case M.10047 — Schwarz Group/SUEZ Waste Management
                     Companies
                     Commission decision pursuant to Article 6(1)(b) in conjunction with
                     Article 6(2) of Council Regulation No 139/20041 and Article 57 of the
                     Agreement on the European Economic Area2
Dear Sir or Madam,
(1)       On 19 February 2021, the European Commission received notification of a proposed
          concentration pursuant to Article 4 of the Merger Regulation by which SB PreZero
          GmbH & Co. KG, PreZero International GmbH and SB Dienstleistung KG, all part
          of the Schwarz group (together ‘Schwarz’, or ‘PreZero’) acquire within the meaning
          of Article 3(1)(b) of the Merger Regulation sole control over a number of companies
          of SUEZ Groupe S.A.S. (‘SUEZ’) which comprise its recovery and recycling
          operations in Luxembourg, Germany, the Netherlands and Poland (together the
          ‘Target’), by way of purchase of shares (the ‘Proposed Transaction’).3 Schwarz is
          designated hereafter as the ‘Notifying Party’ and together with the Target as the
          ‘Parties’.4
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 OJ C 71, 1.3.2021, p. 70.
4     The companies over which Schwarz will acquire control are the following: Brahms Abfallentsorgung
      Deutschland GmbH, SUEZ Polska sp. z o.o., SUEZ Recycling & Recovery Netherlands B.V., Jean
      Lamesch Exploitation S.A., SUEZ Immobilia GmbH & CO. KG and SUEZ Immobilien GmbH,
      comprising certain waste management operations of SUEZ detailed in Annex 1.1 of the Form CO. It
      should be noted that SUEZ will also retain some of its activities in these countries. Notably, in Germany,
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)      Schwarz operates as an integrated service provider in the markets for the collection,
         sorting, treatment, recycling and disposal of household and commercial waste under
         its PreZero division. PreZero has sites in Austria, Belgium, Germany, Italy, the
         Netherlands, Poland and the United States. Recently, PreZero acquired SUEZ
         Nordic AB and is now also active in Sweden.5 Schwarz is also active in food
         retailing in over 30 countries through its retail chains Lidl and Kaufland.
(3)      The Target is active in the markets for collection, sorting, treatment, recycling and
         disposal of household and commercial waste in each of Germany, Poland,
         Luxembourg and the Netherlands.
2.       THE OPERATION
(4)      The Proposed Transaction consists of the acquisition by Schwarz of the entire issued
         share capital of companies that constitute the Target. Upon completion of the
         Proposed Transaction, Schwarz will exercise sole control over the Target.6
3.       UNION DIMENSION
(5)      The undertakings concerned have a combined aggregate world-wide turnover of
         more than EUR 5 000 million (Schwarz: EUR 114 302 million; Target: EUR 1 133
         million). 7 Each of them has a Union-wide turnover in excess of EUR 250 million
         (Schwarz: EUR […]; Target: EUR 1 133 million), but each does not achieve more
         than two-thirds of its aggregate Union-wide turnover within one and the same
         Member State. The notified operation therefore has a Union dimension.
4.       RELEVANT MARKETS
4.1.     Introduction
(6)      Schwarz and the Target are both vertically integrated throughout the waste
         management chain.
(7)      Waste management and recycling services comprise a number of services with
         respect to a variety of different types of waste and materials, provided by waste
         management companies to municipalities, industrial and commercial customers, and
         households. The Parties are active in the collection, sorting and treatment, recycling
         and disposal of various types of waste and waste fractions.
    SUEZ will keep its hazardous waste incinerator in Schkopau, the dual system BellandVision and the LWP
    sorting facility in Ochtendung. Similarly, in the Netherlands, SUEZ will keep its participation in QCP,
    which recycles plastics. In Poland, SUEZ will keep the water activity of SUEZ Polska.
5   This transaction was notified to the Commission under case number M.10000, and has been cleared on
    17 November 2020. The transaction was closed end of November 2020.
6   Some of the plastic recycling and hazardous waste treatment activities of SUEZ in these countries are not
    part of the Proposed Transaction (see footnote 4).
7   Turnover calculated in accordance with Article 5(1) of the Merger Regulation and the Commission
    Consolidated Jurisdictional Notice (OJ C95, 16.4.2008, p. 1).
                                                         2
 ---pagebreak--- (8)      The Commission has previously concluded that the supply of waste management
         services for hazardous waste8 is distinct from that for non-hazardous waste.9
(9)      The Notifying Party agrees with this delineation, and submits that for hazardous
         waste no further segmentation in any manner is required. Concretely, the Proposed
         Transaction does not result in any overlaps other than for the collection of hazardous
         waste.10 The Notifying Party submits that customers of waste collection services
         tend to entrust the collection of all their hazardous waste together, and that from a
         supply-side perspective the leading waste management companies are all able to
         collect all types of hazardous waste, and it is easy to adapt or subcontract the
         collection of certain types of hazardous waste if needed.11
(10)     The market investigation results did not lead to any conclusions contradicting this
         assessment. As regards a possible further segmentation for hazardous waste, it is in
         any case not necessary to delineate exactly the scope of the relevant product markets,
         since any such segmentations do not affect the outcome of the competitive
         assessment of the Proposed Transaction. In particular, the Proposed Transaction does
         not result in affected markets for hazardous waste under any plausible product
         market definition. 12 For that reason, hazardous waste will not be further discussed in
         this Decision.
(11)     With regard to non-hazardous waste, the Commission has found that separate
         product markets could be defined for each stage of the waste management process in
         previous decisions. Concretely, as a first step, the different waste fractions, such as
         paper and cardboard, lightweight packaging (‘LWP’), glass and residual waste, are
         collected from households, collection points, factories, offices, industrial sites, shops
         etc. (collected volumes may be grouped in a transfer station before further
         treatment). The collected waste is then sorted and/or treated, to recover valuable
         waste fractions for commercialisation as secondary raw materials (e.g. recycling) or
         prepare the waste for disposal at incineration plants or landfill sites. As a result, the
         Commission has in the past defined separate product markets for the collection,
         sorting and treatment13, commercialisation 14 and disposal15 of non-hazardous
         waste.16
8   Waste is considered hazardous when it contains substances that cause the waste to display hazardous
    properties for people or the environment. An overview of the properties that can render waste hazardous
    can be found in Annex III of Directive 2008/98/EC of the European Parliament and of the Council of
    19 November 2008 on waste and repealing certain Directives as modified by Directive (EU) 2018/851 of
    the European Parliament and of the Council of 30 May 2018 (OJ L 150, 14.6.2018, p. 109). See
    https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32018L0851.
9   See cases M.4576, AVR/Van Gansewinkel, paragraph 9; M.5901, Montagu/ GIP/Greenstar, paragraph 10;
    M.448, GKN/Brambles/Leto Recycling, paragraph 13.
10  Paragraph 293 of the Form CO.
11  Paragraphs 125 et seq. of the Form CO.
12  See paragraphs 290 et seq. of the Form CO; no affected markets would arise in the markets for
    (i) collection, (ii) chemical and physical treatment, (iii) disposal (distinguishing between incineration and
    landfill), whether at the EU, national, or narrower than national level.
13  Treatment includes for instance the crushing of glass, biological treatment, mechanical-biological
    treatment, and the production of alternative fuels such as refuse-derived fuel or solid-recovered fuel, that
    are used in for example cement kilns. As the Proposed Transaction does not result in affected markets
    under any plausible market definition, treatment will not be further discussed in this Decision.
                                                             3
 ---pagebreak--- (12)     With regard to the collection of non-hazardous waste, the Commission has in
         previous decisions differentiated between the collection of household waste on the
         one hand, and industrial and commercial waste on the other.17 Within industrial and
         commercial waste, the Commission has considered a possible further segmentation
         between demolition & construction waste, industrial waste, and commercial waste. 18
(13)     Within household waste, the Commission has found that separate product markets
         could be defined depending on the type of waste fraction concerned, and has
         considered a distinction between inter alia paper, paperboard and cardboard (‘PPC’),
         flat glass, hollow glass and LWP (including different plastics, aluminium, tinplate
         and various composites). 19 This segmentation has been applied across the various
         stages of the waste management chain.
(14)     The Notifying Party agrees with the Commission’s decision-making practice of
         defining separate relevant product markets for the various stages of the waste
         management process. It also concurs that a relevant product markets exists for the
         collection of household waste, separate from the collection of commercial and
         industrial waste.20 As regards a further segmentation based on waste fractions, the
         Notifying Party agrees that such a segmentation is appropriate for the collection of
         waste,21 so that a separate relevant product market exists for the collection of hollow
         glass, as well as for sorting and treatment, so that a separate relevant product market
         exists for the sorting of LWP.22
14  Commercialisation refers to the selling of marketable fractions to traders, manufacturers etc. As the
    Proposed Transaction does not result in affected markets under any plausible market definition,
    commercialisation will not be further discussed in this Decision.
15  Disposal refers to the incineration in various waste incineration plants, or landfill (i.e. burying or piling of
    waste), primarily of waste that does not contain any recoverable waste fractions. As the Proposed
    Transaction does not result in affected markets under any plausible market definition, disposal will not be
    further discussed in this Decision.
16  See cases M.4576, AVR/Van Gansewinkel, paragraph 10; M.9164, Remondis/DSD, paragraph 9; M.295,
    SITA-RPC/SCORI, paragraph 17; M.5464 – Veolia Eau / Société des eaux d’Arles / Société Stéphanoise
    des eaux, paragraph 26; M.5901 – Montagu/GIP/Greenstar, paragraph 20.
17  See cases M.4576, AVR/Van Gansewinkel, paragraph 10; M.5901, Montagu/ GIP/Greenstar,
    paragraph 15.
18  See cases M.4576, AVR/Van Gansewinkel, paragraph 11; M.5464 – Veolia Eau / Société des eaux d’Arles
    / Société Stéphanoise des eaux, paragraph 27. As the assessment does not differ for commercial and
    industrial waste irrespective of the relevant product market considered, the Commission considers that for
    the purpose of this Decision, the exact scope of the product market can be left open.
19  See case M.9164, Remondis/DSD, paragraphs 9, 14.
20  Paragraph 188 of the Form CO.
21  More specifically, the Notifying Party puts forward that a segmentation per waste fraction is relevant for
    collection in Germany, as there contracts with municipalities only cover certain waste fractions. It further
    argues that such segmentation is however not relevant for collection in the Netherlands or Poland, as in
    those countries contracts with municipalities cover all fractions. As the Proposed Transaction does not
    result in affected markets in the Netherlands or Poland irrespective of the exact product market concerned,
    the Commission did not investigate this further. As the Proposed Transaction also does not result in
    affected markets for the collection of other waste fractions irrespective of the exact product market
    concerned, the Commission limited its investigation to hollow glass, and did not otherwise further
    investigate the other waste fractions.
22  Paragraphs 141-178 of the Form CO. As the Proposed Transaction does not result in affected markets for
    the sorting of other waste fractions irrespective of the exact product market concerned, the Commission
    limited its investigation to LWP, and did not otherwise further investigate the other waste fractions.
                                                           4
 ---pagebreak--- (15)      The market investigation confirmed that separate relevant product markets exist for
          the various stages of the waste management process. Furthermore, the market
          investigation did not elicit any evidence contradicting the existence of a relevant
          product market for household waste, separate from industrial and commercial waste.
          Lastly, as regards the distinction by waste fractions at the different stages of the
          waste management process, market participants confirmed that separate relevant
          markets exist at least for each of collection of hollow glass and sorting of LWP.23
(16)      Within the framework described above, considering all plausible product markets
          and the assessment on the plausible geographic markets in Sections 4.2.2 and 4.3.2,
          the Proposed Transaction only gives rise to horizontally affected markets in relation
          to the sorting of LWP as a result of the Parties’ overlapping activities in the
          Netherlands and for the collection of hollow glass as a result of the Parties’
          overlapping activities in Germany. As such, this will be the starting point for the
          Commission’s assessment in this Decision. Furthermore, the Proposed Transaction
          gives rise to several vertical links (examined in section 5.3), namely (i) between the
          collection of LWP and the collection of industrial and commercial (‘I&C’) waste24
          (both upstream) and the sorting of LWP (downstream), (ii) between the sorting of
          LWP (upstream) and the commercialisation of LWP (downstream), and (iii) between
          the collection of I&C waste (upstream) and the retail sale of daily consumer goods25
          (downstream).26
4.2.      Sorting of LWP
(17)      Within the recycling process, the first stage is for LWP to be collected, following
          which it is brought to an LWP sorting plant where different fractions are recovered,
          before being commercialized. LWP sorting plants use different techniques (such as
          optical or magnetic sorting, infrared technology and compressed air) to separate all
23   Replies to questions 4-5 of Questionnaire Q1 – Competitors for the sorting of Dutch LWP located in the
     Netherlands; Replies to questions 3-4 of Questionnaire Q2 – Competitors for the sorting of Dutch LWP
     located in Germany; Replies to questions 4-5 of Questionnaire Q3 – Competitors for the sorting of Dutch
     LWP located in Germany and Belgium; Replies to questions 3-4 of Questionnaire Q4 – Customers for the
     sorting of Dutch LWP; Replies to questions 3-5 of Questionnaire Q5 – Competitors for the collection of
     hollow glass in the Bielefeld region; Replies to questions 3-5 of Questionnaire Q6 – Customers for the
     collection of hollow glass in the Bielefeld region. For the purpose of this Decision, the Commission did
     not investigate the exact delineations of other waste fractions, as the Proposed Transaction does not result
     in affected markets under any plausible market definition.
24   Potentially segmented on the basis of whether the waste is commercial, industrial, or demolition and
     construction waste, as explained in paragraph (12).
25   The Commission has in previous cases considered that there is a distinct relevant product market for the
     retail sale of daily consumer goods mainly carried out by retail outlets such as supermarkets, hypermarkets
     and discount chains. See for example M.4590 – Rewe/Delvita, paragraphs 9-14, M.7920 – Netto/J
     Sainsbury/Dansk Supermarked/New Edlington/Hedon/Roundhay Road, paragraph 19; M.7224 –
     Koninklijke Ahold/Spar CZ, paragraph 10; M.1221 – Rewe/Meinl, paragraph 81; M.3905 –
     Tesco/Carrefour (Czech Republic and Slovakia), paragraph 15.
26   As for all of the vertical links created by the Proposed Transaction, all plausible markets would result in
     the same outcome in terms of the competitive assessment (as explained in detail below in Section 5.3), the
     exact market definitions can be left open for the purpose of the assessment of vertical links in this
     Decision. As such, the remainder of Section 4 will focus on the relevant product markets for the sorting of
     LWP and the collection of hollow glass, for which the Proposed Transaction results in horizontally
     affected markets.
                                                            5
 ---pagebreak---           types of LWP fractions.27 The extracted materials are then compressed into bales,
         which are sold to recyclers.28
(18)      In the Netherlands, there are two alternative ways of collecting and sorting LWP
          from households: source-separation and post-separation. In a system of source-
          separation, households separate their waste, disposing of LWP in a distinct bin or
          bag that is collected separately and then sorted into different LWP fractions at an
          LWP sorting plant. Post-separation systems require an additional step: households
          do not separate all their waste but rather dispose of LWP and residual waste in a
          single bin or bag. Consequently, after collection, the LWP must be separated from
          the residual waste at a post-separation plant and is then transported to the LWP
          sorting plant, where it is sorted into different LWP fractions. 29
(19)     Finally, the demand for LWP sorting services in the Netherlands emanates from
         organisations to which producers and importers of packaged products – which are
         legally responsible for the prevention, collection and recycling of packaging waste –
         have delegated their responsibilities. 30 This ‘extended producer responsibility’
          applies to companies that are the first to make packaged products available to the
          market in the Netherlands and/or who remove the packaging on import.
4.2.1. Product market definition
(20)     As mentioned above in Section 4.1, the Commission has previously considered the
         existence of separate relevant product markets for each stage of the waste
         management process on the one hand, and for the various waste fractions on the
         other, pointing to the existence of a relevant product market for the sorting of LWP.
         Notifying Party’s view
(21)     In line with the Commission’s decision-making practice, the Notifying Party agrees
         that a separate relevant product market exists for the sorting of LWP.31
(22)     The Notifying Party submits that no further segmentation based on whether a source-
          separation or post-separation system applies is warranted. Notably, it argues that
          both source-separated LWP and post-separated LWP are ultimately sorted by an
          LWP sorting plant, and that the vast majority of LWP sorting plants are able to
          compete for the sorting of both source-separated LWP and post-separated LWP
          without a need for technical adjustments. Moreover, it observes that, in addition to
          separating waste streams, post-separation plants also extract LWP fractions for a
          portion of the volumes that they handle. Indeed, post-separation plants sell
27  In the Netherlands, the relevant fractions for LWP sorting are, in general: (i) beverage cartons,
    (ii) polyethylene (‘PE’) – HD-PE (high-density), LD-PE (low-density, film fraction) (iii) polypropylene
    (‘PP’), (iv) polyethylene terephthalate (‘PET’) - PET bottles, PET trays, (v) polystyrene (‘PS’), (vi) mixed
    plastics, (vii) residue (baled and fines), (viii) tin-plate, (ix) aluminium. According to the Notifying Party,
    all LWP sorting facilities in the Netherlands are able to sort these fractions.
28  Paragraphs 650 et seq of the Form CO.
29  Paragraph 520 of the Form CO.
30  This extended producer responsibility follows from Dutch national legislation, the Packing Decree 2014,
    which implements the Directive 94/62/EC of 20 December 1994 on packaging and packaging waste.
31  Paragraphs 165, 178 of the Form CO.
                                                               6
 ---pagebreak---           approximately 25% of the extracted LWP fractions directly to recyclers,32 just as
          LWP sorting plants do with the fractions that they extract. As such, according to the
          Notifying Party those volumes should be included in the LWP sorting market.33
          Commission’s assessment
(23)      Firstly, the market investigation has confirmed the existence of a distinct market for
          the sorting of LWP. Indeed, virtually all market investigation respondents have
          confirmed that LWP sorting is carried out separately from the sorting of other waste
          fractions, by different companies and at specific plants that are only able to sort
          LWP. There is a specific demand for the sorting of LWP, which is subject to distinct
          tendering and contracting.34
(24)      Secondly, as regards a possible distinction based on whether a source-separation or
          post-separation system applies, a large majority of market investigation respondents
          confirmed that post-separation plants and LWP sorting plants are operated by
          different companies, carry out different tasks and correspond to different customer
          needs. Concretely, the market investigation showed that post-separation and LWP
          sorting in fact take place at different levels of the waste management value chain,
          with post-separation being a necessary intermediary step before LWP sorting when
          no source-separation is being carried out. 35 Moreover, the Parties admit that post-
          separations services are subject to different contracts than LWP sorting. 36
          Respondents to the market investigation have confirmed that operators of post-
          separation facilities do not compete for LWP sorting contracts and, vice-versa, LWP
          sorters do not compete for post-separation contracts.37 As a result, post-separation
          services do not compete with LWP services. The Commission therefore considers,
          for the purpose of this Decision, that both source-separated LWP and post-separated
          LWP volumes should be considered to belong to the LWP sorting market (as
          ultimately both types of LWP are sorted in the same LWP sorting plants); however,
          post-separation services form a separate market, upstream of LWP sorting.
(25)      As regards the LWP fractions extracted in post-separation plants and sold directly to
          recyclers, the Commission does not consider that these volumes belong to the LWP
          sorting market. The mere fact that LWP fractions extracted in post-separation plants
          might compete with the fractions extracted in LWP sorting plants when it comes to
          the commercialisation of LWP fractions38 does not provide evidence of the existence
          of any competitive relationship between post-separation plants and LWP sorting
32  The remaining 75% needs to be sorted by a LWP sorting plant.
33  Paragraphs 520 et seq. of the Form CO; Notifying Party’s White Paper 2, submitted on 19 March 2021,
    paragraph 2.
34  Replies to question 5 of Questionnaire Q1 – Competitors for the sorting of Dutch LWP located in the
    Netherlands; Replies to question 4 of Questionnaire Q2 – Competitors for the sorting of Dutch LWP
    located in Germany; Replies to question 5 of Questionnaire Q3 – Competitors for the sorting of Dutch
    LWP located in Germany and Belgium; Replies to question 4 of Questionnaire Q4 – Customers for the
    sorting of Dutch LWP.
35  Replies to question 5 of Questionnaire Q4 – Customers for the sorting of Dutch LWP; Replies to
    question 6 of Questionnaire Q1 – Competitors for the sorting of Dutch LWP located in the Netherlands.
36  See paragraph 525 of the Form CO.
37  Replies to question 5 of Questionnaire Q4 – Customers for the sorting of Dutch LWP; Replies to
    question 6 of Questionnaire Q1 – Competitors for the sorting of Dutch LWP located in the Netherlands.
38  An activity in respect of which the Parties’ presence does not give rise to an affected market and therefore
    it is not analysed in this Decision.
                                                           7
 ---pagebreak---         plants in the LWP sorting market. On the contrary, as explained in paragraph (24)
        above, LWP sorting entities do not compete for post-separation contracts and post-
        separation plants do not compete for LWP sorting contracts. Therefore, there is no
        reason to include LWP fractions extracted in post-separation plants in the LWP
        sorting market.
(26)    Thirdly, one respondent to the market investigation observed that, in the
        Netherlands, household LWP should be distinguished from commercial LWP. This
        is because the sorting of household LWP falls under the extended producer
        responsibility scheme, while commercial LWP currently does not.39
(27)    In this regard, first, according to the Notifying Party, there are no technical obstacles
        preventing facilities from sorting both household and commercial LWP, and in any
        case the current situation will change from 2023, when commercial LWP will also
        fall under the scope of the extended producer responsibility scheme. At that time,
        both types of LWP will be dealt with in the same manner. Second, it appears that
        currently, commercial LWP is primarily incinerated, with only very limited volumes
        being sorted (6 kt of commercial LWP compared to 455 kt of household LWP).
        Third, while the Target has sorted approximately […] in 2020, the Notifying Party
        […].40
(28)    For those reasons, the Commission considers that the question whether different
        markets for the sorting of commercial and household LWP exist can be left open for
        the purpose of this Decision. Given that the Parties’ activities only overlap for the
        sorting of household LWP, and as the limited volumes of commercial LWP sorted
        would make no material difference to the competitive assessment, the Commission
        will only examine the effects of the Proposed Transaction on the market for the
        sorting of household LWP.
4.2.2. Geographic market definition
(29)    The Commission has not previously examined the sorting of LWP. In
        Remondis/DSD, which was referred by the Commission to the German competition
        authority (‘Bundeskartellamt’), 41 the Bundeskartellamt considered regional markets
        for the sorting of LWP in Germany, based on the LWP sorting plants' catchment
        areas and supply streams, without reaching a conclusion on the precise geographic
        market definition. 42
        Notifying Party’s view
(30)    Overall, the Notifying Party takes the view that the market for the sorting of LWP
        generated in the Netherlands is at least national in scope, given that LWP can easily
        be transported across the Netherlands for sorting as well as cross-border.43
        Concretely, currently approximately a third of all Dutch LWP is sorted in Germany.
39  Replies to question 4.1 of Questionnaire Q4 – Customers for the sorting of Dutch LWP; See also
    Paragraphs 509 of the Form CO.
40  Notifying Party’s reply to RFI 14, paragraph 25.
41  See case M.9164 – Remondis/DSD, paragraph 20.
42  See case B4-21/19 - Remondis/DSD, paragraphs 138 et seq.
43  Paragraphs 234 et seq. of the Form CO.
                                                      8
 ---pagebreak---         Furthermore, according to the Notifying Party Belgian LWP sorting plants can also
        compete for the sorting of Dutch LWP.44
(31)    The Notifying Party further argues that barriers for LWP sorters located outside of
        the Netherlands to compete are low. First, as regards transport costs, the Notifying
        Party explains that, while it does not know the distance LWP currently travels
        between the point of collection and the LWP sorting plants, the distance between its
        transfer stations and LWP sorting plants (i.e. excluding the distance between the
        point of collection and the transfer station which is unknown, thus underestimating
        the overall travel distance) varies but can viably go up to 300 km or more. Notably,
        the Notifying Party submits that several of their German LWP sorting plants are
        sorting or have sorted Dutch LWP in the past. For example, […], and PreZero has in
        the past sorted Dutch LWP at Porta Westfalica, which is 170 km from the Dutch
        border.45 The Notifying Party also provided examples of LWP being transported
        over distances greater than 300 km. Concretely, it submits that PreZero sorts LWP
        from […] in its German LWP sorting facilities. According to the Notifying Party,
        this shows that there is no fixed maximum distance for the transport of Dutch LWP
        for sorting. 46
(32)    The Notifying Party stresses that in any event, the transport costs are not a
        determinative factor for obtaining LWP sorting contracts, as ultimately customers
        consider the total costs of the LWP recycling chain. 47 According to the Notifying
        Party, transport costs for the transfer of the (collected) LWP from the transfer station
        to the sorting facility accounts in general for significantly less than […]%, and
        possibly less than […]%, of the total costs of the recycling chain. 48 In the Notifying
        Party’s view, transport costs therefore cannot be considered to impede German LWP
        sorting facilities in competing for Dutch LWP sorting contracts. In that context, the
        Notifying Party has, by way of example, provided information on a tender issued by
        Midwaste/RKN which it won (for quality reasons) in 2019, though for which the
        second-closest bidder was a German LWP sorter, which was actually able to offer a
        better price in spite of distance.49
(33)    The Notifying Party further argues that transport costs are not determinative given
        that higher transport costs for sending LWP to Germany can be compensated by
        lower sorting costs in Germany and by lower transport costs when LWP is
        subsequently sent to recyclers in Germany. This is in particular relevant as “almost
        none” of the recycling plants to which sorted Dutch LWP can be sent are located in
        the Netherlands.50
(34)    Second, as regards technical barriers, the Notifying Party submits that there are no
        technical barriers that could limit the possibilities for non-Dutch LWP sorting plants
        to sort Dutch LWP. Concretely, the waste fractions making up the LWP sorted in
44  Paragraphs 453 et seq. of the Form CO.
45  Paragraph 470 of the Form CO.
46  Notifying Party’s White Paper 2, submitted on 19 March 2021, paragraphs 6-10.
47  Paragraph 470 of the Form CO.
48  Paragraph 470 of the Form CO.
49  Notifying Party’s White Paper 2, submitted on 19 March 2021, paragraphs 6-10; Notifying Party’s reply
    to RFI 4, Annex 4.2.
50  Notifying Party’s White Paper 2, submitted on 19 March 2021, paragraphs 11-15; Notifying Party’s reply
    to RFI 10, paragraph 24.
                                                        9
 ---pagebreak---          LWP sorting plants are in general similar in both the Netherlands and Germany.51
         While the Notifying Party recognizes that the proportion of the different waste
         fractions in the overall LWP mix differs depending on the country the LWP
         originates from, it argues that these differences do not have an impact on the ability
         of German LWP sorters to sort Dutch LWP, as German plants would only have to
         make minor adjustments to achieve that purpose.52 Furthermore, although
         Regulation (EC) No 1013/2006 of 14 June 2006 on shipments of waste (the ‘Waste
         Shipment Regulation’), provides that packaging waste from different areas of origin
         must not be mixed, 53 LWP sorters are able to sort LWP from both countries in the
         same LWP sorting plant by using a so-called ‘batch operation’ system.54 The
         Notifying Party estimates that it takes less than one hour to switch between the
         sorting of Dutch LWP and the sorting of German LWP or vice versa, and the
         switching does not incur other costs than the loss of revenues flowing from the time
         required for the switching. 55
(35)     Third, from a regulatory perspective, German LWP sorting facilities need to obtain
         an export license to be authorized to import Dutch LWP to Germany, which is to be
         requested by the exporting company (i.e. the LWP sorter’s customer).56 According to
         the Notifying Party, all waste management companies are used to and can easily do
         the required notifications. Moreover, administrative authorities reviewing license
         applications have no discretion and must accept them provided that the required
         forms are filled in adequately.
(36)     Moreover, LWP transport is subject to the requirement of a financial guarantee (or
         equivalent insurance) covering in particular the cost of transport, cost of storage and
         costs of recovery or disposal. The amount of the bank guarantee is generally based
         on the volumes transported, though local authorities have discretion in determining
         the exact amount of such guarantees. According to the Notifying Party, the need to
         provide a financial guarantee does not constitute a barrier to trade since it can either
         be easily obtained by a bank or directly provided by the customer.57
51  Footnote 282 of the Form CO.
52  Paragraph 476 of the Form CO.
53  Footnote 286 of the Form CO.
54  In a batch operation system, there are separate input warehouses, the sorting system is completely emptied
    before the changes from German to Dutch material, or vice versa, and there are separate output
    warehouses, so that the entire process can ensure separate treatment of waste according to its origin.
55  Paragraph 477 of the Form CO.
56  See paragraphs 485 et seq. of the Form CO. The regulation of the cross-border transport of waste is
    harmonized at EU level through the Waste Shipment Regulation. Under this Regulation, the transport of
    LWP across borders is subject to prior written notification and consent by the competent authorities of
    destination and dispatch. This prior written notification and consent process generally takes 3-5 months
    depending on the level of information required by the competent authority. The company that intends to
    export waste needs to submit a prior written notification to the competent authority of dispatch, which will
    then transmit the notification to the competent authority of destination once the notification has been
    properly carried out.
57  Paragraph 485 of the Form CO.
                                                           10
 ---pagebreak---          Commission’s assessment
(37)     As per the Market Definition Notice, the relevant geographic market is defined as
         ‘the area in which the undertakings concerned are involved in the supply and
         demand of products or services, in which the conditions of competition are
         sufficiently homogeneous and which can be distinguished from neighbouring areas
         because the conditions of competition are appreciably different in those areas.’58
         Determining a relevant (geographic) market is thus a tool to identify the geographic
         area within which the conditions of competition are sufficiently homogeneous, and
         within which companies are able to exert a competitive constraint on the Parties
         concerned.
4.2.2.1. Demand for LWP sorting is national
(38)     The Notifying Party has explained,59 and the market investigation has shown, that
         demand for the sorting of LWP is national, as the chain for the recycling of LWP is
         organised at the national level.
(39)     European Union Directive 94/62/EC of 20 December 1994 on packaging and
         packaging waste (‘the Packaging Directive’) requires Member States to take
         necessary measures to ensure that systems are set up for the collection and recycling
         of packaging waste. These systems must be open to the participation of economic
         operators. Member States however have discretion regarding the manner in which
         they choose to implement this obligation, and schemes implementing the Packaging
         Directive vary by country in their design and scope.
(40)     Under the Dutch ‘extended producer responsibility’ regime, which implements the
         Packaging Directive,60 producers and importers of packaged products are legally
         responsible for the prevention, collection and recycling of packaging waste. Such
         companies, when they are above a certain size, must register with Afvalfonds
         Verpakkingen (‘Afvalfonds’), 61 and pay a fee to Afvalfonds according to the
         volumes of packaging they place on the market. In exchange, Afvalfonds takes over
         their responsibility for the recycling of packaging waste. Nedvang BV (‘Nedvang’,
         formerly ‘VPKT’) is the fully-owned subsidiary of Afvalfonds that ensures the
         practical implementation of the extended producer responsibility principle, both
         directly by contracting for the sorting and recycling of packaging waste, and
         indirectly by compensating other bodies that arrange for sorting and recycling.
(41)     Moreover, the composition of LWP to be sorted and the manner in which collection
         of waste is organised varies from country to country. For instance, Dutch LWP
         typically has a higher plastic content that LWP originating in Germany, where
58  Commission Notice on the definition of the relevant market for the purposes of Community competition
    law, OJ C 372, 9.12.1997, paragraph 8.
59  Paragraphs 432 et seq. of the Form CO.
60  Through the Besluit beheer verpakkingen 2014 (‘Packaging Decree 2014’).
61  The packaging waste fund, a non-profit organisation established by producers and importers to
    collectively meet the extended producer responsibilities stated in the Packaging Decree. See
    https://afvalfondsverpakkingen.nl/en/packaging-waste-fund.
                                                       11
 ---pagebreak---          plastic bottles are partly covered by a deposit scheme and recovered separately.62
         These differences have a decisive impact in the sorting process, as explained in
         Section 4.2.2.2(D).
(42)     In short, demand for LWP sorting services is structured nationally, based on national
         rules governing the legal responsibility for the collection and sorting of LWP. As
         such, in the following section, the Commission will assess the competitive
         conditions for the supply of LWP sorting services to customers in the Netherlands,
         where the Parties’ activities overlap.
4.2.2.2. Supply of sorting services of LWP is impacted by distance, customer preferences,
           composition of LWP and national regulations
(43)     The supply of LWP sorting services to Dutch customers appears to be limited by a
         number of factors, in particular distance from the plant to collection point, customer
         preferences, composition of LWP and national regulations, although this does not
         prevent some facilities located in Germany from also sorting LWP from the
         Netherlands. Concretely, of the approximately 450kt of Dutch LWP sorted in 2020,
         around 1/3rd was sorted in plants in Germany located close to the Dutch border (with
         the farthest plant being situated 150km from the border in driving distance).
(44)     In order to identify the area in which the conditions of competition are sufficiently
         homogeneous, the Commission will assess the barriers that exist for the sorting of
         LWP from the Netherlands, as identified by the market investigation. The following
         factors are relevant for this assessment: first, transport costs significantly limit the
         distance which LWP can travel to reach an LWP sorting plant. Second,
         environmental costs are taken into account as customers try to avoid transporting
         LWP for sorting over long distances to minimize the associated CO2 emissions.
         Third, beyond transport and environmental costs, LWP sorters broadly report that
         customers have a preference for keeping waste within the country. Fourth, due to the
         specific LWP composition and quality requirements, technical adjustments are
         required for a German (or Belgian) plant to be able to sort also Dutch LWP. Fifth,
         sending LWP for sorting outside the Netherlands involves more administrative
         formalities than sorting the LWP within the country.
         (A)       Travel distance and transport costs
(45)     In order to test the Notifying Party’s arguments on the lack of economic barriers for
         non-Dutch LWP sorters to sort LWP from the Netherlands, the Commission
         investigated the maximum economically viable travel distance of LWP for sorting
         and the importance of transport costs.
(46)     First, as regards the maximum economically viable distance over which LWP can
         travel for sorting, the Notifying Party’s views were contradicted by the market
         investigation. Notably, in the course of the market investigation, a majority of
         respondents asserted that LWP cannot profitably travel distances in excess of 200
         km for sorting. This is because LWP is a very light material with a low mass density,
62  The German deposit scheme for PET bottles and beverage cans means that a greater proportion of this
    type of waste is returned by consumers instead of being disposed of with LWP waste (see footnote 283 of
    the Form CO).
                                                         12
 ---pagebreak---         which therefore occupies considerable space. In terms of tonnage this means that
        only a relatively small amount of LWP can be transported in a truck at a time.
        Pressing the LWP in bales is not an option because this has a very negative effect on
        the sorting of the material. 63 This places plants in the Netherlands at a competitive
        advantage compared with plants in Germany. 64 German competitors specifically
        indicated that distance is a ‘critical’ condition to be competitive in the market65 and
        they confirmed that it becomes uneconomical to transport LWP for sorting beyond
        200 km. 66 Moreover, one of the larger German sorters was of the view that it would
        not be competitive in tenders for the sorting of LWP originating from the provinces
        in the western part of the Netherlands, i.e. those located at around 200 km or more
        from its plant.67
(47)    The Notifying Party points to instances in which LWP has travelled over distances
        greater than 200 km in order to reach a sorting plant. 68 Concretely, the Notifying
        Party submits that it sorts LWP from […] at its plants in Germany, and that it is
        aware of several instances of LWP being transported over longer distances in
        Germany. However, the Notifying Party admits at the same time that […]% of the
        LWP sorted at the Parties’ own Rotterdam and Zwolle plants likely comes from less
        than 90 km away.69 Moreover, the mere fact that some LWP volumes are sent or
        have been sent in the past from […] to Germany by ship for sorting has little bearing
        on the assessment of competitive conditions for the sorting of LWP from the
        Netherlands and the transport costs involved in these cases cannot be compared with
        those for the transport of LWP from the Netherlands, which takes place entirely via
        truck. For those reasons, the Commission considers that the contrary examples
        provided by the Notifying Party do not alter the Commission’s finding that 200 km
        appears to be the maximum economically viable distance over which LWP can
        competitively travel for sorting, as shown by both the results of the market
        investigation. If anything, this appears conservative in view of Notifying Party’s
        own observation of the distance travelled by the bulk of the volumes that they sort,
        of 90 km.
(48)    Second, with regard to transport costs, the Notifying Party argues that they are not a
        determinative factor for obtaining LWP sorting contracts, as ultimately the costs
        taken into account are the total costs of the LWP recycling chain. It further considers
        that higher transport costs for sending LWP to Germany can be compensated by
        lower sorting costs in Germany and by lower transport costs when LWP is
        subsequently sent to recyclers in Germany. 70 The Notifying Party provides in this
        context as an example a tender issued by […] under which it was awarded a lot
        in 2019. 71 The Notifying Party claims that it was awarded this tender as a result of
63  Replies to question 8 of Questionnaire Q4 – Customers for the sorting of Dutch LWP; Replies to
    question 16 of Questionnaire Q2 – Competitors for the sorting of Dutch LWP located in Germany.
64  Replies to question 9.1 of Questionnaire Q4 – Customers for the sorting of Dutch LWP.
65  See minutes of a call with a competitor on 9 February 2021, paragraph 9.
66  See minutes of a call with a competitor on 9 February 2021, paragraph 8.
67  See minutes of a call with a competitor on 10 March 2021, paragraph 4.
68  Notifying Party’s White Paper 2, submitted on 19 March 2021, paragraphs 6-10.
69  Paragraph 470 of the Form CO.
70  Notifying Party’s reply to RFI 10, paragraph 24. See also Notifying Party’s White Paper 1, submitted on
    5 March 2021, paragraphs 11-15.
71  Notifying Party’s White Paper 2, submitted on 19 March 2021, paragraphs 6-10; Notifying Party’s reply
    to RFI 4, Annex 4.2.
                                                         13
 ---pagebreak---         qualitative rather than price factors (with price in this tender being the sum of the
        sorting rate and transport costs). The Notifying Party believes that the second-closest
        bidder was a German LWP sorter, which was actually able to offer a better price, and
        concludes from this that neither transport costs nor transport distance are
        determinative in tenders.
(49)    However, the Notifying Party’s argument that the transport costs are not
        determinative for obtaining LWP sorting contracts is at odds with the tender
        specifications that it itself has shared, which do consider transport costs as an
        important assessment factor. Concretely, the Notifying Party has shared a sample of
        documents showing award criteria for eight tenders for the sorting of Dutch LWP
        awarded between 2014 and 2019. In six of the eight calls for tenders/contracts for
        LWP sorting, bidders were specifically asked to indicate the distance over which
        LWP would travel to reach the LWP sorting plant for the purpose of calculating
        transport costs, as an element of the price. Consequently, it appears that the cost of
        transport to the sorting station is a relevant element for customers to assess bids and
        determine the award of an LWP sorting contract.
(50)    As such, it is clear that the correct framework for assessing the transport costs is not
        the total costs of the LWP recycling chain, as the Notifying Party claims, but rather
        the costs related to LWP sorting. Considering this, the data available shows that
        transport costs constitute a significant proportion of the costs of LWP sorting, and do
        limit how far LWP can be sent for sorting. Concretely, while the Notifying Party
        estimates that the cost of transporting Dutch LWP to a sorting plant in the
        Netherlands accounts for […]% of the total costs of the recycling chain (this figure
        rises to […]% if Dutch LWP is sent to a plant in Germany),72 however, as a
        proportion of sorting costs (rather than the total cost of the recycling chain), these
        figures rise to […]% and […]% when the LWP is sorted in plants in the Netherlands
        and Germany respectively. This indicates not only that transport costs are a
        significant part of the costs of sorting, but that those costs will increase substantially
        when LWP is sent to plants located in Germany.
(51)    Furthermore, the Notifying Party’s argument in any case does not apply to situations
        where the entity commercialising the sorted LWP to recyclers is not the customer but
        the sorting entity itself. Notably, according to the Notifying Party, Nedvang – the
        main Dutch LWP sorting customer – ‘generally transfers the ownership of the LWP
        to the sorting plants except for some small volumes, for which it commercializes the
        sorted LWP itself’.73 Furthermore, the Notifying Party confirmed that for […] of the
        Target’s large LWP sorting contracts with the main Dutch customers, it is the Target
        itself (i.e. the LWP sorter, not the customers of the sorting service) that carries out
        the commercialisation of the sorted LWP.74 In those situations, the customer has an
        interest in minimising transport cost to the sorting station since it will not bear the
        costs from the sorting station to the recyclers.
(52)    As described at paragraph (33) above, the Notifying Party also argues that transport
        costs are not determinative given that higher transport costs for sending LWP to
        Germany can be compensated by lower sorting costs in Germany and by lower
72  Notifying Party’s reply to RFI 10, paragraphs 21-22.
73  Notifying Party’s reply to RFI 3, paragraphs 54-55.
74  Notifying Party’s reply to RFI 3, paragraphs 54-55.
                                                         14
 ---pagebreak---         transport costs when LWP is subsequently sent to recyclers in Germany. According
        to the Notifying Party, this is particularly relevant given that almost none of the
        recycling plants to which sorted LWP is sent are based in the Netherlands.
(53)    On this, firstly the Commission notes that even in cases where the customer is
        responsible for the entire recycling chain, this argument would not apply in cases
        where the LWP is not recycled in Germany. Contrary to what the Notifying Party
        implies, this seems to be most of the cases. Concretely, according to the information
        provided by the Notifying Party, only […]% of the output volumes of the Target’s
        plant in Rotterdam was recycled in Germany in 2019, whereas […] […]% was
        recycled in the Netherlands and […]% in other countries. As regards PreZero, […]%
        of the output of its Zwolle plant in 2020 was recycled in the Netherlands.75
        Therefore, in contrast to what the Notifying Party submits, it seems that in the vast
        majority of situations the entire recycling chain is kept within Dutch borders.
(54)    Furthermore, even regarding the proportion of LWP sent to recycling plants in
        Germany, it is not apparent why for these volumes the lower cost of transporting
        sorted LWP from a sorting to a recycling plant in Germany would compensate for
        the higher cost of transporting LWP for sorting from the Netherlands to Germany.
        Indeed, unsorted LWP is more costly to transport than sorted LWP.76 Sorted LWP
        has a higher mass density since it has been cleaned up of impurities and, unlike
        unsorted LWP, can be and in fact is compressed into bales. 77 As a result, the
        transport of sorted LWP is more efficient than the transport of unsorted LWP. In
        order to minimise costs at every step of the recycling chain, customers therefore seek
        to limit pre-sorting transport (i.e. where transport costs are proportionately higher).
(55)    Finally, the Notifying Party’s view that higher transport costs can be compensated
        by lower sorting costs (in particular due to lower labour costs) in German plants is
        inconsistent with the views of market participants, who, as mentioned above in
        paragraph (46), indicated that they cannot offer competitive sorting services for
        LWP if it would need to travel further than 200 km. Furthermore, the Notifying
        Party’s own estimates are that the sorting cost of LWP (i.e. covering only the sorting
        fees at the facilities and not transport costs) in the Netherlands accounts for […]% of
        total costs (based on the entire recycling chain, from collection to
        commercialisation), while the figure for Germany is […]%. 78 The difference
        therefore accounts for […]% of total sorting costs. The Notifying Party also
        estimates that the difference between the cost of transporting LWP to a sorting plant
        in the Netherlands and to a sorting plant in Germany is […]% of total costs of the
        recycling chain (and thus at least in a number of cases greater than the […]%
        difference in sorting fees). Therefore, even according to the Parties’ own estimates,
        higher transport costs are not necessarily entirely compensated by lower sorting
        costs. Moreover, the fact that plants in Germany may have lower labour costs does
        not change the fact that they are nonetheless rendered less competitive by transport
        costs.
75  Notifying Party’s reply to RFI 14, paragraphs 5-7.
76  Notifying Party’s reply to RFI 14, paragraph 12.
77  Notifying Party’s reply to RFI 14, paragraph 12.
78  Notifying Party’s White Paper 1, submitted on 5 March 2021, paragraph 35.
                                                       15
 ---pagebreak---         (B)        Environmental costs (CO2 emissions)
(56)    The information available, notably calls for tenders and their specifications, shows
        that next to transport costs, the environmental cost of transport is also a factor taken
        into account by customers in awarding tenders. Sorters with more distant LWP
        sorting plants are sometimes penalised, through a correction of the price quoted or
        through negative points for quality, not only because of higher transport costs but
        also for environmental reasons related to the increased CO2 emissions associated
        with longer transport.
(57)    Concretely, as mentioned, the Notifying Party has shared a sample of documents
        showing award criteria for eight tenders for the sorting of Dutch LWP organised
        between 2014 and 2019. In half of these tenders, bidders were awarded qualitative
        points for ‘sustainable transport’,79 based on the distance LWP would need to travel
        to the LWP sorting plant. The application of these qualitative criteria is intended to
        capture the environmental impact through higher CO2 emissions of transporting
        LWP over long distances.80
(58)    As already mentioned in Section 4.2.2.2(A), besides being penalised under
        qualitative criteria, the transport distance to the sorting plant is also often reflected in
        the price score that a bidder is awarded. In six of the eight tenders reviewed, bidders
        were asked to specify the distance over which LWP would travel to reach the sorting
        plant for the purpose of calculating transport costs, as an element of the price.
        Although adjustments to the price are intended to correct for the financial cost of
        transportation over longer distances (rather than for the higher CO2 emissions from
        trucks), there is a significant overlap between tenders in which the transport distance
        is penalised through corrections to the price and those in which it is penalised
        through a loss of points for quality. In three of the eight tenders examined, a bidder
        with a plant located in Germany would have been doubly penalised for the distance
        of the sorting plant from the transhipment station where collected LWP would be
        gathered: first for the additional transport costs making the price less competitive (as
        explained in Section 4.2.2.2(A)), and second by losing points for quality linked to
        ‘sustainable transport’.81 This double penalty has been confirmed in the market
        investigation: customers expressed that LWP sorting plants should be situated as
        close as possible to the source of the waste, both because of the cost of transportation
        and given the need to minimise environmental harm from CO2 emissions in the
        waste management chain.82 Competitors also confirmed that besides being less
        competitive on price, bidders located at a greater distance would be allocated
        negative points in a tender due to high CO2 emission incurred by the transport of the
        waste, a disadvantage for which a bidder would need to compensate by lowering its
        price.83
79  Notifying Party’s reply to RFI 13, Annexes 1-B.1, 1-B.5, 1-B.6, 1-B.8.
80  See minutes of a call with a competitor on 10 February 2021, paragraph 15.
81  Notifying Party’s reply to RFI 13, Annexes 1-B.5, 1-B.6, 1-B.8.
82  Minutes of a call with a customer on 19 February 2021, paragraph 12.
83  Minutes of a call with a competitor on 10 February 2021, paragraph 15.
                                                         16
 ---pagebreak---          (C)        Customer preference for sorting of Dutch LWP in the Netherlands
(59)     In addition to transport costs and environmental costs which limit the distance over
         which LWP can travel for sorting, the market investigation also elicited that the
         sorting of Dutch LWP is impacted by the existence of a preference for sorting Dutch
         LWP within the Netherlands.
(60)     Concretely, all sorters active on the Dutch LWP sorting market that responded to the
         market investigation considered that there is a political preference for Dutch LWP to
         be sorted in the Netherlands.84 One sorter explained that this preference is grounded
         on concerns about the integrity of the overall LWP sorting and recycling chain, and
         in particular regarding the proportion of collected LWP that is actually sorted and
         recycled. For that reason, sorting in the Netherlands is viewed more favourably from
         a political point of view, as it ‘provides better political backup’.85 German sorters
         active in offering LWP sorting services to customers in the Netherlands also believe
         that such customers have a preference for sorting to take place in the Netherlands.86
(61)     Customers themselves provided mixed views. On the one hand, a number of
         customers denied the existence of any kind of national preference,87 or explicitly
         insisted that the distance, and not the specific country in which a sorting plant is
         located, is the most important factor in selecting a supplier of sorting services.88 On
         the other hand, several customers confirmed that municipalities on whose behalf
         they arrange for sorting do prefer LWP to be sorted in the Netherlands or close to the
         border.89 One respondent explains that this is motivated both by environmental
         reasons and by a desire to stimulate employment in the country where the waste is
         generated.90 One customer, which contracts LWP sorting services on behalf of a
         number of Dutch local authorities, explained that the Dutch government and
         municipalities expect LWP sorting to be achieved as close to the point where waste
         is generated as possible, and that they only have recourse to German sorters to the
         extent that capacity in the Netherlands is short.91 This would seem to be consistent
         with the (volume) market shares provided by the Notifying Party (see Table 2),
         which show that the proportion of LWP that customers have sent to be sorted to
         German plants has declined over the last years as new capacity has been built in the
         Netherlands.
84  Replies to question 13.1 of Questionnaire Q1 – Competitors for the sorting of Dutch LWP located in the
    Netherlands; Replies to question 19.1 of Questionnaire Q2 – Competitors for the sorting of Dutch LWP
    located in Germany.
85  […]’s response to question 13.1 of Questionnaire Q1 – Competitors for the sorting of Dutch LWP located
    in the Netherlands.
86  Replies to questions 19 and 20 of Questionnaire Q2 – Competitors for the sorting of Dutch LWP located
    in Germany.
87  Replies to question 14 of Questionnaire Q4 – Customers for the sorting of Dutch LWP.
88  Replies to question 14.1 of Questionnaire Q4 – Customers for the sorting of Dutch LWP.
89  […]’s replies to question 13.1 of Questionnaire Q4 – Customers for the sorting of Dutch LWP. Minutes of
    a call with a customer on 19 February 2021, paragraph 12.
90  […]’s replies to question 13.1 of Questionnaire Q4 – Customers for the sorting of Dutch LWP.
91  Minutes of a call with a customer on 19 February 2021, paragraph 12.
                                                         17
 ---pagebreak--- (62)    With regards to the 2019 Midwaste/RKN tender cited by the Notifying Party, the
        Commission understands that the most important factor in the Notifying Party’s
        success was its commitment to build a new sorting facility in the Netherlands. It is
        apparent from the award letter sent to the Notifying Party that under 3 of the 5
        qualitative criteria applied in this tender, the decision to build a new plant at Zwolle
        was a key reason for the score awarded. This award letter states that “the new
        installation (in the Netherlands) creates clear added value for the circular
        economy.” The fact that the Notifying Party’s offer may not have been the most
        competitive in terms of price is unsurprising given that it involved sending LWP to
        Germany (to Schwarz’s plant in Porta Westfalica) for sorting during a transitional
        period (2019 and early 2020, incurring higher transport costs in that time) and given
        also the investments which the Notifying Party was incurring in building the new
        sorting plant in Zwolle. In any case, the fact that Schwarz decided to build a new
        plant in Zwolle to sort the Dutch LWP under this contract when it could have
        continued to sort Dutch LWP from its LWP sorting plant in Germany is indicative of
        a clear advantage for sorting Dutch LWP in plants closer to the collection point. The
        Commission therefore considers this tender to be further evidence of the fact that
        customers have a clear preference for LWP to be sorted in the Netherlands.
        (D)       Technical barriers
(63)    The results of the market investigation also pointed to the existence of technical
        barriers for non-Dutch LWP sorters to sort Dutch LWP, related to the composition of
        the LWP mix and to the regulations on traceability of LWP. These barriers imply
        additional costs that LWP sorting plants located in other Member States must face
        when also sorting Dutch LWP alongside LWP from their own country. This further
        limits the possibility of sending Dutch LWP to neighbouring countries for sorting.
(64)    First, the differences in the LWP mix between the Netherlands and Germany impact
        sorting operations. Sorters, in particular those which are able to sort Dutch LWP
        from plants in Germany, confirmed that the mix of waste fractions composing LWP
        is different in both countries and needs to be treated separately. Indeed, Dutch LWP
        tends to contain greater quantities of plastics, while German LWP tends to contain a
        greater proportion of paper and metallic waste. Because of the different composition
        of the waste, LWP needs to be sorted in different batches, and some adjustments
        must be made to the sorting machinery when changing batches from different
        countries, resulting in lost time (and therefore lost capacity). One sorter in Germany
        estimated the costs associated with switching between the sorting of Dutch and
        German LWP to be several thousands of euros per week, while another estimated
        these costs to be approximately EUR 250 000 per year. Therefore, a German plant
        that intends to sort also Dutch LWP must change its production process.92
(65)    Moreover, Dutch regulatory requirements on the traceability of waste require that
        Dutch LWP be stored separately from LWP from other countries, both before and
        after sorting, 93 which means that plants that want to sort both German and Dutch
        LWP need to invest in additional storage.
92  Replies to question 8 of Questionnaire Q2 – Competitors for the sorting of Dutch LWP located in
    Germany.
93  As explained in paragraph (34).
                                                    18
 ---pagebreak--- (66)    For those reasons, despite mixed views as to the importance of these factors,94
        German sorters that responded to the market investigation agreed that LWP sorting
        plants in Germany are at a significant disadvantage compared to LWP sorting plants
        in the Netherlands. A competitor who previously sorted Dutch LWP mentioned:
        ‘German and Dutch sorting plants are designed differently; have different processes
        in place to sort the different LWP mixes and attain the different standards. Sorting a
        different LWP mix would require the rebuilding of a facility. Adapting the plant to be
        able to receive LWP from another country would require significant investments,
        depending on the existing technology and size of the plant. Consequently, it is
        generally impossible for a plant to serve simultaneously Dutch and German
        customers’95. Another sorter which currently serves the Dutch market indicated that
        ‘[n]ot all German LWP sorting plants are necessarily able to sort Dutch LWP.
        Dutch regulations set different quality standards for the LWP sorting output than
        German authorities, and not all German plants can meet these standards, at least
        not without incurring additional costs’.96
(67)    One respondent active in Germany located less than 20 km from the Dutch border,
        with prior experience in sorting Dutch LWP, indicated that adapting the sorting
        plants to sort LWP from different countries is very costly, while sorting LWP from
        different countries in shifts would also be very difficult, as the adjustments to the
        sorting lines would take 4-5 hours each time (thereby lowering the plant’s
        utilization). For these reasons, combined with the need to obtain authorisations for
        cross-border shipments of waste (discussed below), this respondent considered that it
        was significantly more difficult for plants in Germany to sort Dutch LWP.97 Other
        LWP sorters with plants in Germany close to the Dutch border, and which have
        sorted Dutch LWP in the past, likewise confirmed that sorting LWP from the
        Netherlands and Germany within the same facility was excessively complex and
        costly.98
        (E)        Administrative formalities
(68)    Lastly, specific administrative formalities apply to the cross-border transport for
        LWP sorting. Concretely, sending LWP for sorting outside the Netherlands involves
        more administrative formalities than sorting the LWP in the country, including the
        setting up of a financial guarantee. This too limits the possibilities for transporting
        Dutch LWP cross-border for sorting.
(69)    As mentioned above in paragraph (34), the regulation of cross-border transport of
        waste is harmonized at EU level through the Waste Shipment Regulation. Although
        these are not considered a serious impediment by German sorters already sorting
        Dutch LWP, they are seen as an additional obstacle by sorters in Germany and
        Belgium not currently active for the sorting of Dutch LWP.
94  Replies to questions 8.3, 8.4, 10.1, 10.2 of Questionnaire Q2 – Competitors for the sorting of Dutch LWP
    located in Germany.
95  Minutes of a call with a competitor of 2 February 2021, paragraph 17.
96  Minutes of a call with a competitor on 9 February 2021, paragraph 8.
97  Reply of a German sorter to question 8.4 of Questionnaire Q3 – Competitors for the sorting of Dutch
    LWP located in Germany and Belgium.
98  Reply of a German sorter to RFI 9, paragraph 3; Minutes of a call with a competitor on 2 February 2021,
    paragraph 17.
                                                          19
 ---pagebreak--- (70)    Concretely, sorters located in Germany which are active in the sorting of Dutch
        LWP indicated that they do not consider the costs of satisfying these administrative
        formalities (i.e. the fees and guarantees) to be very significant, although they also
        indicated that these costs, combined with the obligation to keep waste from different
        countries separate, did make it significantly more difficult for them to sort Dutch
        LWP.99 Among sorting plants close to the Dutch border in Belgium and Germany
        which do not sort Dutch LWP, a majority indicated that these administrative barriers
        make it significantly more difficult to sort Dutch LWP.
(71)    Large customers of LWP sorting services in the Netherlands held differing views on
        whether the administrative barriers associated with the cross-border shipment of
        waste are a significant impediment for plants outside of the Netherlands. One large
        customer explained that in its view, the administrative obligations that come with
        notifying cross-border transports of waste, and the cost of the associated fees and
        guarantees, are not a problem for German LWP sorters for whom the sorting of
        Dutch LWP is part of their daily business. 100 Three other customers however
        explained that the requirement to comply with the Waste Shipment Regulation
        places an additional burden on LWP sorting plants located in Germany when it
        comes to the sorting of Dutch LWP.101
4.2.2.3. Conclusion on geographic market definition
(72)    In conclusion, for customers of LWP sorting services in the Netherlands, both supply
        and demand are national in scope.
(73)    Indeed, it results from the above that Dutch LWP can generally only be sorted in an
        economically viable manner in LWP sorting plants that are relatively close to the
        transfer station where collected waste is gathered, notably at most approximately 200
        km. The Market Definition Notice remarks that in cases like the present one, where
        the transport of a product incurs significant transport costs, deliveries from a given
        plant are limited to a certain area around each plant by the impact of transport
        costs.102 In principle, such an area could constitute the relevant geographic market.
        However, as the Market Definition Notice explains, if the distribution of plants is
        such that there are considerable overlaps between the areas around different plants, it
        is possible that the pricing of those products will be constrained by a chain
        substitution effect, and lead to the definition of a broader geographic market. Such
        chain substitution effects would appear to be present in the Netherlands. Given the
        size of the country, all sorting plants are able to compete for a significant part of
        national demand, and the radii within which they are able to offer LWP sorting
        services overlap to a significant extent.
(74)    Other factors identified in the market investigation also suggest that the market for
        the sorting of Dutch LWP is national in scope, notably customer preference,
        variation in the composition of the LWP between Member States, technical
        regulations on traceability and other administrative factors.
99  Replies to questions 11, 12, 13 of Questionnaire Q2 – Competitors for the sorting of Dutch LWP located
    in Germany.
100 Minutes of a call with a customer on 19 February 2021, paragraph 14.
101 Replies to question 11 and 11.1 of Questionnaire Q4 – Customers for the sorting of Dutch LWP.
102 Commission Notice on the definition of the relevant market for the purposes of Community competition
    law, OJ C 372, 9.12.1997, paragraph 57.
                                                        20
 ---pagebreak--- (75)     While these elements limit the ability of plants in other Member States to compete
         on an equal footing with Dutch plants for the sorting of Dutch LWP, they do not
         completely prevent them from competing, as illustrated by the fact that certain plants
         in Germany, located within the economically viable distance, together currently
         receive approximately one third of the volumes of Dutch LWP for sorting. These
         plants however should be considered out-of-market constraints, as they face
         additional costs and obstacles to supply customers in the Netherlands that Dutch
         plants do not face and, as explained earlier, are generally considered disadvantaged
         in comparison to them. That plants in other Member States are out-of-market
         constraints is also demonstrated by the fact that other German and Belgian plants do
         not sort Dutch LWP, do not submit bids or participate in any tenders for the sorting
         of Dutch LWP and, when approached by the Commission, these competitors showed
         to be largely unaware of the conditions (quality standards, administrative
         requirements) for sorting LWP, despite being in some cases very close to the Dutch
         border.103
(76)     Ultimately, therefore, competitive conditions for the sorting of Dutch LWP are
         different for LWP sorting plants located in the Netherlands and LWP sorting plants
         located outside of the Netherlands (even if close to the border).
(77)     For these reasons, the Commission considers that conditions of competition are
         sufficiently homogeneous only within the territory of the Netherlands, so that the
         relevant geographic market for the sorting of LWP is national.
4.3.     Collection of hollow glass
4.3.1. Product market definition
(78)     As mentioned above, in prior decisions, the Commission distinguished separate
         relevant product markets for each stage of the waste management process and for
         different waste fractions. In particular, the Commission has identified a separate
         relevant product market for the collection of hollow glass. 104
         Notifying Party’s view
(79)     The Notifying Party agrees that the collection of hollow glass constitutes a separate
         relevant product market, though caveats that this is primarily relevant for household
         waste only, and for Germany.
(80)     Notably, in Germany only certain waste fractions are collected directly from the
         households (i.e. PPC, LWP and residual household waste). Hollow glass is collected
         in containers that are set up in different communal spaces throughout the
         municipality, under specific collection contracts. This distinction is not relevant for
         I&C waste, where the different waste fractions are typically not collected
         separately.105
103  Replies to questions 9.4 and 12 of Questionnaire Q3– Competitors for the sorting of Dutch LWP located
     in Germany and Belgium.
104  See Section 4.1 for a more detailed overview of the Commission’s decision-making practice.
105  Paragraphs 172-173 and footnote 103 of the Form CO.
                                                          21
 ---pagebreak---         Commission’s assessment
(81)    The market investigation confirmed the existence of a separate relevant product
        market for the collection of hollow glass. All market investigation respondents, both
        competitors and customers, indicated that in Germany, the collection of hollow glass
        is organised separately from the collection of other waste fractions.106 They explain
        that the collection of hollow glass is organised by so-called ‘dual systems’, which
        are operators that organise the recycling of packaging waste on behalf of the
        manufacturers, importers and retailers who, as distributors, are originally responsible
        for the recycling. This service is provided by the dual systems against payment of a
        license fee by the distributors. Dual systems thus tender and contract the collection
        of hollow glass separately. The collection itself is, contrarily to other waste fractions,
        not done directly at the households, but rather at centralised drop-off points in the
        collections areas of the municipality. 107
(82)    In view of the above, the Commission considers, for the purpose of this Decision, a
        separate relevant product market for the collection of hollow glass.
4.3.2. Geographic market definition
(83)    In the past, the Commission has considered for the Netherlands that while the
        demand for the collection of hollow glass must be regarded as local, collection
        schemes are set up, financed and operated at national level, and that consequently
        prices, subsidies and means of collection vary from Member State to Member State.
        Larger collection companies are active across the country. For those reasons, the
        Commission considered the market for collection of hollow glass to be national. 108
        The Commission has not investigated the geographic scope for the collection of
        hollow glass in Germany. However, the Bundeskartellamt has considered both the
        national level and a ‘regional level’ comprising of a Landkreise (‘district’) and
        adjoining districts, ultimately leaving the geographic market definition open. 109
        Notifying Party’s view
(84)    The Notifying Party submits that also for Germany, the collection of hollow glass is
        national in scope. It argues that in Germany too, large companies operate throughout
        the country, tenders are organised on a national basis and the regulatory framework
        is predominantly national in scope. The barriers to entry at regional level are very
        low; a company only needs to make available bottle banks and collection trucks and
        potentially hire additional employees in order to start operating in another region.
        Ultimately, companies collecting hollow glass face their competition at national
        level. 110
106 Replies to question 4 of Questionnaire Q5 – Competitors for the collection of hollow glass in the Bielefeld
    region; replies to question 4 of Questionnaire Q6 - Customers for the collection of hollow glass in the
    Bielefeld region.
107 Replies to question 4.1, 5, 5.1 of Questionnaire Q5 – Competitors for the collection of hollow glass in the
    Bielefeld region; replies to question 4.1, 5, 5.1 of Questionnaire Q6 - Customers for the collection of
    hollow glass in the Bielefeld region.
108 See case M.4576 – AVR/Van Gansewinkel, paragraph 19.
109 See case B4-21/19 – Remondis / DSD, paragraphs 125 et seq.
110 Paragraphs 223, 312 of the Form CO.
                                                         22
 ---pagebreak---         Commission’s assessment
(85)    The market investigation in the present case supports largely the arguments put
        forward by the Notifying Party.
(86)    The demand for hollow glass collection services in Germany is structured on the
        basis of individual districts, but following rules set nationally. Contracts typically
        last three years, and market investigation respondents explained that on an annual
        basis, around a third of all districts in Germany are allocated to the dual systems,
        who are responsible for the organisation of the collection of hollow glass. The
        allocation of districts is random, on the basis of a lottery system which takes into
        account the volume licensed to each dual system. Dual systems can be allocated
        districts from all over the country. Dual systems operators then select their hollow
        glass collector in each of the districts for which they are responsible, by issuing calls
        for tenders that are open to all hollow glass collectors nationwide. The collection
        itself is done locally. 111
(87)    On the supply-side, the market investigation showed that some bigger companies,
        such as Schwarz, SUEZ, Remondis and Alba, organise their operations in terms of
        collection schemes, operations and financing nation-wide and are active across the
        country, while others are only present at the regional or local level. Indeed, whereas
        some competitors indicated that they have submitted bids and offer collection
        services across the country, others stated that they have submitted bids and offer
        services only for certain regions/districts. Customers have also indicated that while
        some companies submit bids across the country, others’ focus is more regionally or
        locally. 112 As such, bigger companies appear to compete with each other at national
        level, and in certain regions with more regional or local players too.
(88)    Furthermore, the market investigation has revealed that there are price differences
        across different regions in Germany, though market respondents explained in this
        regard that this is related mainly to whether it concerns collection in more urban
        versus in more rural areas, as transport costs differ.113 The legal framework is the
        same across the country, as it ‘is essentially determined by the Verpackungsgesetz
        (VerpackG), and in part also by the Kreislaufwirtschaftsgesetz (KrWG). Both are
        federal laws that claim national validity.’114 Whereas a local presence is required,
        barriers to enter a region seem to be rather low: market investigation respondents
        described that ‘[t]o take on a contract in a new district, a collector needs only
        trucks, containers and drivers, and a place to park the trucks and to weigh /
        temporarily store the hollow glass collected (transit warehouse) before it is picked
111 Replies to questions 4-5 of Questionnaire Q5 – Competitors for the collection of hollow glass in the
    Bielefeld region; replies to question 4-5 of Questionnaire Q6 - Customers for the collection of hollow
    glass in the Bielefeld region; Minutes of a call with a competitor on 2 February 2021, paragraphs 3-5, 9;
    Minutes of a call with a customer on 2 February 2021, paragraphs 5-6.
112 Replies to questions 6-10 of Questionnaire Q5 – Competitors for the collection of hollow glass in the
    Bielefeld region; replies to question 6-8 of Questionnaire Q6 - Customers for the collection of hollow
    glass in the Bielefeld region; Minutes of a call with a competitor on 2 February 2021, paragraph 10.
113 Replies to questions 11, 11.1 of Questionnaire Q5 – Competitors for the collection of hollow glass in the
    Bielefeld region; replies to question 9, 9.1 of Questionnaire Q6 - Customers for the collection of hollow
    glass in the Bielefeld region.
114 Replies to questions 12, 12.1 of Questionnaire Q5 – Competitors for the collection of hollow glass in the
    Bielefeld region; replies to question 10, 10.1 of Questionnaire Q6 - Customers for the collection of hollow
    glass in the Bielefeld region.
                                                            23
 ---pagebreak---          up for transport to the sorting plants’. However, respondents also mentioned that ‘a
         company is usually less willing to compete in a region in which it does not yet have
         any infrastructure’. Some market investigation participants added that ‘the regional
         knowledge in a contractual area due to collection from central depot containers
         does not have to be too well-founded, as is the case with near-household collection
         services’ and that ‘[a]s projects are awarded based on the offered price, local
         reputation does not play a role in winning contracts for the collection of glass.’115
(89)     In conclusion, while the market investigation point to the existence of a national
         market, it also showed the existence of regional or local elements. In any case, for
         the purpose of this Decision the exact geographic market definition can be left open
         as it does not affect the outcome of the competitive assessment of the Proposed
         Transaction with regard to the collection of hollow glass.
(90)     As explained below, applying a conservative approach, the Commission will in its
         competitive assessment consider a smaller than national geographic market,
         comprising of the Bielefeld district and adjoining districts (the ‘Bielefeld
         Region’) 116, as only under this plausible market definition the Proposed Transaction
         results in an affected market.
5.       COMPETITIVE ASSESSMENT
(91)     The Proposed Transaction gives rise to horizontally affected markets in relation to
         the sorting of LWP in the Netherlands and for the collection of hollow glass if the
         Bielefeld Region (Germany) is considered.
(92)     Furthermore, the Proposed Transaction will give rise to several vertical links,
         namely (i) between the collection of LWP and the collection of I&C waste117 (both
         upstream) and the sorting of LWP (downstream), (ii) between the sorting of LWP
         (upstream) and the commercialisation of LWP (downstream), and (iii) between the
         collection of I&C waste (upstream) and the retail activities (downstream). 118
(93)     In addition, on 15 March 2021 the Commission received a submission from the
         Polish national competition authority UOKiK, putting forth general concerns about
         the Proposed Transaction due to the fact that ‘[t]he market for waste disposal is
         highly concentrated and we have spotted some competition problems in the past.
115 Replies to questions 13.1 of Questionnaire Q5 – Competitors for the collection of hollow glass in the
    Bielefeld region; replies to question 11.1 of Questionnaire Q6 - Customers for the collection of hollow
    glass in the Bielefeld region; Minutes of a call with a customer on 2 February 2021, paragraphs 7-9;
    Minutes of a call with a competitor on 2 February 2021, paragraph 6-8.
116 Concretely, in line with the approach taken by the Bundeskartellamt and suggested by the Notifying Party,
    the starting point is the Target’s location in Bielefeld, and then including two layers of adjoining districts:
    (i) the immediate adjoining districts i.e. Gütersloh and Lippem and (ii) the outer adjoining districts i.e.
    Herford, Soest, Paderborn, Höxter, Holzminden, Hameln-Pyrmont, Schaumburg, Minden-Lübbecke,
    Osnabrück, Warendorf and Steinfurt. See footnote 194 of the form CO.
117 Potentially segmented on the basis of whether the waste is commercial, industrial, or demolition and
    construction waste.
118 As for all of the vertical links created by the Proposed Transaction, all plausible markets would result in
    the same outcome in terms of the competitive assessment (as explained in detail below in Section 5.3), the
    exact market definitions can be left open for the purpose of the assessment of vertical links in this
    Decision.
                                                            24
 ---pagebreak---          Since it is the biggest transaction in this market in Poland in years we needed to
         express our concerns that it may worsen the situation on a general level.’
(94)     However, on the basis of the information submitted by the Notifying Party, the
         Proposed Transaction would not result in affected markets for waste management
         services within Poland under any plausible product or geographic market definition.
         UOKiK’s submission does not contain information supporting another conclusion; in
         fact, it does not raise merger-specific concerns or even allege the existence of
         affected markets in Poland.119 Furthermore, UOKiK attached two studies120 to its
         submission which contain market share estimates, including those of the Parties,
         which do not rise to the level of affected markets under the meaning of the
         Form CO. 121 Rather, UOKiK’s concern relates to the fact that in spite of the high
         number of competitors in Poland, many local authorities receive no more than one
         bid when organising tenders. The Proposed Transaction will not materially worsen
         this situation due to the Parties’ limited competitive position in Poland (whether at
         the local, regional, or national level). Finally, the market investigation did not elicit
         any information that could point to the existence of affected markets for waste
         management services in Poland, nor did the Commission receive any additional
         complaints in relation to the Polish market. For that reason, the possible impact of
         the Proposed Transaction for the Parties’ waste management activities in Poland will
         not be further discussed in this Decision.
5.1.     Horizontal non-coordinated effects – sorting of Dutch LWP
(95)     The Proposed Transaction raises concerns in relation to horizontal non-coordinated
         effects in the sorting of Dutch LWP. The Commission’s concerns result from (i) the
         Parties and competitors’ position in the relevant market, (ii) the closeness of
         competition, (iii) the spare capacity in the market, (iv) the structure of demand for
         the sorting of LWP, and (v) the barriers to entry or expansion.
5.1.1. Structure of supply: the Parties and competitors’ position in the relevant market.
(96)     Within the Netherlands there are 5 competitors (each of the Parties, Omrin, Attero
         and PRA) for the sorting of LWP. Table 1 below shows each sorter’s plant, its
         capacity, and its capacity market share.
119  UOKiK submission of 15 March 2020; Notifying Party’s reply to RFI 16, paragraph 1.
120  Raport - Badanie rynku usług związanych z gospodarowaniem odpadami komunalnymi w gminach
     miejskich w latach 2014-2019, UOKiK (2020); Raport badanie rynku usług związanych z
     zagospodarowania odpadów komunalnych w instalacjach w latach 2014-2019, UOKiK (2019).
121  According to these studies, the Parties’ combined share at the national level in Poland would not exceed
     10% in the last year for which data was available (i.e. in 2019).
                                                            25
 ---pagebreak--- Table 1: Parties’ and Dutch competitors’ capacity market shares for the sorting of
Dutch LWP (2020)122
         Company                     Location                  Capacity (kt)             Capacity share
          PreZero                   Zwolle (NL)                    […]                      [20-30]%
           Target                 Rotterdam (NL)                   […]                      [30-40]%
        Combined                                                   […]                      [50-60]%
           Omrin                  Heerenven (NL)                   […]                      [10-20]%
           Attero                   Wijster (NL)                   […]                      [10-20]%
            PRA                  Amsterdam (NL)                    […]                       [5-10]%
          TOTAL                           /                         329                        100%
Source: Form CO, Table 20 and Annexes 6-D and 7 and competitors’ non-confidential responses to the
market investigation. For the driving distance, the information has been provided by the respective
competitors or elaborated by the Commission.
(97)     According to the above Table, the Parties would control almost [50-60]% of the
         capacity in the Netherlands for the sorting of LWP. It should be noted that this figure
         underestimates the Parties’ position since, as explained in paragraph (111), a
         significant part ([…] kt, i.e. almost half) of Omrin’s capacity is dedicated to sorting
         the LWP generated by its own municipalities, 123 which means that the portion of its
         capacity actually available for the merchant market would be significantly lower
         (around […] kt, instead of the […] kt mentioned in the Table above).
(98)     These figures differ from those provided by the Notifying Party, which pointed to a
         significantly lower combined market share. Notably, the Notifying Party has
         provided capacity market shares taking into account next to the Dutch LWP sorting
         plants also the entire capacity of the five German plants that serve the Dutch LWP
         sorting market.124 On this basis, the Parties’ combined market share in terms of
         capacity would be [20-30]%. The Commission, however, considers that these shares
         overestimate the competitive strength of German LWP sorting plants, since most of
         their capacity is used to serve the German market.125
122 Besides its plant in Zwolle, PreZero has a plant in Porta Westfalica, Germany, around 150 km from the
    Dutch border, from which it used to sort Dutch LWP. The Zwolle plant in the Netherlands was built in the
    context of a contract with a Dutch customer [confidential details on customer and contract duration] ,
    although the Porta Westfalica plant continued sorting Dutch LWP […] until the Zwolle plant was
    completed (see paragraph 505 of the Form CO). The Notifying Party submits that since then the Porta
    Westfalica plant has not sorted Dutch LWP [confidential details on the sorting activities of the Notifying
    Party] (see paragraph 452 of the Form CO). For this reason, this plant has not been included in this table.
    The Commission has not included in the table above the capacities of post-separation plants which the
    Notifying Party included in Table 20 and Annexes 6-D and 7 of the Form CO (namely, HVC Alkmaar,
    AVR Rotterdam, AEB Amsterdam) since, as explained in paragraphs (24),(25) above, post-separation
    must be considered a separate market from LWP sorting.
123 See minutes of a call with a competitor on 27 January 2021, paragraphs 5-6.
124 Notably, in addition to the LWP sorting plants mentioned above, the Notifying Party included in its
    estimations also […] Ochtendung, […] kt for Hubert Eing Gescher, […] kt for Augustin Meppen, […] kt
    for Alba Marl and […] kt for Schönmackers Kerpen/Kempen, resulting in an overall market of 863 kt
    capacity, of which the Parties’ […] kt represents approximately [20-30]%.
125 In fact, Dutch LWP only accounts for 15% of the capacity of Alba’s plant’s in Marl (see minutes of the
    call with Alba of 9 February 2021, paragraph 5 and Alba’s reply to RFI 11, paragraph 1) and one third of
    the capacity of Hubert Eing’s plant (see Hubert Eing’s reply to RFI 11, paragraph 1). SUEZ also indicated
    that […]% of its plant in Ochtendung is dedicated to sort Dutch LWP. Augustin did not reply to the
    market investigation. As regards the spare capacity (i.e. capacity not currently used) of these plants, it is
    uncertain what proportion will be dedicated to the German or to the Dutch market. However, Alba has
                                                          26
 ---pagebreak--- (99)     The Commission considers that market shares based on the volumes of Dutch LWP
         effectively sorted by each market player provide a more accurate picture of the
         competitive situation in the market. Table 2 below shows for the Parties’ and their
         competitors’ plants located in the Netherlands the volumes of Dutch LWP sorted by
         each of them and their market shares for the last three years.
Table 2: Parties’ and Dutch competitors’ volume market shares for the sorting of
Dutch LWP (2018-2020)
                             2018                             2019                            2020
  Company
                   Vol. (kt)          %           Vol. (kt)           %             Vol. (kt)          %
  PreZero*           […]          [10-20]%           […]           [20-30]%           […]          [20-30]%
  Target             […]          [40-50]%           […]           [30-40]%           […]          [30-40]%
  Combined           […]          [60-70]%           […]           [60-70]%           […]          [60-70]%
  Attero             […]          [20-30]%           […]           [20-30]%           […]          [10-20]%
  Omrin**            […]          [10-20]%           […]           [10-20]%           […]          [10-20]%
  PRA                […]           [0-5]%            […]            [0-5]%            […]           [5-10]%
  TOTAL              217            100%              217            100%             261            100%
Source: Form CO, Table 20 and Annexes 6-D and 7.
(*) Including Zwolle and Porta Wesfalica plants.
(**) Assuming that […] kt of the volumes sorted in the plant in 2020 and 2019 are captive (of a total of
capacity of the plant of […] kt). For 2018, the capacity of the plant was lower ([…] kt) and all volumes are
assumed to be sold to the merchant market.
(100) The above Table shows that also in terms of volumes sorted in the Netherlands, the
         Proposed Transaction consists in the combination of the two largest competitors in
         the Dutch LWP sorting market. Post-transaction, the Parties’ combined market share
         considering only the Dutch LWP sorting plants would be [60-70]% in 2020, a
         percentage which has remained stable over the last three years. This market share
         would be more than […] points higher than that of its next competitor, Attero
         ([10-20]%), who would be the only remaining competitor with a market share higher
         than [10-20]%.
(101) The Notifying Party submits that the volumes of Dutch LWP sorted by plants in
         Germany should also be taken into account. If these were taken into account in the
         same manner as the volumes sorted by Dutch plants, the Parties would have a
         combined market share of [30-40]% in 2020 (see Table 3 below).
     indicated that even though all the capacity of its plant in Marl can theoretically serve the Dutch market,
     they do not expect a growth in the volumes of Dutch LWP to be sorted in the future. Hubert Eing also
     replied that they do not expect increases in the volumes of Dutch LWP volumes to be sorted and their
     capacity to take additional ones would in any case be limited (see replies by Alba and Hubert Eing to
     question 4 and 5 of RFI 8 and RFI 11).
     Theoretically, some of the Dutch sorting plants could also serve the German market. However, this has
     never been the case due to the historic under-capacity of the Dutch market. Moreover, neither the Parties
     nor any competitor has indicated during the market investigation that they have any plans to serve the
     German market from Dutch plants.
                                                           27
 ---pagebreak--- Table 3: Parties’ and Dutch/German competitors’ volume market shares for the
sorting of LWP (2018-2020)
                                          2018                       2019                         2020
 Company
                                Vol. (kt)         %        Vol. (kt)         %          Vol. (kt)         %
 PreZero*                         […]         [10-20]%       […]          10-20]%         […]          10-20]%
 Target                           […]         [20-30]%       […]         [20-30]%         […]         [20-30]%
 Combined                         […]         [30-40]%       […]         30-40]%          […]         30-40]%
 Attero                           […]          10-20]%       […]          10-20]%         […]          10-20]%
 Omrin**                          […]          [5-10]%       […]          [5-10]%         […]          [5-10]%
 PRA                              […]           [0-5]%       […]           [0-5]%         […]           [0-5]%
 TOTAL NL Plants                  […]         [40-50]%       […]         [40-50]%         […]         [50-60]%
 Schönmackers                     […]          10-20]%       […]          10-20]%         […]          10-20]%
 SUEZ Ochtendung ****             […]          10-20]%       […]          [5-10]%         […]          10-20]%
 Agustin Meppen                   […]          10-20]%       […]          10-20]%         […]          10-20]%
 Hubert Eing                      […]           [0-5]%       […]           [0-5]%         […]          [5-10]%
 Alba                             […]           [0-5]%       […]          [5-10]%         […]           [0-5]%
 TOTAL NL+DE Plants               377            100%        416            100%          447            100%
Source: Form CO, Table 20 and Annexes 6-D and 7 and replies to the market investigation.
(*) The volumes for Prezero include all Dutch LWP volumes sorted at its Zwolle and Porta Westfalica plants.
(**) Assuming that […] kt of the volumes sorted in the plant in 2020 and 2019 are captive (of a total of
capacity of the plant of […] kt). For 2018, the capacity of the plant was lower ([…] kt) and all volumes are
assumed to be sold to the merchant market.
(***) The “total NL plants” for 2018 and 2019 does not include any of PreZero’s volumes, since all Dutch
LWP sorted by PreZero was sorted from Porta Westfalica, Germany. For 2020, all of PreZero’s volumes were
sorted at its Zwolle Plants, hence all of PreZero’s volumes are included in the “total NL plants”.
(****) SUEZ’s plant in Ochtendung is excluded from the scope of the Proposed Transaction.
(102) Even if the volumes of Dutch LWP sorted by German LWP sorting plants were
         taken into account, the merged entity would, as the table above indicates, be the clear
         market leader, with almost three times the size of the next competitor, Schönmackers
         (who has a market share of [10-20]%, i.e. […] percentage points less). There would
         be no remaining competitors with a market share higher than [10-20]%.
(103) In conclusion, regardless of whether only competitors located in the Netherlands, or
         also competitors located in Germany, are taken into account, the Proposed
         Transaction would combine the two largest competitors in the market and would
         result in the combined entity becoming the clear market leader, with a considerable
         lead over any competitor.
(104) As a caveat to the latter scenario (i.e. considering both Dutch and German LWP
         sorters), the Commission notes that, as explained in detail in Section 5.1.2, German
         LWP sorting plants cannot be deemed to exercise an equivalent competitive
         constraint to LWP sorting plants located in the Netherlands. The former are out-of-
         market players which are more distant competitors to the Parties than other Dutch
         plants or than the Parties are to each other. Notably, as already mentioned above in
         Section 4.2.2.2, German LWP sorters face costs and barriers that Dutch customers
         do not face and customers in the Netherlands have a preference for LWP to be sorted
         in the country, which places German plants at a competitive disadvantage.
         Moreover, as explained in Section 5.1.3, the constraint that each player can exert in
         this market is largely determined by its spare capacity. As such, the volume market
         shares including Dutch and German LWP sorters underestimates the merged entity’s
         market power post-transaction.
                                                          28
 ---pagebreak--- 5.1.2. Closeness of competition
        Notifying Party’s view
(105) The Notifying Party argues that the Parties do not compete closely, as their activities
        are largely complementary from a geographic perspective. Notably, given that their
        LWP sorting facilities are far away from each other, the Notifying Party argues that
        they do not compete as closely with respect to customers closer to one of the
        facilities, since in some cases customers may decide to go to the nearest facility. 126
        Commission’s assessment
(106) As a preliminary note, the Commission will assess the closeness of competition
        between those LWP sorters which currently serve the Dutch LWP sorting market.
        These competitors include five Dutch entities (each of the Parties, Attero, Omrin and
        PRA), as well as five out-of-market competitors with plants located in Germany
        close to the Dutch border (SUEZ, 127 Augustin, Hubert Eing, Alba and
        Schönmackers) for the sorting of Dutch LWP.128 Figure 1 below shows the location
        of all of these plants.
Figure 1: LWP sorting plants in Germany and the Netherlands currently sorting
Dutch LWP
  Source: Notifying Party, presentation of 12.03.2021
126 Paragraphs 439, 467 and footnote 277 of the Form CO.
127 SUEZ’s plant in Ochtendung has not been included in the scope of the Proposed Transaction.
128 The Notifying Party claims that there are a number of other German and Belgian plants close to the Dutch
    border. The Commission has approached these companies in the market investigation and all the entities
    responding have confirmed that they have not sorted any Dutch LWP or have not participated in any
    tender for the sorting of Dutch LWP in the last 5 years.
                                                          29
 ---pagebreak--- (107) This Section addresses closeness of competition between these competitors by
        analysing (i) the capacity, location of the plants and business models of the different
        market players, and (ii) the perceived closeness as per the market investigation.
        (A)        Capacity, location and business models of LWP sorting plants
(108) The characteristics of the demand for LWP sorting reflect customers’ particular
        attention to the ability of sorters to meet their requirements, both in terms of capacity
        and distance to the LWP sorting plant. Furthermore, the different business models in
        place, in terms of customer focus or type of operations, have an impact on the
        Parties’ and their competitors’ competitive interactions. The analysis of the capacity,
        business models and location of the plants of the different players available to sort
        Dutch LWP suggests that the Parties compete particularly closely.
(109) Concretely, the Parties own the two largest plants in the Netherlands in terms of
        capacity ([…] kt and […] kt respectively). These plants are respectively located
        slightly north and south of the most populated area of the country (encompassing the
        provinces of North Holland, South Holland and Utrecht) and close to the largest
        cities (Rotterdam, The Hague, Amsterdam).
(110) In contrast, the plants of all the other competitors in the Netherlands have
        significantly less capacity, are less centrally located (with the exception of a much
        smaller plant in Amsterdam) and their business models also differ significantly:
(111) Omrin’s plant is the largest facility on the market after the Parties’ plants.129
        However, its capacity ([…] kt) is […]% less than PreZero’s and […]% less than
        SUEZ’s, whereas the difference in capacity between the Parties’ Zwolle and
        Rotterdam plants is only roughly […]%. Furthermore, Omrin is a public entity,
        owned by 33 municipalities in the North of the country.130 Omrin focuses its activity
        in serving municipalities in that area.131 Notably, almost half of the capacity of its
        sorting plant ([…] kt) is used to sort the LWP generated by its 33 municipalities. 132
        Therefore, the capacity which Omrin can dedicate to the merchant market – where it
        competes with the Parties – is limited (around […] kt, i.e. less than […]% of
        PreZero’s current capacity and less than […]% of SUEZ’s capacity). In addition,
        Omrin focuses mainly on serving its shareholders in specific regions in the North
        whereas SUEZ’s plant is geographically close to municipalities in the South of the
        country due to its location in Rotterdam, and PreZero’s plant at Zwolle is located in
        the centre of the country at a short distance from the main urban areas.
(112) Attero owns the fourth largest plant in the country, located in the province of
        Drenthe, also in the north of the country (which, like Omrin makes it a less close
        competitor). Its capacity ([…] kt), however, is limited when compared to the Parties’
        ([…]% less than PreZero’s capacity in its Zwolle plant and almost […] of SUEZ’s
        Rotterdam capacity).
129 Omrin’s plant is co-owned with Midwaste/RKN, one of the main customers in the market, and with HVC,
    an entity which also owns a pre-sorting plant.
130 See minutes of a call with a competitor on 27 January 2021, paragraph 3.
131 Ibid. More specifically, the municipalities concerned are located in particular in the provinces of Friesland
    (where the plant is located), Groningen and Drenthe.
132 Which are previously pre-sorted in a post-separation plant also owned by Omrin. See minutes of a call
    with a competitor on 27 January 2021, paragraph 5-6.
                                                          30
 ---pagebreak--- (113) PRA owns a relatively small plant of […] kt close to Amsterdam. PRA is part of
         Umincorp, a company originating from a project by the Resources and Recycling
         Group of Delft University of Technology which has developed the magnetic density
         separation (‘MDS’) technology, on which the plant is based. This technology allows
         PRA to achieve a higher recovery rate and an output of higher purity. 133 Another
         specificity of PRA is that it sorts and recycles LWP in the same facility. The plant
         sorts LWP coming from the post-separation stream, and consequently it does not
         compete fully with the Parties (which sort both post-separated and source-separated
         LWP). In the market investigation it has been the only company singled out by
         customers as having a technology which stands out from the rest.134 One of the main
         customers has indicated that PRA’s new technology is new and promising but there
         presents a degree of uncertainty as to its effectiveness.135 Therefore, PRA would not
         constitute a close competitor to the Parties in view of its specific technology, its
         ability to combine sorting and recycling activities at its plant, its ability to compete
         only for part of the LWP and its very limited capacity.
(114) In addition, five competitors in Germany, with plants located close to the Dutch
         border, sort Dutch LWP (including SUEZ with its plant in Ochtendung). All these
         competitors combined have significant capacities. Concretely, SUEZ Ochtendung
         has a capacity of […] kt, Hubert Eing Gescher has […] kt, Augustin Meppen has
         […] kt, Alba Marl […] kt and Schönmackers Kerpen/Kempen […] kt. However,
         they sort significantly less volumes of Dutch LWP than the Parties (see Table 3) as
         most of their capacity is dedicated to German customers. The Commission considers
         that the competitive constraint exerted by these out-of-market competitors cannot be
         considered comparable to the constraint that the Parties exert on each other or that
         Dutch plants exert on the Parties, for the reasons explained below.
(115) First of all, for the reasons explained in Section 4.2.2.2, German competitors are in
         general at a competitive disadvantage in comparison to Dutch LWP sorting plants.
         This has been confirmed by all competitors active in the market which responded to
         the market investigation, which have indicated that there is a political preference for
         Dutch LWP to be sorted in the Netherlands.136 In general, Dutch customers seem to
         resort to out-of-market competitors only to the extent that there is not available
         capacity in local plants. This weaker competition exerted by out-of-market plants is
         reflected in the evolution of the market shares. Table 3 shows that, as Dutch players
         have increased capacity in the last three years (PreZero’s and PRA’s new plants,
         expansion of Omrin’s plant), there has been a decline in the proportion of LWP
133 MDS allows the different flakes to float at their own magnetic level (which is different for different types
    of polymers because of their different densities) by using a very strong magnet. Using this method, the
    different polymers are separated in one process step, which allows, according to PRA, to achieve higher
    recovery and an output of higher purity, leading to lower gate fee costs for recycling. PRA maintains that
    around 85% of the input of its plant is recovered, while others only recover around 60%. (see minutes of
    call with PRA of 3 February 2021).
134 See replies to question 17.1 of Questionnaire Q4 – Customers for the sorting of Dutch LWP.
135 See minutes of a call with a customer on 5 February 2021, paragraph 31. Another respondent also showed
    uncertainty as to the success of this new technology (see minutes of a call with a competitor on 27 January
    2021, paragraph 25).
136 Replies to question 13.1 of Questionnaire Q1 – Competitors for the sorting of Dutch LWP located in the
    Netherlands; Replies to question 19.1 of Questionnaire Q2 – Competitors for the sorting of Dutch LWP
    located in Germany.
                                                          31
 ---pagebreak---          sorted in German plants (from 53% in 2018 to 42% in 2020), 137 despite the fact that
         the latter have also expanded.138 In other words, the proportion of Dutch LWP sorted
         in plants located in the Netherlands has increased in two years from 47% to 58%. In
         the Commission’s view, this is an indication that, when available, Dutch customers
         turn to local capacity, while German sorters are used to adjust for Dutch capacity
         constraints and therefore serve the demand not served domestically. This also
         explains why Schwarz decided to build a sorting plant in Zwolle to sort Dutch LWP
         when it had capacity to do it in its plant in Germany and why German competitors
         do not expect an increase in the volumes of Dutch LWP to be sorted by them in the
         next years.139
(116) Second, the Commission observes that all these plants are significantly more distant
         to the western area of the country (where the Parties’ plants are located). As already
         described in Section 4.2.2.2(A), a majority of respondents to the market
         investigation – and all German competitors – have indicated that the maximum
         distance within which it is economically viable to transport LWP collected in the
         Netherlands is 200 km. The Commission notes in this regard that most of the
         capacity of German competitors is located at more than 200 km from the main cities
         in Western Netherlands. For example, Alba’s plant in Marl – which is the largest
         competing German plant in terms of capacity – is located 230 km from Rotterdam
         (where the Target’s plant is located), 237 km from The Hague, and 215 km from
         Amsterdam. SUEZ’s Ochtendung plant is more than 330 km from Rotterdam and
         Amsterdam, and Schönmaker’s plant in Kerpen would be 250 km from Amsterdam
         and 240 km from Rotterdam. Therefore the fact remains that, regardless of the
         identified technical administrative barriers and of customer preference, most of the
         capacity of the German plants cannot compete for the LWP collected in Western
         Netherlands (the most densely populated part of the country) as intensely as the
         Parties currently do. In fact, a German competitor pointed out that the contracts
         awarded by their Dutch customer concerned LWP collected in the Eastern provinces
         of the country – closer to the German border – and expressly indicated that it would
         not be capable of competing for the sorting of LWP collected further inland.140
(117) In view of the above, the Commission considers that German competitors are likely
         to be economically less efficient than the Parties (or other Dutch plants), at least
         when bidding for contracts for the sorting of LWP in the western part of the country
         or for contracts where a relevant proportion of the LWP is collected in that area.
(118) Third, besides being economically less competitive, plants located at greater
         distances from the collection points than the Parties’ plants may also be seen as
         environmentally less efficient than the local ones. As explained in
         Sections 4.2.2.2(A) to 4.2.2.2(C), distance is also a relevant factor for customers
137 While the total volume of Dutch LWP sorted has grown considerably in the last three years, from 377 kt
    in 2018 to 447 kt in 2020, i.e. an 18% growth in only two years, in that same period the amount of LWP
    sorted by Dutch plants has grown at an even faster rate, from 177 in 2018 to 261 kt in 2020, i.e. an
    increase of 47%. These percentages do not take into consideration recent contracts granted recently by
    Dutch customers to German plants.
138 In fact, Alba’s plant has been recently expanded but only a minor portion of its capacity is dedicated to the
    sorting of Dutch LWP.
139 One of the customers cites as the main reason for this the recent openings and expansions by PreZero (see
    reply of a competitor to question 5 of RFI 11).
140 See minutes of call with […], of 10 March 2021, paragraph 4.
                                                          32
 ---pagebreak---         when assessing the environmental efficiency or transport sustainability of the
        different offers submitted in a tender. Longer transport distances imply more CO2
        emissions and therefore higher long-term environmental costs. Customers
        accounting for close to half of demand openly admitted this preference, citing
        reasons linked to sustainability and environmental reasons and, expressly, the need
        to reduce CO2 emissions and to minimise environmental costs. 141
(119) In short, at least as regards a relevant portion of the country, most of the capacity in
        the hands of German competitors is located more than 200 km from the collection
        point and is therefore too distant and thus less efficient economically and
        environmentally than the Parties’ plants. As regards German plants which are
        located closer to the borders and thus at 200 km or less from the collection points,
        they are still more distant from the western area of the Netherlands than the Parties’
        plants, and are therefore less competitive from both an economical and an
        environmental perspective.
(120) In conclusion, the Parties can be considered to compete particularly closely with one
        another for Dutch LWP sorting contracts. Moreover, although out-of-market
        competitors located in Germany can and do compete for the sorting of Dutch LWP,
        they compete with the Parties less closely than other Dutch plants and less closely
        than the Parties compete with each other.
        (B)        Closeness perception of market investigation respondents
(121) The responses provided by the different market participants during the market
        investigation support the view that the Parties are each other’s closest competitors.
        When asked to rank the closest competitors to each of the Parties, market
        participants mention the Parties more frequently than any other market player. Attero
        and Omrin are mentioned too, though significantly less frequently and generally as
        less close. Respondents also suggest that German competitors are more distant
        competitors: Alba is only mentioned as fourth or fifth closest (and is mentioned only
        once as the closest to the Parties) and Hubert Eing or Augustin are mentioned less
        frequently.142
(122) Therefore, in a manner consistent with the Commission’s own assessment, market
        participants perceive the Parties as each other’s closest competitor, with Attero being
        second, Omrin third and Alba only fourth.
        (C)        Conclusion on closeness of competition
(123) In view of the above, the Parties appear to be particularly close competitors, and
        possibly the closest to each other. Attero and Omrin seem to be less close, and
        German competitors even more distant competitors.
141 Replies to question 14 of Questionnaire Q4 – Customers for the sorting of Dutch LWP. See also the
    minutes of a call with a customer on 19 February 2021, paragraph 12.
142 Replies to question 23 of Questionnaires Q1 – Competitors for the sorting of Dutch LWP and of Q2 -
    Competitors for the sorting of Dutch LWP located in Germany. See also question 18 of Questionnaire Q4
    – Customers for the sorting of Dutch LWP.
                                                        33
 ---pagebreak--- (124) Therefore, the Proposed Transaction would likely eliminate PreZero’s main
        competitive constraint.
5.1.3. Analysis of the spare capacity in the market
        Notifying Party’s view
(125) The Notifying Party acknowledges that, due to the low marginal costs of LWP
        sorting plants, these sorting plants need to be operated at almost full capacity to be
        profitable.143 Notably, in order to be profitable, a sorting plant must operate at 90%
         of its capacity.144 It specifies that limited spare capacity is however irrelevant, as
         competition takes place when contracts expire (and capacity is thus opened up),
         which occurs regularly. Concretely, in the Netherlands the contracts typically have a
         length of three to four years (and in Germany they are awarded on an annual
         basis). 145 As a result, the Notifying Party argues that, post-merger, PreZero would
         not have market power because a number of the Parties’ contracts will expire at the
         end of 2022 and these volumes could be lost to competitors. 146
        Commission’s assessment
(126) The Commission acknowledges that at times information on spare capacity may
        offer a somewhat static view of the market, since contracts expire regularly, which
        liberates new capacity. However, while it is true that at expiration of the contracts
        new capacity is added to the market, at that moment also more demand needs to be
        satisfied. Therefore, if demand is relatively stable, the overall amount of spare
        capacity in the market will likely remain unchanged, albeit its distribution among the
        different players may vary as contracts expire and new ones are adjudicated, which
        the Commission will take into account in its assessment.
(127) LWP sorting plants need to operate at 90% in order to be profitable (which means
        that any new entrant will need to ensure that most of its new capacity is reserved to
        be profitable). For the same reason, the unused or spare capacity in the market tends
        not to exceed 10% of the total capacity. Once this level is reached, the incentives to
        expand capacity will decrease or disappear altogether as any new capacity
        investment runs the risk of being unprofitable in the absence of an increase in
        demand. Because of this structural limitation, spare capacity becomes a critical
        element to assess the degree of market power. In fact, it is the spare capacity in the
        hands of competitors that will determine their ability to prevent or defeat any price
        increases by the merged entity post-transaction.
143 Notifying Party’s White Paper 1, submitted on 5 March 2021, paragraph 62, and paragraph 483 of the
    form CO.
144 See footnote 313 of the Form CO. This has been confirmed in the market investigation, although with
    some minor differences in the percentages: Dutch competitors have provided a slightly lower figure
    (80-85%, see replies to question 26 of Questionnaire Q1 – Competitors for the sorting of Dutch LWP
    located in the Netherlands ), and German competitors a slightly higher one (95%, see replies to question
    34 of Questionnaire Q2 – Competitors for the sorting of Dutch LWP located in Germany ).
145 See paragraphs 515, 591, 647 of the Form CO and Notifying Party’s White Paper 1, submitted on 5 March
    2021, paragraph 96
146 See Notifying Party’s White Paper 1, submitted on 5 March 2021, paragraphs 63-65. In particular, the
    Parties point out to the following contracts which are due to expire by the end of 2022: (i) for PreZero,
    […]; (ii) for the Target, […].
                                                         34
 ---pagebreak---  (128) The Commission will assess, first, the spare capacity in the hands of competitors in
           the Netherlands (which are the closer to the Parties), and second, the spare capacity
           in the hands of out-of-market competitors (which are more distant competitors to the
           Parties).
           (A)        Spare capacity of Dutch LWP sorting plants
 (129) Table 4 offers an overview of the spare capacity of the different LWP sorting plants
           located within the Netherlands.147
 Table 4: Spare capacity of Dutch plants (2020)
                                         Total capacity     Volumes sorted                       Spare capacity
    Company          Plant location                                             Spare capacity
                                             (in Kt)             (in Kt)                              (in Kt)
     PreZero             Zwolle               […]                 […]              [20-30]%148         […]
      SUEZ              Rotterdam             […]                 […]                [10-20]%          […]
   Combined                                   […]                 […]               [10-20]%           […]
       PRA             Amsterdam              […]                 […]                  [0-5]%          […]
      Attero             Wijster              […]                 […]                 [5-10]%          […]
      Omrin            Heerenveen             […]                 […]                 [5-10]%          […]
     TOTAL                                     329                 291                  12%              38
Source: Form CO, Table 20 and Annexes 6-D and 7.
 (130) Table 4 reflects that, although the total amount of spare capacity is not negligible
           (38 kt, representing 12% of the total installed capacity in the Netherlands), [70-80]%
           of that spare capacity ([…] kt) is in the hands of the Parties. The spare capacity in
           the hands of other Dutch competitors ([…] kt) represents [0-5]% of the total capacity
           of Dutch plants, [0-5]% of the total amount of LWP volumes sorted in Dutch plants
           and, most importantly, only [0-5]% of the Parties’ combined capacity post-
           transaction, and [20-30]% of their combined spare capacity.
 (131) Essentially, this means that for any of the Parties’ customers with a demand higher
           than […] kt149 or any customer of the Parties’ competitors with an increase in
           demand higher than […] kt wanting to sort its LWP within the Netherlands – as
           many prefer to do, see Section 4.2.2.2(C) – the Parties will continue to be or become
           an unavoidable trading partner. It is true that for smaller customers with very limited
           sorting needs (e.g. small municipalities), it would be easier to find some spare
           capacity.150 However, as the Parties indicate and as will be explained in
           Section 5.1.4.2, these customers represent a minority of demand (only […]% of the
 147  For simplification purposes, PRA is included in the Table, although it could considered a less close
      competitor to the Parties (see paragraph (113)). However, given its limited capacity, its inclusion as no
      appreciable effect on the assessment.
 148  The Zwolle plant only became operational midway through 2020. The decision to build the Zwolle plant
      however was premised on it being used at […]% of capacity, as per the Notifying Party’s reply to RFI 4,
      Annex 5.1 page 5.
 149  To put in the right context the […] kt of spare capacity that all Dutch competitors have, it suffices to note
      that the smaller contract the Parties currently have in force is for […] kt.
 150  The responses to the market investigation, indeed, reflect that smaller customers often do not see the
      Parties as unavoidable (see replies to question 23 of Questionnaire Q4 – Customers for the sorting of
      Dutch LWP.).
                                                              35
 ---pagebreak---          total demand of the market, according to the Parties’ own estimates151) and, most
         importantly, will disappear as customers as of 2023 given that Afvalfonds will then
         take over the responsibility for their LWP sorting needs. 152 Therefore, for the
         customers representing the large majority of the market, the combined spare capacity
         in the Netherlands of the Parties’ closer competitors does not seem sufficient to meet
         their demand.
(132) In this context, the Notifying Party’s argument that, post-merger, PreZero would not
         have market power because a number of the Parties’ contracts will expire at the end
         of 2022 and these volumes could be lost to competitors is ineffective. The data on
         spare capacity shows that these contracts could not be lost to any other competitor in
         the Netherlands, since the spare capacity of all Dutch competitors combined is lower
         than the volumes of each of those contracts. While customers could opt to divide
         their needs into multiple smaller contracts and in that way divert sufficient demand
         away from the merging entity to make its operations unprofitable, this solution
         would probably be ineffective to compensate the merged entity’s marker power.
         First because the capacity that could effectively be diverted (8 kt according to
         current spare capacity figures) would be extremely limited. Second, because since
         the merged entity’s capacity would still be indispensable to meet the customers’
         entire demand at a given moment, the Parties will likely retain considerable
         bargaining power even when negotiating smaller contracts for which there could still
         be some competing capacity.153 This bargaining power could be further reinforced
         by the fact that a considerable portion of the demand in the market154 is adjudicated
         in private negotiations, and is therefore not subject to public tender laws aiming at
         protecting smaller bidders.
(133) In sum, post-transaction the merged entity would control [70-80]% of the spare
         capacity in the Netherlands. This means that for customers representing the large
         majority of the market, the combined spare capacity of Dutch competitors would not
         be sufficient to meet their demand. As a result, the merged entity will be an
         indispensable trading partner for Dutch LWP sorting customers.
         (B)        Spare capacity of out-of-market competitors
(134) In this Section, the Commission will analyse whether customers would have the
         ability to switch a significant part of their demand to German competitors in case the
         merged entity were to increase prices post-transaction.
151 See the Target’s estimates provided in its reply to RFI 14, paragraph 17.
152 According to the Notifying Party, in 2023, Nedvang and RKN will be the only two customers,
    representing 100% of the demand. The limited volumes currently organized by some municipalities will
    shift to the two largest customers (Nedvang or RKN), see Notifying Party’s reply to RFI 14, paragraphs
    18, 19. See Section 5.1.4 for more details.
153 The same could be said of the contracts of other Dutch competitors which may expire in the next years.
    Admittedly, customers would always have the choice to renew those contract with the same sorter. Also in
    these cases, though, the Parties’ perceived indispensability for future contracts could translate into an
    increased bargaining power.
154 In particular, the demand represented by Nedvang, a private organisation which is not subject to public
    tender rules. According to the Parties, Nedvang currently represents 42% of the total demand of the
    market, a percentage that will increase as of 2023 when smaller customers will exit the market (see
    Notifying Party’s replies to RFI 14, paragraph 18-19). For more details, see Section 5.1.4).
                                                          36
 ---pagebreak--- (135) The Notifying Party argues that since LWP sorting plants need to operate at near full
          capacity, there is an incentive for German competitors to fill any spare capacities
          they might have by sorting additional Dutch LWP,155 especially in view of the fact
          that (i) contracts in the Netherlands are awarded for longer periods than in
          Germany,156 and that (ii) sorting Dutch LWP might be more profitable, mainly
          because prices for the sorting of LWP are higher in the Netherlands than in
          Germany.157
(136) Table 5 offers an overview of the spare capacity of the different sorting plants in
          Germany that compete for the sorting of Dutch LWP.
Table 5: Spare capacity of German plants (2020)
                                                               Volumes sorted
                                          Total                    (in Kt)                   Spare    Spare
    Company           Plant location    capacity                   Dutch       German     capacity  capacity
                                                       Total
                                         (in Kt)                    LWP          LWP        (in %)   (in Kt)
                                                      (in Kt)
                                                                   (in kt)      (in Kt)
       Alba                Marl           […]          […]          […]          […]      [20-30]%    […]
      SUEZ             Ochtendung         […]          […]          […]          […]        [0-5]%    […]
 Schönmackers Kerpen/ Kempen              […]          […]          […]          […]      [10-20]%    […]
   Hubert Eing           Gescher          […]          […]          […]          […]       [5-10]%    […]
    Augustin             Meppen           […]          […]          […]          […]      [10-20]%    […]
     TOTAL                                 530          454          169          285        14%        75
Source: Form CO, Table 20 and Annexes 6-D and 7 and competitors’ non-confidential responses to the
market investigation.
(137) As Table 5 shows, with the exception of Alba, the spare capacity in the hands of
          German competitors is very limited and the total amount (75 kt) is still less than the
          capacity of each of the Parties.
(138) Moreover, the Commission has been able to verify that the capacity available for
          German competitors to react to a price increase by the merged entity post-transaction
          would in reality be considerably lower than 75 kt and, possibly, only slightly above
          30 kt or even less in the future. First of all, sorting facilities do not achieve a 100%
          utilisation rate, since factors such as downtimes for maintenance need to be factored
          in, which means the available capacity is always less than the figure resulting from
          subtracting the used capacity from the total capacity.158 Second, the spare capacity of
          German LWP sorting plants, although theoretically available for the Dutch LWP
          sorting market,159 also needs to serve the German LWP sorting market in case of an
          increase of the sorting needs of customers in that market, which constitutes the
          majority of most of these plants’ business.160 Third, as regards specifically […]’s
          plant – where most of the spare capacity would be concentrated – the Commission
          has found that due to recent contractual commitments, its available capacity is
155  See Notifying Party’s White Paper 1, submitted on 5 March 2021, paragraphs 70-73.
156  Three/four years in the Netherlands vs. one in Germany.
157  The market investigation has indeed confirmed that prices in Germany are 20% higher than in the
     Netherlands (see replies to question 17 of Questionnaire Q2 – Competitors for the sorting of Dutch LWP
     located in Germany).
158  Notifying Party’s White Paper 1, submitted on 5 March 2021, footnote 37.
159  As […] has confirmed (see […]’s reply to RFI 8, paragraph 5.1).
160  In fact, as Table 5 shows, most of the capacity of German plants is used to serve German customers.
                                                            37
 ---pagebreak---          significantly lower than the […] kt reflected in Table 5 and that in the next years its
         overall capacity will need to be reduced by up to 10% to improve its sorting quality
         in order to meet new regulatory targets. 161 Fourth, other competitors have also
         indicated to the Commission that their spare capacity is even more limited than what
         the non-confidential figures reflected in Table 5 show. In short, the combined spare
         capacity in the hands of all German competitors is also very limited, currently
         amounting to about [10-20]% of the combined capacity of the Parties and less than
         the volumes of the smallest contract the Parties currently have in force. This capacity
         combined would be insufficient to satisfy the demand of the main customers
         representing the large majority of the Dutch market. Therefore, as explained above,
         any attempt by these customers to divert smaller volumes away from the merging
         entity to render its operations unprofitable would be unlikely considering the latter’s
         bargaining power, and in any case would result in the LWP being transported longer
         distances and thus in higher transport costs and CO2 emissions.
(139) In conclusion, even if there were an incentive for German plants close to the border
         with the Netherlands to fill their spare capacity with Dutch LWP, the Commission
         finds that the existing levels of spare capacity of competitors would likely be
         insufficient to discipline the merged entity’s competitive behaviour post-transaction.
(140) Regardless of the above, the Commission acknowledges that besides filling-in their
         spare capacity with Dutch LWP, German competitors could also try to increase the
         capacity available to the Dutch market by making more capacity available to Dutch
         than to German customers in future. Plants might choose not to compete for the
         renewal of German contracts once they expire162 and to dedicate the resulting
         capacity to the Dutch market.163 While this strategy could admittedly increase the
         spare capacity for Dutch customers in the medium term, it would involve a number
         of risks since, as explained above,164 German competitors face economic,
         administrative and technical challenges to sorting Dutch LWP that Dutch
         competitors do not face and, most importantly, that they do not have to face when
         sorting German LWP. Despite the potential higher profitability of sorting Dutch
         LWP, German competitors who currently focus their activity on German customers
         are unlikely to have sufficient incentives to sacrifice stable and more certain sales in
         their primary market in exchange for a hypothetical and more uncertain growth in
         the Dutch market, where local sorters have a competitive advantage and where
         customers are perceived to have a national preference.165 The submissions by
         German competitors in response to the market investigation suggest that they do not
         contemplate such a strategic change in the next years, and in fact indicated that, even
161 See replies to question 26.2 of Questionnaire Q2 – Competitors for the sorting of Dutch LWP located in
    Germany.
162 Sorting LWP contracts in Germany typically have a duration of one year (see Notifying Party’s White
    Paper 1, submitted on 5 March 2021, paragraph 71).
163 Another way would be by allocating part of the volumes currently sorted in their plants next to the
    Netherlands to other plants in Germany ([…], for instance, has other plants in Germany). However, the
    effects of any reallocation would be, in the Commission’s view, limited, since the spare capacity of the
    plants that these competitors have in other parts of Germany would also be limited and, in any case,
    reallocation could only take place in respect of LWP generated in locations sufficiently close to the new
    plant.
164 See Section 4.2.2.2.
165 See Section 4.2.2.2(C).
                                                        38
 ---pagebreak---         taking into account the Proposed Transaction, they do not expect a significant
        increase in the volumes of Dutch LWP to be sorted in the next years.166
(141) Moreover, even if German competitors could make available sufficient spare
        capacity, switching a part of the demand for the sorting of Dutch LWP to German
        (or Belgian) out-of-market competitors would be in many instances at the expense of
        longer transportation distances for the LWP, and thus higher environmental costs in
        the form of CO2 emissions, which, as explained in Section 4.2.2.2(B), is one of the
        elements customers take into account when awarding tenders or contracts.
(142) In conclusion, even if out-of-market competitors had or could make available
        sufficient spare capacity to satisfy the demand of the main Dutch customers for LWP
        sorting, these competitors are more distant competitors to the Parties than other
        Dutch competitors or than the Parties are to each other. Therefore, the Proposed
        Transaction would result in a in a significant loss of competition in the Dutch LWP
        sorting market.
        (C)        Conclusion on spare capacity
(143) In view of the above, the Commission concludes that:
        (a)      Considering the limited spare capacity in the hands of (Dutch and German)
                 competitors, it is unlikely that customers could switch a significant part of
                 their demand to those competitors in case the merged entity was to increase
                 prices post-transaction. The merged entity would therefore become an
                 unavoidable trading partner as a result of the Proposed Transaction, which
                 would thus threaten to create a dominant position in the Dutch LWP sorting
                 market; and
        (b)      even if out-of-market competitors were capable of making additional
                 capacity available to the Dutch LWP sorting market, the constraint exerted by
                 these competitors would be significantly lower than the constraint the Parties
                 currently exert on each other and their capacity would risk to be
                 environmentally less efficient.
(144) These conclusions are consistent with the views of market participants consulted in
        the market investigation. Most customers did not indicate being able to switch a
        significant amount (more than 100 kt) of LWP volumes currently sorted by Dutch
        plants to German plants167 and not a single customer considered itself to be capable
        of defeating a possible price increase by the merged entity by sending the LWP to
        other competitors in the Netherlands or in Germany. German sorters indicated that,
        even taking into account the Proposed Transaction, the amount of Dutch LWP to be
        sorted in their plants will likely decrease or remain stable.168 Finally, the larger
        Dutch customers – which represent more than 80% of the current demand – consider
166 See paragraph (115).
167 Replies to question 24 of Questionnaire Q4 – Customers for the sorting of Dutch LWP.
168 Alba’s reply to RFI 8, paragraph 4.2 and Hubert Eing’s reply to RFI 11, paragraph 4.2 ; Replies to
    question 28 of Questionnaire Q2 – Competitors for the sorting of Dutch LWP located in Germany.
                                                        39
 ---pagebreak---          that they will become dependent on the Parties for the sorting of large volumes of
         LWP.169
5.1.4. Demand-side consideration
5.1.4.1. Expected future evolution in demand
         Notifying Party’s view
(145) In the Notifying Party’s view, the outlook for demand for LWP sorting services in
         the Netherlands in the coming years is uncertain. The Notifying Party submits that
         despite an increase in population in the Netherlands, overall a waste per capita
         reduction is expected in the country170 and identifies three trends which will decrease
         the amount of LWP to be collected from households and sorted. These include a
         government strategy (through the Dutch Plastic Pact) to reduce the amount of
         plastics in packaging by 2025, the implementation of the EU’s Single Use Plastics
         Directive,171 and the implementation of a deposit scheme for small drinks bottles and
         cans (which will mean that less plastic waste will be sent to LWP sorting plants). 172
         The Target however estimates an annual increase in Dutch LWP volumes at
         around 2%.173
         Commission’s assessment
(146) Demand for LWP sorting services in the Netherlands is largely driven by the
         regulatory intervention of the public administrations.
(147) At EU level, the Packaging Directive aims at harmonising national measures on
         waste management and to reduce the impact of packaging and packaging waste on
         the environment. The PPWD contains measures designed to prevent the production
         of packaging waste, and to promote the re-use, recycling and other alternatives to
         final disposal. Two of the policies enacted by PPWD have a direct impact on the
         demand for LWP sorting in the Netherlands: (i) recycling targets, and (ii) extended
         producer responsibility.
(148) First, the PPWD’s recycling targets require EU Member States to take the necessary
         measures to ensure that at least 65% (by weight) of all packaging waste (50% for
         plastic) will be recycled by 31 December 2025. By 31 December 2030, this target
         will rise to 70% (55% for plastic). In the Netherlands, these recycling targets have
169 See replies by Nedvang and RKN/Midwaste to question 23 of Questionnaire Q4 – Customers for the
    sorting of Dutch LWP.
170 See paragraph 598 of the Form CO.
171 According to the Notifying Party, the Single Use Plastics Directive provides that certain single-use plastic
    products (cotton bud sticks, cutlery, plates, straws, stirrers, sticks for balloons, cups, food and beverage
    containers made of expanded polystyrene, and all products made of oxo-degradable plastic) will be
    banned from 3 July 2021. For other single-use plastic products, the Directive provides for a mechanism
    aiming at limiting their use including through awareness-raising measures. In the Notifying Party’s view,
    the impact of this Directive on the LWP volumes will remain limited, as the single use plastics are
    predominately non packaging products (see Notifying Party’s reply to RFI 14, paragraphs 35, 36).
172 Paragraph 600 of the Form CO.
173 Paragraph 603 of the Form CO.
                                                           40
 ---pagebreak---          been implemented in the Packaging Decree 2014.174 These regulatory targets imply
         that demand is expected to be relatively inelastic, and that therefore an increase of
         prices is not expected to lead to a decrease in demand.
(149) There seems to be no consensus in the industry as to how demand will evolve. Some
         market respondents indicated that the increased targets will make demand
         increase.175 Others, however, pointed out that they will not change substantially the
         input of sorting plants – since all household LWP is already sorted – but will
         increase the output, i.e. in the extracted materials, through an improvement of the
         quality of the sorting process.176 In line with this, several respondents also explained
         that the increase in recycling targets would be accompanied by more stringent
         standards for measuring recycling rates,177 which will require sorters to improve
         their processes in order to improve recovery of materials which can be sent to
         recycling plants, and to reduce residual waste which needs to be disposed of. These
         improvements in quality are expected to come either through sorting lines being
         slowed down (resulting in reduced capacity) or in costly investments to improve
         efficiency.178
(150) Second, under the extended producer responsibility scheme, producers are made
         responsible for the treatment or disposal of consumer goods after use. The PPWD
         requires all EU Member States to ensure that extended producer responsibility
         schemes are set up for all kinds of packaging by the end of 2024. In the Netherlands,
         the Packaging Decree of 2014 set up an extended producer responsibility scheme
         under which producers and importers of packaged goods are legally responsible for
         the prevention, collection and recycling of packaging waste. As explained in
         paragraph (38), Afvalfonds is ultimately responsible for meeting its members’
         obligations.
(151) At present, the extended producer responsibility scheme for packaging in the
         Netherlands only applies to household waste, and not to waste collected outside of
         households (e.g. from companies, sporting clubs, schools, etc.). On 1 January 2023,
         the scheme will be extended to waste collected through commercial streams. The
         Notifying Party believes that this will result in an increase in LWP volumes sorted.
(152) The market investigation also showed that there is uncertainty among market
         participants as to how demand will evolve in the coming years. More than half of
         customers of LWP services which responded to the market investigation expected
         the demand for LWP sorting services to increase in the Netherlands in the next 3-5
174 The Netherlands already achieved the 2025 65% recycling target for all packaging waste and 50% for
    plastic in 2017 and 2018, respectively (see paragraph 632 of the Form CO).
175 See replies to question 26 of Questionnaire Q2 – Competitors for the sorting of Dutch LWP located in
    Germany; Replies to question 20.1 of Questionnaire Q4 – Customers for the sorting of Dutch LWP.
176 See minutes of a call with a competitor on 9 February 2021, paragraph 12; See also replies to question 19
    and 20 of Questionnaire Q4 – Customers for the sorting of Dutch LWP.
177 See replies to questions 20.1 and 20.2 of Questionnaire Q4 – Customers for the sorting of Dutch LWP;
    Replies to question 19.1 of Questionnaire Q3 – Competitors for the sorting of Dutch LWP located in
    Germany and Belgium; Minutes of a call with a customer on 5 February 2021, paragraph 25; Minutes of a
    call with a competitor on 3 February 2021, paragraph 26.
178 See replies to questions 20.1 and 20.2 of Questionnaire Q4 – Customers for the sorting of Dutch LWP.;
    replies to question 19.1 of Questionnaire Q3 – Competitors for the sorting of Dutch LWP located in
    Germany and Belgium.; Minutes of a call with a customer on 5 February 2021, paragraph 32; Minutes of a
    call with a competitor on 3 February 2021, paragraph 26.
                                                          41
 ---pagebreak---         years.179 However, only two of the market respondents considered that demand
        would increase significantly. The rest responded either that it would increase
        (without providing any estimates) or that it would grow moderately (in line with
        GDP). However, there were also market respondents that stated that demand will
        remain stable, and some explicitly pointed out that the sorting market is
        characterized by significant uncertainty so that they could not be conclusive.180 A
        competitor also mentioned that in 2020 the coronavirus pandemic resulted in an
        increase in packaging waste (possibly due to higher demand for food consumed at
        home), suggesting that this could result in a decrease in LWP volumes as
        consumption patterns return to normality.181
(153) In short, in view of the Notifying Party’s views and the market investigation, it is
        unclear whether or to what extent demand for LWP sorting services will actually
        increase in the coming years.
5.1.4.2. Buyer Power
        Notifying Party’s view
(154) The Notifying Party argues that the concentration of demand in the Netherlands
        gives customers significant buyer power. According to the Notifying Party, buyer
        power manifests itself in the fact that Nedvang has significant discretion in
        organizing its demand. It can for instance award contracts directly to sorters without
        recourse to a tender procedure, award contracts for relatively lengthy periods of 3-4
        years, sponsor expansion or entry, and split demand among multiple different
        sorters. The Notifying Party also argues that Midwaste/RKN’s practice of setting a
        maximum sorting price in its tenders is illustrative of buyer power.182
        Commission’s assessment
(155) In the Netherlands, two customers account for the majority of the demand for LWP
        sorting. As explained above (paragraphs (38) and (150)), the extended producer
        responsibility scheme in place in the Netherlands means that Afvalfonds and
        Midwaste/RKN account for approximately 85% of the demand.183
(156) There are currently four types of customers for LWP sorting in the Netherlands:184
        (i) private company Nedvang (subsidiary of Afvalfonds); (ii) public organizations
        representing municipalities, which take on responsibility for sorting and recycling
        under a contract with Nedvang for the sorting and recycling of waste (at present,
        Midwaste/RKN is the only organization of that kind); (iii) municipalities or groups
179 See replies to question 19 of Questionnaire Q4 – Customers for the sorting of Dutch LWP.
180 See replies to question 25 of Questionnaire Q2 – Competitors for the sorting of Dutch LWP located in
    Germany; Replies to question 19 of Questionnaire Q4 – Customers for the sorting of Dutch LWP. See also
    minutes of a call with a competitor on 5 March 2021, paragraph 5.
181 See minutes of a call with a competitor on 9 February 2021, paragraph 10. The Notifying Party also
    confirmed that there had been a surplus of LWP in 2020 due to the pandemic (see Form CO, footnotes 259
    and 260); Replies to question 25.1 of Questionnaire Q2 – Competitors for the sorting of Dutch LWP
    located in Germany.
182 See Notifying Party’s White Paper 1, submitted on 5 March 2021, paragraph 94.
183 Notifying Party’s reply to RFI 14, paragraph 17.
184 See footnote 365 of the Form CO.
                                                         42
 ---pagebreak---         of municipalities which retain the responsibility for the sorting and
        commercialization, such as ASL Limburg, Haarlem, Den Haag or Omrin; and
        (iv) waste management companies, such as Veolia, to which the sorting and
        commercialization services have been subcontracted by municipalities.
(157) Currently, approximatively 5 municipalities or groups of municipalities (i.e.
        Haarlem, Den Haag, ASL, Voorschoten Rozendaal, Westerkwartier and Omrin) have
        chosen to retain responsibility for the sorting and commercialization of the LWP.185
        However, from 2023, municipalities will no longer be authorized to keep
        responsibility for the sorting and commercialization of LWP and will be required
        either to join an organization regrouping several municipalities such as
        Midwaste/RKN which organize these activities on behalf of the municipalities, or to
        transfer these responsibilities to Nedvang. Nedvang will therefore take responsibility
        for all sorting and recycling of LWP, either directly, or through an agreement with
        public organizations which have entered into an agreement with Nedvang (at
        present, only Midwaste/RKN, though Omrin may do so in future). In view of this,
        the Notifying Party argues that, as from 2023, 100% of the demand will be in the
        hands of Nedvang and Midwaste/RKN.186
(158) Although the Commission acknowledges that there is buyer concentration in the
        market, this does not necessarily give rise to sufficient buyer power to prevent any
        risk of competitive harm. In fact, in order for large customers to exert buyer power,
        it is indispensable that they have at least two options in the market. The market
        investigation and the analysis of spare capacity indicate that this will not always be
        the case post-transaction. Rather, customers have indicated that post-transaction the
        merged entity would be an unavoidable trading partner, outweighing any buyer
        power which customers in this market might have.187
(159) As described in section 5.1.3, considering the limited spare capacity in the hands of
        (Dutch and German) competitors, it is unlikely that customers could switch a
        significant part of their demand to those competitors were Schwarz to increase prices
        post-merger. Current spare capacities in the Netherlands are approximately 38 kt (of
        which […] kt are in the hands of the Parties), and estimated to be significantly below
        75 kt in plants close to the border and capable of sorting Dutch LWP in Germany.188
        By contrast, volumes contracted by large customers like Midwaste/RKN and
        Nedvang are significantly higher. In one single contract, expiring late 2023,
        Midwaste/RKN allocated a contract for annual sorting of 90 kt of LWP, split into
        two parcels. At present, and even with recourse to plants in Germany, it would be
        impossible for Midwaste/RKN to find sufficient spare capacity for these volumes
        without relying on the Parties. In circumstances where only one service provider can
        effectively satisfy the demand, the setting of maximum prices in tender conditions
        would be ineffective (as a price constraining tool) since the service provider always
        retains the option not to participate in the tender.
185 See footnote 365 of the Form CO.
186 Notifying Party’s reply to RFI 14, paragraph 18.
187 Minutes of a call with a customer of 5 February 2021, paragraph 35, 37.
188 As explained above, actual spare capacity is estimated to be considerably lower in Germany for a number
    of reasons, including the fact that the reported 55 kt of capacity at Alba’s plant in Marl is no longer
    accurate as Alba has signed new contracts for 2021.
                                                         43
 ---pagebreak--- (160) It is true that smaller customers with limited demand could theoretically find some
        spare capacity available and would not be entirely dependent on the merged entity.189
        However, as the Notifying Party indicates, these customers represent a minor portion
        of the current demand190 and are expected to disappear as from 2023. By contrast,
        the Parties’ largest customers consider that they will be dependent on the Parties for
        the sorting of a large proportion of their LWP.191 Moreover, none of the customers
        responding to the market investigation considered that it would be capable of
        defeating a price increase by the combined entity post-transaction.192
(161) Although it is possible for customers to split their demand into smaller contracts in
        order to stimulate competition, it will impossible for any of the largest customers to
        divert the entirety of their demand away from the Parties post-transaction.
(162) In view of the above, the Commission considers that although demand for LWP
        sorting services is highly concentrated in the Netherlands, the market investigation
        has shown that customers would nonetheless be highly dependent on the merged
        entity post-transaction.
5.1.5. Barriers to entry and expansion
        Notifying Party’s view
(163) The Notifying Party submits that the barriers to enter the market for the sorting of
        Dutch LWP are low. In support of its assessment, the Notifying Party submits that a
        facility can be built within two years, the technology is widely available and there
        are no strong regulatory hurdles. In terms of costs, the Notifying Party includes that
        the building of its plant in Zwolle incurred costs of up to approximately EUR […].
        And while the minimum capacity of an LWP sorting plant should be 50 kt and it
        should operate at 90% of its capacity in order to be viable, according to the
        Notifying Party nothing prevents a new entrant from participating in tenders for
        LWP sorting before having become operational. 193
(164) According to the Notifying Party, the lack of high barriers to entry is demonstrated
        by regular entries and expansions. The Notifying Party refers in this regard to a
        number of recent entries and expansions, including by Alba, whose […] kt plant in
        Marl (Germany) became recently operational and has secured a […] kt contract for
        the sorting of Dutch LWP, and by Omrin, who built a […] kt LWP sorting plant in
        Heereveen (the Netherlands) that started its activities in 2018, as well as by PreZero
        itself, who built its […] kt LWP sorting plant in Zwolle which started operations
        in 2020. 194
(165) The Notifying Party also argues that there are enough LWP volumes on the market
        to make new entry attractive and viable, and that new entry is expected. In that
        regard, the Notifying Party submits that PRA is planning on opening a second LWP
189 Replies to question 22 of Questionnaire Q4 – Customers for the sorting of Dutch LWP.
190 Approximately 15%, see paragraph (155).
191 See replies to question 23 of Questionnaire Q4 – Customers for the sorting of Dutch LWP.
192 See replies to question 30 of Questionnaire Q4 – Customers for the sorting of Dutch LWP.
193 See paragraphs 504-507 of the Form CO.
194 See paragraphs 495-496 of the Form CO.
                                                         44
 ---pagebreak---         sorting plant, and that ASL Limburg, an association representing the municipalities
        of Limburg, will launch a tender for the building of an additional sorting facility, to
        be operational in 2024. Furthermore, a number of German LWP sorting plants which
        currently do not sort Dutch LWP might enter the market, and in Belgium five new
        LWP sorting plants are being constructed.195
        Commission’s assessment
(166) New entry is unlikely to take place in a sufficiently ample and timely manner to
        deter or defeat anti-competitive effects of the Proposed Transaction, for the
        following reasons.
(167) First, most participants to the market investigation pointed to barriers to entry, in the
        form of costs between EUR 30 and 40 million for the building of an LWP sorting
        plant, and an average time for carrying out such a project of 2 years with the time
        period for amortization being 7 years. 196 Various market investigation respondents
        indicated that ‘the funds required to invest in a new facility are high and not easy to
        attract. […] This gives large companies a real advantage and could push smaller,
        innovative players out of the market. […] smaller companies cannot afford the risk
        of building a new facility and do not necessarily have the skills to do it’, that ‘[t]he
        construction of a sorting plant requires tens of millions of euros of investment. Large
        companies are able to build new plants because of their financial means.’ and that
        ‘the bigger waste management companies are, the more likely they will have enough
        financial resources to build bigger plants’. Some respondents further specified their
        statement by identifying the companies they considered able to invest in a new LWP
        sorting plant. These stated only a few large players, explaining that only those could
        credibly afford the risk of an expansion. 197
(168) The Commission examined the possibility of subsidized entry in this context, and
        found that while the largest customers for LWP sorting services, notably Nedvang
        and Midwaste/RKN, can try to incentivise the building of a new plant, even they are
        not in a position to subsidize such entry. Concretely, whereas these LWP sorting
        customers can favour new entry by granting a contract with a longer duration, no
        financial benefits are given. Indeed, responses to the market investigation showed
        that ‘there is a limit to what […] can do to try to subsidize new capacity in that
        manner, as it will not pay more than the market rate for the LWP’ and that even the
        largest customers are not in a position to sponsor new entry, as they cannot take over
        the risk for the building of a new plant from the LWP sorter; at most, such customers
        can offer contracts with a longer duration than is usual. 198
195 See paragraphs 497-503 of the Form CO.
196 See paragraph 504 of the Form CO; Notifying Party’s reply to RFI 4, paragraph 18; Replies to question 25
    of Questionnaire Q1 – Competitors for the sorting of Dutch LWP located in the Netherlands; Replies to
    question 32 of Questionnaire Q2 – Competitors for the sorting of Dutch LWP located in Germany; Replies
    to question 34 of Questionnaire Q3 – Competitors for the sorting of Dutch LWP located in Germany and
    Belgium.
197 Minutes of a call with a competitor on 16 February 2021, paragraph 18; Minutes of a call with a
    competitor on 29 January 2021, paragraph 6; Minutes of a call with a competitor on 3 February 2021,
    paragraph 28; Minutes of a call with a customer on 19 February 2021, paragraph 17.
198 Minutes of a call with a customer on 5 February 2021, paragraph 32; Minutes of a call with a customer on
    19 February 2021, paragraph 17.
                                                         45
 ---pagebreak--- (169) Furthermore, it appears from the market investigation as well as the Notifying
         Party’s own submissions, that in order to be viable a new plant must have a
         minimum capacity of 70-100 kt and must operate at a high capacity utilisation rate,
         of at least 90%.199 A large majority of market investigation respondents has
         indicated that this forms an obstacle for entry.200
(170) In addition, the fact that expansions have been carried out in or around the
         Netherlands in the last years could act as a disincentive for new entry/expansion. In
         fact, as indicated in Section 5.1.3, once the spare capacity in the market reaches 10%
         of the total installed capacity, the incentives for entry/expansion may decrease or
         disappear altogether as any new capacity investment runs the risk of being
         unprofitable. In this sense, it cannot be excluded that these recent entries/expansions
         may have placed the market in a situation of equilibrium between supply and
         demand, although uncertainty as to the evolution of demand renders this assessment
         highly tentative.201 Nevertheless, this has been corroborated by a major customer
         which has indicated that, after Alba’s expansion, there would currently seem to be
         some excess capacity in the market.202
(171) In short, taking into account (i) the (costs related with) the minimum required
         investments, (ii) the need for assurance of supply at least for 7 years, (iii) the need to
         ensure a very high utilisation rate and the consequent structural limitation of capacity
         in this market, and (iv) the recent expansions and the uncertainty as regards future
         demand, the Commission takes the view that the current market conditions render
         the incentive of competitors to expand or enter in the market for the sorting of Dutch
         LWP very unlikely.
(172) In addition to, and regardless of, the limited ability and incentives for entry or
         expansion of capacity for the sorting of Dutch LWP, the Notifying Party’s argument
         that new entry is expected was contradicted by the market investigation.
(173) Concretely, only one concrete plan for the building of one small plant in the
         Netherlands in the coming years was identified in the course of the market
         investigation. This new plant would represent approximately a 3% increase in LWP
         sorting capacity in the Netherlands. Indeed, across all market investigation
         respondents, all but one mentioned that they were not aware of new LWP sorting
         capacity effectively entering the Dutch LWP sorting market in the coming years.
199 Replies to questions 26 of Questionnaire Q1 – Competitors for the sorting of Dutch LWP located in the
    Netherlands; Replies to questions 34 of Questionnaire Q2 – Competitors for the sorting of Dutch LWP
    located in Germany; Replies to question 23 of Questionnaire Q3 – Competitors for the sorting of Dutch
    LWP located in Germany and Belgium. Minutes of a call with a competitor on 29 January 2021,
    paragraph 5. For completeness, some respondents mentioned slightly lower numbers, of 80-85%, though
    the majority, including the Notifying Party, indicated a required capacity utilisation rate of 90% or higher.
    Hence, for the purpose of this Decision 90% was taken as a representative average.
200 Replies to question 27 of Questionnaire Q1 – Competitors for the sorting of Dutch LWP located in the
    Netherlands; Replies to questions 35 of Questionnaire Q2 – Competitors for the sorting of Dutch LWP
    located in Germany; Replies to question 33 of Questionnaire Q3 – Competitors for the sorting of Dutch
    LWP located in Germany and Belgium; Minutes of a call with a competitor on 27 January 2021,
    paragraph 22.
201 As would be indicated by the fact that, as Table 5 shows, the spare capacity of Dutch plants in the market
    is already above 10%.
202 Minutes of a call with a customer on 5 February 2021, paragraph 22.
                                                          46
 ---pagebreak---          While some respondents listed supposed projects, these were indicated to be based
         on rumours and were not confirmed by the market player concerned.203
(174) Furthermore, while some projects for the building of new LWP sorting plants
         outside of the Netherlands were announced, none of these will have an impact on the
         capacity available for sorting Dutch LWP. Notably, as the Notifying Party indicated,
         in Belgium five LWP sorting plants will become operational in the coming years,
         operated by PreZero, Indaver, Valodec, Valtris and Sitel. The construction of these
         plants is connected to revisions to the Belgian LWP collection system in 2019,
         namely the introduction of the ‘New Blue Bag’, whereby households will be able to
         sort all types of LWP.204 While the Notifying Party assumes that the construction of
         these plants will lead to overcapacity in Belgium, possibly translating in capacity
         available for the sorting of Dutch LWP, the market investigation results showed that
         none of the companies building a new LWP sorting plant expects the capacity it will
         make available to sort Dutch LWP to increase in the coming years.205 The Notifying
         Party, for its part, confirmed with regard to its new LWP sorting plant in Belgium
         that no capacity will be available for Dutch LWP.206 Similarly, the market
         investigation indicated that only a small amount of additional capacity would be
         created in Germany, though respondents also confirmed expecting no changes in the
         capacity that will be available for sorting Dutch LWP.207
(175) For these reasons, the Commission considers that new entry is not likely, timely and
         sufficient to deter or defeat anti-competitive effects brought about by the Proposed
         Transaction.
5.1.6. Conclusion on horizontal non-coordinated effects – sorting of Dutch LWP
(176) In view of the above, the Commission considers that the Proposed Transaction raises
         serious doubts as to its compatibility with the internal market with regards to the
         sorting of Dutch LWP either (i) by the creation of a dominant position and/or (ii) by
         the elimination of important competitive constraints that the Parties had exerted
         upon each other and a reduction of competitive pressure on the remaining
         competitors.
203 Replies to questions 20, 22, 23 of Questionnaire Q1 – Competitors for the sorting of Dutch LWP located
    in the Netherlands; Replies to questions 30, 31 of Questionnaire Q2 – Competitors for the sorting of
    Dutch LWP located in Germany; Replies to questions 26, 30, 31 of Questionnaire Q3 – Competitors for
    the sorting of Dutch LWP located in Germany and Belgium; Replies to questions 25 of Questionnaire Q4
    – Customers for the sorting of Dutch LWP; Minutes of a call with a competitor on 9 February 2021,
    paragraph 19; Minutes of a call with a customer on 3 February 2021, paragraph 22; Minutes of a call with
    a competitor on 5 March 2021, paragraph 6; Minutes of a call with a customer on 19 February 2021,
    paragraph 17.
204 As explained by the Notifying Party, in its reply to RFI 4, paragraph 36.
205 Replies to question 28 of Questionnaire Q3 – Competitors for the sorting of Dutch LWP located in
    Germany and Belgium.
206 Notifying Party’s reply to RFI 10, paragraphs 28, 29.
207 Reply to question 28 of Questionnaire Q3 – Competitors for the sorting of Dutch LWP located in
    Germany and Belgium.
                                                          47
 ---pagebreak--- 5.2.      Horizontal non-coordinated effects – collection of hollow glass
          Introduction
(177) The overlaps of the Parties’ activities in relation to the collection of hollow glass
          differ depending on the exact geographic market considered. Concretely, although
          the Parties’ activities for the collection of hollow glass overlap both at a regional
          level (in the Bielefeld region 208), as well as at national level in Germany, the
          Proposed Transaction would only give rise to an affected market at the level of the
          Bielefeld region. For that reason, the below competitive assessment will only
          concern the collection of hollow glass in the Bielefeld region.
          Notifying Party’s view
(178) The Notifying Party submits that the Proposed Transaction would not lead to
          competition concerns, for the following reasons.
(179) First, the Notifying Party submits that collection companies compete on a national
          level, as larger collection companies operate throughout the country, tenders are
          organised nationally, the legal framework is predominantly determined at national
          level and barriers to enter at regional level are low.
(180) Second, with regard to the Bielefeld region specifically, the increment brought about
          by the Proposed Transaction is limited209 and the Parties focus on different districts
          within this region. Furthermore, the Parties face many strong competitors, such as
          Remondis, August Meyer and Reiling Glass Recycling. 210
          Commission’s assessment
(181) As a preliminary note, the Notifying Party’s arguments in relation to the national
          scale of competition were partly confirmed by the results of the market investigation.
          Indeed, as mentioned above in Section 4.3.2, the results of the market investigation
          confirmed that some larger companies operate nationally, that tenders are open to
          market participants nationwide, and the legal framework is set by nationally
          applicable rules. However, some regional and local elements were also brought to
          light. For example, the market investigation pointed to the presence of regional and
          local market players and to the existence of price differences across different regions
          in Germany. For this reason, the Commission has left open whether the market’s
          geographic scope is national or narrower, and will assess the competitive impact of
          the Proposed Transaction on the only potentially affected market, in the Bielefeld
          region.
208  In line with the approach taken by the Bundeskartellamt and suggested by the Notifying Party, the starting
     point for defining this regional area is the Target’s location in Bielefeld, and then including two layers of
     adjoining districts: (i) the immediate adjoining districts i.e. Gütersloh and Lippe, and (ii) the outer
     adjoining districts i.e. Herford, Soest, Paderborn, Höxter, Holzminden, Hameln-Pyrmont, Schaumburg,
     Minden-Lübbecke, Osnabrück, Warendorf and Steinfurt.
209  Concretely, the Target’s activity in the area of hollow glass collection in Bielefeld is rather incidental and
     covers only one contract of the 16 currently in place in the region. See Notifying Party’s reply to RFI 15,
     paragraph 14.
210  Paragraphs 302-330 of the Form CO.
                                                             48
 ---pagebreak--- (182) For the collection of hollow glass in the Bielefeld region, the Notifying Party
         submits that the market shares are the following.
           Table 5: Sorting of hollow glass in the Bielefeld region in 2020
          Company                                                Volumes (kt)                Share in %
          Schwarz                                                       […]                     [40-50]
          Target                                                        […]                      [5-10]
          Combined                                                      […]                     [40-50]
          Reiling Glass Recycling                                       […]                     [20-30]
          August Meyer                                                  […]                     [10-20]
          ARGE NW020-GE Kreis Paderborn                                 […]                      [5-10]
          ARGE DS Glas Kreis Warendorf                                  […]                       [5-0]
          Remondis Recycling                                            […]                       [0-5]
          Total                                                          93                        100
         Source: Form CO and Notifying Party’s reply to RFI 15
(183) Notwithstanding the merged entity’s significant market share for the collection of
         hollow glass in the Bielefeld region, the Commission ultimately considers that the
         Proposed Transaction does not raise serious doubts as to its compatibility with the
         internal market as a result of horizontal non-coordinated effects, for the following
         reasons.
(184) First, the Parties’ market position is constrained in the short term as new contracts
         will be tendered out in the next years and there are sufficient credible bidders in the
         market.
(185) In fact, the market investigation respondents have explained that contracts for
         collection services for hollow glass are tendered out regularly, with the price
         appearing to be the determining– and according to various respondents the only –
         criterion of selection of the preferred bid.211 In that context, the large majority of
         market investigation respondents, including competitors and customers, has also
         stated that they do not consider the Parties to have any competitive advantage vis-à-
         vis other companies active in the Bielefeld region. 212
(186) At the same time, the market investigation has shown that customers consider that
         they would have sufficient alternative collectors of hollow glass to turn to should the
         merged entity refuse to provide collection services or otherwise provide these
         services at significantly worse conditions in the Bielefeld region, and vice versa that
         competitors consider that they would be able to present as an alternative to the
         merged entity for the collection of hollow glass in the Bielefeld region in such a
211 Replies to question 15 of Questionnaire Q5 – Competitors for the collection of hollow glass in the
    Bielefeld region; replies to question 13 of Questionnaire Q6 - Customers for the collection of hollow glass
    in the Bielefeld region. The Notifying Party has specified that the majority of the 16 contracts currently in
    place in the Bielefeld region will expire in the coming 2 years. See Notifying Party’s reply to RFI 15,
    paragraph 5.
212 Replies to question 17 of Questionnaire Q5 – Competitors for the collection of hollow glass in the
    Bielefeld region; replies to question 15 of Questionnaire Q6 - Customers for the collection of hollow glass
    in the Bielefeld region.
                                                          49
 ---pagebreak---           case.213 Therefore, there appears to be a sufficient number or credible bidders post-
          transaction to compete for the new contracts.
(187) Second, on the barriers to enter a new region for the collection of hollow glass,
          market investigation respondents revealed that while the current contractor has a
          small advantage vis-à-vis others, this is true for all regions, and that in any case the
          investments which would be needed for entry are rather limited. Concretely, this
          requires only the set-up of the logistical infrastructure, such as bottle banks, trucks
          (with a crane that can handle the specific dimensions of the bottle banks), loading
          and parking space and personnel, some of which may be rented, leased or
          subcontracted.214
(188) In any case, there will be five remaining competitors already operating in the
          Bielefeld region who would not need to face these investments in order to expand
          their operations in the region and bid for new contracts. Nothing would seem to
          prevent customers from resorting to these competitors in future contracts if the
          Parties were to refuse to provide collection services or provide these services at
          significantly worse conditions.
(189) This assessment was largely confirmed in the market investigation, across both
          competitors and customers, as a majority of respondents does not expect a price
          increase in the collection of hollow glass in the Bielefeld region as a result of the
          Proposed Transaction.215
(190) For these reasons, the Commission takes the view that the Proposed Transaction
          does not raise serious doubts as to its compatibility with the internal market as
          regards the collection of hollow glass in the Bielefeld region.
5.3.      Vertical effects
(191) The Commission has analysed the existence of three potential vertical links
          identified by the Parties: (i) between the collection of LWP and the collection of
          I&C waste216 (both upstream) and the sorting of LWP (downstream), (ii) between
          the sorting of LWP (upstream) and the commercialisation of LWP (downstream),
          and (iii) between the collection of I&C waste (upstream) and the Notifying Party’s
          grocery retail activities (downstream).
213  Replies to question 16 of Questionnaire Q5 – Competitors for the collection of hollow glass in the
     Bielefeld region; replies to question 14 of Questionnaire Q6 - Customers for the collection of hollow glass
     in the Bielefeld region; Minutes of a call with a competitor on 2 February 2021, paragraph 12; Minutes of
     a call with a customer on 2 February 2021, paragraphs 10-11.
214  Replies to questions 18-19 of Questionnaire Q5 – Competitors for the collection of hollow glass in the
     Bielefeld region; replies to question 16-17 of Questionnaire Q6 - Customers for the collection of hollow
     glass in the Bielefeld region; Minutes of a call with a competitor on 2 February 2021, paragraphs 6-7;
     Minutes of a call with a customer on 2 February 2021, paragraph 8.
215  Replies to question 22 of Questionnaire Q5 – Competitors for the collection of hollow glass in the
     Bielefeld region; replies to question 20 of Questionnaire Q6 - Customers for the collection of hollow glass
     in the Bielefeld region.
216  Potentially segmented on the basis of whether the waste is commercial, industrial, or demolition and
     construction waste. As mentioned before in paragraph (12) and footnote 18, for the purpose of this
     Decision the Commission refers to ‘I&C waste’ while leaving the exact scope of the product market open,
     as the assessment does not differ irrespective of the exact relevant product market considered.
                                                            50
 ---pagebreak--- 5.3.1. Collection of LWP and collection of I&C waste (both upstream) and the sorting of
        LWP (downstream)
(192) The Target collects LWP (with a [5-10]% market share) and I&C waste (with a
        market share below 5% under any plausible product or geographic market definition)
        in the Netherlands, and both Parties are active in LWP sorting in the Netherlands
        (and would have a combined market share in excess of 30% under any plausible
        geographic market definition).
(193) However, from a commercial perspective, there is no vertical link between these two
        activities. Indeed, in the Netherlands collecting entities do not themselves decide
        who will sort waste volumes. These decisions can only be made by Nedvang, public
        organisations such as Midwaste/RKN and the municipalities. 217 Consequently, the
        Parties are not in a position, even theoretically, to determine the vertical integration
        of their collection and sorting services. As such, the Proposed Transaction could not
        possibly result in customer or input foreclosure.218
(194) Therefore, the Commission considers that the Proposed Transaction does not give
        rise to any vertical link between the Parties219 and, for that reason does not raise
        serious doubts as to its compatibility with the internal market as a result of vertical
        effects between the collection of LWP or I&C waste and the sorting of LWP,
        irrespective of the market definition upheld.
5.3.2. Sorting of LWP (upstream) and commercialisation of LWP (downstream)
(195) Similarly, the Proposed Transaction does not appear to result in a vertical link
        between the sorting of LWP (upstream) and the commercialisation of LWP
        (downstream).
(196) Indeed, in practice, an LWP sorting facility either acquires ownership of the LWP it
        sorts, or the ownership is retained by the customer. If the LWP sorter takes
        ownership of the LWP it sorts, it then commercialises the output of its sorting
        process. If the ownership of the LWP remains with the customer however, this
        customer will itself arrange for the sorted fractions to be commercialised. As such,
        either both of these activities are entirely internalised, or the sorted LWP remains the
        customer’s property, so that this customer takes care of the commercialisation. For
        that reason, the Proposed Transaction could not create any risk of input or customer
        foreclosure. And while commercialisation can also be done by a trader, who engages
217 Some municipalities have subcontracted their waste management services to private companies (e.g.
    Veolia), but none of them to the Parties. In any case, municipalities will no longer be authorized to keep
    responsibility for sorting and commercialization of LWP as from 2023.
218 From 2023, with the expansion of Extended Producer Responsibility, this will also be applicable to LWP
    coming from the commercial waste stream.
219 According to paragraph 4 of the Commission Guidelines on the assessment of non-horizontal mergers
    under the Council Regulation on the control of concentrations between undertakings (‘Non-horizontal
    Guidelines’), OJ C 265, 18.10.2008, ‘[v]ertical mergers involve companies operating at different levels of
    the supply chain, for example, when a manufacturer of a certain product (the ‘upstream firm’) merges
    with one of its distributors (the ‘downstream firm’) […]’. Footnote 4 clarifies that ‘the terms ‘downstream’
    and ‘upstream’ are used to describe the (potential) commercial relationship that the merging entities have with
    each other. Generally the commercial relationship is one where the ‘downstream’ firm purchases the output
    from the ‘upstream’ firm and uses it as an input in its own production, which it then sells on to its customers’.
    Therefore, in the absence of a commercial relationship, there cannot be any vertical overlap between the Parties.
                                                             51
 ---pagebreak---         in mere trading activities (i.e. commercialises LWP fractions that have not been
        sorted by itself), as neither of the Parties is active in such trading activities no
        vertical relationship arises from the Proposed Transaction in this regard.
(197) For these reasons, the Commission considers that the Proposed Transaction does not
        give rise to any vertical link between the Parties and, for that reason, does not raise
        serious doubts as to its compatibility with the internal market as a result of vertical
        effects between the sorting of LWP and the commercialisation of LWP, irrespective
        of the market definition upheld.
5.3.3. Collection of I&C waste (upstream) and grocery retail (downstream)
(198) The Notifying Party’s LIDL and Kaufland grocery retail stores in Germany,
        Luxembourg, the Netherlands and Poland, generate waste and are therefore
        customers for the collection of commercial waste. This would give rise to a potential
        vertically affected market in Luxembourg, where the Target’s share on the market
        for the collection of non-hazardous commercial waste is approximately [70-80]%,220
        while the Notifying Party’s share of the retail market is approximately [0-5]%. The
        Notifying Party further submits that its share of demand for commercial waste
        collection services is approximately [0-5]%, lower than its share on the downstream
        retail market.221
(199) The Notifying Party argues that services for the collection of commercial waste are
        not an important input for the operation of grocery retail stores as such services are
        not an important cost factor for a retail business. The Notifying Party estimates that
        the collection of commercial waste accounts for less than […]% of a retail business’
        operating costs. This means that waste collection accounts for a smaller proportion
        of the business’ costs than electricity, personnel, leasing and marketing.
(200) The Commission takes the view that there does not seem to be a vertical relationship
        between the Parties within the meaning of paragraph 4 of the Non-horizontal
        Guidelines. In fact, waste collection services purchased by a retail business cannot
        be considered to constitute an ‘input in its own production, which it then sells on to
        its customers’.222 Retail businesses do not incorporate waste collection services in
        any way into their production process or into the products or services they offer to
        their customers.
(201) However, even if these markets were considered to be vertically related, no
        competition concerns as a result of vertical effects would arise, for the following
        reasons.
(202) First, the Commission considers that, for the purposes of the present Decision, any
        hypothetical input foreclosure would not raise any competition problems since waste
        collection services would not be an ‘important input’ for the downstream activity
        within the meaning of paragraph 34 of the Non-horizontal guidelines: in the first
        place, the collection of commercial waste accounts for less than […]% of a retail
220 The Target’s share would be above 30% on any plausible sub-segmentation.
221 See paragraphs 395 et seq. of the Form CO.
222 See the Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the
    control of concentrations between undertakings ("Non-Horizontal Merger Guidelines"), OJ C 265,
    18.10.2008, footnote 4.
                                                      52
 ---pagebreak---         business’ operating costs, which is a smaller proportion of the business’ costs than
        electricity, personnel, leasing and marketing. In the second place, it does not seem
        that the collection of waste can be considered a critical component of grocery retail
        businesses without which they could not effectively sell their products on the
        market. In the third place, waste collection does not represent a significant source of
        product differentiation for supermarkets.
(203) In any case, the Commission takes the view that the Proposed Transaction will not
        lead to input foreclosure, as the merged entity would have neither the ability nor the
        incentive to engage in an input foreclosure strategy.
(204) Regarding the merged entity’s ability to foreclose, although the Target has a very
        significant position in the upstream market for commercial waste collection in
        Luxembourg, other providers of similar services, such as Veolia active in
        neighbouring France, could easily enter the market.
(205) As regards the merged entity’s incentive to engage in input foreclosure, given that
        waste collection services form a very small proportion of a retail business’ costs,
        such a strategy would not have a significant impact on the competitiveness of
        downstream rivals, and would not result in downstream demand being diverted away
        from foreclosed rivals. Nor would such a strategy allow the merged entity to benefit
        from higher price levels downstream, as it would be unlikely to succeed in
        significantly raising rivals’ costs.
(206) Second, the Commission takes the view that the Proposed Transaction will also not
        lead to customer foreclosure, given the Notifying Party’s low share of demand for
        commercial waste collection services in Luxembourg ([0-5]%).
(207) For these reasons, the Commission considers that the Proposed Transaction does not
        raise serious doubts as to its compatibility with the internal market as a result of
        vertical effects between the retail activities and the collection of I&C waste
        irrespective of the market definition upheld.
6.      PROPOSED REMEDIES
(208) In order to render the concentration compatible with the internal market, the
        Notifying Party has modified the notified concentration by entering into the
        following commitments (the ‘Commitments’) 223, which are annexed to this Decision
        and described in detail in the Form RM, and form an integral part thereof.
(209) Notably, on 17 March 2021, the Notifying Party submitted a set of remedies (‘Initial
        Commitments’), which the Commission market tested from 18 March 2021 to
        26 March 2021. On 31 March 2021, the Commission communicated to the Notifying
        Party the feedback received by market test respondents, after which the Notifying
        Party submitted revised commitments and a revised Form RM, on 8 April 2021 (the
        ‘Revised Commitments’).
223 For the purpose of Sections 6, 7 and 8, the ‘Commitments’ refer to both the Initial and Revised
    Commitments.
                                                   53
 ---pagebreak--- (210) As per the Commitments224, the Notifying Party proposes to divest the ‘Rotterdam
        plant’, an LWP sorting plant in Rotterdam currently owned by SUEZ Recycling and
        Recovery Netherlands B.V., which is part of the Target.
(211) Specifically, the Notifying Party commits to divest (together the ‘Divestment
        Business’):
        (a)      All tangible assets necessary for the sorting of LWP at the Rotterdam plant,
                 including [Confidential information on details of the Divestment Business].
        (b)      Licenses, permits and authorisations necessary for the sorting of LWP at the
                 Rotterdam plant to the extent transferrable under applicable law, related to
                 the sorting capacity and storage of waste, as well as for the export of mixed
                 plastic packaging (the latter during a transitional period).
        (c)      Sorting contracts, notably the external customers contracts relating to the
                 sorting of LWP, supply contracts for a number of trade flows, and the lease
                 contracts for working equipment.
        (d)      Customer accounts, orders, and credit records relating to the sorting of LWP
                 at the Rotterdam plant.
        (e)      The Personnel included in the organisational chart under paragraph 23 of the
                 Schedule to the Commitments.
        (f)      The Key Personnel, notably the Plant Manager, Production Manager, Watch
                 Leaders and Head of Maintenance.
        (g)      A number of transitional services, for the Divestment Business to continue to
                 be economically viable and competitive.
(212) In addition, the Notifying Party has entered into related commitments, inter alia
        regarding the separation of the Divestment Business from their retained businesses,
        the preservation of the viability, marketability and competitiveness of the
        Divestment Business, including the appointment of a monitoring trustee and, if
        necessary, a divestiture trustee.
(213) The Notifying Party considers that these Commitments would eliminate any serious
        doubts which may be identified by the Commission in relation to the sorting of
        Dutch LWP. In particular, the Notifying Party is of the view that the Commitments
        fully set off the addition of market shares and capacity in relation to LWP sorting in
        the Netherlands through the Proposed Transaction, as they would effectively remove
        the overlap between the Parties for this activity.
224 The general description below appears both in the Initial and Revised Commitments. The amendments
    made in the Revised Commitments are explained in detail in Section 7.1.2.
                                                      54
 ---pagebreak--- 7.      ASSESSMENT OF THE PROPOSED REMEDIES
7.1.    Suitability of the Commitments to remove serious doubts
(214) The Divestment Business has a sorting capacity of 102 kt, and sorted 92 kt of LWP
        in 2020, making it the largest sorting facility in the Netherlands both in terms of
        capacity and in terms of LWP volumes sorted. Furthermore, the Divestment
        Business is well located to compete for the sorting of Dutch LWP, in Rotterdam and
        within a short driving distance from the main Dutch population centres, suggesting
        that it is particularly well placed to serve a significant proportion of demand in the
        Netherlands. Given that it is also the only plant the Target uses for the sorting of
        Dutch LWP, these Commitments would result in a removal of the entire overlap
        resulting from the Proposed Transaction in relation to the sorting of Dutch LWP.
(215) However, specific provisions and the structure of the divestment raised issues
        identified in the course of the market test, which led to a revision of the Notifying
        Party’s Initial Commitments.
7.1.1. Results of the market test of the Initial Commitments
(216) The results of the market test indicated that overall, in principle the sale of the
        Divestment Business to a suitable purchaser would be sufficient to remove the
        competition concerns raised by the Proposed Transaction. Indeed, the overwhelming
        majority of both competitors and customers that took a position indicated that they
        consider that the Commitments would remove the competition concerns in respect of
        the sorting of Dutch LWP.225
(217) Market test respondents however did voice concerns with regard to the sharing of
        facilities between the merged entity and the purchaser, and pointed to a risk of
        dependency of the purchaser on the merged entity.
(218) Concretely, the Initial Commitments as originally submitted on 17 March 2021
        envisaged two scenarios with respect to the tangible assets, with a possibility for the
        purchaser to choose among those.
(219) The Divestment Business is located on the Rotterdam site, which is currently leased
        to SUEZ by [Confidential information on details of the Divestment Business]. The
        Divestment Business includes the LWP sorting plant, which is located in the main
        building on the Rotterdam site. [Confidential information on details of the
        Divestment Business].
(220) [Confidential information on details of the Divestment Business].
(221) [Confidential information on details of the Divestment Business].
(222) In the course of the market test, the concern was raised that the shared use
        [Confidential information on details of the Divestment Business], could result in
        exchanges of sensitive information, since information on the volumes and capacity
225 Replies to question 8 of Questionnaire Q7 – Market test of the proposed remedies – Questionnaire to
    customers; Replies to question 8 of Questionnaire Q8 – Market test of the proposed remedies –
    Questionnaire to competitors.
                                                     55
 ---pagebreak---          of the Rotterdam plant would be [Confidential information on details of the
         Divestment Business], allowing Schwarz to have access to it.226
(223) Some respondents also believed that renting the site from Schwarz could make the
        purchaser dependent on the merged entity in its operation of the divestment
        business. 227 If the merged entity were to retain a lease over the site and to sublet
         parts of the site to the purchaser, the latter would be reliant on the merged entity
         continuing to do so on market terms. It could also have the effect of hindering the
        purchaser from deciding to make additional investments in the facilities. Finally, one
        respondent explained that the use of the Rotterdam facilities was subject to a number
        of permits regulating the permissible waste volumes and noise and odour emissions
        that could emanate from the site. According to this respondent, there was a risk that
         the shared use of these permits could likewise make the purchaser dependent on the
         merged entity for the operation of the facility. 228
7.1.2. The Revised Commitments and the Commission’s assessment
(224) In order to address the concerns raised during the market test, the Notifying Party
        amended the Initial Commitments to provide for two alternatives, between which the
        purchaser will be able to choose. The Notifying Party retained Scenario 2
        [Confidential information on details of the Divestment Business].
(225) As such, the Revised Commitments provide that in principle, Schwarz will divest to
        the purchaser [Confidential information on details of the Divestment Business],
        including the Divestment Business, [Confidential information on details of the
        Divestment Business], and facilities such as [Confidential information on details of
        the Divestment Business] (i.e. Scenario 2). Alternatively, in case the purchaser
        prefers this and [Confidential information on details of the Divestment Business],
        Schwarz would divest only the Divestment Business (including the respective part of
        the ground lease and [Confidential information on details of the Divestment
        Business]), but retain [Confidential information on details of the Divestment
        Business] and share [Confidential information on details of the Divestment
        Business]. This would not result in the purchaser having to rent any part of the land
        or facilities from Schwarz. Although the purchaser could choose to make
        [Confidential information on details of the Divestment Business] available to
        Schwarz, this would not result in the purchaser obtaining sensitive information
        relating to a competitor, as Schwarz would not be operating a competing LWP
        sorting business on the Rotterdam site.229
(226) Moreover, the Revised Commitments no longer include a possibility for the VCCP
         to assist the purchaser during a transitional period before returning to the Notifying
226 Replies to questions 2, 5, and 6 of Questionnaire Q7 – Market test of the proposed remedies –
    Questionnaire to customers.
227 Replies to question 6 of Questionnaire Q7 – Market test of the proposed remedies – Questionnaire to
    customers.
228 Replies to question 6.1.1 of Questionnaire Q7 – Market test of the proposed remedies – Questionnaire to
    customers.
229 The reverse situation, whereby Schwarz would have made the weighbridge available to the purchaser,
    would have created a risk of information sharing because Schwarz would have had access to confidential
    information regarding the operation of the Rotterdam plant while continuing to operate an LWP sorting
    plant at Zwolle.
                                                        56
 ---pagebreak---          Party, again to remove any risk of inappropriate exchange of information. Per the
         Revised Commitments, the VCCP, at the choice of the purchaser, will either be
         included in the Divestment Business or be retained by Schwarz, in which latter case
         there would be no possibility for assistance of the purchaser for a transitional period.
(227) The Commission considers that these amendments address the concerns raised
         during the market test, and that as such the Revised Commitments of 8 April 2021
         are suitable to remove the competition concerns raised by the Proposed Transaction.
7.2.     Viability and attractiveness of the Divestment Business
(228) The Divestment Business is profitable, with a turnover of EUR […] in 2020, and an
         EBITDA of EUR […]. 230
(229) The market test has confirmed the viability and attractiveness of the Divestment
         Business. Concretely, of the market test respondents that replied in this regard, all
         but one confirmed that the Divestment Business would be viable, and would allow a
         suitable purchaser to compete effectively and on a lasting basis for the sorting of
         Dutch LWP.231
(230) Based on the market test results, the Commission considers that the Divestment
         Business is a viable and attractive business. This is further confirmed by the fact that
         at least five companies active in waste management have expressed a preliminary
         interest in acquiring the Divestment Business.
7.3.     Purchaser criteria and buyers
(231) The Commitments contain the standard requirement that the purchaser (i) be
         independent from the Notifying Party, (ii) have the financial resources, proven
         expertise and incentive to maintain and develop the Divestment Business as a viable
         and active competitive force, and (iii) be unlikely to create competition concerns.232
(232) The Commission’s market test aimed at verifying whether these criteria were
         sufficient or whether further purchaser criteria should be included.
(233) Among market test respondents that expressed a view, a majority believed that the
         standard criteria would be sufficient and that a potential purchaser would not
         necessarily need to have specific operational experience in order to operate the
         Divestment Business as an active competitive force.233 Nevertheless, respondents
         unanimously considered that a purchaser with general experience of waste
230  Paragraph 52 of the revised Form RM.
231  Replies to question 4 of Questionnaire Q7 – Market test of the proposed remedies – Questionnaire to
     customers; Replies to question 4 of Questionnaire Q8 – Market test of the proposed remedies –
     Questionnaire to competitors.
232  The same requirements appear in the Initial and Revised Commitments.
233  Replies to question 11 of Questionnaire Q7 – Market test of the proposed remedies – Questionnaire to
     customers; Replies to question 11 of Questionnaire Q8 – Market test of the proposed remedies –
     Questionnaire to competitors.
                                                          57
 ---pagebreak---          management would be suitable, but that specific experience in the LWP sorting
         market does not appear to be a necessary condition.234
(234) Consequently, the Commission considers that, as provided in the Revised
         Commitments, any suitable purchaser will need to demonstrate proven expertise and
         incentive to maintain and develop the Divestment Business as a viable and active
         competitive force in competition with the Parties and other competitors.235 As per
         the results of the market investigation and the Commission’s competitive
         assessment, a purchaser with waste management experience would likely fulfil these
         criteria.
7.4.     Conclusion
(235) For the reasons outlined above, the Revised Commitments entered into by the
         Notifying Party are sufficient to eliminate in full the serious doubts as to the
         compatibility of the Proposed Transaction with the internal market with regard to the
         sorting of Dutch LWP as a result of horizontal non-coordinated effects. The
         Commission therefore concludes that, subject to full compliance with the Revised
         Commitments given by the Notifying Party, the Proposed Transaction would not
         significantly impede effective competition in the internal market or a substantial part
         thereof.
(236) The Revised Commitments in section B of the Annex constitute conditions attached
         to this Decision, as only through full compliance therewith can the structural
         changes in the relevant markets be achieved. The other commitments set out in the
         Annex constitute obligations, as they concern the implementing steps which are
         necessary to achieve the modifications sought in a manner compatible with the
         internal market.
8.       CONCLUSION
(237) For the above reasons, the Commission has decided not to oppose the notified
         operation as modified by the Revised Commitments and to declare it compatible
         with the internal market and with the functioning of the EEA Agreement, subject to
         full compliance with the conditions in section B of the commitments annexed to the
         present Decision and with the obligations contained in the other sections of the said
         commitments. This Decision is adopted in application of Article 6(1)(b) in
         conjunction with Article 6(2) of the Merger Regulation and Article 57 of the EEA
         Agreement.
                                                            For the Commission
                                                            (Signed)
                                                            Margrethe VESTAGER
                                                            Executive Vice-President
234  Replies to question 13 of Questionnaire Q7 – Market test of the proposed remedies – Questionnaire to
     customers; Replies to question 13 of Questionnaire Q8 – Market test of the proposed remedies –
     Questionnaire to competitors.
235  Paragraph 15(b) of the Revised Commitment Text.
                                                      58
 ---pagebreak--- [non-confidential version]                                                  Revised offer: 07.04.2021
                                               Case M.10047
              SCHWARZ GROUP / SUEZ WASTE MANAGEMENT COMPANIES
                     COMMITMENTS TO THE EUROPEAN COMMISSION
Pursuant to Article 6(2) of Council Regulation (EC) No 139/2004 (the “Merger Regulation”),
Schwarz Group (the “Notifying Party”) hereby enter into the following Commitments (the
“Commitments”) vis-à-vis the European Commission (the “Commission”) with a view to rendering
the acquisition of sole control over several companies which form the recycling and recovery
operations of SUEZ in Germany, Luxembourg, the Netherlands, and Poland (the
“Concentration”) compatible with the internal market and the functioning of the EEA Agreement.
This text shall be interpreted in light of the Commission’s decision pursuant to Article 6(1)(b) of the
Merger Regulation to declare the Concentration compatible with the internal market and the
functioning of the EEA Agreement (the “Decision”), in the general framework of European Union
law, in particular in light of the Merger Regulation, and by reference to the Commission Notice on
remedies acceptable under Council Regulation (EC) No 139/2004 and under Commission Regulation
(EC) No 802/2004 (the “Remedies Notice”).
Section A.        Definitions
1. For the purpose of the Commitments, the following terms shall have the following meaning:
    Affiliated Undertakings: undertakings controlled by the Parties and/or by the ultimate parents of
    the Parties, whereby the notion of control shall be interpreted pursuant to Article 3 of the Merger
    Regulation and in light of the Commission Consolidated Jurisdictional Notice under Council
    Regulation (EC) No 139/2004 on the control of concentrations between undertakings (the
    "Consolidated Jurisdictional Notice").
    Assets: the assets that contribute to the current operation or are necessary to ensure the viability
    and competitiveness of the Divestment Business as indicated in Section B, paragraph 5 (a), (b) and
    (c) and described more in detail in the Schedule.
    Closing: the transfer of the legal title to the Divestment Business to the Purchaser.
    Closing Period: the period of […] from the approval of the Purchaser and the terms of sale by the
    Commission.
    Confidential Information: any business secrets, know-how, commercial information, or any
    other information of a proprietary nature that is not in the public domain.
    Conflict of Interest: any conflict of interest that impairs the Trustee's objectivity and
    independence in discharging its duties under the Commitments.
 ---pagebreak--- Divestment Business: the business or businesses as defined in Section B and in the Schedule
which the Notifying Party commits to divest.
Divestiture Trustee: one or more natural or legal person(s) who is/are approved by the
Commission and appointed by Schwarz and who has/have received from Schwarz the exclusive
Trustee Mandate to sell the Divestment Business to a Purchaser at no minimum price.
Effective Date: the date of adoption of the Decision.
First Divestiture Period: the period of […] from the Effective Date.
Hold Separate Manager: the person appointed by Schwarz for the Divestment Business to
manage the day-to-day business under the supervision of the Monitoring Trustee.
Key Personnel: all personnel necessary to maintain the viability and competitiveness of the
Divestment Business, as listed in the Schedule, including the Hold Separate Manager.
Monitoring Trustee: one or more natural or legal person(s) who is/are approved by the
Commission and appointed by Schwarz, and who has/have the duty to monitor Schwarz’
compliance with the conditions and obligations attached to the Decision.
Parties: the Notifying Party and the undertaking that is the target of the concentration.
Personnel: all staff currently employed by the Divestment Business, including staff seconded to
the Divestment Business, shared personnel as well as the additional personnel listed in the
Schedule.
Purchaser: the entity approved by the Commission as acquirer of the Divestment Business in
accordance with the criteria set out in Section D.
Purchaser Criteria: the criteria laid down in paragraph 15 of these Commitments that the
Purchaser must fulfil in order to be approved by the Commission.
Schedule: the schedule to these Commitments describing more in detail the Divestment Business.
SUEZ: SUEZ Groupe S.A.S., France
Trustee(s): the Monitoring Trustee and/or the Divestiture Trustee as the case may be.
Trustee Divestiture Period: the period of […] from the end of the First Divestiture Period.
Schwarz: the German Schwarz Group which the acquirers of the Concentration (SB PreZero
GmbH & CO. KG, PreZero International GmbH, and SB Dienstleistung KG) are part of. Schwarz
is not a subordinate group of companies (and is not incorporated as such), but does form a single
economic unit pursuant to para 135 of the Commission's Consolidated Jurisdictional Notice. The
acquirers of the Concentration are part of Schwarz and are all incorporated under the laws of
Germany, have their registered office at Stiftsbergstraße 1, Neckarsulm, Germany, and are
                                                   2
 ---pagebreak---     registered with the Commercial Register at Stuttgart (SB PreZero GmbH & Co. KG under number
    HRA 737416, PreZero International GmbH under number HRB 772407, and SB Dienstleistung
    KG under number HRA 721997).
Section B.        The commitment to divest and the Divestment Business
       Commitment to divest
2. In order to maintain effective competition, Schwarz commits to divest, or procure the divestiture
    of the Divestment Business by the end of the Trustee Divestiture Period as a going concern to a
    purchaser and on terms of sale approved by the Commission in accordance with the procedure
    described in paragraph of these Commitments. To carry out the divestiture, Schwarz commits to
    find a purchaser and to enter into a final binding sale and purchase agreement for the sale of the
    Divestment Business within the First Divestiture Period. If Schwarz has not entered into such an
    agreement at the end of the First Divestiture Period, Schwarz shall grant the Divestiture Trustee an
    exclusive mandate to sell the Divestment Business in accordance with the procedure described in
    paragraph 28 in the Trustee Divestiture Period.
3. Schwarz shall be deemed to have complied with this commitment if:
       (a)       by the end of the Trustee Divestiture Period, Schwarz or the Divestiture Trustee has
                 entered into a final binding sale and purchase agreement and the Commission
                 approves the proposed purchaser and the terms of sale as being consistent with the
                 Commitments in accordance with the procedure described in paragraph 16; and
       (b)       the Closing of the sale of the Divestment Business to the Purchaser takes place within
                 the Closing Period.
4. In order to maintain the structural effect of the Commitments, the Notifying Party shall, for a
    period of 10 years after Closing, not acquire, whether directly or indirectly, the possibility of
    exercising influence (as defined in paragraph 43 of the Remedies Notice, footnote 3) over the
    whole or part of the Divestment Business, unless, following the submission of a reasoned request
    from the Notifying Party showing good cause and accompanied by a report from the Monitoring
    Trustee (as provided in paragraph 42 of these Commitments), the Commission finds that the
    structure of the market has changed to such an extent that the absence of influence over the
    Divestment Business is no longer necessary to render the proposed concentration compatible with
    the internal market.
                                                       3
 ---pagebreak---        Structure and definition of the Divestment Business
5. The Divestment Business consists of a sorting facility for lightweight packaging waste in
    Rotterdam which is currently owned by SUEZ Recycling & Recovery Netherlands B.V. which is a
    part of SUEZ. The legal and functional structure of the Divestment Business as operated to date is
    described in the Schedule. The Divestment Business, described in more detail in the Schedule,
    includes all assets and staff that contribute to the current operation or are necessary to ensure the
    viability and competitiveness of the Divestment Business, in particular:
       (a)       all tangible and intangible assets (including intellectual property rights);
       (b)       all licences, permits and authorisations issued by any governmental organisation for
                 the benefit of the Divestment Business;
       (c)       all contracts, leases, commitments and customer orders of the Divestment Business;
                 all customer, credit and other records of the Divestment Business; and
       (d)       the Personnel.
6. In addition, the Divestment Business includes the benefit, for a transitional period of up to […]
    after Closing and on terms and conditions equivalent to those at present afforded to the
    Divestment Business, of all current arrangements under which Schwarz or its Affiliated
    Undertakings supply products or services to the Divestment Business, as detailed in the Schedule,
    unless otherwise agreed with the Purchaser. Strict firewall procedures will be adopted so as to
    ensure that any competitively sensitive information related to, or arising from such supply
    arrangements will not be shared with, or passed on to, anyone outside the providing Schwarz
    operations.
Section C.         Related commitments
       Preservation of viability, marketability and competitiveness
7. From the Effective Date until Closing, the Notifying Party shall preserve or procure the
    preservation of the economic viability, marketability and competitiveness of the Divestment
    Business, in accordance with good business practice, and shall minimise as far as possible any risk
    of loss of competitive potential of the Divestment Business. In particular Schwarz undertakes:
       (a)       not to carry out any action that might have a significant adverse impact on the value,
                 management or competitiveness of the Divestment Business or that might alter the
                 nature and scope of activity, or the industrial or commercial strategy or the investment
                 policy of the Divestment Business;
       (b)       to make available, or procure to make available, sufficient resources for the
                 development of the Divestment Business, on the basis and continuation of the existing
                 business plans;
       (c)       to take all reasonable steps, or procure that all reasonable steps are being taken,
                 including appropriate incentive schemes (based on industry practice), to encourage all
                 Key Personnel to remain with the Divestment Business, and not to solicit or move any
                                                         4
 ---pagebreak---                  Personnel to Schwarz’ remaining business. Where, nevertheless, individual members
                 of the Key Personnel exceptionally leave the Divestment Business, Schwarz shall
                 provide a reasoned proposal to replace the person or persons concerned to the
                 Commission and the Monitoring Trustee. Schwarz must be able to demonstrate to the
                 Commission that the replacement is well suited to carry out the functions exercised by
                 those individual members of the Key Personnel. The replacement shall take place
                 under the supervision of the Monitoring Trustee, who shall report to the Commission.
       Hold-separate obligations
8. The Notifying Party commits, from the Effective Date until Closing, to keep the Divestment
    Business separate from the business(es) it is retaining and to ensure that unless explicitly
    permitted under these Commitments: (i) management and staff of the business(es) retained by
    Schwarz have no involvement in the Divestment Business; (ii) the Key Personnel and Personnel of
    the Divestment Business have no involvement in any business retained by Schwarz and do not
    report to any individual outside the Divestment Business.
9. Until Closing, Schwarz shall assist the Monitoring Trustee in ensuring that the Divestment
    Business is managed as a distinct and saleable entity separate from the business(es) which
    Schwarz is retaining. Immediately after the adoption of the Decision, Schwarz shall appoint a
    Hold Separate Manager. The Hold Separate Manager, who shall be part of the Key Personnel,
    shall manage the Divestment Business independently and in the best interest of the business with a
    view to ensuring its continued economic viability, marketability and competitiveness and its
    independence from the businesses retained by Schwarz. The Hold Separate Manager shall closely
    cooperate with and report to the Monitoring Trustee and, if applicable, the Divestiture Trustee.
    Any replacement of the Hold Separate Manager shall be subject to the procedure laid down in
    paragraph 8(c) of these Commitments. The Commission may, after having heard Schwarz, require
    Schwarz to replace the Hold Separate Manager.
       Ring-fencing
10. Schwarz shall implement, or procure to implement, all necessary measures to ensure that it does
    not, after the Effective Date, obtain any Confidential Information relating to the Divestment
    Business and that any such Confidential Information obtained by Schwarz before the Effective
    Date will be eliminated and not be used by Schwarz. This includes measures vis-à-vis Schwarz’
    appointees on the supervisory board and/or board of directors of the Divestment Business. In
    particular, the participation of the Divestment Business in any central information technology
    network shall be severed to the extent possible, without compromising the viability of the
    Divestment Business. Schwarz may obtain or keep information relating to the Divestment
    Business which is reasonably necessary for the divestiture of the Divestment Business or the
    disclosure of which to Schwarz is required by law.
       Non-solicitation clause
11. The Parties undertake, subject to customary limitations, not to solicit, and to procure that
    Affiliated Undertakings do not solicit, the Key Personnel transferred with the Divestment Business
    for a period of […] after Closing.
                                                       5
 ---pagebreak---        Due diligence
12. In order to enable potential purchasers to carry out a reasonable due diligence of the Divestment
    Business, Schwarz shall, subject to customary confidentiality assurances and dependent on the
    stage of the divestiture process:
       (a)        provide to potential purchasers sufficient information as regards the Divestment
                  Business;
       (b)        provide to potential purchasers sufficient information relating to the Personnel and
                  allow them reasonable access to the Personnel.
        Reporting
13. Schwarz shall submit written reports in English on potential purchasers of the Divestment
    Business and developments in the negotiations with such potential purchasers to the Commission
    and the Monitoring Trustee no later than 10 days after the end of every month following the
    Effective Date (or otherwise at the Commission’s request). Schwarz shall submit a list of all
    potential purchasers having expressed interest in acquiring the Divestment Business to the
    Commission at each and every stage of the divestiture process, as well as a copy of all the offers
    made by potential purchasers within five days of their receipt.
14. Schwarz shall inform the Commission and the Monitoring Trustee on the preparation of the data
    room documentation and the due diligence procedure and shall submit a copy of any information
    memorandum to the Commission and the Monitoring Trustee before sending the memorandum out
    to potential purchasers.
Section D.         The Purchaser
15. In order to be approved by the Commission, the Purchaser must fulfil the following criteria:
       (a) The Purchaser shall be independent of and unconnected to the Notifying Party and its
       Affiliated Undertakings (this being assessed having regard to the situation following the
       divestiture).
       (b) The Purchaser shall have the financial resources, proven expertise and incentive to maintain
       and develop the Divestment Business as a viable and active competitive force in competition
       with the Parties and other competitors;
       (c) The acquisition of the Divestment Business by the Purchaser must neither be likely to create,
       in light of the information available to the Commission, prima facie competition concerns nor
       give rise to a risk that the implementation of the Commitments will be delayed. In particular, the
       Purchaser must reasonably be expected to obtain all necessary approvals from the relevant
       regulatory authorities for the acquisition of the Divestment Business.
16. The final binding sale and purchase agreement (as well as ancillary agreements) relating to the
    divestment of the Divestment Business shall be conditional on the Commission’s approval. When
    Schwarz has reached an agreement with a purchaser, it shall submit a fully documented and
    reasoned proposal, including a copy of the final agreement(s), within one week to the Commission
    and the Monitoring Trustee. Schwarz must be able to demonstrate to the Commission that the
    purchaser fulfils the Purchaser Criteria and that the Divestment Business is being sold in a manner
                                                         6
 ---pagebreak---     consistent with the Commission's Decision and the Commitments. For the approval, the
    Commission shall verify that the purchaser fulfils the Purchaser Criteria and that the Divestment
    Business is being sold in a manner consistent with the Commitments including their objective to
    bring about a lasting structural change in the market. The Commission may approve the sale of the
    Divestment Business without one or more Assets or parts of the Personnel, or by substituting one
    or more Assets or parts of the Personnel with one or more different assets or different personnel, if
    this does not affect the viability and competitiveness of the Divestment Business after the sale,
    taking account of the proposed purchaser.
Section E.         Trustee
       I.          Appointment procedure
17. Schwarz shall appoint a Monitoring Trustee to carry out the functions specified in these
    Commitments for a Monitoring Trustee. The Notifying Party commits not to close the
    Concentration before the appointment of a Monitoring Trustee.
18. If Schwarz has not entered into a binding sale and purchase agreement regarding the Divestment
    Business one month before the end of the First Divestiture Period or if the Commission has
    rejected a purchaser proposed by Schwarz at that time or thereafter, Schwarz shall appoint a
    Divestiture Trustee. The appointment of the Divestiture Trustee shall take effect upon the
    commencement of the Trustee Divestiture Period.
19. The Trustee shall:
       (i) at the time of appointment, be independent of the Notifying Party and its Affiliated
       Undertakings;
       (ii) possess the necessary qualifications to carry out its mandate, for example have sufficient
       relevant experience as an investment banker or consultant or auditor; and
       (iii) neither have nor become exposed to a Conflict of Interest.
20. The Trustee shall be remunerated by the Notifying Party in a way that does not impede the
    independent and effective fulfilment of its mandate. In particular, where the remuneration package
    of a Divestiture Trustee includes a success premium linked to the final sale value of the
    Divestment Business, such success premium may only be earned if the divestiture takes place
    within the Trustee Divestiture Period.
                   Proposal by Schwarz
21. No later than two weeks after the Effective Date, Schwarz shall submit the name or names of one
    or more natural or legal persons whom Schwarz proposes to appoint as the Monitoring Trustee to
    the Commission for approval. No later than one month before the end of the First Divestiture
    Period or on request by the Commission, Schwarz shall submit a list of one or more persons whom
    Schwarz proposes to appoint as Divestiture Trustee to the Commission for approval. The proposal
    shall contain sufficient information for the Commission to verify that the person or persons
    proposed as Trustee fulfil the requirements set out in paragraph 19 and shall include:
                                                       7
 ---pagebreak---         (a)       the full terms of the proposed mandate, which shall include all provisions necessary to
                  enable the Trustee to fulfil its duties under these Commitments;
        (b)       the outline of a work plan which describes how the Trustee intends to carry out its
                  assigned tasks;
        (c)       an indication whether the proposed Trustee is to act as both Monitoring Trustee and
                  Divestiture Trustee or whether different trustees are proposed for the two functions.
                   Approval or rejection by the Commission
22. The Commission shall have the discretion to approve or reject the proposed Trustee(s) and to
    approve the proposed mandate subject to any modifications it deems necessary for the Trustee to
    fulfil its obligations. If only one name is approved, Schwarz shall appoint or cause to be appointed
    the person or persons concerned as Trustee, in accordance with the mandate approved by the
    Commission. If more than one name is approved, Schwarz shall be free to choose the Trustee to be
    appointed from among the names approved. The Trustee shall be appointed within one week of the
    Commission’s approval, in accordance with the mandate approved by the Commission.
                   New proposal by Schwarz
23. If all the proposed Trustees are rejected, Schwarz shall submit the names of at least two more
    natural or legal persons within one week of being informed of the rejection, in accordance with
    paragraphs 17 and 22 of these Commitments.
                   Trustee nominated by the Commission
24. If all further proposed Trustees are rejected by the Commission, the Commission shall nominate a
    Trustee, whom Schwarz shall appoint, or cause to be appointed, in accordance with a trustee
    mandate approved by the Commission.
        II.        Functions of the Trustee
25. The Trustee shall assume its specified duties and obligations in order to ensure compliance with
    the Commitments. The Commission may, on its own initiative or at the request of the Trustee or
    Schwarz, give any orders or instructions to the Trustee in order to ensure compliance with the
    conditions and obligations attached to the Decision.
                   Duties and obligations of the Monitoring Trustee
26. The Monitoring Trustee shall:
    (i)       propose in its first report to the Commission a detailed work plan describing how it
              intends to monitor compliance with the obligations and conditions attached to the
              Decision.
                                                           8
 ---pagebreak--- (ii)  oversee, in close co-operation with the Hold Separate Manager, the on-going management
      of the Divestment Business with a view to ensuring its continued economic viability,
      marketability and competitiveness and monitor compliance by Schwarz with the
      conditions and obligations attached to the Decision. To that end the Monitoring Trustee
      shall:
        (a) monitor the preservation of the economic viability, marketability and
             competitiveness of the Divestment Business, and the keeping separate of the
             Divestment Business from the business retained by the Parties, in accordance with
             paragraphs 7 and 8 of these Commitments;
        (b) supervise the management of the Divestment Business as a distinct and saleable
             entity, in accordance with paragraph 9 of these Commitments;
        (c) with respect to Confidential Information:
               −   determine all necessary measures to ensure that Schwarz does not after the
                   Effective Date obtain any Confidential Information relating to the
                   Divestment Business,
               −   in particular strive for the severing of the Divestment Business’ participation
                   in a central information technology network to the extent possible, without
                   compromising the viability of the Divestment Business,
               −   make sure that any Confidential Information relating to the Divestment
                   Business obtained by Schwarz before the Effective Date is eliminated and
                   will not be used by Schwarz and
               −   decide whether such information may be disclosed to or kept by Schwarz as
                   the disclosure is reasonably necessary to allow Schwarz to carry out the
                   divestiture or as the disclosure is required by law;
        (d) monitor the splitting of assets and the allocation of Personnel between the
             Divestment Business and Schwarz or Affiliated Undertakings;
(iii) propose to Schwarz such measures as the Monitoring Trustee considers necessary to
      ensure Schwarz’ compliance with the conditions and obligations attached to the Decision,
      in particular the maintenance of the full economic viability, marketability or
      competitiveness of the Divestment Business, the holding separate of the Divestment
      Business and the non-disclosure of competitively sensitive information;
(iv)  review and assess potential purchasers as well as the progress of the divestiture process
      and verify that, dependent on the stage of the divestiture process:
        (a) potential purchasers receive sufficient and correct information relating to the
             Divestment Business and the Personnel in particular by reviewing, if available, the
             data room documentation, the information memorandum and the due diligence
             process, and
        (b) potential purchasers are granted reasonable access to the Personnel;
                                                  9
 ---pagebreak---     (v)      act as a contact point for any requests by third parties, in particular potential purchasers, in
             relation to the Commitments;
    (vi)     provide to the Commission, sending Schwarz a non-confidential copy at the same time, a
             written report within 15 days after the end of every month that shall cover the operation
             and management of the Divestment Business as well as the splitting of assets and the
             allocation of Personnel so that the Commission can assess whether the business is held in
             a manner consistent with the Commitments and the progress of the divestiture process as
             well as potential purchasers;
    (vii)    promptly report in writing to the Commission, sending Schwarz a non-confidential copy at
             the same time, if it concludes on reasonable grounds that Schwarz is failing to comply
             with these Commitments;
    (viii)   within one week after receipt of the documented proposal referred to in paragraph 16 of
             these Commitments, submit to the Commission, sending Schwarz a non-confidential copy
             at the same time, a reasoned opinion as to the suitability and independence of the
             proposed purchaser and the viability of the Divestment Business after the Sale and as to
             whether the Divestment Business is sold in a manner consistent with the conditions and
             obligations attached to the Decision, in particular, if relevant, whether the Sale of the
             Divestment Business without one or more Assets or not all of the Personnel affects the
             viability of the Divestment Business after the sale, taking account of the proposed
             purchaser;
    (ix)     assume the other functions assigned to the Monitoring Trustee under the conditions and
             obligations attached to the Decision.
27. If the Monitoring and Divestiture Trustee are not the same [legal or natural] persons, the
    Monitoring Trustee and the Divestiture Trustee shall cooperate closely with each other during and
    for the purpose of the preparation of the Trustee Divestiture Period in order to facilitate each
    other's tasks.
                   Duties and obligations of the Divestiture Trustee
28. Within the Trustee Divestiture Period, the Divestiture Trustee shall sell at no minimum price the
    Divestment Business to a purchaser, provided that the Commission has approved both the
    purchaser and the final binding sale and purchase agreement (and ancillary agreements) as in line
    with the Commission's Decision and the Commitments in accordance with paragraphs 17 and 16
    of these Commitments. The Divestiture Trustee shall include in the sale and purchase agreement
    (as well as in any ancillary agreements) such terms and conditions as it considers appropriate for
    an expedient sale in the Trustee Divestiture Period. In particular, the Divestiture Trustee may
    include in the sale and purchase agreement such customary representations and warranties and
    indemnities as are reasonably required to effect the sale. The Divestiture Trustee shall protect the
    legitimate financial interests of Schwarz, subject to the Notifying Party unconditional obligation to
    divest at no minimum price in the Trustee Divestiture Period.
29. In the Trustee Divestiture Period (or otherwise at the Commission’s request), the Divestiture
    Trustee shall provide the Commission with a comprehensive monthly report written in English on
                                                        10
 ---pagebreak---     the progress of the divestiture process. Such reports shall be submitted within 15 days after the end
    of every month with a simultaneous copy to the Monitoring Trustee and a non-confidential copy to
    the Notifying Party.
       III.       Duties and obligations of the Parties
30. Schwarz shall provide and shall cause its advisors to provide the Trustee with all such co-
    operation, assistance and information as the Trustee may reasonably require to perform its tasks.
    The Trustee shall have full and complete access to any of Schwarz’ or the Divestment Business’
    books, records, documents, management or other personnel, facilities, sites and technical
    information necessary for fulfilling its duties under the Commitments and Schwarz and the
    Divestment Business shall provide the Trustee upon request with copies of any document.
    Schwarz and the Divestment Business shall make available to the Trustee one or more offices on
    their premises and shall be available for meetings in order to provide the Trustee with all
    information necessary for the performance of its tasks.
31. Schwarz shall provide the Monitoring Trustee with all managerial and administrative support that
    it may reasonably request on behalf of the management of the Divestment Business. This shall
    include all administrative support functions relating to the Divestment Business which are
    currently carried out at headquarters level. Schwarz shall provide and shall cause its advisors to
    provide the Monitoring Trustee, on request, with the information submitted to potential
    purchasers, in particular give the Monitoring Trustee access to the data room documentation and
    all other information granted to potential purchasers in the due diligence procedure. Schwarz shall
    inform the Monitoring Trustee on possible purchasers, submit lists of potential purchasers at each
    stage of the selection process, including the offers made by potential purchasers at those stages,
    and keep the Monitoring Trustee informed of all developments in the divestiture process.
32. Schwarz shall grant or procure Affiliated Undertakings to grant comprehensive powers of
    attorney, duly executed, to the Divestiture Trustee to effect the sale (including ancillary
    agreements), the Closing and all actions and declarations which the Divestiture Trustee considers
    necessary or appropriate to achieve the sale and the Closing, including the appointment of advisors
    to assist with the sale process. Upon request of the Divestiture Trustee, Schwarz shall cause the
    documents required for effecting the sale and the Closing to be duly executed.
33. Schwarz shall indemnify the Trustee and its employees and agents (each an “Indemnified Party”)
    and hold each Indemnified Party harmless against, and hereby agrees that an Indemnified Party
    shall have no liability to Schwarz for, any liabilities arising out of the performance of the Trustee’s
    duties under the Commitments, except to the extent that such liabilities result from the wilful
    default, recklessness, gross negligence or bad faith of the Trustee, its employees, agents or
    advisors.
34. At the expense of Schwarz, the Trustee may appoint advisors (in particular for corporate finance
    or legal advice), subject to Schwarz’ approval (this approval not to be unreasonably withheld or
    delayed) if the Trustee considers the appointment of such advisors necessary or appropriate for the
    performance of its duties and obligations under the Mandate, provided that any fees and other
    expenses incurred by the Trustee are reasonable. Should Schwarz refuse to approve the advisors
    proposed by the Trustee the Commission may approve the appointment of such advisors instead,
    after having heard Schwarz. Only the Trustee shall be entitled to issue instructions to the advisors.
                                                         11
 ---pagebreak---     Paragraph 33 of these Commitments shall apply mutatis mutandis. In the Trustee Divestiture
    Period, the Divestiture Trustee may use advisors who served Schwarz during the Divestiture
    Period if the Divestiture Trustee considers this in the best interest of an expedient sale.
35. Schwarz agrees that the Commission may share Confidential Information proprietary to Schwarz
    with the Trustee. The Trustee shall not disclose such information and the principles contained in
    Article 17 (1) and (2) of the Merger Regulation apply mutatis mutandis.
36. The Notifying Party agrees that the contact details of the Monitoring Trustee are published on the
    website of the Commission's Directorate-General for Competition and they shall inform interested
    third parties, in particular any potential purchasers, of the identity and the tasks of the Monitoring
    Trustee.
37. For a period of 10 years from the Effective Date the Commission may request all information
    from the Parties that is reasonably necessary to monitor the effective implementation of these
    Commitments.
        IV.       Replacement, discharge and reappointment of the Trustee
38. If the Trustee ceases to perform its functions under the Commitments or for any other good cause,
    including the exposure of the Trustee to a Conflict of Interest:
    (a) the Commission may, after hearing the Trustee and Schwarz, require Schwarz to replace the
    Trustee; or
    (b) Schwarz may, with the prior approval of the Commission, replace the Trustee.
39. If the Trustee is removed according to paragraph 38 of these Commitments, the Trustee may be
    required to continue in its function until a new Trustee is in place to whom the Trustee has
    effected a full hand over of all relevant information. The new Trustee shall be appointed in
    accordance with the procedure referred to in paragraphs 17-24 of these Commitments.
40. Unless removed according to paragraph 38 of these Commitments, the Trustee shall cease to act as
    Trustee only after the Commission has discharged it from its duties after all the Commitments
    with which the Trustee has been entrusted have been implemented. However, the Commission
    may at any time require the reappointment of the Monitoring Trustee if it subsequently appears
    that the relevant remedies might not have been fully and properly implemented.
Section F.        The review clause
41. The Commission may extend the time periods foreseen in the Commitments in response to a
    request from Schwarz or, in appropriate cases, on its own initiative. Where Schwarz requests an
    extension of a time period, it shall submit a reasoned request to the Commission no later than one
    month before the expiry of that period, showing good cause. This request shall be accompanied by
    a report from the Monitoring Trustee, who shall, at the same time send a non-confidential copy of
    the report to the Notifying Party. Only in exceptional circumstances shall Schwarz be entitled to
    request an extension within the last month of any period.
                                                        12
 ---pagebreak--- 42. The Commission may further, in response to a reasoned request from the Notifying Party showing
    good cause waive, modify or substitute, in exceptional circumstances, one or more of the
    undertakings in these Commitments. This request shall be accompanied by a report from the
    Monitoring Trustee, who shall, at the same time send a non-confidential copy of the report to the
    Notifying Party. The request shall not have the effect of suspending the application of the
    undertaking and, in particular, of suspending the expiry of any time period in which the
    undertaking has to be complied with.
Section G.      Entry into force
43. The Commitments shall take effect upon the date of adoption of the Decision.
       ……………………………………
       (Signed)
       duly authorised for and on behalf of
       SB PreZero GmbH & CO. KG, PreZero International GmbH, SB Dienstleistung KG
                                                    13
 ---pagebreak---                                      SCHEDULE
1. The Divestment Business as operated to date has the following legal and
   functional structure:
1) The Divestment Business consists of a sorting facility for light weight packaging waste
   located in Rotterdam.
2) The Divestment Business is currently part of the Recycling & Recovery Operations of
   SUEZ in the Netherlands. The Divestment Business sorts light weight packaging waste
   from the Netherlands, and extracts several different recyclable materials, in
   particular plastic and metal fractions, which are then available for further recycling.
   For approx. […]% of the volumes, the Divestment Business handles the outbound
   contracts, i.e. the further recycling. For the remaining […]%, the customer arranges
   for further recycling and the Divestment Business is only contracted with the sorting
   of the LWP..
3) […].
4) The transfer of the Divestment Business will take place in the form of a transfer of
   shares, but not of the entity […]. […] includes […] and a large number of […], i.e. also
   those with no relation to the LWP sorting business in Rotterdam. Therefore, a new
   entity will be established, to which the Divestment Business, including the personnel,
   the relevant assets, the relevant licenses and permits (to the extent legally possible),
   the lease agreement for the site on which the Divestment Business operates, and the
   relevant contracts will be transferred. This new entity will be sold to the Purchaser.
   This facilitates the divestment process for the Purchaser and allows a quick
   implementation
5) Thus, the entity that currently holds the […] licences, shall not be transferred as such,
   as the Divestment Business is only a small part of it. The […] licenses cannot be
   transferred to another entity, because such licenses are granted to the specific
   requesting legal entity.[Confidential information on details of the commitment].
6) An organisational chart of the Divestment Business including the number of
   employees is included below.
   [Confidential information on details of the commitment]
7) The Divestment Business is currently operated from an industrial site on which also
   other facilities are operated which are neither part of nor relevant for the
   Divestment Business, as shown in more detail below. For the implementation of the
   Commitments, Schwarz proposes to divest the entire site on which the Divestment
   Business operates, including other activities not relevant for the Divestment Business
   and allowing for a lease-back of the other activities by Schwarz (unless the Purchaser
   prefers another solution). This is also explained below.
2. In accordance with paragraph 5 of these Commitments, the Divestment Business
   includes, but is not limited to:
                                          14
 ---pagebreak--- (a) the following main tangible assets:
8)  The Divestment Business is located at Waalhavenweg 50, Rotterdam, Netherlands.
    The site Waalhavenweg 50 (the “Rotterdam Site”) is owned [Confidential information
    on details of the commitment].
    […]
9)  The Divestment Business includes the light weight packaging sorting facility (“LWP
    Sorting Plant”), which is located in the main building (“Main Building”) on the
    Rotterdam Site (large building in the picture above) including the lease agreement.
    The LWP Sorting Plant consists of (a) a warehouse, (b) sorting machinery, (c)
    sprinkler, (d) coalfilter (to reduce odour), (e) compactor, (f) shredder, (g) climate
    control, (h) workshop .
10) The LWP sorting equipment / machinery forms the main part of the tangible assets of
    the Divestment Business. The figure gives an illustrative overview of the sorting plant
    process and the relevant machinery.
11) In addition to the equipment owned by the Divestment Business, as outlined above,
    for the operation of the Divestment Business, there is also working equipment leased
    by the Divestment Business, including […].
12) Other facilities and equipment of the Target, which are not part of the Divestment
    Business / LWP Sorting Plant and are not relevant for the operation or the
    competitive viability of the Divestment Business with a view to LWP sorting (“Other
    Business”) are also located on the Rotterdam Site. This Other Business includes […],
    including […] which is located on the Rotterdam Site next to the LWP Sorting Plant
    (and separate from the Main Building).
13) There are limited facilities shared by the Divestment Business and the Other Business
    at the Rotterdam Site (“Shared Facilities”). The Shared Facilities include a […], which
    is used by both the Divestment Business and the Other Business, […].
                                           15
 ---pagebreak---  (b) the following main intangible assets:
14)  There are no relevant essential intangible assets. There are no intellectual property
     rights used in conducting the Divestment Business. To the extent that the Divestment
     Business currently operates under a brand name of its current owner and operator,
     such brand names are not essential for its viability and competitiveness. Any
     purchaser can operate the Divestment Business under its own brand – there are no
     relevant competitive advantages associated with the current brand name which
     would not also be associated with the sorting facility (i.e. the Divestment Business)
     itself.
(c)  the following main licences, permits and authorisations:
15)  The Divestment Business is authorized to sort […] kt of LWP in the LWP Sorting Plant.
     As regards the Other Business, the Target is authorized to […] (which is not relevant
     for the Divestment Business / LWP Sorting Plant). These authorizations have no
     expiration date.
16)  The Rotterdam Site is licensed to store a maximum of […] kt or […] m3 of all waste
     flows (plastics and non-plastics) at any time. Storage is licensed either inside, outside,
     in bulk, stored in containers or outside but protected against rain. Licensed storage
     method is dependent on type of waste. […].
17)  The Rotterdam Site has also a number of […] licenses, for mixed plastic packaging and
     other materials ([…]). Only the […] license for mixed plastic packaging is relevant for
     the Divestment Business / LWP Sorting Plant. […].
(d)  the following main         contracts,     agreements,     leases,   commitments       and
     understandings:
18)  The Divestment Business has currently […] contracts for the sorting of light weight
     packaging (i.e. the sole business activity of the Divestment Business) (the “Sorting
     Contracts”). […] These contracts will be transferred to the Purchaser.
19)  The Divestment Business has a supply contract for the following trading flows:
     […].
     […].
     […].
20)  The Rotterdam Site is subject to […].
21)  There are the following lease contracts for working equipment leased by the
     Divestment Business: […].
(e)  the following customer, credit and other records:
22)  […].
(f)  the following Personnel:
                                            16
 ---pagebreak--- 23)  The Personnel includes the staff included in the organisational chart below (approx.
     […] employees […]).
     [Confidential organisational chart of the Divestment Business]
24)  […].
 (g) the following Key Personnel:
25)  The Key Personnel for the Divestment Business are (i) the "Plant Manager", (ii) the
     "Production Manager", (iii) the "Watch Leaders", and (iv) the "Head of Maintenance".
     […], but hired externally by the Divestment Business. […]. The relevant employees will
     be transferred to new entity that will be divested. The identified employees are 100%
     working for LWP Sorting Plant in Rotterdam. The Head of Maintenance will also be
     transferred.
26)  In addition, a “Value Chain Coordinator Plastics” (the “VCCP”) is relevant for (but not
     employed by) the Divestment Business, as he organizes the in-bound flow of to be
     sorted material and the outbound flow of sorted material and also handles the
     management of commercial contracts. […].
 (h) the arrangements for the supply with the following products or services by
     Schwarz or Affiliated Undertakings for a transitional period of up to […] after
     Closing:
27)  For the Divestment Business to continue to be economically viable and competitive,
     the following services are required and shall be provided by Schwarz for a transitional
     period                                   after                                  Closing:
     […]
     […]
     […]
     […]
3.   The Divestment Business shall not include:
28)  The Target has also a contract with […] for the sorting of LWP ([…]). These volumes
     are sorted only in SUEZ's facility in […]. This contract is not part of the Divestment
     Business and the contracted volumes will remain to be sorted in the […] facility
     (which will be retained by SUEZ post-Transaction).
29)  As explained, at the Rotterdam Site, besides the Divestment Business, also the Other
     Business is currently operated.
30)  Schwarz proposes the following scenario for the implementation of the divestment
     of the Divestment Business:
31)  Schwarz divests […], including the Divestment Business, i.e. the LWP Sorting Plant
     including all relevant assets, the Sorting Contracts, and the relevant Personnel,
     [confidential information on the details of the commitment].
32)  In case the Purchaser prefers a scenario [confidential information on the details of
     the commitment].
                                           17
 ---pagebreak--- 4. If there is any asset or personnel which is not be covered by paragraph 2 of this
   Schedule but which is both used (exclusively or not) in the Divestment Business
   and necessary for the continued viability and competitiveness of the Divestment
   Business, that asset or adequate substitute will be offered to potential purchasers.
                                       18