CELEX: 31992M0235
Language: en
Date: 1992-09-04 00:00:00
Title: COMMISSION DECISION of 04.09.1992 declaring a concentration to be compatible with the common market (Case No IV/M.235 - ELF AQUITAINE - THYSSEN / MINOL) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31992M0235

COMMISSION DECISION of 04.09.1992 declaring a concentration to be compatible with the common market (Case No IV/M.235 - ELF AQUITAINE - THYSSEN / MINOL) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 232 , 10/09/1992 P. 0000

 COMMISSION DECISION of 04.09.1992 declaring a concentration to  be compatible with the common market (Case No IV/M.235 - ELF  AQUITAINE - THYSSEN / MINOL) according to Council Regulation  (EEC) No 4064/89  (Only the English text is authentic)  The paper version of the decision is available through the  sales offices of the Office of Official Publications of the  European Communities. PUBLIC VERSION MERGER PROCEDURE ARTICLE 6(1)(b) DECISION Registered with advice of delivery To the notifying party Dear Sirs, Subject: <ind> Case n  IV/M.235 - Elf Aquitaine - Thyssen /  Minol <ind> Your notification of 03.08.1992 pursuant to article 4 of  Council Regulation N  4064/89  1.<ind> The proposed concentration concerns the acquisition by  Elf Mineraloel GmbH (EMO), a  subsidiary of Société Nationale  Elf Aquitaine (SNEA), of Minol Mineraloelhandel AG (Minol) and  other assets held in trust by the Treuhandanstalt.  The  Treuhandanstalt is a trust institution created under public law  by the German State in March 1991 to hold in trust as State  property the shares of formerly state-owned enterprises in the  former GDR, and to privatise, reorganise and administrate such  assets.  Thyssen Handel Berlin GmbH (THB), a company of the  Thyssen group,  is also involved in the operation.  Description of the operation  2.<ind> The operation forms part of the privatisation of East  German industry following reunification. As result of the deal,  Elf will invest 4,5 billion DM in the construction of a new  refinery at Leuna and it will acquire Minol's distribution  network of petroleum products in East Germany.  <ind> More specifically, the agreement signed on 23 July 1992  between, on the one hand, a consortium established between  the  Elf and Thyssen groups, and, on the other hand,  Treuhandanstalt, Leuna Werke and Minol [Leuna Werke and Minol  are two formerly state-owned East German companies whose shares  are held in trust by the Treuhandanstalt.], comprises the  following operations which all form an integral part of the  deal:  <ind> -<ind> EMO and THB will acquire 98% and 2% respectively  of the capital of Minol, a company engaging in the marketing  and distribution of petroleum products through a network of  service stations; <ind> -<ind> Leuna 2000, a limited partnership between EMO  (2/3) and THB (1/3) will acquire certain land and ancillary  facilities for the purpose of building  and operating a new  refinery at Leuna. The existing refining facilities at Leuna  and Zeitz will be managed by RMG Raffinerie 2000 Management  GmbH (RMG), a company owned by EMO (2/3) and THB (1/3), pending  construction of the new refinery,  and they will be dismantled  thereafter; <ind> -<ind> Leuna 2000 will also acquire a 52,5% shareholding  in Mineraloelverbundleitung GmbH (MVL), which owns and operates  a  pipeline and storage network in  the new Bundeslaender.   These MLV shares are currently held in trust by the  Treuhandanstalt.  From an economic point of view, the operation  of the MVL pipeline is linked to the operation of the  refineries at Leuna and Zeitz.  The parties  3.<ind> SNEA and the companies in the Elf group operate in  three main sectors, namely    petroleum products (exploration,  production, refining and distribution), chemicals  (petrochemicals and fine and specialty chemicals) and hygiene- health (pharmaceuticals, parapharmaceuticals, cosmetics and  bio-industries). The main activities of the Thyssen Group  include production of steel, specialty steel, capital goods and  manufactured products, trading in scrap raw materials and  steel, project management and  construction of process plants  and pipelines.  4. <ind> After examination of the notification, the Commission  has concluded that the notified operation falls within the  scope of Council Regulation N  4064/89 and does not raise  serious doubts as to its compatibility with the common market.  I.<ind> CONCENTRATION  5.<ind> Since,  following the completion of the operation,   EMO, either directly or through Leuna 2000 and RMG,  will  acquire control of Minol and the other assets involved, the  operation constitutes a concentration within the meaning of  Article 3(1)(b) of the Regulation.  II.<ind> COMMUNITY DIMENSION  6. <ind> The operation has a Community dimension. The worldwide  turnover of the SNEA group in 1991 was 28,777 million ECU and  the corresponding figure for Minol was about 1,277 million ECU.  The SNEA group had a Community-wide turnover of 17,411 million  ECU and all of Minol's turnover was realized in the Community.  The two undertakings did not achieve more than 2/3 of their  aggregate Community-wide turnover within one and the same  Member State.   III. COMPATIBILITY WITH THE COMMON MARKET  7.<ind> The operation relates to the privatisation of Minol and  other assets by the Treuhandanstalt. The only activities  affected by the operation are refining and distribution of  petroleum products.  <ind> The process of refining leads to the production of a  number of petroleum products, of which the following are   affected by the operation: motor fuels, fuel oil, liquid  petroleum gas, bitumens, lubricants, jet fuels, bunkers  and  naphtha.   8.<ind> The undertakings to be acquired are active only in the  new Bundeslaender. However, in the present case  it is not  necessary to determine the exact scope of the relevant  geographic market, since, as set out below, even under the  narrowest market definition no dominant position will be  created or reinforced as result of the proposed concentration.  Refining of petroleum products  9.<ind> The Elf group's share of the total German refining  capacity is currently estimated at about 1,5%. In the short to  medium term after the completion of the operation, Elf's share  is expected to increase to 5%-8%.  <ind> Even assuming that the relevant geographic market were  the new Bundeslaender, the proposed concentration will not  create or reinforce a dominant position in that market.  Elf's  current share of the East German refining capacity through its  8.33% shareholding in PCK Schwedt is estimated at 5%.  PCK  Schwedt is a refinery owned by a joint venture in which DEA and  VEBA are the main shareholders.  Until 1996, when the new  refinery at Leuna is built, Elf's share of the East German  refining capacity will increase to about 45%, through its  operation and management of the Leuna and Zeitz refineries.   When the new refinery is built and the Leuna and Zeitz  refineries are dismantled, Elf's share will amount to 30% at  the most.  In view of the above and of the fact that the  remaining refining capacities will be held by strong  competitors, the Commission considers that there will be no  creation or strengthening of a dominant position in East  Germany.  Distribution of petroleum products  10.<ind> Elf's market share of the German market,  both at  present and following completion of the proposed concentration,   is low. Elf's share is currently estimated at 2% of the total  consumption of petroleum products in Germany, and between 2%  and 10.2% in narrower product sub-markets. Its present network  market share is estimated at about 2%. Combined with that of  Minol, it will reach about 10%, and the parties estimate it at  around 6-8% by the end of the century.  11.<ind> In East Germany Elf will take over Minol's  distribution network of service stations, which is composed of  896 stations out of a total of about 1340 stations in the whole  of East Germany. In 1991 the estimated market share of Minol in  East Germany was 76% in terms of volume of sales (77% of sales  of gasoline, 75% of sales of gasoil).     <ind> However,  these market shares are being eroded and they  will decrease further, because of the market changes taking  place in East Germany.  In fact, in terms of market power,  Minol's current network is less important than its size would  indicate.  Moreover, new and important competitors have entered  or are planning to enter the market.   <tab> (i)<ind> Out of the 878 stations operated by Minol or  under Minol's brand name (excluding highway service stations)  Minol owns only 265, which represent 45,9% of Minol's sales of  gasoline and 41% of Minol's sales of gasoil.  [Over 100.  The  exact figure is a business secret] of these stations are  currently the object of restitution claims, [Confidential  information relating to stations which are currently the object  of restitution claims.].  <ind> <ind> Most of the remaining stations are owned by local  communities, private persons or cooperatives and they are  operated by Minol under short-term (generally one-year) dealer  contracts (460 stations). Loss of contract to competition is,  as a result, possible. In fact, during the period from 1/1/1991  to 30/6/1992 Minol lost 114 of these stations to competitors  and independent operators.   <ind> <ind> 122 stations are currently operated by 6 Joint  Ventures between Minol, on the one hand, and Aral, DEA, Agip,  May and Wahrlich, on the other hand.  [Details of the joint  venture agreements which constitute business secrets.].  <ind> <ind> Finally,  the size of Minol's network will be  further reduced, because under the agreement with the  Treuhandanstalt, Elf is obliged to sell 10% of Minol's service  stations to medium sized competitors (average quality mix).  <ind> <ind> The quality of the service stations in Minol's  network, in terms of equipment, location and other criteria,   is varied. A large part of the service stations requires  restructuring in order to be able to meet Western standards.  According to a report prepared for the parties by the Dresdner  Bank, [Deleted business secret.] stations were qualified as  "transfer stations" (to be divested) and the ability of further  stations to survive was questioned.  [Deleted business  secrets.].  <ind> (ii)<ind> Since 1990 291 new service stations have been  built in East Germany by important competitors (Esso, Shell,  BP, Aral, DEA, Agip, Total, Fina, Jet) and 359 further stations  are under construction or concrete planning. According to Elf's  competitors, by 1996, 1225 new service stations will be in  operation in East Germany.  <tab> <ind> Elf itself is planning to build [Deleted business  secret] new service stations by 1996 to counterbalance part of  the above mentioned losses of service stations from the  existing Minol network.  In order to compensate partly for  these losses the Treuhandanstalt has agreed to offer Elf  suitable sites for the construction of new service stations.   Elf has stated in this respect that these sites are intended  for the replacement of some of the lost service stations and  not for the construction of additional stations.  The  Commission has taken this statement into account in assessing  the market situation in East Germany.  <ind> The market evolution in East Germany is demonstrated by  Minol's loss of market share within a short period of time.   Only in the first half of 1992 Minol's estimated share fell  to  59% of total East German sales (65% of sales of gasoline, 56%  of sales of gasoil), and, during the same period the share of  its competitors doubled [If independent operators are excluded  and market shares are calculated on the basis of the sales made  by service stations operated by Minol or other petrol  companies, the evolution of market shares would be the  following: <tab> -<ind> in terms of gasoline: in 1991, Minol 85%, others  15%;  in the first half of 1992, Minol 65%, others 35%. <tab> -<ind> in terms of gasoil:  in 1991, Minol 75%, others  25%;  in the first half of 1992, Minol 66%, others 44%.].  For  the reasons set out above, it is expected that Minol's share  will decrease further in the future (Elf has stated that it  expects to maintain a 34% market share by 1996 and  a 25%  market share by the year 2000).   <ind> As a result, it is concluded that Minol's current market  shares are subject to a downward trend and Minol's real market  power in the East German market for distribution of petroleum  products is less than these shares would indicate.  12.<ind> Competitors argue that Elf's right, under the  Management Agreement with the Treuhandanstalt, to manage the  existing refineries at Leuna and Zeitz,  pending construction  of the new refinery, gives Elf access to the products of the  refineries on most favourable terms and, as a result, it  creates an unfair competitive advantage.  This will happen  because the losses of the refineries will be borne by the  Treuhandanstalt and Elf will therefore be able to supply its  own service stations under conditions more favourable than  market conditions, at the expense of the tax-payer.  <ind> However, it is considered that Elf will not be able to  operate the refineries to its own advantage for the following  reasons.  The Management Agreement provides that the manager of  the refineries, namely Elf, shall try to obtain the most  favourable conditions for the refineries with regard to all  sales and supply contracts, and that it shall deal with  affiliated companies at arm's length and on commercially  reasonable terms. In order to ensure that these safeguards are  properly enforced, the Treuhandanstalt has stated in a letter  to the Commission that it shall exercise its inspection rights  under the Management Agreement both by an internal team of  experts and through certification by an independent  consultancy. The aim of the inspection will be to verify, on  the basis of  objective market data (such as Platt, Oil Market  Report, Reuter),  that the products of the refineries are  priced according to market conditions.  13.<ind> Minol's distribution network also includes 50 depots  of various sizes of a total capacity of about 504,900 m3. The  three largest depots representing 65% of Minol's total capacity  are Rostock (137,500 m3), Seefeld (60,000 m3) and Hartmannsdorf  (130,700 m3). 16 depots, including the one in Rostock, are  currently the object of restitution claims.   <ind> The total capacity of the depots operated by independent  companies in East Germany is estimated at about 240,000 m3.  However, competitors argue that, in the short-term, this  capacity is not considered to be sufficient to meet supply  needs, at least in certain parts of East Germany, for the  following reasons. First, a large part of that capacity can  only be used for the storage of diesel and heating oil, and not  for the storage of gasoline for which a special license is  required. Second, depots can be considered as substitutable  sources of supply only within a certain range (normally about  100 to 150 km, less in East Germany, in view of poor road  conditions), especially for service stations with small storage  capacity. Supplies from West Germany (including West Berlin),  to East Germany were made in the past only to a limited extent  (up to 25% in the last six months). Moreover, although several  depots of significant capacity are planned to be built by oil  companies or independent operators in East Germany, it is  estimated that they will not be operational for another few  years.   <ind> On the basis of the above it could therefore be argued  that, over the next few years, Elf's competitors in East  Germany would depend to a certain extent on Minol's depots for  their supplies.  However, at the Commission's request, Elf has  sent to competitors which operate service stations in the new  Bundeslaender legally binding offers to enter into a general  agreement on the use of Minol's depot facilities. Under these  agreements, Elf will engage to give competitors throughput  rights and supplies from Minol's depots on commercially  acceptable terms based on local conditions (cost + margin).   Arbitration by mutually agreed independent experts will be  provided in case of disputes relating to the application of the  agreement.  The general agreement shall be valid for an initial  period of two years, to be extended if the competitor has not  developed sufficient alternative solutions for reasons outside  its control. The offer will be open for at least one month  after it has been made.  14.<ind> With regard to highway service stations in East  Germany, the situation is as follows. Out of a total of 44  stations Minol operates 18 on its own, and 16 more stations  through joint ventures with competitors. The number of service  stations operated by competitors alone were 14 as of July  1992.  <ind> It is doubtful whether there is a separate relevant  market for highway service stations in Germany, because no toll  system exists and drivers can easily use service stations off  the highways.  The exact definition of the relevant market can  be left open, however, since even under a narrow market  definition, no dominant position will be created or reinforced  for the following reasons:   <tab> -<ind> after the dissolution of the joint ventures, Minol  will operate about half of the service stations concerned; <tab> -<ind> competitors are planning to open new highway  service stations in East Germany in the near future; <tab> -<ind> under the agreement with the Treuhandanstalt, the  18 stations operated by Minol will be  transferred to the  Autobahn Holding Company, which intends to lease them to Minol  under 25-year lease agreements. It is considered that this  intended lease constitutes a separate operation which falls  outside the scope of the notifed concentration.  15.<ind> In view of the parties' position in the markets for  refining and distribution of petroleum products as well as the  ongoing  market evolution in East Germany,  and on the basis of  the above-mentioned statements of the Treuhandanstalt and the  legally binding and  irrevocable offers made by Elf, it is  concluded that the proposed concentration will not create or  strengthen a dominant position as a result of which effective  competition would be significantly impeded in the common market  or in a substantial part of it.  For the above reasons, the Commission has decided not to oppose  the notified concentration and to declare it compatible with  the common market. This decision is adopted in application of  Article 6 (1) (b) of Council Regulation No. 4064/89.  For the Commission,