CELEX: 32019M9238
Language: en
Date: 2019-06-05 00:00:00
Title: Commission Decision of 05/06/2019 declaring a concentration to be compatible with the common market (Case No COMP/M.9238 - INEOS Enterprises / Ashland LLC) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                Brussels, 05.06.2019
                                                                C(2019) 4270 final
                                                                                 PUBLIC VERSION
                                                                   In the published version of this decision,
                                                                   some information has been omitted
                                                                   pursuant to Article 17(2) of Council
                                                                   Regulation      (EC)      No     139/2004
                                                                   concerning non-disclosure of business
                                                                   secrets     and      other     confidential
                                                                   information. The omissions are shown
                                                                   thus […]. Where possible the
                                                                   information omitted has been replaced by
                                                                   ranges of figures or a general description.
                                                                To the notifying party
Subject:            Case M.9238 - INEOS Enterprises Holdings Limited / Ashland’s Global
                    Compound Resin Business and Manufacturing Facility in Marl
                    Commission decision pursuant to Article 6(1)(b) of Council Regulation
                    No 139/20041 and Article 57 of the Agreement on the European Economic
                    Area2
Dear Sir or Madam,
(1)       On 25 April 2019, the European Commission received notification of a proposed
          concentration pursuant to Article 4 of the Merger Regulation by which INEOS
          Enterprises Holdings Limited, part of the INEOS group of companies ("INEOS",
          Switzerland), acquires within the meaning of Article 3(1)(b) of the Merger
          Regulation control of two distinct businesses of Ashland Global Holdings Inc.
          ("Ashland", US), namely (i) Ashland’s global composites business as well as (ii) its
          manufacturing plant located in Marl (Germany) by way of a purchase of shares and
          assets (“the Transaction”).3 In this decision, INEOS is also referred to as the
          “Notifying Party”; INEOS and Ashland are collectively designated hereinafter as the
          "Parties"; (i) and (ii) are together referred to as the "Target".
1    OJ L 24, 29.1.2004, p. 1 (the 'Merger Regulation'). With effect from 1 December 2009, the Treaty on the
     Functioning of the European Union ('TFEU') has introduced certain changes, such as the replacement of
     'Community' by 'Union' and 'common market' by 'internal market'. The terminology of the TFEU will be
     used throughout this decision.
2    OJ L 1, 3.1.1994, p. 3 (the 'EEA Agreement').
3    Publication in the Official Journal of the European Union No C 151, 03.05.2019, p. 14.
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)   INEOS is a major multinational chemicals company specialized in the manufacture
      of petrochemicals, specialty chemicals and oil products, globally.
(3)   The Target is active globally in the manufacture of vinyl ester resins ("VER"), gel
      coats, unsaturated polyester resins ("UPR"), benzene and maleic anhydride
      ("MAN"), which are intermediate chemical products used in the production of
      composite resins. It is also active in the manufacture, in Marl (Germany), of 1,4-
      butane-diol ("BDO"), 2-butene-1,4-diol ("B2D"), 2-butyne-1,4-diol ("B3D") and
      tetrahydrofuran ("THF"), which are input chemicals for engineering plastics,
      thermoplastic elastomers and specialty solvents.
2.    THE TRANSACTION
(4)   The Transaction consists in the acquisition of sole control by INEOS of parts of
      Ashland, namely (i) Ashland’s global composites business as well as (ii) Ashland’s
      manufacturing plant located in Marl (Germany) through a stock and asset purchase
      agreement reached on 14 November 2018. The Target is a business with a market
      presence, to which turnover can be clearly attributed.
(5)   The Transaction therefore constitutes a concentration within the meaning of Article
      3(1)(b) of the Merger Regulation.
3.    EU DIMENSION
(6)   The undertakings concerned have a combined aggregate worldwide turnover of more
      than EUR 5 000 million4 (INEOS: EUR [35 000 – 40 000] million; the Target: EUR
      [900 – 1 000] million). Each of them has an EU-wide turnover in excess of EUR 250
      million (INEOS: EUR [20 000 – 25 000] million; the Target: EUR [300 - 350]
      million), but they do not achieve more than two-thirds of their aggregate EU-wide
      turnover within one and the same Member State.
(7)   The notified operation therefore has an EU dimension pursuant to Article 1(2) of the
      Merger Regulation.
4.    RELEVANT MARKETS
(8)   Within the EEA, the Transaction leads to only minor horizontal overlaps in each of
      the separate markets for MAN5, benzene6, acetylene7 and formaldehyde.8 However,
4   Turnover calculated in accordance with Article 5 of the Merger Regulation and the Commission
    Consolidated Jurisdictional Notice (OJ C 95, 16.4.2008, p. 1).
5   Both Parties manufacture MAN in the US and have only a de minimis presence in the EEA. The
    Parties’ combined market share would remain [0-5]% at global level and less than [5-10]% at EEA
    level.
6   The Target produces de minimis quantities of benzene. The Parties’ combined market share would
    remain, in any event, well less than [10-20]% at global level and [0-5]% at EEA level.
7   See section 5.2.2.1 of the present decision.
8   See section 5.2.3.1 of the present decision.
                                                        2
 ---pagebreak---         none of these markets is horizontally affected by the Transaction under any plausible
        relevant product and geographic market definitions.
(9)     The remainder of the present decision will therefore exclusively focus on several
        vertically affected relationships, on the one hand, between styrene and VER and, on
        the other hand, between each of acetylene and formaldehyde with BDO, B2D and
        B3D.
4.1.    Market definitions
4.1.1. Composites product chain
4.1.1.1.        Styrene
(10)    Styrene is an intermediate chemical used as a base material for the production of
        polystyrene and as a co-monomer in the production of several polymers and
        synthetic rubbers. In the context of the present case, the Target uses styrene as an
        input product for the manufacture of UPRs, gel coats and VERs.
(11)    The Notifying Party submits that styrene represents a separate product market due to
        its physical characteristics and the absence of substitutes in the manufacture of
        polystyrene and other derivatives. It further submits that the market for styrene is
        either global or at least EEA-wide in geographic scope.
(12)    In previous decisions, the Commission considered styrene as a separate product
        market9, whose geographic scope is either global or EEA-wide given that it is traded
        as a commodity product and that transport costs are low.10 The Commission’s
        market investigation did not reveal any evidence suggesting that an alternative
        market definition should be considered.
(13)    Therefore, for the purpose of the present case, the relevant product market is
        considered to be styrene. As the Transaction does not raise any competition concerns
        in the market for styrene even under a narrower EEA-wide scope, for the purposes of
        the present case, the exact geographic scope of the market for styrene can be left
        open between EEA and global.
4.1.1.2.        VER
(14)    VER is a thermoset resin used for its higher heat, structural and corrosion resistant
        properties. VER is a key component in the production of corrosion resistant pipes
        and tanks, and is used in several components in boats and other industrial equipment.
(15)    The Notifying Party submits that VER constitutes a separate product market as,
        although it shares certain characteristics with UPRs, it is typically tougher and more
        resilient. The Notifying Party submits that, given the similarities with UPRs, the
        relevant geographic scope should equally be at least EEA-wide.
9     COMP/M.8015 - Synthos / INEOS Styrenics, paragraph 26.
10    COMP/M.8015 - Synthos / INEOS Styrenics, paragraph 27.
                                                     3
 ---pagebreak--- (16)    The Commission did not previously assess the market for VER in detail.11 However,
        the Commission’s market investigation did not reveal any evidence suggesting that
        VER are part of a broader relevant product market or further segmented into
        narrower product markets. For the purpose of the present case, the Commission
        therefore considers that VER constitutes the relevant product market, in particular
        due to the particular characteristics of VER, such as increased toughness and
        resilience, which differentiate them from UPRs. As regards the geographic market
        definition, however, as the Transaction does not raise any competition issues under
        any plausible geographic scope12, the exact geographic market definition can be left
        open between EEA and worldwide.
4.1.2. Butanediol production chain
4.1.2.1.         Acetylene
(17)    Acetylene is a gaseous hydrocarbon, which is generally produced by a chemical
        process where calcium carbide reacts with water, but also from hydrocarbons or as a
        by-product of ethylene production. Acetylene is usually used for glass (lubrication of
        moulds) and metalworking (cutting and welding) applications.
(18)    The Notifying Party submits that acetylene constitutes a separate product market in
        light of limited supply-side and demand-side substitutability.
(19)    The Commission previously considered industrial gases as separate product markets
        subdivided by distribution channel (i.e. tonnage, small on-site plants, bulk and
        cylinders)13, though it did not consider the existence of a particular distribution
        channel via pipeline for acetylene specifically.14 INEOS’ production is
        predominantly used for captive consumption, with its excess supply of acetylene
        being sold to a single customer and transported via pipeline (tonnage supply mode).
        The Commission’s market investigation did not reveal any evidence suggesting that
        the tonnage supply of acetylene is part of a broader relevant product market or
        further segmented into narrower product markets. For the purpose of the present
        case, the Commission therefore considers that the tonnage supply of acetylene
        constitutes the relevant product market.
(20)    In a previous Commission decision, the Commission considered the geographic
        market for the tonnage supply of a number of industrial gases to be EEA-wide.15 The
        Commission’s market investigation did not reveal any elements that would point to
        a smaller geographic market definition for the tonnage supply of acetylene.
(21)    For the purposes of the present case, the Commission therefore considers the
        relevant market to be the EEA market for tonnage supply of acetylene.
11    In COMP/M.8059 - Investindustrial / Black Diamond / Polynt / Reichold, footnote 5, the Commission
      mentioned the market for VER but did not assess it in detail as that concentration did not lead to an
      affected market under any plausible market definition.
12    See section 5.2.1.
13    COMP/M. 8480 - Praxair / Linde, paragraph 91.
14    COMP/M. 8480 - Praxair / Linde, paragraph 34.
15    COMP/M. 8480 - Praxair / Linde, paragraph 105
                                                         4
 ---pagebreak--- 4.1.2.2.         Formaldehyde
(22)    Formaldehyde is a colourless gaseous compound, which is manufactured from
        methanol and air. It is used as an input product for various applications in the
        manufacture of industrial chemicals, resins, plastics or adhesive for the wood
        industry.
(23)    The Notifying Party submits that for the chemical processes used to produce BDO in
        the Marl plant, formaldehyde is required. The Parties also submit that the relevant
        geographic market is EEA-wide, or at least regional and comprising Benelux,
        Germany, Austria, France, Switzerland and Italy.
(24)    In its previous decisions, the Commission considered formaldehyde to constitute a
        separate product market.16 As regards the geographic dimension, the Commission
        previously assessed that the relevant geographic market is at most regional,
        depending on the location of the production plant.17 The Commission’s market
        investigation did not reveal any evidence suggesting that formaldehyde is part of a
        broader relevant product or geographic market.
(25)    Hence, for the purpose of the present case, the relevant product market is considered
        to be formaldehyde. As regards the geographic market definition, however, as the
        Transaction does not raise any competition concerns, each at the narrowest plausible
        national geographic level and at any relevant broader regional level, the exact
        geographic definition can be left open between regional and national markets.
4.1.2.3.         Butanediol Products (BDO, B2D, B3D)
(26)    BDO is a straight-chain molecule, with a high reactivity, easy to incorporate into
        polymer chains. BDO is used either to act as a chain extender or to confer flexibility
        to polymer chains. It is mainly use for the production of polymers such as polyesters,
        polyurethanes, PTMEG or THF.18
(27)    Beside BDO products, the Target further produces B3D and B2D products, which
        the Parties consider to belong to niche markets within the broader market for
        butanediol products. The Target uses a specific manufacturing process (the “Reppe
        method”) which yields either B2D or BDO from the common precursor B3D, itself a
        product of acetylene and formaldehyde19. B3D is mainly applied in metal finishing
        or flame retardants, while B2D is used as a raw material for vitamins and
        agrochemicals.
(28)    The Notifying Party submits that each of B3D, B2D and BDO can be considered to
        be separate product markets given the different applications and end-uses for each
        product. However, it also notes that, as B3D is a precursor to BDO, there is
        significant supply-side substitutability among them, and the Parties are not aware of
        any B2D competitor who does not also produce BDO. The Notifying Party submits
        that each of the geographic markets for B3D, B2D and BDO are global, but that the
        precise geographic scope can be left open for the purpose of the present case.
16    COMP/M.1813 - Industri Kapital (Nordkem) / Dyno, paragraph 34; COMP/M.2396 - Industri Kapita /
      Perstorp (II), paragraph 29.
17    COMP/M.2396 - Industri Kapital / Perstorp (II), paragraph 48.
18    Form CO, paragraph 87.
19    Form CO, paragraph 171-173.
                                                        5
 ---pagebreak--- (29)  The Commission previously considered BDO to be a separate product market.20 The
      possible markets for B3D and B2D have never been previously addressed by the
      Commission. The Commission’s market investigation confirmed that, from a
      demand-side perspective, these products could belong to separate product markets
      due to their different properties and suitability to different end-use applications.
      However, from a supply-side perspective, the market investigation suggested a
      strong level of supply-side substitutability between BDO, B2D and B3D. The
      question as to whether these constitute separate relevant product markets can be left
      open for the purpose of the present case, as the Transaction does not give rise to
      serious doubts as to its compatibility with the internal market under any plausible
      market definition (see sections 5.2.2 and 5.2.3).
(30)  Concerning the geographic market definition, the Commission previously considers
      the market for BDO to be EEA-wide in geographic scope.21 B2D and B3D have not
      been previously assessed by the Commission, but the Commission’s market
      investigation did not reveal any evidence suggesting that the geographic markets for
      B2D and B3D are part of a broader or narrower relevant geographic market than that
      of BDO. Therefore, for the purpose of the present case, the Commission considers
      that the relevant geographic markets for BDO, B2D and B3D are EEA-wide in
      scope.
5.    COMPETITIVE ASSESSMENT
5.1.  Introduction
(31)  The Transaction does not give rise to any horizontally affected markets.
(32)  Conversely, the Transaction gives rise to several vertically affected relationships
      between, on the one hand:
          a. the upstream market for styrene, where INEOS is present; and
          b. the downstream market for VER, where the Target enjoys an important
              market share,
     and, on the other hand:
          c. the upstream markets for acetylene (where both Parties are present in the
              production but the Target has no merchant sales) and formaldehyde (where
              each Party has a small merchant activity); and
          d. the downstream markets for butanediol products (BDO, B2D and B3D),
              where the Target enjoys significant market shares.
(33)  The following sections assess every relevant vertically affected links identified
      above.
20   COMP/M.2314 - BASF/ Eurodiol / Pantochim, paragraph 18.
21   COMP/M.2314 - BASF/ Eurodiol / Pantochim, paragraph 58.
                                                  6
 ---pagebreak--- 5.2.    Vertical effects
5.2.1. Vertical link between styrene and VER
(34)    INEOS is active in the manufacture of styrene, which is an input product for the
        manufacture of VER, where the Target enjoys a market share above 30% in the
        EEA, thus giving rise to a vertically affected link.
5.2.1.1.          Input foreclosure
(35)    Input foreclosure is highly unlikely to arise in the present case, given INEOS’s
        limited EEA ([10-20]%) and worldwide (less than [0-5]%) market shares in the
        upstream market for styrene. In fact, the merged entity would not enjoy a sufficient
        degree of upstream market power in order to be able to engage in an input
        foreclosure strategy.
(36)    In any event, INEOS does not currently supply styrene to any EEA VER
        manufacturer and several alternative suppliers will remain active in the EEA market
        for      styrene       post-Transaction       (e.g.   Royal Dutch/Shell     ([10-20]%),
        LyondellBasell/Covestro ([10-20]%), Repsol SA ([5-10]%) and BASF ([5-10]%)
        and on the global market (e.g. Royal Dutch/Shell ([5-10]%), LyondellBasell ([5-
        10]%), SABIC ([5-10]%), Total Group ([5-10]%) and CNPC ([0-5]%). Therefore,
        the merged entity will have no ability to foreclose access to inputs to its downstream
        competitors in the market for VER.
(37)    As the merged entity would lack the ability to foreclose its downstream rivals, it
        would not benefit from any competitive advantage should it attempt an input
        foreclosure strategy. Given the lack of competitive advantage, there is no incentive
        for the merged entity to foreclose its downstream rivals and thus there would be no
        significant detrimental effect on competition.
(38)    In light of the above, the Transaction is unlikely to raise any risks of input
        foreclosure with respect to the vertical link between the market for styrene upstream
        and the market for VER products downstream.
5.2.1.2.          Customer foreclosure
(39)    Despite the Target’s strong position in the downstream EEA market for VER, where
        the Target enjoys a [40-50]% market share, customer foreclosure is unlikely to arise
        post-Transaction, given the limited demand for styrene that the Target accounts for
        in the EEA22.
(40)    Market shares in the downstream market for VER are shown in Table 1 under the
        two alternative plausible geographic market definitions as defined in section 4.1.1.2.
        The vertical link between the upstream market for styrene and the downstream
        market for VER only arises under the narrower geographic market definition of an
        EEA-wide market for VER.
22 See recital 41 for figures on styrene demand from VER producers.
                                                         7
 ---pagebreak---  ---pagebreak--- 5.2.2.1.         Input foreclosure
(46)    Input foreclosure is highly unlikely to arise in the present case as the merged entity
        would have a limited upstream market share of only [10-20]% in the EEA market for
        the tonnage supply of acetylene. In fact, while both Parties are active in the
        manufacture of acetylene, only INEOS is active in the merchant market with
        pipeline sales to a single customer, [Customer name], itself active in the bottling and
        resale of acetylene. By contrast, the Target’s entire production is destined for captive
        consumption23. Therefore, the merged entity does not enjoy any particular market
        power in the upstream market for acetylene.
(47)    Moreover, none of the Parties directly sells acetylene to downstream butanediol
        competitors of the Target. In fact, players active in the markets for butanediol
        products are independent from the Parties and already have access to sufficient input
        acetylene from alternative, well-established players in the industrial gas industry
        such as Linde, Air Liquide, Air Products, AGA or Messer24.
(48)    While, in practice, some of INEOS’s acetylene sold to [Customer name] could be
        sold to third-party butanediol manufacturers in acetylene cylinders, INEOS has no
        visibility over [Customer name's] sales of acetylene25 and therefore does not have
        the ability to selectively deny the access to acetylene for downstream butanediol
        competitors of the Target. Given the existence of alternative suppliers and the lack
        of visibility over [Customer name's] sales in the merchant market, the merged entity
        would lack the ability to foreclose its downstream rivals.
(49)    As the merged entity would lack the ability to foreclose its downstream rivals, it
        would not benefit from any competitive advantage should it attempt an input
        foreclosure strategy. Given the lack of competitive advantage, there is no incentive
        for the merged entity to foreclose its downstream rivals and thus there would be no
        significant detrimental effect on competition.
(50)    In light of the above, risks of input foreclosure are unlikely to arise post-Transaction
        with respect to the vertical link between the market for acetylene upstream and each
        of the plausible downstream EEA or worldwide markets for BDO, B2D and B3D.
5.2.2.2.         Customer foreclosure
(51)    Despite the relatively high downstream market shares of the Target, in particular in
        the EEA market for B3D ([40-50]%), EEA and worldwide markets for B2D ([90-
        100]% and [30-40]% respectively), EEA market for BDO ([40-50]%) and EEA
        market for BDO, B2D and B3D products ([40-50]%), customer foreclosure is
        unlikely to arise in the present case, as the Target is fully vertically integrated with
        respect to its sourcing of acetylene for its production of butanediol products. In other
        words, as it does not currently rely on any upstream manufacturer of acetylene, it is
        unable to reduce the merchant demand for acetylene.
(52)    Market shares of the Target are shown in Table 2 under every plausible relevant
        alternative product and geographic market definition as defined in section 4.1.2.3.
23 Form CO, paragraph 168.
24 Form CO, paragraph 227.
25 Form CO, paragraph 244.3.
                                                    9
 ---pagebreak---  ---pagebreak--- (53)    Currently, the Target does not purchase acetylene from any third-party acetylene
        producer for its production of BDO, B2D and B3D. Even if the Target were to rely
        on third-party sales of acetylene, the Transaction is unlikely to raise any risks of
        customer foreclosure as the butanediol industry only represents a very limited
        fraction of the overall demand for acetylene (<5% in the EEA). Risks of customer
        foreclosure are highly unlikely to arise post-Transaction as the merged entity does
        not have the ability to foreclose upstream competitors in the acetylene market by
        denying them access to an important customer active in the downstream markets for
        butanediol products.
(54)    As the merged entity would lack the ability to foreclose its upstream rivals, it would
        not benefit from any competitive advantage should it attempt a customer foreclosure
        strategy. Given the lack of competitive advantage, there is no incentive for the
        merged entity to foreclose its upstream rivals and thus there would be no significant
        detrimental effect on competition.
(55)    In light of the above, the Transaction is unlikely to raise any risks of customer
        foreclosure with respect to the vertical link between the market for acetylene
        upstream and each of the plausible downstream EEA or worldwide markets for
        BDO, B2D and B3D.
5.2.2.3.        Conclusion
(56)    In light of the above, neither input nor customer foreclosure are likely to arise post-
        Transaction with respect to the vertical link between the upstream EEA market for
        the tonnage supply of acetylene and each of the plausible downstream EEA or
        worldwide markets for BDO, B2D and B3D. Therefore, the Transaction does not
        raise serious doubts as to its compatibility with the internal market in respect of the
        markets for the tonnage supply of acetylene and each of the markets for BDO, B2D
        and B3D.
5.2.3. Vertical link between formaldehyde and butanediol products
(57)    In the EEA, both INEOS and the Target produce and sell formaldehyde, which is an
        input for the production of B3D, B2D and BDO, where only the Target is active with
        market shares above 30%. The Transaction therefore gives rise to a vertically
        affected link between the upstream market for acetylene and the downstream
        markets for butanediol products.
5.2.3.1.        Input foreclosure
(58)    Input foreclosure is highly unlikely to arise in the present case as the merged entity
        would have limited upstream market shares under every plausible geographic market
        definition. The Parties’ market shares in the formaldehyde market are shown in
        Table 3.
                                                  11
 ---pagebreak--- Table 3 - Formaldehyde market shares for all plausible geographic markets, 2018
        Plausible market           Market      INEOS       INEOS         Target       Target     Combine
                                   size (t)    sales       market        sales (t)    market     d market
                                                           share                      share      share
        Belgium                    [50 000 –   [80-90]     [0-5]%        [0        -  [0-20]%    [0-20]%
                                   100 000]                              10 000]*
        Germany                    [200 000    [15 000     [5-10]%       [0        -  [0-5]%     [5-15]%
                                   –           –                         10 000]*
                                   300 000]    20 000]
        France                     [50 000 –   [400-       [0-5]%        0            0%         [0-5]%
                                   100 000]    500]
        The Netherlands            [50 000 –   [100 -      [0-5]%        [0        -  [0-20]%    [0-20]%
                                   100 000]    150]                      10 000]*
        Regional         Market    [350 000    [15 000     [5-10]%       [0 -10 000]  [0-5]%     [5-10]%
        comprising:                –           –
             - Belgium             400 000]    20 000]
             - Germany
             - France
             - The
              Netherlands
        EEA                        [800 000    [15 000     [0-5]%        [0 -10 000]  [0-5]%     [0-5]%
                                   –           –
                                   850 000]    20 000]
*The Target has sales of [0 -10 000]t in aggregate, that could be distributed among several member states; the figures
shown in Table 3 correspond to the maximum possible level of sales the Target could achieve if all its sales are
concentrated in a single member state where INEOS is already present.
                                    Source: the Parties’ internal estimates
(59)     The Parties’ combined market shares in the upstream market remain limited
         regardless of the geographic scope. Even in the most restrictive region (i.e.
         Germany, where the Parties’ assets are located and the three neighbouring countries
         where INEOS has sales, namely France, Belgium and the Netherlands), combined
         market shares for the merchant market remain low at a maximum of [5-10]%. If the
         region were to be expanded to other member states following the Parties’ proposed
         regional scope (i.e. including Italy, Austria, and Luxembourg), the Parties’ combined
         market shares would be even lower as they do not have any merchant sales in these
         markets. At the narrowest possible national level, market shares would be slightly
         higher in Germany (up to [10-20]%), provided that all of the Target’s sales are
         allocated to Germany, which the Parties have confirmed is not likely to be the case.
         Therefore, under any plausible geographic market definition, the Parties’ combined
         market share in the upstream market for formaldehyde remains fairly limited, and in
         any event below 20%.
(60)     In any event, neither INEOS, nor the Target currently supply formaldehyde to other
         EEA-based suppliers in the markets for butanediol products and numerous
         alternative suppliers of formaldehyde will remain active in this highly fragmented
         market post-Transaction (e.g. Metadynea, Caldic, Kronochem, Hexion), including
         specifically in Germany (with Kronochem and Hexion). Downstream competitors
         for BDO, B2D and B3D therefore already currently have access to sufficient
         formaldehyde to cover their needs before the Transaction, whether internally through
         captive production or on the merchant market. Therefore, the merged entity will
         have no ability to foreclose access to inputs to its downstream competitors in the
         markets for butanediol products, as these competitors do not currently rely on
         INEOS or the Target and are able to source formaldehyde from alternative
         manufacturers.
                                                              12
 ---pagebreak--- (61)    As the merged entity would lack the ability to foreclose its downstream rivals, it
        would not benefit from any competitive advantage should it attempt an input
        foreclosure strategy. Given the lack of competitive advantage, there is no incentive
        for the merged entity to foreclose its downstream rivals and thus there would be no
        significant detrimental effect on competition.
(62)    In light of the above, risks of input foreclosure are highly unlikely to arise post-
        Transaction with respect to the vertical link between the market for formaldehyde
        upstream and each of the plausible downstream EEA or worldwide markets for
        BDO, B2D and B3D.
5.2.3.2.        Customer foreclosure
(63)    As shown in Table 2, the Target enjoys important to significant downstream market
        shares in the EEA market for B3D ([40-50]%), EEA and worldwide markets for
        B2D ([90-100]% and [30-40]% respectively), EEA market for BDO ([40-50]%) and
        EEA market for BDO, B2D and B3D products ([40-50]%). Nevertheless, customer
        foreclosure is unlikely to arise in the present case given the Target’s limited demand
        for formaldehyde products on the merchant market.
(64)    Despite the Target’s high market shares in the downstream markets for BDO, B2D
        and B3D, the quantity of formaldehyde required by the butanediol industry in
        general represents only a limited fraction of the overall consumption of
        formaldehyde at EEA level (<3%). In any event, as the Target does not currently
        purchase formaldehyde on the merchant market for its production of BDO, B2D and
        B3D, the merged entity would not have the ability to foreclose its upstream
        formaldehyde competitors by denying them access to the niche markets of BDO,
        B2D and B3D.
(65)    As the merged entity would lack the ability to foreclose its upstream rivals, it would
        not benefit from any competitive advantage should it attempt a customer foreclosure
        strategy. Given the lack of competitive advantage, there is no incentive for the
        merged entity to foreclose its upstream rivals and thus there would be no significant
        detrimental effect on competition.
(66)    In light of the above, the Transaction is unlikely to raise any risks of customer
        foreclosure with respect to the vertical link between the market for formaldehyde
        upstream and each of the plausible downstream EEA or worldwide markets for
        BDO, B2D and B3D.
5.2.3.3.        Conclusion
(67)    In light of the above, neither input, nor customer foreclosure are likely to arise post-
        Transaction with respect to the vertical link between the upstream market for
        formaldehyde, irrespective of its precise geographic market definition at regional or
        national level, and each of the downstream EEA markets for BDO, B2D and B3D.
        Therefore, the Transaction does not raise serious doubts as to its compatibility with
        the internal market in respect of the markets for formaldehyde and each of the
        markets for BDO, B2D and B3D.
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 ---pagebreak--- 6.   CONCLUSION
(68) For the above reasons, the European Commission has decided not to oppose the
     notified operation and to declare it compatible with the internal market and with the
     EEA Agreement. This decision is adopted in application of Article 6(1)(b) of the
     Merger Regulation and Article 57 of the EEA Agreement.
                                                   For the Commission
                                                   (Signed)
                                                   Margrethe VESTAGER
                                                   Member of the Commission
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