CELEX: 32019M9324
Language: en
Date: 2019-06-12 00:00:00
Title: Commission Decision of 12/06/2019 declaring a concentration to be compatible with the common market (Case No COMP/M.9324 - ALSO / ABC DATA GROUP) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                           Brussels, 12.6.2019
                                                           C(2019) 4473 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                                                             information omitted has been replaced by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.9324 - ALSO/ABC Data Group
                    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 2 May 2019, the European Commission received notification of a proposed
          concentration pursuant to Article 4 of the Merger Regulation (the “ Transaction”)
          by which ALSO Holding AG (“ALSO”) acquires within the meaning of Article
          3(1)(b) of the Merger Regulation sole control over the assets of ABC Data Group
          (“ABC Data”).3 (ALSO is designated hereinafter as the 'Notifying Party' or,
          jointly with ABC Data, the ”Parties”).
1.        THE PARTIES
(2)       ALSO is the parent company of the Also Group which is active in the wholesale
          distribution of products, solutions and services related to information technology,
          telecommunication and consumer electronics. The Also Group has subsidiaries in
          15 EEA Member States and in Switzerland. ALSO, in turn, is solely controlled by
  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 163, 13.05.2019, p. 7.
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---         Droege Group AG, Düsseldorf, Germany, which indirectly holds 51.3% of the
        shares in ALSO and the majority of ALSO's voting rights.
(3)     ABC Data is active as a wholesale distributor of computers, peripherals and
        software, telecommunication equipment and consumer electronics. ABC Data is
        mainly active in Poland where it generates approx. […]% of its worldwide
        turnover.
2.      THE OPERATION
(4)     The Transaction consists of an acquisition of assets. Pursuant to a number of
        agreements concluded between the Parties,4 ALSO will indirectly acquire all
        assets of ABC Data, including all of its shares in a number of subsidiaries in
        Hungary, Lithuania, Poland, Romania and Slovakia.
(5)     ABC Data is the parent company of the ABC Data Group and the Transaction
        will enable ALSO to acquire sole control over almost the entire business of the
        ABC Data Group.5 According to the Parties, such result will be achieved through
        the steps outlined in the following paragraphs.
(6)     First, ALSO and MCI (ABC Data’s mother company) have launched a public bid
        for the 37.15% of ABC Data's shares. Upon successful completion of the bid,
        MCI shall have approximately 66% of ABC Data's shares and retain sole control
        of the company, while ALSO shall have the remaining shares of ABC Data
        purchased in the public takeover bid.6 As part of the Transaction, MCI will not
        transfer any of its shares in ABC Data to ALSO. ALSO, on the other hand, will
        acquire all the assets of ABC Data (except those carved out).
(7)     Once the assets of ABC Data have been transferred to ALSO, MCI will
        repurchase all shares that ALSO acquired through the public bid on ABC Data.
        As a consequence, MCI will then hold (i) the majority of the shares in ABC Data,
        by that time an empty shell company without any operative business and (ii)
        indirectly, 100% of the shares in ABC Data Marketing, at that point also an empty
        shell company without any operative business and (iii) indirectly, 100% in each
        of the subsidiaries of ABC Data that have been carved out from the Transaction.
(8)     The Transaction therefore constitutes a concentration pursuant to Article 3(1)(b)
        of the Merger Regulation.
  4 Tender Offer Agreement signed on 21 December 2018; Agreement for the Sale of Enterprise of ABC
     Data S.A. and Agreement for the Sale of Enterprise of ABC Data Marketing (to be signed after the
     settlement of the Tender offer); Agreement relating to the Resale of ABC Data’s Shares of 21
     December 2018; Framework Agreement (concerning the takeover offer and asset transactions) of 21
     December 2018.
  5 The structure of the Transaction provides for the carve-out of certain subsidiaries of ABC Data, which
     will remain in the hands of ABC Data, while its other assets included in the Transaction are
     transferred to ALSO. None of these subsidiaries carries out operative businesses.
  6 This minority shareholding will not confer joint control to ALSO (either directly or indirectly),
     because ALSO will not obtain any veto rights regarding strategic business decisions within ABC
     Data. It has also been agreed between the Parties that ALSO's minority shareholding in ABC Data
     will only be temporary and will not last more than 1-2 months (hence, the situation will not be on a
     lasting basis).
                                                         2
 ---pagebreak--- 3.        EU DIMENSION
(9)       The combined aggregate worldwide turnover of all the undertakings concerned
          exceeds EUR 5 000 million7 (Droege: EUR […]; ABC Data: EUR […]). Each of
          the undertakings concerned generates an aggregate turnover in excess of 250
          million in the EU (Droege: EUR […] approximately; ABC Data: EUR […]
          approximately). While ABC Data achieves more than two-thirds of its aggregate
          EU-wide turnover in Poland, Droege does not.
(10)      Therefore, the Transaction has a Union dimension pursuant to Article 1(2) of the
          Merger Regulation.
4.        PRODUCT MARKET DEFINITION
(11)      The Parties’ activities overlap in the following product markets (and/or possible
          segments thereof): (i) the wholesale distribution of Information Technology
          ("IT") products (e.g. PCs, notebooks, workstations, tablets, etc.); (ii) wholesale
          distribution of telecommunication equipment (e.g. mobile phones); (iii) wholesale
          distribution of consumer electronics (“CE”) (e.g. TVs, Hi Fi, screens,
          refrigerators, dishwashers, washing machines), and (iv) wholesale distribution of
          printing consumables (e.g. ink cartridges, toner, etc.). The first two categories, i.e.
          IT products and telecommunication equipment, are referred to as information and
          communication technology products (“ICT”) below.
4.1.1.    Wholesale distribution of ICT and CE products
(12)      In the precedents listed at paragraphs (13)-(15), the Commission assessed the
          possible product markets for wholesale distribution of IT products,
          telecommunication equipment and CE.
(13)      In Avnet/Magirus,8 Tech Data/Scribona,9 Tech Data/Avnet,10 the Commission has
          defined a market for the wholesale distribution of IT products, but left open the
          question whether the market should be further sub-segmented (i) by product
          categories (e.g. server, storage, PCs, etc.), (ii) by direct and indirect sales11 or (iii)
          by different distribution models (broadline vs value-added distribution
          (“VAD”)).12
(14)      In Argues/SHC13 and ALSO/PCF,14 the Commission identified a separate market
          for the wholesale of telecommunication products, including wholesale of landline
  7  Turnover calculated in accordance with Article 5 of the Merger Regulation.
  8  Commission decision of 21 September 2012, Case COMP/M. 6577 Avnet/Magirus, para. 10 et seq.
  9  Commission decision of 24 April 2008, Case COMP/M.5091 Tech Data/Scribona, para. 11 et seq.
  10 Commission decision of 23 February 2017, Case COMP/M.8248 Tech Data/Avnet’s Technology
       Solutions.
  11 Direct sales are sales by manufacturers to resellers and end-customers, while indirect sales include
       sales to resellers and retailers through a wholesale distributor.
  12 Broadline distribution is basic, large-scale delivery of products. Additional services, such as consulting
       or system configuration support, sales training, marketing, repair and financial solutions, which can
       be offered by IT distributors, are generally referred to as “value added” services (or value added
       distribution).
  13 Commission decision of 25 September 2008, Case COMP/M.5303 Arques/SHC, para. 31 et seq.
  14 Commission decision of 21 October 2015, Case COMP/M.7708 ALSO/PCF.
                                                            3
 ---pagebreak---          telephony terminals, mobile phones and similar terminals (such as car telephones)
         and accessories as well as other related services, but left the precise market
         definition open.
(15)     In ALSO/PCF, the Commission considered a possible market for wholesale
         distribution of consumer electronics but left the precise market definition open.15
(16)     In the decisions listed at paragraphs from (13)-(15), the Commission also
         included related services, such as after-sales support, training and financial
         services to customers in the wholesale market.16
(17)     The Notifying Party submits that the relevant product market is the overall market
         for wholesale distribution of ICT and CE. As an alternative product market
         definition, the Notifying Party refers to the possible distinction between the
         wholesale distribution of (i) IT products, (ii) telecommunication products, and
         (iii) CE.
(18)     With regard to the distribution of IT products, in the Notifying Party's view, the
         relevant market does not need to be further sub-segmented by (i) direct or indirect
         sales channels, (ii) product category or (iii) distribution model (broadline
         distribution and VAD). According to the Notifying Party, a distinction between
         direct and indirect sales channels is not necessary as both channels constitute
         alternative sources of supply to customers (i.e. retailers and large resellers). A
         further sub-segmentation by product category is not appropriate due to a general
         industry trend towards product convergence, whereby wholesalers offer the same
         product range and one-stop-shop solutions.17 According to the Notifying Party,
         the emergence of cloud services further blurs the distinction between different IT
         products as they are offered on a pay-per-use basis substituting a number of
         different categories of IT products. The Notifying Party considers that, as ALSO
         and ABC Data do not have any meaningful activities as VAD, the exact market
         definition can be left open, as it does not affect the outcome of the proposed
         Transaction.
(19)     The market investigation provided mixed results as to the exact scope of the
         relevant product markets and possible further segmentation as set out at
         paragraphs from (13) to (15).18 For the purpose of the present decision, the exact
         product market definition can be left open as the Transaction does not raise
         serious doubts as to its compatibility with the internal market under any plausible
         product market definition.
  15 Consumer electronics include e.g. "brown goods" such as TVs, Hifi, screens, major domestic
      appliances (i.e. "white goods", such as refrigerators, dishwashers, washing machines) MP3 players,
      photography products and music/movies/games (CD, DVD, computer games).
  16 ALSO's revenues derived from financial services and services such as logistics services, training,
      maintenance, installation and maintenance of hardware and software etc. amount to 3% of its total
      revenues and therefore will not lead to significantly different market shares than those set out in
      section V.1.A.
  17 The Notifying Party argues, in addition, that the relevant product market should include services
      related to the product distribution, such as after-sales support, training and financial services to
      customers in the wholesale market (such services, in the case at hand, account for a minimal
      percentage of the Parties’ respective turnover).
  18 See Q1 to competitors, replies to questions 4, 4.1, 4.1.1, 5, 5.1, 6 and 6.1; Q2 to customers, replies to
      questions 4, 4.1, 4.1.1, 5, 5.1, 6 and 6.1 and Q3 to vendors, replies to questions 4, 4.1, 4.1.1, 5, 5.1, 6
      and 6.1.
                                                           4
 ---pagebreak--- 4.1.2.    Wholesale distribution printing consumables
(20)      In Unipapel/Spicers,19 ALSO/Alpha International,20 the Commission considered a
          separate market for the wholesale of printing consumables (or 'printing supplies',
          such as ink cartridges, toners, etc.). The Commission considered a further
          distinction between distribution channels, i.e. over specialized wholesalers, IT
          wholesalers or wholesalers of office supplies but left the precise product market
          definition open.
(21)      The Notifying Party submits that further segmentation by distribution channel is
          not appropriate as both wholesalers of traditional office supplies and wholesalers
          of IT products supply printing consumables and customers source a number of
          printing consumables products from both.
(22)      The market investigation provided mixed results as to the exact scope of the
          relevant product markets and possible further segmentation as set out at paragraph
          (20).21 For the purpose of the present decision, the exact product market definition
          can be left open as the Transaction does not raise serious doubts as to its
          compatibility with the internal market under any plausible product market
          definition.
4.1.3.    Stationary/online retail sales of electronic devices
(23)      In Carphone Warehouse/Dixons,22 Media Saturn/Redcoon,23 DGSI/Fotovista,24
          the Commission considered whether the retail market for electronic equipment
          should be further sub-segmented into (i) brick-and-mortar shops (offline retailing)
          and (ii) home shopping (which includes online shopping and shopping by
          catalogue) of electronic devices equipment, but left the precise market definition
          open.25
(24)      The Notifying Party submits that the precise market definition can be left open in
          the present case as the Transaction will not raise any concerns regardless of the
          product market definition.
(25)      The Commission considers that, for the purpose of the present decision, the exact
          product market definition can be left open as the Transaction does not raise
  19 Commission decision of 20 December 2011 Case COMP/M.6382 Unipapel/Spicers, para. 46 et seq.
  20 Commission decision of 21 May 2014, Case COMP/M.7189 – ALSO/Alpha International, para. 12 et
       seq.
  21 Q1 to competitors, replies to questions 7 and 7.1, Q2 to customers, replies to questions 7 and 7.1 and
       Q3 to vendors, replies to questions 8 and 8.1.
  22 Commission decision of 25 June 2014, Case COMP/M. 7259 Carphone Warehouse/Dixons, para. 16 et
       seq.
  23 Commission decision of 23 June 2011, Case COMP/M.6226 Media Saturn/Redcoon, para. 9 et seq.
  24 Commission decision of 29 June 2006, Case COMP/M. 4226 DGSI/Fotovista, para. 9 et seq.
  25 A further sub-segmentation was considered into (i) retail trade in brown goods, (ii) retail sale of large
       household appliances ("white goods", e.g. washing machines, refrigerators, etc.), (iii) retail sale of
       small household appliances (e.g. toasters, irons, etc.) and (iv) retail sale of computers and
       telecommunications equipment. For the retail sale of mobile phones and tablet computers, in
       Carphone Warehouse/Dixons, the Commission also examined whether a distinction between (i) tied
       specialist retailers (retail outlets owned by MNOs or MVNOs), (ii) independent specialist retailers
       (retail outlet specialized in the sale of mobile communications devices and services), (iii) generalist
       retailers and
     (iv) specialist electrical retailers, would be necessary.
                                                             5
 ---pagebreak---          serious doubts as to its compatibility with the internal market under any plausible
         product market definition.
4.2.     Geographic market definition
(26)     With regard to wholesale distribution of ICT products (IT products and
         telecommunication equipment), CE and printing consumables, in its previous
         decisions referenced in section 4.1.1 and 4.1.2, the Commission considered
         alternative geographic market definitions: EEA-wide, regional and national in
         scope, but ultimately left the precise geographic market definition open.
(27)     The Notifying Party submits that the relevant geographic market for the
         wholesale distribution of ICT products (IT products and telecommunication
         equipment), CE and printing consumables should be defined as EEA-wide, or
         alternatively at a regional level (i.e. the Baltic region). According to the Notifying
         Party, the precise market definition can be left open as the Transaction will not
         raise any concerns under any plausible market definition.
(28)     With regard to retail sales of electronic devices/equipment, in previous decision
         referenced in section 4.1.3, the Commission considered geographic markets at
         regional and national level but left the precise geographic market definition open.
(29)     In the Notifying Party's view, the precise geographic market definition can be left
         open as the Transaction will not raise any concerns irrespective of the geographic
         market definition.
(30)     The market investigation provided mixed results as to the exact scope of the
         relevant geographic markets.26 For the purpose of the present decision, the exact
         product market definition can be left open as the Transaction does not raise
         serious doubts as to its compatibility with the internal market under any plausible
         geographic market definition.
5.       COMPETITIVE ASSESSMENT
5.1.     Framework for the competitive assessment
5.1.1.   Horizontal non-coordinated effects
(31)     The Horizontal Merger Guidelines describe horizontal non-coordinated effects as
         follows: “A merger may significantly impede effective competition in a market
         by removing important competitive constraints on one or more sellers who
         consequently have increased market power. The most direct effect of the merger
         will be the loss of competition between the merging firms. For example, if prior
         to the merger one of the merging firms had raised its price, it would have lost
         some sales to the other merging firm. The merger removes this particular
         constraint. Non-merging firms in the same market can also benefit from the
         reduction of competitive pressure that results from the merger, since the merging
         firms’ price increase may switch some demand to the rival firms, which, in turn,
  26 Q1 to competitors, replies to questions 8 and 8.1, Q2 to customers, replies to questions 9 and 9.1 and
       Q3 to vendors, replies to questions 8 and 8.1.
                                                         6
 ---pagebreak---         may find it profitable to increase their prices. The reduction in these competitive
        constraints could lead to significant price increases in the relevant market.”27
(32)    Therefore, a merger giving rise to such non-coordinated effects might
        significantly impede effective competition by creating or strengthening the
        dominant position of a single firm, one which, typically, would have an
        appreciably larger market share than the next competitor post-merger.
(33)    The Horizontal Merger Guidelines list a number of factors which may influence
        whether or not significant horizontal non-coordinated effects are likely to result
        from a merger, such as the large market shares of the merging firms, the fact that
        the merging firms are close competitors, the limited possibilities for customers to
        switch suppliers, or the fact that the merger would eliminate an important
        competitive force.28 That list of factors applies equally regardless of whether a
        merger would create or strengthen a dominant position, or would otherwise
        significantly impede effective competition due to non-coordinated effects.
        Furthermore, not all of these factors need to be present to make significant non-
        coordinated effects likely and it is not an exhaustive list.29
(34)    Finally, the Horizontal Merger Guidelines describe a number of factors, which
        could counteract the harmful effects of the merger on competition, including the
        likelihood of buyer power, entry and efficiencies.
5.1.2.  Vertical effects
(35)    According to the Non-Horizontal Merger Guidelines, foreclosure occurs when
        actual or potential rivals’ access to supplies or markets is hampered, thereby
        reducing those companies’ ability and/or incentive to compete. Such foreclosure
        may discourage entry or expansion of rivals or encourage their exit.30
(36)    The Non-Horizontal Merger Guidelines distinguish between two forms of
        foreclosure: input foreclosure occurs where the merger is likely to raise the costs
        of downstream rivals by restricting their access to an important input and
        customer foreclosure occurs where the merger is likely to foreclose upstream
        rivals by restricting their access to a sufficient customer base.31
(37)    In order for foreclosure to be a concern, three conditions need to be met post-
        merger: (i) the merged entity needs to have the ability to foreclose its rivals32 ; (ii)
        the merged entity needs to have the incentive to foreclose its rivals33; and (iii) the
        foreclosure strategy needs to have a significant detrimental effect on the
        parameters of competition on the downstream market (input foreclosure)34 or
        have an adverse impact in the downstream market and harm consumers (customer
27   Horizontal Merger Guidelines, paragraph 24.
28   Horizontal Merger Guidelines, paragraphs 27 et seq.
29   Horizontal Merger Guidelines, paragraph 26.
30   Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control
     of concentration between undertakings (the Non-Horizontal Merger Guidelines), OJ C 265/6,
     18.10.2008, paragraphs 29-30.
31   Non-Horizontal Merger Guidelines, paragraph 30.
32   Non-Horizontal Merger Guidelines, paragraphs 33 to 39 and 60 to 67.
33   Non-Horizontal Merger Guidelines, paragraphs 40 to 46 and 68 to 71.
34   Non-Horizontal Merger Guidelines, paragraphs 47 to 57.
                                                       7
 ---pagebreak---            foreclosure).35 In practice, these factors are often examined together since they are
           closely intertwined.
5.2.1     Horizontally affected markets
5.2.1     Market shares
5.2.1.1.            Wholesale distribution of ICT and CE products
(38)      The Transaction gives rise to a limited number of horizontally affected markets in the
          markets for wholesale distribution of ICT (IT products and telecommunication
          equipment) and CE products (and/or certain product categories thereof) only under a
          geographic market definition identifying a regional36 or national geographic markets
          (i.e. in the Baltic region and in the respective national markets of Estonia, Latvia and
          Lithuania, Poland and Slovakia).
(39)      The Parties only act as wholesaler and therefore are not active on the direct sales
           distribution channel (i.e. from manufacturers to retailers/resellers). The market shares
           set out at paragraphs (41)-(44) below are based on the smallest possible market,
           excluding direct sales and including only indirect sales.37 On a possible market
           comprising both distribution channels, the Parties combined market share are lower.
(40)      Tables 1-3 below present the relevant market shares, based on such segmentation per
           each relevant country.
           Wholesale distribution of ICT and CE products
(41)      On the possible overall market for the wholesale distribution of ICT and CE,
          horizontally affected markets only arise when the market is sub-segmented based on
          distribution channels (i.e. including only indirect sales and excluding direct sales by
          manufacturers).
             Table 1: Wholesale distribution of ICT and CE products (2018)
                                                                  Market share ABC           Combined marke
                           Country            Market share ALSO
                                                                           Data                       share
                            Estonia               [20-30]%                [0-5]%                    [20-30]%
                             Latvia               [10-20]%                [0-5]%                    [20-30]%
                           Lithuania              [10-20]%                [0-5]%                    [20-30]%
             Source: IDC and Parties' estimates
             --------------------------------
35
    Non-Horizontal Merger Guidelines, paragraphs 72 to 77.
36
    Under a geographic market definition, comprising all Baltic countries, the Transaction gives rise to
    horizontally affected markets in the following segments: wholesale distribution of PCs and notebooks ([20-
    30]%), Servers ([30-40]%). Storage ([20-30]%). Printers ([20-30]%), Printing consumables ([40-50]%). The
    increment brought by the Transaction is below [0-5]% on all segments and the market investigation has not
    indicated any competitive concern in this respect. Such segmentation will therefore not be further discussed in
    the following sections.
37
    Based on the Parties' best estimates, manufacturers distribute a large part of then products directly to
    retailers/resellers and end-customers, up to 50% of total sales. This is in line with previous Commission
    decisions, e.g. Commission decision of 26 June 2008. Case COMP/M.5162 Avnet/Horizon. para 10 (for the
    United Kingdom); Commission decision of 19 May 2008. Case COMP/M.5099 Arrow Electronics/Logix.
    para 35. 41 (44 % of servers and 38 % of storage products in 2007 in Denmark); Commission decision of 28
    April 2008. Case COMP/M.5091 Tech Data/Scribona. para 21. 34. 39. 41. 44 (for Finland. Sweden and
    Noway).
 ---pagebreak---              Wholesale distribution of IT products
(42)         On the possible market for wholesale distribution of IT products (excluding direct
             sales by manufacturers), the Transaction leads to the following horizontally affected
             markets:
             Table 2: Wholesale distribution of IT products (2018)
                     Country                                      Market share ABC        Combined market
                                        Market share ALSO                  Data                  share
                      Estonia                 [30-40]%                    [0-5]%               [30-40]%
                       Latvia                  [20-30]%                   [0-5]%               [20-30]%
                     Lithuania                 [10-20]%                   [0-5]%               [20-30]%
                       Poland                  [10-20]%                 [10-20]%               [20-30]%
             Source: IDC and Parties' estimates
(43)      In addition, in a number of sub-segments of the market for wholesale distribution of IT
          products by product category (excluding direct sales by manufacturers) in Estonia,
          Latvia, Lithuania, and Poland, the Parties’ combined market shares are above 20%38:
          •   Estonia: PCs and notebooks ([40-50]%; ALSO: [40-50]%; ABC Data: [0-5]%);
              Workstations ([50-60]%; ALSO: [50-60]%; ABC Data: [0-5]%), Printers ([30-
              40]%; ALSO: [20-30]%; ABC Data: [5-10]%)39.
          •   Latvia: PCs and notebooks ([30-40]%; ALSO: [30-40]%; ABC Data: [0-5]%),
              Workstations ([40-50]%; ALSO: [40-50]%; ABC Data: [0-5]%), Tablet PCs ([20-
              30]%; ALSO: [10-20]%ABC Data: [0-5]%), Printers ([50-60]%; ALSO: [50-60]%;
              ABC Data: [5-10]%)40.
38
     Horizontally affected markets where the increment is below [0-5]% are: Estonia: Servers (ALSO: [40-50]%;
     ABC Data: [0-5]7%); Storage (ALSO [20-30]%; ABC Data: [0-5]%); Latvia: Software (ALSO: [20-30]%;
     ABC Data [0-5]%); Servers (ALSO: [40-50]%; ABC Data: [0-5]%); Storage: (ALSO: [20-30]%; ABC Data:
     [0-5]%); Lithuania: Servers (ALSO: [20-30]%; ABC Data: [0-5]%), Storage (ALSO: [20-30]%; ABC Data:
     [0-5]%); Software (ALSO: [20-30]%; ABC Data: [0-5]%) Denmark: PCs and notebooks (40-50]%; ALSO:
     [40-50]%; ABC Data: [0-5]%); Germany: Storage ([30-40]%; ALSO: [30-40]%; ABC Data: [0-5]%). These
     possible segments are therefore not further discussed in the following sections.
39
      The market shares of the Parties’ competitors in Estonia on the PCs and notebooks segment are: TD Baltic
      ([5-10]%), ACC Distribution [30-40]%), F9 Distribution [5-10]%); Workstations: TD Baltic [20-30]%),
      ACC Distribution ([20-30]%); Printers: ACC Distribution ([10-20]%), TD Baltic ([5-10]%).
40
      The market shares of the Parties’ competitors in Latvia on the PCs and notebooks segment are: ELKO
      Group ([20-30]%), TD Baltic ([10-20]%). ACC Distribution ([20-30]%), F9 Distribution ([10-20]%);
      Workstations: TD Baltic ([10-20]%), ACC Distribution ([10-20]%); Tablet PC: ELKO Group ([10-20]%),
      TD Baltic ([10-20]%), ACC Distribution ([10-20]%); Printers: ELKO Group ([5-10]%), TD Baltic ([5-
      10]%), ACC Distribution ([5-10]%) and others such as TVG, Asbis. F9 Distribution, for which market share
      estimates are not available.
 ---pagebreak---          •     Lithuania: PCs and notebooks ([20-30]%; ALSO: [10-20]%; ABC Data: [0-
              5]%); Storage ([20-30]%; ALSO: ([20-30]%; ABC Data: [0-5]%); Printers (40-
              50]%; ALSO: ([40-50]%; ABC Data: [0-5]%).41
(44)   With regard to Poland, Table 3 provides an overview of the horizontally affected
       markets by product category1 and the increment brought by the Transaction:
        Table 3: Wholesale distribution of IT products (by product category) in Poland -
        (2018)
                  Segment                                    Market share ABC          Combined market
                                   Market share ALSO                  Data                    share
           PCs and notebooks              [10-20]%                 [20-30]%                 [30-40]%
                 Servers                   [5-10]%                 [40-50]%                 [40-50]%
                 Storage                  [20-30]%                  [5-10]%                 [30-40]%
              Workstations                [10-20]%                 [20-30]%                 [30-40]%
               Tablet PCs                 [30-40]%                 [10-20]%                 [40-50]%
                 Printers                  [5-10]%                 [20-30]%                 [30-40]%
        Source: IDC and Parties' estimates
         Wholesale distribution of telecommunications equipment
(45)     On the possible market for wholesale distribution of telecommunications
         equipment (excluding direct sales by manufacturers), the Transaction leads to
         horizontally affected markets only in Poland ([20-30]%; ALSO [5-10]%; ABC
         Data: [10-20]%).
         Wholesale distribution of CE
(46)     On the possible markets for wholesale distribution of CE (excluding direct sales by
         manufacturers), the Transaction leads to horizontally affected markets only in
         Lithuania ([20-30]%; ALSO: [10-20]%; ABC Data: [5-10]%).
5.2.1.2.1. Wholesale distribution of printing consumables
         The Transaction leads to the following horizontally affected markets on the market
         for wholesale distribution of printing consumables.42 The market shares set out at
41
     The market shares of the Parties' competitors in Lithuania on the PCs and notebooks segment are: ACC
     ([30-40]%). AVAD ([10-20]%). TD Baltic ([10-20]%). F9 Distribution ([5-10]%), ELKO ([10-20]%);
     Servers: ACC ([20-30]%), TD Baltic ([20-30]%). ELKO ([5-10]%), F9 Distribution ([5-10]%); Storage:
     ACC ([30-40]%), TD Baltic ([10-20]%). ELKO ([20-30]%), F9 Distribution ([5-10]%); Printers: ACC
     ([10-20]%). TD Baltic ([5-10]%). ELKO ([5-10]%). F9 distribution ([10-20]%).
42
     The market shares of the Parties' competitors in Poland on the PCs and notebooks segment are: AB SA
     ([30-40]%), Ingram Micro ([5-10]%), Tech Data ([10-20]%); Servers: AB SA ([20-30]%). Ingram
     Micro ([0-5]%), Tech Data ([20-30]%); Storage: AB ([10-20]%), Inconi ([20-30]%), Action ([10-
     20]%); Workstations: AB SA ([30-40]%), Ingram Micro ([10-20]%), Tech Data ([10-20]%); Tablet PC:
     AB SA ([20-30]%). Ingram Micro ([5-10]%). Tech Data ([5-10]%), Incom ([10-20]%); Printers: AB SA
     ([20-30]%). Ingram Micro ([0-5]%). Tech Data ([10-20]%), Action ([10-20]%). The Notifying Party
     submits that with regard to the wholesale distribution of Servers and Storage. Veracomp and Arrow are
     also important competitors. As the Parties were not able to provide reasonable assumptions as to their
     market shares, the combined market share of the Parties in these segments is likely overestimated
                                                         11
 ---pagebreak---           Table 4 below are based on the smallest possible market, excluding direct sales and
          including only indirect sales. 44 On a possible market comprising both distribution
          channels, the Parties combined market shares are lower 45
        Table 4: Wholesale distribution of printing consumables (2018)
                     Segment                                       Market share ABC              Combined market
                                       Market share ALSO                      Data                      share
                   Estonia                   [40-50]%                       [0-5]%                    [50-60]%
                     Latvia                  [20-30]%                       [0-5]%                    [20-30]%
                  Lithuania                  [40-50]%                       [0-5]%                    [40-50]%
                  Slovakia                   [10-20]%                      [5-10]%                    [20-30]%
        Source: IDC and Parties' estimates
5.2.2. Horizontal non-coordinated effects
5.2.2.1.            Notifying Party’ s views
(48)     The Notifying Party argues that the Transaction would not raise any unilateral
          effects for the reasons set out below.
(49)     First, the Transaction results in very small increments and the Parties face a number
          of strong competitors on all affected markets, including Poland and Slovakia,
          which will continue to exert a competitive constraint post-Transaction.
(50)     Second, in the Notifying Party’s view, ALSO and ABC Data Group are not close
          competitors. Both ALSO and ABC Data Group supply a large range of ICT
          products (i.e. IT products and telecommunication equipment), CE and printing
          consumables. The product ranges of the Parties are comparable to the product
          ranges supplied by other players active on all affected markets. In addition,
          according to the Notifying Party, all major competitors in the wholesale
          distribution market offer products manufactured by a large variety of
          manufacturers and it is relatively easy and not costly for market players to increase
          their portfolios by entering into supply contracts with further manufacturers and to
          rent additional warehousing space, where necessary.
43
     Horizontally affected markets where the increment is below 1% are: Austria (ALSO: [20-30]%; ABC Data: [0-
     5]%); Croatia (ALSO: [20-30]%; ABC Data: [0-5]%) and Denmark (ALSO: [50-60]%; ABC Data: [0-5]%).
     These markets are therefore not further discussed in the following sections.
44
     Based on the Parties' best estimates, manufacturers distribute a large part of then products directly to
     retailers/resellers and end-customers, up to 50% of total sales. This is in line with previous Commission decisions,
     e.g. Commission decision of 26 June 2008. Case COMP/M.5162 Avnet/Horizon. para 10 (for the United
     Kingdom); Commission decision of 19 May 2008. Case COMP/M.5099 Arrow Electronics/Logix. para 35. 41 (44
     % of servers and 38 % of storage products in 2007 in Denmark); Commission decision of 28 April 2008. Case
     COMP/M.5091 Tech Data/Scribona. para 21. 34. 39, 41. 44 (for Finland. Sweden and Noway).
45
    The market shares of the Parties' competitors on the possible market for the wholesale distribution of printing
     consumables are: Estonia (TD Baltic: [20-30]%); Latvia (TD Baltic: [5-10]%. ACC: [0-5]%, ELKCL [5-10]%);
     Lithuania (ACC: [10-20]%. ELKO: [10-20]%, F9 Distribution: [5-10]%); Slovakia: ASBIS (around [10-20]%-[20-
     30]%). ED Systems ([10-20]%), AT Computers ([10-20]%). SWS ([5-10]%-[10-20]%), AGEM ([5-10]%-[10-
     20]%).
                                                               11
 ---pagebreak--- (51)     Third, the Notifying Party argues that customers can easily switch to other
         wholesalers at any time and without incurring any additional costs because
         customers already apply multi-sourcing strategies. Customers can also increase
         their direct purchases from manufacturers.
(52)     As regards the wholesale of printing consumables, the Notifying Party considers
         that both wholesalers of traditional office supplies and wholesalers of IT products
         constitute alternative sources of printing consumables.
(53)     Fourth, according to the Notifying Party, the Parties' customers are sophisticated
         buyers with substantial buyer power (e.g. specialised retail store chains or groups
         such as Media Markt, MediaExpert, Euronet). At the same time, at the upstream
         level, manufacturers mostly conclude short-term and non-exclusive distribution
         agreements for their product range with several wholesalers and which can easily
         be terminated.
5.2.2.2.          Commission’s assessment
(54)     The Commission considers that, for the reasons set out below, the Transaction
         does not raise serious doubts as to its compatibility with the internal market.
(55)     First, the Transaction results in very small increments under all plausible market
         definitions, with the exception of Poland (see Table 3) and Slovakia (for
         wholesale distribution of printing consumables) (see Table 4).
(56)     Second, as explain below, on all affected markets, the merged entity faces several
         competitors (which are already present) and which will continue to exert a
         competitive constraint post-Transaction.
(57)     With regard to the Polish market, based on the Notifying Party’s submission and
         on the responses to the market investigation,46 the alternative wholesale
         distributors include AB SA Tech Data, Ingram Micro, Veracomp, Action, NTT,
         which will continue to exert a competitive constraint on the merged entity post-
         Transaction.
(58)     With regard to Estonia, based on the Notifying Party's submission and on the
         responses to the market investigation, the alternative wholesale distributions are
         TD Baltic, ACC Distribution, F9 Distribution, Elko, which will continue to exert
         a competitive constraint on the merged entity post-Transaction.
(59)     With regard to Latvia, based on the Notifying Party's submission and on the
         responses to the market investigation, the alternative wholesale distributions are
         ACC, TD Baltic, ELKO, F9 Distribution, which will continue to exert a
         competitive constraint on the merged entity post-Transaction.
(60)     With regard to Lithuania, based on the Notifying Party’s submission and on the
         responses to the market investigation, the alternative wholesale distributors
         include ACC, AVAD, TD Baltic, which will continue to exert a competitive
         constraint on the merged entity post-Transaction.
46   Q2 to customers, replies to question 11.2 and Q3 to vendors, replies to question 14.
                                                         12
 ---pagebreak--- (61)      With regard to Slovakia, based on the Notifying Party’s submission and on the
          responses to the market investigation, the alternative wholesale distributors are
          ASBIS, ED Systems, AT Computers, SWS and AGEM, which will continue to
          exert a competitive constraint on the merged entity post-Transaction.
(62)      Respondents to the market investigation confirmed that (i) manufacturers entrust
          the distribution of their products to multiple wholesale distributors and (ii)
          customers (i.e. resellers and retailers) already apply multi-sourcing strategies.47
          Most customers, manufacturers and competitors who responded to the market
          investigation consider that post-Transaction that there will be a sufficient number
          of alternative distributors for the wholesale supply of ICT products (IT products
          and telecommunication equipment) and printing consumables in all countries
          where both Parties are active.48
(63)      In view of the above, a sufficient number of players will remain post-
          Transaction.49
(64)      Third, the market investigation also suggested that customers of wholesale
          distributors (i.e. resellers and retailers) are sophisticated buyers that use a range of
          channels to procure manufacturers’ products. Some customers indicated that they
          can also procure ICT products (IT products and telecommunications equipment)
          directly from the manufacturers.50 Therefore, the Parties’ customers have two
          basic options for acquiring any product: buying directly from the manufacturer or
          buying from a wholesaler. On that basis, and for the purposes of the present
          decision, the Commission considers that direct sales made by manufacturers to
          retailers or resellers exert a competitive constraint on wholesale distributors, only
          active on the indirect sales channel.
(65)      With respect to printing consumables, the Parties’ customers have three basic
          options for acquiring printing consumables: buying from wholesalers of printing
          consumables, from wholesalers of traditional office supplies or buying directly
          from printer manufacturers. On that basis, and for the purposes of the present
          decision, the Commission considers that sales made through such alternative
          channels exert a competitive constraint on the Parties.
(66)      Fourth, with the sole exception of very few unsubstantiated or contradictory
          comments, virtually all respondents to the market investigation excluded any
          negative impact of the Transaction on their business or on competition in any of
          the affected markets.51
47   Q1 to competitors, replies to questions 18.1, 18.2, 18.3, 18.4; Q2 to customers, replies to questions 9,
     9.1, 9.2 and Q3 to vendors, replies to questions 11, 11.1, 11.2.
 48  Q1 to competitors, replies to questions 11.1; Q2 to customers, replies to questions 11, 11.11.2 and
     Q3 to vendors, replies to questions 11, 11.1, 11.2.
49   Q1 to competitors, replies to questions 15, 15.1 and Q3 to vendors, replies to questions 17, 17.1.
50   Q2 to customers, replies to questions 14, 14.1., 15, 15.1.
51   Q1 to competitors, replies to questions 18.1, 18.2, 18.3, 18.4; Q2 to customers, replies to questions 9,
     9.1, 9.2 and Q3 to vendors, replies to questions 11, 11.1, 11.2.
                                                          13
 ---pagebreak--- 5.3.      Vertically affected markets
5.3.1.    Market shares
(67)      The Transaction would give rise to a limited number of vertical relationships. On
          the potential market for wholesale distribution of IT products, further sub-
          segmented by product category, vertically affected markets arise in Poland for the
          distribution of PCs and notebooks ([30-40]%), Servers [40-50]%), Storage ([30-
          40]%), Workstations ([30-40]%), Tablet PCs ([40-50]%), as well as in Germany.
          52 ALSO is active in Poland and Germany at the downstream level, that is, in the
          market for online/stationary retail sales of ICT (IT products and
          telecommunication equipment) and CE.
5.3.2.    Vertical effects
5.3.2.1.            Notifying Party’s views
(68)      According to the Notifying Party, ALSO’s activities on the Polish market for the
          retailing of ICT products (IT and telecommunication products) and CE, in
          particular smartphones/mobile phones are insignificant and amount to a market
          share below [0-5]%.53 In addition, ALSO operates an online-shop in Polish and
          sells ICT and CE products only to customers based in Poland.
(69)      In the Notifying Party's view, the merged entity does not have the ability to
          restrict access to an important input. The Notifying Party submits that wholesalers
          of ICT (i.e. IT products and telecommunication equipment), CE products do not
          have market power in any country. This is because the availability of products
          depends on the manufacturers and not on the wholesalers. Furthermore,
          manufacturers have supply contracts with many wholesalers and, therefore, the
          Parties' customers, e.g. retailers and e-retailers have many purchase alternatives
          via a variety of distribution channels. Moreover, the Notifying Party submits that
          resellers can also purchase products directly from the manufacturers.
(70)      According to the Notifying Party, the Transaction does not raise concerns in
          relation to customer foreclosure as ALSO is only a minor player in the
          downstream market for the retailing of ICT (IT products and telecommunication
          equipment) and CE products in Poland.
5.3.2.2.            Commission’s assessment
(71)      The Commission considers that for the reasons set out below, the Transaction
          does not raise serious doubts as to its compatibility with the internal market with
          respect to a potential input or customer foreclosure.
52   At the upstream market for the wholesale distribution of IT products, split by product category, the
     Transaction only gives rise to a vertically affected market for the wholesale distribution of PCs and
     notebooks in Germany ([30-40]%). However, the increment is limited to [0-5]%. In addition, the
     vertical relationship between ALSO's activities at the upstream and downstream market in Germany
     existed pre-Transaction and is therefore not merger-specific. Therefore, this vertical relationship will
     not be discussed further.
53 ALSO’s subsidiary in Poland, i-terra, has 10 shops (two in Gdansk, two in Warsaw, Krakow,
     Bialystok, Bydgoszcz, Kielce, Gdynia and Szczecin).
                                                         14
 ---pagebreak--- (72)     With regard to the ability and incentive to engage in input foreclosure, the merged
         entity does not appear to have a significant degree of market power in the
         upstream market for the wholesale distribution of ICT (IT products and
         telecommunication equipment) and CE. There are other wholesale distributors
         active on all affected markets and a majority of customers indicated that they
         already source ICT (IT products and telecommunication equipment) and CE from
         multiple distributors (see paragraph (57)). In addition, in some cases customers
         can also procure products directly from manufacturers. Furthermore, a majority of
         competitors, customers and manufacturers which responded to the market
         investigation consider that the merged entity would have a strong incentive to
         continue to sell to as many customers as possible.54
(73)     With regard to the ability and incentive to engage in customer foreclosure, the
         Commission considers that due to the limited role of ALSO at the retail level in
         Poland, customer foreclosure concerns do not arise as a result of the Transaction.
6.       CONCLUSION
(74)     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
54   See Q1 to competitors, replies to questions 16, 16.1, 17, 17.1; Q2 to customers, replies to questions
     13.1 and 14.1 and Q3 to vendors, replies to questions 13.13.1.
                                                         15