CELEX: 31992M0283
Language: en
Date: 1992-12-21 00:00:00
Title: COMMISSION DECISION of 21.12.1992 declaring a concentration to be compatible with the common market (Case No IV/M.283 - WASTE MANAGEMENT INTERNATIONAL PLC / S.A.E.) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31992M0283

COMMISSION DECISION of 21.12.1992 declaring a concentration to be compatible with the common market (Case No IV/M.283 - WASTE MANAGEMENT INTERNATIONAL PLC / S.A.E.) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 010 , 15/01/1993 P. 0000

 COMMISSION DECISION of 21.12.1992 declaring a concentration to  be compatible with the common market (Case No IV/M.283 - WASTE  MANAGEMENT INTERNATIONAL PLC / S.A.E.) 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 parties Dear Sirs, Subject: <ind> Case No IV/M.283-Waste Management International  plc./S.A.E. <ind> <ind> Notification of 18.11.1992 pursuant to Article 4 of  Council Regulation No. 4064/89  1. <ind> On 18.11.1992, Waste Management International plc.  (WMI) and Société Auxiliaire d'Entreprise S.A. (SAE) notified a  "Protocole d'Accord" (The Agreement) by which they create a  50:50 joint venture, Auxiwaste (WAS) which will be active in  the waste management field in France.   I. THE PARTIES   2.<ind> WMI is the British subsidiary of its US parent, Waste  Management Inc. The Waste Management group provides a wide  range of waste management and related services for both  hazardous and non-hazardous waste world-wide. Within Europe,  WMI is active in Denmark, Finland, France, Germany, Italy,  Spain, Sweden, the Netherlands and the U.K.   3.<ind> SAE, a French Société Anonyme, is the wholly-owned  (96%) subsidiary of Fougerolles S.A. The operations of both SAE  and Fougerolles are concentrated in construction, civil  engineering  and related services. Other than in France, SAE is  also active in Portugal, Spain, Italy, Belgium and the U.K.  <ind> Neither SAE nor Fougerolles is active in the waste  management business.   II. THE OPERATION   4.<ind> The agreement provides for the formation of WAS as a  French Société Anonyme (SA) whose activity will be limited to  the provision of non-hazardous solid waste management services  in France.   5.<ind> WAS will conduct its business either directly or  through subsidiaries. Under the terms of The Agreement WAS will  manage the existing WMI subsidiaries presently engaged in the  business of solid waste management services in France (the SPAT  group of companies and Environnement Service SA (ESSA)) though  WMI will retain   a 90%  stake  in SPAT  and a majority  stake  in ESSA.  III. COMMUNITY DIMENSION   6.<ind> The aggregate worldwide turnover of the Waste  Management group and the SAE group amounts in their last  financial year to more than ECU 5.000 million. Their Community  wide turnover exceeds ECU 250 million.  <ind> The undertakings involved do not achieve more that two- thirds of their aggregate Community-wide turnover within one  and the same Member State.   IV.<ind> CONCENTRATION   <ind> Joint Control  7.<ind> Each of WMI and SAE will hold a 49.9.% Stake in WAS,  the remainder being held by six individuals, each owning one  share. Three of these individuals will be nominated by WMI and  the other three by SAE. This particular structure is necessary  to meet the requirements of the French law on "Sociétés  Anonymes".   <ind> The Conseil d'Administration of WAS will comprise of  eight members, four appointed by WMI and four by SAE. Decisions  of the Conseil d'Administration will normally be taken by a  simple majority. Major commercial and strategic decisions  including, notably the adoption of the operating budget,  investment programme and annual financing plan of WAS, will  require a two-thirds majority.  <ind> Each of WMI and SAE thus exercises joint control with the  other over WAS, with neither party being able to take decisions  unilaterally.   <ind> Joint venture performing on a lasting basis all the  functions of an autonomous economic entity   8.<ind> Under the terms of the agreement, WAS will assume, for  the duration of the JV  by way of contract, control and  management of all of WMI's existing activities as well as any  company in which WAS takes a majority stake either alone or in  conjunction with one or more of the parents, in the French non- hazardous solid waste management field.   The Agreement  provides that all such companies will report exclusively to WAS  which will manage their commercial and competitive policy and  determine their investment programme, annual financing plan and  operating budget.  <ind> Thus the retention by one or the other of the  parents of  a majority interest in such companies will not prejudice WAS's  autonomy given the contractual terms affording WAS management  control. The parents have agreed to provide WAS, if needed,  with any patents, licences or know-how necessary for it fully  to develop its business. WAS will be endowed with capital of 80  million FF to enable it to fund future acquisitions or  creations of new subsidiaries autonomously. Moreover, the  parties have agreed in advance that WAS be free to use up to  50% debt financing in funding such acquisitions.  <ind> The duration of the Agreement is indefinite.  The new  company is thus a joint venture which will perform all the  functions of an autonomous entity on a lasting basis.  <ind> Absence of risk of coordination   9.<ind> SAE has no activities in the field of solid waste  management in France and there is thus no overlap between the  parents of the joint venture. WMI is to cede to WAS control of  its subsidiaries in this sector. A potential for coordination  could only arise, therefore, were one or both parents to enter  the solid waste management field in France independently of the  joint venture. This, however, would not appear a commercially  reasonable step for either parent to take. Having made a  sizeable investment in the joint venture, there would appear to  be little motivation for either parent to establish an  independent rival to the joint venture. Such independent entry  would thus seem neither reasonable nor likely.  10.<ind> The Protocole d'Accord signed by the parties, includes  a de minimis provision in respect of acquisitions. Where the  acquired company earns less that 20% of its French turnover in  solid waste management, and where this turnover is below FF 10  million, the parents are under no obligation to include the  waste management activities in the joint venture. The parties  argue that it is common for many industrial and construction  companies to have small in-house waste management activities.  These tend to comprise of minor collection and/or transport  operations which would not present any genuine competitive  presence in the joint venture's market, particularly as such  operations are likely not to include the provision of these  services to third parties. For this reason the de minimis  clause is judged not to give rise to any meaningful possibility  of coordination between the parents and the joint venture.  11.<ind> While WMI is active in neighbouring EC countries in  the same business as WAS, the market or markets concerned are  geographically distinct. As is argued below the relevant  geographic market(s) are national, if not regional or even  local, for reasons of regulation, local custom and knowledge,  transport costs and the particular legal regime pertaining to  third party liability in the case of waste. There is thus no  possibility of coordination between WMI's activities outside  France and those of WAS.   V. <ind> COMPATIBILITY WITH THE COMMON MARKET  <tab> Affected product market  12.<ind> The joint venture's activities may potentially embrace  any of the following: collection, transport, recycling, reuse,  incineration, treatment and disposal of non-hazardous waste,  i.e. household, commercial, industrial and construction waste  not falling into the waste categories of the relevant hazardous  waste legislation, and municipal, commercial and industrial  cleaning services.  In this context, "recycling" is taken to  mean the collection and separation of materials for recycling.   These materials are then sold to independent brokers  specialising in a particular waste material (eg glass, paper,  plastic) from whom the mills and factories manufacturing the  recycled final product source their raw materials.  13.<ind> Hazardous waste requires complex disposal, treatment  and recycling facilities; a different and more burdensome  regulatory framework applies than for non-hazardous waste; and  the costs involved in treatment and disposal are thus  substantially higher. For these reasons, services provided in  respect of hazardous waste can be excluded in this assessment  of the relevant product market.    14.<ind> The parties state that the market for non-hazardous  waste services cannot further be divided according to the sort  of non-hazardous waste (industrial household or construction)  dealt with. The same types of collection, treatment and  disposal services are frequently offered for household waste  and certain types of non-hazardous industrial waste.   15.<ind> It is possible, however, that certain services in the  non-hazardous waste management sector may constitute distinct  markets as can be seen by the number of smaller niche operators  whose activities are limited to one or a small number of  related waste management services.  16.<ind> For the purpose of this case, however, the precise  delimitation of the relevant product market can be left open,  since even on the basis of the narrowest possible definition of  markets, (e.g. a separate market for the landfill of household  waste), in the absence of any overlap, the operation does not  raise serious doubts.  <ind> Relevant geographic market  17.<ind> The market for treatment of non-hazardous waste  appears to be national or even local in character.   18.<ind> Movement and disposal of waste in the EC are subject  to a complex framework of rules and regulations both at the  Community and national level. EC Directive 91/156 establishes  the "proximity principle", which requires Member States to take  appropriate measures to establish an integrated network of  disposal facilities to enable them to become self sufficient  with respect to the disposal of their own waste and to enable  waste to be disposed of in the nearest appropriate facility.  Member States are also permitted to prevent movements of waste  which are not in accordance with waste management plans adopted  in accordance with the Directive.   19.<ind> The national legislation applicable to waste  management varies within the Member States and even from region  to region. In France, national legislation regulates the  collection, transport and disposal of waste. Local legislation  regulates inter alia the rates charged for services,  environmental protection and landfills and land-use planning.  20.<ind> Management of waste also involves exposure to  substantial third party liability. Under EC and national  legislation, the costs of disposing of waste must be borne in  accordance with the "polluter pays" principle, which provides  that costs must be allocated among or borne entirely by each of  the holder or previous holder of the waste, an undertaking  conducting waste disposal operations, or the producer of the  product from which the waste came.  21.<ind> Transport costs are an important element in the price  charged to customers given the bulky nature of solid non- hazardous waste. Furthermore, these costs are increased by  regulatory requirements as to security in transit of waste.   22.<ind> As a result of these legal constraints, high transport  costs and liability for any mishap involving even non-hazardous  waste, there is an overriding preference for the local  treatment and disposal of waste in order to minimise its  movement on the part of all parties involved.   23.<ind> The total quantity of industrial and household waste,  including both hazardous and non-hazardous waste, imported to  France represented respectively less than 0,5% (1990) and 4%  (1989) of French national production, and is, according to a  report from the French parliament in 1991 [Rapport  d'informations déposé par la Commission de la Production et des  Echanges de l'Assemblée Nationale le 16 octobre 1991 "Rapport  Bockel'.], decreasing. To further limit imports of waste, the  French government has adopted a decree banning imports of  household waste and industrial waste capable of assimilation  into household waste unless the imports are subject to an  agreement between France and the exporting state or a specific  plan for the elimination of waste. There is no export of  household waste from France, and the export of non-hazardous  industrial waste is insignificant.  24.<ind> The national or local character of the market is  further demonstrated by significant price differences between  the Member States. The average price for recycling a ton of  waste in Germany is FF 474 while in France it is only FF 102.   25.<ind> It is clear from the above that the relevant  geographic market  is no more than national in size, and may in  fact be regional or local in nature. Nevertheless, since the  operation does not raise serious doubts as to the compatibility  with the common market even on the basis of the narrowest  market definition the precise relevant geographic market can be  left open.  <ind> Assessment  26.<ind> The joint venture will have an overall market share of  less than 15% in France for the management of non-hazardous  waste. Since prior to the operation, SAE has no assets or  operations in the non-hazardous waste management business and  WMI is active in this  sector in France through the SPAT and  ESSA groups of companies,  there is no overlap between the  operations of SAE and WMI.  Furthermore, the proposed  concentration does not create any significant vertical or  conglomerate links between the parents and the joint venture.   27.<ind> The concentration will not therefore create or  strengthen a dominant position as a result of which effective  competition will be significantly impeded in the common market  or in a substantial part of it.  VI. <ind> ANCILLARY RESTRAINTS  28.<ind> The Protocole d'Accord includes an exclusivity clause  under which both SAE and WMI agree that all their projects,  activities or investments in the solid waste management  business in France will be undertaken through WAS.  This  undertaking is a non-competition clause. To the extent that it  aims to express the reality of the lasting withdrawal of the  parents from the market assigned to the joint venture, this  clause can be regarded as directly related and necessary to the  concentration.  <ind> 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