CELEX: 32014M7161
Language: en
Date: 2014-04-24 00:00:00
Title: Commission Decision of 24/04/2014 declaring a concentration to be compatible with the common market (Case No COMP/M.7161 - DCC ENERGY / QSTAR FÖRSÄLJNING / QSTAR / CARD NETWORK SOLUTIONS) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

                                        Brussels, 24.4.2014
                                        C(2014) 2791 final

                                        [pic]

                                        [pic]

|                                                                       |                                                                       |
|                                                                       |                                                                       |
|                                                                       |                                                                       |
|                                                                       |                                                                       |
|To the notifying party:                                                |                                                                       |

Dear Sir/Madam,

Subject:    Case M.7161 – DCC ENERGY/ QSTAR FÖRSÄLJNING/ QSTAR/ CARD NETWORK SOLUTIONS
         Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/2004[1]

    1) On 20 March 2014, the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation  (EC)  No
       139/2004 by which the undertaking DCC Energy Limited ('DCC Energy', of Ireland), ultimately controlled by DCC  plc  ('DCC',  of  Ireland),
       acquires within the meaning of Article 3(1)(b) of the Merger Regulation control of the whole  of  Qstar  Försäljning  AB  ('Qstar'),  Card
       Network Solutions Europe AB ('Card') and Qstar AB (all of Sweden, together referred to as the 'Target Companies'), by way of  purchase  of
       shares.[2] (DCC and the Target Companies will hereafter be together referred to as the 'Parties'.)

       THE PARTIES

    2) DCC is a publicly listed company that acts as a sales, marketing, distribution and  business  support  services  group,  headquartered  in
       Dublin. DCC operates across five divisions: DCC Energy, DCC SerCom (IT and entertainment products), DCC Healthcare, DCC Environmental  and
       DCC Food and Beverage.

    3) DCC Energy is principally active in the oil, LPG and fuel cards related markets in a number of European countries. In Sweden it is  active
       in the oil and LPG related markets, through its subsidiaries Swea Energi Holding AB and Flogas Sverige AB.

    4) Qstar is principally active in the sale of motor fuels (mainly gasoline, diesel and ethanol)  to  and  from  retail  service  stations  in
       Sweden. The sales of motor fuels are made through a number of retail stations that it owns and operates under the Qstar brand.

    5) Qstar AB is principally active in the wholesale (non-retail) distribution of heating oil,  diesel,  alkylate  gasoline,  wood-pellets  and
       lubricants in Sweden.

    6) Card is a software company providing business and payment systems for the gasoline and fuel  industry.  Their  software  "Allkort"  offers
       technology for payment terminals.

       THE OPERATION AND THE CONCENTRATION

    7) The proposed transaction involves the indirect acquisition of sole control by DCC over Qstar, Qstar AB and Card, through purchase  of  the
       entire issued share capital of each of the latter companies (the 'Proposed Concentration'). The acquisition of the Target  Companies  will
       be executed through the closing of three separate share purchase agreements, which together form a single concentration. All  three  share
       purchase agreements were signed on the same date and their respective closings are de jure conditional upon each  other.  [3]  The  mutual
       interdependence of the three legal transactions shows that the economic aim pursued via the proposed concentration is for DCC  to  acquire
       sole control over all three companies (Qstar, Qstar AB and Card). It is therefore appropriate to treat the three transactions as a  single
       concentration.[4]

       EU DIMENSION

    8) The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 000 million[5] (DCC: EUR 11 025 million; Qstar
       AB/Qstar: EUR […]; Card: EUR […]).

    9) Regarding the question whether the condition of Article 1(2)(b) of the Merger Regulation is fulfilled, it can first be noted that DCC  has
       an EU-wide turnover in excess of EUR 250 million (namely EUR […]). As to the other undertakings concerned, for purposes of calculation  of
       turnover, the respective aggregate EU-wide turnovers of Qstar AB and Qstar should be combined, in accordance  with  Article  5(2)  of  the
       Merger Regulation. The sale of both aforementioned companies is namely part of a single concentration,  simultaneously  occurring  between
       the same seller and purchaser.[6] Qstar AB/Qstar combined have an aggregate EU-wide turnover of EUR […]. Neither DCC  nor  Qstar  AB/Qstar
       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.

       COMPETITIVE ASSESSMENT

   10) All of the Parties' overlapping activities are limited to the territory of Sweden and these give rise to three affected markets, involving
       the non-retail supply of diesel (horizontal overlap, first affected market)[8] and the supply of liquid petroleum gas  ('LPG',  horizontal
       overlap, second affected market[9] and vertical overlap; third affected market).[10] The remaining overlapping activities that do not give
       rise to affected markets involve: (i) the non-retail supply of heating oil; (ii) the non-retail  supply  of  gasoline;  (iii)  the  retail
       supply of motor fuels; (iv) the retail supply of heating oil; (v) the supply of  fuel  cards[11];  (vi)  the  supply  of  (industrial  and
       automotive) lubricants; and (vii) the distribution of wood-pellets.

1 Relevant product markets

   11) As regards the supply of refined oil products, the Parties submit that there is one single product  market  with  no  further  distinction
       either between non-retail and retail sales or by type of oil product. Insofar as relevant to  this  matter,  the  Commission  has  however
       previously defined separate relevant product markets for the (i) non-retail supply of diesel, (ii) non-retail supply  of  LPG,  and  (iii)
       retail supply of motor fuels (encompassing diesel, gasoline and LPG). 'Non-retail' in that regard should  be  understood  as  encompassing
       both wholesale sales made to independent resellers that are not integrated upstream as well as retail sales made to large  industrial  and
       commercial customers (such as e.g. hospitals, factories, etc.).[12]

   12) The Parties also submit that an overall product market for the non-retail supply of mineral  oil  products  exists,  which  comprises  the
       (wholesale) distribution of heating oil, diesel as well as gasoline. The Commission has however previously considered that different "non-
       retail" fuels are supplied for different uses to different types of customers. Indeed, the Commission has previously stated that the  non-
       retail sale of each refined fuel product constitutes a distinct relevant product market.[13] Indeed, these products are not  substitutable
       in terms of demand. Exceptionally, in M.3375 Statoil / SDS (2004), the Commission did consider that diesel and gasoline belong to the same
       product market in view of the existing supply-side substitutability.

   13) With respect to LPG, the Parties believe that within the market for the non-retail supply of LPG, separate relevant product markets  exist
       for the supply of LPG in bulk and in bottles. In that regard, the Parties  indicate  that  the  products  require  different  distribution
       infrastructures as well as different licensing and that no demand-side substitution  exists  between  said  categories  due  to  different
       customer requirements. The Commission has previously also considered a sub-segmentation into LPG sold in bottles and  LPG  sold  in  bulk,
       finally leaving this question open.[14]

   14) In line with the Commission's previous decision-making practice, the Parties believe that the retail supply of motor fuels  constitutes  a
       separate relevant product market which should not be further sub-segmented by type of fuel product, given  the  existence  of  supply-side
       substitutability. Exceptionally, the Commission has however considered – without taking a final  position  –  whether  within  the  latter
       market a separate relevant market for automotive LPG exists.[15]

   15) In any event, the precise definition of all aforementioned relevant product markets can be left open, as the proposed  concentration  does
       not raise serious doubts as to its compatibility with the internal market under any plausible alternative market definition.

2 Relevant geographic markets

   16) The Parties submit that all the aforementioned (possible) relevant product markets  are  national  in  scope,  which  coincides  with  the
       Commission's view entailing that these markets encompass (at least) the entire Swedish territory.[16]

   17) In any event, the precise definition of the geographic scope of the relevant markets can be left open, as the proposed concentration  does
       not raise serious doubts as to its compatibility with the internal market under any plausible alternative scope.

3 Competitive assessment

1 Non-retail supply of diesel

   18) Although the Parties' combined post-merger share of the possible market for the non-retail supply of diesel  in  Sweden  of  [20-30]%  […]
       exceeds 20%, the increment resulting from the proposed concentration is highly limited,[17] as the Target  Companies'  combined  share  of
       this market only amounts to [0-5]% - with DCC having a share of [10-20]%. Moreover, several strong, vertically integrated competitors will
       continue to exert significant competitive pressure on the merged entity such as Preem AB ([40-50]% market share), OK/Q8  ([10-20]%  market
       share), and Statoil ([5-10]% market share).

   19) In light of the foregoing, this horizontal overlap does not raise serious doubts as to its compatibility with the internal market.

2 Non-retail sale of LPG

   20) The Proposed Concentration gives rise to one further, possible horizontal overlap on the overall market for the non-retail sale of LPG  in
       Sweden,[18] on which market the merged entity would  hold  a  share  of  around  [40-50]%.  The  increment  resulting  from  the  proposed
       concentration will however be limited,[19] given that the Target Companies' LPG sales account for less than [0-5]% of the overall market –
       with DCC currently having a [40-50]% share. Finally, several important  competitors  will  continue  to,  post-merger,  exert  significant
       competitive pressure on the merged entity. Such competitors include: (i) E.ON ([10-20]% market share), (ii) Kosan ([10-20]% market share),
       (iii) Neste ([10-20]% market share), and (iv) Preem ([5-10]% market share).

   21) This overlap therefore equally does not raise serious doubts as to its compatibility with the internal market.

3 Non-retail sales of LPG – retail sales of automotive LPG

   22) The Proposed Concentration also gives rise to a vertically affected market due to DCC's (upstream) activities in the  non-retail  sale  of
       LPG and the Target Companies' (downstream) activities in the retail sale of automotive LPG.

   23) DCC is however unlikely to have the ability to, post-merger, engage in any form of input foreclosure. Given  that  it  currently  holds  a
       market share of [40-50]% of the upstream market, customers could, in the event  of  an  attempted  foreclosure,  switch  to  a  number  of
       significant upstream competitors of DCC, such as: (i) E.ON ([10-20]% market share); (ii) Kosan ([10-20]% market share); (iii) Neste  ([10-
       20]% market share); and (iv) Preem ([5-10]% market share). Moreover, 4 of the 5 most important automotive LPG retail stations (those  that
       also serve other types of automotive fuel products, rather than mere warehouses selling bottled LPG) are vertically integrated with third-
       party oil majors (Preem and OK/Q8).

   24) In addition, the merged entity will in any case not have an incentive to foreclose access to inputs. Currently, only 2 out of at least  33
       retail stations that sell automotive LPG[20] in Sweden are supplied by DCC. Also, the Target Companies' position in the downstream  retail
       market is highly limited, accounting for (at most) a [5-10]% market share (2 out of 33  retail  stations[21])  and  generating  an  annual
       turnover of less than EUR […]. Therefore, the basis on which additional profits could theoretically be earned is highly limited.

   25) Furthermore, the merged entity will neither have the ability nor incentive to enter into customer foreclosure. As already  mentioned,  the
       Target Companies' importance in the downstream market for the retail sale of automotive LPG is highly limited given that they only operate
       2 out of 33 retail stations selling automotive LPG, which furthermore generate a highly  limited  turnover.[22]  Accordingly,  the  merged
       entity will be unable to affect the ability of DCC's upstream competitors to effectively compete by engaging in customer foreclosure.

   26) In light of all of the foregoing, it appears that the merged entity will neither have the ability nor incentive to engage in either  input
       or customer foreclosure in relation to the Swedish LPG markets. Therefore, the transaction  does  not  raise  serious  doubts  as  to  its
       compatibility with the internal market as a result of this vertical link.

       CONCLUSION

   27) For the above reasons, the 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.

                                        For the Commission
                                        (Signed)
                                        Joaquín ALMUNIA
                                        Vice-President

-----------------------
[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]   Publication in the Official Journal of the European Union No C 89, 28.03.2014, p. 52.

[3]   Article 5.2 of each of the respective share purchase agreements.
[4]   See recital 20 to the  Merger Regulation and the Commission Consolidated  Jurisdictional  Notice  ("CJN")  (OJ  C95,  16.04.2008,  p1),  in
      particular paragraphs 36 and following.
[5]   Turnover calculated in accordance with Article 5(1) of the Merger Regulation.
[6]   As regards the identity of the seller, it should be noted that both Qstar AB as well as Qstar are currently (ultimately) solely  controlled
      by the individual Claes Bergström, a Swedish national. The fact that 35% of the share capital of Qstar is currently owned by a third  party
      (Svenska Oljebolaget Holding AB) which is not associated with Mr Bergström does not preclude the finding of sole control on the part of the
      latter, given that major strategic decisions (such as those relating to the budget as well as the  annual  business  plan)  are  ultimately
      decided by simple majority of the shareholders' meeting, at which level Mr Bergström holds a majority.
[7]   DCC achieves more than two-thirds of its aggregate EU-wide turnover in the United Kingdom whereas Qstar/Qstar AB achieves  more  than  two-
      thirds of its aggregate EU-wide turnover in Sweden.
[8]   Analysed in 4.3.1 below.
[9]   Analysed in 4.3.2 below.
[10]  Analysed in 4.3.3 below.
[11]  It is important to note that the Parties' fuel card-related activities do not overlap  within  Sweden.  Only  if  the  relevant  geographic
      market was taken to be EEA-wide in scope could this activity, theoretically, be considered to show an overlap, in which case  the  Parties'
      combined market share would however remain below 1%.
[12]  COMP/M.3291 Preem/Skandinaviska Raffinaderi  (2003);  COMP/M.3375  Statoil  /  SDS  (2004);  COMP/M.3543  PKN  Orlen  /  Unipetrol  (2005);
      COMP/M.3516 Repsol / Shell Portugal; COMP/M.4208 Petroplus / European Petroleum  Holdings  (2006);  COMP/M.4545  Statoil  /  Hydro  (2007);
      COMP/M.5005 Galp Energia / Exxonmobil Iberia (2008); COMP/M.5169 Galp Energia Espana / Agip Espana (2008).
[13]  COMP/M.3291 Preem/Skandinaviska Raffinaderi  (2003);  COMP/M.3375  Statoil  /  SDS  (2004);  COMP/M.3543  PKN  Orlen  /  Unipetrol  (2005);
      COMP/M.3516 Repsol / Shell Portugal; COMP/M.4208 Petroplus / European Petroleum  Holdings  (2006);  COMP/M.4545  Statoil  /  Hydro  (2007);
      COMP/M.5005 Galp Energia / Exxonmobil Iberia (2008); COMP/M.5169 Galp Energia Espana / Agip Espana (2008).
[14]  Only in case COMP/M.5005 Galp Energia/ExxonMobil Iberia (2008), the Commission finally decided that Bulk LPG  and  Bottled  LPG  belong  to
      separate relevant product markets. In other cases, this possibility was left open: COMP/M.5637 Motor  Oil  (Hellas)  Corinth  Refineries  /
      Shell Overseas Holdings (2010); COMP/M.3664 Repsol Butano / Shell Gass (LPG) (2005); M.3375 Statoil / SDS (2004).
[15]  COMP/M.5005 Galp Energia / Exxonmobil Iberia (2008).
[16]  COMP/M.3291 Preem/Skandinaviska Raffinaderi (2003); COMP/M.3375 Statoil/SDS (2004); COMP/M.3730 Lukoil / Teboil / Suomen  Petrooli  (2005);
      COMP/M.4532 Lukoil / ConocoPhillips (2007); M.4919 Statoilhydro / Conocophillips (2008).
[17]  The relevant HHI delta will remain below 150.
[18]  Under the narrowest possible market definition no overlap exists, as DCC is only active in the non-retail supply of  bulk  LPG,  while  the
      Target Companies' activity is confined to bottled LPG.
[19]  The relevant HHI delta will remain below 100.

[20]  The Parties submitted that the LPG market is very fragmented and limited in Sweden, inter alia  due  to  unfavourable  tax  treatment,  and
      therefore information on the exact size is difficult to obtain or estimate.
[21]  The Target Companies are currently supplied by […].
[22]  The Parties explain that the Target Companies' annual LPG procurement amounted to around […] tons per annum (in 2013), whereas the  overall
      Swedish market for the supply of bulk LPG covered 342 000 tons (in 2012).

-----------------------
 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.

                                                                  PUBLIC VERSION

                                                                 MERGER PROCEDURE