CELEX: 32016M7941
Language: en
Date: 2016-05-17 00:00:00
Title: Commission Decision of 17/05/2016 declaring a concentration to be compatible with the common market (Case No COMP/M.7941 - SAINT-GOBAIN GLASS FRANCE / CORNING / JV) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

                                        Brussels, 17.5.2016

                                        C(2016) 3048 final

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|To the notifying parties:                                              |                                                                       |
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Dear Sir/Madam,

Subject:    Case M.7941 - SAINT-GOBAIN GLASS FRANCE / CORNING / JV
         Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/2004[1] and Article 57 of the Agreement on the European
         Economic Area[2]

1) On 6 April 2016, the European Commission received a notification of a proposed concentration pursuant to Article 4 of  the  Merger  Regulation
   by which Compagnie de Saint-Gobain S.A. ("Saint-Gobain", France) and Corning Incorporated ("Corning", USA)  acquire,  within  the  meaning  of
   Article 3(4) of the Merger Regulation, joint control of a newly created company constituting a joint venture (the "JV")[3].  Saint-Gobain  and
   Corning are designated hereinafter as the 'Notifying parties' to the proposed transaction.

       THE PARTIES

2) Saint-Gobain is active in three business sectors, namely (i) innovative materials (including flat  glass),  (ii)  construction  products,  and
   (iii) building materials distribution.

3) Corning is a U.S.-based materials company active in speciality glass, ceramics and optical physics for use in  a  wide  range  of  industries.
   Corning's main areas of activity are flat glass for display and cover applications for use in  consumer  electronics;  optical  fiber,  cable,
   hardware and related equipment for communication networks; vessels for drug research and discover applications in the life sciences  industry;
   pharmaceutical tubing; ceramic filters and substrates to reduce emissions from combustible engines; and advanced glass  technologies  for  new
   applications.

       THE OPERATION

4) The operation consists of the incorporation of a JV between Saint-Gobain and Corning which will focus  on  the  development,  manufacture  and
   commercialisation of laminated lightweight automotive glazing solutions, which will incorporate soda-lime glass (traditional glass used in the
   automotive industry) and at least one layer of thin aluminosilicate glass ("TAG") (the product to be developed by the JV is hereunder referred
   to as “TAG-based automotive glazing solutions”) (the "Proposed Transaction"). The JV’s products are expected to  have  unique  characteristics
   and to meet car manufacturers' (“OEM”) specifications in terms of thickness, impact resistance and optical qualities.

       THE CONCENTRATION

5) The Proposed Transaction consists in the creation of a jointly controlled and fully functional JV by Corning and Saint-Gobain. Therefore,  the
   Proposed Transaction constitutes a concentration within the meaning of article 3(4) of the Merger Regulation..

1 Full Functionality

6) The JV will have sufficient resources to operate independently on the  market,  both  in  terms  of  financial  resources,  staff  and  assets
   (paragraph 94 of the Jurisdictional Notice).

7) First, as to the financial resources to operate independently on the market, the Parties will make an initial investment of […]. This  initial
   capital contribution is expected to suffice for the purposes of covering the expenditures of the JV during the  development  and  starting  of
   production of the TAG-based automotive glazing solutions. After this start-up period, the JV should finance itself both by retaining  part  of
   the profits generated and by accessing the capital markets.

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8) Second, the JV will also have sufficient staff to operate independently. At the beginning of operations, [details on staffing of the JV].

9) During the initial development phase, [details on staffing of the JV].

10) Once the development phase is over, [details on staffing of the JV].

11) The JV is expected to have its [details on staffing of the JV].

12) Third, the JV’s activities will be beyond those of the Parents (paragraphs 95-96 of the Jurisdictional Notice). The JV  will  develop  a  new
   product offering (the TAG-based automotive glazing solutions) adding significant value to the Parties’ input products with its  activity.  The
   development of a TAG-based automotive glazing solution will in fact require research and development efforts and the activities of the JV will
   go beyond one specific function for the parents and the JV will offer to the market a product significantly different to those of the Parties.

13) Fourth, albeit the JV will receive the input products from the Parents, the JV will sell its products exclusively to third  parties.  The  JV
   will be selling TAG-based automotive glazing solutions directly to the OEM and no sales to the Parties are expected.

14) As to purchases from the Parents, the development process which will be carried out by the JV will  add  significant  value  to  the  Parties
   input products. Therefore the fully functional nature of the JV will not be impaired.

15) Finally, the JV is expected to operate on a lasting basis as it is not incorporated for a specific period of time.

2 Joint Control

16) Corning and Saint-Gobain will each own 50% of the shares in the JV and both Parties will have the possibility to exercise decisive  influence
   over it for the reasons explained below.

17) First, shareholders’ resolutions (which include the appointment of the Managing Directors and the members of the JV’s  Management  Committee)
   will be taken by an affirmative vote of more than 50% of the voting shares or by unanimous  written  consent,  with  a  quorum  requiring  the
   presence of Shareholders representing more than 50% of the shares.

18) Second, each Party will have the right to appoint one managing director.

19) Third, strategic decisions – including the adoption of the JV's annual budget and business plan – will be  made  by  the  Managing  Committee
   which will be composed of an even number of members (half designated by each Party).  The  Management  Committee  will  adopt  resolutions  by
   unanimous written consent with a quorum requiring the presence of at least two representatives of each Party. Therefore, both Parties will  be
   able to veto decisions at the level of the Management Committee.

20) In light of the above, Corning and Saint-Gobain will jointly control the JV

       EU DIMENSION

21) The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 000 million[4].  Each  of  them  has  an  EU-wide
   turnover in excess of EUR 250 million, but they do not achieve more than two-thirds of their aggregate EU-wide turnover  within  one  and  the
   same Member State. The notified operation therefore has an EU dimension.

       COMPETITIVE ASSESSMENT

22) The Parties are not active in the same product market, hence the Proposed Transaction does not give rise to horizontally reportable  markets.
   Depending on the market definition retained, the Proposed Transaction might generate a (future) horizontal overlap  between  the  activity  of
   Saint-Gobain and those of the JV in the sale of automotive glass.

23) As to possible vertical relationships, the JV will be active in a market which will possibly be downstream to the markets where  the  Parties
   are currently active. In particular, the JV will use the products manufactured by the Parties as input for the products it will manufacture.

1 The business activity of the JV

24) The business activity of the JV will be the development and subsequent production of an innovative laminated  lightweight  glazing  solutions
   for the automotive sector that incorporates soda-lime glass and thin aluminosilicate glass.

25) Soda-lime glass is the basic flat glass product category. It is the most common flat glass type and accounts for the vast  majority  of  flat
   glass being produced. Soda-lime glass is produced through an uninterrupted process where a continuous stream of molten glass is poured from  a
   furnace on to a large shallow bath of molten tin. The molten glass floats on the tin, as oil floats on a pool of  water,  and  forms  a  level
   surface. Thickness is controlled by the speed at which solidifying glass ribbon is drawn  off  from  the  bath.  After  annealing  (controlled
   cooling), the glass emerges as a polished product with virtually parallel surfaces.

26) The resulting float glass can be processed in a number of different ways, e.g. by laminating or toughening the  glass  to  produce  a  safety
   glass which will be shatter-safe on impact, or by coating the glass such as to enhance the energy efficiency  qualities  of  the  glass.  Once
   processed, the glass may be further transformed and used for different end-applications, in particular for the automotive industry  (i.e.  car
   windows and sunroofs) and for architecture/construction (i.e. internal and external glass used in buildings).

27) Aluminosilicate glass is a specialised glass that has aluminium oxide in its composition, a very small amount  of  soda  and  no  lime.  This
   composition results in a highly resistant glass capable of supporting very high temperatures, sudden temperature changes and other  conditions
   which can damage the surface of other types of glass having a different composition. The aluminosilicate composition also enables this type of
   glass to undergo further heat or chemical processing, and it is therefore used for industrial applications such as combustion tubes  or  gauge
   glasses for high pressure steam boilers which require a type of glass resistant to very high temperatures.

28) Corning uses a proprietary fusion draw process to produce its  thin  aluminosilicate  glass  ("TAG").  This  proprietary  production  process
   includes a chemical processing through an ion-exchange process. This process creates a compression which strengthens the glass and prevents it
   from breaking on flaws. The combination of the aluminosilicate glass composition and the ion-exchange process results in a glass product  that
   is resistant to surface damage and better able to resist breakage when flaws are introduced to the surface of the glass.

29) The focus of the JV will be the manufacture of TAG-based automotive glazing solutions combining at least one sheet of TAG  with  a  soda-lime
   layer. The JV’s products are expected to have unique characteristics and to meet OEM specifications in terms of thickness,  impact  resistance
   and optical qualities. The initial market opportunity is small. In the long term, TAG-based  automotive  glazing  solutions  may  become  more
   widely adopted as automobile makers seek to meet lower emissions standards and  improve  energy  consumption  without  sacrificing  automobile
   performance by lowering the overall weight of the vehicle.

2 Market Definition

30) The Proposed Transaction, depending on the market definition retained, will give rise  possibly  to  three  affected  markets:  two  upstream
   vertically affected markets where Saint-Gobain and Corning are active and one downstream affected market where the JV will be active.

1 Production of automotive glass

31) Saint-Gobain is active in the production of automotive glass which will be an input for the TAG-based automotive glazing solution  that  will
   be developed and produced by the JV.

32) In previous decisions, the Commission found that automotive glass constitutes  a  separate  product  market.  It  distinguished  between  (i)
   automotive glass supplied to original equipment manufacturers (“OEMs”) and (ii) automotive  glass  supplied  to  the  independent  aftermarket
   (“IAM”)[5].

33) The Parties also agree with the above market definition.

34) As to the geographic scope of the market, the Commission has in the past decision regarded this market as EEA-wide in scope, however  it  did
   not reach a final conclusion.

35) The information provided by the Parties over the course of the investigation indicated that the vast majority  of  the  automotive  glass  is
   sold within the Member States where it is produced. This might point to a narrower geographic scope of the product market.

36) The market investigation however indicated that it is more appropriate to regard this market as EEA-wide in scope. This  is  because,  first,
   the majority of manufacturers of automotive glass indicated that they compete on an  EEA  wide  level  and,  second,  no  customers  gave  any
   indication that the geographic scope of this market should be regarded as narrower than EEA.

37) Ultimately however, the definition of the relevant product and geographic markets can be left open,  as  regardless  of  the  precise  market
   definition, the transaction will not give rise to competition concerns.

2 Cover material for consumer electronic devices

38) Screens of consumer electronic devices need to be protected and for this purpose different materials are available, such as TAG,  extra  thin
   soda-lime glass (with a thickness of up to 1.1mm), sapphire glass and non-glass covers.

39) The Commission has not analysed this market in previous cases. The Parties claim that the appropriate market definition should encompass  all
   types of cover material as from a demand-side perspective these would be fully substitutable for the reasons explained below.

40) First, the various types of cover material, albeit having slightly different physical  characteristics,  can  be  employed  on  all  consumer
   electronic devices and do guarantee comparable levels of performance.

41) Second, consumer electronic device manufacturers can and do switch from one material to the other. When developing a new product,  all  types
   of cover material are considered and the Parties provided examples of switching from one product to another.

42) The Parties' claims were supported by the findings of the market investigation. Competitors responding to the market investigation  indicated
   that, from a demand side perspective, all types of cover material can be used interchangeably. The market investigation  also  indicated  that
   customers have in the past switched between various types of cover material. Hence, it is  plausible  to  consider  that  substitution  exists
   between different types of cover material for consumer electronic devices.

43) As to the geographic scope of this market, the Parties claim that it should be regarded as worldwide as TAG and  other  cover  materials  are
   delivered worldwide from the production sites, which are located mainly in Asia.

44) The market investigation broadly confirmed the Parties' claims and gave indications that this market could be considered worldwide in scope.

45) Ultimately however, the definition of the relevant product and geographic markets can be left open,  as  regardless  of  the  precise  market
   definition, the transaction will not give rise to competition concerns.

3 TAG-based automotive glazing solutions

46) TAG-based automotive glazing solutions will be the result of the development effort carried out by the JV  and,  according  to  the  Parties,
   should be regarded as a distinct product market from the production of automotive glass for the reasons explained below.

47) First, so far, laminated solutions incorporating TAG have been used for a limited number of applications in high-end  vehicles  with  minimal
   market shares in the automotive sector. These are generally “concept-type” cars where new technologies are introduced at premium prices.

48) Second, it is expected that TAG-based glazing  solutions  will  be  used  in  high  performance  premium  cars.  When  OEMs  incorporate  new
   technological breakthroughs for the production of their cars, they often market them as  an  important  part  of  the  enhanced  technological
   features of their vehicles and as distinguishing factor(s) vis-à-vis other cars. Hence, OEMs developing and manufacturing high-end cars cannot
   easily switch from TAG-based glazing to non-TAG-based automotive glazing solutions. Therefore according to the Parties there will be no demand
   side substitutability between TAG-based glazing solutions and traditional glazing solutions.

49) The market investigation indicated that TAG-based automotive glazing solutions are expected to have  different  characteristics  compared  to
   traditional automotive glazing solutions, in particular, they are  expected  to  be  significantly  lighter  and  thinner.  Also,  the  market
   investigation indicated that both competitors and customers expect that TAG-based automotive glazing solutions will likely be  more  expensive
   compared to traditional automotive glazing; the premium being estimated above 40%. Finally, the OEMs responding to  the  market  investigation
   indicated that in the future they are likely to be able to use the two different glazing solutions on all their vehicles.

50) Notwithstanding the above, TAG-based automotive glazing solutions and traditional glazing solutions will most likely not be substitutable  in
   practice because of the expected technical and price differences between the two.  TAG-based  automotive  glazing  solutions  will  likely  be
   installed on premium/more expensive vehicles  and  will  likely  not  be  attractive  for  other  types  of  vehicles,  mainly  due  to  price
   considerations.

51) This conclusion is also supported by the replies of OEMs to the market investigation where the majority of respondents  indicated  that  they
   expect TAG-based automotive glazing solutions to be used mainly on more expensive vehicle segments.

52) As to the geographic scope of the market, the Parties claim that it – in line with the market for automotive glass – this market will be  EEA
   wide in scope. The market investigation gave indication that this definition might be appropriate.

53) Ultimately however, the definition of the relevant product and geographic markets can be left open,  as  regardless  of  the  precise  market
   definition, the transaction will not give rise to competition concerns.

4 TAG as an input for TAG-based automotive glazing solutions

54) Notwithstanding the fact that consumer electronic TAG can likely be substituted with other  materials,  these  cannot  be  employed  for  the
   development of TAG-based automotive glazing solutions. The TAG-based automotive glazing  solutions  which  the  JV  intends  to  develop  will
   incorporate one layer of TAG and no other materials, Also, the Parties claim that added value of this solution will be brought about by  TAG's
   physical characteristics.

55) Hence, with respect to the development of TAG-based automotive glazing solutions, the Commission considers it plausible that there  will  not
   be demand side substitutability between TAG and other materials as inputs.

56) In light of the above, and notwithstanding the conclusions reached in section 5.1.2. above, the Commission considers that – for the  purposes
   of the present case – TAG could potentially be regarded as a separate input product market.

57) As to the geographic scope of this plausible market, the analysis and conclusion reached in section 5.1.2 above is  plausibly  applicable  to
   this product market as well.

58) Ultimately however, the definition of the relevant product and geographic markets can be left open,  as  regardless  of  the  precise  market
   definition, the transaction will not give rise to competition concerns.

3 Competitive Assessment

1 Non-horizontal effects

59) If the market for TAG-based automotive glazing solutions was to be considered as a separate product  market,  the  Parties  to  the  Proposed
   Transaction will be active on two markets (the production of TAG for Corning and the production of glass for automotive applications for Saint-
   Gobain) which are directly upstream to the market where the JV will be active.

60) As already explained above, the business activity of the JV will be the development  of  a  glazing  solution  for  the  automotive  industry
   combining at least one sheet of TAG with a soda-lime layer. Hence, the inputs for the development and later manufacture of  this  new  glazing
   solution are products manufactured by the Parties (soda-lime glass for Saint-Gobain and TAG for Corning).

61) Hence, the Transaction could lead to input (TAG  or  soda-lime  glass)  foreclosure.  The  Commission  however  takes  the  view  that,  post
   transaction, the Parties will not have the ability to foreclose access to either of the inputs to the JV's competitors.

1 Ability to foreclose access to TAG

1 The Parties Claims

62) The Parties claim that the Proposed Transaction will not affect customers’ ability to source TAG on a global level  and,  in  particular,  in
   the EEA for the purpose of using it as an input to produce automotive glazing applications for the reasons explained below.

63) First, Corning’s existing supply relationships in the EMEA region[6] (namely with [details on customers])  will  not  be  discontinued  as  a
   result of the JVA and Corning will be entitled to continue offering such companies the required technical support.

64) Second, in addition to allowing for the continuity of existing supply relationships with automotive glass manufacturers in the EEA, the  JVA,
   notwithstanding the fact that it is incorporated for an indefinite period of time, only limits  Corning’s  ability  to  supply  TAG  to  third
   parties for the purpose of developing or selling TAG-based automotive glazing solutions until […].

2 Commission's assessment regarding Access to TAG

65) On the upstream market encompassing all cover material for consumer electronic devices, the market share of Corning  is  estimated  at  circa
   [30-40]% in volume.

66) If the possible market for the sales of TAG as input for TAG-based automotive glazing solutions is considered as the relevant input market  –
   the narrowest possible market definition in this case – Corning estimates that  its  market  share  in  2015  was  [80-90]%  and  the  closest
   competitors would be Asahi ([10-20]%) and NEG ([5-10]%). The latter two competitors' market shares increased significantly  compared  to  2014
   (Asahi [0-5]%, NEG [0-5]%).

67) The market investigation as well gave indications that Corning holds a significant market share, however not  as  significant.  According  to
   the respondents to the market investigation, Corning share is  [60-70]%,  Asahi  [10-20]%  (2014)  and  NEG  of  circa  [10-20]%.  The  market
   investigation also indicated that both Asahi and NEG have been steadily increasing their market share in the last 3 years. Specifically, Asahi
   market share increased from [10-20]% in 2013 to the current share and NEG from [0-5]% in 2013 to the current  [10-20]%.  Apart  from  the  two
   competitors above, the market investigation also indicated that Schott manufactures TAG albeit having a more limited market share.

68) As to the (future) market structure on the downstream market (that is the plausible market for TAG-based automotive glazing  solutions),  the
   market investigation indicated that for the development of automotive glazing solutions (irrespective of the type of glass used), it  is  very
   important to have the technical capability to curve glass  and  automotive  glass  manufacturers  have  this  capability.  In  light  of  this
   requirement, the Commission considers as plausible that downstream competitors of the JV will most likely be  automotive  glass  manufacturers
   (alone or in partnership with TAG manufacturers).

69) Hence, downstream, it is plausible – albeit not certain –  that  the  possible  future  competitors  of  the  JV  will  be  automotive  glass
   manufacturers such as Asahi, Pilkington, Guardian, Trakya, Isoclima, Salgglas and Hirschler. In light of the fact that the development of this
   product is at a very early stage, the Commission at this moment is not in the position to determine which companies will actually be active on
   such a market. However, the above list includes the major automotive car manufacturers and those  smaller  automotive  car  manufacturers  for
   which it is known that a development of TAG-based glazing solutions is ongoing.

70) Under this assumption, Corning, notwithstanding the high share of supply of TAG, will have limited possibility to foreclose access to  inputs
   for the reasons explained below.

71) First, alternative credible suppliers exist. Asahi, for example, is active on both the upstream and downstream market and therefore can self-
   supply TAG to its downstream business for the development of a competing solution to that of the JV. NEG on the upstream market has a share of
   supply estimated at circa [10-20]% and could also serve as a supplier of TAG for  downstream  competitors  of  the  JV.  Finally,  prospective
   competitors to the JV responding to the market investigation indicated that also Schott can be regarded as a viable supplier of  TAG  for  the
   development of a TAG-based automotive glazing solution. A respondent to the market investigation indicated that Schott has a limited footprint
   in North America but confirmed that in the EEA, it is an established manufacturer and therefore is a viable supplier in this region.

72) Second, the Commission considers that TAG production capacity is not a constraint at this stage of the development as there is no  particular
   need for very significant volumes of TAG. In fact, currently TAG-based automotive solutions are still under development and in  the  next  two
   years, only samples and prototypes of TAG-based automotive glazing solutions are expected to be manufactured in order to engage  in  marketing
   activities and procurement negotiations with OEMs.

73) During this development phase, and subject to  the  positive  outcome  of  the  development  of  the  product  itself,  it  is  possible  TAG
   manufacturers will be able to scale up their production facility. Hence, in the next 5 years, total  production  capacity  of  TAG  will  most
   likely be significantly different compared to that of today.  This  is  also  supported  by  the  fact  that  both  Asahi  and  NEG  increased
   significantly their respective market share in just two years[7].

74) The Commission therefore takes the view that alternative credible suppliers of TAG already exist and that, in any event, it is possible  that
   total TAG production capacity will increase in the near future, lowering Corning's share of supply on the upstream market. This eliminates, or
   at the very least significantly reduces, Corning's ability to restrict access to TAG for the JV's competitors.

2 Ability to foreclose access to soda-lime glass.

75) The Parties claim that as a result of the Proposed Transaction Saint-Gobain will not have the ability to foreclose access to soda-lime  glass
   to the JV's competitors for the reasons explained below.

76) First, customers will remain free to source float glass from several leading global suppliers which, aside from Saint-Gobain, are  active  in
   the EEA. Moreover, Saint-Gobain’s ability to supply float glass to other automotive glass suppliers and OEMs will not materially change.

77) Second, most automotive glass manufacturers have in house capabilities to manufacture soda-lime glass and the majority of manufactured  float
   glass is used for own use by the glass manufacturers. Third-party sales are exceptional and the marginal traded volumes will not  be  affected
   by the Proposed Transaction.

78) Third, pursuant to the JV agreement, Saint-Gobain remains free to continue the supply of float glass to third parties for the  production  of
   laminated automotive glazing of traditional thicknesses (above 3.2mm). With regard to  the  supply  of  float  glass  for  the  production  of
   laminated automotive glazing below 3.2mm, [details on contractual arrangements].

79) The Commission takes the view that Saint-Gobain will not have the ability to foreclose access to soda-lime glass to the JV's competitors.

80) In the event a TAG manufacturer wanted to start developing a TAG-based automotive solution and needed to source soda-lime glass as an  input,
   then it could approach a number of alternative suppliers. Notwithstanding the relatively high  market  share  of  Saint-Gobain  in  number  of
   operating floats[8] ([20-30]% in 2015) and in terms of sales of automotive glass ([40-50]% in 2015 and [40-50]% in  both  2014  and  2103)[9],
   there are a number of other competitors with significant market shares.

   |                                    |No of Floats                                |Market share                                |
|Saint-Gobain                        |[…]                                         |[20-30]%                                    |
|AGC                                 |[…]                                         |[20-30]%                                    |
|NSG                                 |[…]                                         |[10-20]%                                    |
|Others                              |[…]                                         |[10-20]%                                    |

   Market share capacity Float Glass – Source: Form Co

   |                                |2013                           |2014                           |2015                         |
|Saint-Gobain                    |[40-50]%                       |[40-50]%                       |[40-50]%                     |
|Pilkington                      |[20-30]%                       |[20-30]%                       |[20-30]%                     |
|Asahi                           |[10-20]%                       |[20-30]%                       |[20-30]%                     |
|Fuyao                           |[0-5]%                         |[0-5]%                         |[0-5]%                       |
|Guardian                        |[0-5]%                         |[0-5]%                         |[0-5]%                       |
|Trakya                          |[0-5]%                         |[0-5]%                         |[0-5]%                       |
|Others                          |[5-10]%                        |[5-10]%                        |[0-5]%                       |

   Market shares in value – source Form CO

81) In light of the above the Commission considers that Saint-Gobain will not have the ability to restrict access to soda-lime glass to the  JV's
   competitors.

3 Likely impact on effective competition

82) The Commission takes the view that, even in the event that the Proposed Transaction would allow the Parties to foreclose  access  to  TAG  to
   the JV's downstream competitors, the Proposed Transaction will not have an impact on effective competition for the reasons explained below.

83) The Commission considers that other technical solutions, alternative to TAG-based automotive glazing solutions, currently being developed  by
   automotive glass manufactures, will pose a significant competitive constraint on the JV and will not require TAG for their development.

84) The business rationale underlying the decision of the Parties to start the joint development of a TAG-based automotive  glazing  solution  is
   to address the need of car manufacturers for weight saving in the vehicle architecture. Car manufacturers,  in  fact,  will  need  to  achieve
   higher fuel efficiencies for the vehicles they produce, and weight savings are one of the paths followed to achieve such targets. In order  to
   achieve the required overall weight savings on each vehicle, car manufacturers are pushing for weight savings on the components  including  on
   windshield and glazing. Therefore, the development of the TAG-based glazing solution is one way among others of trying to obtain weight-saving
   in the automotive industry.

85) Since weight-saving is the main goal to be reached, automotive glass manufacturers and  OEMs  are  currently  looking  at  several  technical
   solutions to achieve them. [Details on development project].

86) The market investigation indicated that alternative solutions to TAG-based solutions exist or are under development and  indicated  not  only
   thin soda-lime laminates as a viable option but also Soda Lime single ply outer laminated with PVB to a PET film with  scratch-resistant  hard
   coating as another solution.

87) Competitors of Saint-Gobain contacted in the course of the market investigation indicated that  they  are  developing  other  solutions,  not
   necessarily based on TAG, to respond to the push from OEMs for lighter glazing solutions and some others indicated that development will  soon
   start.

88) At this stage, the TAG-based automotive glazing solution is still under development and whether this solution will be successful  and  widely
   adopted by the OEMs is uncertain at this stage. The same applies for the alternative solutions currently being developed, or which  will  soon
   be developed, by the JV's competitors.

89) Not only it is not certain whether TAG-based glazing solutions will be the  only  viable,  or  economically  more  attractive,  light  weight
   solution or whether other solutions developed by competitors will prove  more  attractive  to  OEMs  but  competitors  will  also  all  deploy
   significant efforts to develop and promote their own solution. This will put them in direct competition with the JV  during  this  development
   phase.

90) Also, it is not certain that only one technical solution will finally be marketed. Therefore, it is possible that once the development  phase
   is over, different technical solutions will be competing with that of the JV for the future business opportunities.

91) The Commission therefore takes the view that the JV will face significant competition from the development of alternative automotive  glazing
   solutions not requiring TAG as an input product.

92) In light of the existence of the above mentioned alternative solutions, the Commission takes the view that is likely  that,  in  the  future,
   neither of the Parties will be a necessary or unavoidable upstream supplier for the JV's competitors. Therefore, the Parties will not  have  a
   significant role on the competitive dynamics of the downstream market. Hence, the Proposed Transaction will not allow the Parties to  increase
   the cost of downstream rivals and therefore will not lead to an upward pressure on the (future) sales price.

93)  The Commission also takes the view that the alternative technical solutions under development indicate that access to  and  IPR  related  to
   TAG can be avoided in the development of a lightweight glazing solution. Therefore, the strong position of the Parties on the input market and
   their IPR portfolio will likely not represent an impediment to the JV's competitor to develop and market their product offering  as  they  can
   rely on different technological solutions requiring different IPRs. Hence, the Commission concludes that the cooperation between  the  Parties
   will not increase barriers to entry on the (future) downstream market where the JV will be active.

4 Conclusion

94) In light of all the above, the Commission considers that input foreclosure can be excluded with regard to the vertical  relationship  between
   the upstream manufacture of TAG and automotive flat glass and the downstream manufacture of TAG-based automotive glazing solutions.

95) Also, in the event that an input foreclosure was to happen, the Commission takes the view that it  will  not  have  an  impact  on  effective
   competition.

2 Horizontal non-coordinated effects

96) If TAG-based automotive glazing solutions, and all lightweight automotive glazing solutions to be developed, were to be  considered  as  part
   of a broader product market encompassing all automotive glass, then the Proposed Transaction could in the future give rise to  a  horizontally
   affected market.

97) Under this framework of analysis, in fact, the JV will be competing on the same  market  as  Saint-Gobain,  albeit  with  a  different  value
   proposition compared to that currently offered by the latter.

98) On this market, Saint-Gobain has a significant market share but the combined entity will face competition from a  number  of  other  credible
   competitors (Asahi, Pilkington, Fuyao, Trakya).[10]

99) If limiting the analysis to only traditional glazing solutions, OEMs can easily switch supplier when new vehicle  models  are  developed.  If
   upcoming lightweight automotive glazing solutions are taken into account, it is likely that at least some of  Saint-Gobain's  competitor  will
   develop a solution which will eventually reach the market. Hence,  OEMs  will  likely  also  have  the  opportunity  to  switch  suppliers  of
   lightweight automotive glass.

100) In light of the above, the Commission considers that the Proposed Transaction does not raise serious doubts as  to  its  compatibility  with
   the internal market with regard to the markets for automotive glass in the EEA.

       CONCLUSION

101) 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

                                        -----------------------
[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 130, 13/04/2016, p. 10.

[4]   Turnover calculated in accordance with Article 5 of the Merger Regulation.

[5]   COMP/M.4173 - NIPPON SHEET GLAS / PILKINGTON.

[6]   Europe, Middle East and Africa.

[7]   See para 59 above.

[8]   According to the Parties, market share in number of floats is a good proxy for market share in volume.

[9]   All market share reported are calculated at EEA level.

[10]  For market share figures, please refer to the table in pare 73 above. At this stage it in not possible to estimate which will be  the  JV's
      market share in the future.

-----------------------
 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