CELEX: 32021M10060
Language: en
Date: 2021-02-11 00:00:00
Title: Commission Decision of 11/02/2021 declaring a concentration to be compatible with the common market (Case No COMP/M.10060 - FRANCISCO PARTNERS / MARLIN EQUITY PARTNERS / CONAN HOLDCO) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                               Brussels, 11.02.2021
                                                               C(2021) 979 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
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                                                               Francisco Partners Management L.P.
                                                               One Letterman Drive,
                                                               Building C—Suite 410
                                                               CA 94129 – San Francisco
                                                               U.S.A.
                                                               Marlin Management Company, LLC,
                                                               338 Pier Avenue
                                                               CA 90254 – Hermosa Beach
                                                               U.S.A.
Subject:            Case M.10060 – FRANCISCO PARTNERS / MARLIN EQUITY
                    PARTNERS / CONAN HOLDCO
                    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 7 January 2021, the European Commission received notification of a proposed
          concentration pursuant to Article 4 of the Merger Regulation by which Francisco
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’).
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---     Partners and Marlin Equity Partners acquire within the meaning of Articles 3(1)(b)
    and 3(4) of the Merger Regulation joint control of Conan Holdco AS (the “JV
    Company”, Norway). The JV Company will combine the activities of Consignor, a
    Norwegian company currently under sole control of Francisco Partners, and
    Unifaun, a Swedish company currently under sole control of Marlin Equity Partners.
    The concentration is accomplished by way of purchase of shares in a newly created
    company constituting a joint venture (the “Transaction”). Francisco Partners and
    Marlin Equity Partners are designated hereinafter as the “Parties”.
1.  THE PARTIES
(2) Francisco Partners, established in the United States of America, is a global private
    equity firm that specialises in investments in technology and technology-enabled
    companies undergoing strategic, technological, and operational inflection points.
    Amongst its portfolio companies, in addition to Consignor, Francisco Partners also
    controls BluJay that operates in the EU in some of the same markets as Consignor
    and Unifaun, via its Software as a Service (“SaaS”) platform.
(3) Marlin Equity Partners, established in the United States of America, is a global
    investment firm focused on leveraging its capital base, industry relationships and
    extensive network of operational resources.
(4) Consignor, established in Norway, is currently solely controlled by Francisco
    Partners. Consignor provides Transport Administration Systems (“TAS”) services, a
    form of Supply Chain Management solution, via a Software as a Service (“SaaS”)
    platform. In the EEA, Consignor has offices in Norway, Sweden and Finland and,
    outside the EEA, in China, the United Kingdom and the United States.
(5) Unifaun, established in Sweden, is currently solely controlled by Marlin Equity
    Partners. Unifaun also provides TAS services under the Unifaun and the TransSmart
    brands, via a cloud-based SaaS business platform. Unifaun has offices in Sweden,
    Finland and the Netherlands, and sales representatives in Denmark, Norway,
    Germany, Belgium and Poland.
2.  THE OPERATION
(6) The Transaction concerns the acquisition by Francisco Partners and Marlin Equity
    Partners of joint control, by way of acquisition of shares, over a company named
    Conan Holdco AS (“the JV Company”). In exchange for these shares, Francisco
    Partners will transfer Consignor’s shares and Marlin Equity will transfer Unifaun’s
    shares to the JV Company. As a result, the JV Company will hold 100% of
    Consignor and Unifaun.3
(7) The acquisitions of joint control of Unifaun and Consignor by the same Parties are
    linked de jure: if the Transaction is not completed, Unifaun’s sole control will
    remain with Marlin Equity Partners and Consignor’s sole control will remain with
3   Form CO, paragraph 40.
                                              2
 ---pagebreak---      Francisco Partners.4 The acquisitions therefore are interdependent within the
     meaning of the Commission’s Consolidated Jurisdictional Notice.5
(8)  Francisco Partners and Marlin Equity Partners will both have veto rights over the
     adoption of strategic decisions of the JV Company, such as the adoption of the
     budget and business plan or the appointment of senior management.6 The creation of
     the JV Company will combine two existing businesses that have their own
     management, staff, assets and customers, and will operate as autonomous entities on
     the market, independently of the parents.7 Therefore, the Transaction constitutes a
     concentration within the meaning of Articles 3(1)(b) and 3(4) of the Merger
     Regulation.
3.   UNION DIMENSION
(9)  The undertakings concerned have a combined aggregate worldwide turnover of more
     than EUR 5 000 million (Marlin Equity Partners: [>EUR 2.500million]; and
     Francisco Partners: [>EUR 5.000 million]; combined: >EUR 7.500 million). Each of
     them has an EU-wide turnover in excess of EUR 250 million (Marlin Equity
     Partners: [>EUR 250 million] and Francisco Partners: [>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.
(10) In view of the above, the Transaction meets the turnover thresholds as set out in
     Article 1(2) of the Merger Regulation, and therefore has an EU dimension.
4.   MARKET DEFINITION
4.1. Product market
(11) Both Unifaun and Consigor are active in the supply of Transport Administration
     Systems (“TAS”).
Commission precedents
(12) The Commission has previously assessed markets for business software,8 but has
     never specifically considered a market for TAS solutions. In previous decisions on
     business software,9 the Commission specified that business application software
     comprises software programs that address some aspects of planning, execution or
     collaboration in a business, government or other organization. These applications
4    Form CO, paragraph 44.
5    Commission Consolidated Jurisdictional Notice under Council Regulation (EC) No 139/2004 on the
     control of concentrations between undertakings (OJ C 95, 16.4.2008), para 39-41.
6    Form CO, paragraph 46.
7    Form CO, paragraphs 48-51.
8    M.3216 – Oracle / PeopleSoft (2004); M.3978 – Oracle / Siebel (2005); M.4944 – SAP / Business
     Objects (2007); M.4987 – IBM / Cognos (2008); M.5763 – Dassault Systemes / IBM DS PLM
     Software business (2010).
9    M.3216 – Oracle / PeopleSoft (2004); M.3978 – Oracle / Siebel (2005); M.4944 – SAP / Business
     Objects (2007); M.4987 – IBM / Cognos (2008); M.5763 – Dassault Systemes / IBM DS PLM
     Software business (2010).
                                                      3
 ---pagebreak---       can in general be divided into: (i) Personal Productivity Applications; and (ii)
      Enterprise Application Software (“EAS”).10 EAS can be further sub-segmented into
      Enterprise Resource Planning (“ERP”), Customer Relationship Management
      (“CRM”), Supply Chain Management (“SCM”), Supplier Relationship Management
      (“SRM”), Product Lifecycle Management (“PLM”) and Business Analytics
      (“BA”).11
(13)  The Commission has defined SCM as applications that automate the process of
      planning, producing and delivering a good or service to market (supply planning,
      manufacturing, order fulfilment, distribution and logistics, sourcing and
      procurement).12 The Commission also previously identified SaaS as a possible
      segment of CRM but left the precise market definition open.13
      The Parties’ views
(14)  The Parties consider that SCM is a far broader concept than TAS, since it
      encompasses the entire supply chain from start to finish, whereas TAS is limited to
      the various functionalities of Transport Administration only. TAS software helps
      companies to automate and optimise their functions within distribution centres, and
      around order fulfilment, shipping and delivery processes.14
(15)  The Parties also submit that TAS covers an array of different operators including: (i)
      Generalist Supply Chain Execution (“SCE”) operators; (ii) Specialised SCE
      operators; (iii) fully-integrated suppliers of Third Party Logistics Services (“3PL”);
      and (iv) Transport Carriers that provide their own-brand TAS solutions. The Parties
      explain that Consignor qualifies as a Specialised SCE operator whereas Unifaun
      would qualify as a Generalist SCE operator.
(16)  The Parties nevertheless consider that all these operators should be part of a single
      TAS market, since there are no material differences between the core services
      provided by the different types of operators and product differentiation plays only a
      limited role.15
Outcome of the market investigation
(17)  In view of the lack of precedents on the market definition for TAS software
      solutions, the Commission launched a market investigation on 7 January 2021,
      asking customers and competitors their views on the market definition. The results
      of the market investigation support the Parties’ views that the provision of TAS
      software solutions may constitute a product market distinct from other business
      software.16 As one competitor explained: “[e]xpanding supply chain execution
      capabilities into areas like warehousing requires substantial investments, know-how
      and market reputation. Each segment has specialized companies covering
      transportation and warehouse management solutions.” This view is corroborated by
10    M.8984 - Hg/Vista/Allocate (2018), paragraph 15.
11    M.8984 – M.4944 – SAP / Business Objects (2007), paragraph 7.
12    M.3216 – Oracle / PeopleSoft (2004), paragraph 18.
13    M.3978 – Oracle / Siebel (2005); M.8124 – Microsoft / LinkedIn (2016), paragraph 36].
14    Form CO, paragraph 76.
15    Form CO, paragraph 81.
16    See replies to question 3.1 – Questionnaire to competitors.
                                                        4
 ---pagebreak---       competitors’ acknowledgment that “Unifaun and Consignor seem to cover the
      transportation management software space only”.17
(18)  Conversely, the majority of competitors who responded to the market investigation
      indicated that generalist and specialised SCE operators do compete with each
      other.18 Whilst the responses of customers were less conclusive, some customers
      also indicated that there was a degree of substitutability between the services offered
      by the Parties.19 As regards competition between SCE operators on the one hand,
      and 3PL suppliers and Transport Carriers on the other hand, the results of the market
      investigation are mixed. For customers, the substitutability of TAS services provided
      by 3PL and Transport Carriers solutions is dependent on, amongst other things, “the
      functionality and carriers supported”.20
(19)  Thus, whilst the results of the market investigation support a distinct market for TAS
      software solutions provided by both Generalist and Specialised SCE operators, it is
      less clear whether the solutions provided by 3PL suppliers and Transport Carriers are
      part of this product market.
Conclusion
(20)  In light of the above, and on the basis of the outcome of the market investigation, the
      Commission considers that TAS software solutions constitute a market distinct from
      SCM and other business software. Whilst the Commission considers that the market
      for TAS software solutions comprises the software solutions provided by both
      Generalist and Specialized SCE operators, it can be left open whether the software
      solutions provided by 3PL suppliers and Transport Carriers are part of the same
      market, as this would in any case not impact the outcome of the competitive
      assessment below.
(21)  In any case, the Commission considers that, for the purposes of this decision, the
      precise product definition can be left open as no serious doubts arise under the
      narrowest plausible product market of TAS solutions provided by Generalist and
      Specialised SCE operators, as assessed below.
4.2.  Geographic market
Commission precedents
(22)  The Commission has previously considered that markets for business software/EAS
      solutions were at least EEA-wide and possibly worldwide in scope.21
17    Idem.
18    See replies to question 4 – Questionnaire to competitors.
19    See replies to questions 3 and 3.2 – Questionnaire to customers.
20    See replies to question 5 – Questionnaire to competitors and questions 4 – Questionnaire to
      customers.
21    M.5904 – SAP/SYBASE (2010); M.4944 – SAP / Business Objects (2007); M.3978 – Oracle / Siebel
      (2005); and M.8984 – Hg/Vista/Allocate (2018).
                                                        5
 ---pagebreak--- The Parties’ views
(23)  The Parties also submit that the market for TAS software solutions, being equivalent
      in nature to business software, is at least EEA-wide in scope. They consider, in
      particular, that (i) TAS operators do not need physical presence in a particular
      country in order to provide services; (ii) the services are standard and do not vary
      between Member States; and (iii) there are minimal national requirements for doing
      business with customers in particular countries.22
Outcome of the market investigation
(24)  The outcome of the market investigation supports the views of the Parties, since the
      majority of respondents consider that the market for TAS software solutions is at
      least EEA-wide and possibly worldwide in scope.23 Only a limited number of
      respondents indicated the potential existence of a regional cross-border market for
      TAS software solutions. Conversely, the results of the market investigation exclude
      a possible national scope of the market for TAS software solutions.
Conclusion
(25)  In light of the above, and on the basis of the outcome of the market investigation, the
      Commission considers that the market for TAS software solutions (whether
      including or excluding solutions by 3PL suppliers and Transport Carriers) is at least
      EEA-wide in scope and potentially worldwide. However, since a limited number of
      respondents indicated the potential existence of a regional cross-border market for
      TAS software solutions (whether including or excluding solutions by 3PL suppliers
      and Transport Carriers), for the purposes of this Transaction, the Commission has
      also assessed the effects of the Transaction at regional level, namely in the Nordic
      region where both Parties are active.
5.     COMPETITIVE ASSESSMENT
(26)  The Parties’ activities overlap horizontally on the market for TAS software
      solutions. There are no vertical overlaps between the Parties.
22    Form CO, paragraphs 98 – 100.
23    See replies to question 6 – Questionnaire to competitors and question 5 – Questionnaire to customers.
                                                       6
 ---pagebreak---  ---pagebreak---  ---pagebreak--- 6.   CONCLUSION
(32) 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
                                                   Executive Vice-President
                                              9