CELEX: 32018M9139
Language: en
Date: 2018-12-13 00:00:00
Title: Commission Decision of 13/12/2018 declaring a concentration to be compatible with the common market (Case No COMP/M.9139 - Haier Europe Appliances Holding B.V. / Candy) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                Brussels, 13.12.2018
                                                                C(2018) 8944 final
  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                         PUBLIC VERSION
  other confidential information. The omissions are
  shown thus […]. Where possible the information
  omitted has been replaced by ranges of figures or a
  general description.                                          To the notifying party
Subject:            Case M.9139 - Haier / Candy
                    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 Area2
Dear Sir or Madam,
(1)         On 8 November 2018, the European Commission received a notification of a
            proposed concentration pursuant to Article 4 of Council Regulation (EC)
            No 139/2004 by which Haier Europe Appliances Holding B.V (the
            Netherlands), belonging to the Haier Group Corporation ("Haier", China)
            acquires within the meaning of Article 3(1)(b) of the Merger Regulation control
            of the whole of Candy S.p.A. ("Candy", Italy) by way of purchase of shares 3
            (Haier is hereinafter referred to as the “Notifying Party” and together, Haier and
            Candy are hereinafter referred to as the “Parties”).
1.        THE PARTIES
(2)         Haier is a Chinese-based manufacturer and supplier of consumer electronics and
            domestic appliances worldwide. Its products are marketed through several main
1    OJ L 24, 29.1.2004, p. 1 (the 'Merger Regulation'). With effect from 1 December 2009, the Treaty on
     the Functioning of the European Union ('TFEU') has introduced certain changes, such as the
     replacement of 'Community' by 'Union' and 'common market' by 'internal market'. The terminology of
     the TFEU will be used throughout this decision.
2    OJ L 1, 3.1.1994, p. 3 (the 'EEA Agreement').
3    Publication in the Official Journal of the European Union No C 418, 19.11.2018, p. 8.
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---        brands, including "Haier", "Casarte", "GE Appliances", "Fisher & Paykel",
       "AQUA" and "Leader".
(3)    Candy is an Italian-based manufacturer and supplier of domestic appliances
       worldwide. Its products are marketed through two main brands, "Candy" and
       "Hoover", and through national brands such as "Rosières" (France) and "Jinling"
       (China).
2.    THE OPERATION
(4)    The transaction consists in the acquisition of the entire share capital of Candy by
       Haier (the ”Transaction”). The Share Purchase Agreement was signed on
       28 September 2018 between Haier Europe Appliances Holding B.V. (a
       subsidiary of Haier Group) and Candy S.p.A.
3.    EU DIMENSION
(5)    The undertakings concerned have a combined aggregate world-wide turnover of
       more than EUR 5 000 million (Haier: 20 868.7 million, Candy […]). Each of
       them has an EU-wide turnover in excess of EUR 250 million (Haier: […],
       Candy […]), 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 within the meaning of Article 1(2) of
       the Merger Regulation.
4.    RELEVANT MARKETS
4.1. Product markets
(6)    The Transaction leads to horizontal overlaps in respect of a number of different
       categories of electric domestic appliances.
(7)    The Notifying Party submits that each category of major domestic appliances
       ('MDAs') should constitute a separate product market due to the lack of demand
       side substitutability. More specifically, the categories identified by the Notifying
       Party are: cooking appliances, hoods, dishwashers, refrigerators, freezers,
       microwave ovens, washing machines and tumble dryers.
(8)    The Notifying Party adds that some of the appliances could be further sub-
       segmented, such as (i) cooking appliances into hobs and ovens (these can be
       sold as separate products) or (ii) refrigerators into single door, double or
       multiple doors, combined fridge-freezer, (iii) microwave ovens into simple
       microwave or integrated microwave ovens, and (iv) washing machines into
       washers and washer-dryers.
(9)    The Notifying Party notes that practically all appliances can be free standing or
       built in, but argues that these should not constitute separate product markets, as
       there is a high degree of supply side substitutability between them and also some
       degree of demand side substitutability.
                                               2
 ---pagebreak--- (10)      The Notifying Party further remarks that MDAs are developing into smart /
          connected devices, which could be a further differentiating factor but explains
          that connected devices represent only 2% of all MDAs at the moment.
(11)      The Commission has previously segmented MDAs according to type of
          appliance and has also considered a further differentiation between free standing
          and built-in appliances. 4
(12)      There are no precedents discussing whether the MDA market or its subsegments
          should be further divided according to smart / connected devices. Respondents
          to the market investigation indicated in this respect that the technology and
          know-how was widely available and was rather simple for MDAs that any MDA
          competitor mastered and was therefore not a distinctive feature that would
          justify further subsegmenting any type of MDA along this line. 5
(13)      The Commission concludes that for the purpose of this decision the exact
          definition of the relevant product market can be left open, as the Transaction
          does not give rise to competition concerns on the basis of any plausible
          definition of the relevant product market.
4.2. Geographic markets
(14)      The Notifying Party argues that the relevant geographic market for the different
          categories of MDAs should be considered EEA-wide, because the same brands
          are marketed EEA-wide and production takes place centrally at a few locations
          irrespectively of where the product is going to be distributed. Many customers
          (retailers) are also active in several countries and prices are broadly homogenous
          across the EEA.
(15)      Commission precedents, however, left open whether the geographic market for
          the different MDAs should be considered EEA wide or national. 6
(16)      The Commission concludes that for the purposes of this decision the exact
          definition of the relevant geographic market can be left open, as the Transaction
          does not give rise to competition concerns on the basis of any plausible
          definition of the relevant geographic market.
5.      COMPETITIVE ASSESSMENT
EEA
(17)      On an EEA-wide market for all MDAs, no affected markets arise irrespective of
          the precise product market definition. Third party independent (Euromonitor)
          research ranks the parties number 8 and 9 respectively among competitors in
          Europe, with BSH (Bosch, Siemens, Neff and Gaggenau), Whirlpool and
4   See e.g. Cases M.7366 Whirlpool/Indesit, paras 10-16 and M.2703 Merloni/GE/JV, paras 9 and 10.
5   See replies to question 7 of the Commission questionnaire to competitors and customers.
6   See e.g. Cases M.7366 Whirlpool/Indesit, paras 22-25.
                                                       3
 ---pagebreak---  ---pagebreak--- (25)     Similarly, if a potential market for built-in hobs were to be considered, despite
         an HHI exceeding 150, the combined share remains below 25%, and other
         suppliers remain available. In particular, Whirlpool will remain the market
         leader ([40-50]% market share), followed by Electrolux ([10-20]%), Inter Ikea
         Systems ([5-10]%), Franke Holding AG ([5-10]%) and Arçelik AS ([0-5]%).The
         Notifying Party will therefore continue to face competitive pressure from a
         number of competitors irrespective of the precise product market definition.
         Consistent with this assessment, although Haier could become the second largest
         player in cooking appliances and on the narrower market for hobs in Italy,
         respondents to the Commission's market investigation did not consider that the
         Transaction would have a significant impact on Haier’s pre-existing market
         share and that the merged entity would still constitute a minor player on the
         market. 9
(26)     The Notifying Party also estimated that post-merger, for both markets – i.e. all
         cooking appliances and built-in hobs will be characterised by HHIs between
         1000 and 2000 with a delta below 250, which reflects a competitive market not
         notably impacted by the Transaction.
(27)     In addition, in relation to all cooking appliance, as well as to its narrower
         markets, the Notifying Party argues that the Parties are not close competitors as
         Haier targets the […] segment while Candy is active in the […].
(28)     Most respondents to the market investigation considered that both Parties are
         present in the ‘value for money’ part of the market, and some saw Haier as
         being present in the premium end. However, even if competition were seen as
         taking place within the segments themselves ('value', 'core', 'premium' and 'super
         premium'), respondents considered that the segments nevertheless exert
         competitive pressure on one other. 10 Therefore, that Haier might be seen as also
         being present in the premium end of the market would not, in itself preclude a
         conclusion that the Parties are close competitors.
(29)     Notwithstanding, such possibility, however, respondents to the market
         investigation do not generally consider the Parties to be close competitors as the
         Parties do not figure among each other’s top three competitors as identified by
         market participants; either for MDAs overall, for hobs in Italy. 11
(30)     Rather, the principal competitors identified were Whirlpool, Electolux and BSH,
         as well as Samsung and Beko. It was also noted during the market investigation
         that, a number of local manufacturers are also active in the cooking appliances
         segment in Italy, beyond the international players 12.
9  See replies to question 9 of the Commission questionnaire to competitors and customers.
10 See replies to question 6 of the Commission questionnaire to competitors and customers.
11 See replies to question 4 of the Commission questionnaire to competitors and customers.
12 See replies to questions 3 and 9 of the Commission questionnaire to competitors and customers.
                                                      5
 ---pagebreak--- (31)     Third party reports 13 submitted by the Parties analysing the competitive
         landscape reflect intense competition on the affected markets and see the
         rationale for the Transaction as being for Haier to gain a stronger foothold on
         the European market and compete more effectively against Whirlpool.
(32)     Respondents to the Commission’s market investigation shared the Parties’ view
         that the landscape of the European MDA industry is both highly competitive and
         highly fragmented, comprising a number of aggressive EU and non-EU based
         competitors. 14
(33)     Competitors and customers considered Haier having a strong international
         portfolio of brands but a relatively weak brand presence, with low market shares
         in MDAs in Europe compared with other regions, such as Asia Pacific and
         North America. 15
(34)     Haier was seen to be strategically geared towards connected smart devices,
         however most respondents held that nowadays, many suppliers have adopted
         this strategy and Haier did not seem to have any unique capacity in this respect,
         while Candy has only started manufacturing such devices. 16
(35)     Customers and competitors responding to the market investigation do not expect
         the Transaction to negatively affect their businesses. Several respondents
         considered that the Transaction could even intensify competition in MDAs as
         Haier intends to gain stronger foothold in Europe competing more aggressively
         to increase its market share: Relying on Candy’s growing brand reputation and
         on its financial and industrial strength, Haier could become a more established,
         stronger competitor as a result of the Transaction. 17
Other Member States
(36)     The transaction results in further six affected markets in the UK, Malta and
         Romania, as indicated in the below table.
13 See Report “Haier takes over Candy to gain a steady foothold in Europe”, October 2018, Euromonitor
   International.
14 See replies to question 2 of the Commission questionnaire to competitors and customers.
15 See replies to question 2 of the Commission questionnaire to competitors and customers.
16 See replies to question 7 of the Commission questionnaire to competitors and customers.
17 See replies to question 9 of the Commission questionnaire to competitors and customers.
                                                      6
 ---pagebreak---  ---pagebreak---       considerations about business rationale, closeness and expected effects of the
      transaction in paragraphs (29) to (36) are also applicable.
6.   CONCLUSION
(40)  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
                                              8