CELEX: 31996M0719
Language: en
Date: 1996-06-28 00:00:00
Title: Commission Decision of 28/06/1996 declaring a concentration to be compatible with the common market (Case No IV/M.719 - Röhm / Rohm and Haas) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31996M0719

Commission Decision of 28/06/1996 declaring a concentration to be compatible with the common market (Case No IV/M.719 - Röhm / Rohm and Haas) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 226 , 03/08/1996 P. 0004

  COMMISSION DECISION of 28/06/1996 declaring a concentration to be compatible with the common  market (Case No IV/M.719 - Roehm / Rohm and Haas) according to Council Regulation (EEC) No  4064/89   (Only the English text is authentic).  The paper version of the decision is available through the sales offices of the Office of Official  Publications of the European Communities.  PUBLIC VERSION  MERGER PROCEDURE  ARTICLE 6(1)(b) DECISION  To the notifying parties  Dear Sirs,  Subject :<ind> Case No IV/M.Case No. IV/M.719 - Roehm/Rohm and Haas  <ind> <ind> Notification of 24.5.1996 pursuant to Article 4 of Council Regulation No 4064/89  1.<ind> On 24.05.1996, the Commission received a notification of a proposed concentration pursuant to  Article 4 of Council Regulation (EEC) No. 4064/89 by which the undertakings Roehm GmbH Chemische  Fabrik (Roehm), controlled by Huels AG, belonging to the VEBA group, and Rohm and Haas Company  (Rohm and Haas) acquire within the meaning of Article 3(1)b of the Council Regulation joint control of  the undertaking RohMax Additives GmbH (Rohmax). Roehm and Rohm and Haas will contribute their  exisiting lubricant oil additives businesses to the joint venture and will each hold 50% of Rohmax.  2.<ind> After examination of the notification, the Commission has concluded that the notified operation  falls within the scope of Council Regulation No. 4064/89 and does not raise serious doubts as to its  compatibility with the common market and with the functioning of the EEA Agreement.  I.<ind> THE PARTIES' ACTIVITIES AND THE OPERATION  3.<ind> The business activities of the undertakings concerned are :  <ind> -<ind> Roehm:<ind> methacrylate chemistry, lubricating oil additives  <ind>   <ind> -<ind> Huels :<ind> basic chemicals, polymers, specialty chemicals, performance chemicals,  methacrylate chemistry and electronics chemistry  <ind> -<ind> VEBA :<ind> electricity, chemicals, oil, trading, transportation and telecommunications  and real estate  <ind> -<ind> Rohm and Haas:<ind> polymers, resins, monomers, performance chemicals, plastics,  lubricating oil additives and agricultural chemicals  4.<ind> The joint venture will be jointly controlled by Roehm and Rohm and Haas. Furthermore, the joint  venture will perform on a lasting basis all the functions of an autonomous economic entity and its creation  will not give rise to coordination of the competitive behaviour of the parties amongst themselves or  between them and the joint venture.  II.<ind> COMMUNITY DIMENSION   5.<ind> The undertakings concerned have a combined aggregate worldwide turnover in excess of 5,000  million ECU (Roehm 635 million ECU, VEBA 38,624 million ECU and Rohm and Haas 2,969 million  ECU). Each of them has a Community-wide turnover in excess of 250 million ECU (Roehm [Deleted  business secret] million ECU, VEBA [Deleted business secret] million ECU and Rohm and Haas [Deleted  business secret] million ECU), but they do not achieve more than two-thirds of their aggregate  Community-wide turnover within one and the same Member State. The notified operation therefore has a  Community dimension, but does not constitute a cooperation case under the EEA Agreement.  III.  COMPATIBILITY WITH THE COMMON MARKET  <tab> A. Relevant product market(s)  6<ind> The operation concerns lubricating oil additives and ester. The turnover of the joint venture in the  ester market is less than [Deleted business secret] million ECU and the market share of the joint venture is  less than 15% in any individual EEA market. Whether ester should be defined as a separate relevant  product market can therefore be left open.   7<ind> The main impact of the operation is in lubricating oil additives. An oil lubricant consists of a base  oil and additives. There are two principal categories of additives: DI packages (Detergent Inhibitor  packages) and viscometric products. DI packages serve to suspend oil contaminants and combustion by- products as well as to prevent oxidation of the oil with the resultant formation of varnish and sludge  deposits. Viscometric products modify the viscometric characteristics of lubricants by reducing the rate of  thinning with increasing temperature and the rate of thickening with low temperatures. Viscometric  products thereby provide enhanced performance at low and high temperatures. In most applications  viscometric products have to be used with DI packages.   8<ind> There is a certain degree of substitutatability between base oils, DI packages and viscometric  products in the production of oil lubricants. High grade base oils thus require less additives than lower  grade base oils. It is thus possible to reduce the amount of DI packages and viscometric products in an oil  lubricant by using higher grade base oils. Furthermore, viscometric products can be formulated to partly  replace some of the components in the DI package and vice versa. However, viscometric products and DI  packages are both essential components of an oil lubricant, and they are not interchangeable. It appears,  therefore, that DI packages and viscometric products are not in the same relevant product market. The  joint venture will be active in lubricating oil additives only through viscometric products.   9<ind> There are five major types of viscometric products: polymethacrylates (PMA's), olefin copolymers  (OCPs), styrene isoprene, styrene butadenes and a hybrid OCP/PMA. The different types of viscometric  products are substitutes in the main applications, but are not perfect substitutes in all applications. PMA's  are for example superior to OCPs for usages in smaller applications like hydraulic oils and gear boxes,  whereas PMA, OCP and styrene isoprene are interchangeable in crank cases of cars, which is the most  important application accounting for more than 70% of the total European usage of viscometric products.  Overall the parties, customers and competitors agree that there is a high degree of demand side  substitutability between the different types of viscometric products for a wide range of applications. It  appears, therefore, that the five major categories of viscometric products are part of the same relevant  product market. However, the market definition can be left open, since the parties would not achieve a  dominant position even on a more narrowly defined market (see below).   <ind> B. Relevant geographic markets  10.<ind> According to the parties as well as information from competitors and customers the relevant  geographic market for viscometric products is the EEA area. Most customers of lubricating oil additives  are large oil companies who pursue a European wide purchasing policy which also means that viscometric  products are readily sold across the borders of the EEA countries. The market for viscometric products is  therefore the EEA.  11<ind> In the ester market the combined market shares of the parties are less than 15% whether  individiual national markets or a wider market is considered. The geographic market definition for the  ester market can therefore be left open.   <ind> C. Assessment   12.<ind> The businesses being contributed to the joint venture are the lubricating oil additives businesses  of Roehm and Rohm and Haas. Following the operation the joint venture will have production facilities in  North America and Western Europe.   <ind> Viscometric products  13<ind> Roehm and Rohm and Haas are active in lubricating oil additives with viscometric products based  on PMA technology. The combined market share of the parties in the market for viscometric products was  less than [ Between 20-30%] in 1995 (value terms). The major competitors as well as the main customers  of the parties are the major oil companies, who are vertically integrated, and several of these companies  are themselves important producers of lubricating oil additives.    14<ind> The new entity will be the biggest supplier of PMA products in the EEA producing about  [Between 40-50%] of all PMA based viscometric products. However, the parties would not achieve a  dominant position enabling it to act independently of competitors, customers and ultimately consumers,  even if the relevant product market was defined as narrowly as PMA products. First, several of the big oil  companies have in-house production of PMA products which are used for their own purposes as well as  sold on the free market. Secondly, customers have indicated that even though Roehm and Rohm and Haas  are the biggest suppliers of PMA products, it would be possible for other independent suppliers to develop  into satisfactory second-source suppliers within the foreseeable future. Thirdly, PMA technology was first  developed more than 100 years ago and is only for a minor part still covered by patents. It is not a  complicated technology, and it would be relatively easy, for example, for a major oil company to produce  PMA based viscometric products.  15.<ind> In view of the market position of the notifying parties, the notified operation will have an  insignificant impact on competition in the European Union and, consequently, effective competition in the  market for viscometric products would not be significantly impeded in the EEA area or any substantial  part of that area.  <tab> Ester  16<ind> The joint venture will produce ester for its own internal purposes and sell a small amount on the  free market. However, the market share of the parties will be less than 15% in each individual EEA  country. Consequently, effective competition in the ester market would not be significantly impeded in the  EEA area or any substantial part of that area.  <ind> V.<ind> CONCLUSION  17.<ind> For the above reasons, the Commission has decided not to oppose the notified operation and to  declare it compatible with the common market. This decision is adopted in application of Article 6(1)(b)  of Council Regulation No 4064/89.  For the Commission