CELEX: 31996M0755
Language: en
Date: 1996-06-18 00:00:00
Title: Commission Decision of 18/06/1996 declaring a concentration to be compatible with the common market (Case No IV/M.755 - Creditanstalt / Koramic / Wienerberger) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31996M0755

Commission Decision of 18/06/1996 declaring a concentration to be compatible with the common market (Case No IV/M.755 - Creditanstalt / Koramic / Wienerberger) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 317 , 26/10/1996 P. 0038

  COMMISSION DECISION of 18/06/1996 declaring a concentration to be  compatible with the common market (Case No IV/M.755 - Creditanstalt /  Koramic / Wienerberger) 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. 755  Creditanstalt/Koramic/Wienerberger  <ind> Notification of 10 May 1996 pursuant to Article 4 of Council  Regulation No  4064/89  1.<ind> On 10.05.1996, the Commission received a notification of aproposed  concentration pursuant to Article 4 of Council Regulation (EEC) No.  4064/89 [OJ No L 395 of 30.12.1989; Corrigendum: OJ No L 257 of  21.09.1990, p. 13.] by which the undertakings CreditanstaltBankverein and  Koramic Building Products N.V. acquire within the meaning of Article  3(1)(b) of the Council Regulation joint control of Wienerberger  Baustoffindustrie AG and Terca Bricks N.V.  2.<ind> After examination of the notification, the Commission has decided  not to oppose the notified operation and to declare it compatible with the  common market and with the functioning of the EEA Agreement. This decision  is adopted in application of Article 6(1)(b) of Council Regulation No  4064/89.  I.<ind> THE PARTIES  3.<ind> CreditanstaltBankverein is a bank, founded in 1855, and has its  headquarters in Vienna. Its purpose is to carry on any type of banking  activity.  4.<ind> Koramic Building Products N.V is incorporated under Belgian law as  a "Naamloze Vennootschap". The purpose of this corporation is on the one  hand to acquire and to hold any form of participation in existing or new  companies, and on the other hand the production and supply of all building  materials, more especially ceramic building materials.  <ind> Koramic Building Products N.V is currently a holding company which  controls the entire brick business of the Koramic Group.  5.<ind> Wienerberger Baustoffindustrie is the parent of the Austrian  Wienerberger  group, which supplies building materials.  II.<ind> THE CONCENTRATION  6.<ind> The proposed concentration will be achieved in two steps :  <ind>   <ind> In the first step, Koramic and Wienerberger will concentrate their  brick activities in Wienerberger Baustoffindustrie AG by contributing  Koramic's subsidiary Terca Bricks N.V. into Wienerberger. In exchange for  this contribution in kind, Koramic will receive new shares of  Wienerberger. At the same time,  Koramic will acquire additional shares of  Wienerberger from CreditanstaltBankverein.  <ind> In the second step, CreditanstaltBankverein and Koramic will form a  50/50 joint venture company, which will bear the name Wienerberger Holding  Gesellschaft mbH. Each party will transfer to Wienerberger Holding  Gesellschaft mbH 25% of the shares in Wienerberger Baustoffindustrie AG  together with one additional share. This latter company will own 100% of  the shares of  Terca Bricks N.V. CreditanstaltBankverein and Koramic will  therefore through Wienerberger Holding Gesellschaft mbH exercise joint  control over Wienerberger Baustoffindustrie AG and Terca Bricks NV.  III.<ind> COMMUNITY DIMENSION  7.<ind> The accumulated worldwide turnover of the undertakings concerned  represents more than 5000 MECU and the Communitywide turnover of  Creditatanstalt and Weinerberger more than 250 MECU. The parties do not  both achieve more than twothirds of their aggregate Communitywide turnover  within one and the same Member State. Therefore the case has a Community  dimension.   IV.<ind> CONCENTRATION  8.<ind> The new entity will constitute a concentration within the meaning  of Article 3 (2) of the Council Regulation N  4064/89.  <ind> Joint Control  9.<ind> Wienerberger Holding Gesellschaft mbH will be owned in equal  shares by its parents, CreditanstaltBankverein and Koramic Building  Products N.V. The parents will form a parties meeting which will decide on  the control of Wienerberger Baustoffindustrie AG.  The board of directors  of Wienerberger Holding Gesellschaft mbH will exercise the voting rights  in the general assembly of Wienerberger Baustoffindustrie AG in accordance  with the directions made by the parties meeting.  The parents will ensure  that the members of the supervisory board of Wienerberger  Baustoffindustrie AG exercise their rights in accordance with the  instructions of the party appointing them.  <ind> Absence of coordination  10.<ind> Because both Koramic and Creditanstalt, through Wienerberger, put  all their brick activities in the joint venture and therefore withdraw  from these product markets, there can be no coordination between the  parents as a result of the creation of the joint venture.  V.<ind> APPRAISAL  A.<ind> Relevant product market  11.<ind> The proposed operation concerns clay bricks, products used for  the building of walls. Bricks can be divided into those remaining visible,  with an aesthetic value (clay facing bricks), and those, invisible when  the building is complete, which are made by treating them with a finishing  coat (clay hollow bricks). In order to define the relevant product market  two issues require to be examined, first the substitutability between clay  facing bricks and clay hollow bricks, secondly, wether or not clay facing  bricks and clay hollow bricks are substitutable, the substitutability of  clay facing bricks and clay hollow bricks with other types of building  materials.  1)<ind> Absence of substitutability between clay facing bricks and clay  hollow bricks.  12.<ind> The competitors and the consumers questioned by the Commission  all agree to say that the relevant product market, at the first step, is  divided into two large groups of products; on the one hand the facing wall  systems, and on the other hand innerwall systems.  i)<ind> Facing wall systems  <ind> Facing wall systems fulfil a visible exterior function. Besides  their construction function, they fulfil an aesthetic role and have to be  resistant against all possible weather influences.    ii)<ind> Construction innerwall systems  <ind> These walling materials consists of all products used for the  manufacturing of rising walls and generally have an innerwall or a  partition wall function. These products become most of the time invisible  because they are plastered or painted for aesthetic reasons.  13.<ind> This division into two relevant product markets has already been  applied in former Commission decisions (Steetley/Tarmac IV/M 180, 12/02/92  under the Council Regulation articles 9 and 6(1)(b)).  14.<ind> Each of these two large groups of products includes a large range  of products. The notifying parties argue that these latter are widely  interchangeable.  <ind> One product market would consist of all facing wall systems, in  which they include clay facing bricks, concrete facing blocks, silica and  limestone blocks, natural stone, hangup systems, sandwich exterior  wallsystems, monolytical exterior wallsystems and other products such as  glass, aluminium and steel.  <ind> The other would be construction innerwall systems, from clay hollow  bricks to concrete blocks, hollow concrete blocks, pumice concrete stone,  limestone blocks and other materials.  iii)<ind> Clay facing bricks :  15.<ind> These materials essentially comprise building bricks that are  suitable for use in fairfaced brickwork and other facings. Such bricks  must be resistant to frost and must meet  certain standards with regard to  crushing strength, efflorescence, the quality and colour of exposed  surfaces and weatherproofing. Shaping is accomplished by extrusion or soft  moulding. The body density is not less than 1.8 kg/dm3 An outstanding   quality of facing bricks is that they are easily adaptable to the  multifarious wishes of architects and buildings owners.   <ind> The size of a facing brick varies from country to country, but is  limited in volume as a "one hand" brick up to + or  2.5 dm3.  iv)<ind> Hollow clay bricks  16.<ind> As long as there are no particular demands with regard to surface  quality and colour, because the wall is going to be stuccoed, these bricks  are referred to as backing or common building bricks.  <ind> Shaping is accomplished only by extrusion.  <ind> According to industrial standards, hollow bricks are bricks with a  density of not more than 0.80kg/dm3 (light weight hollow bricks) to not  more than 1.2kg/dm3 (normal  weight hollow bricks). As a role, this  density is attainable only via a high proportion of cavities (> 40 %) in  conjunction with supplementary aeration of the body.  <ind> Concerning raw material, a cheaper and lower quality clay is  generally used in comparison with that used for clay facing bricks.  <ind> As a result of capital expenditure as well as technology, it would  not be efficient or profitable to produce clay hollow bricks in a clay  facing brick plant. The ratio capital expenditure/turnover for a clay  facing bricks plant with a full capacity of 1000 m3 is about 1.70, whilst  for  a clay hollow bricks plant with the same capacity this ratio is  1.24.  <ind> Moreover, because of the specificity of the machines which are  necessary for the manufacturing of clay facing bricks,  it is not feasible  to produce these latter in a plant planned for the manufacturing of clay  hollow bricks.  17.<ind> Owing to the substantially different productiontechnology and  investment in machinery, the cost and sales prices of clay facing bricks  and clay hollow bricks are noticeably different. Based on the volume of a  clay brick, the sales prices of a clay facing brick is 3 x higher than  that of a clay hollow brick.  18.<ind> For the above reasons the Commission considers that from both the  supply side and the demand side clay facing bricks and clay hollow bricks  constitute two separate product markets.    3)<ind> Substitutability between clay facing bricks / hollow clay bricks  and other building materials  19.<ind> There is little supplyside substitutability between clay bricks  and other types of building materials because the raw materials,  manufacturing processes, plant and unit costs of production are completely  different. Manufacturers who produce both clay bricks and concrete bricks  are very rare.    20.<ind> On the demand side, from a theoretical and technical point of  view, clay facing bricks and hollow clay bricks are substitutable with  other type of building materials. However the local traditions and  consumer taste impose to a large extend the use of particular type of  material. The different types of wall construction can be :  <ind>  innerwall clay block + isolation + facing brick;   <ind>  innerwall concrete block + plaster;<ind>   <ind>  innerwall silica block + isolation + plaster;  <ind>  natural stone;  <ind>  hangup system;  <ind>  sandwich system wall;  <ind>  hollow clay bricks  <ind> The two first types mentioned above are traditionally  used mainly  in Belgium, the Netherlands and the north of France. In Germany and  Austria construction with hollow clay bricks (with vertical cavities) or  innerwall concrete block + plaster or innerwall silica block + isolation +  plaster is usually preferred.   21.<ind> Hence, from the point of view of price, according to the parties  and the competitors, a correct comparison between prices for any building  material has to take into account the cost of the whole wall construction.  An estimation of the cost of the various types of construction is shown in  the following table.  Table 1 : Cost of wall systems  Type of wall systemconstructioncost per M2 ECU/M2  Clay facing bricks24 cm innerwall clay block + 4 cm isolation + facing  brick154.30  Concrete blocks36.5 cm innerwall concrete block + plaster147.80  Silica blocks17.5 cm innerwall silica block + 7 cm isolation +  plaster129.90  Natural stone172.60  Hangup systems145.60  Sandwich exterior wall129.47  monolytical exterior wall30 cm hollow clay bricks133.80  22.<ind> In conclusion, the Commission considers that differences of  price, of technical and/or architectural characteristics and of consumer  preferences are not sufficiently clear to conclude whether  substitutability exists between clay facing bricks / clay  hollow bricks  and other building materials. However, as the joint venture created will  be active only in the sectors concerning clay bricks, the narrowest market  definition can be taken, i.e. clay facing bricks and clay hollow bricks.    B.<ind> Geographic reference market.  23.<ind> The competitors and the consumers questioned by the Commission  have indicated that the geographic reference market for clay facing  bricks, because of their relatively high unit price, would be at least  national or crossborder regional (about 500kms), while that for the clay  hollow bricks, because of their low price, would be defined as local (150  kms).  24.<ind> The parties have based their figures on national geographic  markets. In fact, the location of their plants and of their sales appear  to remain at a national basis.  25.<ind> It appears that most of the brick manufacturers (except the small  manufacturers who are becoming marginal) operate on a national basis, with  a regular spread of their plants, in order to be able to deliver the  bricks at the lowest transportation cost. The spread ofthe plants is  explained also by the necessity to be very close to an area of clay  exploitation deposits.  26.<ind> In conclusion the Commission considers that the geographic  reference market for clay facing bricks is at least national or  crossborder (within a radius of about 500 kms), while for clay hollow  bricks it remains local (within a radius of at the maximum 150 kms).  C.Competition assessment  27.<ind> Owing to the product specialisation of the parties and to their  existing separate locations, (i.e.Koramic is active mainly in clay facing  bricks in Belgium, the Netherlands and  France, whilst Wienerberger is a  strong producer of clay hollow bricks in Germany and Austria), the  proposed operation is complementary in nature. It leads to an addition of  market share, for clay facing bricks only within the regional crossborder  area comprising Belgium, the Netherlands and Germany, and for clay hollow  bricks only in the local market of middleeast Germany.  <ind> Market shares  28.<ind> The market shares in the tables below are indicated on the one  hand for clay facing bricks only (on a national and crossborder basis in  sales volume for 1995), and on the other hand for clay hollow bricks only  (on a national basis and local basis in sales volume for 1995).   i)<ind> Clay facing bricks  Table 2  : market share clay facing bricks on a national basis  CLAY FACING BRICKS <ind> SALES VOLUME 1995 M2   <tab> Belgium  1000 M2   <tab> France   1000 M2 Netherlands  1000 M2 Germany 1000 M2   <tab> Austria 1000 M2   Total market <tab> 9075100%4215100% 10570100%16907100%25100%  Wienerberger <tab>  [..](2)[..](3)[..](2)[..](3)[..](2)[..](3)[..](4)[..](3)[..](2)[.](5)  Terca <tab> [..](6) <tab>  [..](7)[..](4)[..](8)[..](9)[..](7)[..](6)[..](10)[..](2)[.](3)  Wienerberger + Terca <tab>  [..](6)[..](7)[..](4)[..](8)[..](9)[..](7)[..](9)[..](7)[..](2)[.](5)  1st competitor <tab>  [...](6)[...](7)[...](4)[...](7)[...](4)[..](10)[...](4)[...](3)[...](2)[. ..](3)  2nd competitor <tab>  [...](4)[..](10)[...](2)[...](7)[...](4)[..](10)[...](4)[...](3)[...](2)[. ..](3)  3rd competitor <tab>  [...](2)[...](3)[...](2)[...](3)[...](2)[...](3)[...](2)[...](3)[...](2)[. ..](3)  4th competitor <tab>  [...](2)[...](3)[...](2)[...](3)[...](2)[...](3)[...](2)[...](3)[...](2)[. ..](3)  Others <tab> [..](6) <tab>  [..](7)[..](2)[..](3)[..](9)[..](11)[...](12)[...](13)[..](2)[.](7]  (2) Deleted for publication : 0  1000  (3) Deleted for publication : 0  10  (4) Deleted for publication : 1001  2000  (5) Deleted for  publication : 71  80  (6) Deleted for publication : 2001  3000  (7) Deleted for publication : 21  30  (8) Deleted for publication : 41  50  (9) Deleted for publication : 3001  4000  (10) Deleted for publication : 11  20  (11) Deleted for publication : 31  40  (12) Deleted for publication : 8001  9000  (13) Deleted for publication : 51  60  29.<ind> The above table shows that on a national basis there is only one  overlap for clay facing bricks, in Germany. The future entity will have to  face competitors at least as strong as itself in Belgium, where the first  competitor is Desimpel, which has recently been bought by the British  group Hanson. In France and the Netherlands, Terca already holds a strong  market position, although the structure of the market is different between  these countries. Currently in France the market is relatively concentrated  with, following Terca, the presence of two other strong companies, CRTC  and Desimpel. In the Netherlands the market is more fragmented, withtwo  medium competitors and a lot of small competitors. The first competitor,  Rodruza, is a Dutch company and is active only on its domestic market.  Desimpel is the second competitor on this market. In Austria, where in  fact the supply of clay facing bricks is very limited, Wienerberger has  incontestably an existing very strong position, whilst Terca is not active  in this country and does not own plant in the crossborder area.  Table 3  : market share clay facing bricks on a crossborder basis  CLAY FACING BRICKSSALES VOLUME 1995 M2(2)  Belgium + Netherlands + Germany 1000 M2  Total market36552100%  Wienerberger[..](4)[..](3) %  Terca[..](14)[..](7) %  Wienerberger + Terca[..](12)[..](7) %  Desimpel[...](9)[...](3)  Boral[...](6)[...](3)  Vandersanden[...](4)[...](3)  Rodruza[...](4)[...](3)  Others[..](15)[..](13) %  (14) Deleted for publication : 7001  8000  (15) Deleted for publication : 19001  20000  30.In the crossborder area where the parties are both active the market  appears relatively fragmented. The operation will lead to an addition of  market share which is not very significant; in fact Wienerberger's  activity is relatively limited in Germany and it is not present in Belgium  or the Netherlands.  ii)clay hollow bricks  Table 4  : market share clay hollow bricks on a national basis  CLAY HOLLOW BRICKS <ind> SALES VOLUME 1995 M3  <tab> Belgium  1000 M3  <tab> France   1000 M3Netherlands  1000 M3 Germany 1000 M3 <tab>  Austria 1000 M3   Total market<tab> 1712100%2074100% 220100%9641100%2729100%  Wienerberger<tab>  [..](2)[..](3)[..](2)[..](3)[..](2)[..](3)[..](6)[..](7)[..](4)<tab> [..]  Terca<tab>  [..](2)[..](7)[..](2)[..](3)[..](2)[..](7)[..](2)[..](3)[..](2)<tab>  [..](3)  Wienerberger + Terca<tab>  [..](2)[..](10)[..](2)[..](2)[..](2)[..](7)[..](6)[..](7)[..](4)<tab>  [..](8)  1st competitor<tab>  [...](2)[...](7)[...](2)[...](3)[...](2)[...](4)[...](10)[...](2)<tab>  [..](3)  2nd competitor<tab>  [...](2)[..](10)[...](2)[...](2)[...](4)[...](10)[...](2)[..](3)  3rd competitor<tab>  [...](2)[..](10)[...](2)[...](2)[...](2)[...](3)[...](2)[..](3)  4th competitor<tab>  [...](2)[...](3)[...](2)[...](2)[...](2)[...](3)[...](2)[..](3)  Others<tab>  [..](2)[..](7)[..](4)[..][..](2)[..](5)[..](9)[..](11)[..](2)<tab>  [..](87  31.For clay hollow bricks the markets within each country are relatively  highly fragmented. In Belgium, the Netherlands and Austria the proposed  operation will not lead to overlaps; in France and Germany overlaps will  occur but, because they are insignificant, they will not change  significantly the competition situation.  32.At a local level, an overlap will occur in middleeast Germany where,  with [...](7)% of the market, the new entity will follow BTS which holds  [...](11)% of this market.  Vertical integration  33.According to their needs claybrick producers either purchase clay (the  principal component of clay bricks) from the owners of clay pits, buy pits  from local authorities or private owners, or conclude longterm  exploitation contracts.  But, although the parties both own some pits,  vertical integration at the upstream level is relatively low in the  industry.  Licences to exploit the clay pits are granted by national or  local authorities, each claybrick producer being subject to the same rules  in this respect. The market for clay pits is relatively open.  Thus the  upstream vertical integration of the parties creates no competition  problems.  <ind> There is no vertical integration at the downstream level,since, in  each country where they are present, the parties sell directly to  independent distributors and do not own a distribution network.  VI.<ind>   CONCLUSION  34.<ind> Terca and Wienerberger, which will constitute together the new  entity, are already strong companies in the sectors of clay facing bricks  and clay hollow bricks, However the investigation conducted by the  Commission has shown that the proposed operation will not modify in the  medium term the structure of the market, nor will the addition of the  ressources of Koramic enhance the position of Wienerberger in Austria,  which already has access to the financial resources of Creditanstalt. In  fact the activities of the companies have a complementary character, as  regards the product markets concerned as well as the geographic markets  involved.  35.<ind> For the above reasons, the Commission has decided not to oppose  the notified operation and to declare it compatible with the common market  and with the functioning of the EEA Agreement. This decision is adopted in  application of Article 6(1)(b) of Council Regulation No 4064/89.  For the Commission,