CELEX: 32015M7456
Language: en
Date: 2015-02-19 00:00:00
Title: Commission Decision of 19/02/2015 declaring a concentration to be compatible with the common market (Case No COMP/M.7456 - IMERYS / S&B MINERALS) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

Brussels, 19.2.2015
C(2015) 1297 final

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|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|Where possible the information omitted has been replaced by      |            |                                                                |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.                      |            |                                                                |
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|                                                                 |            |MERGER PROCEDURE                                                |

|                                                                       |To the notifying party:                                                |

Dear Sir, Dear Madam,

Subject:    Case M.7456 - IMERYS / S&B MINERALS
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 16 January 2015, the European Commission received notification of a  proposed  concentration  pursuant  to  Article  4  of  the  Merger
       Regulation by which the undertaking Imerys SA (France) acquires within the meaning of Article 3(1)(b) of the Merger Regulation control  of
       the undertaking S&B Minerals Finance SCA (‘S&B', Greece) (with the exception of  its  Greek  bauxite  business)  by  way  of  purchase  of
       shares.[3] Imerys and S&B are designated hereinafter as the "Parties".

       THE PARTIES AND THE OPERATION

    2) Imerys is a multinational company that mines and transforms minerals used to improve the quality of customers' products and  manufacturing
       processes. Imerys operates in four business groups: (i) energy solutions & specialties, (ii) filtration  &  performance  additives,  (iii)
       ceramic materials, and (iv) high resistance minerals.

    3) S&B is a global group that is active, through its subsidiaries, in the extraction and processing of certain industrial minerals for use in
       a wide range of sectors. In particular, it is active in the extraction and supply of perlite, bentonite, wollastonite, as well as  in  the
       production and supply of continuous casting fluxes. S&B's mining sites are mainly located in Greece.

    4) The proposed transaction concerns the acquisition by Imerys of 100% of the shares and voting rights of S&B[4]  on the  basis  of  a  Share
       Acquisition Agreement concluded on 5 November 2014. Therefore, the transaction constitutes a concentration within the meaning  of  Article
       3(1)(b) of the Merger Regulation.

       EU DIMENSION

    5) The concentration does not meet the thresholds required in Article 1(2) and (3) of the Merger Regulation. However, on 26 November 2014 the
       Commission received a request pursuant to Article 4(5) that the concentration should be reviewed by the Commission. As none of the  Member
       States where the transaction was capable of being reviewed (Austria, Germany and Spain) opposed the referral, the concentration is  deemed
       to have a Union dimension and is notifiable under Article 4 of the Merger Regulation.

       COMPETITIVE ASSESSMENT

    6) The proposed transaction primarily concerns the markets for the extraction and supply of industrial minerals, notably perlite, as well  as
       the production and supply of wollastonite, continuous casting fluxes and other minerals used in refractory applications.

1 Relevant markets

1 Relevant product market

    7) The Parties consider that, in view of their respective product portfolios, the following products  are  in  particular  relevant  for  the
       assessment of the Notified Transaction as significant additions to Imerys' existing sales of minerals:  (i)  perlite;  (ii)  wollastonite;
       (iii) bentonite[5]; (iv) continuous casting fluxes. As the  Notified  Transaction  does  not  lead  to  any  affected  markets  concerning
       wollastonite, or continuous casting fluxes these products will be shortly described to the extent they are relevant for the assessment  of
       potential conglomerate effects (see section 3.2.2), but will not be assessed further for the purpose  of  defining  the  relevant  product
       market in this Decision:

        a. wollastonite is an industrial mineral comprised chemically of calcium, silicon and oxygen. Wollastonite is used  as  an  additive  in
           plastics, paint, metallurgic continuous casting processes, and ceramic applications.  Only  S&B  is  active  in  wollastonite.  Other
           complementary materials for these applications include clays, talc, calcium carbonates, mica, diatomite, vermiculite and feldspar, in
           some of which the Parties are active.

        b. continuous casting fluxes ("CCFs") are a range of specialized and high  value-adding  products  crucial  to  the  continuous  casting
           process in steel casting. In particular, CCFs consist of powder, granule and premolten materials that are  manufactured  by  blending
           certain mineral-based raw materials, such as wollastonite, sodium oxide, fluorspar, carbon, alumina, and magnesium oxide.  S&B  is  a
           major supplier of CCFs. Imerys is present on a neighbouring market for refractory materials, which are non-metallic materials (a  mix
           of aggregates, mainly alumina-silicates with binders)  primarily  used  as  heat-buffers  or  linings  in  industrial  installations,
           including the production of steel.

2 Perlite

    8) Perlite is a naturally occurring siliceous rock, whose key property is notably expansion - when heated to certain temperatures, it expands
       from four to twenty times its original volume. According to the Notifying Party, Imerys is mostly active in old perlite ore,  and  S&B  in
       young perlite ore, which tend, due to different properties, to be used in different industrial applications. In  particular,  old  perlite
       ore is mainly used for filtration of  liquids  (e.g.  wine),  whilst  young  perlite  is  used  in  other  end-use  applications,  notably
       horticulture, construction (as lightweight  and/or  fire-resistant  material  in  concrete,  ceiling  tiles  etc.)  and  other  industrial
       applications such as insulation and foundry.

    9) Production of perlite ore usually involves the following steps. Crude perlite is mined using open-pit methods and then  is  moved  to  the
       plant site where it is stockpiled. The crude ore is ground to variable sizes in several circuits and dried to reduce the moisture content.
       The desired size processed perlite ore is stored until it is shipped to an expansion plant. In  end-use  applications  perlite  is  almost
       always used in expanded form. Perlite ore producers can either be vertically  integrated  and  expand  the  ore  themselves  (for  example
       Imerys), or sell unexpanded ore to perlite expanders-traders or end customers, as is the case of S&B.

   10) The practice of trading on the merchant market unexpanded as opposed to expanded perlite varies depending on the  industrial  application.
       With respect to filtration applications, end customers source  almost  exclusively  expanded  perlite.  Conversely,  in  horticulture  and
       construction applications, most customers tend to buy unexpanded perlite and carry out the expansion process in their own expansion  sites
       (notably large construction material companies).

1 Past decisional practice

   11) The Commission has hitherto not yet assessed a market for perlite. In the past cases concerning  industrial  minerals  (talc  and  calcium
       carbonates), the Commission has considered that the relevant product markets should be delineated according to  the  single  mineral,  and
       further segmented in accordance with its end-use applications,[6] subject to certain exceptions, where more than  one  minerals  could  be
       found substitutable for the same application.[7]

2 The Notifying Party's arguments

   12) The Notifying Party considers that on the upstream level, a market for perlite ore to the merchant market could be  identified,  with  the
       possibility of a further sub-segmentation depending on the age and properties of perlite, namely  (i)  old  perlite  ore  and  (ii)  young
       perlite ore. At the downstream level, in line with the Commission’s past practice with respect to  industrial  minerals,  the  market  for
       perlite could be segmented based on the main end-use applications, namely: (i) perlite for filtration, (derived from 'old'  perlite  ore),
       (ii) perlite for horticulture, and (iii) perlite for construction and other Industrial applications (both  derived  from  'young'  perlite
       ore).

   13) The Notifying Party also propose a more detailed categorisation of perlite ore for different end-use applications.

       [pic]

       Source: the Notifying Party[8]

   14) For filtration, the final product is based on milled expanded perlite grains, which explains why fine perlite  ore  grades  are  required.
       Most importantly, for this application, the raw perlite type should be such that during expansion it should create a mixture of  shattered
       and very soft particles so as to be easier to be milled afterwards. This malleability is a characteristic of perlite  extracted  from  old
       ore deposits.

   15) For horticulture, the expanded perlite grains need to be large above 1mm up to 5 mm,  in  order  to  keep  their  grain  integrity  during
       expansion by not expanding violently and creating a lot of shattered particles. This explains why raw perlite sold for this purpose  needs
       to be a coarse grade (for example 0.8-2.5 or 1.2-3.35 mm). Perlite ore with these features is typically extracted in young  ore  deposits,
       i.e. with an age of less than 1 million years.

   16) Finally, for construction and other industrial uses such as cryogenics, the expanded perlite grains need to be  finer  for  having  better
       packing, better insulation and smoother finishing. This is why medium and fine perlite grades are used in this application.  In  addition,
       the perlite ore needs to have higher mechanical resistance so as not to create shattered particles during expansion, which  is  a  quality
       typically found in perlite extracted from young deposits. That said, sometimes, also old perlite ore can  provide  expanded  particles  of
       high strength, hence be employed for such application.

   17) According to the Notifying Party, it may also be sensible to consider, for some end-use  application,  a  wider  market  comprising  other
       minerals showing a good degree of substitutability with perlite. However, the market definition can be left open.

3 Results of the market investigation

       Production of perlite ore / raw perlite

   18) At the highest plausible relevant product market for perlite ore, the market investigation showed that due to the  unique  characteristics
       of perlite (such as low weight, filtration, insulation and fire-resistance properties) the possibility to substitute  perlite  with  other
       industrial minerals is very limited, and only concerns filtration applications (diatomaceous earth and vermiculite).[9]

   19) The distinction between young and old perlite ore, as proposed by the Notifying Party, was rejected as uncommon or  overly  simplistic  in
       the market investigation. Customers instead referred notably to different grain sizes and expanded/unexpanded form as the relevant product
       characteristics influencing their procurement.[10]  Accordingly,  certain  competitors  claimed  that  the  geological  age  was  not  the
       determining indicator of performance of the perlite ore for various end-use applications.[11]

       Upstream merchant supplies of perlite ore

   20) Perlite customers recognised the importance of differentiating between expanded perlite  and  unexpanded  perlite  (ore).  By  definition,
       expanded perlite is much more voluminous than unexpanded perlite (up to 20 times), and its price  can  be  10  times  higher.  The  market
       investigation confirmed that buyers of expanded perlite cannot readily switch to unexpanded perlite, as they lack the facilities to expand
       perlite. Conversely, buyers of unexpanded perlite, which typically operate own perlite expansion plants, are unwilling to procure expanded
       perlite.[12]

   21) Supplies of unexpanded perlite ore are therefore distinct from expanded perlite and could therefore be analysed on  a  plausible  merchant
       market for supply of perlite ore, irrespective of the customer type or the end-use application.

       Perlite for filtration, horticulture and construction/industrial end-use applications

   22) The market investigation confirmed a clear differentiation of perlite customer groups  and  perlite  suppliers,  and  generally  supported
       segmentation by end-use application for filtration, horticulture, and construction/industrial.

   23) In the market investigation, customers confirm that substitution between various types and grades of perlite is limited for a  given  end-
       use application. A customer commented that "we speak about completely different end products – only a few can f.inst.  manufacture  filter
       perlite".[13] Customers using perlite for different applications explained  that  they  can  only  use  certain  grades  of  perlite  with
       appropriate particle size distribution, combined water content, and degree of density/expansion.[14] This suggests  a  limited  degree  of
       demand side substitution for perlite/perlite ore for different end applications.

   24) A similar conclusion on limited substitution can also be drawn on the supply side. Although one competitor claims  that  old/fine  perlite
       and young/coarse perlite are  one and the same  product,  replies  from  other  competitors  confirm  the  general  lack  of  supply  side
       substitution. A competitor for example stated: "Each ore is naturally suited to make certain end products. This can be influenced  by  the
       processing steps taken to size the ore and the temperature used for expansion."[15]

   25) Limited supply side substitutability is also consistent with the observed supply relationships. Notably, customers  active  in  filtration
       prevailingly buy expanded perlite from two main sources. (i) Imerys, which is vertically integrated and sells expanded  perlite  directly.
       (ii) IPM/Diperlit, which sells perlite ore to traders such as CECA and Grefco which in turn expand the ore and resell expanded perlite  to
       filtration customers. Other suppliers, including S&B, only have a marginal presence in sales to this  customer  group.  The  situation  is
       reversed concerning perlite and perlite ore sold for horticulture and construction/industrial applications, where S&B  has  strong  market
       presence, while Imerys only sells very limited quantities. The pattern repeats for other competitors: Grefco/Dicalite and Ceca  are  major
       traders in expanded perlite for filtration but have no noticeable sales to horticulture  and  construction/industrial  customers.  On  the
       other hand, important suppliers like EEKOM and Perlite’92 only supply horticulture and/or construction/industrial customers, but  are  not
       meaningfully present in the filtration segment.[16] Only one company, IPM/Diperlit seems to have significant presence across several  main
       end-use applications.

       Conclusion

   26) The market investigation suggests that, in keeping with the Commission’s previous decisional practice, different end-use  applications  of
       perlite could be found to constitute separate relevant product markets.[17] However, as the subsequent competitive assessment  shows  that
       the Notified Transaction does not raise serious doubts as to its compatibility with the internal market on any of  the  plausible  product
       markets, the exact product market definition can be left open.

3 Relevant geographic market

1 Past decisional practice

   27) In the Imerys / Rio Tinto Talc Business[18], the Commission confirmed its earlier findings[19] that the geographic  dimension  of  markets
       for industrial minerals can be at least EEA in scope subject to the following factors:

         – significant cross-border trade;

         – evidence of global trade patterns;

         – relative high-value per ton;

         – ease of transport;

         – low costs of maritime freights.

2 The Notifying Party's arguments

   28) The Notifying Party contends that the Commission’s past practice of generally defining the geographic dimension of markets for high  value
       minerals as at least EEA-wide should also apply to all the industrial minerals concerned by the Notified Transaction,  including  perlite.
       For these minerals, the geographic market is worldwide in scope in view of existing trade patterns and relative  high  value  of  minerals
       compared to transportation costs.

   29) Expanded perlite is much less dense than perlite ore and thus more voluminous. For this reason, it tends to travel shorter distances  than
       perlite ore. The Notifying Party considers that the market  for  expanded  perlite  should  be  EEA-wide  in  scope  or  at  least  macro-
       regional.[20]

3 Results of the market investigation

   30) The market investigation broadly confirmed that the geographic scope of the market for perlite is at least EEA and Turkey irrespective  of
       the end application. This is supported by significant cross border trade across the EEA and sizeable imports to the EEA  from  Turkey.  In
       addition, perlite ore from mines used to supply the EEA market is also sold to overseas markets world-wide without  any  major  variations
       according to the end application.[21]

   31) Concerning expanded perlite, transport costs appear to represent an important constraint, resulting in shorter transport  distance  ranges
       compared to perlite ore.[22] Accordingly, actual transport patterns show that expanded perlite only travels to a  limited  extent  in  the
       EEA, either within the same Member State or cross-border to neighbouring or nearby Member States.[23]

   32) However, the geographic market definition can be left open as the Notified Transaction raises no  competitive  issues  regardless  of  the
       exact geographic scope of the markets.

2 Competitive Assessment

1 Perlite

1 Horizontal overlaps

       Production of perlite ore / raw perlite

   33) On the plausible market for the production of perlite ore irrespective of the end application, the Parties hold [20-30]% on the world-wide
       level (Imerys: [5-10]%, S&B: [20-30]%), followed by Grefco/Dicalite and IPM/Diperlite with  around  [10-20]%  each.[24]  If  the  relevant
       geographic dimension of the market were to be the EEA and Turkey[25], the Parties’ combined production would amount to approximately  [40-
       50]%, all end-uses combined (S&B: [40-50]%, Imerys: [5-10]%).[26]  The  Notified  Transaction  appears  unlikely  to  lead  to  unilateral
       anticompetitive effects due to (i) the limited increment in the production of perlite ore, (ii) the complementary nature of  the  Parties’
       respective perlite product and customer portfolios, and (iii) the presence  of  other  significant  perlite  ore  suppliers  in  the  EEA:
       IPM/Diperlit[27], Perlite ’92 and EEKOM. Moreover, certain sophisticated buyers of perlite ore appear to be able to sponsor the  expansion
       of suppliers' capacity to foster more price competition.[28] Finally, Imerys’ product portfolio  focussed  on  filtration  appears  to  be
       subject to some degree of competitive pressure from other filtration minerals, such as diatomaceous earth and vermiculite.

   34) The Notified Transaction could also be assessed on a plausible market for merchant sales of perlite ore. On that market,  S&B  would  hold
       [30-40]% of sales in 2013. However, Imerys' is vertically integrated into the downstream market for the supplies of expanded  perlite  and
       hardly sells any perlite ore in the EEA. Accordingly, its market share only amounts to [0-5]% of merchant sales. A competitive  assessment
       on this plausible market level would thus not be representative of the Parties’ respective market position in the production and supply of
       perlite.

       Expanded perlite

   35) Unlike Imerys, S&B does not focus on sales of expanded perlite. Its sales of expanded perlite are thus very limited, and do  not  lead  to
       any significant overlaps even on national markets as the narrowest plausible geographic market.[29]

       Perlite for, respectively, filtration, horticulture, and construction

   36) The narrowest possible relevant product market is that for perlite (or perlite  ore)  for  distinct  end  applications,  respectively  for
       filtration, horticulture and construction/industrial use.

   37) According to the Notifying Party, the Parties' activities in perlite appear to be mostly complementary since Imerys uses  its  ore  mostly
       internally to produce expanded perlite for the filtration industry, whereas S&B mostly sells unexpanded perlite ore  to  the  horticulture
       and construction industries.

   38) The market investigation confirmed that, based on the past supply patterns, there was no significant overlap between the Parties for  each
       of the three main end applications: filtration (limited presence of S&B), horticulture (only limited presence of Imerys), and construction
       (limited presence of Imerys).

       Filtration

   39) According to the Notifying Party, Imerys is the second largest producer on the upstream market for perlite ore for filtration, with around
       [20-30]%, and significantly smaller than IPM/Diperlit, with more than double the sales of Imerys.[30] Perlite for filtration is  typically
       sold in expanded form, concerning which Imerys competes with a number of perlite ore expanders such as  Grefco/Dicalite  ([30-40]%),  Ceca
       ([10-20]%) and Nordisk ([10-20]%), to which IPM/Diperlit supplies filtration grade perlite ore. The  market  investigation  confirmed  the
       strong market position of IPM/Diperlit and the existence of downstream expanders of perlite supplied by IPM/Diperlit as direct competitors
       to Imerys. It also confirmed that S&B only had a marginal presence in  this  segment.[31]  Moreover,  it  appears  that  other  industrial
       minerals, such as diatomaceous earth and vermiculite, can viably replace perlite as a filtration aid, and thus represent a further  source
       of constraint for the Parties.

   40) Given the very limited overlap of the Parties, the presence of a very strong supplier of perlite  ore  for  filtration  IPM/Diperlite  and
       significant downstream suppliers of expanded perlite for filtration, as well as competitive  constraints  from  other  minerals  used  for
       filtration, the transaction is unlikely to lead to anticompetitive effects due to the combination of the Parties'  production  of  perlite
       ore for filtration.

       Horticulture

   41) Perlite is sold in both expanded and unexpanded form to horticulture customers. According to the Notifying Party, S&B sells  approximately
       [40-50] % of perlite ore for horticulture, Imerys accounts for around [0-5]% of sales, while the largest competitor is EEKOM  with  around
       [50-60] %.[32]

   42) The market investigation confirmed that Imerys only has a marginal presence in this segment, and no customer in  the  horticulture  sector
       expected the transaction to have a negative impact on competition. In addition, Imerys appears to have limited, if any, spare capacity for
       the production of perlite ore.[33] As such, it would lack both the ability and the incentive to  divert  its  sales  from  existing  sales
       channels to enter the horticulture segment on a significant scale.

   43) Given the very limited overlap of the Parties, and the presence of other  significant  supplier  of  perlite  ore  for  horticulture,  the
       transaction is unlikely to lead to anticompetitive effects due  to  the  combination  of  the  Parties'  production  of  perlite  ore  for
       filtration. For the same reason, the transaction is also unlikely to lead to concerns of input foreclosure  through  increased  prices  of
       S&B's perlite ore to Imerys' competitors in the supply of expanded perlite for horticulture.

       Construction / industrial

   44) Construction is the largest end-use segment for perlite in the EEA (550-580kt in 2013, filtration: 130-150kt, horticulture: 90-100kt). For
       the most part, perlite ore is sold unexpanded to the customers in the construction/industrial sector, as many of them purchase significant
       quantities and have own expanding facilities. According to the Notifying party, S&B holds approximately [50-60] %  of  sales  volumes  for
       this end use (of which around [a significant portion] account for low-end  perlite),  while  Imerys  accounts  for  around  [0-5]%.  Other
       significant competitors include Perlite 92 (around [10-20] %), and EEKOM ([10-20] %), and IPM/Diperlit ([0-5] %).

   45) The market investigation on the whole corroborated the Parties' assessment, and confirmed that Imerys only  had  marginal  sales  in  this
       segment. It also suggests that some of the competitors may even have a stronger market position than indicated  by  the  Notifying  Party.
       Certain respondents have however raised concerns that the notified transaction may result in price increases, as the combined  entity  may
       have such market power as to deter expansion or new entry.

   46) Considering that Imerys does not have a meaningful presence in the construction segment, the  transaction  is  unlikely  significantly  to
       increase the Parties' combined market power in perlite sales for construction / industrial end uses. In addition, Imerys appears  to  have
       limited, if any, spare capacity for the production of perlite ore.[34] As such, it would lack both the ability and the incentive to divert
       its sales from existing sales channels to enter the construction/industrial segment on a significant scale.

       Conclusion

   47) In view of very limited overlap of the Parties and the existence of significant competitors,  the  notified  transaction  does  not  raise
       serious doubts as to its compatibility with the internal market on each of the main  end-use  perlite  applications,  namely  perlite  for
       filtration, horticulture, and construction/industrial use, respectively.

2 Vertical relationships

   48) The notified transaction would result in a vertically integrated undertaking, active both on the upstream market of  selling  perlite  ore
       (primarily current S&B business) to end customers and perlite expanders/traders (which buy perlite ore, expand it and  resell  it  to  end
       customers) and on the downstream market(s) for the supply of expanded perlite (primarily current Imerys business).

   49) However, in line with the arguments developed above, it seems unlikely that the proposed transaction would give rise to input  foreclosure
       effects because (i) Imerys and the S&B Group focus on different types of perlite ore which are used for different end  applications,  (ii)
       the market for perlite ore appears to be global (or at least EEA-wide) and there are a number of alternative perlite ore suppliers.

   50) In the market investigation, a respondent claimed that the Parties would be able to foreclose downstream competitors in  expanded  perlite
       by increasing the prices for perindopril ore sold as an input to perlite expanders/traders.  This  would  presumably  allow  the  combined
       entity to gain market shares in expanded perlite to the detriment of  existing  independent  expanders/traders.  As  Imerys  is  currently
       prevailingly supplying expanded perlite for filtration, while S&B sells unexpanded perlite for  horticulture  and  construction/industrial
       use, such a scenario would rest on the premise that the expanders of perlite ore currently supplied by S&B are in competition with Imerys'
       expanded perlite business. While this would contradict the finding that the relevant product market is segmented according to main end-use
       applications for perlite, the merits of this claim will be examined on a hypothetical  broader  market  comprising  all  perlite  material
       irrespective of end use.

   51) The Parties would hold approximately [40-50] % on the hypothetical merchant market for perlite ore (S&B: 39%, Imerys: [10-20] %), or  [40-
       50]% in the production of perlite ore in the EEA and Turkey, all end-uses combined (S&B: [40-50] %, Imerys: [5-10]%)[35].  However,  while
       the total sales of perlite (expanded or unexpanded) amounted to around 770kt[36] in the EEA  in  2013,  the  Parties'  combined  expansion
       capacities would only suffice to expand […]kt[37] of perlite ore yearly, less than ([10-20] % of all perlite. To  gain  market  share  for
       expanded perlite, it would thus not be sufficient to merely increase perlite ore prices. In addition, the Parties  would  need  to  invest
       into new expansion capacity with significant costs and  lead  time.  However,  even  disregarding  the  limited  substitutability  between
       different grades of perlite ore, the Parties would risk that their current customers for perlite ore would switch to  other  suppliers  of
       perlite ore in view of the price increase. This risk is all the more significant as any new expansion capacity would likely remain limited
       compared to the Parties' current overall sales of perlite ore. While the Parties could only capture a small part of the  demand  with  the
       incremental expansion capacity, the entirety of their perlite ore sales could be contested in case of such a price increase by significant
       competitors such as IPM/Diperlite, Perlite'92 and EEKOM. The market  investigation  suggested  that  such  switching  would  generally  be
       possible.[38] In view of the above arguments, the Parties thus likely lack ability and incentive to follow such a foreclosure scenario. At
       any rate, given that such a scenario would relate principally to current S&B output, and that Imerys' increment is relatively small,  such
       a scenario is not necessarily specific to the notified transaction.

2 Conglomerate effects

   52) In the Imerys/Rio Tinto Talc Business, the Commission considered that conglomerate effects are unlikely to arise in  industrial  minerals:
       “bundling or tying practices are not common with respect to the end use applications in which  the  talc  and  the  minerals  in  Imerys's
       portfolio are used”.[39]

   53) In general, the Parties would benefit from an extended and, to a large extent, complementary product  portfolios  for  certain  industrial
       applications, notably metallurgy (S&B's continuous casting fluxes  –  "CCFs"  and  Imerys'  refractory  materials)  and  chemicals  (S&B's
       wollastonite and Imerys' clays and other minerals). The Notified Transaction however does not raise doubts as to  its  compatibility  with
       the internal market due to possible conglomerate effects for the following reasons.

       Wollastonite

   54) Wollastonite can potentially be combined with kaolin, calcium carbonates, mica, diatomite, ball  clays,  perlite,  vermiculite,  feldspar,
       quartz and talc that are sold by Imerys for use in paint, plastics and ceramics applications. Since Imerys holds a high market  share  for
       talc (([70-80]%), it could attempt to make the sales of talc dependent on the customers' purchases  of  wollastonite  in  a  tying  and/or
       bundling scenario, to the detriment of other wollastonite suppliers.

   55) However, the market investigation[40] has confirmed that (i) there are alternative sources of supply for wollastonite and talc  and  there
       are competitors, such as Sibelco, also capable of of offering both, (ii) none of the minerals at issue can  be  considered  a  "must-have"
       item in a way similar to consumer goods, (iii) Imerys has a limited market share for some key minerals, (iv) bundling is quite uncommon in
       the industry, and (v) customers tend to be large sophisticated groups with buyer power.

       CCFs

   56) CCFs are primarily used as key additives in iron and steel casting processes. S&B supplies CCFs exclusively to the  steel  industry  where
       Imerys is active in the production of refractory materials, which are essentially used as temperature-resistant lining for  installations,
       such as furnaces. S&B appears to hold a strong market position in CCFs ([50-60] %). It could thus attempt to tie or bundle  its  sales  of
       CCFs to the metallurgy customers' purchases of refractory materials in order to improve its market position in the latter business.

   57) Such a scenario however appears unlikely for the following reasons. Firstly, Imerys is not active in all types of refractory products, and
       is present in only 3 out of 5 reported product segments (active in acid unshaped refractories (monolithics), basic  unshaped  refractories
       (monolithics) and acid shaped refractories, but not in basic shaped refractories and flow-control refractories). Moreover, Imerys only has
       a more significant presence in the acid unshaped segment ([10-20]%), while it has low market shares both in basic unshaped and acid shaped
       refractories ([5-10] % and [0-5]%, respectively). Therefore, it is not clear whether the Parties would have the  incentive  to  engage  in
       such a strategy as there would be a risk that customers divert their purchases from the Parties  in  view  of  the  limited  presence  and
       incomplete product portfolio in refractories. Moreover, the market investigation[41] confirmed that (i) there  are  alternative  suppliers
       and there is at least one competitor, Vesuvius, capable of matching Imerys' offer, (ii) bundling is quite uncommon in  the  industry,  and
       (iii) customers tend to be large sophisticated groups with buyer power.

   58) Accordingly, the vast majority of respondents in the market investigations raised no concerns that the Notified Transaction would lead  to
       anti-competitive effects in either metallurgy or chemicals applications.

       CONCLUSION

   59) 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 C 27, 27.1.2015, p. 6–6.

[4]   The transaction excludes S&B Group's bauxite business in Greece.

[5]   The proposed transaction gives rise to minimal horizontal overlaps in bentonite, which is a clay formed by the  decomposition  of  volcanic
ash, having the ability to absorb large quantities of water and expand to several times its normal volume. The major uses  of  bentonite  are  in
pet litter absorbents, civil engineering (sealing, tunnelling, slurry walls), oil drilling mud, foundry-sand bond, binder  for  pelletizing  iron
ore, and for bleaching liquids (filtering, clarifying, and decolorizing). According to the Parties' estimates, there is no overlap in the EEA  as
Imerys only has a small bentonite operation in South Africa which is only serving the local market. At a worldwide level, the  Parties'  combined
market share in 2013 would be below [10-20]%. Bentonite will therefore not be discussed further in this decision.

[6]   See, for example, M.3796 Omya/Huber PCC, paragraph 235.

[7]   M.6189 – Imerys / Rio Tinto Talc Business, paragraph 24.

[8]   Reply to question 1 of the Commission’s request for information dated 10 February 2015.

[9]   See replies to questions 7  and 11 – Questionnaire to customers (Q1). For example, customers active in  filtration  stated  that  "customer
already switch [sic] on their own, for instance if kieselguhr [diatomaceous earth] is getting too expensive they switch  back  to  perlite",  "in
our filtration process we can use mainly Diatomite instead of Perlite with the same equipment".

[10]  See replies to questions 8-10  - Questionnaire to customers (Q1).

[11]  See replies to questions 9-11 – Questionnaire to competitors (Q2).

[12]  See replies to questions 12-14  – Questionnaire to customers (Q1).

[13]  See replies to question 19 - Questionnaire to competitors (Q2).

[14]  See replies to question 18 - Questionnaire to competitors (Q2).

[15]  See replies to questions 9-11 – Questionnaire to competitors (Q2).

[16]  See replies to questions 4.2, 29.2 and 29.4 - Questionnaire to customers (Q1).

[17]  With the exception of perlite for filtration, where the market investigation suggested that it could be substitutable with other  minerals,
notably diatomaceous earth and vermiculite See paragraph (18).

[18]  M.6189 Imerys/Rio Tinto Talc Business.

[19]  See, for example, M.1381, Imetal/English China Clays and M.3796 Omya/Huber.

[20]  See also decisions of the Spanish Competition Authority (2 June 2005  N-05049  Imerys/World  Mineral  and  15  September  2010  CP/0022/10,
S&B/Europerlit); Austrian  Competition  Authority  (CECA  Italiana  S.r.l.l  Winkelmann  Mineraria  S.r.lBWB/Z-888  of  22.12.2008)  and  Italian
Competition Authority (C9868 – CECA Italiana/Winkelmann Mineraria S.r.l. In Boll .49/2008).

[21]  See replies to questions 22 and 31– Questionnaire to competitors (Q2), and questions 21 and 27– Questionnaire to customers (Q1).

[22]  See replies to questions 23 and 29 – Questionnaire to competitors (Q2), and questions  22  and  27–  Questionnaire  to  customers  (Q1).  A
customer explained that “expanded perlite has got a strongly different specific weight (50-70 kg/m3), while raw perlite is 1000-1200 kg/m3.  This
reflects on a strongly different transportation price, as the delivered volume (bulk or big bags) will be the same but with  15/20  times  weight
difference.”

[23]  See replies to question 25– Questionnaire to customers (Q1).

[24]  Form CO, p. 74-75.

[25]  Imerys exports the totality of its EEA supplies from Turkey. See Form CO, p. 77, and reply to question 1 of the  Commission’s  request  for
information dated 10 February 2015.

[26]  See Form CO, p. 77-80.

[27]  S&B and two key shareholders of IPM/Diperlite have established a joint venture company Pergem Mineral Mining Industry and  Trade  S.A.  The
objective of the JV is the production, processing and export of perlite ore in the former Commonwealth of Independent States.  […] the JV is  not
likely to reduce competition between the Parties and IPM/Diperlite, as it appears that […]. See reply to the questions of 4 February 2015.

[28]  Minutes of a telephone call with a customer held on 3 February 2015.

[29]  S&B's expansion facilities are located in Spain (Sevilla), Greece and Bulgaria, while Imerys expansion facilities are  in  Spain  (Alicante
and Rubi), France and the north of Italy. As the transport distance is on average between 150 and 250 km,  there  appears  to  be  no  geographic
overlap of the Parties' perlite expansion activities in Spain. See reply to the Commission's request for information dated 20 January 2015.

[30]  See Form CO, p. 79-80. The sales volumes for filtration concern expanded perlite. As the sales  are  expressed  in  metric  tons,  and  the
expansion process is essentially only about expanding the volume of  perlite,  the  weight  of  expanded  perlite  can  be  used  to  assess  the
production/sales volumes of unexpanded perlite ore.

[31]  See replies to question 35.2. - Questionnaire to competitors (Q2) and replies to question 5 and 29 – Questionnaire to customers (Q1).

[32]  See Form CO, p. 79-80, and the explanation in footnote 30.

[33]  See Form CO, p. 83 and 74.

[34]  See Form CO, p. 83 and 74.

[35]  See Form CO, p. 77-80.

[36]  The vast majority of this volume is expanded prior to end-use, either by the producer of perlite ore directly  (for  example,  Imerys),  by
independent expanders/traders, or by the end customers itself.

[37]  Annex 1 to the reply to the Commission's request for information of 20 January 2015.

[38]  See replies to questions 32 and 33 – Questionnaire to customers (Q1).

[39]  M.6189 Imerys/Rio Tinto Talc Business Talc.

[40]  See customers' replies to questionnaires dated 21 January 2015.

[41]  See customers' replies to questionnaires dated 21 January 2015.