CELEX: 31993M0322
Language: en
Date: 1993-04-14 00:00:00
Title: COMMISSION DECISION of 14.04.1993 declaring a concentration to be compatible with the common market (Case No IV/M.322 - ALCAN / INESPAL / PALCO) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31993M0322

COMMISSION DECISION of 14.04.1993 declaring a concentration to be compatible with the common market (Case No IV/M.322 - ALCAN / INESPAL / PALCO) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 114 , 24/04/1993 P. 0000

 COMMISSION DECISION of 14.04.1993 declaring a concentration to  be compatible with the common market (Case No IV/M.322 - ALCAN  / INESPAL / PALCO) 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 Registered with advice of delivery To the notifying party Dear Sirs, Subject: <ind> Case No. IV/M.322 - Alcan/Inespal/Palco  <ind>  <ind> Notification of 11.03.1993 pursuant to Article 4  of Council Regulation No. 4064/89  1. <ind> The above operation concerns the acquisition by Alcan  Aluminium Ltd. Canada (Alcan) or its subsidiary Alcan  Deutschland GmbH of a 50% interest in Productos Aluminio de  Consumo, S.A. Spain (Palco), currently wholly owned by  Industria Española del Aluminio, S.A. Spain (Inespal).  2. <ind> After examination of the notified operation, the  Commission has concluded that it falls within the scope of  application of Council Regulation No. 4064/89 and does not  raise serious doubts as to its compatibility with the common  market.  I. <ind> THE PARTIES  3. <ind> Inespal is a subsidiary of the Spanish state holding  INI.  It manufactures, converts and markets aluminium including  aluminium foils.  In the market for aluminium foil containers,  Inespal is active only via Palco.  4. <ind> Alcan is the parent company of a multinational  industrial group engaged in all aspects of the aluminium  business.  Through subsidiaries and related companies, the  activities of Alcan include bauxite mining, alumina refining,  aluminium smelting, manufacturing, sales and recycling.  Alcan  also manufactures aluminium foils which are used for the  production of foil  containers.  Through its subsidiary, Alcan  Deutschland GmbH, Alcan is also a significant aluminium  container manufacturer in Europe.  5. <ind> Palco produces semi-rigid aluminium foil containers  with corrugated and smooth walls for industrial and consumer  use in the food sector.  Palco is active on the Spanish and  Portuguese markets where it is the leading supplier of  aluminium containers.  Palco is currently wholly owned by  Inespal.  II. <ind> CONCENTRATION   <ind> Joint control  6. <ind> After completion of the operation, both Alcan and  Inespal will have 50% of the shares in Palco.  The board of  directors of Palco will comprise six members, three appointed  by Alcan and three by Inespal.  The board's decisions shall be  unanimous.  As a result, Palco will be jointly controlled by  Alcan and Inespal.   <ind> Full function joint venture  7. <ind> Palco will continue its existing activities in the  area of aluminium foil containers and will take over the  respective activities of Alcan in Spain.  The company will  therefore be a joint venture that will perform all the  functions of an autonomous entity on a lasting basis.   <ind> Absence of co-ordination of competitive behaviour  8. <ind> Inespal is currently active in the aluminium container  market exclusively via Palco.  After completion, Inespal will  have no other interest in the market for aluminium foil  containers except through its shareholding in the joint  venture.  Given Inespal's small interest (about 5% of Inespal's  foil production) in the supply needs of Palco - which is shown  by a supply agreement for aluminium foils subject to  competitive prices - it is not likely, on commercial grounds,  for Inespal to seek to re-enter the market for aluminium foil  containers.  9. <ind> Alcan will remain active in the product market of the  joint venture outside Spain.  It is one of the leading  companies in that market both via wholly owned subsidiaries as  well as via a joint venture (Alcan EKCO Packaging Ltd., UK)  with the Tenneco group of companies.  10. <ind> The different nature of Inespal's interests in the  foil container market compared to Alcan, which will retain a  substantial interest in this market, is reflected in the  General Agreement between Inespal and Alcan.  According to this  agreement:   <ind> [Business secret.]  11. <ind> Alcan and Inespal are both active in markets which  are upstream of the aluminium foil container market.  Both  undertakings produce primary aluminium and aluminium foils  which are used for the production of foil containers.   Nevertheless, it is unlikely that the concentration will have  an impact on competition in these  upstream markets.  The  common interest of both parent companies indicated by the total  demand on their joint venture for aluminium foils - is only  about 1% of their total production of aluminium foils and with  regard to existing overcapacities in that market is not  significant.  12. <ind> The acquisition by Alcan of joint control of Palco  does not therefore have as its object or effect the co- ordination of the competitive behaviour of undertakings which  remain independent.  The proposed creation of a joint venture  is thus a concentration within the meaning of Article 3 of the  Merger Regulation.  III. COMMUNITY DIMENSION  13. <ind> The aggregate worldwide turnover of Alcan Ltd. and  the INI group in their last financial year amounts to more than  5,000 million ECU.  Their Community-wide turnover each exceeds  250 million ECU.  The parties did not achieve more than two- thirds of their Community-wide turnover in one and the same  Member State.  The operation therefore has a Community  dimension within the meaning of Article 1(2) of the  Regulation.  IV. <ind> COMPATIBILITY WITH THE COMMON MARKET  1. <ind> The relevant product market  14. <ind> Palco is engaged in the manufacture and marketing of  semi-rigid aluminium foil containers primarily for use in the  food industry.  In Spain, these containers are used in  particular in the poultry industry, wholesaling, the bakery  sector and aviation.  The parties have submitted that the  relevant product market comprises:   <ind> - <ind> coated and uncoated aluminium containers; and   <ind> - <ind> containers manufactured from:  <ind>  <ind> - <ind> synthetic (plastic) materials,  <ind>  <ind> - <ind> (metallic) papers and cardboard, and  <ind>  <ind> - <ind> sheet metal.  15. <ind> Although there might be some substitutability between  containers of different materials for the same purpose, there  are also significant indications, eg technical characteristics  such as heat resistance, airtightness and suitability for  recycling as well as price differences between aluminium  containers and containers made from other materials, which  might lead to the assumption of distinct product markets with  regard to the material used.  In this case, however, the  precise delimitation of the relevant product market need not be  specified because even on the basis of a narrow market  definition, ie coated and uncoated, semi-rigid aluminium foil  containers, the operation does not raise serious doubts.  2. <ind> The geographic reference market  16. <ind> In the EC the supply side of the market seems to be  characterised by some large and vertically integrated companies  such as Alcan, Alusuisse and Reynolds and a number of small and  medium sized competitors mainly active on their national  markets.  This seems to be particularly true for Spain where  national producers (amongst them Palco) have a significant  market share.   17. <ind> On the other hand, the nature and characteristics of  the product do not allow the assumption that there might exist  national consumer preferences or other important barriers to  entry such as transport costs.  Furthermore, there seem to be  no appreciable price differences and there are some large  industrial clients act on a Community-wide basis.  These are  strong indications of the existence of an EC-wide market for  aluminium foil containers.  18. <ind> For the purposes of this decision, however, it is not  necessary to decide whether there is a Community or national  market for aluminium foil containers because even in the latter  alternative the operation does not raise serious doubts as to  its compatibility within the common market.  3. <ind> Competition assessment  19. <ind> In the EC, Alcan, including its joint venture Alcan- EKCO, seems to be the market leader with a share of about one  third of the market followed by Alusuisse with a market share  of less than 20%.  Taking into account the small addition of  market shares of Palco with less than 2% in the EC, it is not  expected that the concentration will create or strengthen a  dominant position as a result of which effective competition  would be significantly impeded in the common market.  20. <ind> In Spain (market value below 20 million ECU),  Alcan/Palco, due to the concentration, achieve a joint market  share of well above 40% on the market for aluminium foil  containers.  On the Spanish market, there are important actual  competitors such as Fedinsa and Endal.  Furthermore, due to the  narrowest possible market definition described above, the joint  venture to a certain extent faces competition from other  European aluminium container manufacturers, eg Alusuisse and  Pechiney, and competition from containers made from materials  other than aluminium.  In addition, it has to be considered  that the market for aluminium containers is clearly growing.   Thus, it is likely that the parties behaviour in the market  will be controlled to an appreciable extent by their  competitors.  For the above reasons, the Commission has decided not to oppose  the notified concentration 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