CELEX: 32017M8689
Language: en
Date: 2017-12-21 00:00:00
Title: Commission Decision of 21/12/2017 declaring a concentration to be compatible with the common market (Case No COMP/M.8689 - Rubis Terminal / Phillips 66 Central Europe Inc. / Zeller & Cie) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                Brussels, 21.12.2017
                                                                C(2017) 9124 final
     In the published version of this decision, some
     information has been omitted pursuant to Article
                                                                           PUBLIC VERSION
     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     omitted has been replaced by ranges of figures or a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.                                      To the Notifying Parties
Subject:            Case M.8689 - Rubis / Phillips 66 / Zeller & Cie
                    Commission decision pursuant to Article 6(1)(b) of Council
                    Regulation No 139/20041 and Article 57 of the Agreement on the
                    European Economic Area2
Dear Sir or Madam,
(1)         On 17 November 2017, the European Commission received notification of a
            proposed concentration pursuant to Article 4 of the Merger Regulation by which
            the undertakings Rubis Terminal SA ("Rubis Terminal", France), belonging to
            the Rubis Group, and Phillips 66 Central Europe Inc. ("Phillips 66", USA),
            belonging to the Phillips 66 Group acquire within the meaning of Article 3(1)(b)
            and 3(4) of the Merger Regulation joint control of the whole of Zeller et
            Compagnie ("Zeller", France) by way of purchase of shares3. Rubis Terminal
            and Phillips 66 are referred to as the "Notifying Party" and together with Zeller
            as the "Parties".
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 401, 25.11.2017, p. 22.
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--- 1.    THE PARTIES
(2)      Rubis Terminal is a subsidiary of the Rubis Group and is active in the storage of
         petroleum products, chemicals, agro-products and fertilisers in Europe. Rubis
         Terminal is also active in the market for wholesale of petroleum products in
         France. Rubis Group is specialised in distributing petroleum products (fuel,
         LPG, etc.) and storing liquid products (petroleum products, chemicals, agro-
         products, fertilisers) in Europe, Africa and the Caribbean.
(3)      Phillips 66 is part of the Phillips 66 Group, a diversified energy manufacturing
         and logistics company with a portfolio of integrated businesses: midstream,
         chemicals, refining and marketing and specialties. Phillips 66 processes,
         transports, stores and markets fuels and products globally.
(4)      Zeller is active in the sales of fuels, bitumen and oil and other petroleum
         products in Alsace and the Grand Est region in France. Zeller sells to companies
         active in different economic sectors and is currently jointly owned and
         controlled by Phillips 66 and Shell Deutschland Oil GmbH ("Shell").
2.    THE OPERATION
(5)      The operation consists of the acquisition by Rubis Terminal of the shares and
         rights that Shell currently holds in Zeller (the "Transaction").
    2.1.    Joint control
(6)      Following the Transaction, Phillips 66 and Rubis Terminal will each hold 50%
         of the shares in Zeller. Pursuant to Zeller's bylaws, Zeller is managed by its
         managing director, which is appointed by the shareholders under a simple
         majority vote. Other strategic decisions, in particular in relation to the budget
         and business plan, need to be approved by all the shareholders or the
         supervisory board. The supervisory board currently consists of two members
         representing Phillips 66, and two members representing Shell. It thus follows
         that Shell and Phillips 66 currently jointly control Zeller, which post-
         Transaction will be jointly controlled by Rubis Terminal and Phillips 66.
    2.2.    Full functionality
(7)      Zeller has a management dedicated to its day-to-day operations, it employs staff
         and owns or rents the assets necessary to its activities, it has significant purchase
         and supply agreements with parties other than its parent companies and it has
         existed since 1970 and will continue to exist on a lasting basis. Zeller is
         therefore a full function joint venture.
3.    THE CONCENTRATION
(8)      The Transaction represents an acquisition of joint control within the meaning of
         Article 3(1)(b) and 3(4) of the Merger Regulation by Rubis Terminal and
         Phillips 66 over Zeller.
                                                  2
 ---pagebreak--- 4.       EU DIMENSION
(9)        The undertakings concerned have a combined aggregate world-wide turnover of
           more than EUR 5 000 million4 [Rubis Group: EUR 3 004 million, Phillips 66
           Group: EUR 76 140 million, Zeller: EUR 112.3 million]. Two of them have an
           EU-wide turnover in excess of EUR 250 million [Rubis Group: […], Phillips 66
           Group: […]], 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 .
5.       RELEVANT MARKETS
(10)       Zeller is active in the markets for non-network sales of (i) diesel, (ii) gasoline,
           (iii) gas oil, (iv) fuel oil, (v) domestic heating oil, (vi) bitumen and (vii) jet fuel
           in Alsace and Grand Est region, in France, and Rubis Terminal has a small
           activity in the west part of the Grand Est region.
  5.1. Non-retail sales of refined oil products
     5.1.1.       Product market definition
(11)       The Commission has previously consistently distinguished the retail and non-
           retail sale of refined oil products, the latter encompassing the supply to
           independent resellers or retailers not integrated upstream, as well as to large
           industrial and commercial consumers by secondary means of transport. In
           previous decisions, the Commission concluded that the non-retail sale of each of
           the products - gasoline, diesel, domestic heating oil (either gas oil/light fuel oil
           or kerosene), heavy fuel oil and LPG - constitutes a distinct product market.5
(12)       The Notifying Party does not contest the Commission's decisional practice
           which is retained for the present case.
     5.1.2.       Geographic market definition
(13)       The Notifying Party submits that the geographic market was in previous
           Commission decision considered regional (sub-national), national or local in
           scope and that the geographic market definition can be left open for the purposes
           of this Transaction.
(14)       The Commission has previously considered the market for non-retail sale of
           refined oil products to be national, regional or even local in scope 6. The exact
4    Turnover calculated in accordance with Article 5 of the Merger Regulation.
5    See cases COMP/M.3291 Preem / Skandinaviska Raffinader (2003); COMP/M.3375 Statoil / SDS
     (2004); COMP/M.3543 PKN Orlen / Unipetrol (2005); COMP/M.4208 Petroplus / European
     Petroleum Holdings (2006); COMP/M.4545 Statoil / Hydro (2007); COMP/M.5005 Galp Energia /
     Exxonmobil Iberia (2008); COMP/M.5169 Galp Enrgia Espana / Agip Espana (2008).
6    The possibility of a national market existing was however left open: COMP/M.1628 TotalFina / Elf
     (2000); COMP/M.6935 Argos / Sopetral (2013).
                                                         3
 ---pagebreak---            definition of the geographic market can however be left open as the Transaction
           does not create competition concerns under any plausible delineation.
  5.2. Non-retail sales of bitumen
     5.2.1.      Product market definition
(15)       The Commission has previously considered the sale of bitumen as distinct from
           the non-retail sale of fuels as it has a distinct set of uses and a small number of
           customers which differentiates it from other non-retail sale fuel products7.
(16)       The Notifying Party does not contest the Commission's decisional practice
           which is retained for the present case.
     5.2.2.      Geographic market definition
(17)       The Notifying Party submits that the geographic market was in a previous
           Commission decision considered national or narrower but submits that the
           geographic market definition can be left open as no serious doubts arise
           irrespective of this definition.
(18)       The Commission has often considered the geographic market for bitumen to be
           national in scope8, but the high cost of transportation points to the existence of a
           market that is regional in scope. The Commission left open whether the
           geographic scope is national or narrower 9 and also for the purposes of this
           proposed Transaction the precise geographic definition is left open.
      5.3.    Non-retail sales for jet fuel supply
     5.3.1.      Product market definition
(19)       The Notifying Party does not contest the Commission's decisional practice and
           submits that the precise product market definition can be left open as no
           competition problems arise on any of the alternative markets.
(20)       In previous Commission decisions10, the Commission considered jet fuel a
           separate product market, distinct from other refined oil products. At the upper
           level of the supply chain, aviation fuel is sold ex-refinery to wholesalers, oil
           companies and airlines and at the lower level of the supply chain, aviation fuel is
           supplied from an airport into planes ('into-plane sales'). The Commission has
           noted that from a demand side perspective aviation fuel could be further
           segmented into two different types of aviation fuel, jet fuel and avgas,
7    See Cases COMP/M.727 BP/MOBIL (1996).
8    See Cases COMP/M.727 BP/MOBIL (1996), COMP/M.3543 PKN Orlen/Unipetrol (2005).
9    See Cases COMP/M.1464 Total/Petrofina (1999), COMP/M.3516 Repsol YPF/Shell Portugal (2004).
10   See COMP/M.3110 OMV / BP (Southern Germany package) (2003); COMP/M.5005 Galp Energia /
     Exxonmobil Iberia (2008).
                                                    4
 ---pagebreak---           depending on what it is intended to be used for11, but the Commission left the
          question open whether such segmentation constituted separate markets.
(21)      For the purposes of the proposed Transaction the exact product market
          definition can be left open, since on any plausible market the concentration does
          not raise competition concerns.
    5.3.2.       Geographic market definition
(22)      The Notifying Party submits that the geographic market was in previous
          Commission's decisions considered EU/Western Europe or in some cases
          narrower in scope but submits that the geographic market definition can be left
          open as the market is not affected by the proposed Transaction.
(23)      The Commission has previously defined geographic markets for into-plane
          service on a local scope, i.e. on the basis of individual airports.12
(24)      For the purposes of the proposed Transaction the exact geographic market
          definition can be left open, since on any plausible geographic market the
          concentration does not raise competition concerns.
 5.4. Storage of petroleum products
    5.4.1.       Product market definition
(25)      The Notifying Party does not contest the Commmission's decisional practice
          defining a separate product market for the leasing of storage capacity for
          petroleum products to third parties and submit that it is unnecessary to further
          subdivide the market according to the function or type of tank concerned since
          (i) all the operators in the market have storage capacities for several refined
          products or product categories, (ii) from a technical point of view, the same type
          of tanks are used for the storage of the different refined products and (iii) most
          of the clients need to store different products at the same time.
(26)      The storage of petroleum products available to third parties has been previously
          defined by the Commission as a distinct product market,13 separate from
          relevant product markets for the storage of crude oil, vegetable oils, chemicals
          and gas, due to technical and commercial considerations14.
(27)      The Notifying Party submitted that for storage purposes switching from storing
          jet fuel and gasoline to other non-heated refined products is easy. Switching
11  See Case COMP/M.7387 BP / Statoil Fuel and Retail Aviation.
12  See Cases COMP/M.1383 Exxon / Mobil (1999) and COMP/M.3110 OMV/BP (Southern Germany
    Package) (2003); COMP/M.5005 Galp Energia / Exxonmobil Iberia (2008).
13  See cases COMP/M.6935 Argos / Sopetral (2014); COMP/M.6261 North Sea Group / Argos Groep /
    JV (2011); COMP/M.4532 Lukoil / ConocoPhillips (2007), COMP/M.1621 Pakhoed / Van Ommeren
    (1999).
14  See cases COMP/M.6935 Argos / Sopetral (2014); COMP/M.6525 SESA / DISA / SAE / JV (2012);;
    COMP/M.4532 Lukoil / ConocoPhillips (2007); COMP/M.1621 Pakhoed/Van Ommeren (1999);
    COMP/M.1464 Total / Petrofina (II) (1999).
                                                   5
 ---pagebreak---          from gasoline to diesel can be achieved within a week15, but switching from
         destillates (diesel, gasoil, domestic heating oil) to gasoline is more complex
         depending on the authorisations. If the new product is heated then a switch
         possibility depends on the existing equipment and may require very significant
         investments.
(28)     This suggests distinct markets could exist depending on the storage equipment
         (tank) needs. Therefore, the Commission considers also a further sub-
         segmentation of the storage of petroleum products by type of product but the
         precise product market definition can be left open since the Transaction would
         not lead to competition concerns under any of the plausible product market
         definitions.
    5.4.2.      Geographic market definition
(29)     The Notifying Party considers that the geographical delineation of the market
         for storage of refined products should be based on a radius of 150 km around
         each depot and not limited by administrative or national borders.
(30)     In previous decisions the Commission found that the geographic scope of the
         market of storage of petroleum products depends on the size of the Member
         State at hand and is accordingly national, regional or limited to a radius that in
         average does not exceed 150 kilometres around the relevant storage depot.16
(31)     The Commission considers that the question of the exact geographic market
         definition can be left open, as the Transaction does not lead to serious doubts as
         to its compatibility with the internal market even on the basis of the narrowest –
         local – market definition.
6.      COMPETITIVE ASSESSMENT
(32)     The Transaction only leads to vertically affected markets as regards the
         (upstream) markets for storage of petroleum products available to third parties in
         (i) the SES/Wagram area and (ii) the Village Neuf area, on which Rubis
         Terminal is active, and the (downstream) market for the non-retail sales of
         heavy fuel oil in the Alsace region, on which Zeller is active. The Transaction
         leads to further vertical relationships if the storage market were to be further
         sub-segmented by type of product.
15 Responses submitted on 24 and 27.11.2017.
16 See cases COMP/M.6261 North Sea Group / Argos Groep (2011); COMP/M.6525 SESA / DISA /
   SAE / JV (2012); COMP/M.1621 TotalFina / Elf (2000).
                                                   6
 ---pagebreak---  ---pagebreak---  ---pagebreak---         Storage capacity used by Zeller   Volume (m3)      Share in storage used by Zeller
        SES                               […] m3
        Village Neuf                      […] m3           [50-100]%
        Wagram Terminal                   […] m3
        SFDM (Saint Baussant)             […] m3           [0-50]%
        Source: Form CO
(39)   Thus, Zeller only uses limited storage capacity from other suppliers than Rubis
       Terminal pre-Transaction.
          6.2.2.   Non-horizontal effects: Storage of petroleum products available to
                   third parties – non-retail sales of refined fuel products
(40)   If the upstream market for the storage of petroleum products is further divided
       according to the type of product(s) stored, Rubis Terminal's market shares on
       the some of the narrower markets may be higher than 30%, which could lead to
       other markets being vertically affected. The Notifying Party submits that its
       competitors also have storage capacities for several refined products (see
       paragraphs (25) and (35)).
(41)   The Notifying Party submits that it is unable to provide market share estimates
       under a narrower definition according to the type of petroleum product stored.
       However in the last 3 years Rubis Terminal did not store heavy fuel oil,
       bitumen, or avgas / jet fuel in the SES/Wagram area, respectively the Village-
       Neuf area. In addition, Zeller does not require storage for heavy fuel oil such
       products.
(42)   The merged entity would not have the ability to engage in an input foreclosure
       strategy as, with exception of the market for heavy fuel oil, Zeller has a small
       market share on all the markets for non-retail sales of refined fuel products
       (below 6%). It will therefore not be profitable for the merged entity to enter into
       an input foreclosure strategy.
(43)   The Commission also carried out a market investigation and none of the
       respondents, customers of Rubis Terminal and competitors of Zeller, raised
       concerns with regard to the proposed Transaction. The investigation also
       confirmed that other storage providers offer possibilities for different refined
       petroleum products.
(44)    Zeller already sources [50-100]% of its storage needs from Rubis Terminal and
       is not an important customer given that it uses […]% of Rubis Terminal's
       storage capacity in the SES/Wagram area and […]% of Rubis Terminal's
       storage capacity in the Village Neuf area (where Rubis Terminal's overall
       market share is [0-5]%). Thus, the merged entity would not have the ability to
       engage in a customer foreclosure strategy.
 6.3. Conclusion on non-horizontal effects
(45)   Based on the above, the Commission considers that the concentration does not
       raise serious doubts as to its compatibility with the internal market with regard
       to non-horizontal effects under any plausible product and geographic market
       definition.
                                                9
 ---pagebreak--- 7.   CONCLUSION
(46)  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
                                             10