CELEX: 32019M9462
Language: en
Date: 2019-10-18 00:00:00
Title: Commission Decision of 18/10/2019 declaring a concentration to be compatible with the common market (Case No COMP/M.9462 - EMIL FREY GROUP / AUTOCOMMERCE / AVTO TRIGLAV / AC-MOBIL) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                Brussels, 18.10.2019
                                                                C(2019) 7596 final
                                                                                  PUBLIC VERSION
                                                                  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                                                                  possible the information omitted has been
                                                                  replaced by ranges of figures or a general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.
                                                                To the notifying party
Subject:            Case M.9462 - EMIL FREY GROUP / AUTOCOMMERCE / AVTO
                    TRIGLAV / AC-MOBIL
                    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 25 September 2019, the European Commission received the notification of a
          proposed concentration pursuant to Article 4 of Council Regulation (EC) No
          139/2004 by which the Emil Frey Group acquires within the meaning of Article
          3(1)(b) of the Merger Regulation, control of the whole of Autocommerce, Avto
          Triglav and AC-Mobil.3 Autocommerce, Avto Triglav, AC Mobil are referred to as
          the "Target" and together with Emil Frey Group (the "Notifying Party") 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 332, 3.10.2019, p. 19.
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)   Emil Frey is active in the import and distribution of new and used motor vehicles of
      different brands in a number of Member States.
(3)   Autocommerce sells new and second-hand passenger cars ("PCs") and light
      commercial vehicles ("LCVs") as well as new trucks and buses, mainly through the
      retail channel in Slovenia.
(4)   Avto Triglav sells new and second-hand PCs and LCVs through retail and
      wholesale channels predominantly in Slovenia and to Croatia.
(5)   AC-Mobil sells new and second-hand PCs and LCVs through retail and wholesale
      channels in Slovenia.
2.    THE OPERATION
(6)   Under the terms of the Sales and Purchase Agreement, dated 8 July 2019, Emil Frey
      will acquire all of the issued and outstanding membership interests of
      Autocommerce, Avto Triglav and AC-Mobil ("the Transaction").
3.    THE CONCENTRATION
(7)   The Transaction represents an acquisition of sole control within the meaning of
      Article 3(1)(b) of the Merger Regulation by Emil Frey over Autocommerce, Avto
      Triglav and AC-Mobil.
4.    EU DIMENSION
(8)   The undertakings concerned have a combined aggregate world-wide turnover of
      more than EUR 5 000 million4 (Emil Frey: […] million, Target Companies […]
      million). Each of them has an EU-wide turnover in excess of EUR 250 million (Emil
      Frey: […] million, Target Companies […] million), but they do not achieve more
      than two-thirds of their aggregate EU-wide turnover within one and the same
      Member State.
(9)   The notified Transaction therefore has an EU dimension within the meaning of
      Article 1(2) of the Merger Regulation.
5.    MARKET DEFINITION
(10)  The activities of the Parties give rise to horizontal overlaps and vertical links in the
      markets for the wholesale distribution of new LCVs and PCs in Slovenia and Croatia
      and the retail markets for new LCVs and PCs in Slovenia and Croatia.
4    Turnover calculated in accordance with Article 5 of the Merger Regulation.
                                                        2
 ---pagebreak--- 5.1.    Product market definition
5.1.1. The markets for the wholesale distribution of new LCVs and PCs
(11)    The Notifying Party considers that there is only one wholesale distribution market
        for both PCs and LCVs for the following reasons. From the supply side, all the
        competitors of Emil Frey both propose and sell PCs and LCVs. From the demand
        side, retailers usually buy both LCVs and PCs, and the wholesale and retail
        distribution agreements with the car manufacturers usually concern both PCs and
        LCVs. Finally, at the product level, the Notifying Party argues that there is a trend
        for less differentiation between PCs and LCVs.
(12)    The Notifying Party agrees with the Commission's previous decisional practice that
        the markets for wholesale distribution of PCs and LCVs should not be further sub-
        segmented based on "classes" of cars (e.g. mini cars, small cars, medium cars, etc.).
(13)    In previous decisions, the Commission has left open whether the market for the
        wholesale distribution of new PCs and LCVs should be combined or separated
        between PCs and LCVs.5 Therefore, the Commission considered the following
        potential markets (i) an overall market for the wholesale distribution of new LCVs
        and PCs, (ii) a market for the wholesale distribution of new PCs only and (iii) a
        market for the wholesale distribution of new LCVs only.
(14)    The Commission found that these markets should however not be further sub-
        segmented based on "classes" of cars (e.g. mini cars, small cars, medium cars, etc.),
        given that manufacturers normally distribute a model range which covers different
        market segments under the same distribution channel.6
5.1.2. The markets for the retail distribution of new LCVs and PCs
(15)    The Notifying Party claims that the market for retail distribution of new PCs and
        LCVs could be further sub-segmented between LCVs and PCs.
(16)    In previous decisions, the Commission has considered a distinction between the
        retail distribution of PCs and LCVs. Similarly to the wholesale distribution, it found
        that further sub-segmentation by classes of cars is not appropriate.7 Therefore, the
        Commission considered the following potential markets (i) an overall market for the
        retail distribution of new LCVs and PCs, (ii) a market for the retail distribution of
        new PCs only and (iii) a market for the retail distribution of new LCVs only.
5.1.3. Conclusion
(17)    For the purpose of this decision the Commission considers that the question of the
        exact product market definition at the wholesale level can be left open between (i) an
5     See cases COMP/M.8449 – Peugeot / Opel, paragraphs 28-33 (2017), COMP/M.2832 – General
      Motors / Daewoo Motors, paragraph 20 and 36 (2002), COMP/M.3388 – Ford Motor Company / Polar
      Motor Group, paragraph 7 (2004), COMP/M.5250 – Porsche/Volkswagen, paragraphs 26-28 (2008).
6     See cases COMP/M.8449 – Peugeot / Opel, paragraphs 28-33 (2017), COMP/M.7747 PGA/MSA,
      paragraph 11 (2015); COMP/M.6403 Volkswagen / KPI Polska / Skoda Auto Polska / VW Bank Polska
      / VW Leasing Polska, paragraph 22 (2011); COMP/M.182 Inchape / IEP, paragraph 9 (1992).
7     See cases COMP/M.8449 – Peugeot / Opel, paragraph 36 (2017), COMP/M.7747 PGA / MSA,
      paragraph 11 (2015); COMP/M.6403 Volkswagen / KPI Polska / Skoda Auto Polska / VW Bank Polska
      / VW Leasing Polska, paragraph 27 (2011).
                                                     3
 ---pagebreak---        overall market for the wholesale distribution of new LCVs and PCs, (ii) a market for
       the wholesale distribution of new PCs only and (iii) a market for the wholesale
       distribution of new LCVs only. For the purpose of this decision the Commission also
       considers that the question of the exact product market definition at the retail level
       can be left open between (i) an overall market for the retail distribution of new LCVs
       and PCs, (ii) a market for the retail distribution of new PCs only and (iii) a market
       for the retail distribution of new LCVs only on the other hand. This is because the
       Transaction does not give rise to serious doubts as to its compatibility with the
       internal market under any of these possible market definitions.
5.2.   The relevant geographic markets
(18)   The Notifying Party considers that the wholesale and retail distribution markets
       should be national in scope.
(19)   In previous decisions, the Commission has considered that the markets for wholesale
       distribution for new PCs and LCVs, is at least national ultimately leaving the
       question open whether it is EEA-wide or national in scope.8
(20)   As for the retail distribution of new PCs and LCVs, in previous decisions the
       Commission has left open whether the geographic market is EEA-wide, national, or
       local in scope.9
(21)   For the purpose of this decision the Commission considers that the question of the
       exact geographic market definition can be left open between (i) EEA-wide and (ii)
       national for the wholesale level and between (i) EEA-wide, (ii) national or (iii) local
       for the retail level, as the Transaction does not give rise to serious doubts as to its
       compatibility with the internal market under the narrowest plausible market
       definition.
6.     COMPETITIVE ASSESSMENT
(22)   On the basis of the product market definitions discussed in Section 5, the activities
       of the Parties lead to the following affected markets:10
       (a)       Horizontal overlaps: (i) wholesale distribution of new LCVs in Croatia, (ii)
                 wholesale distribution of new LCVs in Slovenia, and (iii) wholesale
                 distribution of new PCs and LCVs combined in Slovenia.
8    See cases COMP/M.8449 – Peugeot / Opel, paragraph 32 (2017), COMP/M.6958 - CD&R / We buy
     any car, paragraph 18 (2013); COMP/M.5250 - Porsche / Volkswagen, paragraph 42 (2008)
9    See cases COMP/M.8449 – Peugeot / Opel, paragraphs 37 (2017), COMP/M.7747 - PGA/MSA,
     paragraph 16 (2015); COMP/M.6718 - Toyota Tsusho Corporation / CFAO, paragraph 12 (2012);
     COMP/M.6403 - Volkswagen / KPI Polska / Skoda Auto Polska / VW Bank Polska / VW Leasing
     Polska, paragraph 28 (2011); COMP/M. 5709 - Volkswagen / Mahag, paragraph 20 (2009);
     COMP/M.5250 - Porsche / Volkswagen, paragraph 42 (2008); COMP/M.3388 - Ford Motor Company
     Ltd / Polar Motor Group Ltd, paragraph 11 (2004); COMP/M.3352 - VW / Hahn + Lang, paragraph 15
     (2004).
10   For completeness, it should be noted that the Parties' activities also overlap on the following markets:
     retail distribution of new PCs and LCVs in Slovenia and Croatia, retail distribution of used LCVs and
     PCs, wholesale and retail distribution of OE spare parts for PCs and LCVs in Slovenia and Croatia, car
     repair and maintenance services. As these overlaps do not lead to affected markets, they are not further
     discussed.
                                                        4
 ---pagebreak---        (b)      Vertical links: (i) between the upstream market for wholesale distribution of
                new LCVs in Croatia and the downstream market for the retail distribution of
                new LCVs in Croatia, and (ii) between the upstream market for wholesale
                distribution of new LCVs in Slovenia and the downstream market for the
                retail distribution of new LCVs in Slovenia. 11
6.1.   Competitive assessment - Horizontal overlaps
       The wholesale distribution of new LCVs in Croatia
(23)   Due to the limited combined market shares ([30-40]%) of the Parties, the small
       increment ([5-10]%) brought by the Transaction, as well as the existence of a
       number of credible competitors on this market,12 it is unlikely that the Transaction
       will raise serious doubts as to its compatibility with the internal market. The market
       investigation also supported this conclusion.13
       The wholesale distribution of new LCVs in Slovenia
(24)   Due to the limited combined market shares of the Parties ([30-40]%),14 as well as the
       existence of a number of credible competitors on this market,15 it is unlikely that the
       Transaction will raise serious doubts as to its compatibility with the internal market.
       The market investigation also supported this conclusion.16
       The wholesale distribution of new PCs and LCVs in Slovenia
(25)   Due to the limited combined market shares of the Parties ([20-30]%), the
       Transaction is unlikely to raise serious doubts as to it compatibility with the internal
       market. The market investigation also supported this conclusion.17
       Conclusion
(26)   In view of the above, the Commission considers that the Transaction does not raise
       serious doubts as to its compatibility with the internal market as a result of horizontal
       effects.
11   With regard to the potential vertical links between the upstream wholesale level in Croatia and Slovenia
     and the downstream local markets at retail level, it should be noted that the Parties confirmed that
     market shares at local level do not exceed 20%. Therefore, as market shares are expected to be limited
     and as the same factors and market dynamic apply, the competitive assessment conducted in Section
     6.2, also applies to any such vertical links with local downstream markets.
12   Namely, Renault Nissan Hrvatska ([20-30]%), Porsche Croatia d.o.o. ([10-20]%), Opel South East
     Europe Ltd. ([10-20]%), etc.
13   Non-confidential replies to questionnaire Q1 – Customers and Q1 - Competitors.
14   The increment for this market is not negligible ([10-20]%), however, due to the limited combined
     market share of the Parties and the strong number of competitors, the Transaction does not raise serious
     doubts as to its compatibility with the internal market.
15   Namely, Renault Nissan Slovenija ([20-30]%), Porsche Slovenia d.o.o. ([10-20]%), Summit Motors
     Ljublijana d.o.o. ([10-20]%), etc.
16   Non-confidential replies to questionnaire Q1 – Customers and Q1 - Competitors.
17   Non-confidential replies to questionnaire Q1 – Customers and Q1 - Competitors.
                                                           5
 ---pagebreak--- 6.2.   Competitive assessment – Vertical links
       Vertical link between the Parties activities in Croatia
(27)   The Parties activities give rise to an affected vertical link between Emil Frey's
       activities on the upstream market for wholesale distribution of new LCVs in Croatia
       and the Target's activities on the downstream market for the retail distribution of
       LCVs in Croatia.
(28)   With regard to input foreclosure, the market shares of the Parties are not very high
       ([30-40]%) on the upstream markets. Moreover, the number of strong competitors
       that have similar market shares would make any attempt of foreclosure difficult.
       Finally, due to the low market shares on the downstream market ([5-10]%), the
       merged entity would also have no incentive to foreclose input.
(29)   As for customer foreclosure, the Parties' market shares are limited on the
       downstream markets ([5-10]%) which would effectively prevent the merged entity
       from engaging in customer foreclosure.
(30)   The market investigation showed that the majority of respondents to the market
       investigation do not expect any effects resulting from the Transaction.18
       Vertical link between the Parties activities in Slovenia
(31)   The Parties activities give rise to an affected vertical link between Emil Frey's
       activities on the upstream market for wholesale distribution of new LCVs in
       Slovenia and the Target's activities on the downstream market for the retail
       distribution of LCVs in Slovenia.
(32)   With regard to input foreclosure, the market shares of the Parties are not very high
       ([30-40]%) on the upstream markets. Moreover, the presence of competitors that
       have similar market shares would make any attempt of foreclosure difficult.
(33)   The Parties' market shares are limited on the downstream markets ([10-20]% in
       Slovenia) which would effectively prevent the merged entity from engaging in
       customer foreclosure.
(34)   The market investigation showed that the majority of respondents to the market
       investigation do not expect any effects resulting from the Transaction.19
18   Non-confidential replies to question iv of questionnaire Q1 – Customers: the majority of the customers
     asked stated the Transaction will have a neutral or positive impact both on their own companies, that
     the level of competition in the affected markets and the majority of the customers asked stated the price
     level in the different segments will also remain the same. See also Non-confidential replies to question
     ii of questionnaire Q1 – Competitors: The results of the market investigation further indicated that
     competitors consider that the price level will not be affected as a result of the Transaction.
19   Non-confidential replies to question iv of questionnaire Q1 – Customers: the majority of the customers
     asked stated the Transaction will have a neutral or positive impact both on their own companies, that
     the level of competition in the affected markets and the majority of the customers asked stated the price
     level in the different segments will also remain the same. See also Non-confidential replies to question
     ii of questionnaire Q1 – Competitors: The results of the market investigation further indicated that
     competitors consider that the price level will not be affected as a result of the Transaction.
                                                          6
 ---pagebreak--- 7.   CONCLUSION
(35) For the above reasons, the European Commission has decided not to oppose the
     notified Transaction 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
                                              7