CELEX: 32015M7663
Language: en
Date: 2015-08-27 00:00:00
Title: Commission Decision of 27/08/2015 declaring a concentration to be compatible with the common market (Case No COMP/M.7663 - DTZ / CUSHMAN & WAKEFIELD) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

Brussels, 27.08.2015
C(2015) 6090 final

                                        [pic]

|To the notifying party:                                                |                                                                       |

Dear Sirs,

Subject:    Case M.7663 – DTZ / Cushman & Wakefield
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 24 July 2015, the European Commission received a notification of a proposed concentration pursuant to Article 4  of  Council  Regulation
      (EC) No 139/2004[3]  by which the undertaking DTZ (USA) controlled by TPG (USA) and PAG  Asia  Capital  (Hong  Kong)  acquires  within  the
      meaning of Article 3(1)(b) of the Merger Regulation control of the whole of Cushman & Wakefield ("C&W", USA) by way of purchase of  shares.
      DTZ and C&W are collectively referred to as "Parties".

       THE PARTIES

   2) DTZ is a provider of real estate services in Asia, Europe and North America. DTZ represents tenants and owners in real estate transactions,
      advises on real estate investments, and provides consulting, property management and valuation services. DTZ has been jointly controlled by
      TPG, a US investment firm, and PAG Asia Capital, an Asian investment firm, since 2014.

   3) C&W is a provider of real estate services, generating the majority of its revenues in North America. C&W is controlled by EXOR  S.p.A.,  an
      Italian public investment company.

       THE OPERATION

   4) On 9 May 2015, DTZ, EXOR and C&W entered into a Stock Purchase Agreement and Plan of Merger. Pursuant to this agreement, EXOR will transfer
      its shares in C&W to a DTZ subsidiary, which will merge with C&W ("the Transaction"). Post-Transaction, DTZ will indirectly own 100% of the
      common stock of C&W. Therefore, the Transaction amounts to a concentration within the meaning of the Merger Regulation.

       EU DIMENSION

   5) The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 000 million (DTZ: EUR […] million and C&W:  EUR
      […] million).  Each of them has an EU-wide turnover in excess of EUR 250 million (DTZ: EUR […] million and C&W: EUR […] million), 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.

       MARKET DEFINITION

   6) The Transaction concerns real estate services provided to commercial customers. Real estate service providers offer advice  and  assistance
      to individuals, companies, and institutions looking to buy/sell,  rent/lease,  develop,  maintain,  and  invest  in  real  estate.  At  the
      commercial level, companies contract with real estate service  providers  to  buy/sell  or  rent/lease  commercial  properties  (factories,
      offices, and shops), to manage properties, and for advice on real estate markets.

           4.1 Product market

   7) The Commission has examined the real estate services sector on  several  previous  occasions[4].  It  has  left  open  the  product  market
      definition, but has in the past considered six main segments:

        i) asset management: management of real estate asset portfolios,

       ii) valuation: appraisal and valuation of real estate assets,

      iii) development: construction or renovation of existing buildings with the aim of selling or letting the site,

       iv) brokerage: buying/selling and renting/leasing real estate assets on behalf of third parties,

        v) consulting: provision of advice on real estate, and

       vi) property management: management and operation of real estate assets for third parties.

   8) The Parties do not contest this approach. The Commission's market investigation  has  yielded  mixed  results  concerning  these  six  main
      segments. While competitors tended to consider that they constituted separate markets,[5] customers rather saw them as part of  an  overall
      real estate market.[6] However given that the Transaction would not lead to serious doubts regardless of whether the  market  is  segmented
      into the above categories, the exact market definition can be left open.

   9) The Commission has also considered, but ultimately left open, whether real estate services could  be  further  segmented  between  services
      provided to commercial customers and those provided to  residential  customers.[7]  In  the  course  of  the  market  investigation,  large
      majorities of competitors and customers alike stated that the provision of real estate services at residential level (to  individuals)  and
      at commercial level (to companies) were indeed separate markets.[8] Given however that C&W does not provide  any  services  to  residential
      customers in the EEA and given that therefore there is no overlap between the Parties, it can be left open if there should be a distinction
      between commercial and residential customers.

  10) Finally, the Commission has considered, but ultimately left open, whether it would be appropriate to segment the commercial property sector
      based on the category of real estate (distinguishing between office, industrial, and retail properties).[9]

  11) DTZ does not believe this distinction is meaningful. Moreover, certain of the Parties' activities cannot be attributed  to  the  categories
      considered by the Commission in previous cases. This includes certain services related to certain types of residential  (i.e.,  residential
      projects for commercial clients), healthcare, parking and hospitality properties. The Parties have grouped these activities in  a  separate
      category entitled "Other Real Estate".

  12) The Commission's market investigation proved inconclusive as to the need for this further distinction. While competitors tended  to  reject
      the idea of further segmentation,[10] customers rather favoured it.[11] When asked to explain which type of properties they would  consider
      under a further sub-segmentation "other real estate", competitors and customers provided  answers  that  were  largely  in  line  with  the
      Parties' proposed categorisation.[12] However, it is not necessary to  conclude  on  the  exact  delineation  of  the  market  because  the
      Transaction would not lead to any serious doubts under any plausible market definition.

           4.2 Geographic market

  13) The Commission has previously considered, but ultimately left open,  whether  real  estate  service  markets  are  national,  regional,  or
      local.[13] DTZ believes it is appropriate to consider the commercial  real  estate  service  sector  on  the  basis  of  national  markets.
      Majorities of competitors and customers queried in the Commission's market investigation alike considered that the  scope  of  the  markets
      concerned was likely to be national.[14] Concerning the  potential  sub-segments  office,  industrial,  retail  and  "other  real  estate",
      respondents were tied between national and regional (and sometimes local) market sizes.[15] Given however that the  Transaction  would  not
      lead to any serious doubts under any plausible geographic scope, the exact geographic market definition can be left open.

       COMPETITIVE ASSESSMENT

  14) The market shares of the Parties give rise[16] to the following horizontally affected markets[17]:

|                                                        |DTZ              |C&W                    |Combined             |
|Belgium / Valuation / Offices                           |[10-20]%         |[5-10]%                |[20-30]%             |
|Belgium / Brokerage / Retail Real Estate                |[0-5]%           |[20-30]%               |[20-30]%             |
|UK / Consulting / Other Real Estate                     |[0-5]%           |[20-30]%               |[20-30]%             |
|UK / Valuation / Other Real Estate                      |[5-10]%          |[30-40]%               |[30-40]%             |
|Birmingham / Property Management / All Real Estate      |[10-20]%         |[10-20]%               |[20-30]%             |

      Table 1: Affected Markets (Source: Form CO)

           5.1 Belgium / Valuation / Offices

  15) The merged entity would reach a combined market share of [20-30]% with a [5-10]% increment brought about by the Transaction.

  16) The Parties submit that the main competitors, BNP Paribas Real Estate and CBRE, will have higher market shares than the merged entity  with
      [20-30]% and [20-30]% respectively.

  17) The respondents to the market investigation highlighted several important players as being close competitors of  the  Parties[18]  and  the
      majority of customers, which responded to the market investigation,  considered  that  the  Transaction  would  have  no  impact  on  their
      companies.[19]

  18) With regard to the impact of the Transaction on the Belgian market for office valuation, competitors tended to consider the merger to  have
      a positive effect on the market,[20] whereas customers were rather neutral.[21]

  19) According to the majority of customers and competitors, who replied to the market investigation, the market segment for office real  estate
      presents no or low barriers to entry.[22]

  20) In light of the results of the market investigation, the low market share of the combined entity and the presence of two competitors with a
      stronger market presence than the merged entity, the Transaction does not raise serious doubts in the Belgian market for the  valuation  of
      offices.

           5.2 Belgium / Brokerage / Retail Real Estate

  21) The merged entity would reach a combined market share of [20-30]% with a [0-5]% increment brought about by the Transaction.

  22) The Parties submit that the limited increment reflects the negligible impact of the Transaction on this market.

  23) The Parties submit that the competitors present in this market will act as a  strong  competitive  constraint  to  the  merged  entity,  in
      particular CBRE with a [5-10]% market share, but also JLL with [5-10]%.

  24) The respondents to the market investigation highlighted several important players as being close competitors of  the  Parties[23]  and  the
      majority of customers which responded to the  market  investigation  considered  that  the  Transaction  would  have  no  impact  on  their
      companies.[24]

  25) With regard to the impact of the Transaction on the Belgian market for brokerage of retail  real  estate,  competitors  tended  to  have  a
      negative view of the Transaction. One in particular underlined the increased size of the merged entity as potential cause for lower quality
      services.[25] Customers, on the contrary, considered that the Transaction would have no impact on the market, in view, among others, of the
      limited market share of DTZ and the presence of several competitors in this fragmented market.[26]

  26) According to the majority of customers and competitors who replied to the market investigation, the segment of retail real estate  presents
      no or low barriers to entry.[27]

  27) In light of the results of the market investigation and the limited increment of the Transaction on the Parties' combined market share, the
      Transaction does not raise serious doubts in the Belgian market for brokerage of retail real estate.

           5.3 UK / Consulting / Other Real Estate

  28) The merged entity would reach a combined market share of [20-30]% with a [0-5]% increment brought about by the Transaction.

  29) The Parties submit that the Parties have different focuses in this market. DTZ generates its revenues from work with educational  providers
      and healthcare providers, while C&W does not undertake any assignment in these sectors, but works mostly  with  governmental  agencies  and
      local authorities.

  30) The Parties submit that the competitors present in this market will act as a  strong  competitive  constraint  to  the  merged  entity,  in
      particular JLL with a [20-30]% market share, but also CBRE with [5-10]%, and Savills with [5-10]%.

  31) The respondents to the market investigation highlighted several important players as being close competitors of  the  Parties[28]  and  the
      majority of respondents to the market investigation considered that the Transaction would have no impact on their companies.[29]

  32) With regard to the impact of the Transaction on the UK market for consulting on other real estate, the majority of competitors replied that
      the Transaction would have no impact on the market,[30] while the  majority  of  customers  either  did  not  form  an  opinion  about  the
      transaction or considered it positive for the market.[31]

  33) The majority of competitors responding to the market investigation consider that the market segment for other real estate has low  barriers
      to entry.[32]

  34) In light of the results of the market investigation, the limited increment in market share and the different  focus  of  the  Parties,  the
      Transaction does not raise serious doubts in the UK market for consulting on other real estate.

           5.4 UK / Valuation / Other Real Estate

  35) The merged entity would reach a combined market share of [30-40]% with a [5-10]% increment brought about by the Transaction.

  36) The Parties submit that the Parties have different focus on this market. DTZ generates over […]%  of  its  revenues  in  this  market  from
      leisure and hospitality real estate, while C&W generates only around […]% of its revenues  in  the  leisure  and  hospitality  sector;  C&W
      generates the rest of its revenues in this market from mixed-use buildings ([…]%), self-storage estates ([…]%) and a broad range  of  other
      industries.

  37) The Parties submit that the competitors present in this market will act as a  strong  competitive  constraint  to  the  merged  entity,  in
      particular CBRE with a [10-20]% market share, but also JLL with [10-20]%, and Savills with [5-10]%.

  38) The respondents to the market investigation highlighted several important players as being close competitors of  the  Parties[33]  and  the
      majority of respondents to the market investigation considered that the Transaction would have no impact on their companies.[34]

  39) With regard to the impact of the Transaction on the UK market for valuation of other real estate, the  majority  of  both  competitors  and
      customers replied that the Transaction would  have  no  impact  on  the  market,  in  view,  among  others,  of  the  presence  of  several
      competitors.[35]

  40) According to customers who replied to the market investigation, the segment of other real estate presents a certain degree of  barriers  to
      entry,[36] while for the majority of competitors it has low barriers to entry.[37]

  41) In light of the results of the market investigation, the different focus of the Parties and the presence of several  sizeable  competitors,
      at this stage the Transaction does not raise serious doubts in the UK market for valuation of other real estate.

           5.5 Birmingham / Property Management / All Real Estate

  42) The merged entity would reach a combined market share of [20-30]% with a [10-20]% increment brought about by the Transaction.

  43) The Parties submit that the competitors present in this market will act as a  strong  competitive  constraint  to  the  merged  entity,  in
      particular GVA with a [20-30]% market share, but also CBRE with [10-20]%, JLL and Savills with [10-20]% each and KnightFrank with [5-10]%.

  44) The Commission notes that, despite the rather high increment, the combined market share is rather low.

  45) Moreover no concerns were raised during the market investigation from competitors or customers with regard to this market.

  46) In conclusion, in view of the low combined market share and the presence of several sizeable competitors, at  this  stage  the  Transaction
      does not raise serious doubts in Birmingham in the market for property management for all real estate.

           5.6 Vertically affected markets

  47) The parents of DTZ own certain participations in companies active in markets which are upstream to the market in which  the  merged  entity
      will be active, notably in real estate development and assets management. However, their market shares remain in all circumstances below [5-
      10]%.

  48) The Parties submit that in view of the limited market shares and the highly fragmented nature of both the upstream and downstream  markets,
      the merged entity will not have the ability or the incentive to pursue any strategy of input or customer foreclosure.

  49) In conclusion, the Commission considers that Transaction does not raise serious doubts with regard to non-horizontal relationships.

       CONCLUSION

  50) 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)
Phil Hogan
Member of the Commission

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[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]   OJ L 24, 29.1.2004, p. 1 (the "Merger Regulation").

[4]   M.6889 – Sogecap/ Cardif/ Ensemble Immobilier Clichy-La-Garenne; M.6621 – CNP Assurances/BNP Paribas/Immeuble Val-De-Marne;  and  M.3370  –
BNP Paribas/Atis Real International.

[5]   Replies to Q1 – Questionnaire to competitors, question 6.

[6]   Replies to Q2 – Questionnaire to customers, question 6.

[7]   M.3370 - BNP Paribas/Atis Real International.

[8]   Replies to Q1 – Questionnaire to competitors, question 5; Replies to Q2 – Questionnaire to customers, question 5.

[9]   M.2863 – Morgan Stanley/Olivetti/Telecom Italia/Tiglio; M.3370 - BNP Paribas/Atis Real International.

[10]  Replies to Q1 – Questionnaire to competitors, question 7.

[11]  Replies to Q2 – Questionnaire to customers, question 7.

[12]  Replies to Q1 – Questionnaire to competitors, question 7.2; Replies to Q2 – Questionnaire to customers, question 7.2.

[13]  M.7203 – Unibail-Rodamco/CPPIB/Centro; M.6834 – Goldman Sachs/TPG Lundy/Brookgate; M.6889 – Sogecap/Cardif/Ensemble  Immobilier  Clichy-la-
Garenne; M.6621 – CNP Assurances/BNP  Paribas/Immeuble  Val-De-Marne;  M.3370  –  BNP  Paribas/Atis  Real  International;  and  M.2863  –  Morgan
Stanley/Olivetti/Telecom Italia/Tiglio.

[14]  Replies to Q1 – Questionnaire to competitors, question 8; Replies to Q2 – Questionnaire to customers, question 8.

[15]  Replies to Q1 – Questionnaire to competitors, question 9; Replies to Q2 – Questionnaire to customers, question 9.

[16]  DTZ is also active in the Netherlands through its affiliate, DTZ Zadelhoff. [Description of DTZ's relationship with DTZ  Zadelhoff],  there
are no overlaps between the Parties in the Netherlands and therefore no affected markets.

[17]  Market shares calculated based on Parties' estimates excluding the provision of in-house services.

[18]  Replies to Q1 – Questionnaire to competitors, question 12; Replies to Q2 – Questionnaire to customers, question 12.

[19]  Replies to Q2 – Questionnaire to customers, question 13.

[20]  Replies to Q1 – Questionnaire to competitors, question 14.

[21]  Replies to Q2 – Questionnaire to customers, question 14.

[22]  Replies to Q2 – Questionnaire to customers, question 11; Replies to Q1 – Questionnaire to competitors, question 11

[23]  Replies to Q1 – Questionnaire to competitors, question 12; Replies to Q2 – Questionnaire to customers, question 12.

[24]  Replies to Q2 – Questionnaire to customers, question 13.

[25]  Replies to Q1 – Questionnaire to competitors, question 14.

[26]  Replies to Q2 – Questionnaire to customers, question 14.

[27]  Replies to Q2 – Questionnaire to customers, question 11; Replies to Q1 – Questionnaire to competitors, question 11

[28]  Replies to Q1 – Questionnaire to competitors, question 12; Replies to Q2 – Questionnaire to customers, question 12.

[29]  Replies to Q1 – Questionnaire to competitors, question 13; Replies to Q2 – Questionnaire to customers, question 13.

[30]  Replies to Q1 – Questionnaire to competitors, question 14.

[31]  Replies to Q2 – Questionnaire to customers, question 14.

[32]  Replies to Q1 – Questionnaire to competitors, question 11

[33]  Replies to Q1 – Questionnaire to competitors, question 12; Replies to Q2 – Questionnaire to customers, question 12.

[34]  Replies to Q1 – Questionnaire to competitors, question 13; Replies to Q2 – Questionnaire to customers, question 13.

[35]  Replies to Q1 – Questionnaire to competitors, question 14; Replies to Q2 – Questionnaire to customers, question 14.

[36]  Replies to Q2 – Questionnaire to customers, question 11.

[37]  Replies to Q1 – Questionnaire to competitors, question 11

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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.

                                                                  PUBLIC VERSION

                                                                 MERGER PROCEDURE