CELEX: 32019M9500
Language: en
Date: 2019-10-25 00:00:00
Title: Commission Decision of 25/10/2019 declaring a concentration to be compatible with the common market (Case No COMP/M.9500 - LINDSAY GOLDBERG GROUP / BILCARE RESEARCH SWISS HOLDING I AND II) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                               Brussels, 25.10.2019
                                                               C(2019) 7803
                                                                                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                                                                information omitted has been replaced by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.9500 — Lindsay Goldberg Group / Bilcare Research Swiss
                    Holding I and II.
                    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 20 September 2019, the European Commission received a notification of a
          proposed concentration pursuant to Article 4 of Council Regulation (EC)
          No 139/20043 by which the undertaking Lindsay & Co. LLC (USA) which belongs
          to Lindsay Goldberg group (‘Lindsay Goldberg’, USA) acquires within the meaning
          of Article 3(1)(b) of the Merger Regulation sole control of Bilcare Research Swiss I
          AG and Bilcare Research Swiss II AG (together with their subsidiaries ‘Bilcare
          Research Group’, Switzerland) by way of purchase of shares (‘the Transaction’).
          Lindsay Goldberg and Bilcare Research Group will be hereinafter referred 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    OJ L 24, 29.1.2004, p. 1 (the “Merger Regulation”).
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) Lindsay Goldberg indirectly manages different funds that hold equity investments in
    operating portfolio companies. These portfolio companies are active in various
    industry sectors, namely in the fields of skilled nursing facility financing, women's
    healthcare practice platform, asphalt production, fans, asset management services,
    liquid storage, containerboard, pulp and paper products, pharmaceutical products,
    health centres, packaging, shipping containers, steel, metals, and alloys.
(3) Bilcare Research Group is a global manufacturer and supplier of technical plastic
    films that are used for the production of flexible packaging as well as for non-
    packaging applications. Bilcare Research Group is a 100% subsidiary of Bilcare Ltd
    (India), which also owns activities in Global Clinical Supplies and non-Clonable ID
    Technologies, […].
2.  THE OPERATION
(4) Pursuant to the Share Purchase Agreement dated 10 July 2019, Lindsay Goldberg
    will purchase 100% of the shares in the companies that comprise Bilcare Research
    Group. Following the implementation of the Proposed Transaction, Lindsay
    Goldberg will thus hold 100% of the shares in the entities forming Bilcare Research
    Group. The Proposed Transaction is therefore a concentration pursuant to
    Article 3(1)(b) of the Merger Regulation.
3.  EU DIMENSION
(5) The undertakings concerned have a combined aggregate world-wide turnover of
    more than EUR 2,500 million (Lindsay Goldberg: EUR […] million, Bilcare
    Research Group EUR […] million). Each of them has an EU-wide turnover in excess
    of EUR 100 million (Lindsay Goldberg: EUR […] million, Bilcare Research Group
    EUR […] million). In […] and […], Lindsay Goldberg and Bilcare Research Group
    have a combined turnover in excess of EUR 100 million and an individual turnover
    in excess of EUR 25 million. None of the undertakings concerned achieve more of
    2/3 of their EU turnover in one Member State. The notified operation therefore has
    an EU dimension pursuant to Article 1(3) of the Merger Regulation.
4.  COMPETITIVE ASSESSMENT
(6) Bilcare Research Group is organized around three business units:
    -   Pharma Packaging Innovations (‘PPI’) supplies the pharmaceutical industry and
        offers a range of products from low to ultra-high-barrier films and related
        packaging optimisation and research services. The main area of application are
        barrier films and foils for pharmaceutical blister packs.
    -   Specialty Film Solutions (‘SFS’) supplies films for shrink sleeves labels mainly
        used for the labelling of beverage bottles and other consumer products as well as
        PVC films used in end applications like printing and graphics.
                                              2
 ---pagebreak---         -    Card Solutions (‘Cards’) supplies PVC films and overlays for banking cards and
             other gift and loyalty cards applications.
(7)     Lindsay Goldberg’s portfolio company Schur Flexibles (‘Schur Flexibles’, Austria)
        sells very limited amounts of shrink films for labelling of bottles and some technical
        and specialty films, activities which overlap horizontally with the SFS business of
        Bilcare Research Group.4 Schur is active also in the sourcing and trading of input
        materials for the production of flexible packaging products, notably PE resins, PP
        resins, additives (fillers, lubricants, antiblocking agents) and colour batches. Bilcare
        Research Group purchases some of these products for manufacturing blister base for
        packaging applications in its PPI business and technical and specialty films for non-
        packaging applications in its SFS and Cards businesses. There is therefore a
        potential vertical link between Schur and Bilcare Research Group.
4.1.    Product and geographic markets
4.1.1. Blister base
(8)     Within plastic flexible packaging for pharmaceuticals, the Commission considered in
        previous cases a further sub-segmentation between blister packaging (used primarily
        for solid tablets) and laminated sachets (used for e.g. medicines in powder form).5
        The Commission also considered that blister materials6 can potentially be further
        split into (i) blister lidding and (ii) blister base, with a further sub-division of the
        latter into (a) cold-form and (b) plastic-based blister bases.7 This segmentation
        remains valid in the present case.
(9)     In previous cases, the Commission has consistently considered the geographic scope
        of the flexible packaging market, including blister base, to be at least EEA-wide.8 In
        the present case, these conclusions remain applicable.
4.1.2. Technical and Specialty films and Shrink films
(10)    With regard to technical and specialty films for non-packaging applications, the
        Commission noted in previous cases that the market should be segmented based on
        groups of end-applications,9 but left it open whether shrink films could be
        considered a separate sub-segment of technical and specialty films.10 Shrink films
        are made of polymer films, which shrink when heated to the shape of the surface of
        the products they are applied to. Technical and specialty films are mainly single-
        layer foils for non-packaging industrial purposes.11
4   Both Parties are also active in pharmaceutical packaging but they sell different products which are
    complementary and not overlapping. Schur provides laminated sachets, predominantly for transdermal
    drug delivery systems (e.g. nicotin patches). Bilcare Research Group sells blister base exclusively from
    polyvinyl chloride (PVC).
5   Case COMP/M.5599-Amcor/Alcan, paragraph 30.
6   The primary component of blister packaging is a cavity or pocket made from a formable web, usually a
    thermoformed plastic. This is the blister base. The blister base has a backing of paperboard or a seal of
    aluminium foil, the blister lidding.
7   Case COMP/M.6681 - Strategic Value Partners/Klöckner Holdings, para. 13.
8   Case COMP/M.6681 - Strategic Value Partners/Klöckner Holdings, para. 14.
9   Case COMP/M.6681 - Strategic Value Partners/Klöckner Holdings, para. 23.
10 Case COMP/M.6681 - Strategic Value Partners/Klöckner Holdings, para. 27.
11 Case COMP/M.3946 - Renolit/Solvay, para. 15.
                                                          3
 ---pagebreak--- (11)    In light of the decisional practice and based on Bilcare Research Group's internal
        segmentation, the parties submit that the market for technical and specialty films
        could be further segmented into (i) shrink films for labelling, (ii) printing (for maps,
        posters etc), (iii) cards (covering credit cards), (iv) decorative films (for furniture,
        doors and windows) and (v) stationary. The precise market definition can be left
        open because the Transaction would only lead to a minimal share increment even on
        the basis of this narrow segmentation.
(12)    The geographic scope of the markets for films was considered to be at least EEA-
        wide and for certain end-use applications even global.12 This geographic market
        definition remains valid in the present case.
4.1.3. Raw materials for plastic packaging products and plastic films
(13)    The potential supply relationship between Schur Flexibles and Bilcare Research
        Group relates to the following input materials: semi-finished PE films, additives
        (fillers, lubricants, antiblocking agents) and color batches.
(14)    Based on previous decisional practice of the Commission, there appears to be no
        overall product market comprising all raw materials used for plastic packaging
        products and plastic films.13 Rather, the Commission considered basic and
        intermediate chemicals based on the individual raw material/chemical/compound.
        The geographic market has been considered at least EEA-wide.14 These market
        definitions remain valid in the present case.
4.2.    Competitive assessment
4.2.1. Horizontal overlaps
(15)    The Notifying Party estimates the total demand for technical and specialty films in
        the EEA (including shrink films for labelling) at approximately EUR […] million
        in 2018. In 2018, Bilcare Research Group generated sales of roughly EUR […]
        million with technical and specialty films in the EEA (estimated market share of
        [20-30]%). As regards a potential sub-segment of shrink films, the total demand in
        the EEA is estimated at EUR […] million. With sales of approximately EUR […]
        million, Bilcare Research Group's share in this potential sub-segment is estimated at
        [20-30]% in the EEA.
(16)    Schur generates minimal sales of less than EUR […] million per year with the sale
        of shrink films for the labelling of bottles (EUR […] in 2018). These sales result in
        an estimated market share of [0-5]% in technical and specialty films overall and
        approximately [0-5]% in shrink films, in the EEA. Accordingly, the increment
        (‘delta’) of the Herfindahl-Hirschman Index resulting from the Proposed Transaction
        would be below 150 ([…] in the technical and specialty films segment and […] in a
        potential sub-segment for shrink films).
(17)    A narrower segmentation of the technical and specialty films by application would
        not bring different results. Although the market share of Bilcare Research Group is
12  Case COMP/M.3946 - Renolit/Solvay, para. 33.
13  Case IV/M.1163 - Borealis/IPIC/OMV/PCD, para. 14. Cf. as well Case COMP/M.8015 - Synthos/Ineos
    Styrenics, para. 17; COMP/M.6093 - BASF/Ineos/Styrene/JV, para. 18.
14 Case COMP/M.4737 - Sabic/GE Plastic, para. 22.
                                                     4
 ---pagebreak---        higher in some applications ([40-50]% in printing and [50-60]% in stationery), the
       increment brought by Schur Flexibles in these two areas is below [0-5]% (less than
       EUR […] of sales in each of the applications).
(18)   Accordingly, the horizontal overlaps caused by the Transaction appear to be
       minimal. No market participant has submitted that the increment brought about by
       Schur Flexibles would be higher. Therefore, the Transaction does not raise serious
       doubts in relation to horizontal overlaps in technical and specialty films.
4.2.2. Vertical links
(19)   Schur Flexibles sells raw materials for the production of plastic flexible packaging to
       third parties. Schur Flexibles is active in the resale / trading of some of the raw
       materials sourced by Bilcare Research Group, i.e. fillers, lubricants, antiblocking
       agents and colour batches. Currently, Schur does not sell these products to Bilcare
       Research Group. There is however a potential vertical link between Schur Flexibles
       which is active upstream and Bilcare Research Group, which is active downstream.
(20)   As regards input foreclosure, for all of these products, Schur Flexibles achieves […]
       in the EEA: less than EUR […] as regards fillers and less than EUR […] in relation
       to lubricants, antiblocking agents and colour batches. Accordingly, the EEA market
       share of Schur in each of these markets is less than [0-5]%, which excludes any risk
       of input foreclosure.
(21)   As regards customer foreclosure, Bilcare Research Group could use some of these
       products in its production, namely semi-finished PE films, fillers, lubricants,
       antiblocking agents or colour batches. The only potential sub-segments in which
       Bilcare Research Group reaches or exceeds a market share of 30% in the EEA as a
       downstream supplier are plastic-based blister bases ([30-40]%), technical and
       specialty films for printing ([40-50]%), technical and specialty films for cards
       ([30-40]%) and technical and specialty films for stationary ([40-50]%). These
       downstream markets are therefore technically affected but do not appear to raise
       customer foreclosure issues for the following reasons.
(22)   In its last completed financial year 2019, between 1 April 2018 and 31 March 2019,
       Bilcare Research Group sourced fillers for a value of EUR […], lubricants for a
       value of EUR […], antiblocking agents for a value of EUR […] and colour batches
       for a value of EUR […].
(23)   These numbers show that Bilcare Research Group's consumption of fillers,
       lubricants, antiblocking agents and colour batches is always significantly higher than
       Schur Flexibles’s sales of these products. Accordingly, even if Bilcare Research
       Group would start sourcing all fillers, lubricants, antiblocking agents and colour
       batches from Schur post-closing (which it currently does not), this could not possibly
       lead to any customer foreclosure as Bilcare Research Group would still have to
       source from several other suppliers, as it currently does, to fulfil its demand. There is
       therefore no risk of customer foreclosure.
(24)   No market participant has expressed concerns in relation to input or customer
       foreclosure. Accordingly, the Transaction does not raise serious doubts regarding
       vertical links between fillers, lubricants, antiblocking agents and colour batches on
       the one hand, blister bases and technical and specialty films on the other hand.
                                                  5
 ---pagebreak--- 5.   CONCLUSION
(25) 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
                                              6