CELEX: 31996M0788
Language: en
Date: 1996-09-03 00:00:00
Title: COMMISSION DECISION of 03/09/1996 declaring a concentration to be compatible with the common market (Case No IV/M.788 - AgrEvo / Marubeni) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31996M0788

COMMISSION DECISION of 03/09/1996 declaring a concentration to be compatible with the common market (Case No IV/M.788 - AgrEvo / Marubeni) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

 COMMISSION DECISION of 03/09/1996 declaring a concentration to be  compatible with the common market (Case No IV/M.788 - AgrEvo / Marubeni)  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 To the notifying parties Subject: <ind> Case No IV\M.788   AgrEvo/Marubeni <tab> <ind> Notification of 01.08.1996 pursuant to Article 4 of Council  Regulation No 4064\89 1.<ind> On 01.08.1996 Hoechst Schering AgrEvo GmbH (AgrEvo) and Marubeni  Corporation (Marubeni) notified the establishment of a joint venture (JV)  which will be active in the distribution of products for the  agricultural  and horticultural sectors in Europe. 2.<ind> After examination of the notification, the Commission has  concluded that the notified operation falls within the scope of Council  Regulation (EEC) No 4064/89 and does not raise serious doubts as to its  compatibility with the common market and with the functioning of the EEA  Agreement. I<tab> THE PARTIES 3.<ind> AgrEvo is a German company jointly controlled by Hoechst AG and  Schering AG. Its establishment was approved by the Commission  (Hoechst/Schering, IV/M. 392). AgrEvo operates worldwide in the crop  protection (herbicides, fungicides, insecticides, etc) and environmental  health businesses. In particular, AgrEvo is a manufacturer and distributor  of agrochemical and horticultural products worldwide. 4.<ind> Marubeni is a Japanese trading company, overseeing a range of  global operations that extend from the development of natural resources to  the retail marketing of finished products.  II<tab> THE OPERATION 5.<ind> AgrEvo will establish a limited liability company in the  Netherlands (the JV) and subsequently will sell 60 percent of the share  capital of JV to Marubeni.  III<ind> THE CONCENTRATION <ind> Joint Control 6.<ind> The JV will be jointly controlled by AgrEvo and Marubeni, with  Marubeni owning [Deleted business secret  more than 50%] of the share  capital of the JV and AgrEvo owning [less than 50%]. Article II(4)(c) of  the Master Agreement governing the JV provides that certain matters shall  require  shareholders' approval by a majority of 76% of the share capital.  This means that such decisions can only be taken with the approval of both  AgrEvo and Marubeni. These matters include the approval of: <ind> <ind> the budget for each financial year and the annual business  plan for the JV as well as entering into any contract or obligation  inconsistent with the budget; <ind> <ind> capital investments in excess of Dfl. [...]; <ind> <ind> appointment and removal as well as the remuneration of any  director or employee of the JV; and <ind> <ind> change in the JV's business philosophy. 7.<ind> These matters are strategic decisions affecting the business  policy of the JV, and as such, they confer to AgrEvo and Marubeni joint  control over the JV. <ind> Full function joint venture 8.<ind> The JV will distribute products for the agricultural and  horticultural sectors in Europe. These products include plant protection  products, special fertilizers and seeds. AgrEvo will transfer to the JV   its existing activities in the field of distribution of these products,  which consist of three companies: one company in the United Kingdom  (Profarma Ltd.), and two companies in the Netherlands (Heyboer B.V. and  Jan Mertens Beheer B.V.). [...] 9.<ind> The JV will be active in a trade market, specifically, the  distribution of products for the agricultural and horticultural sectors.  There are a large number of independent distributors inthis market. They  are not vertically integrated into production of agrochemical products,  but are dedicated to the business of distribution. Such distribution is a  specialised business, requiring sizeable investments in customised  warehouses (to meet regulatory approvals) and qualified staff (to provide  timely advice to customers). Many of the major agrochemical producers  utilise independent distributors to distribute the majority of their  products, rather than exclusively distributing for themselves because of  these demanding requirements. 10.<ind> The three existing distribution companies of AgrEvo in the  distribution of products for the agricultural and horticultural sectors  currently obtain the majority of their agrochemical products from third  party producers, rather than from AgrEvo. Furthermore, the supply  agreements which accompany the establishment of the JV account for a  limited proportion of the JV's annual requirements coming from AgrEvo and  allow the JV to continue its current commercial relationships with third  party producers. It is therefore likely that the JV will continue to  obtain a substantial proportion of its supplies from other sources. It can  thus be excluded that the JV will act as a sales agency for its parent  companies.[See point 15 of the Notice on the distinction between  concentrative and cooperative joint ventures.] 11.<ind> In addition, the JV will have sufficient financial and other  resources in order to operate its activity on a lasting basis. It will  initially consist of the current three distribution companies of AgrEvo  and further it will have to provide alone for its own activity. <ind> Absence of coordination of competitive behaviour 12.<ind> AgrEvo will transfer its existing European activities in the  distribution of products for the agricultural and horticultural sectors to  the JV and will consequently withdraw from the market. Marubeni is not yet  active in this sector in Europe and will be active only through the joint  venture. Coordination of the competitive behaviour of the parent companies  can therefore be excluded. IV<tab> COMMUNITY DIMENSION 13.<ind> The combined aggregate worldwide turnover of AgrEvo and Marubeni  in 1995 exceeded ECU 5,000 million (with turnover respectively, of 1.6 and  1.12 ECU billion). The 1995 aggregate Communitywide turnover of each of  the parties  exceeded 250 million ECU (AgrEvo's turnover was [more than  250 million ECU] million ECU and Marubeni's turnover was [more than 250  million ECU] billion ECU) and AgrEvo and Marubeni do not achieve more than  twothirds of their Communitywide turnover within one and the same Member  State. Therefore, the operation has a Community dimension.  V<ind> COMPATIBILITY WITH THE COMMON MARKET A.<tab> Relevant product market 14. <ind> The parties state that the relevant product market is the  distribution of agricultural and horticultural products, which is separate  from the market of the production of these products. As noted above in the  discussion on the full function aspects of this operation, it appears that  the activity of distributing products for the agricultural and  horticultural sectors belongs to a market which is separate from the  production of these products.  It can be left open whether the products to  be distributed by the JV constitute a single product market or different  product markets, because, as has been noted, there is no overlap in the  activities of the parties in the EEA. B.<ind> Relevant geographic market 15.<ind> The parties state that, since certain market conditions affecting  demand and distribution channels for products for the agricultural and  horticultural sectors are similar across Europe, the relevant geographic  market could be considered to be European. However, the parties also note  that distribution conditions in each Member State are affected by specific  factors which differ in the various states, such as local climate and  agronomic conditions, special permits, registrations and other regulatory  approvals regarding the storage, transport and sale of these products. For  the purposes of the present case, it is nevertheless not necessary to  provide a precise geographic market definition, since even on the  narrowest geographic market definition the operation will not create or  strengthen a dominant position. C.<tab> Assessment 16.<ind> The JV will operate in the market for the distribution ofproducts  for the agricultural and horticultural sectors in the EEA and several  other European countries. The existing activities of AgrEvo amount,  according to the parties, to 13% of the supplies of these products on a  EUwide level, ranging from 5.3% in Austria to 26.6% in the Netherlands.  Marubeni is not active in any of these fields in Europe. Consequently,  there will be no overlap in these distribution activities. Furthermore, as  noted earlier, there are many independent distributors present in this  market. It can therefore be excluded that this operation will lead to the  creation or the strengthening of a dominant position. 17.<ind> In view of the above, it can be concluded that the proposed  concentration does not create or strengthen a dominant position as a  result of which effective competition would be significantly impeded in  the EEA or any substantial part of that area. VI<tab> ANCILLARY RESTRAINTS 18.<ind> As a part of the JV agreement, the parties have entered into a  supply agreement between AgrEvo and the JV. The quantities to be supplied  by AgrEvo and to be purchased by the JV will be, until [...], for the  United Kingdom and the Netherlands, the same quantities provided by AgrEvo  to its own three distribution companies in the previous year. For all  other territories, for which distribution companies will have to be  created, the quantities to be supplied will correspond to [less than 30%]  of the annual requirements of the JV in the respective territory. These  provisions of the agreement can be considered as ancillary to the  operation (see section C of the Notice regarding restrictions ancillary to  concentrations).  19.<ind> The supply agreement further provides that for each subsequent  year for the period ending [...], the quantities to be supplied will be at  least the quantities of products that AgrEvo supplied to the JV in the  respective previous year, and that the JV would be obliged to purchase  such quantities unless they are able to supply themselves from other  sources "at more favourable conditions" than those offered by AgrEvo.  These provisions can be considered ancillary only insofar as the  quantities to be supplied by AgrEvo, and purchased by the JV, do not  exceed the quantities previously established for the calendar year [...].   VII<ind> CONCLUSION 20.<ind> For the above reasons, the Commission has decided not to oppose  the notified operation and to declare it compatible with the common market  and with the functioning of the EEA Agreement. This decision is adopted in  application of Article 6(1)(b) of Council Regulation (EEC) No 4064/89. For the Commission,