CELEX: 32018M8721
Language: en
Date: 2018-01-30 00:00:00
Title: Commission Decision of 30/01/2018 declaring a concentration to be compatible with the common market (Case No COMP/M.8721 - OWENS CORNING / PAROC) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                Brussels, 30.1.2018
                                                                C(2018) 611 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                                                                  information omitted has been replaced by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.8721 - OWENS CORNING / PAROC
                    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 15 December 2017, the European Commission received notification of a
          proposed concentration pursuant to Article 4 of the Merger Regulation by which
          Owens Corning Finland Oy, a subsidiary of Owens Corning (“Owens Corning”,
          United States), acquires sole control of the Paroc Group (“Paroc”, Finland) by
          acquiring all shares of Parry 1 Holding AB, its parent company.3 Owens Corning
          is designed hereinafter as "the notifying party". Owens Corning and Paroc are
          designated hereinafter as the "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 C444, 23.12.2017, p. 11.
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)   Owens Corning is active worldwide in the development, manufacture and sale of
      roofing, insulation and glass fibre composites.
(3)   Paroc is active in the production and supply of mineral wool insulation materials
      for building and technical applications. More specifically, Paroc manufactures
      mineral wool building insulation for thermal, fire and acoustic applications in
      residential and commercial construction. It also manufactures mineral wool
      technical insulation for heating, ventilation, and air conditioning systems;
      industrial processes; and the marine, offshore and original equipment
      manufacturing industries. Paroc is currently controlled by the CVC Group, an
      investment fund4.
2.    THE OPERATION AND THE CONCENTRATION
(4)   Pursuant to a Share Sale and Purchase Agreement signed on 27 October 2017,
      Owens Corning will indirectly acquire all the shares in and thus sole control over
      Paroc through its subsidiary Owens Corning Finland Oy. Hence, the proposed
      transaction qualifies as a concentration within the meaning of 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 5 000 million5 (Owens Corning: EUR […], Paroc: EUR […]).
      Each of them has an EU-wide turnover in excess of EUR 250 million (Owens
      Corning: EUR […], Paroc: EUR [...]), 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.
4.    COMPETITIVE ASSESSMENT
4.1.  Introduction
(6)   The proposed transaction gives rise to one potential horizontal overlap, namely as
      regards Paroc's mineral wool insulation products and Owens Corning's cellular
      glass insulation product. Furthermore, there is one vertical link with Owens
      Corning supplying glass fibre veil to Paroc, which Paroc uses in acoustic ceiling
      products.
4    CVC Group acquired control of Paroc in 2015. This transaction was approved by the European
     Commission in Case No COMP/M.7457 – CVC/Paroc.
5    Turnover calculated in accordance with Article 5 of the Merger Regulation and the Commission
     Consolidated Jurisdictional Notice (OJ C 95, 16.4.2008, p. 1).
                                                      2
 ---pagebreak--- 4.2.    Market definitions
4.2.1. Product market: Mineral wool and cellular glass
(7)     Insulation products reduce the thermal and acoustic exchange through a wall, roof
        or a duct on which they are placed. The Commission has previously found that
        insulation products constitute a separate market from other building products.6
(8)     There are different materials used for insulation products. The Commission has in
        past cases considered a possible sub-segmentation of insulation products by
        insulation material, between (a) mineral wools (stone or glass wools); and (b)
        foams (expanded polystyrene (EPS), extruded polystyrene or polyurethane).7
(9)     Furthermore, there are different general applications for insulation products. The
        Commission has in the past considered segmenting the relevant market into
        building insulation (hereinafter referred to as "BI") and technical insulation
        (hereinafter referred to as "TI"). While it has previously left open the relevant
        market, it indicated in CVC/Paroc that “it is likely that mineral wool BI and
        mineral wool TI constitute distinct product markets”.8
(10)    In past cases, the Commission did not further sub-divide the market for building
        insulation based on specific applications for which these products are used (such
        as loft pitched roof, prefabricated roof, floating floor, ceilings, etc.) due to supply-
        side substitutability9 and did not sub-divide the technical insulation products
        further by reference to individual product types.
(11)    Cellular glass, as produced by Owens Corning, has not been considered in
        previous cases. Cellular glass is a specialty insulation material, with a high degree
        of compressive strength characterised by high resistance. Cellular glass is fully
        water resistant and will not burn. Cellular glass is more expensive than mineral
        wool (the price of cellular glass is around 400 USD per cubic meter, compared to
        around USD 250 for mineral wool).
(12)    The notifying party submits that for the following reasons, cellular glass and
        mineral wool do not fall into the same product market: they serve different end
        applications; use substantially different raw materials and production equipment
        in their manufacture; and are not generally substitutable given their different
        product performance and characteristics, as well as end uses.
(13)    The Commission's investigation in this case confirms that the market for
        insulation products should likely be segmented into building insulation and
        technical insulation products due to the different customer groups served,
        different relative strength of suppliers and different products used. Nevertheless,
        this segmentation can be left open in this case as the proposed transaction does
        not give rise to serious doubts as to its compatibility with the internal market
        under the alternative plausible market definitions.
6     M.7457 – CVC/Paroc, para. 17-18; M.3407 – Saint Gobain/Dahl, paragraphs 8 and 9; M.1974 –
      Compagnie de Saint-Gobain/Raab Karcher, paragraph 9; and M.1873 – Compagnie de Saint-
      Gobain/Meyer International, paragraphs 9 and 10. See also M.6871 – Mohawk Industries/Spano
      Invest, paragraphs 28 and 29.
7     M.3407 – Saint Gobain/Dahl, para 10; M.3943 – Saint Gobain/BPB, para. 29.
8     M.7457 – CVC/Paroc, para. 18.
9     M.3943 – Saint Gobain/Dahl, para. 25-28.
                                                    3
 ---pagebreak--- (14)   The results of the Commission's investigation indicate further that cellular glass
       and mineral wool are not close substitutes and may therefore not fall into the
       same relevant product market. On the one hand, some market participants
       suggested that all kinds of insulation material compete as they serve the same
       purpose, that is to say to insulate buildings, in particular when taking into account
       the full cost-of-ownership and not only the sales price of the products. On the
       other hand, the majority of market participants working with Paroc's products
       never or very rarely used cellular glass, indicating that the substitutability
       between the two products is limited. Nevertheless, it is not necessary to conclude
       on the exact product market definition as the proposed transaction does not give
       rise to serious doubts as to its compatibility with the internal market under the
       alternative plausible market definitions. Therefore, the product market definition
       can be left open in this Decision.
4.2.2. Geographic market
(15)   Previous cases have found the geographic market for the manufacture of
       insulation products to be (i) at least national; (ii) wider than national (i.e. regional
       to the Nordics or the Baltics); and (iii) possibly EEA-wide. The Commission has
       ultimately left the precise definition of the relevant geographic markets open.10
       The notifying party submits that the same approach can be taken in this case.
(16)   Among the views expressed by customers and competitors in the market
       investigation, some consider that the market tends to be national, whereas others
       point to the cross-border supply in the EEA of insulation material produced in
       countries in geographic proximity. However, it is not necessary to conclude on
       the exact geographic market definition as the proposed transaction does not give
       rise to serious doubts as to its compatibility with the internal market under the
       alternative plausible geographic market definitions.
4.2.3. Upstream market: Glass fibre veil
(a)      Product market
(17)   Veils are thin sheets of glass fibre strands bound together by synthetic resin
       binders used at the outermost layer of a composite in order to improve surface
       characteristics. They can be wet-processed from wet use chopped strands in a
       process very similar to paper manufacturing or dry processed from long fibres
       that are produced in a dedicated (textile) furnace. Wet- and dry processed veils
       have different performance characteristics. However, for some end uses such as
       asphalt, foam panels, plastic reinforcement mats and bitumen waterproofing, both
       wet- and dry produced veils are suitable.11
(18)   Veils are used in a variety of end-use applications, including the production of
       mineral wool insulation and ceiling insulation products.
(19)   As regards a potential distinction between wet- and dry-processed veil, the
       Commission has previously considered that for some end applications there is a
       certain degree of substitution but did not, however, ultimately conclude on the
10    M.7457 – CVC/Paroc, para. 28.
11    M.4828 – Owens Corning/Saint Gobain Vetrotex, paras. 41-43.
                                                   4
 ---pagebreak---        market definition.12 As regards the vertical link with suspended acoustic
       applications assessed in this case, dry-processed veils are not generally suitable
       for applications that require a homogenous fibre surface, such as suspended
       acoustic applications. Therefore, the vertical link in this case is limited to the
       potential sub-market for wet-processed veil.
(20)   Furthermore, according to some market participants, a distinction can be made
       between veil used for front facers and back facers in insulation applications. The
       parties consider that this distinction would be artificial because the ultimate use of
       the product depends on each customer's particular preferences. In particular,
       Owens Corning does not control the end use of the facers that it sells to customers
       who, according to the parties, can partially substitute back facers for front facers.
       However, it is not necessary to conclude on the exact product market definition as
       the proposed transaction does not give rise to serious doubts as to its
       compatibility with the internal market under the alternative plausible market
       definitions. Therefore, the product market definition can be left open for the
       purpose of this Decision.
(b)      Geographic market
(21)   The Commission has previously defined the geographically relevant market for
       glass fibre products as EEA-wide13, and the market for veil as European14 (EEA
       Member States as well as Serbia, Montenegro, and Turkey). The notifying party
       submits that the geographically relevant market is at least EEA-wide, but that in
       any event, the market definition can be left open. Against that background, the
       Commission will conservatively assess the market for veil as EEA-wide in this
       Decision.
4.2.4. Downstream market: suspended ceiling acoustic tiles
(22)   Veils are used as an input in different BI and TI mineral wool products. The
       market definitions for BI and TI mineral wool products are set out in paragraphs
       (7) to (16) above. Paroc uses veils produced by Owens Corning specifically for
       the production of suspended acoustic ceiling tiles which are a type of acoustic
       insulation and BI product. Ultimately, there is no need for the Commission to
       conclude on the market definition of acoustic insulation products, in particular
       suspended ceiling acoustic tiles. The proposed transaction does not give rise to
       serious doubts as to its compatibility with the internal market on a narrowly
       defined market for suspended acoustic tiles at the EEA and national level where
       the vertical link is most pronounced.
4.3.   Competitive assessment
4.3.1. Horizontal overlaps – BI and TI (mineral wool and cellular glass)
(23)   There are limited overlaps between the parties' activities in the sale of BI and TI
       materials.
12    M.4828 – Owens Corning/Saint Gobain Vetrotex, para. 45.
13    M.3064 – Ahlström Capital/Capman/Nordkalk, para. 32.
14    M.4828 – Owens Corning/Saint Gobain Vetrotex, para. 56.
                                                   5
 ---pagebreak--- 4.3.1.1. Assessment of horizontal overlaps in insulation materials
(24)    Paroc does not produce foams or cellular glass; it is active only in the production
        of mineral wool insulation. Within the EEA, Owens Corning manufactures and
        supplies only cellular glass insulation products, but no mineral wool or foam
        insulation products, and currently has no plans to extend its activities into other
        types of insulation materials in the EEA. Therefore, if the market is sub-
        segmented by insulation material, there is no overlap between the parties’
        activities.
(25)    If a wider market including all insulation materials is defined:
     a. The overlaps in BI are minimal. Owens Corning sells low volumes of cellular
          glass for use in BI. The Parties' combined market share in the EEA is less than
          [5-10]% with an increment due to Owens Corning of [0-5]%. The combined
          national market shares in the affected markets reach [20-30]% in Sweden, [20-
          30]% in Finland, [20-30]% in Lithuania and [20-30]% in Estonia and Latvia
          (leading to combined market shares in the Baltics of [20-30]% and in the Nordic
          countries of [10-20]%). However, the market shares of Owens Corning do not
          exceed [0-5]% in any of the national EEA markets and the increment in market
          shares is therefore negligible.
     b. The overlaps in TI are limited. The Parties' combined market share in the EEA
          is [20-30]% with an increment due to Owens Corning of [5-10]%. However, due
          to the different geographic focus of their activities, there are only a limited
          number of affected markets at the national level: Paroc's market shares
          reach [60-70]% in both Estonia and Finland, [40-50]% in Latvia and [20-30]%
          in Lithuania (leading to a market share in the Baltics of [40-50]% and in the
          Nordic countries of [30-40]%). However, the increment due to Owens Corning
          is at most [0-5]% in each of those national markets. The increment in market
          shares at the EEA level and in those countries is therefore minimal. The only
          other nationally affected market is Sweden with Paroc's market share
          at [40-50]% combined with a [5-10]% market share of Owens Corning, totalling
          to [50-60]%.
(26)    Further, the results of the investigation confirmed for all affected markets,
        including Sweden, that cellular glass and mineral wool are not close substitutes as
        set out in paragraph (14), that Owens Corning is a small supplier, and that there
        are a number of alternative suppliers for insulation materials, which include
        mainly Rockwool, Isover/Saint-Gobain and Knauf. Moreover, none of the
        customers and competitors who replied to the Commission's investigation
        expected any impact of the proposed transaction on their business due to the
        overlap of the Parties' activities in insulation materials, and no competition
        concerns were raised in this regard, including for the Swedish market.
4.3.1.2. Conclusion on horizontal overlaps
(27)    In light of the considerations in recitals (23) to (26), the Commission concludes
        that the proposed transaction does not give rise to serious doubts about its
        compatibility with the internal market due to horizontal effects in insulation
        materials.
                                                 6
 ---pagebreak--- 4.3.2. Vertical relationships – veil / mineral wool BI (acoustic ceilings)
(28)    The proposed transaction leads to a limited vertical link between upstream veil
        products where Owens Corning is active and downstream insulation products
        where both Paroc and Owens Corning are active. Specifically, Paroc purchases
        veil mainly for use in BI materials ([90-100]% of its veil purchases, equivalent to
        EUR […]) and within the portfolio of BI materials mainly for use in acoustic
        ceiling products ([40-50]% of its veil purchases for BI, equivalent to EUR […]
        million). Acoustic ceilings are part of the BI mineral wool business of Paroc and
        represented around EUR […]and [5-10]% of Paroc's sales in 2016.
(29)    This Decision will focus on the vertical links between veil upstream and BI
        products downstream (see paragraphs (30) to (45)) since the potential vertical link
        in TI is minimal. Paroc purchased only a value of EUR […] of veil for use in TI
        in 2016. Products using veil thus play an immaterial role in Paroc's TI product
        portfolio. As a result, Paroc is an insignificant customer of veil for use in TI in the
        EEA, making customer foreclosure concerns highly unlikely. Furthermore, due to
        the minimal significance for its product portfolio, Paroc would not be able to
        benefit from foreclosing access to veil used in TI to its competitors, making
        potential input foreclosure concerns highly unlikely.
4.3.2.1. Downstream markets: acoustic ceilings
(30)    In a potential market for BI products including all insulation materials, Paroc's
        market share does not exceed [30-40]% at the EEA level or in any of the national
        or regional markets. In a narrower market for BI mineral wool products, Paroc's
        market share exceeds [30-40]% in Lithuania at [40-50]%, Finland at [40-50]%,
        Sweden at [30-40]%, Latvia at [30-40]% and Estonia at [30-40]% (leading to a
        market share in the Baltics of [40-50]% and in the Nordic countries of [20-30]%).
(31)    In the narrowest plausible market which has been identified by market
        participants as a potential area of concern in the Commission's market
        investigation, a potential downstream market for acoustic suspended ceiling
        products, Paroc’s market share reaches [20-30]% in Finland, [10-20]% in
        Sweden, [10-20]% in Norway and [5-10]% in Denmark, according to the parties,
        while its EEA market share is [5-10]%Paroc's main competitors in acoustic
        suspended ceiling products are market leaders Isover/Saint-Gobain with market
        shares of [40-50]-[50-60]% and Rockwool with market shares of [10-20]-
        [40-50]% in those markets. Competitor Saint-Gobain is vertically integrated and
        thus produces both veil upstream and acoustic ceiling products and other BI
        products downstream.
4.3.2.2. Upstream markets: veil
(32)    The merchant market share of Owens Corning in veil in the EEA amounts
        to [20-30]%. The largest competitor is market leader Johns Manville
        with [30-40]% followed by Saint-Gobain at [10-20]% and Ahlstrom at [10-20]%.
        Considering only wet-processed veil, Owens Corning's market share is [20-30]%.
        Considering only veil sold for suspended ceiling applications, Owens Corning's
        market share is [70-80]% with competitors Johns Manville and Ahlstrom
        accounting for [20-30]% and [5-10]% respectively.
                                                  7
 ---pagebreak--- 4.3.2.3. Customer foreclosure assessment
(33)    The Commission's assessment of potential customer foreclosure will focus on the
        narrow vertical link between veil and acoustic ceiling products as this is the only
        area highlighted as a potential concern by market participants in the
        Commission's market investigation. As regards the wider markets for BI (mineral
        wool) products in general, the market investigation confirmed that there are many
        other customers in the EEA that Paroc's purchasing share in the EEA is low and
        that veil producers are not concerned about losing Paroc as a potential customer.
(34)    As regards potential customer foreclosure concerns regarding Paroc's activities in
        acoustic ceiling products specifically, Paroc already purchases parts of its total
        veil requirements across all insulation products from Owens Corning (for an
        amount of EUR […] in 2016). [Information on Paroc´s purchases from other
        companies] (for an amount of EUR […] in 2016), which limits the potential scope
        of customer foreclosure concerns since the other veil suppliers already do not rely
        on Paroc's purchases.
(35)    Moreover, veil is used for many end uses other than acoustic ceilings, with
        roofing being the most important end use. Insulation and ceiling represent only
        27% of the end-use of veil sales in the EEA, meaning that at least 73% of the
        market demand for veil will not be significantly affected by the proposed
        transaction. In line with that and given that Paroc's activities are concentrated on
        northern Europe, Paroc has a limited purchasing share of [0-5]% for all veil sold
        in the EEA and of [0-5]% for all veil sold in the EEA for suspended acoustic
        applications.
(36)    With respect to […] in particular, Paroc estimates that its purchases from […] of
        […] m2 and EUR […] represented approximately [0-5]% of […] veil sales
        volumes and [0-5]% of […] veil sales value in the EEA in 2016. Accordingly,
        […] would risk losing less than [0-10]% of its current veil sales in the EEA if the
        Parties implemented a customer foreclosure strategy after the Transaction. Such
        limited potential sales loss makes any effects of a potential customer foreclosure
        strategy unlikely, including in terms of effects on R&D spending.
(37)    Furthermore, because of qualification requirements, Paroc could only switch to
        using Owens Corning’s veil in [0 to 3years]. Moreover, Paroc has also explained
        that […].
(38)    In light of the results of the market investigation and the evidence available, the
        Commission concludes that the proposed transaction would not give rise to
        competition concerns related to customer foreclosure.
4.3.2.4. Input foreclosure assessment
(39)    The Commission's assessment of potential input foreclosure will likewise focus
        on the narrow vertical link between veil and acoustic ceiling products as this is
        the only area highlighted as a potential concern by market participants in the
        Commission's market investigation. As regards the wider markets for BI (mineral
        wool) products in general, the market investigation confirmed that there are a
        sufficient number of alternative veil suppliers (as reflected in Owens Corning's
        moderate market share of [20-30]%) and that BI competitors are not concerned
        about losing Owens Corning as a potential supplier.
                                                 8
 ---pagebreak--- (40)  As regards potential input foreclosure concerns regarding Paroc's activities in
      acoustic ceiling products specifically, Owens Corning supplies veil to Paroc’s
      competitors in acoustic ceilings, including in particular to Rockwool and
      Isover/Saint-Gobain.
(41)  The notifying party submits that Owens Corning's main competitors (Johns
      Manville, Saint-Gobain and Ahlstrom) all possess industrial assets that allow
      them to manufacture veil for suspended acoustic applications. Owens Corning
      considers that, with the collaboration of customers, they would be able to expand
      their range of products to all categories of facers within […].
(42)  According to the Commission's investigation, Owens Corning has a market share
      of [70-80]% in the supply of veil for acoustic applications in the EEA.
      Nevertheless, it is not clear whether Owens Corning would have the ability to
      engage in input foreclosure after the proposed transaction since competitor
      [competitor] is the EEA market leader in the wider veil market in the EEA (with a
      market share of [30-40]% compared to Owens Corning's [20-30]%) and thus has
      significant experience and expertise in selling veil in the EEA. Furthermore, as
      submitted by the notifying party, Johns Manville may be able to expand its veil
      product portfolio, […], to improve its product offering for acoustic applications.
      With respect to the differentiation in the use of veil between front and back uses,
      Paroc estimates that [purchases] from [supplier] are used on the front of the
      product, thereby indicating, from Paroc's perspective, that [supplier] has
      capabilities of producing veil to be used also on the front face of acoustic ceiling
      products.
(43)  In any event, according to the results of the Commission's market investigation, it
      appears unlikely that Owens Corning would have incentives to engage in an input
      foreclosure strategy. It appears unlikely that the gains from such a strategy would
      outweigh its losses.
      (a)       While representing between [5-10] and [20-30]% of the input costs, the
                price of veil represents only up to [5-10]% of the end acoustic ceiling
                product price of Paroc15.
      (b)       Paroc's market share on the downstream market for acoustic insulation is
                limited at [5-10]% in the EEA and reaches at most [20-30]% at the
                national level in Finland. Thus, Paroc's sales in the downstream markets
                which could benefit from a potential decrease of competition in the
                downstream markets are currently limited.
      (c)       [Discussion of likelihood of downstream expansion]
      (d)       Competitors producing acoustic ceilings are important veil customers of
                Owens Corning with [customer] accounting for [50-60]% of Owens
                Corning's total veil sales in volume ([40-50]% in value) and [customer] for
                [20-30]% (in volume and value) in the EEA. Those companies may be
                able to react to a potential input foreclosure strategy by switching veil
                purchases not affected by the input foreclosure strategy (such as veil not
15   Paroc's acoustic insulation sales amounted to EUR […] in the EEA in 2016 (p. 49 of the Form CO);
     Paroc's purchases of veil used in acoustic ceiling insulation amounted to a value of approximately
     EUR […] in 2016 (p.7 of the reply of the notifying party to RFI of 9 January 2018.)
                                                       9
 ---pagebreak---                 used in acoustic applications) to alternative suppliers. Owens Corning's
                veil sales in the EEA amounted to EUR […] in 2016, thereof less than
                EUR […] was sold to Paroc. Owens Corning is unlikely to jeopardise its
                business relationship with [customer X and customer Y] generating
                EUR […] and EUR […] of revenue respectively to benefit its acoustic
                ceilings business generating EUR […] of revenue in 2016.
        (e)     Owens Corning's largest customer Rockwool indicated that they saw a risk
                that Owens Corning would engage in input foreclosure but explained that
                they did not consider input foreclosure as likely to occur.
(44)    Furthermore, Saint-Gobain, the market leader in acoustic insulation in the EEA
        and in most of the national affected markets, is vertically integrated upstream in
        veil production and would therefore be unlikely to be significantly affected by a
        potential input foreclosure strategy. Because of Saint-Gobain's market position,
        the effects of a potential input foreclosure strategy would be limited overall as
        regards the market for acoustic insulation products. Saint-Gobain confirmed
        during the Commission's market investigation that it expected the overall impact
        of the proposed transaction on its business to be limited.
(45)    Therefore, in light of the results of the market investigation and the evidence
        available to it, the Commission considers that even if the merged entity had the
        ability to engage in input foreclosure, it is unlikely that it would have sufficient
        incentives to do so. Thus, the Commission concludes that the proposed
        transaction would not give rise to competition concerns related to input
        foreclosure.
4.3.2.5. Conclusion on vertical effects
(46)    In light of the considerations in recitals (28) to (45), the Commission concludes
        that the proposed transaction does not give rise to serious doubts about its
        compatibility with the internal market due to input or customer foreclosure
        concerns as regards veil and insulation materials, in particular acoustic ceilings.
5.      CONCLUSION
(47)    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