CELEX: 32020M9410
Language: en
Date: 2020-02-27 00:00:00
Title: Commission Decision of 27/02/2020 declaring a concentration to be compatible with the common market (Case No COMP/M.9410 - SAUDI ARAMCO / SABIC) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                 Brussels, 27.2.2020
                                                                 C(2020) 1259 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                                                                  information omitted has been replaced by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.
                                                                 Saudi Arabian Oil Company
                                                                 North Park 3, Building 3302
                                                                 P.O. Box 5000
                                                                 31311 Dhahran
                                                                 Saudi Arabia
Subject:             Case M.9410 - SAUDI ARAMCO/SABIC
                     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 23 January 2020, the European Commission received notification of a
          concentration pursuant to Article 4 of the Merger Regulation, which would result
          from a proposed transaction by which Saudi Arabian Oil Company (together with
          the entities it directly or indirectly controls referred to as “Saudi Aramco”) intends to
          acquire the 70% shareholding in Saudi Basic Industries Corporation (together with
          the entities it directly or indirectly controls “SABIC”) currently held by the Public
          Investment Fund of Saudi Arabia (the “PIF”) (the “Transaction”). Through this
          acquisition of shares, Saudi Aramco would acquire sole control over SABIC.3 (Saudi
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 35, 03.02.2020, p. 10.
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---        Aramco is designated hereinafter as the “Notifying Party” while Saudi Aramco and
       SABIC are designated hereinafter as the “Parties”.)
    1. THE PARTIES
(2)    Saudi Aramco is a listed joint stock company established in Saudi Arabia by virtue
       of Royal Decree. Saudi Aramco is listed on the Saudi Stock Exchange (Tadawul).
       Saudi Aramco is 98.5% owned by Saudi Arabia. The remaining 1.5% is publicly
       traded. Saudi Aramco is mainly active in the upstream petroleum value chain. Saudi
       Aramco explores, produces and markets crude oil (which represents approximately
       […]% of its global turnover), as well as natural gas, LPG and fuels (which account
       for […]% of its global turnover). In addition, Saudi Aramco is active in the
       production and sale of chemicals, including basic chemicals such as aromatics,
       olefins, and polyolefins and more complex products such as polyols and advanced
       synthetic rubber.
(3)    SABIC is a listed joint stock company established in Saudi Arabia by virtue of
       Royal Decree SABIC is listed on the Saudi Stock Exchange. SABIC is controlled by
       the PIF, which holds 70% of SABIC’s shares. The remaining shares (30%) are
       publicly traded.4 SABIC is primarily active in the downstream petroleum value
       chain. SABIC produces and sells commodity chemicals (including petrochemicals),
       intermediates, polymers (also referred to as plastics), fertilizers and, to some extent,
       metals. SABIC does not produce or sell crude oil or natural gas.
(4)    The PIF is a sovereign wealth fund established in Saudi Arabia by virtue of a Royal
       Decree. The PIF is wholly owned by Saudi Arabia. The PIF invests in Saudi Arabia
       and globally in various sectors and asset classes, including telecoms, aerospace,
       energy, green technologies and security.
    2. THE OPERATION
(5)    On 27 March 2019,         Saudi Aramco and the PIF entered into a share purchase
       agreement pursuant to     which Saudi Aramco agreed to acquire the 70% shares of
       SABIC owned by the       PIF (the “Transaction”). Saudi Aramco will thus acquire direct
       sole control of SABIC    by virtue of the Transaction.
    3. THE CONCENTRATION
(6)    The Transaction involves the acquisition of sole control over SABIC by Saudi
       Aramco within the meaning of Article 3(1)(b) of the Merger Regulation.
(7)    Although Saudi Aramco and SABIC are both owned by Saudi Arabia, the
       Transaction constitutes a concentration within the meaning of Article 3 of the
       Merger Regulation because each of Saudi Aramco and SABIC forms part of
       different economic units.
(8)    When investigating transactions between state-owned entities (“SOEs”), the
       Commission assesses whether such SOEs constitute separate economic units having
4     SABIC’s second largest shareholder owned approximately 6% of SABIC’s shares at the date of the
      Notification.
                                                   2
 ---pagebreak---        an independent power of decision within the State. If not, the transaction constitutes
       an internal restructuring, which by definition falls outside the scope of the concept of
       concentration under the meaning of Article 3 of the Merger Regulation. According
       to Article 5(4) of the Merger Regulation, read in conjunction with Recital 22 of the
       Merger Regulation and the Jurisdictional Notice,5 two State-owned enterprises
       ("SOEs") will be considered separate economic units having an independent power
       of decision if they have a power of decision independent from each other and
       independent from the State concerned. In order to carry out this assessment, the
       Commission takes into account a number of criteria, developed in its case practice,
       which allow it to ascertain: (i) the SOEs' autonomy from the State in deciding
       strategy, business plan and budget; and (ii) the possibility for the State to coordinate
       commercial conduct by imposing or facilitating coordination. 6 Such coordination is
       assessed on the basis of factors such as the lack of interlocking directorships
       between the SOEs, the existence of specific rules safeguarding the independence of
       the SOEs toward the State, the information rights of the State concerning strategic
       business information of the SOEs, or the existence of formal mechanisms and
       safeguards ensuring that commercially sensitive information is not shared between
       the SOEs.
(9)    In the present case, Saudi Aramco and SABIC are separate economic units from
       each other, given that the government of Saudi Arabia (the “Saudi State”) does not
       coordinate SABIC’s activities with Saudi Aramco, and that SABIC operates
       independently from the Saudi State. As explained below, this is apparent from the
       fact that SABIC is run independently by its “Supervisory Board”, the PIF’s limited
       interference in SABIC’s strategy, SABIC’s arm’s-length relations with Saudi
       Aramco, and the fierce commercial negotiations that brought about the Transaction,
       which would not have been necessary if SABIC and Saudi Aramco were already part
       of the same economic unit.
(10)   First, SABIC is run independently by its Supervisory Board, which adopts SABIC’s
       business plan and budget. Members of SABIC’s Supervisory Board are subject to
       conflict of interest provisions, both under the Saudi Capital Markets Regulations 7
       and SABIC’s internal rules,8 which ensure that they do not take instructions from
5    Paragraphs 52-53, 153 and 194 of the Commission Consolidated Jurisdictional Notice under Council
     Regulation (EC) No 139/2004 on the control of concentrations between undertakings. (the
     “Jurisdictional Notice”)
6    See for example case COMP/M.7850 - EDF / CGN / NNB Group of companies, decision of 10.03.2006,
     paragraph 30 and seq. and case COMP/M.5549 – EDF/Segebel, decision of 12.11.2009, paragraph 92
     and seq.
7    Inter alia, Article 21(a) of Saudi Arabia’s Capital M arket Authority’s Corporate Governance Regulations (the
     “CGRs2): the “Board represents all shareholders; it shall perform its duties of care and loyalty in managing the
     Company’s affairs and undertake all actions in the general interest of the Company”. Article 86(2) of the CGRs:
     “a Board Member shall represent all shareholders of the Company and take all actions to achieve the best interests
     of the Company and its shareholders, while protecting the rights of the other Stakeholders rather than only the
     interests of the group that elected him”. Article 43 of the CGRs: “The Board shall develop an explicit and written
     policy to deal with actual and potential conflicts of interest situations which may affect the performance of Board
     members”. Article 44 of the CGRs: “A member of the Board shall: (1) […] prioritise the interests of the Company
     over his/her own interest […] (2) avoid situations of conflicts of interest […] (3) protect the confidentiality of the
     information related to the Company and its activities, and not disclose any of such information to any person.”
8    Form CO, Annex 5, Appendix 6.4.1 (SABIC’s Conflict of Interest policy); Form CO, Annex 5
     paragraphs 41-44 of the response to RFI 4; SABIC’s Corporate Code of Ethics (available here:
     https://www.sabic.com/en/investors/corporate-governance/corporation-code-of-ethics) and SABIC’s
     Board Charter (available here: y arsabic.com/assets/en/Images/BoardCharter_tcm1010-12422.pdf)
                                                               3
 ---pagebreak---         just one shareholder, but act in the interest of all shareholders (including its widely
        dispersed minority shareholders, who own 30% of SABIC). In addition, other than in
        its role of regulator, there is no mechanism for the Saudi State (e.g. as the PIF’s sole
        shareholder) to directly give any orders to SABIC. 9
(11)    Second, although the PIF can appoint the majority of Directors to the Board of
        SABIC, unlike Saudi Aramco, whose Board includes ministers of the Saudi
        government none of the members of SABIC’s Supervisory Board are ministers of
        the Saudi government.10 Moreover, there are no interlocking directorships between
        Saudi Aramco’s Board of Directors and SABIC’s Supervisory Board, nor have there
        been in at least the past five years.11
(12)    Third, the Notifying Party submits that the PIF receives only limited information
        from SABIC in its role as an investor. 12 This implies that any material coordination
        of the activities of SABIC with those of Saudi Aramco would be challenging and
        would be carried out without detailed knowledge of SABIC’s pricing, customers or
        overall strategy. Moreover, SABIC does not receive any confidential information
        from or relating to Saudi Aramco, and vice versa. 13
(13)    Fourth, the nature of the PIF’s typical role as an institutional investment fund
        appears to have allowed SABIC to manage its business largely independently from
        the PIF (and thus also from the Saudi State). For instance, the Notifying Party
        submits that the PIF’s management or its Board of Directors have not reviewed any
        strategic documents assessing SABIC’s performance or strategy, and the PIF has
        [confidential details on interactions between the PIF and SABIC].14 This suggests
        that the PIF is involved in SABIC’s business and strategy only to a very limited
        extent, and ultimately supports the view that SABIC and Saudi Aramco’s activities
        are not coordinated by the Saudi State.
(14)    Fifth, the Notifying Party submits that the Parties’ commercial interactions are
        limited and at arm’s length.15 The Notifying Party has submitted evidence to show
        that, at least in the vertically affected markets where Saudi Aramco or SABIC acts as
        a supplier of one another, […].16 In the markets where the Parties overlap, the Parties
        consider and treat each other as competitors, and the Notifying Party submits that
        they act as “independent stakeholders” in the three joint ventures in which they both
        participate: the COTC (standing for “Crude oil to chemicals”) complex in Yanbu,
9    Form CO, Annex 5, paragraphs 36 and 48 of the response to RFI; paragraph 29 of the response to RFI
     6.
10   Form CO, Annex 5, paragraph 7 of the response to RFI 1.
11   Form CO, Annex 5, paragraph 15 of the response to RFI 4; Annex 5, Appendices 6.6.1 and 6.6.2.
12   Form CO, Annex 5, paragraph 2 of the response to RFI 4; paragraph 106 of the response to RFI 6. This
     includes the disclosure of […].
13   Form CO, Annex 5, paragraph 12 of the response to RFI 1; paragraphs 1 and 8 of the response to RFI 4.
14   Notifying Party’s response to RFI 9, paragraph 17. Form CO, Annex 5, paragraphs 57-60 and 106 of
     the response to RFI 6.
15   Form CO, Annex 5, paragraphs 11-12 of the response to RFI 1; paragraph 16 of RFI 4 and questions 12
     and 13 RFI 6 and to question 1 of the Notifying Party’s response to RFI 9.
16   Notifying Party’s response to question 1 of RFI 9 (including Annex 9.1).
                                                         4
 ---pagebreak---         Saudi Arabia; Marafiq (a power and water utility joint-stock company in Saudi
        Arabia) and Dussur (an investment company within Saudi Arabia). 17
(15)    Lastly, the Parties’ internal documents evidence that the Transaction was fiercely
        negotiated at arm’s length, and gave rise to lengthy exchanges between Saudi
        Aramco and the PIF in the course of a full negotiation process.18 Separate advisors
        were hired by Saudi Aramco and the PIF, numerous non-disclosure agreements were
        signed, and Saudi Aramco insisted on proceeding with a confirmatory due diligence
        […].19 There were material disagreements on key commercial terms such as […].20
        A separate committee was set up within Saudi Aramco’s Board, with strict ring-
        fencing of confidential information and conflict of interest provisions in place, to
        determine the appropriate valuation for the bid to acquire Saudi Aramco.21 Such
        arm’s length negotiations, and material costs that these negotiations involved, would
        not have been necessary if the Transaction were an internal restructuring where the
        Parties were already part of one economic unit within Saudi Arabia.
    4. UNION DIMENSION
(16)    The Parties have a combined aggregate worldwide turnover of more than EUR 5 000
        million22 [Saudi Aramco: EUR […] million, SABIC: EUR […] million]. Each of
        them has a Union-wide turnover in excess of EUR 250 million [Saudi Aramco: EUR
        […] million, SABIC: EUR […] million], but neither of the Parties achieves more
        than two-thirds of their aggregate Union-wide turnover within one and the same
        Member State. The notified operation therefore has a Union dimension.
(17)    As mentioned in paragraph (7) above, Saudi Aramco and SABIC are both owned by
        the Saudi State. In accordance with the principle of non-discrimination between the
        public and private sectors, Recital (22) of the Preamble to the Merger Regulation
        notes that the turnover of an undertaking, be it controlled by a public or private
        entity, shall encompass the sales of all the undertakings making up an economic unit
        with an independent power of decision. In the present Decision, the concentration
        has a Union dimension on the sole basis of the respective turnovers of Saudi Aramco
        and SABIC. In addition, SABIC does not achieve more than two-thirds of its
        aggregate Union-wide turnover within one Member State. Consequently, for the
        purpose of assessing the Union dimension of the concentration, it is not necessary to
        assess whether Saudi Aramco is part of a wider economic unit.
17    Form CO, Annex 5, paragraph 12 of the response to RFI 1. See also paragraphs referred to in footnote
      15 above.
18    Form CO, Annex 5, response to questions 2 and 10 of RFI 6, and Appendices 6.4.2 and 6.10.1 to
      6.10.11.
19    Form CO, Annex 5, response to RFI 6, paragraphs 69 and 73 to 79.
20    Form CO, Annex 5, response to RFI 6, paragraphs 69, 80 to 86.
21    Form CO, Annex 5, response to RFI 6, paragraphs 6, 50 and 69.
22    Turnover calculated in accordance with Article 5 of the Merger Regulation.
                                                         5
 ---pagebreak---     5. ANALYTICAL FRAMEWORK AND R ELEVANT MARKETS
    5.1. Analytical framework
(18)    Under Articles 2(2) and 2(3) of the Merger Regulation, the Commission must assess
        whether a proposed concentration would significantly impede effective competition
        in the internal market or in a substantial part of it, in particular through the creation
        or strengthening of a dominant position.
(19)    A merger can entail horizontal effects. In this respect, the Commission Guidelines
        on the assessment of horizontal mergers under the Merger Regulation (“the
        Horizontal Merger Guidelines”)23 distinguish between two main ways in which
        mergers between actual or potential competitors on the same relevant market may
        significantly impede effective competition, namely (a) by eliminating important
        competitive constraints on one or more firms, which consequently would have
        increased market power, without resorting to coordinated behaviour (non-
        coordinated effects); and (b) by changing the nature of competition in such a way
        that firms that previously were not coordinating their behaviour are now
        significantly more likely to coordinate and raise prices or otherwise harm effective
        competition. A merger may also make coordination easier, more stable or more
        effective for firms, which were coordinating prior to the merger (coordinated
        effects).24
(20)    In addition, a merger can also entail vertical effects when it involves companies
        operating at different levels of the same supply chain. Pursuant to the Commission
        Guidelines on the assessment of non-horizontal mergers under the Council
        Regulation on the control of concentrations between undertakings (the “Non-
        Horizontal Merger Guidelines”),25 vertical mergers do not entail the loss of direct
        competition between merging firms in the same relevant market and provide scope
        for efficiencies. However, there are circumstances in which vertical mergers may
        significantly impede effective competition. This is in particular the case if they give
        rise to foreclosure.26 The Non-Horizontal Merger Guidelines distinguish between
        two forms of foreclosure: input foreclosure, where the merger is likely to raise costs
        of downstream rivals by restricting their access to an important input, and customer
        foreclosure, where the merger is likely to foreclose upstream rivals by restricting
        their access to a sufficient customer base. 27
    5.2. Relevant markets
(21)    In the present case, as further detailed below, and in view of the supply by both
        Parties of certain chemical products, the Transaction gives rise to horizontally
        affected potential markets with regard to:
23    Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of
      concentrations between undertakings, OJ C 31, 5.2.2004 p.5.
24    Horizontal Merger Guidelines, paragraph 22.
25    OJ C 265, 18.10.2008, p. 6
26    Non-Horizontal Merger Guidelines, para 18.
27    Non-Horizontal Merger Guidelines, para 30.
                                                        6
 ---pagebreak---           butyl rubber (see Section 6.1 below);
          ethylene glycols (“EGs”) (see Section 6.2 below);
          ethylene propylene terpolymer rubber and ethylene propylene co-polymer
           (together, “EP(D)M”) (See Section 6.3 below);
          polyethylene (see Section 6.4 below);
          polypropylene resins (“PP resins”) (see Section 6.5 below);
          ethanolamines (“EOAs”) (see Section 6.6 below); and
          pygas (see Section 6.7 below).
(22) In addition, the Commission also conducted an assessment with regard to the
     following horizontally overlapping products that either (i) are not affected based on
     the Notifying Party’s estimates but for which the Parties’ market shares appear to be
     close to the 20% threshold, or (ii) for which the Notifying Party did not provide
     market shares:
          tailgas (see Section 6.8 below);
          raffinate-2 (see Section 6.9 below); and
          polybutadiene rubber (“PBR”) (see Section 6.10 below).
(23) Section 6 of this Decision sets out the Commission’s assessment for each of the
     abovementioned horizontal overlaps. The assessments are presented separately for
     each horizontal overlap, whereby the competitive assessment of the relevant overlap
     immediately follows the relevant market definition. However, as further detailed
     below in Section 6, the horizontal overlaps arising from the Transaction are limited
     and are unlikely to raise serious doubts as to their compatibility with the internal
     market.
(24) In addition, and as illustrated below, in view of the Parties’ activities in the supply of
     distinct chemical products, which are however part of the same production value
     chain, the Transaction gives rise to vertically affected potential markets with regard
     to:
          hydrogen, upstream, with hydrogenated nitrile butadiene rubber, downstream
           (see Section 7.1 below);
          ethylene oxide, upstream, with ethylene glycols, downstream (See Section 7.2
           below);
          butadiene, upstream, with chloroprene rubber, downstream (See Section 7.3
           below); and
          ethylene and butene-1, upstream, with polyethylene, downstream (See Section
           7.4 below).
(25) In addition, the Commission also conducted an assessment with regard to one
     vertical link that would be vertically affected due to the Parties’ combined market
                                                 7
 ---pagebreak---         shares in the supply of the downstream product in the EEA in 2017 and 2016 (but
        not in 2018), namely:
            ethylene, propylene and hexene-1, upstream, with ethylene propylene
             terpolymer rubber and ethylene propylene co-polymer, downstream (see Section
             7.5 below);
(26)    Section 7 sets out the Commission’s assessment for each of the abovementioned
        vertical links. The assessments are presented separately for each vertical link,
        whereby the competitive assessment of the relevant link immediately follows the
        relevant market definition. However, as further detailed below in Section 7 of the
        Decision, the vertical links arising from the Transaction are limited and are unlikely
        to give rise to serious doubts as to their compatibility with the internal market.
    6. HORIZONTAL OVERLAPS – M ARKET DEFINITION AND COMPETITIVE ASSESSMENT
    6.1. Butyl rubber
    6.1.1. Market definition
(27)    Butyl rubber is an elastomer produced by polymerisation of isobutylene with a
        smaller amount of isoprene. Butyl rubber can be further halogenated using chlorine
        or bromine processes. The products obtained are referred to, separately as
        halogenated chlorobutyl rubber and halogenated bromobutyl rubber (respectively),
        or jointly as halogenated butyl rubber – as opposed to non-halogenated butyl rubber.
        Around 75% of global butyl rubber output is in the form of halogenated butyl rubber
        (with the remainder being non-halogenated butyl rubber). All major global butyl
        rubber producers produce both regular and halogenated butyl rubber.
(28)    Due to its high degree of gas impermeability, butyl rubber is widely used to produce
        a range of rubber goods such as inner tubes, sealants, air cushions, pneumatic
        springs and similar products. Its main use is the production of inner liners and inner
        tubes for tyres. As a result, the automotive industry accounts for approximately 70%
        of global butyl rubber consumption. There are also smaller applications in the
        pharmaceutical industry (e.g. sealants for medicine bottles, pharmaceutical
        packaging), and in the food industry (e.g. chewing gum).
    6.1.1.1. Product market definition
The Commission’s precedents
(29)    In Dow/DuPont, the Commission identified a separate product market for butyl
        rubber.28 In subsequent cases involving synthetic elastomers, the Commission has
        also considered that individual synthetic elastomer families could constitute separate
        product markets due to their specific properties, but ultimately left the question
        open.29
28    Under the name IIR (Isobutene isoprene rubber), which is another way of referring to butyl rubber. See
      case IV/M.663 - Dow/DuPont, decision of 21.02.1996.
29    See case COMP/M.3733 - Dow/DDE, decision of 26.04.2005.
                                                       8
 ---pagebreak---   The Notifying Party’s view
(30)       The Notifying Party considers that butyl rubber forms a separate product market but
           submits that the precise product market definition can be left open as the Transaction
           would not lead to competitive concerns irrespective of the market definition. 30
  The Commission’s assessment
(31)       The Commission’s market investigation confirmed that butyl rubber likely forms a
           separate product market from other elastomers. Respondents generally considered
           that butyl rubber is not substitutable with other products, given its superior
           performance as an air barrier in the tyre industry, as well as the restrictions inherent
           to the registration of formulations for use in healthcare packaging.31 Respondents
           further indicated that halogenated and non-halogenated rubber are also not generally
           substitutable with each other, in particular because non-halogenated butyl rubber
           cannot be co-vulcanised with other tyre materials and is therefore not suitable for
           inner liner applications.32 Responses from the market investigation indicated that,
           within the halogenated category, a distinction may be drawn between bromobutyl
           and chlorobutyl as they can be used for the manufacture of different types of tyres,
           however they also indicated that further segmentation is unlikely to be justified. 33
           The market investigation also suggested that butyl rubber and its segments are
           somewhat homogeneous products across suppliers (at least as regards products
           sourced by major tyre manufacturers), 34 and that from a supply-side perspective it is
           generally possible to switch production between the different types without incurring
           very large costs.35
(32)       In any event, the Commission considers that, for the purposes of the present
           Decision, the exact scope of the product market definition for butyl rubber can be
           left open, since the Transaction does not raise serious doubts as to its compatibility
           with the internal market, under any plausible product market definition (i.e. butyl
           rubber overall or segmented between non-halogenated and halogenated, and further
           sub-segmented between halogenated bromobutyl or chlorobutyl rubber).
      6.1.1.2. Geographic market definition
  The Commission’s precedents
  (33)     In Dow/DuPont, the Commission considered the relevant geographic market for
           butyl rubber to be at least EEA-wide, and probably larger, ultimately leaving the
  30    Form CO, paragraphs 578-580.
  31    Responses to questions 3.1 and 6.1 of Q1 - Questionnaire to competitors and customers of Butyl rubber
        and Polybutadiene rubber.
  32    Responses to question 4.1 of Q1 - Questionnaire to competitors and customers of Butyl rubber and
        Polybutadiene rubber.
  33    Responses to questions 4.1 and 5.1 of Q1 - Questionnaire to competitors and customers of Butyl rubber
        and Polybutadiene rubber.
  34    It must be noted that for certain smaller applications, such as in the pharmaceutical and food industries,
        only certain grades of butyl rubber can be used, and thus the product homogeneity between suppliers is
        reduced.
  35    Responses to questions 8.1, 7.1 and 7.2 of Q1 - Questionnaire to competitors and customers of Butyl
        rubber and Polybutadiene rubber.
                                                             9
 ---pagebreak---        geographic market definition open.36 In subsequent cases involving synthetic
       elastomers, the Commission has also considered that the relevant geographic market
       was at least EEA-wide, and probably larger, though it ultimately left open the
       precise geographic market definition. 37
The Notifying Party’s view
(34)   The Notifying Party considers that the geographic market for butyl rubber is global
       or at least EEA-wide in scope.38
(35)   First, the Notifying Party argues that each major butyl rubber manufacturer only has
       a few production facilities, which are able to serve customers around the globe. The
       Notifying Party further claims that manufacturers use multiple production sites from
       different geographic locations to supply butyl rubber to the same customer.
(36)   Second, the Notifying Party explains that the major butyl rubber customers are
       global tyre manufacturers with worldwide presence in the tyre industry, with the
       ability to source butyl rubber worldwide, and also to multisource from suppliers
       located in various locations worldwide with relatively frequent changes in product
       flows. More generally, the Notifying Party claims that there are significant trade
       flows across regions.
(37)   Third, the Notifying Party considers that production costs are comparable among
       various location facilities, and that neither transportation costs, nor import duties
       constitute significant barriers to trading butyl rubber across regions.
The Commission’s assessment
(38)   All respondents to the market investigation considered that the relevant geographic
       scope for butyl rubber and its possible sub-segments is likely worldwide.
       Respondents expressed that both the supply of and demand for butyl rubber are
       global, with regular trade flows between regions. 39 The majority of respondents also
       indicated that, for the most part, there are no technical, economic or regulatory
       barriers to purchasing or selling butyl rubber at a worldwide level at competitive
       terms, with the exception of recently imposed anti-dumping duties in China.40
       Accordingly, the vast majority of customers responding to the market investigation
       confirmed that suppliers’ plants outside the EEA could credibly sell butyl rubber to
       customers in the EEA.41
(39)   In any event, the Commission considers that, for the purposes of the present
       Decision, the exact scope of the geographic market definition for butyl rubber can be
       left open, since the Transaction does not raise serious doubts as to its compatibility
36   Under the name IIR, which stands for isobutene isoprene rubber, and is another way of referring to
     butyl rubber. See case IV/M.663 - Dow/DuPont, decision of 21.02.1996.
37   See case COMP/M.3733 - Dow/DDE, decision of 26.04.2005.
38   Form CO, paragraphs 581-584.
39   Responses to questions 9.1 and 11.1 of Q1 - Questionnaire to competitors and customers of Butyl
     rubber and Polybutadiene rubber.
40   Responses to question 12.1 of Q1 - Questionnaire to competitors and customers of Butyl rubber and
     Polybutadiene rubber.
41   Responses to question 11 of Q1 - Questionnaire to competitors and customers of Butyl rubber and
     Polybutadiene rubber.
                                                    10
 ---pagebreak---  ---pagebreak---  ---pagebreak---     6.1.2.1. Non-coordinated effects
The Notifying Party’s view 44
(44)    The Notifying Party submits that the Transaction is unlikely to give rise to any
        horizontal non-coordinated effects in the market for butyl rubber that would
        represent a significant impediment to effective competition. 45 The Notifying Party
        claims that SABIC is an insignificant player in this market, and that the market share
        increment brought by SABIC is negligible (less than [0-5]%) regardless of the
        product market definition adopted. It considers that the Parties are not close
        competitors for butyl rubber, in light of the fact that SABIC only sells scrap material
        and only has one customer. The Notifying Party further claims that the combined
        entity would continue to face competition from a number of strong competitors, such
        as ExxonMobil (the largest player worldwide), NKNK and Cenway Technologies, as
        well as other smaller players. Further, the Notifying Party submits that barriers to
        enter the butyl rubber business are small, as is reflected by the recent construction of
        a new butyl rubber plant in India, where no other butyl rubber production facility
        existed before,46 as well as other recent expansions in Singapore and China. Lastly,
        it submits that the Parties’ largest customers are global tyre manufacturers with
        significant countervailing buyer power.
The Commission’s assessment
(45)    At worldwide level, the Parties’ combined market share in the overall market for
        butyl rubber in 2018 was [20-30]%, with a negligible increment of [0-5]% from
        SABIC, and a HHI increment of less than 150. The Parties’ shares in each of the
        potential sub-segments are also modest. In halogenated butyl rubber, their combined
        share was [20-30]% with a [0-5]% increment and a HHI increment below 150. In
        halogenated bromobutyl rubber, the Parties’ combined share was [20-30]% with a
        [0-5]% increment and a HHI increment below 150. In non-halogenated butyl rubber,
        their combined share was [20-30]% with a [0-5]% increment and a HHI increment
        below 150.47
(46)    The results of the market investigation broadly confirmed that the Notifying Party’s
        market share estimates are reliable and, in particular, that SABIC is a small supplier
        of butyl rubber (and its sub-segments) worldwide.48 The majority of respondents
        confirmed that, post-Transaction, there will remain a number of credible competitors
        in the market to constrain the combined entity, such as ExxonMobil, NKNK and
        Sibur Petrochemicals, among others, and that customers will continue to have a
44    The Notifying Party’s arguments are presented for the overall market of butyl rubber only. However,
      the Notifying Party also submits that there are no significant variations in the competitive dynamics of
      the potential sub-segments of butyl rubber (Form CO, paragraph 592).
45    Form CO, paragraphs 591-655.
46    This is the Reliance Sibur Elastomers butyl rubber manufacturing facility that is being constructed in
      Jamnagar, Gujarat, India. This facility is operated as a joint venture between Sibur Petrochemicals and
      Reliance Industries. Once fully operational, it is expected to h ave an annual production capacity of 120
      KT. Form CO paragraph 625.
47    Source: Annex RFI 2.25 Shares butyl rubber and sub-segments.
48    Responses to questions 17 and 18 of Q1 - Questionnaire to competitors and customers of Butyl rubber
      and Polybutadiene rubber.
                                                           13
 ---pagebreak---         sufficient choice of credible suppliers to meet their needs. 49 Moreover, the majority
        of customers responding to the market investigation confirmed that they typically
        procure butyl rubber from multiple suppliers, find no significant barriers or costs to
        switching suppliers, and have switched supplier in the last three years. 50 Although
        respondents considered that entry into the butyl rubber market could be challenging,
        they also identified a number of players who had entered or expanded in the past five
        years (e.g. NKNK, Cenway Technologies, Chambroad) and other players who were
        planning to enter or expand in the near future (e.g. Cenway Technologies, and a JV
        between Reliance Industries and Sibur Petrochemicals in Jamnagar, India). 51
        Finally, the majority of respondents to the market investigation did not consider that
        the Transaction would have any negative impact on prices, quality, choice or
        innovation for the worldwide market for butyl rubber. More generally, no material
        concerns were raised regarding the Parties’ horizontal overlap in butyl rubber. 52
   6.1.2.2. Coordinated effects
(47)    As set out above, SABIC is not an important player in the butyl rubber market as it
        only sells “scrap” butyl rubber and has a market share of no more than [0-5]%
        worldwide. The results of the market investigation broadly confirmed that the
        Notifying Party’s market share estimates are reliable and, in particular, that SABIC
        is a small supplier of butyl rubber (and its sub-segments) worldwide.53 Accordingly,
        the Commission does not consider that the mere reduction in the number of firms in
        the market (through the loss of SABIC as a competitor) is a factor that, in itself,
        facilitates coordination. However, SABIC is a partner of ExxonMobil, the largest
        player, in the Kemya JV, a 50/50 joint venture producing butyl rubber at a plant in
        Al Jubail, Saudi Arabia.
(48)    The Kemya JV was established in 1980, primarily with the objective of producing
        polyethylene, but it has expanded since into the production of other petrochemical
        products, including butyl rubber.54 The Kemya JV manufactured […] kt of butyl
        rubber in 2018, and accounts for around [0-5]% market share of butyl rubber
        worldwide.
(49)    The Transaction therefore creates a structural change in the butyl rubber market.
        Post-Transaction, Saudi Aramco and ExxonMobil will participate in a joint venture,
        which produces around [0-5]% of worldwide butyl rubber sales and [Information on
        the split of profits between the Kemya JV’s parents]. In this Section, the
49    Responses to questions 17 and 30 of Q1 - Questionnaire to competitors and customers of Butyl rubber
      and Polybutadiene rubber.
50    Responses to questions 14 and 25, and 26 of Q1 - Questionnaire to competitors and customers of Butyl
      rubber and Polybutadiene rubber.
51    Responses to questions 27, 28 and 29 of Q1 - Questionnaire to competitors and customers of Butyl
      rubber and Polybutadiene rubber.
52    Responses to questions 31.2 and 32 of Q1 - Questionnaire to competitors and customers of Butyl
      rubber and Polybutadiene rubber.
53    Responses to questions 17 and 18 of Q1 - Questionnaire to competitors and customers of Butyl rubber
      and Polybutadiene rubber.
54    The Kemya JV also manufactures styrene butadiene rubber, thermoplastic elastomers, carbon black,
      ethylene propylene co-polymer. Other than butyl rubber, none of the products manufactured by the
      Kemya JV appear likely to give rise to coordinated effects, as butyl rubber is the only product market in
      which the Parties hold a material share, ExxonMobil is a major player, and the market is concentrated.
                                                        14
 ---pagebreak---       Commission assesses whether this structural change can significantly impede
      effective competition, through the creation or strengthening of a collective dominant
      position in the relevant market(s) for butyl rubber. For this purpose, the Commission
      assesses whether such change increases the likelihood that ExxonMobil and Saudi
      Aramco are able to coordinate, or makes coordination between the firms easier,
      more stable, or more effective.
The Notifying Party’s view
(50)  The Notifying Party submits that the Transaction will not give rise to horizontal
      coordinated effects because it does not change the market structure, and because the
      indirect structural link between Saudi Aramco and ExxonMobil will not facilitate
      coordination due to the strict confidentiality provisions in place. 55
(51)  Firstly, the Notifying Party submits that the Transaction will not result in a market
      share increase. SABIC has no sales of prime-grade butyl rubber, [Information on the
      Kemya JV arrangements]. According to the Kemya Agreements, SABIC only has
      the right to sell “scrap” butyl rubber (i.e. output neither meeting the agreed product
      specifications nor the required quality for “prime” and “substandard” butyl rubber),
      […].56 Moreover, all of SABIC’s (scrap) butyl rubber sales are to a single customer
      within Saudi Arabia. Even if the sales of scrap butyl rubber are taken into
      consideration, the Transaction gives rise to only a minor increment to Saudi
      Aramco’s sales, ranging from below [0-5]% to [0-5]% depending on the type of
      butyl rubber.
(52)  Secondly, the Notifying Party submits that the Kemya JV will not allow for the
      exchange of sensitive information between ExxonMobil and Saudi Aramco post-
      Transaction. It submits that, while the Kemya Agreements contain57 [Details on the
      contractual JV agreements]. 58
(53)  Thirdly, the Notifying Party argues that it is difficult for the combined entity and
      ExxonMobil to reach a common understanding on possible factors of coordination,
      given that prices in the market for butyl rubber are not transparent. Moreover, the
      Notifying Party submits that collusion would not be sustainable due to this lack of
      transparency, that there is no effective deterrent mechanism to enforce any attempted
      coordination, and that customers and competitors would be able to undermine any
      attempt at coordination.59
(54)  Lastly, the Notifying Party emphasizes that with respect to the structural link created
      by the Transaction, which involves the [Information on the profit split among the JV
      shareholders], the Transaction only introduces a minimal change in the combined
      entity’s incentive to compete, or rather coordinate, on the butyl rubber market. As
      regards ExxonMobil, it argues that ExxonMobil’s incentive to coordinate will not
      change, because the Transaction does not materially affect the extent to which it can
      recapture any lost sales.
55   Form CO, Annex 20 – Coordinated Effects Analysis – Part 1, paragraphs 1-27.
56   For completeness, under the Kemya Agreements, […].
57   Such information includes […].
58   Form CO, Annex 20 – Coordinated Effects Analysis – Part 2, paragraph 4.
59   Form CO, Annex 20 – Coordinated Effects Analysis – Part 2, paragraphs 13-15.
                                                    15
 ---pagebreak--- (55)   The Notifying Party concludes that, in the absence of any changes to market
       structure resulting from the Transaction, there is no plausible risk of horizontal
       coordinated effects in the butyl rubber market.
The Commission’s assessment
(56)   As explained in paragraph (19), a merger in a concentrated market can lead to
       anticompetitive horizontal coordinated effects if it significantly impedes effective
       competition, through the creation or strengthening of a collective dominant position,
       because it increases the likelihood that firms are able to coordinate or makes
       coordination easier, more stable or more effective.
(57)   Pursuant to the Horizontal Guidelines, to assess whether a merger gives rise to
       horizontal coordinated effects, the Commission examines, firstly, whether it would
       be possible to reach terms of coordination60 and, secondly, whether the coordination
       would be likely to be sustainable.61 In examining the possibility and sustainability of
       coordination, the Commission specifically considers the changes that the transaction
       brings about. The reduction in the number of firms in a market may in itself be a
       factor that facilitates coordination.
(58)   The following Section focuses on the risk of horizontal coordinated effects arising
       from the Transaction in the market for butyl rubber at worldwide level. However,
       this analysis at worldwide level would also apply to the EEA, to the extent that the
       relevant geographic market for butyl rubber were considered EEA-wide. This is
       because the market investigation indicated that competitive conditions appear similar
       at EEA-wide and worldwide level for the reasons outlined in paragraph (38) above
       and,62 meaning that the analysis regarding whether coordination is possible or
       sustainable is the same at EEA-level as worldwide.
       Possibility of reaching terms of coordination
(59)   The market investigation indicated that the butyl rubber market has some
       characteristics that may be conducive to reaching a common perception regarding
       how coordination should work.
               The market investigation broadly confirmed the Notifying Party’s market
                share estimates and, consequently, that the market for the supply of butyl
                rubber is relatively concentrated worldwide, with Saudi Aramco and
60   As regards the possibility of reaching terms of coordination, coordination is more likely to emerge in
     markets where it is relatively simple to reach a common understanding on the terms of coordination.
     Coordination may take various forms, including keeping prices above the competitive level, or dividing
     the market, for instance by customer characteristics or by allocating contracts in bidding markets.
61   As regards the sustainability of coordination, three conditions are necessary for coordination to be
     sustainable. Firstly, the coordinating firms must be able to monitor to a sufficient degree whether th e
     terms of coordination are being adhered to. Secondly, discipline requires that there is a credible
     deterrent mechanism that can be activated if deviation is detected. Thirdly, the reactions of outsiders,
     such as current and future competitors not participating in the coordination, as well as customers,
     should not be able to jeopardise the results expected from the coordination.
62   Responses to questions 9, 10, 11 and 12 of Q1 - Questionnaire to competitors and customers of Butyl
     rubber and Polybutadiene rubber.
                                                         16
 ---pagebreak---                  ExxonMobil together accounting for more than [60-70]% of total worldwide
                 sales.63
                Moreover, demand is also fairly concentrated, with the top 10 global tyre
                 manufacturers representing around 70% of the demand for butyl rubber. 64
                 While the results of the market investigation were somewhat mixed, several
                 respondents indicated that for at least some types of customer (e.g. global
                 tyre producers), butyl rubber is a relatively homogenous product across
                 different suppliers.65
                Customers further explained that prices for butyl rubber are generally based
                 on formulas which take into consideration the price of hydrocarbons and that,
                 insofar as the price of inputs (e.g. isobutylene) is known by market
                 participants, there is a moderate level of transparency in the prices charged
                 by suppliers.66
(60)   On the other hand, the market investigation also brought to light some factors that
       suggest that it may not be entirely straightforward to reach terms of coordination in
       relation to butyl rubber.
                Firstly, as regards demand, the butyl rubber market is growing. IHS Markit
                 data indicates that demand has grown at an average rate of 4% per year
                 between 2012-2017 and is expected to increase by 2.3% per year over the
                 next five years.67
                Secondly, as regards supply, a number of competitors have recently
                 expanded their production capacity (see paragraph (69) below), to the point
                 that the market is characterised by overcapacity. 68 Moreover, capacity is
                 forecasted to continue to increase by around 4.2% per annum in the next 5
                 years, according to IHS Markit (which the market investigation confirmed is
                 accurate).69 The market investigation confirmed that suppliers’ capacity has
                 been and is continuing to expand rapidly, with respondents pointing to
                 expansions by ExxonMobil, Chambroad and Cenway Technologies, as well
63   Responses to questions 15, 16, 17 and 18 of Q1 - Questionnaire to competitors and customers of Butyl
     rubber and Polybutadiene rubber.
64   Form CO, paragraph 605.
65   At least within each sub-type of butyl rubber (e.g. halogenated chlorobutyl rubber from different
     suppliers). Responses to question 8 of Q1 - Questionnaire to competitors and customers of Butyl rubber
     and Polybutadiene rubber. Notably, for certain applications (e.g. pharmaceutical and food), only
     certain grades of butyl rubber, developed by a reduced amount of suppliers can be used, and thus the
     product homogeneity of the product between suppliers is reduced.
66   Responses to questions 21 and 23 of Q1 - Questionnaire to competitors and customers of Butyl rubber
     and Polybutadiene rubber.
67   IHS Markit Report “Butyl Elastomers” 15 August 2018, p. 6.
68   According to the data provided by the Notifying Party (Form CO, Annex 21), the worldwide butyl
     rubber capacity was […]kT in 2018, while worldwide sales of butyl rubber amounted to […]kT.
     According to data provided by the Notifying Party (Form CO, paragraphs 599 - 622) and the results of
     the market investigation (Responses to question 13 of Q1 - Questionnaire to competitors and customers
     of Butyl rubber and Polybutadiene rubber), the utilization rate of the top 5 butyl rubber manufacturers
     worldwide […].
69   IHS Markit Report “Butyl Elastomers” 15 August 2018, p. 13.
                                                       17
 ---pagebreak---                  as a 120 kilotons-per-annum expansion by a Reliance-Sibur joint venture in
                 Jamnagar, India.70
                Thirdly, the majority of customers suggested that the use of a pricing formula
                 means there is a “moderate” degree of price transparency (see paragraph (59)
                 above), but importantly suppliers of butyl rubber who responded to the
                 market investigation thought prices are not transparent. Respondents also
                 explained that prices are set by way of bilateral negotiations for contracts that
                 run for at least a year or, more typically, two years or more. 71
                 Notwithstanding the fact that input costs represent a significant element of
                 pricing for butyl rubber, the Notifying Party submitted data indicating that
                 […].72
                Fourthly, as outlined in paragraph (47) above, SABIC is not considered a
                 material supplier of butyl rubber. Thus, the reduction in the number of firms
                 in the market (through the loss of SABIC as a competitor) does not, of itself,
                 facilitate coordination by increasing transparency between butyl rubber
                 suppliers.
    (61)         In addition, in light of the specific circumstances of the case, the creation of
        the structural link between Saudi Aramco and ExxonMobil via the Kemya JV is not
        likely to increase the likelihood that butyl rubber suppliers can reach terms of
        coordination, as neither JV partner receives commercially sensitive information
        about the other. Pursuant to the bylaws of the Kemya JV, [Information on
        information flow mechanisms in the Kemya JV arrangements]. Indeed, according to
        the Notifying Party’s submissions and the evidence received by the Commission, 73
        all information provided by ExxonMobil to the Kemya JV [Information on
        information flow mechanisms in the Kemya JV arrangements].74 Therefore, strict
        ring-fencing measures are in place such that post-Transaction the Kemya JV will not
        give Saudi Aramco insight into ExxonMobil’s sales, prices or other commercial
        information. [Information on the Kemya JV arrangements].
(62)    Overall, however, it is not necessary to conclude on whether it is possible to reach
        terms of coordination on this market, or on the extent to which the Transaction
        makes reaching terms of coordination possible or easier, as any coordination post-
        Transaction would not be sustainable in light of the likely reaction of outsiders, as
        set out below.
        Sustainability of coordination: Monitoring deviations
(63)    For similar reasons as outlined above, the evidence is mixed on whether the
        worldwide market for butyl rubber is sufficiently transparent to allow the combined
        entity and ExxonMobil to monitor deviations from any hypothetical coordination.
70    Responses to questions 27 and 28 of Q1 - Questionnaire to competitors and customers of Butyl rubber
      and Polybutadiene rubber – see also footnote 46.
71    Responses to questions 21 and 23 of Q1 - Questionnaire to competitors and customers of Butyl rubber
      and Polybutadiene rubber.
72    See chart in page 2 of M.9410 – Saudi Aramco – SABIC – response to follow up question on RFI 7.
73    [Information on information flow mechanisms in the Kemya JV arrangements ], they were provided to
      the Commission directly by ExxonMobil as part of a submission made by ExxonMobil on 03.02.2020.
74    Form CO, Annex 20 – Coordinated Effects Analysis – Part 2, paragraph 5.
                                                       18
 ---pagebreak---         On the one hand, there are few significant suppliers worldwide and global tyre
        producers account for 70% of worldwide purchases of butyl rubber. Prices are
        generally linked to raw material costs, and are as a result updated/indexed on
        average monthly or less.75 That said, contracts (and so, the Commission understands,
        the pricing mechanism that applies throughout the contract) are updated less
        frequently – at least yearly, and typically every two years or more. 76 Customers
        consider that there is “moderate” price transparency, likely as price movements are
        linked to raw material costs (though, importantly, suppliers consider price
        transparency to be low). Moreover, contracts are negotiated bilaterally, and the
        market investigation did not provide any evidence to suggest that suppliers would
        have insight into prices an individual customer agrees with another supplier. For the
        reasons noted in paragraph (61) above, the creation of a structural link via the
        Kemya JV does not appear to affect Saudi Aramco or ExxonMobil’s ability to
        monitor deviations.
(64)    Overall, however, it is not necessary to conclude on whether market transparency is
        such that monitoring allows for the threat of timely and sufficient retaliation to any
        deviation, as any coordination post-Transaction would not be sustainable in light of
        the likely reaction of outsiders, as set out below.
        Sustainability of coordination: Deterrent mechanisms
(65)    The Notifying Party has not provided the Commission with sufficient evidence to
        exclude that there could be a sufficiently severe and credible deterrent mechanism to
        convince Saudi Aramco or ExxonMobil to adhere to the terms of any hypothetical
        coordination. On the one hand, the market investigation indicated that the gain from
        deviating at the right time could be significant. Contracts for butyl rubber are
        renegotiated at least yearly, and typically every two years or more. The top 10 global
        tyre manufacturers are very significant customers of butyl rubber, representing 70%
        of worldwide demand.77 Most customers multi-source, consider that there are no
        barriers to switching other than the need to qualify the supplier’s plant and product,
        and indeed have switched butyl rubber supplier in the last three years.78 The
        Notifying Party provides an indicative example that illustrates the potential gain
        from deviation – in 2012, […] (one of the world’s top 5 largest tyre producers)
        switched all of its worldwide butyl rubber purchases away from Saudi Aramco to
        Russian manufacturers, as they offered lower prices. 79
    (66)          On the other hand, Saudi Aramco and SABIC appear to have significant
        sale/purchase relations with ExxonMobil that might (in principle) allow for
        retaliation outside the butyl rubber market.80 The Notifying Party has not identified
75    Responses to question 23.3 of Q1 - Questionnaire to competitors and customers of Butyl rubber and
      Polybutadiene rubber.
76    Responses to question 23.2 of Q1 - Questionnaire to competitors and customers of Butyl rubber and
      Polybutadiene rubber.
77    Form CO, paragraph 601.
78    Responses to question 14, 25 and 26 of Q1 - Questionnaire to competitors and customers of Butyl
      rubber and Polybutadiene rubber.
79    Form CO, Annex 20 – Coordinated Effects Analysis – Part 2, paragraphs 53.
80    To take just one product as an example, SABIC supplied $[…] of ethylene to ExxonMobil and
      procured $[…] of ethylene from it. Form CO, Annex 20 – Coordinated Effects Analysis – Part 2,
      paragraphs 94 and 96.
                                                     19
 ---pagebreak---        the full extent of these sale/purchase relations, the value of these relations by
       product, or the extent to which these arrangements may allow for retaliation. 81 The
       Commission therefore is not able to exclude that, if non-compliance can be
       identified, a timely and effective deterrence mechanism would be available. For
       completeness, termination of the Kemya JV (or its butyl rubber production) does not
       appear to be an effective deterrence mechanism [Information on the Kemya JV
       arrangements].82
(67)   Overall, however, it is not necessary to conclude on whether a sufficiently severe
       and credible deterrent mechanism is available, as any coordination post-Transaction
       would not be sustainable in light of the likely reaction of outsiders, as set out below.
       Sustainability of coordination: Reaction of outsiders
(68)   The sustainability of any attempted coordination between Saudi Aramco and
       ExxonMobil is likely to be jeopardised by the reaction of non-coordinating
       competitors and customers.
(69)   First, as regards competitors, Saudi Aramco and ExxonMobil’s rivals are well-
       placed to jeopardise any coordination and are incentivised to do so. There is global
       overcapacity for butyl rubber compared with demand, with operating rates declining
       from approximately 81% in 2010 compared with 72% in 2017. 83 The market
       investigation confirmed that a number of competitors (to Saudi Aramco and
       ExxonMobil) have been increasing worldwide butyl rubber production capacity in
       recent years and are continuing to do so.84 The market investigation pointed to
       expansions by Chambroad and Cenway Technologies, as well as a 120 kilotons-per-
       annum expansion by a Reliance-Sibur joint venture in Jamnagar, India. 85 Significant
       expansions are also planned by NKNK in Russia in 2020 (adding 55 kilotons-per-
       annum to an existing plant) and Shandong Senchi in China in 2020 (building a new
       butyl rubber plant with capacity of 60 kilotons-per-annum).86 The market
       investigation confirmed that these competitors that have expanded capacity
       (Chambroad, Cenway Technologies, Reliance-Sibur, NKNK, Shandong Senchi) are
       all credible suppliers of butyl rubber in the EEA and worldwide. 87 As such,
       competitors operating with spare capacity and, in particular, with recent expansions,
       act as a significant constraint on Saudi Aramco and ExxonMobil and are likely to
       make any attempted coordination unsustainable.
(70)   Second, as regards customers, the market investigation has confirmed that customers
       multi-source, can switch supplier and that the majority have done so in the last three
81   Form CO, Annex 20 – Coordinated Effects Analysis – Part 2, paragraphs 92-96.
82   Form CO, Annex 20 – Coordinated Effects Analysis – Part 2, paragraphs 20, 97-104.
83   IHS Markit report, “Butyl Elastomers”, 15 August 2018, p.13.
84   Responses to questions 27 and 28 of Q1 - Questionnaire to competitors and customers of Butyl rubber
     and Polybutadiene rubber.
85   Responses to questions 27 and 28 of Q1 - Questionnaire to competitors and customers of Butyl rubber
     and Polybutadiene rubber – see also footnote 46.
86   IHS Markit Report “Butyl Elastomers” 15 August 2018, p. 28.
87   Responses to questions 16, 17 and 18 of Q1 - Questionnaire to competitors and customers of Butyl
     rubber and Polybutadiene rubber.
                                                      20
 ---pagebreak---         years.88 Indeed, for at least the global tyre manufacturers, butyl rubber is a relatively
        homogenous product across different suppliers. 89 As outlined in paragraph (69)
        above, global tyre manufactures account for a significant proportion of the market
        and the real risk of losing such a customer is likely to make coordination
        unsustainable. As a result, the risk of a large customer tempting deviation or reacting
        to coordination by switching to a non-coordinating firm is high. No material
        concerns were raised regarding butyl rubber, and the vast majority of customers
        responding to the market investigation confirmed that they consider they will
        continue to have access to a sufficient choice of credible suppliers post-Transaction,
        and that the Transaction will not have any impact on price, quality, choice or
        innovation regarding butyl rubber. 90
Conclusion
(71)    In conclusion, for the reasons set out above, the Commission considers that the
        Transaction does not raise serious doubts as a result of horizontal non-coordinated or
        coordinated effects concerning butyl rubber. As regards non-coordinated effects, this
        is in particular because of the Parties’ modest combined market shares and the
        negligible increment from SABIC. As regards coordinated effects, the creation of a
        structural link between Saudi Aramco and ExxonMobil will not increase the risks of
        coordination, in particular because any attempted coordination will not be
        sustainable given the likely response by competitors (who have significant spare
        capacity and continue to expand capacity and are well placed to compete for
        customers) and customers (who are well placed to switch very significant orders
        either to new suppliers or to tempt deviation).
    6.2.Ethylene glycol (“EGs”)
    6.2.1. Market definition
(72)    Ethylene glycols (“EGs”) are colourless, odourless, relatively non-volatile liquids.
        EGs are mainly produced from ethylene oxide (“EO”) (around 90%) or, less
        frequently, from coal.91 The production of EGs from EO results in the simultaneous
        production of three types of EG: mono-ethylene glycol (“MEG”) (around 90% of the
        production), and the co-products di-ethylene glycol (“DEG”) and tri-ethylene glycol
        (“TEG”) (which account for only around 9% and 1% of EG production).
(73)    MEG is primarily used as the main input in the production of polyesters, which are
        subsequently used in the production of fibres, films and resins used to make plastic
        (PET) bottles. MEG is also used as an input material in the production of
        polyalkylene glycol. In addition, due to its low freezing point, MEG is also used in
        antifreeze solutions.
88    Responses to question 14, 25 and 26 of Q1 - Questionnaire to competitors and customers of Butyl
      rubber and Polybutadiene rubber.
89    At least within each sub-type of butyl rubber (e.g. halogenated chlorobutyl rubber from different
      suppliers). Responses to question 8 of Q1 - Questionnaire to competitors and customers of Butyl rubber
      and Polybutadiene rubber
90    Responses to questions 30 and 31.2 of Q1 - Questionnaire to competitors and customers of Butyl
      rubber and Polybutadiene rubber.
91    Only the so-called “coal to MEG” processes can produce mono-ethylene glycol without di-ethylene
      glycol and tri-ethylene glycol as by-products.
                                                        21
 ---pagebreak--- (74)    DEG is used as a raw material for the production of polyurethanes and unsaturated
        polyester resins. Similarly to MEG, DEG can also be blended into antifreeze
        solutions.
(75)    TEG is used for the dehydration of gases, the manufacture of insecticides, the
        synthesis of some organic derivatives and the production of plasticizers.
    6.2.1.1. Product market definition
The Commission’s precedents
(76)    The Commission has considered the market for EGs and its potential sub-segments
        in previous decisions.92 While noting that MEG, DEG and TEG are used in different
        applications, the Commission acknowledged that from a supply-side perspective
        these three products were at that time invariably produced together and in the same
        proportions.93 The Commission ultimately left open whether EGs constitute a
        separate single product market or whether they should be further sub-segmented
        between MEG, DEG and TEG.94
The Notifying Party’s view
(77)    The Notifying Party submits that it does not disagree with the Commission’s
        precedents, but considers that for the purposes of the present Decision, the exact
        product market definition can be left open.95
The Commission’s assessment
(78)    The majority of respondents to the market investigation indicated that EGs are not
        substitutable with other products, explaining that EGs have specific properties and
        applications that are challenging to replicate at a competitive level.96 Further, while
        the majority of respondents consider that the different types of EG (i.e. MEG, DEG
        and TEG) are likely not substitutable with each other from a customer perspective in
        light of their different properties, responses to the market investigation indicated that
        the different types of EGs are typically produced together and through the same
        process from EO.97
(79)    In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the product market definition for EGs can be left open,
92    See case COMP/M.4094 - Ineos/BP Dormagen, decision of 10.08.2006. See also cases COMP/M.4005
      - Ineos/Innovene, decision of 09.12.2005, COMP/M.3467 - Dow Chemicals/PIC/White Sands JV,
      decision of 28.06.2004 and COMP/M.2345 - Deutsche BP/Erdölchemie, decision of 26.04.2001.
93    New so-called “coal to MEG” processes now allow for the production of MEG only, using coal as an
      input. However, these technologies were not available at the time of case COMP/M.4094 - Ineos/BP
      Dormagen.
94    The Commission also considered and rejected a product market encompassing both EGs and purified
      EO. It found that there is a relationship between the production of purified EO and EGs (as they are
      produced from the same raw material), but as the products are made using different equipment and
      processes it concluded that there is no supply -side substitutability between them. See case
      COMP/M.4094 - Ineos/BP Dormagen, decision of 10.08.2006, paragraph 55.
95    Form CO, paragraphs 263-264.
96    Responses to question 3 of Q2 - Questionnaire to competitors and customers of Ethylene glycols.
97    Responses to questions 4 and 6.1, 10.3, 11 of Q2 - Questionnaire to competitors and customers of
      Ethylene glycols.
                                                        22
 ---pagebreak---         since the Transaction does not raise serious doubts as to its compatibility with the
        internal market, under any plausible product market definition (i.e. EGs overall or
        segmented between MEG, DEG and TEG).
    6.2.1.2. Geographic market definition
The Commission’s precedents
(80)    In previous decisions, the Commission has considered whether the relevant
        geographic market for EGs and its potential sub-segments could be at least EEA-
        wide, Western Europe, or possibly global in scope, but ultimately left open the exact
        geographic market definition.98
        The Notifying Party’s view
(81)    The Notifying Party submits that it does not disagree with the Commission’s
        precedents, but it considers that for the purposes of the present Decision, the exact
        geographic market definition can be left open. 99
The Commission’s assessment
(82)    The market investigation indicated that the relevant geographic market for EGs is
        likely worldwide, or at least EEA-wide.100 All respondents consider the market for
        EGs to be worldwide, pointing to significant patterns of trade worldwide, the ease of
        transporting EGs and the fact that MEG, DEG and TEG are commodity products. 101
        Customers responding to the market investigation confirmed that they can and do
        source EGs from suppliers based outside the EEA for use in their facilities within the
        EEA.102 While some respondents identified that there are some tariffs and import
        duties between regions, they emphasised that trade flows for EGs remain global. 103
(83)    In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the geographic market definition for EGs can be left
        open between EEA and worldwide, since the Transaction does not raise serious
        doubts as to its compatibility with the internal market, under any plausible
        geographic market definition.
    6.2.2. Competitive assessment
(84)    Both Parties supply EGs (including MEG, DEG and TEG). SABIC is active in the
        EEA and worldwide, whereas Saudi Aramco’s activities are more limited as it only
98    See cases COMP/M.4094 - Ineos/BP Dormagen, decision of 10.08.2006, COMP/M.4005 -
      Ineos/Innovene, decision of 09.12.2005, COMP/M.3467 - Dow Chemicals/PIC/White Sands JV,
      decision of 28.06.2004 and COMP/M.2345 - Deutsche BP/Erdölchemie, decision of 26.04.2001.
99    Form CO, paragraphs 265-267.
100   The market investigation strongly indicated that a market limited to Western Europe would not be
      appropriate for EGs or any of its sub-segments for the purposes of the present Decision, so it is not
      considered further in this Decision.
101   Responses to question 7 of Q2 - Questionnaire to competitors and customers of Ethylene glycols.
102   Responses to question 9 of Q2 - Questionnaire to competitors and customers of Ethylene glycols.
103   Responses to questions 10.1 and 10.2 of Q2 - Questionnaire to competitors and customers of Ethylene
      glycols.
                                                        23
 ---pagebreak---  ---pagebreak--- The Commission’s assessment
(88)    As outlined in paragraph (85) above, the Transaction only gives rise to horizontally
        affected possible markets in the supply of EGs, MEG or DEG at worldwide level.
(89)    At worldwide level, the Parties’ combined market shares range between [20-30]%
        and [20-30]%, depending on whether EGs are considered as a whole or if the
        product market is segmented between MEG and DEG. Irrespective of the product
        market definition considered, the increment brought by Saudi Aramco is small ([0-
        5]% or less) and the HHI increment remains below 150.
(90)    The results of the market investigation broadly confirmed that the Notifying Party’s
        market share estimates are reliable and, in particular, that Saudi Aramco is a
        relatively small supplier of EGs, MEG and DEG worldwide. 107 The majority of
        respondents confirmed that, post-Transaction, there will remain a number of strong
        competitors in the market to constrain the combined entity, such as Shell, Sinopec,
        BASF, PIC, Lotte and Formosa and that customers will continue to have a sufficient
        choice of credible suppliers to meet their needs. 108 Moreover, the majority of
        customers responding to the market investigation confirmed that they typically
        procure EGs from multiple suppliers, can switch relatively easily, and have switched
        supplier in the last 3 years.109 The majority of respondents considered that it is
        relatively easy for an existing supplier to expand its sales of EGs or begin selling in
        a new location.110 Finally, the majority of respondents to the market investigation
        did not consider that the Transaction would have any negative impact on prices,
        quality, choice or innovation for the worldwide market for EGs (or its sub-
        segments). In addition, no material concerns were raised regarding the Parties’
        horizontal overlap in EGs.111
(91)    In light of the above, taking account of the results of the market investigation and of
        all the evidence available to it, the Commission considers that the Transaction does
        not raise serious doubts as to its compatibility with the internal market in relation to
        the market for EGs, regardless of whether the relevant geographic market is
        considered EEA-wide or worldwide or if the product market is EGs or sub-
        segmented between MEG, DEG and TEG.
    6.3.Ethylene propylene terpolymer rubber and ethylene propylene co-polymer
        (together, “EP(D)M”)
    6.3.1. Market definition
(92)    Ethylene propylene terpolymer rubber (“EPDM”) is a synthetic rubber obtained by
        polymerisation of ethylene and propylene in the presence of a diene component.
107   Responses to questions 13 and 14 of Q2 - Questionnaire to competitors and customers of Ethylene
      glycols.
108   Responses to questions 12, 13 and 20 of Q2 - Questionnaire to competitors and customers of Ethylene
      glycols.
109   Responses to questions 16 and 17 of Q2 - Questionnaire to competitors and customers of Ethylene
      glycols.
110   Responses to question 19 of Q2 - Questionnaire to competitors and customers of Ethylene glycols.
111   Responses to questions 22 and 23 of Q2 - Questionnaire to competitors and customers of Ethylene
      glycols.
                                                       25
 ---pagebreak--- (93)    The ethylene-propylene elastomer family also comprises another type of rubber,
        which is ethylene propylene co-polymer (“EPM”). EPDM accounts for about 85% of
        the total world production of EP(D)M and EPM accounts for the remaining 15%.
        For the purposes of this Decision, EPDM and EPM will be referred to jointly as
        “EP(D)M”.
(94)    Owing to its resistance to ozone, aging, weather, and high temperatures, EP(D)M
        has multiple uses in the automotive industry, such as the manufacture of sealing
        systems, radiator hoses, brake parts, belts, as well as other rubber-moulded goods.
        EP(D)M is also blended with other polymers in order to improve their physical
        properties, such as impact and chemical resistance. Finally, EP(D)M is used in the
        construction industry for the waterproofing of roofs, window-seals and facades, in
        oil additives (mainly EPM), as well in various rubber goods, such as soccer balls.
    6.3.1.1. Product market definition
The Commission’s precedents
(95)    In Dow/DDE, the Commission identified a potential separate product market for
        EPDM.112 Moreover, in Dow/DuPont, the Commission had defined product markets
        for synthetic elastomers according to their chemical composition. 113
The Notifying Party’s view
(96)    The Notifying Party submits that EPDM and EPM should be considered as part of
        the same relevant product market, given that (i) EPM and EPDM exhibit common
        properties, and are largely substitutable from a demand-side perspective, (ii) the two
        products are manufactured on the same production lines, and switching between the
        two is possible in a timely and cost-effective manner, suggesting a strong supply-
        side substitutability between the two products, and (iii) EPDM is estimated to
        account for about 85% of the total world production of EP(D)M.114
The Commission’s assessment
(97)    The majority of respondents to the market investigation indicated that EPDM is not
        substitutable with other products due to its specific characteristics. 115 This likely
        includes EPM, with which EPDM is substitutable only for certain applications. 116
        Furthermore, the majority of the demand for EP(D)M is from the automotive
        industry, which requires a number of approvals to meet safety and performance
        standards, making EP(D)M difficult to substitute for customers.117
(98)    In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the product market definition for EP(D)M can be left
112   See case COMP/M.3733 - Dow/DDE, decision of 26.04.2005.
113   See case IV/M.663 - Dow/DuPont, decision of 21.02.1996.
114   Form CO, paragraphs 680-683.
115   Responses to question 3 for Q4 - Questionnaire for competitors and customers of Ethylene propylene
      terpolymer rubber (EPDM).
116   Responses to question 3 for Q4 - Questionnaire for competitors and customers of Ethylene propylene
      terpolymer rubber (EPDM).
117   Responses to question 17 for Q4 - Questionnaire for competitors and customers of Ethylene propylene
      terpolymer rubber (EPDM).
                                                      26
 ---pagebreak---         open, since the Transaction does not raise serious doubts as to its compatibility with
        the internal market, under any plausible product market definition (i.e. EP(D)M
        overall, or segmented between EPDM and EPM).
    6.3.1.2. Geographic market definition
        The Commission’s precedents
(99)    In cases involving synthetic elastomers, the Commission has previously considered
        that the relevant geographic market could be at least EEA-wide, and probably larger,
        though it ultimately left open the precise geographic market definition. 118
The Notifying Party’s view
(100) The Notifying Party considers that the geographic market for EP(D)M is global or at
        least EEA-wide in scope, as EP(D)M is traded globally, with significant imports and
        exports between continents.119 Moreover, the Notifying Party points out that major
        EP(D)M manufacturers’ production facilities are able to serve customers around the
        globe. Further, the Notifying Party emphasises that the main customers for EP(D)M
        are global automotive players and compounders, with enough sophistication to easily
        switch between suppliers and procure EP(D)M from suppliers located in different
        regions across the globe. Lastly, the Notifying Party considers that neither
        transportation costs, nor import duties constitute significant barriers to trading
        EP(D)M across regions.
The Commission’s assessment
(101) All respondents to the market investigation considered that the relevant geographic
        market for EP(D)M is worldwide.120 Respondents to the market investigation
        considered that suppliers with plants located outside the EEA could credibly supply
        customers located in the EEA, and a majority of them expressed that they already
        did so. Respondents also pointed to the lack of significant barriers to purchasing
        worldwide.121
(102) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the geographic market definition for EP(D)M, EPDM,
        or EPM can be left open, since the Transaction does not raise serious doubts as to its
        compatibility with the internal market, under any plausible geographic market
        definition (i.e. EEA-wide or worldwide).
118   See cases IV/M.663 - Dow/DuPont, decision of 21.02.1996 and COMP/M.3733 - Dow/DDE, decision
      of 26.04.2005. In case COMP/M.3733 - Dow/DDE, even though EPDM was defined as a separate
      product market, the Commission did not define the geographic market for EPDM, since this product
      was not affected under any plausible geographic market.
119   Form CO, paragraphs 684-688.
120   Responses to question 5 for Q4 - Questionnaire for competitors and customers of Ethylene propylene
      terpolymer rubber (EPDM).
121   Responses to questions 6, 7 and 9 for Q4 - Questionnaire for competitors and customers of Ethylene
      propylene terpolymer rubber (EPDM).
                                                       27
 ---pagebreak---  ---pagebreak---        EPDM.122 In particular, the Notifying Party submits that the market share increment
       brought by SABIC is de minimis (below [0-5]%), and that the Parties are not close
       competitors for EP(D)M, including because Saudi Aramco is a well-established
       global supplier while SABIC is a new and fringe supplier with small capacity. The
       Notifying Party adds that SABIC is not a maverick entrant that could disrupt the
       segment, given that EP(D)M is a commodity product and that SABIC’s product and
       production methods are the same as those of its competitors. Moreover, the
       Notifying Party submits that the combined entity would continue, post-Transaction,
       to face competition from a number of strong, well-established competitors, such as
       ENI, ExxonMobil and DowDuPont, with respective market shares in 2018 of [20-
       30]%, [10-20]% and [10-20]%123 , as well as from other smaller players. Lastly, the
       Notifying Party considers that the barriers to enter the EP(D)M business are
       minimal, and that the Parties’ largest customers, who are global automotive
       manufacturers and suppliers, have significant buyer power.
The Commission’s assessment
(111) As outlined in paragraph (107) above, the Transaction only gives rise to a
       horizontally affected market in the supply of EP(D)M and EPDM in the EEA.
(112) The results of the market investigation broadly confirmed that the Notifying Party’s
       market share estimates are reliable. 124 The Parties’ combined market share for
       EP(D)M in the EEA was therefore around [20-30]% in 2018.
(113) Regarding potential non-coordinated effects, the Commission notes that the
       increment brought by SABIC is small (below [0-5]%), and the HHI increment
       remains below 150. Likewise, on a narrower segmentation for EPDM, the Parties’
       combined market share remains modest, at [20-30]%.
(114) In addition, the results of the market investigation broadly indicated that the Parties
       are not each other’s closest competitors for EP(D)M in the EEA. While Saudi
       Aramco is firmly ranked among top suppliers such as ENI or Kumho, SABIC is
       considered by respondents to the market investigation to be a lesser competitor in
       this market. This holds true in a narrower segment for EPDM as well. 125 Even
       though the majority of suppliers expressed that entering or expanding into the
       market for the supply of EP(D)M in the EEA could be challenging, the majority of
       customers confirmed that, post-Transaction, they expected that there will remain a
       sufficient pool of credible suppliers to meet their needs. 126 Moreover, the majority of
       customers responding to the market investigation confirmed that they typically
       procure EP(D)M from a variety of suppliers, and, even though they have expressed
       that switching can be difficult given the need to qualify suppliers of EP(D)M, a large
122  Form CO, paragraphs 689-746.
123  Source: Notifying Party’s estimates.
124  Responses to questions 11, 12 and 13 of Q4 - Questionnaire for competitors and customers of Ethylene
     propylene terpolymer rubber (EPDM).
125  Responses to questions 11, 12 and 13 of Q4 - Questionnaire for competitors and customers of Ethylene
     propylene terpolymer rubber (EPDM).
126  Responses to questions 17, 18 and 19 of Q4 - Questionnaire for competitors and customers of Ethylene
     propylene terpolymer rubber (EPDM).
                                                     29
 ---pagebreak---         majority expressed that they had in fact switched suppliers over the last 3 years.127
        Lastly, the majority of respondents to the market investigation did not consider that
        the Transaction would have any negative impact on prices, quality, choice or
        innovation for the EEA market for EP(D)M (nor for EPDM separately) and no
        material concerns were raised regarding the Parties’ horizontal overlap for these
        products.128
(115) Regarding potential coordinated effects, while the three largest competitors (Saudi
        Aramco, ExxonMobil and ENI) appear to have similar market shares in the supply
        of EP(D)M in the EEA ([10-20]-[20-30]%), this market does not appear to be
        concentrated. The HHI for the market for EP(D)M in the EEA will indeed remain
        below 1650 post-Transaction and the market investigation confirmed that there are a
        number of smaller, but credible competitors outside these top three suppliers, such as
        DowDupont, Lion Chem Capital and Kumho. 129 Moreover, because SABIC only
        accounts for a share of [0-5]% of the market, the mere reduction in the number of
        firms in the market for EP(D)M in the EEA (through the loss of SABIC as a
        competitor) does not appear to be a factor that facilitates coordination. In light of
        these elements, as well as the evidence available to it, the Commission considers that
        the Transaction does not raise serious doubts as to its compatibility with the internal
        market in relation to potential coordinated effects in the market of EP(D)M in the
        EEA.130
(116)    In light of the above, taking account of the results of the market investigation and of
        all the evidence available to it, the Commission considers that the Transaction does
        not raise serious doubts as to its compatibility with the internal market in relation to
        the market for EP(D)M, regardless of whether the relevant product market is
        considered to be EP(D)M or EPDM.
    6.4. Polyethylene
    6.4.1. Market definition
(117) Polyethylene is a thermoplastic obtained through the polymerisation of ethylene,
        either alone or with a co-monomer, such as butene, hexene or propene. It is one of
        the most commonly used plastics; polyethylene resins are used in a wide array of
        applications, including films, coatings, packaging, bags, plastic pipes, bottles and
        various moulded plastic products. There are three main categories of polyethylene:
        high density polyethylene (“HDPE”), low density polyethylene (“LDPE”) and linear
        low density polyethylene (“LLDPE”).
127   Responses to questions 14, 15 and 16 of Q4 - Questionnaire for competitors and customers of Ethylene
      propylene terpolymer rubber (EPDM).
128   Responses to questions 20 and 21 of Q4 - Questionnaire for competitors and customers of Ethylene
      propylene terpolymer rubber (EPDM).
129   Responses to questions 11, 12 and 13 of Q4 - Questionnaire for competitors and customers of Ethylene
      propylene terpolymer rubber (EPDM).
130   For completeness, the Transaction would create a structural link between Saudi Aramco and
      ExxonMobil through the Kemya JV. However, as outlined in paragraph (61) in relation to butyl rubber,
      this structural link is not likely to increase the likelihood that Saudi Aramco and ExxonMobil can reach
      terms of coordination, as neither JV partner receives commercially sensitive information about the
      other. Moreover, ENI (the second largest player) is not a party to the JV.
                                                             30
 ---pagebreak--- (118) HDPE is manufactured by low pressure processes and is a stiff product with good
        chemical resistance and low permeability to gases and vapours due to its high
        density. It is mainly used in the manufacture of drain pipes, rigid containers (e.g.
        milk jugs, detergent bottles), toys and large blow mouldings (drums, automotive fuel
        tanks, large pipes).
(119) LDPE is manufactured by high pressure processes and is a more flexible product
        than HDPE, while still being crack resistant and having good water and gas
        resistance. It is used to produce more flexible plastic products, mainly films and
        coatings, as well as car bumpers, garden hoses and grocery bags.
(120) LLDPE was developed as a low-pressure manufacturing alternative to the high
        pressure LDPE process. It is stretchable and flexible, but is also resistant to high
        impact and puncture damage. LLDPE is principally used in film or packaging
        applications as well as in injection or roto-moulded articles, membranes and pipes.
        Within the LLDPE family, there are three main types depending on the co-monomer
        used in the manufacturing process: “C4 LLDPE”, which uses butene as co-
        monomer, “C6 LLDPE”, which uses hexene as co-monomer and “C8 LLDPE”,
        which uses octene as co-monomer.
    6.4.1.1. Product market definition
The Commission’s precedents
(121) The Commission has considered the market for polyethylene and its potential sub-
        segments in previous decisions.131 The Commission considered that HDPE
        constitutes a relevant market separate from LDPE and LLDPE in light of differences
        in the production methods, performance characteristics and end uses.132 The
        Commission has also found that C8 LLDPE forms part of a separate relevant product
        market from LDPE as well as from other types of LLDPE (i.e. from C4 and C6
        LLDPE).133 However, the Commission has left open whether there is a single
        relevant product market for LDPE, C4 LLDPE and C6 LLDPE, or whether LDPE
        forms part of a separate relevant product market from C4 LLDPE and C6 LLDPE
        (together).134
The Notifying Party’s view
(122) The Notifying Party considers that polyethylene could either be considered a single
        relevant product market or that it could be segmented between HDPE, LDPE and
        LLDPE.135
131   See case COMP/M.1671 - Dow Chemical/Union Carbicide, decision of 3.05.2000. See also cases
      COMP/M.2345 - Deutsche BP/ Erdölchemie, decision of 26.04.2001, COMP/M.2806 SABIC/DSM
      Petrochemicals, decision of 18.06.2002, COMP/M.4426 SABIC/Huntsman, decision of 20.12.2006,
      COMP/M.4744 INEOS/Borealis, decision of 24.08.2007, COMP/M.7465 - Arkema/Bostik , decision of
      28.01.2015.
132   See case COMP/M.1671 - Dow Chemical/Union Carbicide, decision of 3.05.2000 and case
      COMP/M.708 Exxon/DSM, decision of 15.10.1996.
133   See case COMP/M.1671 - Dow Chemical/Union Carbicide, decision of 3.05.2000.
134   See cases COMP/M.2345 - Deutsche BP/ Erdölchemie, decision of 26.04.2001, COMP/M.2806
      SABIC/DSM Petrochemicals, decision of 18.06.2002.
135   Form CO, paragraphs 143-145.
                                                     31
 ---pagebreak--- The Commission’s assessment
(123) The majority of respondents to the market investigation confirmed that polyethylene
        is not substitutable with other products in light of its product characteristics,
        explaining that for a number of applications polyethylene cannot be substituted with
        other materials without significant, costly and long-term changes to customers’
        production processes.136 The majority of respondents confirmed that HDPE has
        different characteristics from LDPE and LLDPE, and so cannot be used as a
        substitute to them. The majority of respondents further indicated that substitutability
        between LDPE and LLDPE is limited as their different properties (such as different
        levels of resistance to heat) make them more suitable for different end
        applications.137
(124) The results of the market investigation indicated that LLDPE could be further
        segmented between C4, C6 and C8 LLDPE, with the caveat that C4 LLDPE and C6
        LLDPE could be substitutable to an extent depending on the end use application. 138
        It was noted that there are price differences between the three products, that
        customers may need to change their processes for manufacturing the end products to
        switch between C4, C6 and C8 LLDPE, and that it is not straightforward for
        suppliers to switch production between them.
(125) In any event, the Commission considers that, for the purposes of this Decision, the
        exact scope of the product market definition for polyethylene can be left open, since
        the Transaction does not raise serious doubts as to its compatibility with the internal
        market, under any plausible product market definition.
    6.4.1.2. Geographic market definition
The Commission’s precedents
(126) In previous decisions, the Commission has considered the relevant geographic
        market for polyethylene and its potential sub-segments to be Western Europe or
        EEA-wide, and possibly global in scope. 139 However, the Commission ultimately
        left the geographic market for polyethylene and its potential sub-segments open.140
136   Responses to question 3 of Q5 - Questionnaire to competitors and customers of Polyethylene.
137   Responses to questions 4 and 5 of Q5 - Questionnaire to competitors and customers of Polyethylene.
      Additionally, the majority of respondents did not consider LDPE to be substitutable with C4, C6 or C8
      LLDPE - see responses to question 6.3 of Q5 - Questionnaire to competitors and customers of
      Polyethylene.
138   Responses to questions 6.1 and 6.2 of Q5 - Questionnaire to competitors and customers of
      Polyethylene.
139   See cases COMP/M.4744 - INEOS/Borealis, decision of 24.08.2007, COMP/M.7465 - Arkema/Bostik ,
      decision of 28.01.2015 and COMP/M.1671 - Dow Chemical/Union Carbicide, decision of 3.05.2000.
140   See cases COMP/M.4744 - INEOS/Borealis, decision of 24.08.2007, COMP/M.7465 - Arkema/Bostik ,
      decision of 28.01.2015 and COMP/M.1671 - Dow Chemical/Union Carbicide, decision of 3.05.2000.
                                                        32
 ---pagebreak--- The Notifying Party’s view
(127) The Notifying Party submits that the geographic market for polyethylene and its sub-
        segments is EEA-wide or global, noting that polyethylene is widely traded, that there
        are significant imports into Europe, and that there are limited barriers to trade. 141
The Commission’s assessment
(128) The market investigation indicated that the relevant geographic market for
        polyethylene (and its plausible sub-segments) is likely worldwide.142 Respondents
        pointed out that there are significant patterns of trade worldwide and that the same
        main suppliers are active worldwide. 143 Competitors explained that they can readily
        supply EEA customers from their production facilities based outside the EEA. 144
        Polyethylene customers confirmed that they can and do source polyethylene from
        suppliers based outside the EEA for use in their facilities within the EEA. 145 On the
        other hand, respondents identified that there are some barriers to trading worldwide,
        namely tariffs, transport costs and long-lead times, though they emphasised that
        trade flows remain global.146
(129) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the geographic market definition for polyethylene can
        be left open, since the Transaction does not raise serious doubts as to its
        compatibility with the internal market, under any plausible geographic market
        definition (EEA or worldwide).
    6.4.2. Competitive assessment
(130) Both Parties supply polyethylene (including HDPE, LDPE and C4, C6 and C8
        LLDPE) worldwide and in the EEA.
(131) At worldwide level, the Transaction does not give rise to any horizontally affected
        markets for polyethylene (or its plausible sub-segments).147
(132) In the EEA, the Transaction only gives rise to horizontally affected markets if the
        following plausible product markets: (i) the supply of C4 LLDPE, 148 (ii) the supply
        of C4 and C6 LLDPE, and (iii) the supply of LDPE, C4 and C6 LLDPE.
141   Form CO, paragraphs 146-149.
142   The market investigation strongly indicated that a market limited to Western Europe would not be
      appropriate for polyethylene or any of its sub-segments for the purposes of the present Decision, so it is
      not considered further in this Decision.
143   Responses to question 7 of Q5 - Questionnaire to competitors and customers of Polyethylene.
144   Responses to question 8 of Q5 - Questionnaire to competitors and customers of Polyethylene
145   Responses to question 9 of Q5 - Questionnaire to competitors and customers of Polyethylene.
146   Responses to question 10 of Q5 - Questionnaire to competitors and customers of Polyethylene.
147   For completeness, the Notifying Party estimates that the Parties’ combined worldwide market share in
      the supply of polyethylene was [5-10]% in 2018 (by volume) and that their combined market share
      would not exceed 20% under any plausible sub-segmentation at worldwide level. The Notifying Party
      also estimates that the Parties’ combined market share in the EEA would be [10-20]% for polyethylene,
      and would only exceed 20% in the sub-segmentations listed in the paragraph.
148   There is no affected market in relation to C6 LLDPE as the Parties’ market shares are only [5-10]% in
      the EEA in 2018.
                                                         33
 ---pagebreak---  ---pagebreak---         part of the relevant product market. The increment brought by Saudi Aramco is
        small ([0-5]% or less) and the HHI increment remains below 150. If the market is
        further segmented and only considered to be C4 LLDPE alone, the combined market
        share would amount to [30-40]%, the increment brought by Saudi Aramco would be
        [0-5]% and the HHI increment would be 256, in the context of a relatively
        fragmented market, where the HHI post-Transaction would remain below 2250.
(137) The results of the market investigation broadly confirmed that the Notifying Party’s
        market share estimates are reliable and, in particular, that Saudi Aramco is a
        relatively small supplier of C4 and C6 LLDPE, as well as LDPE, in the EEA. 150 The
        majority of respondents confirmed that, post-Transaction, there will remain a
        number of strong competitors in the market to constrain the combined entity, such as
        DowDuPont,151 ExxonMobil, INEOS, ENI and Total (as well as major global
        players such as Sinopec) and that customers will continue to have a sufficient choice
        of credible suppliers to meet their needs. 152 Moreover, the majority of customers
        responding to the market investigation confirmed that they typically procure C4 and
        C6 LLDPE, as well as LDPE, from multiple suppliers, can switch relatively easily
        and have switched supplier in the last 3 years. 153 The majority of respondents
        considered that it is relatively straightforward for an existing supplier to expand its
        sales of these products or to start selling them in a new country. 154 Finally, the
        majority of respondents to the market investigation did not consider that the
        Transaction would have any negative impact on prices, quality, choice or innovation
        for the EEA market for polyethylene (or its sub-segments) and no material concerns
        were raised regarding the Parties’ horizontal overlap in relation to polyethylene or
        these sub-segments thereof.155
(138) In light of the above, taking account of the results of the market investigation and of
        all the evidence available to it, the Commission considers that the Transaction does
        not raise serious doubts as to its compatibility with the internal market in relation to
        the market for polyethylene or its plausible sub-segments described above,
        regardless of whether the relevant geographic market is considered EEA-wide or
        worldwide, and of the product market definition adopted.
    6.5. Polypropylene resins (PP resins)
    6.5.1. Market definition
(139) Polypropylene resins (“PP resins”) are thermoplastic polymers obtained by
        polymerisation of propylene, either alone or with a co-monomer, such as ethylene.
        They are low-cost commodity products, used in high volumes. PP resins are tough,
        flexible, lightweight and heat resistant. They are used in plastic applications, which
150   Responses to questions 11, 13 and 14 of Q5 - Questionnaire to competitors and customers of
      Polyethylene.
151   As of June 1st , 2019, DowDuPont was separated into three independent companies (Dow, Dupont and
      Corteva). DowDuPont’s performance plastics division remained within Dow.
152   Responses to questions 12, 13 and 20 of Q5 - Questionnaire to competitors and customers of
      Polyethylene.
153   Responses to questions 16, 17 and 18 of Q5 - Questionnaire to competitors and customers of
      Polyethylene.
154   Responses to question 19 of Q5 - Questionnaire to competitors and customers of Polyethylene.
155   Responses to question 21 of Q5 - Questionnaire to competitors and customers of Polyethylene.
                                                       35
 ---pagebreak---         include reusable containers, stationery, laboratory materials and packaging, among
        others.
    6.5.1.1. Product market definition
The Commission’s precedents
(140) In previous decisions, the Commission has considered whether the market for PP
        resins should be segmented between (i) homopolymers, (ii) impact (block) co-
        polymers and (iii) random co-polymers, but it has always left the exact product
        market definition open.156
The Notifying Party’s view
(141) The Notifying Party submits that PP resins should be considered as a single relevant
        product market.157
The Commission’s assessment
(142) The majority of respondents to the market investigation indicated that PP resins
        overall are not substitutable with other products and that, within PP resins, each type
        (i.e. homopolymer, impact (block) co-polymers and random co-polymers) is not
        substitutable with one another or with other products given the special properties
        that each type confers to the end product. 158 Moreover, the majority of respondents
        indicated that no further sub-division of the three types of PP resins is necessary. 159
(143) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the product market definition for PP resins can be left
        open, since the Transaction does not raise serious doubts as to its compatibility with
        the internal market, under any plausible product market definition (i.e. an overall
        market for PP resins, or sub-segments for homopolymers, impact (block) co-
        polymers and random co-polymers).
    6.5.1.2. Geographic market definition
The Commission’s precedents
(144) The Commission has previously left open whether the geographic market for PP
        resins was Western Europe, EEA-wide or global.160
156   See cases COMP/M.8877 - LyondellBasell Industries/A Schulman, decision of 27.06.2018,
      COMP/M.4744 - Ineos/Borealis, decision of 24.08.2007, COMP/M.4426 - SABIC/Huntsman
      Petrochemicals UK, decision of 20.12.2006.
157   Form CO, paragraphs 373-374.
158   Responses to questions 3 and 4 of Q6 - Questionnaire to competitors and customers of Polypropylene
      resins.
159   Responses to question 5 of Q6 - Questionnaire to competitors and customers of Polypropylene resins.
160   See cases COMP/M.8877 - LyondellBasell Industries/A Schulman, decision of 27.06.2018,
      COMP/M.4744 - Ineos/Borealis, 24.08.2007, COMP/M.4426 - SABIC/Huntsman Petrochemicals UK,
      20.12.2006.
                                                        36
 ---pagebreak--- The Notifying Party’s view
(145) The Notifying Party submits that the geographic market for PP resins and its sub-
        segments is global or at least EEA-wide in scope, given the lack of trade barriers
        globally and in the EEA, the fact that PP resins are commodity products, and the fact
        that they can be easily transported for little cost (i.e. transport costs represent less
        than 5% of the product’s total cost).161
The Commission’s assessment
(146) The market investigation strongly indicated that the relevant geographic market for
        PP resins, as well as each of its sub-types, is likely worldwide or at least EEA-wide
        in scope.162 The majority of respondents indicated that within the EEA there existed
        no major barriers to trading PP resins.163 At worldwide level, the market
        investigation pointed to the existence of inter-regional product flows, which have
        been growing steadily for a number of years, customers’ willingness to source
        globally, and customer’s perception that suppliers located outside the EEA can
        credibly and competitively sell PP resins to customers in the EEA.164
(147) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the geographic market definition for PP resins can be
        left open between EEA and worldwide, since the Transaction does not raise serious
        doubts as to its compatibility with the internal market, under any plausible
        geographic market definition (EEA or worldwide).
    6.5.2. Competitive assessment
(148) Both Parties supply PP resins, including its three main types, worldwide, although
        Saudi Aramco is a much smaller supplier than SABIC. The markets for PP resins
        (generally), homopolymers, and random co-polymers are not affected at any
        plausible geographic level.165 In relation to PP resins, the Transaction only gives rise
        to a horizontally affected market in the supply of impact (block) co-polymers in the
        EEA. The Transaction does not gives rise to an affected market for impact (block)
        co-polymers at worldwide level.
161   Form CO, paragraphs 377-378.
162   The market investigation strongly indicated that a market limited to Western Europe would not be
      appropriate for PP resins or any of its sub-segments for the purposes of the present Decision, so it is not
      considered further in this Decision.
163   Responses Responses to question 10 of Q6 - Questionnaire to competitors and customers of
      Polypropylene resins.
164   Responses to questions 7 and 9 of Q6 - Questionnaire to competitors and customers of Polypropylene
      resins.
165   The Parties’ combined market shares are, in PP resins (generally), [5-10]% at worldwide level and [10-
      20]% in the EEA; in homopolymers, [5-10]% at worldwide level and [5-10]% in the EEA; and in
      random co-polymers, without increment as Saudi Aramco is not active in the supply of random co -
      polymers.
                                                         37
 ---pagebreak---  ---pagebreak---         remain a number of strong competitors in the market to compete with the combined
        entity, such as Borealis, INEOS, Total or LyondellBasell, and that customers will
        continue to have a sufficient choice of credible suppliers to meet their needs.169
        Indeed, a customer explained that “all competitors have a wide and excellent
        product range, covering many application as well as a good global footprint. All run
        world scale plants and are economically able to compete easily against
        SABIC/Saudi Aramco”.170 Moreover, the majority of customers responding to the
        market investigation indicated that they typically procure impact (block) co-
        polymers from multiple suppliers, can switch with relative ease and have in fact
        switched suppliers in the last 3 years.171 Finally, the majority of respondents to the
        market investigation did not consider that the Transaction would have any negative
        impact on prices, quality, choice or innovation in the EEA market for impact (block)
        co-polymers and no material concerns were raised regarding this horizontally
        affected market.172
(153) In light of the above, taking account of the results of the market investigation and of
        all the evidence available to it, the Commission considers that the Transaction does
        not raise serious doubts as to its compatibility with the internal market in relation to
        the market for PP resins, regardless of whether the market is considered EEA-wide
        or worldwide or segmented by type of resin (i.e. homopolymers, impact (block) co-
        polymers, and random co-polymers).
    6.6. Ethanolamines (“EOAs”)
    6.6.1. Market definition
(154) EOAs are colourless and viscous liquids, with an ammoniac smell. By controlling
        production parameters, manufacturers are able to obtain three main types of EOAs,
        namely mono-ethanolamine (“MEA”), di-ethanolamine (“DEA”) and tri-
        ethanolamine (“TEA”). EOAs are produced from ethylene oxide and ammonia.
(155) MEA, DEA and TEA have applications in the production of lubricants, detergents,
        agricultural products, cement, and household and personal care products. They are
        also used as surfactants feedstock and as metal-working fluids.
(156) In particular, DEA is used in the production of glyphosate herbicide, in the personal
        care and detergent industries and in the production of synthetic metalworking fluids.
        DEA also has applications in the removal of acid gases from refinery streams. More
        recently, DEA has been used as a raw material for the production of diethanol
        isopropanolamine, a chemical product used as a cement grinding additive.
169   Responses to questions 13, and 20 of Q6 - Questionnaire to competitors and customers of
      Polypropylene resins.
170   Response to question 15.1 of Q6 - Questionnaire to competitors and customers of Polypropylene resins.
171   Responses to questions 16, 17 and 18 of Q6 - Questionnaire to competitors and customers of
      Polypropylene resins.
172   Responses to questions 21 and 22 of Q6 - Questionnaire to competitors and customers of
      Polypropylene resins.
                                                       39
 ---pagebreak---     6.6.1.1. Product market definition
The Commission’s precedents
(157) The Commission has in the past considered the market for EOAs and its potential
        sub-segments.173 While acknowledging that MEA, DEA and TEA are used in
        different applications for which they are not substitutable, the Commission also
        noted that these three products might be substitutable to some extent when used as
        solvents. On the supply-side, the Commission noted that these three products are
        invariably produced together within the same production facilities, while pointing
        out that switching production between MEA, DEA and TEA can be difficult. The
        Commission ultimately left open whether EOAs constitutes a single product market
        or it should be further sub-segmented between MEA, DEA and TEA.
The Notifying Party’s view
(158) The Notifying Party does not disagree with the Commission’s precedents, but
        considers that for the purposes of the present Decision, the exact product market
        definition can be left open.174
The Commission’s assessment
(159) The majority of respondents to the market investigation confirmed that EOAs are not
        substitutable with other products, explaining that EOAs are used in specific
        applications for which no substitute is available. 175 Further, respondents indicated
        that the different types of EOA (i.e. MEA, DEA and TEA) are generally not
        substitutable with each other from a customer perspective in light of their different
        properties, noting, however, that some applications might allow switching between
        these three products, though sometimes requiring different dosage to deliver the
        same outcome.176 The majority of respondents confirmed that no further
        segmentation is necessary beyond the segmentation between different types of EOA
        (i.e. MEA, DEA and TEA).177
(160) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the product market definition for EOAs can be left
        open, since the Transaction does not raise serious doubts as to its compatibility with
        the internal market, under any plausible product market definition (i.e. as an overall
        EOAs market or segmented between MEA, DEA and TEA).
    6.6.1.2. Geographic market definition
The Commission’s precedents
(161) In the past, the Commission has considered the relevant geographic market for
        EOAs and its potential sub-segments to be at least EEA-wide, and possibly global in
        scope.178 However, while acknowledging that many arguments tend to support the
173   See case COMP/M.4005 - Ineos/Innovene, decision of 09.12.2005.
174   Form CO, paragraphs 817-818.
175   Responses to question 3 of Q3 - Questionnaire to competitors and customers of Di-ethanolamine.
176   Responses to question 4 of Q3 - Questionnaire to competitors and customers of Di-ethanolamine.
177   Responses to question 5 of Q3 - Questionnaire to competitors and customers of Di-ethanolamine.
178   See case COMP/M.4005 - Ineos/Innovene, decision of 09.12.2005.
                                                        40
 ---pagebreak---         global dimension of the EOAs market, the Commission ultimately left the
        geographic market for EOAs and its potential sub-segments open.
 The Notifying Party’s view
(162) The Notifying Party does not disagree with the Commission’s precedents, but
        considers that for the purposes of the present Decision, the exact geographic market
        definition can be left open.179
 The Commission’s assessment
(163) The market investigation indicated that the relevant geographic market for all types
        of EOAs is likely worldwide. As regards DEA specifically (as the only plausible
        EOA product market in which there is an affected market), respondents generally
        considered the market for DEA to be worldwide, pointing to significant trade flows
        globally.180 Customers responding to the market investigation confirmed that they
        can and do source DEA from suppliers based outside the EEA for use in their
        facilities within the EEA.181 A majority of respondents considered that there are no
        barriers to trading DEA at worldwide level, though some respondents identified that
        there are some logistic barriers, as well as obstacles, such as the availability and
        costs of inputs, that would not allow a potential manufacturer to supply DEA
        worldwide from any location.182
(164) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the geographic market definition for EOAs can be left
        open, since the Transaction does not raise serious doubts as to its compatibility with
        the internal market, under any plausible geographic market definition (EEA-wide or
        worldwide).
    6.6.2. Competitive assessment
(165) At worldwide level, the Transaction does not give rise to any affected market,
        regardless of whether EOAs are considered as a single relevant market, or split
        between MEA, DEA and TEA.183
(166) At EEA level, the Transaction only gives rise to an affected market if the relevant
        product market is considered to be DEA. 184
179   Form CO, paragraphs 819-822.
180   Responses to question 6 of Q3 - Questionnaire to competitors and customers of Di-ethanolamine.
181   Responses to question 8 of Q3 - Questionnaire to competitors and customers of Di-ethanolamine.
182   Responses to questions 9.1.2 of Q3 - Questionnaire to competitors and customers of Di-ethanolamine.
183   The Parties’ (2018 volume) market share in EOAs at worldwide level was [10-20]%, with an increment
      of [5-10]% from SABIC. If EOAs are sub-segmented, the Parties would have a combined market share
      of [10-20]% in MEA (with a [0-5]% increment from SABIC), of [10-20]% in DEA (with a [5-10]%
      increment from Saudi Aramco) and [10-20]% in TEA (with a [0-5]% increment from SABIC).
184   At EEA level, the Parties’ (2018 volume) market share in EOAs was [10-20]% (with an [5-10]%
      increment from SABIC), in MEA it is [10-20]% (with a [5-10]% increment from SABIC) and in TEA it
      is [10-20]% (with a [5-10]% increment from Saudi Aramco).
                                                        41
 ---pagebreak---  ---pagebreak---         continue to have a sufficient choice of credible suppliers to meet their needs in the
        EEA.188 Moreover, the majority of customers responding to the market investigation
        confirmed that they typically procure DEA from multiple suppliers, can switch fairly
        easily and have switched supplier in the last 3 years. 189 The majority of respondents
        considered that it is was relatively straightforward for an existing supplier to expand
        its sales of DEA in the EEA.190 Finally, the majority of respondents to the market
        investigation did not consider that the Transaction would have any negative impact
        on prices, quality, choice or innovation for the EEA market for DEA and no material
        concerns were raised regarding the Parties’ horizontal overlap in DEA at EEA level.
(172) In light of the above, taking account of the results of the market investigation and of
        all the evidence available to it, the Commission considers that the Transaction does
        not raise serious doubts as to its compatibility with the internal market in relation to
        the market for EOAs, regardless of whether the market is considered EEA-wide or
        worldwide or if the product market is considered to be an overall EOAs market or
        sub-segmented between MEA, DEA and TEA.
    6.7. Pygas
    6.7.1. Market definition
(173) Pygas (or pyrolysis gasoline) is a high octane mixture of aromatics, olefins and other
        hydrocarbons. It is a by-product of the production of ethylene and propylene and is
        used in the production of benzene and toluene.
    6.7.1.1. Product market definition
The Commission’s precedents
(174) In previous decisions, the Commission has considered whether there is a distinct
        market for pygas (overall), or if there are separate markets for (i) untreated pygas,
        which is a very reactive material produced in the cracker by distillation, and (ii)
        treated pygas, which is treated with hydrogen to increase stability. Ultimately, the
        Commission left this question open. 191
The Notifying Party’s view
(175) The Notifying Party notes that untreated pygas has high reactivity and low stability
        and, as a result, it is rarely sold to third parties, and is instead converted by the same
        producer into treated pygas.192 However, the Notifying Party does not disagree with
        the Commission’s precedents and submits that for the purposes of the present
        Decision the product market definition can be left open.
188   Responses to question 19 of Q3 - Questionnaire to competitors and customers of Di-ethanolamine.
189   Responses to questions 15, 16 and 17 of Q3 - Questionnaire to competitors and customers of Di-
      ethanolamine.
190   Responses to question 18 of Q3 - Questionnaire to competitors and customers of Di-ethanolamine.
191   See case COMP/M.4426 - SABIC/Huntsman Petrochemicals, decision of 20.12.2006. See also cases
      COMP/M.4734 - Ineos/Kerling, decision of 30.01.2008, COMP/M.4744 - Ineos/Borealis, decision of
      24.08.2007, COMP/M.4401 - Basell/Münchsmünster Cracker and Associated Assets, decision of
      21.12.2006, and COMP/M.4041, Basell / Craqueur de l’Aubette, decision of 22.12.2005.
192   Form CO, paragraphs 983-985.
                                                       43
 ---pagebreak--- The Commission’s assessment
(176) The majority of respondents to the market investigation confirmed that pygas is not
        generally substitutable with other products, though some respondents pointed out
        that for particular applications there may be a degree of substitutability with other
        chemical products (for example, toluene might be used as a gasoline blending
        component in place of pygas).193 Respondents to the market investigation generally
        considered that treated and untreated pygas are substitutable, though some pointed
        out that treated and untreated pygas have different product qualities and that
        untreated pygas is usually processed into treated pygas on-site, rather than being sold
        on the merchant market.194
(177) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the product market definition for pygas can be left open,
        since the Transaction does not raise serious doubts as to its compatibility with the
        internal market, under any plausible product market definition (i.e. pygas overall, or
        segmented between treated pygas and untreated pygas).
    6.7.1.2. Geographic market definition
The Commission’s precedents
(178) In previous decisions, the Commission has considered the relevant geographic
        market for pygas and its potential sub-segments to be Western Europe or EEA-
        wide.195 However, the Commission ultimately left the geographic market for pygas
        and its potential sub-segments open.
The Notifying Party’s view
(179) The Notifying Party submits that the relevant geographic market for pygas is global
        or at least EEA-wide in scope.196 It submits that pygas is a commodity product and
        that there are no barriers to trading pygas globally or within the EEA. It notes that
        Saudi Aramco supplies pygas on a global basis.
The Commission’s assessment
(180) Respondents to the market investigation considered the relevant geographic market
        for pygas to be at least EEA-wide, if not global, confirming that are there no material
        barriers to trading within the EEA or worldwide.197 Respondents noted that REACH
        authorisation may be required to supply pygas in the EEA, but did not consider this
        to be a material barrier to trading. Customers responding to the market investigation
193   Responses to question 3 of Q9 - Questionnaire to competitors and customers of Pygas.
194   Responses to question 4 of Q9 - Questionnaire to competitors and customers of Pygas.
195   See case COMP/M.4426 - SABIC/Huntsman Petrochemicals, decision of 20.12.2006. See also cases
      COMP/M.4734 - Ineos/Kerling, decision of 30.01.2008, COMP/M.4744 - Ineos/Borealis, decision of
      24.08.2007, COMP/M.4401 - Basell/Münchsmünster Cracker and Associated Assets, decision of
      21.12.2006, and COMP/M.4041, Basell / Craqueur de l’Aubette, decision of 22.12.2005.
196   Form CO, paragraphs 986-988.
197   Responses to questions 6 and 9 of Q9 - Questionnaire to competitors and customers of Pygas. The
      market investigation strongly indicated that a market limited to Western Europe would not be
      appropriate for pygas or any of its sub-segments for the purposes of the present Decision, so it is not
      considered further in this Decision.
                                                        44
 ---pagebreak---  ---pagebreak--- The Notifying Party’s view
(185) As shown in Table 10 above, there is no affected market in relation to pygas in 2018.
      As regards 2017, the Notifying Party submits that the Parties’ combined shares are
      modest (less than [20-30]%), that Saudi Aramco is not a supplier of pygas and only
      exceptionally made small sales in 2017, and that the combined entity will continue
      to face competition from a number of competitors in the EEA and worldwide,
      including LyondellBasell, DowDupont, ExxonMobil, Total and ENI.202 Moreover, it
      submits that barriers to entry are low and that customers are large manufacturers
      with significant buyer power and the ability to easily switch between suppliers.
      Therefore, the Notifying Party submits that the Transaction will not significantly
      impede effective competition in relation to the horizontally affected market for
      pygas in the EEA.
The Commission’s assessment
(186) As outlined in paragraph (183) above, the Transaction would only give rise to
      horizontally affected markets in the supply of pygas in the EEA on the basis of Saudi
      Aramco’s exceptional sales in 2017.
(187) The Notifying Party estimates that the Parties’ combined market share in the supply
      of pygas in the EEA was [20-30]% in 2017. The increment brought by Saudi
      Aramco is small ([0-5]%) and the HHI increment remains below 150.
(188) The results of the market investigation broadly confirmed that the Notifying Party’s
      market share estimates are reliable and, in particular, that Saudi Aramco is a
      negligible supplier of pygas in the EEA. 203 The majority of respondents confirmed
      that, post-Transaction, there will remain a number of strong competitors on the
      market to constrain the combined entity, such as LyondellBasell, Dow, BASF,
      INEOS and Total and that customers will continue to have a sufficient choice of
      credible suppliers to meet their needs. 204 The respondents did not consider SABIC
      and Saudi Aramco to be close competitors for the supply of pygas. 205 Moreover, the
      majority of customers responding to the market investigation confirmed that they
      typically procure pygas from multiple suppliers, can switch relatively easily and
      have switched suppliers in the last 3 years.206 The majority of respondents
      considered that it is relatively straightforward for an existing supplier to expand its
      sales of pygas or begin selling in a new country. 207 Finally, the majority of
      respondents to the market investigation did not consider that the Transaction would
      have any negative impact on prices, quality, choice or innovation for the EEA-wide
      market for pygas (or its sub-segments) and no material concerns were raised
      regarding pygas.208
202  Form CO, paragraphs 993-1012.
203  Responses to questions 13 and 14 of Q9 - Questionnaire to competitors and customers of Pygas.
204  Responses to questions 10, 11, 12 and 19 of Q9 - Questionnaire to competitors and customers of Pygas.
205  Responses to question 14 of Q9 - Questionnaire to competitors and customers of Pygas.
206  Responses to questions 15 and 16 of Q9 - Questionnaire to competitors and customers of Pygas.
207  Responses to question 18 of Q9 - Questionnaire to competitors and customers of Pygas.
208  Responses to question 20 of Q9 - Questionnaire to competitors and customers of Pygas.
                                                       46
 ---pagebreak--- (189) In light of the above, taking account of the results of the market investigation and of
        all the evidence available to it, the Commission considers that the Transaction does
        not raise serious doubts as to its compatibility with the internal market in relation to
        the market for pygas, regardless of whether the market is considered EEA-wide or
        worldwide or segmented between treated and untreated pygas.
    6.8. Tailgas
    6.8.1. Market definition
(190) Tailgas is a flammable gas mixture containing combustible components as well as
        sulphur components. It is produced as a by-product from the cracking of various
        feedstocks, such as LPG, naphta and natural gas liquids, and from the processing of
        crude oil. Tailgas can be used to start the furnaces of crackers or burned in an
        incineration unit. Tailgas can also be called “refinery fuelgas”.209
    6.8.1.1. Product market definition
The Commission’s precedents
(191) The Commission has not previously considered the market definition for the
        production and sale of tailgas.
The Notifying Party’s view
(192) The Notifying Party considers that tailgas could be considered as a separate relevant
        product market, but submits that, for the purposes of the case at hand, the exact
        product market definition can be left open as the Transaction would not lead to
        competitive concerns regardless of the precise market definition. 210
The Commission’s assessment
(193) The results of the market investigation were not conclusive as to whether tailgas is
        substitutable with other products.211 However, the responses to the market
        investigation indicated that there are no further subcategories of tailgas, 212 and that
        consequently tailgas requires no further sub-segmentation.
(194) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the product market definition for tailgas can be left
        open, since the Transaction does not raise serious doubts as to its compatibility with
        the internal market, under any plausible product market definition.
    6.8.1.2. Geographic market definition
The Commission’s precedents
(195) The Commission has not previously considered the geographic market definition for
        the production and sale of tailgas.
209   Email to the case team from a market participant dated 7 February 2020.
210   Form CO, paragraphs 960-961.
211   Responses to question 3 of Q8 - Questionnaire to competitors and customers of Tailgas.
212   Responses to question 4 of Q8 - Questionnaire to competitors and customers of Tailgas.
                                                        47
 ---pagebreak--- The Notifying Party’s view
(196) The Notifying Party considers that the geographic market is global or at least EEA-
        wide in scope, because there are no barriers to trading tailgas globally and especially
        within the EEA.213 The Notifying Party considers, however, that for the case at hand,
        the exact scope of the geographic market definition can be left open as the
        Transaction will not lead to competitive concerns regardless of the precise market
        definition.
The Commission’s assessment
(197) The results of the market investigation were somewhat inconclusive, but indicate
        that the geographic market for tailgas may be national, as wide as the relevant
        pipeline network, or EEA-wide. A market participant explained that gas streams
        require a pipeline network, which is typically national or regional. 214 According to
        this respondent, there are technical barriers to purchasing or selling tailgas at
        competitive terms at a worldwide level, because tailgas is transported via a gas
        stream and cannot be easily shipped.215 In addition, the market investigation
        indicated that tailgas customers located in the EEA source from within the EEA and
        that only plants in the EEA can credibly supply tailgas customers located in the
        EEA.216
(198) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the geographic market definition for tailgas can be left
        open, since the Transaction does not raise serious doubts as to its compatibility with
        the internal market, under any plausible geographic market definition (national, as
        wide as the relevant pipeline network, EEA-wide, or even worldwide).
    6.8.2. Competitive assessment
(199) While SABIC only sells tailgas in the EEA, all of Saudi Aramco’s sales were
        achieved outside the EEA, namely in the United States. Consequently, the Parties’
        activities do not overlap when looking at the tailgas market within the EEA (at
        national or EEA level). The Parties would only overlap horizontally in the supply of
        tailgas to the extent that the market is considered worldwide. Although the market
        investigation suggested the relevant geographic market would likely be narrower
        than worldwide, as the results were somewhat inconclusive, this potential horizontal
        overlap on a worldwide market is assessed below for completeness.
(200) The Notifying Party does not provide market shares estimates for tailgas at
        worldwide level on the grounds that there is no reliable data regarding the total sales
        of tailgas worldwide. However, the Notifying Party provided the value of the sales
        generated by the Parties in 2018 for tailgas worldwide, which amounted to EUR […]
        for SABIC (exclusively in the EEA) and EUR […] for Saudi Aramco (exclusively in
        the United States).
213   Form CO, paragraphs 962-963.
214   Response to question 5 of Q8 - Questionnaire to competitors and customers of Tailgas.
215   Response to question 8 of Q8 - Questionnaire to competitors and customers of Tailgas.
216   Response to questions 6-7 of Q8 - Questionnaire to competitors and customers of Tailgas.
                                                       48
 ---pagebreak---   The Notifying Party’s view
  (201) The Notifying Party submits that the Parties’ sales of tailgas are modest, and that
          they do not overlap in the EEA, since Saudi Aramco’s sales were generated only in
          the United States.217
  The Commission’s assessment
(202)     The market investigation did not provide sufficient information to enable the
          Commission to reconstruct the total market size or the Parties’ market shares for
          tailgas worldwide, which is the only geographic market definition on which the
          Parties overlap.218
(203)     However, the market investigation indicated that the merchant market for tailgas is
          limited.219 Market respondents explained that tailgas is produced by refineries as a
          by-product, typically for internal consumption (i.e. captive use).220
(204)     In addition, the market investigation indicated that, while entry and expansion for
          tailgas is rather difficult, because the production of tailgas requires a refinery, 221
          sufficient credible suppliers will remain in the market post-Transaction, both in the
          EEA and at worldwide level.222
(205)     No market respondent expects the Transaction to have a negative competitive impact
          in terms of price, quality, choice, or innovation on the tailgas market, be it EEA-
          wide (or narrower) or worldwide.223
(206)     In light of the above, taking account of the results of the market investigation and of
          all the evidence available to it, the Commission considers that the Transaction does
          not raise serious doubts as to its compatibility with the internal market in relation to
          the market for tailgas, regardless of whether the market is considered as national, as
          wide as the available pipeline network, EEA-wide or worldwide.
      6.9. Raffinate-2
      6.9.1. Market definition
  (207) Raffinate-2 is a colourless, highly flammable gas obtained as a by-product of the
          separation of isobutylene from raffinate-1. It consists of n-butene, butane and
          potentially residual butadiene. Raffinate-2 is mainly used for the manufacture of
          secondary butyl alcohol and methyl ethyl ketone. It also used as a heating gas in
          industrial facilities.
  217   Form CO, paragraphs 964-966.
  218   Responses to question 9 of Q8 - Questionnaire to competitors and customers of Tailgas.
  219   Responses to question 3.1 of Q8 - Questionnaire to competitors and customers of Tailgas.
  220   Responses to question 17 of Q8 - Questionnaire to competitors and customers of Tailgas. Email to the
        case team from a market participant dated 7 February 2020.
  221   Responses to question 17 of Q8 - Questionnaire to competitors and customers of Tailgas
  222   Responses to question 18 of Q8 - Questionnaire to competitors and customers of Tailgas.
  223   Responses to question 18 of Q8 - Questionnaire to competitors and customers of Tailgas
                                                          49
 ---pagebreak---     6.9.1.1. Product market definition
The Commission’s precedents
(208) The Commission has not previously considered the product market definition for the
        production and sale of raffinate-2.
The Notifying Party’s view
(209) The Notifying Party submits that raffinate-2 should be considered as a separate
        relevant product market.224
 The Commission’s assessment
(210) The majority of respondents to the market investigation indicated that raffinate-2 is
        not substitutable with other products, and in particular it is not substitutable with its
        precursors in the naphtha cracking process (namely, crude C4 and raffinate-1).225
        The vast majority of respondents also confirmed that no further segmentation of
        raffinate-2 is necessary.226
(211) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the product market definition for raffinate-2 can be left
        open, since the Transaction does not raise serious doubts as to its compatibility with
        the internal market, under any plausible product market definition.
6.9.1.2. Geographic market definition
The Commission’s precedents
(212) The Commission has not previously considered the geographic market definition for
        the production and sale of raffinate-2.
The Notifying Party’s view
(213) The Notifying Party submits that the geographic market for raffinate-2 is global or at
        least EEA-wide in scope.227 The Notifying Party argues that the absence of trade
        barriers globally and especially within the EEA is the main reason why the
        geographic market for raffinate-2 should be considered to be global or at least EEA-
        wide in scope.
The Commission’s assessment
(214) The market investigation indicated that the relevant geographic market for raffinate-
        2 is likely EEA-wide, or potentially worldwide. Most respondents consider the
        market for raffinate-2 to be EEA-wide, pointing to significant limitations to the
        transportation of the product, such as logistics and high transport costs due to the
        fact that raffinate-2 is a flammable gas that needs to be liquefied in order to be
224   Form CO, paragraphs 560-561.
225   Responses to question 3 of Q7 - Questionnaire to competitors and customers of Raffinate-2.
226   Responses to question 4 of Q7 - Questionnaire to competitors and customers of Raffinate-2.
227   Form CO, paragraphs 562-563.
                                                        50
 ---pagebreak---         transported.228 However, some customers indicated that some international trade
        flows exist between Europe and the USA.229
(215) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the geographic market definition for raffinate-2 can be
        left open, since the Transaction does not raise serious doubts as to its compatibility
        with the internal market, under any plausible geographic market definition (EEA-
        wide or worldwide).
    6.9.2. Competitive assessment
(216) SABIC only supplies raffinate-2 within the EEA. On the other hand, Saudi Aramco
        supplies raffinate-2 both within the EEA and worldwide. However, 99% of Saudi
        Aramco’s sales were achieved in North America and Asia (i.e. outside the EEA).
(217) The Notifying Party did not provide market shares estimate for raffinate-2 on the
        grounds that there is no reliable data regarding the size of the market in the EEA and
        worldwide. However, the Notifying Party provided the value of the sales of
        raffinate-2 generated by the Parties in 2018, which amounted to EUR […]for SABIC
        (exclusively in the EEA) and EUR […]for Saudi Aramco (out of which EUR
        […]was generated in the EEA).
The Notifying Party’s view
(218) The Notifying Party claims that the Parties are not close competitors. This is mainly
        because they operate in different geographic areas, with SABIC being only present
        in the EEA, and Saudi Aramco only making around 1% of its sales of raffinate-2 in
        the EEA. Moreover the Notifying Party claims that SABIC’s sales in the EEA were
        made essentially to one customer.
The Commission’s assessment
(219) Using the sales figures provided by the Notifying Party and other market participants
        in response to the market investigation, the Commission was able to partially
        reconstruct the market, thus yielding some conservative estimates for the Parties’
        market shares.230
(220) At EEA level, the data gathered allowed the Commission to establish that the market
        for raffinate-2 would not be affected by the Transaction. The Parties’ combined
        market shares will remain below 20%, with a negligible increment of less than [0-
        5]% from SABIC and a HHI increment below 150.
(221) At worldwide level, the data gathered by the Commission did not suffice to confirm
        that raffinate-2 would not be a horizontally affected market. However, most
        respondents indicated that there are over 20 credible suppliers of raffinate-2
        worldwide.231 When asked to list the top five suppliers for raffinate-2 worldwide,
        none of the respondents mentioned Saudi Aramco, and only one mentioned SABIC,
228   Responses to questions 5 and 8 of Q7 - Questionnaire to competitors and customers of Raffinate-2.
229   Responses to question 6 of Q7 - Questionnaire to competitors and customers of Raffinate-2.
230   Responses to question 9 of Q7 - Questionnaire to competitors and customers of Raffinate-2.
231   Responses to question 10 of Q7 - Questionnaire to competitors and customers of Raffinate-2.
                                                        51
 ---pagebreak---         ranking it as number four supplier worldwide. 232 None of the respondents identified
        the Parties as close competitors.233 A majority of respondents confirmed that
        customers will continue to have a sufficient choice of credible suppliers to meet their
        needs.234 Finally, all respondents to the market investigation consider that the
        Transaction would not have any negative impact on prices, quality, choice or
        innovation in the worldwide market for raffinate-2 and no material concerns were
        raised regarding the Parties’ horizontal overlap in raffinate-2.235
(222) In light of the above, taking account of the results of the market investigation and of
        all the evidence available to it, the Commission considers that the Transaction does
        not raise serious doubts as to its compatibility with the internal market in relation to
        the market for raffinate-2, regardless of whether the market is considered EEA-wide
        or worldwide.
    6.10.        Polybutadiene rubber (PBR)
    6.10.1. Market definition
(223) PBR is an elastomer derived from the polymerisation of butadiene through a solution
        process. The tyre industry accounts for the majority of global PBR consumption.
        PBR is also used as an additive to improve the toughness of plastics such as
        polystyrene, in addition to other minor uses. Both Parties are active in the production
        and sale of PBR, primarily for the tyre application.
6.10.1.1.        Product market definition
The Commission’s precedents
(224) In Bayer/Hüls, the Commission identified a separate product market for PBR. 236
        This distinction was reasserted in Wacker/Air products. The Commission has
        previously also found that synthetic latex products should not be further divided into
        submarkets according to the grade qualities of the latex dispersions. 237
The Notifying Party’s view
(225) The Notifying Party agrees with the Commission’s precedents that PBR forms a
        separate product market.238
The Commission’s assessment
(226) The vast majority of respondents to the market investigation confirmed that PBR is
        not substitutable with other products. Respondents explained that even though some
        degree of substitutability might be attainable in certain applications, for the majority
232   Responses to question 11 of Q7 - Questionnaire to competitors and customers of Raffinate-2.
233   Responses to question 13 of Q7 - Questionnaire to competitors and customers of Raffinate-2.
234   Responses to question 18 of Q7 - Questionnaire to competitors and customers of Raffinate-2.
235   Responses to question 21 of Q7 - Questionnaire to competitors and customers of Raffinate-2.
236   See case IV/M.751 - Bayer/Hüls, decision of 03.07.1996 and case IV/M.1097 - Wacker/Air products,
      decision of 04.08.1998.
237   See cases M.5355 - BASF/CIBA, decision of 12.03.2009; M.5424 - Dow/Rohm and Haas, decision of
      08.01.2009; and M.1993 - Rhodia/Raisio/JV, decision of 20.07.2000.
238   Form CO, paragraphs 497-498
                                                       52
 ---pagebreak---         of applications, and in particular for its main application in tyre manufacturing, PBR
        is not substitutable with other products. 239 The majority of respondents indicated that
        no further segmentation is necessary. 240 While some respondents acknowledge that
        PBR exists in different grades, and can be produced using different types of catalysts
        for the polymerisation process, they also consider that these sub-types are usually
        substitutable with each other and price differences are minimal, so that these
        products should be considered as part of the same market. 241
(227) The Commission considers that, for the purposes of the present Decision, and in line
        with previous Commission decisions, PBR can be considered to form a single
        relevant product market.
6.10.1.2.        Geographic market definition
The Commission’s precedents
(228) The Commission has previously considered the relevant geographic market for all
        types of synthetic latex products (including PBR) to be EEA-wide.242 In particular,
        the Commission pointed to differences in price levels between regions and the fact
        that the flow of supply between continents was not significant.
The Notifying Party’s view
(229) The Notifying Party argues that the relevant geographic market for PBR is global or
        at least EEA-wide in scope.243 The Notifying Party submits that each major PBR
        manufacturer has a global presence and that this is also true of the major PBR
        customers, which are global tyre manufacturers with worldwide presence. The
        Notifying Party further explains that there are significant trade flows across regions,
        the top PBR manufacturers being located in the US, the EEA, South Korea, Russia
        and Japan. In addition, the Notifying Party claims that production costs are roughly
        comparable between various worldwide production facilities and that neither
        transportation costs, nor import duties constitute significant barriers to trading PBR
        across regions.
The Commission’s assessment
(230) The market investigation indicated that the relevant geographic market for PBR is
        likely worldwide or at least EEA-wide. Respondents generally considered the market
        for PBR to be worldwide, pointing to significant patterns of trade worldwide, such as
        exports from the EEA to Asia and America, as well as imports from China into the
        EEA and the USA, and the fact that PBR is a commodity product. 244 Customers
239   Responses to question 33 of Q1 - Questionnaire to competitors and customers of Butyl rubber and
      Polybutadiene rubber.
240   Responses to question 34 of Q1 - Questionnaire to competitors and customers of Butyl rubber and
      Polybutadiene rubber
241   Responses to question 34 of Q1 - Questionnaire to competitors and customers of Butyl rubber and
      Polybutadiene rubber.
242   See case case IV/M.751 - Bayer/Hüls, decision of 03.07.1996   and case IV/M.1097 - Wacker/Air
      products, decision of 04.08.1998.
243   Form CO, paragraphs 499-503.
244   Responses to question 35 of Q1 - Questionnaire to competitors and customers of Butyl rubber and
      Polybutadiene rubber.
                                                    53
 ---pagebreak---  ---pagebreak--- (234) The Transaction does not give rise to an affected market for PBR at worldwide or
       EEA levels on the basis of the most recently available market shares (i.e. 2018
       figures).248 However, given that the Parties’ market shares appear to be close to the
       20% threshold for a market to be considered as horizontally affected, the
       Commission has assessed this overlap on a conservative basis.
       The Notifying Party’s view
(235) According to the Notifying Party’s estimates, in the EEA the Parties had a
       combined market share of [10-20]%in volume in 2018, with a limited increment of
       [0-5]% from SABIC and a HHI increment of <150. 249 The Notifying Party submits
       that, on this market, the combined entity would continue to face competition from a
       number of strong competitors, such as NKNK ([10-20]%) and ENI ([5-10]%), as
       well as other smaller players. The Notifying Party also submits that the Parties’
       largest customers are global tyre manufacturers, with significant countervailing
       buying power, and the ability to easily switch between suppliers and procure PBR
       from suppliers located in other regions. Finally, the Notifying Party considers that,
       while Saudi Aramco is a well-established global supplier of PBR, SABIC is a new
       entrant on this market and is a fringe supplier, lacking the production and
       distribution scale of its larger competitors. However, the Notifying Party adds that
       SABIC is not a maverick entrant that could disrupt the segment, given that PBR is a
       commodity product and that SABIC’s product and production methods are the same
       as those of its competitors.
The Commission’s assessment
(236) The results of the market investigation broadly confirmed that the Notifying Party’s
       market share estimates are reliable and, in particular, that SABIC is a relatively
       small supplier of PBR worldwide as well as in the EEA. 250 The majority of
       respondents confirmed that, post-Transaction, there will remain a number of strong
       competitors on the market in the EEA to constrain the combined entity, such as ENI,
       NKNK, Sibur Petrochemicals, Synthos and Trinseo, and that customers will
       continue to have a sufficient choice of credible suppliers to meet their needs. 251
       Moreover, the majority of customers responding to the market investigation
       confirmed that they typically procure PBR from multiple suppliers, can switch
       relatively easily and have switched supplier in the last 3 years. 252 The majority of
       respondents considered that it is relatively straightforward for an existing supplier to
       expand its sales of PBR or begin selling in a new country. 253 Finally, the majority of
       respondents to the market investigation did not consider that the Transaction would
248  Form CO, paragraphs 504-507.
249  According to the Notifying Party’s estimates, the market shares of the Parties did not substantially
     differ in the past three years, and were even lower than in 2018, and market shares in value would not
     substantially differ from market shares in volume.
250  Responses to questions 41.1, 41.2 and 42 of Q1 - Questionnaire to competitors and customers of Butyl
     rubber and Polybutadiene rubber.
251  Responses to questions 43 and 48 of Q1 - Questionnaire to competitors and customers of Butyl rubber
     and Polybutadiene rubber.
252  Responses to questions 44, 45 and 46 of Q1 - Questionnaire to competitors and customers of Butyl
     rubber and Polybutadiene rubber.
253  Responses to question 47 of Q1 - Questionnaire to competitors and customers of Butyl rubber and
     Polybutadiene rubber.
                                                        55
 ---pagebreak---         have any negative impact on prices, quality, choice or innovation in the market for
        PBR at EEA level, and no material concerns were raised regarding the Parties’
        horizontal overlap in PBR.254
(237) In light of the above, taking account of the results of the market investigation and of
        all the evidence available to it, the Commission considers that the Transaction does
        not raise serious doubts as to its compatibility with the internal market in relation to
        the market for PBR, regardless of whether the market is considered EEA-wide or
        worldwide.
    6.11.        General conclusion of horizontal effects
(238) In light of the considerations set out in paragraphs (27) to (237), and taking account
        of the results of the market investigation and of the evidence available to it, the
        Commission concludes that the Transaction does not raise serious doubts as to its
        compatibility with the internal market with respect to non-coordinated and
        coordinated horizontal effects.
    7. VERTICAL LINKS – M ARKET DEFINITION AND COMPETITIVE ASSESSMENT
    7.1. Hydrogen (upstream) with hydrogenated nitrile butadiene rubber (HNBR)
        (downstream)
    7.1.1. Market definitions
    7.1.1.1. Hydrogen
(239) Hydrogen is one of the most widely used industrial gases, with applications in
        chemical, food, and glass production. Its principal use is for the synthesis of
        ammonia. It can be supplied both as a liquid and as a gas, and can be distributed via
        different channels (tonnage, bulk, and cylinders).
7.1.1.1.1. Product market definition
The Commission’s precedents
(240) In previous decisions, the Commission has held that each industrial gas, including
        hydrogen, belongs to a separate product market because of their different chemical
        and physical properties and because of the general lack of demand-side or supply-
        side substitutability.255 In addition, it concluded that each distribution channel
        (tonnage, bulk and cylinders) forms a distinct relevant product market.256
254   Responses to questions 49.1, 49.2 and 50 of Q1 - Questionnaire to competitors and customers of Butyl
      rubber and Polybutadiene rubber.
255   See case COMP/M.8480 - Praxair/Linde, decision of 28.08.2018, case COMP/M.1641 - Linde/AGA,
      decision of 9.02.2000, case COMP/M.3314 - Air Liquide/Messer Targets, decision of 15.03.2004.
256   See case COMP/M.8480 - Praxair/Linde, decision of 28.08.2018, COMP/M.1641 - Linde/AGA,
      decision of 9.02.2000 and case COMP/M.3314 - Air Liquide/Messer Targets, decision of 15.03.2004.
                                                       56
 ---pagebreak--- The Notifying Party’s view
(241) The Notifying Party submits that it does not disagree with the Commission’s
        precedents.257
The Commission’s assessment
(242) The majority of respondents to the market investigation confirmed that hydrogen is
        not substitutable with other products, even though it might compete to an extent with
        other products (e.g. batteries, fuel) in emerging mobility applications. 258 Further,
        respondents indicated that the different modes of delivery for hydrogen (i.e. tonnage,
        bulk and cylinders) are not substitutable with each other from a customer perspective
        since they respond to distinct customer needs. 259 The majority of respondents
        confirmed that no further segmentation is necessary beyond the segmentation
        between different modes of delivery of hydrogen.260
(243) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the product market definition for hydrogen can be left
        open, since the Transaction does not raise serious doubts as to its compatibility with
        the internal market, under any plausible product market definition (i.e. as an overall
        hydrogen market or segmented between hydrogen supplied by tonnage, bulk and
        cylinders).
7.1.1.1.2. Geographic market definition
The Commission’s precedents
(244) In previous decisions, the Commission considered that the geographic market for
        hydrogen supplied in tonnage was EEA-wide, whereas it was national for hydrogen
        supplied in bulk and in cylinder.261
The Notifying Party’s view
(245) The Notifying Party submits that the geographic market definition for the production
        and supply of hydrogen is global or at least EEA-wide in scope, given the lack of
        trade barriers globally and in particular within the EEA.
The Commission’s assessment
(246) The market investigation confirmed the Commission’s precedents that the
        geographic market for hydrogen supplied in tonnage is EEA-wide. Respondents to
        the market investigation indicated that global suppliers compete against each other
        for opportunities to supply tonnage hydrogen within the EEA and even to some
        extent at worldwide level. On the other hand, results of the market investigation
        indicated that the supply tonnage of hydrogen in the EEA requires a local presence
        in the EEA, for instance concerning maintenance organization and operating
257   Form CO, paragraphs 2397-2406.
258   Responses to question 3 of Q11 - Questionnaire to competitors and customers of Hydrogen.
259   Responses to question 4 of Q11 - Questionnaire to competitors and customers of Hydrogen.
260   Responses to question 5 of Q11 - Questionnaire to competitors and customers of Hydrogen.
261   See cases COMP/M.1641 - Linde/AGA, decision of 9.02.2000, COMP/M.3314 - Air Liquide/Messer
      Targets, decision of 15.03.2004 and Case COMP/M.4823 - Yara/Praxair, decision of 28.11.2007.
                                                       57
 ---pagebreak---         structure. Regarding hydrogen supplied in cylinder, market respondents indicated
        that the geographic market remained national. Regarding hydrogen supplied in bulk,
        the results of the market investigation also pointed towards a national or EEA-wide
        market.262 Respondents indicated that it is possible to transport bulk hydrogen over
        several hundred kilometres, i.e. cross-borders.263
(247) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the geographic market definition for hydrogen can be
        left open, since the Transaction does not raise serious doubts as to its compatibility
        with the internal market, under any plausible geographic market definition.
7.1.1.2. Hydrogenated nitrile butadiene rubber (HNBR)
7.1.1.2.1. Product market definition
(248) Hydrogenated nitrile butadiene rubber ("HNBR") is a synthetic rubber known for its
        physical strength and retention of properties after long-term exposure to heat, oil and
        chemicals. It is produced through selective hydrogenation of nitrile butadiene rubber
        in an organic solvent. The process can yield a number of different grades of HNBR
        with different acrylonitrile content, hydrogenation levels, and polymer viscosity.
        These properties and composition will render certain grades more suitable for
        different end-use applications.
(249) HNBR is used to produce dynamic and static seals, hoses, and belts for automotive
        applications, as well as rolls for steel and paper mills for industrial applications. It is
        also used in the food, pharmaceutical and medical industries.
The Commission’s Precedents
(250) The Commission has not previously considered the product market definition for the
        production and sale of HNBR.
The Notifying Party’s view
(251) The Notifying Party submits that all grades of HNBR are part of a single product
        market. In the Notifying Party’s view, although there are multiple grades of HNBR
        available in the market, they all have the same key qualities, such as physical
        strength and retention of properties after long-term exposure to heat, oil, and
        chemicals.264 It also submits that there is a high-level of supply-side substitutability
        between the various grades of HNBR.
The Commission’s assessment
(252) Despite providing examples of potential substitution between HNBR and other types
        of synthetic rubber, the result of the market investigation indicated that it may be
        appropriate to define a separate product market for HNBR, though it was
        inconclusive on this point. In particular, the majority of respondents consider that no
262   Responses to question 6 of Q11 - Questionnaire to competitors and customers of Hydrogen.
263   Responses to questions 6, 7, 8 and 9 of Q11 - Questionnaire to competitors and customers of Hydrogen.
264   Form CO, paragraphs 2454-2460.
                                                        58
 ---pagebreak---         further segmentation of this product (by grade for instance) is relevant or
        necessary.265
(253) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the product market definition for HNBR can be left
        open, since the Transaction does not raise serious doubts as to its compatibility with
        the internal market, under any plausible product market definition.
7.1.1.2.2. Geographic market definition
The Commission’s precedents
(254) The Commission has not previously considered the geographic market definition for
        the production and sale of HNBR.
The Notifying Party’s view
(255) The Notifying Party submits that the geographic market is global or at least EEA-
        wide in scope, as the major suppliers are active across the principal economic
        regions of the world, operate on a global basis, and transport costs remain low
        (below 5% of the sales price).266
The Commission’s assessment
(256) The market investigation indicated that the relevant geographic market for HNBR is
        likely worldwide. Respondents generally considered the market for HNBR to be
        worldwide, pointing to significant patterns of trade worldwide and the fact that
        HNBR is used and sourced worldwide by global automotive manufacturers. 267 All
        customers that responded to the market investigation considered that suppliers’
        plants based outside the EEA can credibly sell HNBR to customers in the EEA. 268
        None of the respondents identified any barriers to purchasing or selling HNBR at a
        worldwide level at competitive terms. 269
(257) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the geographic market definition for HNBR can be left
        open, since the Transaction does not raise serious doubts as to its compatibility with
        the internal market, under any plausible geographic market definition (i.e. EEA-wide
        or worldwide).
7.1.2. Competitive assessment
(258) The Transaction gives rise to a vertically affected link concerning the supply of
        hydrogen (upstream) by SABIC and the supply of HNBR (downstream) by Saudi
        Aramco.
265   Responses to questions 3 and 4 of Q12 - Questionnaire to competitors and customers of HNBR.
266   Form CO, paragraphs 2454-2460.
267   Responses to questions 3 and 4 of Q12 - Questionnaire to competitors and customers of HNBR.
268   Responses to questions 3 and 4 of Q12 - Questionnaire to competitors and customers of HNBR.
269   Responses to questions 3 and 4 of Q12 - Questionnaire to competitors and customers of HNBR.
                                                       59
 ---pagebreak---  ---pagebreak---  ---pagebreak--- The Commission’s assessment
(267) Given the Parties’ (through SABIC) small market shares in the upstream market for
       hydrogen and in any of its plausible sub-segments, and consequently the combined
       entity’s inability to foreclose access to hydrogen post-Transaction, input foreclosure
       will not be assessed in the present Decision.
(268) Regarding potential customer foreclosure risks, the results of the Commission’s
       market investigation indicated that the combined entity is unlikely to be able to
       successfully engage in any customer foreclosure strategy in relation to hydrogen
       rivals (upstream) through its downstream position in HNBR.
(269) First, as regards ability, the market investigation confirmed the Notifying Party’s
       estimates that Saudi Aramco is a large supplier of HNBR in the EEA and
       worldwide.273 However, the market investigation confirmed that the combined entity
       would not have the ability to engage in a customer foreclosure strategy towards
       hydrogen suppliers. It strongly confirmed that major suppliers of hydrogen are
       international companies with a customer base that extends well beyond just HNBR
       producers.274 It accordingly confirmed that Saudi Aramco is a relatively small
       purchaser of hydrogen in the EEA and worldwide. 275 In light of the above, it is
       unlikely that the combined entity would have the ability to foreclose suppliers of
       hydrogen (upstream) through a customer foreclosure strategy.
(270) Second, as regards incentive, the market investigation has broadly confirmed that the
       Notifying Party’s market share estimates for hydrogen are reliable and, in particular,
       that SABIC is considered a minor supplier of hydrogen at both worldwide and EEA
       levels, irrespective of the delivery channel (i.e. tonnage, bulk or cylinders). 276 This
       supports the Notifying Party’s claim that the Parties’ very modest market share in
       this market would severely limit the benefits that the combined entity would reap
       from a customer foreclosure strategy.
(271) Third, even if the combined entity completely ceases to purchase hydrogen from
       upstream rivals post-Transaction, such foreclosure is unlikely to have an adverse
       impact in the downstream market for HNBR in the EEA or worldwide. As explained
       above, the combined entity is a small purchaser of hydrogen. Consequently, an
       insufficient fraction of hydrogen output (upstream) would be affected by the revenue
       decreases resulting from the fact that the combined entity would, post-Transaction,
       completely cease to purchase hydrogen from upstream rivals. Moreover, even if the
       impact were concentrated on one upstream supplier who faces a cost increase as a
       result, there are a number of strong suppliers of hydrogen (such as Air Liquide, Air
       Products and Linde)277 who would be unaffected by the foreclosure, and customers
       have confirmed that switching is easy. 278 Therefore, it is unlikely that a customer
       foreclosure attempt would have an impact upstream, but even if it did, downstream
273  Responses to question 11 of Q12 - Questionnaire to competitors and customers of HNBR.
274  Responses to question 1 of Q11 - Questionnaire to competitors and customers of Hydrogen.
275  Responses to questions 10 and 13 of Q11 - Questionnaire to competitors and customers of Hydrogen
     and Form CO, Annex D.
276  Responses to question 12 of Q11 - Questionnaire to competitors and customers of Hydrogen.
277  Responses to questions 11 and 12 of Q11 - Questionnaire to competitors and customers of Hydrogen.
278  Responses to questions 14 and 15 of Q11 - Questionnaire to competitors and customers of Hydrogen.
                                                      62
 ---pagebreak---         customers would have an effective and timely counter-strategy to any foreclosure
        attempt.
(272) Moreover, all hydrogen manufacturers that responded to the market investigation
        confirmed that they do not have any material concerns about a potential customer (or
        input) foreclosure strategy that the Parties might try to put in place and that, post-
        Transaction, they would still have enough customers to sell hydrogen to, at both
        worldwide and EEA level.279 Respondents to the market investigation also indicated
        that they do not expect that the Transaction would have any negative impact on
        prices, quality, choice or innovation for the market for HNBR (or indeed hydrogen)
        at either EEA or worldwide level and no material concerns were raised regarding
        either product.280
(273) In light of the above, taking account of the results of the market investigation and of
        all the evidence available to it, the Commission considers that it is unlikely that the
        Transaction could lead to customer foreclosure risks from the vertical link between
        hydrogen (upstream) and HNBR (downstream). As a result, this vertical link is
        unlikely to significantly impede effective competition.
7.2.    Ethylene oxide (upstream) with ethylene glycols (downstream)
7.2.1. Market definitions
1. 7.2.1.1. Ethylene oxide (“EO”)
(274) EO is a colourless, hazardous and flammable gas obtained through the partial
        oxidation of ethylene. It is mostly used as a raw material for the production of other
        chemicals, such as EG, glycol ethers, ethoxylates, EOA, and polyalkylene glycols.
        EO also has applications as a disinfectant, for instance to sterilize surgical
        instruments in hospitals or to remove pests and microorganisms from spices or furs,
        among others.
7.2.1.1.1. Product market definition
The Commission’s precedents
(275) In past decisions, the Commission has considered that EO constitutes a separate
        product market because EO is characterized by low substitutability with other
        products, especially when used as a direct raw material in chemical reactions. 281 In
        more recent cases, the Commission left the precise market definition open. 282 In
        Ineos/BP Dormagen,283 the Commission also considered whether onsite supplies
        (i.e. long-term arrangements with customers whose plants that convert EO are
        located on, or adjacent to, the EO supplier’s site and connected via pipeline) and off-
279   Responses to question 18 of Q11 - Questionnaire to competitors and customers of Hydrogen.
280   Responses to questions 18.1 and 18.2 of Q11 - Questionnaire to competitors and customers of HNBR
      and responses to questions 19.1, 19.2 and 20 of Q11 - Questionnaire to competitors and customers of
      Hydrogen.
281   See cases COMP/M.4005 - Ineos/Innovene, decision of 09.12.2005 and COMP/M.2345 - Deutsche
      BP/Erdölchemie, decision of 26.04.2001.
282   See cases COMP/M.5927 - BASF/Cognis, decision of 30.11.2010, COMP/M.4094 - Ineos/BP
      Dormagen, decision of 10.08.2006.
283   See case COMP/M.4094 - Ineos/BP Dormagen, decision of 10.08.2006.
                                                       63
 ---pagebreak---         site supplies (i.e. supplies to other customers involving transport) constituted two
        separate markets, but ultimately left the exact market definition open.
The Notifying Party’s view
(276) The Notifying Party submits that, for the case at hand, and given the Parties’ very
        limited sales of EO in the EEA (amounting to less that EUR […] in value), the
        competitive assessment should be done based on a product market encompassing all
        EO sales.284
The Commission’s assessment
(277) The majority of respondents to the market investigation indicated that EO is not
        substitutable with other products, explaining that it has specific properties and
        applications for which there are no substitutes available. 285 Some respondents
        indicated that a distinction between offsite EO (which is generally purified EO) and
        onsite EO (which is generally crude EO) may be justified, however, the majority of
        respondents did not consider that any segmentation of EO is necessary. 286
(278) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the product market definition for EO can be left open,
        since the Transaction does not raise serious doubts as to its compatibility with the
        internal market, under any plausible product market definition (i.e. as an overall EO
        market or segmented between onsite and off-site supplies).
7.2.1.1.2.       Geographic market definition
The Commission’s precedents
(279) In the past, the Commission has considered the relevant geographic market for EO
        and its potential sub-segments to be Western Europe (EEA plus Switzerland) or
        regional (Northern or Southern Europe), given the difficulties and costs associated
        with the transportation of this hazardous product, 287 but ultimately left the exact
        geographic market definition open.288
The Notifying Party’s view
(280) The Notifying Party submits that, for the case at hand, there precise geographic
        market definition for EO can be left open given the very limited sales in the EEA of
        the Parties, whose market shares remain far below 30% regardless of the precise
        geographic market definition.289
284   Form CO, paragraphs 1766-1767.
285   Responses to question 3 of Q16 - Questionnaire to competitors and customers of Ethylene oxide.
286   Responses to question 4 of Q16 - Questionnaire to competitors and customers of Ethylene oxide.
287   See cases COMP/M.5927 - BASF/Cognis, decision of 30.11.2010, COMP/M.4094 - Ineos/BP
      Dormagen, decision of 10.08.2006, COMP/M.4005 - Ineos/Innovene, decision of 09.12.2005 and
      COMP/M.2345 - Deutsche BP/Erdölchemie, decision of 26.04.2001.
288   See case COMP/M.5927 - BASF/Cognis, decision of 30.11.2010.
289   Form CO, paragraph 1768.
                                                       64
 ---pagebreak--- The Commission’s assessment
(281) The market investigation indicated that the relevant geographic market for EO is
        likely regional or EEA-wide in scope, pointing to significant cross-border trade
        flows within, as well as beyond, the EEA. 290 Respondents generally considered that,
        due to the hazardous nature of the product, which makes transportation difficult,
        there is little or no overseas transportation of EO. Moreover, several market
        participants indicated that, in their view, the relevant geographic market for EO is
        wider than Western Europe and should also include Poland, Slovakia and Romania,
        and possibly go as far as Russia.291
(282) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the geographic market definition for EO can be left
        open, since the Transaction does not raise serious doubts as to its compatibility with
        the internal market, under any plausible geographic market definition (i.e. regional
        or EEA-wide).
7.2.1.2. Ethylene glycols (“EG”)
(283) As explained above in paragraph (72) onwards, the exact product and geographic
        market definitions for EG can be left open as no competitive concerns arise under
        any plausible product market definition (i.e. EG overall, or segmented between
        MEG, DEG and TEG) or geographic market definition (i.e. worldwide or EEA-
        wide).
7.2.2. Competitive assessment
(284) The Transaction gives rise to a vertically affected link concerning the supply of EO
        (upstream) and the supply of EG (downstream).
(285) Upstream, Saudi Aramco sells limited amounts of EO, at both worldwide and EEA
        level. More specifically, Saudi Aramco only sells EO through its affiliates […]. In
        turn, SABIC is not active in EO.
(286) Downstream, Saudi Aramco and SABIC both produce and sell EG. Saudi Aramco
        has no sales of EG in the EEA. SABIC sells EG at both EEA and worldwide levels
        (see section 6.2.2).
290   Responses to question 5 of Q16 - Questionnaire to competitors and customers of Ethylene oxide. The
      market investigation strongly indicated that a market limited to Western Europe would not be
      appropriate for EO or for the purposes of the present Decision, so it is not considered further in this
      Decision.
291   Responses to question 8 of Q16 - Questionnaire to competitors and customers of Ethylene oxide.
                                                       65
 ---pagebreak---  ---pagebreak---  ---pagebreak---        have the ability to engage in a customer foreclosure strategy. The market
       investigation broadly confirmed that the vast majority of EG suppliers are already
       vertically integrated and produce EO to address their internal needs, and in general
       do not source this product externally, which considerably restrains the Parties’
       ability to engage in any customer foreclosure strategy. 295 Importantly, as the Parties
       do not procure EO from third parties they cannot foreclose any EO suppliers (e.g. by
       reducing or stopping purchases of EO from them). All EO manufacturers that
       responded to the market investigation confirmed that they do not have any material
       concerns about a potential customer foreclosure strategy and that, post-Transaction,
       they would still have enough customers to sell EO to at both worldwide and EEA
       level.296 In light of the above, it is unlikely that the combined entity would have the
       ability to foreclose manufacturers of EO (upstream) through a customer foreclosure
       strategy.
(295) Second, as regards incentive, the market investigation has broadly confirmed that the
       Notifying Party’s market share estimates are reliable and, in particular, that Saudi
       Aramco is considered a very minor supplier of EO at EEA level.297 This would tend
       to support the view that even if such a customer foreclosure was possible, and was
       efficiently implemented so that it successfully managed to bring up the prices for EO
       in the EEA, the Parties’ very modest market share in this market would significantly
       limit the benefits that the combined entity would reap from such a strategy.
(296) Third, such a strategy is unlikely to have an adverse impact in the downstream
       market for EG in the EEA or worldwide, mainly because the vast majority of EG
       suppliers are vertically integrated for their EO supply. The majority of respondents
       confirmed that, post-Transaction, there will remain a number of strong suppliers of
       EO who will continue to constrain the combined entity at both worldwide and EEA
       level, such as INEOS, BASF and Royal Dutch Shell. 298 The market investigation
       moreover confirmed that non-integrated customers of EO typically procure EO from
       multiple suppliers, can switch fairly easily and that they do switch in practice. 299
       Therefore, customers will have effective and timely counter-strategies to any attempt
       by the combined entity to increase prices or reduce sales upstream. Moreover,
       respondents do not expect that the Transaction would have any negative impact on
       prices, quality, choice or innovation for the market for EG (or indeed EO) at either
       EEA or worldwide level and no material concerns were raised regarding either
       product.300
(297) In light of the above, taking account of the results of the market investigation and of
       all the evidence available to it, the Commission considers that it is unlikely that the
295  Responses to question 5 of Q16 - Questionnaire to competitors and customers of Ethylene Oxide. Also
     note that the Commission has already in the past adjudicated on the validity of this general argument t o
     dispel any competitive concern as regards the vertical relationship between EO and EG in case
     COMP/M.4094 - Ineos/BP Dormagen, decision of 10.08.2006.
296  Responses to question 17 of Q16 - Questionnaire to competitors and customers of Ethylene Oxide.
297  Responses to question 12 of Q16 - Questionnaire to competitors and customers of Ethylene Oxide.
298  Responses to question 17 of Q16 - Questionnaire to competitors and customers of Ethylene Oxide.
299  Responses to questions 13, 14 and 15 of Q16 - Questionnaire to competitors and customers of Ethylene
     Oxide.
300  Responses to question 22 of Q2 - Questionnaire to competitors and customers of Ethylene Glycols, an d
     responses to questions 18.1, 18.2 and 19 of Q16 - Questionnaire to competitors and customers of
     Ethylene Oxide.
                                                       68
 ---pagebreak---         Transaction would lead to customer foreclosure risks from the vertical link between
        EO (upstream) and EG (downstream).
7.3.    Butadiene (upstream) with chloroprene rubber (downstream)
7.3.1. Market definitions
7.3.1.1.Butadiene
(298) Butadiene is a reactive, colourless gas generally stored and supplied in pressurised
        and refrigerated tanks or pipelines. It can be produced by extractive distillation from
        crude C4, which is a by-product of ethylene and propylene production, or as a by-
        product of the steam cracking of naphtha. Butadiene is used as an input to
        manufacture a number of products. It is used to produce (i) “rubber type” polymers
        (e.g. chloroprene rubber, polybutadiene rubber, styrene butadiene rubber), which are
        used in automotive tyres, hoses, conveyor belts, footwear, flooring, additives,
        gloves, etc., and (ii) “plastic type” polymers, which are used in consumer and
        industry electronics, automotive parts, etc. Production of two types of synthetic
        rubber, namely polybutadiene rubber and styrene butadiene rubber, accounts for
        nearly 55% of global butadiene demand.
7.3.1.1.1. Product market definition
The Commission’s precedents
(299) The Commission has considered the market for butadiene in previous decisions. 301
        The Commission has previously considered that butadiene is a separate product
        market,302 but in more recent decisions it left the precise market definition open. 303
        In addition, the Commission's market investigation in a previous case suggested that
        there is only one grade of butadiene.304
The Notifying Party’s view
(300) The Notifying Party submits that, for the purposes of the present Decision, the exact
        product market definition can be left open because the Transaction will not lead to
        competition concerns regardless of the market definition adopted.305
The Commission’s assessment
(301) The majority of respondents to the market investigation indicated that butadiene is
        not substitutable with other products given its specific properties. 306 The majority
301   See case COMP/M.6905 - Ineos/Solvay, decision of 8.05.2014. See also case COMP/M.4041
      Basell/Société du Craqueur de l’Aubette, decision of 22.12.2015 and case COMP/M.2345 Deutsche
      BP/ Erdölchemie, decision of 26.04.2001.
302   See case COMP/M.2345 Deutsche BP/ Erdölchemie, decision of 26.04.2001.
303   See case COMP/M.6905 - Ineos/Solvay, decision of 8.05.2014 and COMP/M.4041 Basell/Société du
      Craqueur de l’Aubette, decision of 22.12.2015.
304   See case COMP/M.6905 - Ineos/Solvay, decision of 8.05.2014. See also case COMP/M.4041
      Basell/Société du Craqueur de l’Aubette, decision of 22.12.2015 and case COMP/M.2345 Deutsche
      BP/ Erdölchemie, decision of 26.04.2001.
305   Form CO, paragraphs 471-473.
306   Responses to question 3 of Q17 - Questionnaire to competitors and customers of Butadiene.
                                                       69
 ---pagebreak---         also confirmed that no further segmentation is necessary (for instance by grade) and
        that butadiene is a commodity product. 307
(302) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the product market definition for butadiene can be left
        open, since the Transaction does not raise serious doubts as to its compatibility with
        the internal market, under any plausible product market definition.
7.3.1.1.1. Geographic market definition
The Commission’s precedents
(303) In a past decision, the Commission found that the relevant geographic market for
        butadiene was Western Europe.308 In more recent decisions, the Commission has
        considered the relevant geographic market for butadiene could be at least “Western
        Europe +”, (i.e. including Western Member States, Poland and the Czech Republic)
        but ultimately left the geographic market for butadiene open. 309
The Notifying Party’s view
(304) The Notifying Party submits that the relevant geographic market for butadiene is
        global or at least EEA-wide in scope, arguing that there are no trade barriers, that
        manufacturers of butadiene supply customers around the world with significant trade
        flows and that the EEA is a large net exporter of butadiene to other regions. 310
The Commission’s assessment
(305) The market investigation indicated that the relevant geographic market for butadiene
        could be EEA-wide or even worldwide.311 The majority of respondents considered
        that the market for butadiene is worldwide or EEA-wide, noting that butadiene is
        traded around the world and that the EEA is a net exporter of butadiene due to
        comparatively low feedstock prices in Europe. 312 Competitors explained that, given
        the favourable feedstock prices within the EEA, imports to the EEA are relatively
        limited.313 However, the majority of customers responding to the market
        investigation confirmed that they could credibly source butadiene from suppliers
        based outside the EEA for use in their facilities within the EEA. 314 The respondents
307   Responses to question 4 of Q17 - Questionnaire to competitors and customers of Butadiene.
308   See case COMP/M.2345 Deutsche BP/Erdölchemie, decision of 26.04.2001
309   See case COMP/M.6905 - Ineos/Solvay, decision of 8.05.2014. See also case COMP/M.4041
      Basell/Société du Craqueur de l’Aubette, decision of 22.12.2015 and case COMP/M.2345 Deutsche
      BP/Erdölchemie, decision of 26.04.2001.
310   Form CO paragraphs 474-477.
311   The market investigation strongly indicated that a market limited to Western Europe+ would not be
      appropriate for butadiene or any of its sub-segments for the purposes of the present Decision, so it is
      not considered further in this Decision.
312   Responses to question 5 of Q17 - Questionnaire to competitors and customers of Butadiene.
313   Responses to questions 5 and 6 of Q17 - Questionnaire to competitors and customers of Butadiene.
314   Responses to question 7 of Q17 - Questionnaire to competitors and customers of Butadiene.
                                                       70
 ---pagebreak---         to the investigation confirmed that, provided prices are favourable, there are no
        barriers to selling butadiene EEA-wide or worldwide.315
(306) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the geographic market definition for butadiene can be
        left open, since the Transaction does not raise serious doubts as to its compatibility
        with the internal market, under any plausible geographic market definition (i.e.
        EEA-wide or worldwide).
7.3.1.2.Chloroprene rubber
(307) Chloroprene rubber (also referred to as polychloroprene or neoprene) is a synthetic
        rubber with a high chlorine content that is produced by polymerising chloroprene.
        Chloroprene rubber has good mechanical strength, low flammability and good
        resistance to ozone, weather, aging and chemicals. Chloroprene rubber is used
        mainly for technical rubber parts (such as cables and hoses), which are often used in
        the automotive industry, as well as for adhesives (in particular in the shoe and
        furniture industries) and as latex for diving equipment, bitumen modifications and
        the inner sole of shoes.
7.3.1.2.1    Product market definition
The Commission’s precedents
(308) In a past decision, the Commission found that the chloroprene rubber forms a
        separate product market.316 In particular, the Commission noted that synthetic
        elastomers, such as chloroprene rubber, have specific characteristics and/or costs
        which define the applications for which they may be used.
The Notifying Party’s view
(309) The Notifying Party submits that, for the purposes of the present Decision, the exact
        product market definition can be left open, because the Transaction would not lead
        to any competitive concerns, regardless of the precise market definition. 317
The Commission’s assessment
(310) The majority of respondents to the market investigation indicated that chloroprene
        rubber is not substitutable with other products given its specific properties and
        applications.318 A majority of customers also indicated that it may be appropriate to
        further segment chloroprene rubber by grade, in particular as certain applications
        require chloroprene rubber with a low monomer content. 319
(311) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the product market definition for chloroprene rubber
315   Responses to questions 8.1 and 8.2 of Q17 - Questionnaire to competitors and customers of Butadiene.
      Some respondents noted that REACH authorisation may be necessary to sell within the EEA, but this
      was not considered a material barrier.
316   See case COMP IV/M.663 - Dow/Dupont, decision of 21.02.1996.
317   Form CO, paragraphs 2080-2081.
318   Responses to question 3 of Q18 - Questionnaire to competitors and customers of Chloroprene rubber.
319   Responses to question 4 of Q18 - Questionnaire to competitors and customers of Chloroprene rubber.
                                                       71
 ---pagebreak---         can be left open, since the Transaction does not raise serious doubts as to its
        compatibility with the internal market, under any plausible product market definition
        (i.e. chloroprene rubber overall or segmented by grade).
7.3.1.2.2. Geographic market definition
The Commission’s precedents
(312) In a past decision, the Commission has considered the relevant geographic market
        for chloroprene rubber to be EEA-wide, if not wider, but ultimately left the precise
        market definition open320 In a past cartel decision relating to chloroprene rubber, the
        Commission noted that “the major suppliers and customers are present in each of
        the principal economic regions of the world and operated on a global basis”.321
The Notifying Party’s view
(313) The Notifying Party submits that the relevant geographic market for chloroprene
        rubber is global or at least EEA-wide in scope, arguing that there are no trade
        barriers, manufacturers of chloroprene rubber supply customers around the world
        and transportation costs are low.322 However, the Notifying Party submits that for
        the purposes of the present Decision, the exact geographic market definition can be
        left open as the Transaction will not will not lead to any competitive concerns
        regardless of the definition adopted.
The Commission’s assessment
(314) The market investigation indicated that the relevant geographic market for
        chloroprene rubber is likely worldwide or at least EEA-wide. The majority of
        respondents considered there are no barriers to selling chloroprene rubber EEA-
        wide.323 While responses were split on whether there are barriers to selling
        chloroprene rubber worldwide, respondents explained that chloroprene rubber is in
        practice shipped worldwide and considered the market for chloroprene rubber to be
        worldwide.324 Competitors explained that they can readily supply EEA customers
        from their production facilities based outside the EEA. 325 Customers responding to
        the market investigation confirmed that they can and do source chloroprene rubber
        from suppliers based outside the EEA for use in their facilities within the EEA
        (citing examples of sourcing from Japan, the US and China). 326
(315) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the geographic market definition for chloroprene rubber
        can be left open, since the Transaction does not raise serious doubts as to its
        compatibility with the internal market, under any plausible geographic market
        definition (i.e. EEA-wide or worldwide).
320   See case COMP/M.663 - Dow/Dupont, decision of 21.02.1996.
321   See case COMP/38629 Chloroprene Rubber, Commission decision of 05.12.2007.
322   Form CO, paragraphs 2082-2085.
323   Responses to question 8.1 of Q18 - Questionnaire to competitors and customers of Chloroprene rubber.
324   Responses to questions 5 and 8.2 of Q18 - Questionnaire to competitors and customers of Chloropren e
      rubber.
325   Responses to question 6 of Q18 - Questionnaire to competitors and customers of Chloroprene rubber.
326   Responses to question 7 of Q18 - Questionnaire to competitors and customers of Chloroprene rubber.
                                                       72
 ---pagebreak---  ---pagebreak---  ---pagebreak--- (324) First, as regards ability, the market investigation confirmed the Notifying Party’s
       estimates that Saudi Aramco is a large supplier of chloroprene rubber in the EEA. 333
       However, the market investigation confirmed that the combined entity would not
       have the ability to engage in a customer foreclosure strategy. The market
       investigation confirmed that butadiene is a commodity product, and respondents
       noted that it is used to manufacture a range of rubber products. 334 This, together with
       the responses and data received as part of the market investigation, 335 supports the
       Notifying Party’s arguments that Saudi Aramco only represents a modest proportion
       of purchases of butadiene in the EEA. Moreover, the majority of respondents did not
       expect the Transaction to have a significant impact on the market for butadiene and,
       in particular, the majority of suppliers that expressed a view considered that there
       will remain a sufficient pool of customers to which they can sell butadiene post-
       Transaction.336 In light of the above, it is unlikely that the combined entity would
       have the ability to foreclose butadiene suppliers (upstream) by attempting a customer
       foreclosure strategy.
(325) Second, as regards incentives, the market investigation has broadly confirmed that
       the Notifying Party’s market share estimates are reliable and, in particular, that
       Saudi Aramco is a very minor supplier of butadiene at EEA level.337 This would tend
       to support the view that even if such customer foreclosure was possible, and was
       efficiently implemented so that it successfully managed to bring up the prices for
       butadiene in the EEA, the Parties’ very modest market share in this market would
       significantly limit the benefits that the combined entity would reap from such a
       strategy. However, some respondents to the market investigation considered that the
       combined entity may have an incentive to vertically integrate its supply of butadiene
       with the manufacture of downstream products (such as chloroprene rubber), though
       others noted that this may not be feasible from a logistical perspective. 338
(326) Third, even if the combined entity completely ceases to purchase butadiene from
       upstream rivals post-Transaction, such a strategy is unlikely to have an adverse
       impact in the downstream market for chloroprene rubber in the EEA. As explained
       above, the combined entity is a small purchaser of butadiene. Consequently, an
     chloroprene rubber. Even if the (downstream) product market for chloroprene rubber were segmented
     by grade and the combined entity were to be the sole supplier of a particular grade , for the same reasons
     as for chloroprene rubber, the Transaction would not raise serious doubts as to its compatibility as a
     result of this vertical link. Indeed, (i) all plausible grades of chloroprene rubber use butadiene as an
     input, and (ii) regardless of the plausible sub-segmentation of chloroprene rubber, for the reasons
     described in this Section (in particular, the Parties’ low share of purchases of butadiene, their low share
     of sales of butadiene, and the fact that respondents to the market invest igation did not raise any
     concerns regarding a potential foreclosure risk), the Parties will lack the ability and incentive to engage
     in a customer foreclosure strategy, and even if they do, such strategy is unlikely to have an adverse
     impact in the downstream market for chloroprene rubber (or any of its sub-segments) in the EEA.
333  Responses to questions 11.1 and 12 of Q18 - Questionnaire to competitors and customers of
     Chloroprene rubber.
334  Responses to questions 3, 4 and 14 of Q17 - Questionnaire to competitors and customers of Butadiene.
335  Responses to question 9 of Q17 - Questionnaire to competitors and customers of Butadiene, and Form
     CO Annex D.
336  Responses to questions 17 and 18 of Q17 - Questionnaire to competitors and customers of Butadiene.
337  Responses to questions 9, 10, 11 and 12 of Q17 - Questionnaire to competitors and customers of
     Butadiene.
338  Responses to question 18 of Q17 - Questionnaire to competitors and customers of Butadiene and
     question 18 of Q18 - Questionnaire to competitors and customers of Chloroprene rubber.
                                                            75
 ---pagebreak---        insufficient fraction of butadiene output (upstream) would be affected by the revenue
       decreases resulting from the fact that the combined entity would, post-Transaction,
       completely cease to purchase butadiene from upstream rivals. Accordingly, some
       respondents stated that even if Saudi Aramco were to vertically integrate its
       butadiene and chloroprene rubber activities they do not expect this to have a material
       impact on the market for chloroprene rubber given that chloroprene rubber
       production is a small use of butadiene. 339 Moreover, even if the impact were
       concentrated on one upstream supplier who faces a cost increase as a result, there are
       a number of strong suppliers of butadiene, including Evonik, INEOS, BASF, Dow,
       PKN Orlen, Total and others,340 who would be unaffected, and customers can switch
       fairly easily.341 Finally, while butadiene appears to be a material input cost in the
       manufacture of chloroprene rubber ([20-30]%, according to the Notifying Party),342
       a number of respondents explained that the market for butadiene is “long” in the
       EEA, in that there is a greater supply of butadiene than demand because feedstock
       prices in the EEA are competitive. 343 Therefore, it is unlikely that a customer
       foreclosure attempt would have an impact upstream, but even if it did, downstream
       customers would have an effective and timely counter-strategy to any foreclosure
       attempt.
(327) In light of the above, taking account of the results of the market investigation and of
       all the evidence available to it, the Commission considers that the Transaction does
       not raise serious doubts as to its compatibility with the internal market in relation to
       the vertical link between butadiene (upstream) and chloroprene rubber (downstream)
       and, in particular, that it is unlikely that this vertical link would lead to customer
       foreclosure risks.
7.4.   Ethylene (upstream) with C4 LLDPE (downstream); butene -1 (upstream) with
          C4 LLDPE (downstream)
(328) In this Section, the Commission analyses the vertical effects arising from the
       Transaction because of the vertically affected market in the supply of C4 LLDPE
       (where both Parties are active), which is vertically linked with the supply of two
       products: ethylene (where both Parties are active) and butene-1 (where only SABIC
       is active).
7.4.1. Market definitions
2. 7.4.1.1. Ethylene
(329) Ethylene is the simplest olefin hydrocarbon, and the most widely produced organic
       compound worldwide. It occurs naturally in crude oil and natural gas, but it is
       mostly produced industrially by cracking heavier hydrocarbons such as naphtha,
       liquid petroleum gas, or ethane.
339   Responses to question 18 of Q18 - Questionnaire to competitors and customers of Chloroprene rubber.
340   Responses to questions 9 and 11 of Q17 - Questionnaire to competitors and customers of Butadiene.
341   Responses to questions 13, 14 and 15 of Q17 - Questionnaire to competitors and customers of
      Butadiene.
342   Form CO, paragraph 2171
343   Responses to questions 5, 6 and 7 of Q17 - Questionnaire to competitors and customers of Butadiene.
                                                        76
 ---pagebreak--- (330) Ethylene is used to produce polyethylene, ethylene oxide, or ethylbenzene, which
        themselves serve to produce a number of second-level derivatives including EG.
7.4.1.1.1. Product market definition
The Commission’s precedents
(331) The Commission has previously considered ethylene to be a separate relevant
        product market.344
The Notifying Party’s view
(332) The Notifying Party does not disagree with the Commission’s precedents. 345
The Commission’s assessment
(333) The market investigation has largely confirmed the Commission’s precedents that
        ethylene is a separate relevant product market. Market respondents generally agreed
        that ethylene is a commodity product with a single grade and is not substitutable
        with any other products.346
(334) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the product market definition for ethylene can be left
        open, since the Transaction does not raise serious doubts as to its compatibility with
        the internal market, under any plausible product market definition.
7.4.1.1.2. Geographic market definition
The Commission’s precedents
(335) The Commission previously considered that the relevant geographic market for
        ethylene should be as broad as the available pipeline networks, given its highly
        flammable nature that makes it unsuitable for road or rail transport. 347
The Notifying Party’s view
    (336)        The Notifying Party submits that the market for ethylene is global or at least
        EEA-wide in scope.348 This is due to the fact that there are no trade barriers globally
        and especially between EEA countries, and that transport between various global
        regions has significantly increased over the past years. For instance, the Notifying
        Party notes that the ethylene it sells to the EEA is [Information on Saudi Aramco’s
        commercialization of ethylene in the EEA], and that a portion of the ethylene it
        produces in the EEA is sold to China. Therefore, the Notifying Party considers that
        the Commission’s precedents are overly narrow and should be widened to include at
        least the territory of the EEA.
344   See case COMP/M.4744 - Ineos/Borealis, decision of 24.08.2007 and case COMP/M.2345 - Deutsche
      BP/Erdölchemie, decision of 26.04.2001.
345   Form CO, paragraphs 125-126.
346   Responses to questions 3 and 4 of Q13 - Questionnaire to competitors and customers of Ethylene.
347   See case COMP/M.4744 - Ineos/Borealis, decision of 24.08.2007 and case COMP/M.2345 - Deutsche
      BP/Erdölchemie, decision of 26.04.2001.
348   Form CO, paragraphs 129-135.
                                                       77
 ---pagebreak--- The Commission’s assessment
(337) The market investigation confirmed that while ethylene can be and is shipped
        globally, the viability of trading it in EEA is limited by the need to have access to
        the pipeline network and to coastal storage facilities via an existing terminal. 349
        Therefore, respondents to the market investigation appeared to equate the EEA with
        the pipeline network. The majority of customers reported purchasing ethylene for
        use in the EEA from EEA-based suppliers, and saw no major barriers to purchasing
        from anywhere in the EEA.350 Additionally, the majority of suppliers indicated that
        they sold ethylene on a global scale, and the majority of customers considered that
        suppliers’ plants outside EEA could credibly sell ethylene to customers in the
        EEA.351
(338) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the geographic market definition for ethylene can be left
        open between EEA and worldwide, since the Transaction does not raise serious
        doubts as to its compatibility with the internal market, under any plausible
        geographic market definition.
7.4.1.2.Butene-1 (C4)
(339) Butene-1 is the shortest type of Linear Alpha Olefin (“LAO”), which are classified
        by the length of the hydrocarbon chain, varying from four carbons (butene-1) to
        more than thirty (expressed as C30+). LAOs have a wide range of applications.
        Butene-1 (C4) is primarily used as a co-monomer in the production of some
        differentiated types of polyethylene (HDPE and C4 LLDPE). Butene-1 is also used
        as an intermediary in the production of various chemical products including butyl
        mercaptan, aldehyde intermediates, alcohols and other C4 derivatives.
7.4.1.2.1.   Product market definition
The Commission’s precedents
(340) The Commission has not previously considered butene-1 as a separate relevant
        product market. It has treated LAOs as a separate market, but it has also left open
        whether LAOs should be further sub-segmented.352
The Notifying Party’s view
(341) The Notifying Party does not disagree with the Commission’s precedents. 353
The Commission’s assessment
(342) Most respondents to the market investigation considered LAOs can be substituted
        with each other and therefore constitute a single relevant product market. However,
        some indicated that for the manufacture of polyethylene, substitution between
349   Responses to questions 5 and 6 of Q13 - Questionnaire to competitors and customers of Ethylene.
350   Responses to questions 9 and 10 of Q13 - Questionnaire to competitors and customers of Ethylene.
351   Responses to questions 7 and 8 of Q13 - Questionnaire to competitors and customers of Ethylene.
352   See case COMP/M.1293 - BP/Amoco, decision of 11.12.1998 and case COM P/M .2299 - BP
      Chemicals/Solvay/HDPE JV, decision of 29.11.2001.
353   Form CO, paragraph 1419.
                                                        78
 ---pagebreak---         different types of LAOs might prove costly and would require reformulation as well
        as approval work.354
(343) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the product market definition for butene-1 can be left
        open, since the Transaction does not raise serious doubts as to its compatibility with
        the internal market, under any plausible product market definition (i.e. as an overall
        LAO market or a narrower market for butene-1).
7.4.1.2.2. Geographic market definition
The Commission’s precedents
(344) The Commission has not previously considered the geographic scope of a plausible
        market for butene-1. It has, however, considered that the geographic market for all
        LAOs (including butene-1) would be global or at least EEA-wide.355
The Notifying Party’s view
(345) The Notifying Party submits that the geographic market for the production and sale
        of all LAOs is global or at least EEA-wide in scope, as there are no trade barriers
        globally and especially in the EEA. 356
The Commission’s assessment
(346) The Commission’s market investigation confirmed that all LAOs are globally traded
        with ease and with no major barriers impeding it. 357 Suppliers indicated that they
        would be able to easily supply the EEA from plants outside it, and customers
        considered that plants outside the EEA can credibly sell LAOs to customers in the
        EEA.358
(347) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the geographic market definition for butene-1 can be
        left open, since the Transaction does not raise serious doubts as to its compatibility
        with the internal market, under any plausible geographic market definition (i.e.
        EEA-wide or worldwide).
7.4.1.3.C4 LLDPE
(348) As explained above in paragraphs (117) onwards, the exact product and geographic
        market definitions can be left open as no competitive concerns arise under any
        plausible product market definition (including if polyethylene is segmented between
        LDPE, LLDPE and HDPE or by comonomer, for example to the level of C4
        LLDPE) or geographic market definition (worldwide or EEA-wide).
354   Responses to question 4 of Q15 - Questionnaire to competitors and customers of Hexene-1.
355   See case COMP/M.1293 - BP/Amoco, decision of 11.12.1998 and case COM P/M .2299 - BP
      Chemicals/Solvay/HDPE JV, decision of 29.11.2001.
356   Form CO, paragraphs 1420-1421.
357   Responses to questions 5 and 8 of Q15 - Questionnaire to competitors and customers of Hexene-1.
358   Responses to questions 6 and 7 of Q15 - Questionnaire to competitors and customers of Hexene-1.
                                                        79
 ---pagebreak---  ---pagebreak---       engage in any customer foreclosure strategy in relation to ethylene rivals (upstream)
      through its downstream position in C4 LLDPE.
(355) First, as regards ability, the data provided by the Notifying Party and received
      pursuant to the market investigation confirmed that the combined entity is a
      relatively small purchaser of ethylene in the EEA and worldwide. 360 The majority of
      respondents did not expect the Transaction to have a significant impact on the
      market for ethylene and, in particular, the majority of suppliers that expressed a view
      considered that there will remain a sufficient pool of customers to which they can
      sell ethylene post-Transaction.361 In light of the above, it is unlikely that the
      combined entity would have the ability to foreclose ethylene suppliers (upstream) by
      attempting a customer foreclosure strategy.
(356) Second, as regards incentive, the market investigation has broadly confirmed that the
      Notifying Party’s market share estimates are reliable and, in particular, that Saudi
      Aramco is considered a very minor supplier of ethylene, at both worldwide and EEA
      level, and irrespective of the precise market definition considered. 362 This supports
      the idea that even if such a customer foreclosure was possible, and was efficiently
      implemented so that it successfully managed to bring up the prices for ethylene in
      the EEA or worldwide, the Parties’ modest market share in this market would
      severely limit the benefits that the combined entity would reap from such a strategy.
(357) Third, even if the combined entity completely ceases to purchase ethylene from
      upstream rivals post-Transaction, such a strategy is unlikely to have an adverse
      impact in the downstream market for C4 LLDPE in the EEA. As explained above,
      the combined entity is a small purchaser of ethylene. Consequently, an insufficient
      fraction of ethylene output (upstream) would be affected by the revenue decreases
      resulting from the fact that the combined entity would, post-Transaction, completely
      cease to purchase ethylene from upstream rivals. Moreover, even if the impact were
      concentrated on one upstream supplier who faces a costs increase as a result, the
      market investigation confirmed that there are a number of strong suppliers of
      ethylene in the EEA that will remain post-Transaction, including BASF, BP, Dow,
      Shell, Total and others.363 The majority of customers also confirmed that they multi-
      source and that switching between suppliers of ethylene (which they indicated is a
      commodity product) is easy.364 Therefore, it is unlikely that a customer foreclosure
      attempt would have an impact upstream, but even if it did, downstream customers
      would have an effective and timely counter-strategy to any foreclosure attempt.
(358) In light of the above, taking account of the results of the market investigation and of
      all the evidence available to it, for the purposes of the present Decision the
      Commission considers that the Transaction does not raise serious doubts as to its
      compatibility with the internal market in relation to the vertical link between
      ethylene (upstream) with C4 LLDPE (downstream), regardless of whether the
      market is considered to be EEA-wide or worldwide.
360  Responses to question 11 of Q13 - Questionnaire to competitors and customers of Ethylene and Form
     CO, Annex D.
361  Responses to question 19 of Q13 - Questionnaire to competitors and customers of Ethylene.
362  Responses to question 13 of Q13 - Questionnaire to competitors and customers of Ethylene.
363  Responses to question 13.1 of Q13 - Questionnaire to competitors and customers of Ethylene.
364  Responses to questions 15 and 16 of Q13 - Questionnaire to competitors and customers of Ethylene.
                                                      81
 ---pagebreak---  ---pagebreak--- (364) First, as regards ability, the market investigation confirmed that SABIC is a large
      supplier of C4 LLDPE in the EEA. 368 However, data submitted by the Notifying
      Party indicates that the combined entity will be a small purchaser of butene-1.369 In
      addition, the majority of respondents did not expect the Transaction to have a
      significant impact on the upstream market for LAOs, including in the market for
      butene-1, and, in particular, all LAO manufacturers that expressed a view considered
      that the Transaction would have no significant impact on their business. 370 In light of
      the above, it is unlikely that the combined entity would have the ability to foreclose
      butene-1 suppliers (upstream) by attempting a customer foreclosure strategy.
(365) Second, as regards incentive, the market investigation has broadly confirmed that the
      Notifying Party’s market share estimates are reliable and, in particular, that SABIC
      is only a minor supplier of LAOs, at both worldwide and EEA level, and irrespective
      of the precise market definition considered (while Saudi Aramco does not
      manufacture LAOs).371 This would tend to support the view that even if such a
      customer foreclosure was possible, and was efficiently implemented so that it
      successfully managed to bring up the prices for butene-1 or LAOs in the EEA or
      worldwide, the Parties’ very modest market share in this market would severely limit
      the benefits that the combined entity would reap from such a strategy.
(366) Third, even if the combined entity completely ceases to purchase butene-1 from
      upstream rivals post-Transaction, such a strategy is unlikely to have an adverse
      impact in the downstream market for C4 LLDPE in the EEA. As explained above,
      the combined entity is a small purchaser of butene-1. Consequently, an insufficient
      fraction of butene-1 output (upstream) would be affected by the revenue decreases
      resulting from the fact that the combined entity would, post-Transaction, completely
      cease to purchase ethylene from upstream rivals. Moreover, even if the impact were
      concentrated on one upstream supplier who faces a costs increase as a result, the
      market investigation confirmed that there will remain a number of strong suppliers
      of LAOs to constrain the combined entity post-Transaction and customers have
      confirmed that customers multi-source and have switched customer in the last three
      years.372 Therefore, it is unlikely that a customer foreclosure attempt would have an
      impact upstream, but even if it did, downstream customers would have an effective
      and timely counter-strategy to any foreclosure attempt.
(367) In light of the above, taking account of the results of the market investigation and of
      all the evidence available to it, the Commission considers that the Transaction does
      not raise serious doubts as to its compatibility with the internal market in relation to
      the vertical link between butene-1 (upstream) with C4 LLDPE (downstream),
      regardless of whether the market is considered EEA-wide or worldwide.
368  Responses to question 11, 12, 13 of Q5 - Questionnaire to competitors and customers of Polyethylene.
369  Form CO, Annex D.
370  Responses to questions 18 and 19 of Q15 - Questionnaire to competitors and customers of Hexene-1.
371  Responses to questions 11 and 12 of Q15 - Questionnaire to competitors and customers of Hexene-1.
372  Responses to questions 10, 11, 13, 15 and 17 of Q15 - Questionnaire to competitors and customers of
     Hexene-1.
                                                      83
 ---pagebreak--- 7.5.    Ethylene (upstream) with ethylene propylene terpolymer rubber (EPDM)
          (downstream); propylene (upstream) with EPDM (downstream); and hexene -
          1 (upstream) with EPDM (downstream)
(368) In this Section, the Commission analyses the vertical effects arising from the
        Transaction because of the vertically affected market in the supply of EP(D)M
        (where both Parties are active), which is vertically linked with the supply of two
        products (upstream to EP(D)M): ethylene (where both Saudi Aramco and SABIC are
        active), propylene (where both Saudi Aramco and SABIC are active), and hexane-1
        (where SABIC is active).
7.5.1. Market definitions
4. 7.5.1.1. Ethylene
(369) As explained above in paragraphs (329) onwards the exact product and geographic
        market definitions for ethylene can be left open as no competitive concerns arise
        under any product or geographic market definition.
7.5.1.2.Propylene
(370) Propylene is the second simplest member of the olefins family after ethylene. It is a
        non-toxic, non-corrosive and colourless gas of a highly flammable nature. It is
        produced via a steam cracking process from a variety of feedstock, including from
        naphtha and from liquefied petrol gas. As a building block compound, its main use is
        to be processed into polypropylene resins, which accounts for more than half of the
        global propylene consumption. Other uses of propylene include the production of
        propylene oxide, acrylic acid, or butanol, among others.
7.5.1.2.1. Product market definition
The Commission’s precedents
(371) In past decisions, the Commission has considered propylene as a separate relevant
        product market,373 or left the precise product market definition open. 374
The Notifying Party’s view
(372) The Notifying Party does not disagree with the Commission’s precedents, but
        submits that the precise product market definition can be left open as the Transaction
        would not significantly impede effective competition irrespective of the precise
        product market definition.375
The Commission’s assessment
(373) The market investigation has largely confirmed the Commission’s precedents that
        view propylene as a separate relevant product market. Market respondents generally
        agreed that propylene is not substitutable with any other products. 376 However,
373   See case COMP/M.2345 - Deutsche BP/Erdölchemie, decision of 26.04.2001.
374   See Case COMP/M.7162 - Ineos/SSG Solvents Business, decision of 5.05.2014.
375   Form CO, paragraphs 354-355.
376   Responses to question 3 of Q14 - Questionnaire to competitors and customers of Propylene.
                                                       84
 ---pagebreak---         respondents drew a distinction between three grades: polymer grade (purity of
        ~99.5%), chemical grade (purity of ~90-95%) and industrial or refinery grade (lower
        purity, ~60%). Respondents strongly indicated that the market is weighted towards
        the highest two grades, as refinery grade propylene is usually consumed captively,
        rather than being traded widely and can only be used after upgrading it to chemical
        or polymer grade. 377 As one supplier explained “polymer grade is the product
        universally traded (…) the other grades are normally consumed captively (…) where
        they are traded, they are traded in much smaller volumes and their price is a
        percentage of the polymer grade contract price”.378 Moreover, suppliers indicated
        that there is high supply-side substitutability, as all different production processes
        are capable of producing propylene with different purities. 379
(374) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the product market definition for propylene can be left
        open, since the Transaction does not raise serious doubts as to its compatibility with
        the internal market, under any plausible product market definition.
7.5.1.2.2. Geographic market definition
The Commission’s precedents
(375) In past decisions, the Commission has considered that the relevant geographic
        market for propylene is at least Western European and possibly EEA-wide,380 or left
        the precise geographic market definition open. 381
The Notifying Party’s view
(376) The Notifying Party does not disagree with the Commission’s precedents, but
        submits that the precise market definition can be left open as the Transaction would
        not significantly impede effective competition irrespective of the precise geographic
        market definition.382
The Commission’s assessment
(377) The market investigation suggested that the market for propylene is global, 383 as
        there are steady flows of propylene between regions and the supply, demand and
        pricing conditions are influenced by global trends. 384 This appears to be particularly
        true for the EEA, where feedstock price differences with other regions make imports
377   Responses to question 4 of Q14 - Questionnaire to competitors and customers of Propylene.
378   Supplier’s response to question 4 of Q14 - Questionnaire to competitors and customers of Propylene.
379   Supplier’s response to question 4 of Q14 - Questionnaire to competitors and customers of Propylene.
380   See, e.g., case COMP/M.5424 - Dow/Rohm and Haas, decision of 8.01.2009.
381   See case COMP/M.7162 - Ineos/SSG Solvents Business, decision of 5.05.2014.
382   Form CO, paragraphs 356-360.
383   The market investigation strongly indicated that a market limited to Western Europe would not be
      appropriate for propylene for the purposes of the present Decision, so it is not considered further in this
      Decision.
384   Responses to question 5 of Q14 - Questionnaire to competitors and customers of Propylene.
                                                         85
 ---pagebreak---         attractive.385 Moreover, the majority of customers considered that supplier’s plants
        outside the EEA could credibly supply customers inside the EEA. 386
(378) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the geographic market definition for propylene can be
        left open, since the Transaction does not raise serious doubts as to its compatibility
        with the internal market, under any plausible geographic market definition (i.e. EEA
        or worldwide).
7.5.1.3.Hexene-1 (C6)
(379) Hexene-1 is a type of Linear Alpha Olefin (“LAO”), which are classified by the
        length of the hydrocarbon chain, varying from four carbons (butene-1) to more than
        thirty (expressed as C30+). LAOs have a wide range of applications. Hexene-1 (C6)
        is primarily used as a co-monomer in the production of some differentiated types of
        polyethylene and EP(D)M.
7.5.1.3.1. Product market definition
The Commission’s precedents
(380) In past decisions, the Commission found that LAOs constitute a separate market, and
        left open the question as to whether LAOs should be further sub-segmented.387 In
        particular, the Commission has not assessed whether hexene-1 forms a separate
        relevant product market.
The Notifying Party’s view
(381) The Notifying Party does not disagree with the Commission’s precedents. 388
The Commission’s assessment
(382) The market investigation indicated that, for the production of polyethylene, hexene-1
        can partially be substituted by other LAOs such as butene-1 and octene-1, but not for
        the synthesis of other chemicals, where it delivers specific properties to the final
        product.389 In addition, most respondents indicated that no further segmentation of
        hexene-1 is required.390
(383) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the product market definition for hexene-1 can be left
        open, since the Transaction does not raise serious doubts as to its compatibility with
        the internal market, under any plausible product market definition (i.e. as an overall
        LAO market or a narrower market for hexene-1).
385   Responses to question 8 of Q14 - Questionnaire to competitors and customers of Propylene.
386   Responses to question 7 of Q14 - Questionnaire to competitors and customers of Propylene.
387   See case COMP/M.1293 - BP/Amoco, decision of 11 December 1998 and case COMP/M.2299 - BP
      Chemicals/Solvay/HDPE JV, decision of 29.11.2001.
388   Form CO, paragraph 1419.
389   Responses to question 3 of Q15 - Questionnaire to competitors and customers of Hexene-1.
390   Responses to question 4 of Q15 - Questionnaire to competitors and customers of Hexene-1.
                                                       86
 ---pagebreak--- 7.5.1.3.2. Geographic market definition
The Commission’s precedents
(384) The Commission has not previously considered the geographic scope of a plausible
        market for hexene-1. It has, however, considered that the geographic market for all
        LAOs (including hexene-1) would be global or at least EEA-wide.391
The Notifying Party’s view
(385) The Notifying Party submits that the geographic market for the production and sale
        of all LAOs is global or at least EEA-wide in scope, as there are no trade barriers
        globally and especially in the EEA. 392
The Commission’s assessment
(386) The Commission’s market investigation confirmed that all LAOs, including hexene-
        1, are globally traded with ease and with no major barriers impeding it. 393 Suppliers
        indicated that they would be able to easily supply customers within the EEA from
        plants outside it, and customers confirmed that plants outside the EEA can credibly
        sell hexene-1 to customers in the EEA.394
(387) In any event, the Commission considers that, for the purposes of the present
        Decision, the exact scope of the geographic market definition for hexene-1 can be
        left open, since the Transaction does not raise serious doubts as to its compatibility
        with the internal market, under any plausible geographic market definition (i.e.
        EEA-wide or worldwide).
7.5.1.4.Ethylene propylene terpolymer rubber (EPDM)
(388) As explained above in paragraphs (92) onwards, ethylene propylene terpolymer
        rubber (“EPDM”) is a synthetic rubber obtained by polymerisation of ethylene and
        propylene in the presence of a diene component. The ethylene-propylene elastomer
        family also comprises another type of rubber, which is ethylene propylene co-
        polymer (“EPM”). For the purposes of the present Decision, EPDM and EPM will
        be referred to jointly as “EP(D)M”. As explained above in paragraphs (95) onwards,
        the exact product and geographic market definitions for EP(D)M can be left open as
        no competitive concerns arise under any product or geographic market definition.
7.5.2. Competitive assessment
5. 7.5.2.1. Ethylene (upstream) with EP(D)M (downstream)
(389) The Transaction gives rise to a vertically affected link concerning the supply of
        ethylene (upstream) and the supply of EP(D)M (downstream). Upstream, both
        Parties produce and sell ethylene worldwide and in the EEA. Downstream, both
        Parties also produce and sell EP(D)M worldwide and in the EEA.
391   See case COMP/M.1293 - BP/Amoco, decision of 11.12.1998 and case COM P/M .2299 - BP
      Chemicals/Solvay/HDPE JV, decision of 29.11.2001.
392   Form CO, paragraphs 1420-1421.
393   Responses to questions 5 and 8 of Q15 - Questionnaire to competitors and customers of Hexene-1.
394   Responses to questions 6 and 7 of Q15 - Questionnaire to competitors and customers of Hexene-1.
                                                        87
 ---pagebreak--- (390) According to the Notifying Party’s estimates, this link is vertically affected due to
       the Parties’ combined market shares, downstream, in the supply of EP(D)M in the
       EEA in 2017 and 2016. The combined shares accounted for [30-40]% in 2017
       (Saudi Aramco: [30-40]%; SABIC: [0-5]%;) and [30-40]% in 2016 (Saudi Aramco:
       [30-40]%; SABIC: [0-5]%). The EP(D)M market is not vertically affected if defined
       as worldwide in scope, or when looking at 2018 data.
(391) The Notifying Party’s estimates for the Parties’ and their largest competitors’ market
       shares in the supply of ethylene (upstream) and EP(D)M (downstream) in the EEA
       are shown in Table 6 and Table 18 above.
The Notifying Party’s view
(392) The Notifying Party submits that the combined entity would lack the ability or
       incentive to engage in a customer foreclosure strategy.395 This is due to the Parties’
       relatively low market shares in EP(D)M, the existence of a sufficient customer base
       for ethylene and competition in the upstream market for ethylene, and the fact that
       EP(D)M producers represent a small customer base compared to other downstream
       purchasers of ethylene (as only 10% of EEA demand for ethylene comes from the
       EP(D)M industry).
The Commission’s assessment
(393) The relationship between ethylene and EP(D)M would not represent an affected
       market on the basis of the most recently available market shares (i.e. 2018 figures).
       However, the Commission has assessed this link on a conservative basis.
(394) Given the Parties’ negligible market shares in the upstream market for ethylene, and
       consequently the combined entity’s inability to foreclose access to ethylene post-
       Transaction, input foreclosure will not be assessed in the present Decision.
(395) Regarding potential customer foreclosure risks, the results of the Commission’s
       market investigation indicated that the combined entity is unlikely to be able to
       successfully engage in any customer foreclosure strategy in relation to ethylene
       rivals through its downstream position in EP(D)M in the EEA.
(396) Firstly, as regards ability to foreclose access to EP(D)M customers from ethylene
       rivals, the Parties have a modest position in the downstream market for EP(D)M
       based on the most recent market data (2018). Participants to the market investigation
       generally confirmed that the Parties’ market share estimates are largely accurate. 396
       In a market with a post-merger HHI below 2 000, and possessing small-to-moderate
       market shares ([10-20]% (worldwide) and [20-30]% (EEA)), the Notifying Party is
       unlikely to have the ability to foreclose suppliers of a significant downstream
       customer base.397 As outlined in paragraph (355) above, the combined entity will be
       a small purchaser of ethylene and many other customers are available, and so is
       unlikely to have the ability to foreclose upstream suppliers.
395  Form CO, paragraphs 1505-1512.
396  Responses to questions 11, 12 and 13 of Q4 - Questionnaire to competitors and customers of Ethylene
     propylene terpolymer rubber (EP(D)M).
397  Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of
     concentrations between undertakings (2008/C/ 265/07), paragraph 25.
                                                      88
 ---pagebreak--- (397) Secondly, as regards incentive, with a combined market share of [0-5]% worldwide
       and [10-20]% in the EEA in the merchant market for ethylene, the Notifying Party
       would not have a significant presence in the upstream market and so its benefits
       from a foreclosure strategy would likely be limited.
(398) Thirdly, such a strategy is unlikely to have an adverse impact in the downstream
       market for EP(D)M in the EEA or worldwide. As outlined in paragraph (357) above,
       there are a number of strong suppliers of ethylene in the EEA, customers multi-
       source and can switch easily. This lack of impact was confirmed during the market
       investigation, where respondents confirmed that they do not expect the Transaction
       to have any negative impact on prices, quality, choice on innovation for the market
       for EP(D)M (or indeed ethylene) in the EEA or worldwide and no material concerns
       were raised regarding either product. 398
(399) In light of the above, taking account of the results of the market investigation and of
       all the evidence available to it, for the purposes of this Decision the Commission
       considers that the Transaction does not raise serious doubts as to its compatibility
       with the internal market in relation to the vertical link between ethylene (upstream)
       with EP(D)M (downstream), regardless of whether the market is considered to be
       EEA-wide or worldwide.
6. 7.5.2.2. Propylene (upstream) with EP(D)M (downstream)
(400) Both Parties produce propylene (upstream) and sell it worldwide and in the EEA as
       well as producing EP(D)M (downstream) and selling it worldwide and in the EEA.
       This link is vertically affected in the EEA due to the Parties’ combined market
       shares in EP(D)M in the EEA in 2017 (Saudi Aramco: [30-40]%; SABIC: [0-5]%;
       combined: [30-40]%) and for 2016 (Saudi Aramco: [30-40]%; SABIC: [0-5]%;
       combined: [30-40]%). The Parties’ market shares in EP(D)M for 2018 can be seen in
       Table 6 above.
398  Responses to questions 19 and 20 of Q4 – Questionnaire to competitors and customers of Ethylene
     propylene terpolymer rubber (EP(D)M) and responses to question 19 and 20 of Q13 - Questionnaire t o
     competitors and customers of Ethylene.
                                                   89
 ---pagebreak---  ---pagebreak---         generally confirmed that the Parties’ shares are largely accurate.400 In a market with
        a post-merger HHI below 2 000, and possessing small-to-moderate market shares
        ([10-20]% (worldwide) and [20-30]% (EEA)), the Notifying Party is unlikely to
        have the ability to foreclose suppliers of a significant downstream customer base.401
        As only a small percentage (less than 2%) of all propylene production is used as an
        input for EP(D)M, the combined entity will be a small purchaser of propylene, and
        so is unlikely to have the ability to foreclose upstream suppliers. 402
(407) Secondly, as regards incentive, with a combined market share of [0-5]% worldwide
        and [5-10]% in the EEA in the merchant market for propylene, the Notifying Party
        would not have a significant presence in the upstream market, and so its benefits
        from a foreclosure strategy would likely be limited.
(408) Thirdly, such a strategy is unlikely to have an adverse impact in the downstream
        market for EP(D)M in the EEA or worldwide. This was confirmed during the market
        investigation, where all competitors in the market for propylene expressed that they
        expect to continue having access to a sufficient pool of customers post-Transaction,
        and most respondents expressed that they do not expect the Transaction have any
        negative impact on prices, quality, choice or innovation in the market for EP(D)M
        (or propylene) in the EEA or worldwide. 403
(409) In light of the above, taking account of the results of the market investigation and of
        all the evidence available to it, the Commission considers that the Transaction does
        not raise serious doubts as to its compatibility with the internal market in relation to
        the vertical link between propylene (upstream) with EP(D)M (downstream),
        regardless of whether the market is considered EEA-wide or worldwide.
7.5.2.3.Hexene-1 (upstream) with EP(D)M (downstream)
(410) SABIC produces hexene-1 (upstream) and sells it worldwide and in the EEA. Both
        Parties produce EP(D)M (downstream) and sell it worldwide and in the EEA. This
        link is vertically affected in the EEA due to the Parties’ combined market shares in
        EP(D)M in the EEA in 2017 (Saudi Aramco: [30-40]%; SABIC: [0-5]%; combined:
        [30-40]%) and for 2016 (Saudi Aramco: [30-40]%; SABIC: [0-5]%; combined: [30-
        40]%). The Parties’ market shares in EP(D)M for 2018 can be seen in Table 6 above.
400   Responses to questions 11, 12 and 13 of Q4 - Questionnaire to competitors and customers of Ethylene
      propylene terpolymer rubber (EP(D)M).
401   Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of
      concentrations between undertakings (2008/C/ 265/07), paragraph 25.
402   Form CO, paragraph 1660.
403   Responses to questions 17 and 18 of Q14 - Questionnaire to competitors and customers of Propylene;
      responses to question 20 of Q4 – Questionnaire to competitors and customers of Ethylene propylene
      terpolymer rubber (EP(D)M).
                                                       91
 ---pagebreak---  ---pagebreak---        as an input for EP(D)M (the majority being used for polyethylene (37%), oxo
       alcohols (16%), and oil field chemicals (7%)), the combined entity will be a small
       purchaser of hexene-1, and so is unlikely to have the ability to foreclose upstream
       suppliers.407
(416) Secondly, with a combined market share of [0-5]% worldwide and [5-10]% in the
       EEA in the merchant market for hexene-1, the Notifying Party would not have a
       significant presence in the upstream market, and so its benefits from a foreclosure
       strategy would likely be limited.
(417) Thirdly, such a strategy is unlikely to have an adverse impact in the downstream
       market for EP(D)M in the EEA or worldwide. Thus, the availability of a significant
       amount of alternative customers would void a customer foreclosure strategy of its
       desired effect. This was confirmed during the market investigation, where all
       competitors in the market for hexene-1 expressed that they expect to continue having
       access to a sufficient pool of customers post-Transaction, and most respondents
       expressed that they do not expect that the Transaction will have any negative impact
       on prices, quality, choice or innovation in the market for EP(D)M (or hexene-1) in
       the EEA or worldwide.408
(418) In light of the above, taking account of the results on the market investigation and of
       all the evidence available to it, the Commission considers that the Transaction does
       not raise serious doubts as to its compatibility with the internal market in relation to
       the vertical link between hexene-1 (upstream) with EP(D)M (downstream),
       regardless of whether the market is considered EEA-wide or worldwide.
7.6.   General conclusion on vertical effects
(419) In the light of the considerations in paragraphs (239) to (418) the Commission
       concludes that the Transaction does not raise serious doubts as to its compatibility
       with the internal market with respect to vertical effects.
407  Form CO, paragraph 2046.
408  Responses to question 17 and 18 of Q15 - Questionnaire to competitors and customers of Hexene-1;
     responses to question 20 of Q4 – Questionnaire to competitors and customers of Ethylene propylene
     terpolymer rubber (EP(D)M).
                                                     93
 ---pagebreak--- 8.    CONCLUSION
(420) 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
                                                    Executive Vice-President
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