CELEX: 31997M0926
Language: en
Date: 1997-10-23 00:00:00
Title: COMMISSION DECISION of 23/10/1997 declaring a concentration to be compatible with the common market (Case No IV/M.926 - MESSER GRIESHEIM/HYDROGAS) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31997M0926

COMMISSION DECISION of 23/10/1997 declaring a concentration to be compatible with the common market (Case No IV/M.926 - MESSER GRIESHEIM/HYDROGAS) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 376 , 11/12/1997 P. 0011

COMMISSION DECISION of 23/10/1997 declaring a concentration to be compatible with the common market (Case No IV/M.926 - MESSER GRIESHEIM / HYDROGAS) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic).The paper version of the decision is available through the sales offices of the Office of Official Publications of the European Communities.PUBLIC VERSIONMERGER PROCEDUREARTICLE 6(1)(b) DECISIONTo the notifying partiesDear Sirs,Subject:   Case No IV/M.926 - MESSER GRIESHEIM/HYDROGAS      Notification of 24.09.1997 pursuant to Article 4 of Council Regulation N/ 4064/891.   On 24.09.1997, the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EEC) N  4064/89 by which Messer Griesheim GmbH ("Messer") and Hydrogas A.S. ("Hydrogas") create a joint venture Hydrogas-Messer ("HM") for the production and sale of industrial gases and related equipment in Sweden.2.   After examination of the notification, the Commission has concluded that the notified operation falls within the scope of Council Regulation (EEC) N  4064/89 and does not raise serious doubts as to its compatibility with the common market and with the functioning of the EEA Agreement.I.   THE PARTIES3.   Messer is a German subsidiary of Hoechst AG which holds 66.7 percent of the shares in the Messer group. The remaining shares are owned by Messer Industrie GmbH. Messer is a world-wide group active in two major business areas: industrial gases (including application technology and advanced gas systems) and cutting and welding equipment.4.   Hydrogas is a wholly owned Norwegian subsiduary of Norsk Hydro ASA. Hydrogas' activities are primarily confined to industrial gases and it produces such gases for use in all types of industriesII.   CONCENTRATIVE JOINT VENTURE   A. Joint control5.   The notified operation is a joint venture between Messer and Hydrogas for the production and sale of industrial gases as well as related equipment in Sweden. The parties have entered into a shareholders agreement for the setting up of the joint venture and each party will contribute 50% of the total share capital.6.   The joint venture will be managed by a board of directors consisting of four members, with each party appointing two members respectively. [Deleted for publication]7.   [Deleted for publication]8.   Accordingly, both parties will have the possibility to exercise decisive influence over the strategic commercial behaviour of the joint venture and therefore HM will be jointly controlled by Messer and Hydrogas.   B. Autonomous long-lasting economic entity9.   The joint venture will perform, on a lasting basis, all the functions of an autonomous economic unit. It is set up for an unlimited time period. For the start-up period, the parents will supply HM with the technology (Hydrogas with commercial know-how and Messer with technical know-how) necessary for the production and sales of inustrial gases and related equipment and services in Sweden. The joint venture will, among others, enter into an agreement with Hydrogas covering the supply of liquid carbon dioxide. This supply agreement is, however, non-exclusive and HM is free to purchase carbon dioxide from any third party. 10.   After the initial set-up period HM will in all respects have its own organisation for all purposes relevant to its business and it will also contract its own customers. It will be free to sell and purchase assets, industrial gases and related equipment to or from any third party and it will have all the funds and personnel necessary for this purpose. Therefore, HM will have all the functions of an autonomous economic entity.   C. Concentrative joint venture11.   The parents are both active in the industrial gas sector in Europe and elsewhere. However, only Hydrogas is at present active in Sweden although not to a very significant extent and all its activities (including all relevant assets etc) on the Swedish market will be transfered to HM. Thus, after the completion of the start-up period, neither of the parents will be competing in Sweden in the field of activities of the joint venture.  Since markets for industrial gases are regional  in scope (see below), neither parent will be present on the same geographic market as HM. The creation of the joint venture will not, therefore, give rise to co-ordination of the competitive behaviour of the parents.III.   COMMUNITY DIMENSION12.   Hoechst and Hydrogas  have a combined aggregate world-wide turnover in excess of ECU 5 000 million (Ecu 27,462 million and 10,346 million respectively). Each of them has a Community-wide turnover in excess of ECU 250 million (Ecu 11,967 million and 6,357 million rspectively). Furthermore, they do not achieve more than two-thirds of their aggregate Community-wide turnover within one and the same Member State. The notified operation therefore has a Community dimension.  It does not fulfill the criteria under Article 2 of Protocol 24 to the EEA Agreement and therefore it does not fall to be treated as a cooperation case under that agreement.IV.   COMPETITIVE ASSESSMENT   A.    Relevant product market13.   Industrial gases have a large number of applications and are used in practically all industries and manufacturing processes.  For instance, oxygen is used for cutting and welding, malting glass and metals, health care and environmental protection.  Nitrogen is used as an inert gas for protection from oxidation and packaging of foodstuffs and as a liquid for rapid cooling or freezing of foodstuffs or non-food applications for paint removal and medical treatment. Customers typically include companies in the steel sector, processing industry, food and  beverage companies, municipalities, hospitals and companies in the electronic industry.14.   The raw material for industrial gases is air and the industrial gases are normally produced in air separation units which are either installed at the premises of the customer (on-site plants) or as stand-alone plants.  Industrial gases which are not produced on-site are usually delivered to customers in pipe-lines, tanks or cylinders.  The quantities delivered vary from thousands of tons of nitrogen and oxygen to small cylinders containing precise mixtures of speciality gases.15.   Although the different industrial gases are not demand substitutable, there is a degree of supply substitutability given the common raw material (air) and the fact that the major suppliers are producers of all or most industrial gases.  However, it is not necessary to delineate exactly the relevant product market because in all alternative market definitions considered, effective competition would not be significantly, impeded in the EEA or any substantial part of that area (see below).   B   Relevant geographic market16.   The market for industrial gases is local or regional in scope.  Industrial gases can normally not, except for certain high purity and high value gases and, to a lesser extent, carbon dioxide, be economically distributed to customers located more than approximately 200 kilometres from the production facility.  Thus, with few minor exceptions, imports and exports of industrial gases are negligible. The local or regional character of the market is illustrated by the fact that suppliers of industrial gases may, under certain circumstances, enter into swap arrangements with each other, in order to reduce transportation costs and to obtain more efficient utilisation of their production facilities.   C   Impact of the concentration17.   HM is a start-up venture in Sweden and has not yet any customer. The main competitor in Sweden is AGA, which has an aggregate market share at the national level of approximately 80%; the remaining 20% is held by Air Liquide.  The establishment of HM should therefore increase competition in the Swedish market for industrial gases.V   ANCILLARY RESTRAINTS18.   As set out in the shareholders Agreement neither of the parents shall compete with HM on the Swedish market for industrial gases as long as they have any shares in HM and for a period of one year thereafter.19.   The non-competition clause is directly related to the establishment and operation of HM and is also necessary for the protection of the interests of the parties and HM itself.  Thus, the non-competition clause is ancillary to the concentration.VI   CONCLUSION20.   For the above reasons, the Commission has decided not to oppose the notified operation and to declare it compatible with the common market and with the functioning of the EEA Agreement.  This decision is adopted in application of Article 6(1)b of Council Regulation (EEC) N  4064/89.For the Commission,