CELEX: 31995M0625
Language: en
Date: 1995-08-23 00:00:00
Title: COMMISSION DECISION of 23/08/1995 declaring a concentration to be compatible with the common market (Case No IV/M.625 - Nordic Capital / Transpool) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31995M0625

COMMISSION DECISION of 23/08/1995 declaring a concentration to be compatible with the common market (Case No IV/M.625 - Nordic Capital / Transpool) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 243 , 20/09/1995 P. 0005

  COMMISSION DECISION of 23/08/1995 declaring a concentration  to be compatible with the common market (Case No IV/M.625 -  Nordic Capital / Transpool) according to Council Regulation  (EEC) No 4064/89   (Only the English text is authentic).   The paper version of the decision is available through the  sales offices of the Office of Official Publications of the  European Communities  PUBLIC VERSION  MERGER PROCEDURE  ARTICLE 6(1)(b) DECISION  To the notifying parties  Dear Sirs,  Subject :<ind> Case N  IV/M.625  Nordic Capital/Transpool  <ind> <ind> Notification of 25.07.1995 pusuant to Article 4  of Council Regulation N  4064/89   1.<ind> On 25 July 1995 Atle AB (Atle), Investment AB Bure  (Bure), Almaenna Pensionsfonden, 4:e (AP4:e), Svenska  Handelsbanken (SHB), Skandia (Skandia), Electra Investment  Trust Plc. (Electra), AB Fortos (Fortos) and KF Invest AB  (KF) jointly notified a transaction whereby they will  acquire joint control of the company Transpool AB  (Transpool).   2.<ind> After examination of the notification, the  Commission has concluded that the notified transaction  constitutes a concentration falling within the scope of  Council regulation N  4064/89. The concentration does not  raise serious doubts as to its compatibility with the common  market and the functioning of the EEA agreement.  I. <tab> THE PARTIES  <tab> Investor companies  3.<ind> Atle is a Swedish investment company whose business  strategy is to invest directly as well as indirectly   through other venture capital organizations  in small and  mediumsized Swedish companies. Atle has more than 70 such  investments of which most are in companies with less than  500 employees. Investments are spread over a large range of  sectors such as food, leisure, wastehandling, engineering  and information technology.  4.<ind> Bure is a Swedish investment company which currently  has interests in the engineering industry and in the  production of food (confectionery).  5.<ind> AP4:e is the fourth board of the Swedish General  PensionFund which is a public organization whose activity  consists of investing pension funds for various profitable  purposes. According to Swedish law, the General Pension Fund  consist of five independent entities (Boards) each of which  has its own board of directors. The parties have confirmed  to the Commission that only the fourth and the fifth board  are allowed to invest in shares of companies and comparable  securities, and that there is no coordination of the  activities of the fourth and fifth board. Moreover, AP4:e is  by law allowed to have at most 10% of the voting rights in a  particular company.  6.<ind> Svenska Handelsbanken is a Swedish banking group  with a universal range of banking services. The company in  the group which is a party to the operation is Svenska  Handelsbanken Livfoersaekringsbolag.   7.<ind> Skandia is a Swedish group of companies which is  active in life assurance, nonlife insurance and reinsurance.  The company in the group which is a party to the operation  is Livfoersaekringsbolaget Skandia.  8.<ind> Nordic Capital Svenska AB (Nordic Capital) is an  investment company jointly controlled by Atle, Bure, AP4:e,  SHB and Skandia, since each party has veto rights concerning  the management decisions. Nordic Capital structures and  recommends structural investments and buyouts to its parent  companies. It is the main vehicle used by the investors to  carry out the transaction.  9.<ind> Electra is a British investment trust specializing  in long term equity investments in private companies,  principally in Europe and the USA.   <tab> Current owner companies  10.<ind> KF is the central organization of a group of  Swedish consumer cooperatives. According to KF's 1994 Annual  Report, KF has more than 100 cooperative member societies.  KF is primarily active in food and convenience goods  retailing.   11.<ind> Fortos is a wholly owned subsidiary of Volvo, the  Swedish industrial conglomerate which has its main  activities in automotives. The activities of Volvo outside  its core automotive business are held in the Fortos group of  companies (air transport, tourism, pharmaceuticals,  beverages etc.).   12.<ind> KF and Fortos jointly control the company  Borgtornet AB (Borgtornet) which hold 100% of the shares of  Transpool. In addition to Transpool, Borgtornet also has  interests in hotel and cruise ship operations.  <tab> Target companies  13.<ind> The target company of the operation is Transpool.  The activities of Transpool are organized in two wholly  owned subsidiaries: Transwede Airways AB (Transwede) and NRT  Nordpool AB (Nordpool). Transwede is an airline with  scheduled airline flights, charter flights and air freight  services. It is the second largest airline in Sweden (after  SAS). Nordpool is one of the largest Scandinavian travel  agencies with its main activities in the leisure market for  package tours.  II.<ind> THE OPERATION   14.<ind> Nordic Capital and Electra will inject new capital  into Transpool in the form of a convertible subordinated  loan. Electra will be represented in the operation by Nordic  Capital. However, Nordic Capital will need the approval of  Electra in decisions concerning Transpool.   15.<ind> The investors have an option to convert the  convertible subordinated loan to a 50% share holding in  Transpool, at the latest by mid1996. The investors can  exercise the option at their own discretion. The loan will  have to be repaid at the middle of 1996, if the investors  decide not to convert. However, it is the intention to  convert the loan in the first half of 1996 (see below).   III.<ind> THE CONCENTRATION  <tab> Joint control  16.<ind> In return for the convertible subordinated loan the  investors will have four out of eight board members. KF and  Fortos will each have two. A majority is required for  decisions by the board of Transpool. However, for key  strategic decisions as well as for other important issues  like dividend policy and major capital expenditure unanimity  by the board is required. Transpool will therefore be  jointly controlled by Fortos, KF, Nordic Capital (Atle,  Bure, AP4:e, SHB, Skandia, and Electra).  17.<ind> The management structure following the capital  injection will give the parties joint control over  Transpool. Although for thetime being the investors simply  provide a loan which first in one year may be turned into a  shareholding, the acquisition of joint control has to be  considered as taking place on a lasting basis. First, the  option to convert the convertible subordinate loan is  exclusively an option of the investor companies. Secondly,  the structure of joint control will not change materially in  the event where the investors decide to exercise their  option of conversion of the convertible subordinate loan to  equity capital. Thirdly, the investors will appoint four out  of eight board members. Fourthly, the investors have already  participated in the appointment of the new management team.  Fifthly, the new management team will over the next year be  making long term decisions like the acquisition of new  aircrafts. These decisions have at least a 35 year time  horizon and will be crucial for the long term perspectives  of Transpool. It would not be economically viable to reverse  these decisions in a years time. The new management team has  in that connection prepared extensive documentation used in  the decision of the investor companies to participate in the  current operation. Sixthly, the investment strategies of  Nordic Capital and Electra are normally to take a long term  interest in the companies in which they invest. It should in  this context also be noted that Nordic Capital has already  participated in a similar deal involving KF (see case  IV/M.522  Scandinavian Project). These elements are  indicative of the long term nature of the engagement of the  investor companies in Transpool. The parties have informed  the Commission that the acquisition of joint control by the  investors have only been structured in this way for  corporate reorganisation and accounting purposes, and they  have confirmed to the Commission that it is their intention  to make the new structure permanent and that the investors  have a long term perspective. Therefore, the control  structure of the joint venture can be considered as being  established on a lasting basis.  <tab> Full function on a lasting basis  18.<ind> Transpool will basically continue to be active as  an airline and a travel agency. One of the main purposes of  the operation is to achieve better coordination between the  operations of the two existing companies Transwede (the  airline) and Nordpool (the travel agency). The acquisition  of joint control does not change anything in this respect,  and the joint venture is therefore full function.  <tab> Absence of coordination  19.<ind> Volvo and KF will continue to have some leisure  activities in the company Borgtornet, but outside Transpool.  These activities notably consist of cruise ship operations  and the Reso hotel chain. The Reso hotels mainly focus on  the business traveller market. They are mainly situated in  central locations in the bigger cities in Sweden and Norway.  The hotel operations of Borgtornet are therefore only  marginally related to the hotel operations of Nordpool,  which are mostly resort hotels outside Scandinavia. However,  there is in any case no risk of coordination of the parent  companies activities, since the investor companies have  confirmed to the Commission that they neither have sole nor  joint control nor any material interest in any companies in  the markets of Transpool. There is therefore no potential  for coordination arising from the transaction notified.  <ind> Conclusion  20.<ind> The operation involves a change of joint control by  two parties to joint control by threeparties of Transpool.  The resulting joint venture has a concentrative character  within the meaning of the Merger Regulation.  IV.<ind> COMMUNITY DIMENSION   21.<ind> The concentration has a Community dimension as  specified in Article 1(2) of the merger Regulation. The  undertakings concerned have an aggregate worldwide turnover  of more than ECU 10 billion, which is above the ECU 5  billion requested by in the Merger Regulation. AP4:e (ECU  423 million), SHB (ECU 6343 million), Fortos (ECU 8942  million, includes Volvo), KF (ECU 3469 million) and Nordpool  (ECU 375 million) all have a Communitywide turnover of more  than ECU 250 million. Skandia, Fortos (including Volvo)  Nordpool do not achieve more than twothirds of their  aggregate Communitywide turnover within one and the same  member state.  22.<ind> The concentration does not constitute a case which  has to be jointly assessed by the Commission and the EFTA  Surveillance Authority under the EEA Agreement, since the  combined turnover of the undertakings concerned in the  territory of the EFTA States isless than 25% of their total  turnover within the EEA, and only one undertaking concerned  (Fortos with an EFTA wide turnover of ECU 537 millions  (including Volvo)), has a turnover exceeding ECU 250  millions in the territory of the EFTA states.  V.<ind> COMPATIBILITY WITH THE COMMON MARKET AND THE EEA  AGREEMENT  <tab> A. Relevant product markets  <ind> According to the parties the following relevant  product markets can be defined for this operation:  <ind> Scheduled flight market  23.<ind> Scheduled flight services are the market for  regular international and domestic line flights. Transwede  is active as a domestic carrier in Sweden and with services  to London. Transwede is the second largest domestic carrier  in Sweden (SAS is the largest).  <tab> Charter flight market  24.<ind> Charter flight services are mainly leisure flights,  often sold as part of a package tour. Transwede is one of  the largest charter flight operators in the Nordic area.  <tab> Air freight market  25.<ind> Transwede is the second largest operator in Sweden  in this market (after SAS).   <tab> Package tours market  26.<ind> Nordpool sells package tours with points of  departure in Sweden, Finland, Norway and Denmark. Nordpool  is the largest panNordic tour operator of package tours with  about one third of the market.  <ind> Hotel operations markets  27.<ind> Nordpool is a hotel operator, mainly of tourist  hotels. This activity is closely related to its activities  as a package tour operator (see above). Hotel accommodation  is normally part of the package of a package tour.  <tab> B. Relevant geographic market  28.<ind> The parties consider the product markets in  question either to be Nordic or national. However, the  market definitions can be left open, since there are no  market share additions on the relevant markets (see below).    <tab> C. Assessment  29.<ind> The operation will lead to no change of the market  structures of the markets affected by the operation, because  the investors are not active on any of the above markets.  There is therefore no addition of market shares, and  accordingly no need to assess the market positions of the  joint venture further from this perspective.  30.<ind> There will be no reduction in potential competition  through the operation, since the investor companies are  financial investors investing in the restructuring of a  company, and they have had no particular interest in the  markets of Transpool before the operation.  31.<ind> The operation will therefore not create or  strengthen a dominant position.  VI.<ind> ANCILLARY RESTRAINTS  32.<ind> The notifying parties have agreed to a  noncompetition clause pursuant to which Fortos, KF,  Borgtornet and the investors agree for a period of two  years, that neither Transpool nor any of its subsidiaries  will enter the business travel agency business. Transpool is  at the moment not active on the market for business  travellers.  33.<ind> The noncompetition clause relates to a recent sale  by Fortos and KF of a Swedish business travel agency. As  part of the sales agreement Fortos and KF made a noncompete  undertaking in order to protect the assets of the business  travel agency from competition from Fortos and KF. The  present noncompetition clause is an incorporation of an  almost identical noncompetition clause demanded by Fortos  and KF in order to avoid a breach of the noncompetition  clause relating to the sale of the business travel agency.  However, the present noncompetition clause does not aim at  guaranteeing the transfer of the full value of the target  companies, but rather aims at protecting a third party  against competition from Transpool in the business travel  agency market. It is accordingly not directly related to the  operation and not necessary for its implementation. It is  therefore not ancillary and may instead be subject to an  assessment under Article 85 of the Treaty.  VII.<tab> CONCLUSION  34.<ind> The notified operation amounts to a capital  injection with an ensuing change of the control structure.  However, the operationwill not lead to an addition of any  market shares and therefore not to any change of market  structure in the markets of the joint venture. The operation  will therefore neither create nor strengthen a dominant  position as a result of which effective competition would be  significantly impeded in the EEA market.  <ind> For the above reasons, the Commission has decided not  to oppose the notified operation and to declare it  compatible with the common market and with the functioning  of the EEA Agreement. This decision is adopted in  application of Article 6(1)b of Council Regulation No  4064/89.  For the Commission,