CELEX: 32015M7602
Language: en
Date: 2015-08-19 00:00:00
Title: Commission Decision of 19/08/2015 declaring a concentration to be compatible with the common market (Case No COMP/M.7602 - DEUTSCHE TELEKOM GROUP / MET HOLDING / JV) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

                                        Brussels, 19.8.2015
                                        C(2015) 5941 final

                                        [pic]

                                        [pic]

|                                                                       |                                                                       |
|                                                                       |                                                                       |
|To the notifying parties:                                              |                                                                       |

Dear Sir/Madam,

Subject:    Case M.7602 - DEUTSCHE TELEKOM GROUP/ MET HOLDING/ JV
         Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/2004[1] and Article 57 of the Agreement on the European
         Economic Area[2]

    1) On 17 July 2015, the Commission received a notification of a proposed concentration pursuant to Article 4 of Council  Regulation  (EC)  No
       139/2004  by which the undertakings Magyar Telekom Nyrt. ("Magyar  Telekom",  Hungary),  controlled  by  Deutsche  Telekom  AG  ("Deutsche
       Telekom", Germany), and MET Holding AG ("MET Holding", Switzerland), will acquire within the meaning of Article 3(1)(b) and  3(4)  of  the
       Merger Regulation joint control in a newly created company constituting a  joint  venture  ("JV")  by  way  of  purchase  of  shares  (the
       "Transaction")[3]. Magyar Telekom and MET Holding are designated hereinafter as the 'Notifying Parties' and together with the  JV  as  the
       'Parties'.

       THE PARTIES

    2) Magyar Telekom is a company primarily active in the provision of telecommunications services in Hungary.  The  company  is  controlled  by
       Deutsche Telekom AG ("Deutsche Telekom", Germany). Magyar Telekom is also a retail energy supplier providing electricity and  natural  gas
       services to residential and also non-residential customers.

    3) MET Group is a group of undertakings solely owned by the holding company MET Holding, active in Europe, in particular, in the trading  of,
       and wholesale and retail sales of natural gas, electricity, oil products. It is engaged in the retail sale  of  natural  gas  in  Hungary,
       Slovakia, Romania and Croatia and has started to build up its presence in the retail electricity markets.

    4) JV will be active in the retail supply of natural gas and electricity in Hungary.

       THE CONCENTRATION

    5) The JV will be jointly controlled by Magyar Telekom and MET Holding.

    6) Upon the establishment of the JV, MET Holding and Magyar Telekom will hold each a 50 % per cent of the shares in  the  JV.  The  Notifying
       Parties will have equal voting rights at the general meeting of JV, and they will be able to nominate an equal number of  members  to  the
       board of directors. Voting rights and provisions on quorum will also ensure that both Parties are able to influence or block the decisions
       of the board. The Transaction therefore leads to an acquisition of joint control over JV by Magyar Telekom  and  MET  Holding  within  the
       meaning of Article 3(1)(b) of the Merger Regulation.

    7) The JV qualifies as a full function joint venture within the meaning of Article 3(4) of the Merger Regulation, as it will perform  on  the
       lasting basis all the functions of an autonomous economic entity.

    8) The JV will have sufficient resources to operate independently on a market. Magyar Telekom  and  MET  Holding  will  transfer  to  the  JV
       customer contacts, sales related databases, contractual rights and obligations. As  a  result  the  JV  will  have  access  to  sufficient
       resources including finance and assets in order to conduct on a lasting basis its business activities. The JV will also have a  management
       fully dedicated to its day-to-day operations. It will be established for an undefined period of time.

       EU DIMENSION

    9) The undertakings concerned have a combined aggregate world-wide turnover of more than EUR  5  000  million  (Magyar  Telekom  EUR  62  658
       million; MET Holding EUR […])[4]. Each of them has an EU-wide turnover in excess of EUR 250 million (Magyar Telekom EUR […];  MET  Holding
       […] EUR), but they do not achieve more than two-thirds of their aggregate EU-wide turnover within one  and  the  same  Member  State.  The
       notified operation therefore has an EU dimension within the meaning of Article 1(2) of the Merger Regulation.

       RELEVANT MARKETS

1 Product market definition

   Retail supply of gas

   10) The Commission has distinguished between the following product markets in the retail gas sector: (i) supply to household  customers;  (ii)
       supply to small industrial and commercial customers; (iii) supply to large industrial customers; (iv)  supply  to  gas  fired  electricity
       power plants.[5]

   11) The Notifying Parties claim that the distinction between large industrial and small industrial and commercial  customers  should  be  made
       according to the customers' reserved capacity for gas. The Notifying Parties submit that large customers have typically more than 500 m3/h
       and small industrial customers less than 500 m3/h of reserved gas capacity. [6] The majority of customers and competitors confirmed in the
       market investigation that in Hungary large industrial customers typically have more than 500 m3/h of reserved  gas  capacity.  Competitors
       mainly confirmed that small industrial and commercial customers should be considered as the ones having less than 500 m3/h of reserved gas
       capacity. The distinction is therefore maintained for the present case.

   12) Furthermore, the Notifying Parties claim that a distinction between electricity fired power plants and large industrial  customers  should
       not be made as both types of customers are served under similar contracts and both customers consume similar volumes of gas.

   13) Customers and competitors in the market investigation did not provide a clear distinction with regard to large  industrial  customers  and
       power plants. Several customers and competitors did not consider a significant difference between the two customers  groups  in  terms  of
       prices, commercial relationship or marketing. However, some market participants indicated that both customer groups could be considered as
       different due to specific supply requirements for power plants, such as flexibility in contracting, off-take obligation,  special  payment
       conditions, and penalties in the gas purchase contracts.

   14) The Commission considers that the exact product market definition can be left open as the Transaction does not give rise to serious doubts
       as to its compatibility with the internal market under any plausible market definition that is a retail gas market  for  large  industrial
       customers with and without power plants.

       2 Geographic market definition

   15) In relation to the geographic market definition, the Commission has defined in its previous decisions the gas retail markets as not  wider
       than national.[7]  The Parties agree with this definition.

   16) The Commission considers that the exact geographic market definition can be left open as the Transaction does not  give  rise  to  serious
       doubts as to its compatibility with the internal market under any plausible market definition.

       COMPETITIVE ASSESSMENT

   17) The Parties' activities lead to horizontally affected retail gas markets in Hungary for (i) small  industrial  and  commercial  customers,
       (ii) large industrial customers and (iii) large industrial customers and power plants.[8]

   18) The market shares of the Parties for the affected retail gas markets in Hungary for the year 2014 are presented below:

|                        |Magyar Telekom               |MET Holding                  |Combined                       |

    |VALUE |VOLUME |VALUE |VOLUME |VALUE |VOLUME | |Small industrial and commercial customers |[0-5] % |[5-10] % |[10-20] % |[10-20] % |[10-20] %
    |[20-30]  % | |Large industrial customers |[0-5] %  |[0-5] % |[20-30] %  |[30-40] % |[30-40] %  |[30-40] % | |Large industrial customers  and
   power plants |[0-5] %  |[0-5] % |[20-30] %  |[20-30]% |[20-30] %  |[30-40] % | |Source: Form CO

   19) The Commission considers that the increment brought by the transaction is small. The market share of Magyar Telekom on any  of  the  above
       mentioned plausible markets does not exceed 5 % in Hungary.

   20) On the market for small industrial and commercial customers the Parties will face a number of strong competitors, such as Fogaz (20-25 %),
       Tigaz (17-22 %), E.ON (12-17 %), and MVM Group (2-7 %)[9]. Fogaz and Tigaz are stronger than the  Parties  post-transaction  and  each  of
       these competitors has a higher market share than Magyar Telekom.

   21) On the retail gas markets for (i) large industrial customers and (ii) large industrial customers and power plants a number of  competitors
       with significant market shares will remain active, such as: MVM Group (19-24 %), Fogaz (9-14 %), Tigaz (5-10 %) and E.ON (4-9 %)[10].

   22) Even though on the retail gas markets for (i) large industrial customers and (ii) large industrial customers and power plants the combined
       entity has the highest market share post-transaction, the Commission considers that the Transaction  will   have  limited  impact  on  the
       market as Magyar Telekom is not a significant competitor on both of these markets. Each of the competitors has a higher market share  than
       Magyar Telekom.

   23) In addition, during the market investigation the majority of competitors and customers indicated that Magyar Telekom is not  an  important
       or price aggressive competitor on the two markets.

   24) Moreover, the combined entity will be restrained by potential competitors. Firstly, in 2015 Elmu-Emasz  Group  announced  entry  into  the
       market for large industrial customers. The new entrant intends to acquire 10-15 %  of  the  market  share.  Secondly,  there  are  several
       companies that have already received licenses for operation in retail supply of gas from the Hungarian authorities and planning  to  start
       their activities in the near future.[11]

   25) The limited competitive impact by the  Transaction  was  also  confirmed  by  the  market  investigation.  The  customers  in  the  market
       investigation stated that they see sufficient alternatives to Magyar Telekom and MET Holding for gas supply procurement.

   26) Finally, the majority of customers and competitors stated in the market investigation that the transaction will not have any effect on the
       Hungarian retail gas markets for (i) small industrial and commercial customers; (ii) large industrial customers;  (iii)  large  industrial
       customers and power plants.

   27) Based on the above and all the available evidence, the Commission considers that the Transaction does not raise serious doubts as  to  its
       compatibility with the internal market in relation to the Hungarian retail gas markets for (i) small industrial and commercial  customers,
       (ii) large industrial customers and (iii) large industrial customers and power plants.

   28) In addition, the Commission considers that the Transaction is unlikely to give rise to conglomerate effects in  relation  to  telecom  and
       energy provision services. Firstly, the JV will only be active on retail markets for gas and electricity and  secondly,  post  transaction
       the JV will face competition from a number of significant competitors (see paragraphs 20 and 21 above). The Commission therefore considers
       that the Transaction does not raise serious doubts as to its compatibility with the internal market in relation to conglomerate effects.

       CONCLUSION

   29) 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),
                                        Miguel ARIAS CAÑETE
                                        Member of the Commission

-----------------------
[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 246, 28.07.2015, p. 7.

[4]   Turnover calculated in accordance with Article 5 of the Merger Regulation.
[5]   COMP/M.6910 Gazprom/Wintershall/Target Companies, COMP/M.4180 Gaz de France/Suez, COMP/M.3440 EDP/ENI/GDP and  COMP/M.5740  Gazprom/A2A/JV.
      The market for retail gas supply to household customers is not affected by the current transaction.
[6]   This approach was followed by the Hungarian Competition Authority in Decision no Vj/31/2013.
[7]   Case COMP/M.5740 – GAZPROM/A2A/JV; Case COMP/M.3868 – Dong/Elsam/Energi E2.
[8]   The combined market share of the Parties on the retail markets for electricity in Hungary does not exceed 5 %.
[9]   The market shares estimates are provided for both - value and volume.
[10]  The market shares estimates are provided for both - value and volume.
[11]  Full list of companies that received licenses for their activities is provided on www.mekh.hu.

-----------------------
 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.

                                                                  PUBLIC VERSION

                                                                 MERGER PROCEDURE