CELEX: 32021M10154
Language: en
Date: 2021-07-09 00:00:00
Title: Commission Decision of 09/07/2021 declaring a concentration to be compatible with the common market (Case No COMP/M.10154 - BME / SAINT-GOBAIN DISTRIBUTION THE NETHERLANDS) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                 Brussels, 9.7.2021
                                                                 C(2021) 5237 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                                                                  information omitted has been replaced by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.
                                                                 BME Group Holding B.V.,
                                                                 Walaardt Sacréstraat 405,
                                                                 1117 BM, Schiphol,
                                                                 The Netherlands
Subject:             Case M.10154 – BME/ Saint-Gobain Distribution the Netherlands
                     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 4 June 2021, the European Commission received notification of a proposed
          concentration pursuant to Article 4 of the Merger Regulation by which BME Group
          Holding B.V. (‘BME’ or the ‘Notifying Party’, the Netherlands) intends to acquire
          within the meaning of Article 3(1)(b) of the Merger Regulation sole control over
          Saint-Gobain Distribution the Netherlands B.V. (‘SGDN’, the Netherlands). The
          acquisition is accomplished by way of purchase of shares (‘the Transaction’). 3 BME
          and SGDN are designated hereinafter as the ‘Parties’.
1     OJ L 24, 29.1.2004, p. 1 (the ’Merger Regulation’). With effect from 1 December 2009, the Treaty on the
      Functioning of the European Union (‘TFEU’) has introduced certain changes, such as the replacement of
      ‘Community’ by ‘Union’ and ‘common market’ by ‘internal market’. The terminology of the TFEU will
      be used throughout this decision.
2     OJ L 1, 3.1.1994, p. 3 (the ‘EEA Agreement’).
3     Publication in the Official Journal of the European Union No C 234, 17.6.2021, p. 10–11.
Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE
Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË
Tel: +32 229-91111. Fax: +32 229-64301. E-mail: COMP-MERGER-REGISTRY@ec.europa.eu.
 ---pagebreak--- 1.       THE PARTIES
(2)      BME is a Netherlands-based company indirectly controlled by The Blackstone
         Group Inc. (‘Blackstone’). BME is active in the distribution of building materials via
         general builders’ merchant (‘GBM’), specialist builders’ merchant (‘SBM’) and
         do-it-yourself (‘DIY’) stores in Austria, Belgium, France, Germany, the Netherlands,
         Portugal,4 Spain5 and Switzerland.
(3)      In the Netherlands, BME operates 72 GBM stores under the BMN brand, 6 SBM
         stores specialised in interior finishing products under the BMN Wijcks brand,
         2 SBM stores specialised in ironmongery under the BMN IJzerwaren brand and
         17 cash-and-carry stores as a franchisee under the Bouwmaat brand. 6
(4)      SGDN is active in the Netherlands as a distributor of building materials via GBM
         and SBM stores. Moreover, it is active in the wholesale of ceramic tiles and of
         sanitary, heating and plumbing (‘SHAP’) products.
(5)      SGDN operates in the Netherlands 35 GBM stores under the Raab Karcher
         (32 stores) and De Jager Tolhoek (3 stores) brands and one SBM store in interior
         finishing products under the Van Keulen brand.
2.       THE CONCENTRATION
(6)      On 1 April 2021, BME, via its fully owned subsidiary BMN Bouwmaterialenhandel
         B.V. (‘BMN’), entered into a share purchase agreement (‘SPA’) to acquire 100% of
         the shares of SGDN. As a result of the Transaction, SGDN will be solely controlled
         by BME.
(7)      The Transaction is therefore a concentration pursuant to Article 3(1)(b) of the
         Merger Regulation.
3.       UNION DIMENSION
(8)      The undertakings concerned have a combined aggregate worldwide turnover in 2019
         of more than EUR 5 000 million (Blackstone: EUR […] million; SGDN: EUR […]
         million).7 Each of them has a Union-wide turnover in 2019 in excess of
         EUR 250 million, (Blackstone: EUR […] million; SGDN: EUR […] million) but
         they do not achieve more than two-thirds of their aggregate Union-wide turnover
         within one and the same Member State.
4   BME Group has announced that it has reached an agreement to acquire the remaining 50% of the share
    capital in Portuguese retailer Maxmat from Sonae MC; the transaction is expected to be completed in Q3
    of 2021.
5   BME’s acquisition of Grupo BMV, a supplier of interior finishing building products with 36 distribution
    centres across Spain, closed on 2 June 2021.
6   BME owns and operates […] Bouwmaat cash-and-carry franchise stores (which are […]% owned) and
    partly owns and operates […] Bouwmaat franchise stores (which are owned on a […] basis with its joint
    venture partner, Ter Steege Handel). BME also has a […]% interest in […] Bouwmaat franchise store
    which is managed by Ter Steege Handel ([…]). For completeness, BME is also active in the sale of bricks
    and roof tiles in the Netherlands through Kooy Baksteencentrum B.V. and V.O.F. De Amstel […].
7   Turnover calculated in accordance with Article 5 of the Merger Regulation .
                                                          2
 ---pagebreak--- (9)      The Transaction has therefore a Union dimension pursuant to Article 1(2) of the
         Merger Regulation.
4.       RELEVANT M ARKETS
4.1.     Relevant Product Markets
(10)     The Parties’ activities overlap in the retail distribution of building products via GBM
         stores and in the retail distribution of interior finishing products via SBM stores. In
         addition, there is a vertical link between SGDN’s activities in the wholesale
         distribution of ceramic tiles and SHAP products and BME’s activity as a GBM retail
         distributor.
(11)     The Commission has previously defined a market for the distribution of building
         products in general, and has considered but left open whether this market can be
         further divided into: (i) wholesale to retailers; (ii) retail sale to professional
         customers, primarily via GBM and SBM stores; and (iii) retail sale to non-
         professional customers, primarily through DIY stores.8
4.1.1. Wholesale distribution of building products
(12)     In relation to the wholesale distribution of building materials to retailers, the
         Commission has considered potential markets for particular types of building
         products.9
(13)     In light of this distinction by product category, the Notifying Party submits that there
         are two distinct relevant product markets: (i) the wholesale supply of tiles and (ii) the
         wholesale supply of SHAP Products.
(14)     According to the Notifying Party there is no need to further segment the wholesale
         supply of tiles market according to the type of material (e.g. ceramic, stone or
         concrete). Nonetheless, because SGDN only supplies ceramic tiles, the Notifying
         Party has provided market shares data on this narrower plausible segment. In
         addition, the Notifying Party submits that given supply-side substitution, there is no
         need to further segment the ceramic tiles market according to the end use, i.e. tiles
         for floors, on one hand, and tiles for walls, on the other.10
(15)     Similarly, the Notifying Party claims there is no need to further segment the
         wholesale supply of SHAP market, by subcategories of products, such as sanitary
         ware. However, as SGDN mainly supplies sanitary ware, the Notifying Party has
         provided market share data also for this segment.11
8    See, for example, Case COMP/M.7703 – PontMeyer/DBS, paragraphs 11–12; Case COMP/M.3407 –
     Saint Gobain/Dahl, paragraphs 12 and 16; Case COMP/M.3142 – CVC/Danske Traelast,
     paragraphs 11-13; Case COMP/M.8733 – Lone Star/Stark , paragraph 25; and Case COMP/M.9406 – Lone
     Star - Stark Group/ Saint Gobain BDD, paragraph 19.
9    Case COMP/M.9406 – Lone Star - Stark Group/Saint Gobain BDD, paragraphs 27 to 49; Case
     COMP/M.8733 – Lone Star/Stark , paragraphs 10 to 24; and Case COMP/M. 9790 – Blackstone/KP1,
     paragraphs 15 to 17.
10 Form CO, paragraphs 86 and 87.
11 Form CO, paragraph 90.
                                                         3
 ---pagebreak--- (16)    Market participants who expressed a view support a distinction per product category
        within the market for the wholesale distribution of building products. 12 They
        maintain that, for instance, each type of building product (e.g. SHAP) serves the
        needs of a different type of customer (e.g. plumbers) and that the supply chains of
        certain products (e.g. concrete) are different from those of other building materials. 13
(17)    For the purpose of this Decision, the Commission will assess the effects of the
        Transaction on the market for the wholesale supply of ceramic tiles and on the
        market for the wholesale supply of SHAP. Because the Transaction does not raise
        serious doubts as to its compatibility with the internal market under any plausible
        narrower market definition, it can be left open for the purpose of this Decision
        whether it is appropriate to further segment each of these two markets.
4.1.2. Retail sale of building materials
(18)    As mentioned in paragraph (11), the Commission has considered, although
        ultimately left open, a further segmentation of the market for the retail sale of
        building products based on the type of customer, i.e. professional and non-
        professional customers. The Commission has also previously considered whether the
        retail sale to professional customers could be further divided between GBMs and
        SBMs.14
(19)    Within SBMs, the Commission has also considered whether separate product
        markets exist for the distribution of individual product categories. 15 In particular, the
        Commission has considered specialist retailers in relation to 'fitting-out' or interior
        finishing products, including plaster-based products, suspended ceilings and
        associated products, but has left the market definition open. 16 .
(20)    The Notifying Party considers that there is an             overall market for retail sales of
        building products, without further distinction              between professional or non-
        professional customers,17 given that there are a           number of retailers on the Dutch
        market which are present on both segments and               target both professional and non-
        professional customers.18
(21)    The market investigation however supports the distinction between retail sales to
        professional and to non-professional customers. Namely, the ample majority of
        market participants who expressed a view19 consider such distinction per type of
        customer justified based on, inter alia, the differences in: (i) sales approach and
        service levels; (ii) pricing; (iii) packaging sizes; (iv) quality of products; and/or
        (v) delivery and transport.20 Notwithstanding, a number of market participants21 note
12  Questionnaire Q2 to competitors, question 4.
13  Questionnaire Q2 to competitors, question 4.1.
14  Case COMP/M.3943 – Saint-Gobain/BPB, paragraph 15.
15  Case COMP/M.3407 – Saint Gobain/Dahl, paragraph 14 and 15, Case COMP/M.3943 – Saint-Gobain/
    BPB, paragraphs 17-19 and Case COMP/M.9790 – Blackstone/KP1, paragraph 23.
16  Case COMP/M.3943 – Saint-Gobain/BPB, paragraph 114.
17  Form CO, paragraph 92.
18  Form CO, paragraph 92.
19  Questionnaire Q2 to competitors, question 5 and Questionnaire Q1 to customers, question 7.
20  Questionnaire Q2 to competitors, question 5 and Questionnaire Q1 to customers, questio n 7.
21  Questionnaire Q2 to competitors, question 5 and Questionnaire Q1 to customers, question 7.
                                                        4
 ---pagebreak---          that the distinction between professional and non-professional customers, while still
         relevant, is becoming increasingly blurry and outdated: “one-person building
         companies buy indistinctively from general building merchants and DIY stores,
         blurring the distinction between B2B and B2C.”22
(22)     Although the Notifying Party also disagrees with the distinction between GBMs and
         SBMs stores, it has nonetheless provided information on the retail sale of interior
         finishing products via SBM stores, including for the dry finishing products segment,
         as this is the only product sub-category where the Parties’ activities overlap.
(23)     The market investigation has also supported the distinction between retail sales to
         professional customers via GBM stores and SBM stores, namely, retailers
         specialised in interior finishing products. Such distinction is particularly relevant
         from the point of view of customers who expressed a view, in light of the different
         kinds of products, prices and services offered by SBM and GBM stores.23 Although
         to a lesser extent, competitors who expressed a view also support this distinction,
         claiming, inter alia, that: “the knowhow of the sales person plays an important role”
         in the SBM segment.24 However, also in this case some market participants indicate
         that the distinction between both types of stores is becoming more and more
         unclear.25
(24)     In any event, because the Transaction does not raise serious doubts as to its
         compatibility with the internal market under any plausible market definition, the
         exact market definition of the retail sales of building products can be left open for
         the purpose of this Decision. The Commission will assess the impact of the
         Transaction taking account of the following narrower plausible market definition
         that give rise to an affected market, i.e. retail distribution of building materials to
         professional customers via GMB stores and retail distribution of interior finishing
         products, including dry finishing products, via SBM stores.
4.2.     Relevant Geographic Markets
4.2.1. Wholesale distribution of building products
(25)     The Commission has previously found that the relevant wholesale markets are likely
         to be at least national in scope (and possibly wider). 26
(26)     The Notifying Party shares this view,27 which has also been widely confirmed by
         market participants who expressed a view due to, inter alia, the high transport costs
         and the homogeneous prices at national level.28
(27)     Hence, for the purpose of the present decision, the Commission will examine the
         market for the wholesale distribution of building products in the Netherlands.
22   Minutes of the call with a competitor on 4 March 2021, paragraph 6.
23   Questionnaire Q2 to competitors, question 6 and Questionnaire Q1 to customers, question 8.
24   Minutes of the call with a competitor on 4 March 2021, paragraph 16.
25   Questionnaire Q2 to competitors, question 6 and Questionnaire Q1 to customers, question 8.
26   Case COMP/M.7703 – Pontmeyer/DBS, paragraph 17; COMP/M.3142 – CVC/Danske Traelast,
     paragraph 14.
27   Form CO, paragraphs 99 and 100.
28   Questionnaire Q2 to competitors, question 7.
                                                          5
 ---pagebreak--- 4.2.2. Retail sale of building products
(28)     In past decisions, the Commission has considered national29 or local30 geographic
         market dimensions for the retail distribution of building products, although the
         question has ultimately been left open. At local level, catchment areas with a 30-km
         radius around GBM stores and catchment areas with a 50-km radius around SBM
         stores have been considered.31
(29)     The Notifying Party submits that the market for the retail distribution of building
         products to professional customers is national in scope in the Netherlands. 32 It
         emphasises the importance of centrally placed orders and direct deliveries from
         central warehouses, which they claim reduces the significance of local stores. 33
(30)     With regard to the retail sale of building products to professional customers via
         GBM stores, the market investigation was inconclusive as to whether the market is
         national or local (i.e., within a 30 km radius from the store) in scope. While a narrow
         majority of competitors who expressed a view considers the market to be national in
         scope, a narrow majority of customers who expressed a view sees the market as
         local.34 Concerning the retail sale of building products to professional customers by
         SBM stores, the majority of market participants who expressed a view support the
         definition of the market as national in scope. 35
(31)     Because the Transaction does not raise serious doubts as to its compatibility with the
         internal market even under the narrowest segment, it can be left open for the purpose
         of this Decision whether the geographic scope of the market for the retail sale of
         building products, possibly segmented by customer type (between retail sale to
         professional and to non-professional customers) and further segmented by sales
         channel (into GBM or SMB stores), is local or national.
5.       COMPETITIVE ASSESSMENT
5.1.     Analytical Framework
(32)     Under Article 2(2) and (3) of the Merger Regulation, 36 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. Depending on the position of the parties in
         the supply chain, a concentration may entail horizontal and/or non-horizontal effects.
29   Case COMP/M.3142 – CVC/Danske Traelast, paragraphs 14 to 16.
30   Case COMP/M.7703 – Pontmeyer/DBS, paragraphs 21 and 22; Case COMP/M.3943 – Saint-Gobain/
     BPB, paragraphs 20 to 22.
31   Case COMP/M.7703 – Pontmeyer/DBS, paragraph 21; Case COMP/M.7107 – Cordes & Graefe/
     POMPAC/COMAFRANC paragraph 19; Case COMP/M.3184 – Wolseley/Pinault Bois & Materiaux,
     paragraphs 19–22.
32   Form CO, paragraph 104.
33   Form CO, paragraph 104.
34   Questionnaire Q2 to competitors, question 8 and Questionnaire Q1 to customers, question 9.
35   Questionnaire Q2 to competitors, question 9 and Questionnaire Q1 to customers, question 10.
36   As regards the assessment in relation to the EEA, see also Annex XIV to the EEA Agreement.
                                                           6
 ---pagebreak--- (33)    Horizontal effects arise when the parties to a concentration are actual or potential
        competitors in one or more of the relevant markets concerned. The Commission
        appraises horizontal effects in accordance with the guidance set out in the Horizontal
        Merger Guidelines.37
(34)    Non-horizontal effects arise when the parties to a concentration operate in different
        levels of the supply chain in certain relevant markets (vertical effects). The
        Commission appraises non-horizontal effects in accordance with the guidance set out
        in the Non-Horizontal Merger Guidelines.38
(35)    Both the Horizontal and Non-Horizontal Merger Guidelines distinguish between two
        main ways in which mergers between actual or potential competitors on the same
        relevant market may significantly impede effective competition, namely
        non-coordinated and coordinated effects.
(36)    In horizontal mergers, non-coordinated effects may significantly impede effective
        competition by eliminating the competitive constraint imposed by each party to the
        merger on the other, as a result of which the merged entity would have increased
        market power, without resorting to coordinated behaviour. In that regard, the
        Horizontal Merger Guidelines consider not only the direct loss of competition
        between the merging firms, but also the reduction in competitive pressure on non-
        merging firms in the same market that could be brought about by the merger.39
(37)    The Horizontal Merger Guidelines list a number of factors, which may influence
        whether or not significant non-coordinated effects are likely to result from a merger.
        In particular, the Horizontal Merger Guidelines refer to the large market shares of
        the merging firms, the fact that the merging firms are close competitors, the limited
        possibilities for customers to switch suppliers or the fact that the merger would
        eliminate an important competitive force. 40 Not all these factors need to be present
        for significant non-coordinated effects to be likely. The list of factors is also not
        exhaustive.
(38)    Concentrations which, by reason of the limited market share of the undertakings
        concerned, are not liable to impede effective competition may be presumed to be
        compatible with the internal market. An indication to this effect exists, in particular,
        where the market share of the undertakings concerned does not exceed 25% either in
        the internal market or in a substantial part of it. 41
(39)    In non-horizontal mergers, non-coordinated effects may arise when the concentration
        gives rise to foreclosure. In vertical mergers, foreclosure can take the form of input
        foreclosure, where the merger is likely to raise costs of downstream rivals by
        restricting their access to an important input; and/or the form of customer
37  Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of
    concentrations between undertakings (OJ C 31, 5.2,2014, p. 5).
38  Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of
    concentrations between undertakings (OJ C 265, 18.10.2008, p. 6).
39  Horizontal Merger Guidelines, paragraph 24.
40  Horizontal Merger Guidelines, paragraph 26.
41  Horizontal Merger Guidelines, para 18.
                                                        7
 ---pagebreak---          foreclosure, where the merger is likely to foreclose upstream rivals by restricting
         their access to a sufficient customer base. 42
(40)     In assessing the likelihood of an anticompetitive foreclosure scenario, the
         Commission examines whether the merged entity would have post-transaction the
         ability to foreclose access to either inputs or customers, whether the merged entity
         would have the incentives to do so and whether such foreclosure strategy would have
         a detrimental effect on competition. 43
5.2.     Horizontally Affected Markets
(41)     The Transaction gives rise to potentially relevant horizontally affected markets with
         regard to (i) the retail distribution of building materials to professional customers by
         GBM stores in the Netherlands, and (ii) the retail distribution of interior finishing
         products to professional customers by SBM stores in the Netherlands.
5.2.1. Retail distribution of building materials to professional customers via General
         Builders’ Merchants
(42)     In the retail distribution of building materials to professional customers via GBMs,
         BME is active with GBM and cash-and-carry formats (the latter as a franchisee),
         whereas SGDN is active with only GBM formats under two brands (Raab Karcher
         and De Jager Tolhoek).
(43)     The Notifying Party submits that the Transaction will not give rise to a significant
         impediment of effective competition (SIEC) and puts forward a number of
         arguments to that effect. First, the market shares are small to moderate. Second, the
         Parties are not close competitors because they offer different product ranges, target
         different customer groups and focus on different channels to market. Third, the
         Parties face strong competitors with similar networks of stores. Fourth, customers
         multisource. Fifth, the majority of retail competitors have access to the same
         manufacturers. Sixth, the Parties also face competition from manufacturers who sell
         directly to builders.
(44)     Considering both GBM and cash-and-carry formats, the Parties have a combined
         value share of [20-30]% (and a combined volume share of [20-30]%) at national
         level. Post-Transaction several other GBMs will remain in the market, including
         national brands with a footprint of stores across the Netherlands. They include
         among others: TABS with two brands and circa 100 stores; Bouwcenter, a marketing
         and purchasing group that includes several brands and has approximately 82
         branches; 4Plus, a marketing and purchasing group of builders' merchants with 65
         affiliated members and circa 72 stores; De Stiho Groep with 23 stores; Sakol, a
         GBM purchasing group with 8 members and 26 branches, amongst others.
(45)     A couple of larger customers expressed the concern that Post-Transaction the
         Parties’ competitors would not have the same ability to address their needs with
         regard to very large projects.44 However, several findings suggest that this concern
42   Non-Horizontal Merger Guidelines, para 30.
43   Non-Horizontal Merger Guidelines, para 30.
44   Agreed Minutes of a call with a Customer on 11 March 2021 and agreed minutes of a call with a
     Customer on 12 March 2021.
                                                     8
 ---pagebreak---  ---pagebreak---         12 others; in Raalte, 15 others; in Rijsen, 13 others; and in Vriezenveen, 15 others.
        The alternative competitors include other GBM networks and independent GBMs.
(49)    Second, both customers and competitors consider that most of these alternative
        GBMs are also close or very close competitors to the Parties. These competitors are
        TABS, Concordia, 4Plus, and Sakol. In addition, some of the independent GBMs
        present in these six catchment areas have a similar product offering to the Parties. In
        Coevorden, 3 independent GBMs offer a similar product assortment; in Goor,
        2 independent GBMs; in Nieuwleusen, 1; in Raalte, 3; in Rijsen, 4; and in
        Vriezenveen, 4 independent GBMs.49
(50)    Third, in each of these six catchment areas the majority of sales come from ‘project
        sales’, i.e., sales invoiced by the GBM but delivered directly from the manufacturers
        to the building sites.50 In these types of sales, characteristic of large and medium
        customers, the Parties feel also the constraint imposed by manufacturers that sell
        directly to larger and medium customers. Moreover, the direct access to the
        manufacturers gives these customers bargaining power vis-à-vis the Parties.
(51)    Fourth, the customer overlap between the Parties in each of these catchment areas is
        relatively small, which shows that already today the vast majority of the Parties’
        customers source from other competitors. In Coevorden, [10-20]% of the SGDN's
        customers are also BME customers, whereas only [10-20]% of the BME customers
        are also SGDN customers. This shows that more than [80-90]% of SGDN customers
        and nearly [90-100]% of BMN's customers are able to get their supplies from other
        GBMs. In Goor, [10-20]% of the SGDN's customers are also BME customers,
        whereas [10-20]% of the BME customers are also SGDN customers. This shows that
        more than [80-90]% of the SGDN's and BMN's customers are able to get their
        supplies from other GBMs. In Niewleusen, [10-20]% of the SGDN's customers are
        also BME customers, whereas only [10-20]% of BME customers are also SGDN
        customers. This shows that around [80-90]% of the each of the Parties' customers are
        able to get their supplies from other GBMs. In Raalte, [10-20]% of the SGDN's
        customers are also BME customers, whereas [10-20]% of the BME customers are
        also SGDN customers. This shows that around [80-90]% of SGDN customers and
        around [80-90]% of BMN's customers are able to get their supplies from other
        GBMs. In Rijsen and in Vriezenvenn, [10-20]% of the SGDN's customers are also
        BME customers, whereas [10-20]% of the BME customers are also SGDN
        customers. This shows that almost [80-90]% of SGDN customers and more than
        [80-90]% of BMN's customers are able to get their supplies from other GBMs. 51
(52)    Finally, concerning both national and local levels, the majority of respondents to the
        market investigation do not expect that the proposed Transaction will have an effect
        on prices, quality or choice.52 Moreover, no stakeholder has raised concerns that can
        be confirmed on the basis of the available evidence.
49  Form CO, Annex 24.B,   Annex 24.D, Annex 24.I, Annex 24.K, Annex 24.L, Annex 24.N.
50  Form CO, Annex 24.B,   Annex 24.D, Annex 24.I, Annex 24.K, Annex 24.L, Annex 24.N.
51 Form CO, Annex 24.B,    Annex 24.D, Annex 24.I, Annex 24.K, Annex 24.L, Annex 24.N.
52 Q1- Questionnaire to    Customers,  questions 28 and 29; and Q2 – Questionnaire to Competitors,
    questions 33 and 34.
                                                     10
 ---pagebreak--- (53)     In light of the above, the Commission concludes that the proposed Transaction does
         not raise serious doubts as to its compatibility with the internal market in relation to
         the retail distribution of building materials to professional customers via GBM stores
         in the Netherlands, be it at the national or at the local level.
5.2.2. Retail distribution of interior finishing products to professional customers
(54)     The Parties are also active in the retail distribution of interior finishing products to
         professional customers by SBM stores. This overlap does not give rise to an affected
         market on the basis of a 50-km radius catchment area as considered in the
         precedents.53 A horizontally affected local market arises only if a catchment area
         with a 30 km radius is considered from SGDN’s only SBM store Van Keulen in
         Amsterdam. Even in such a hypothetical scenario, narrower than the precedent and
         not supported by the market investigation, the Parties would have relatively low
         combined market shares ([20-30]% in value and [30-40]% in volume) and at least
         three credible competitors would remain present, such as SIG ([20-30]% in volume),
         DSG ([20-30]% in volume), and Baustoff Metal ([10-20]% in volume).54
(55)     At national level, the Transaction would only give rise to a horizontally affected
         market if a hypothetical market for the retail of dry finishing products via SBMs and
         GBMs was considered. On such hypothetical market – not supported by the
         Commission’s past decisions, nor by the market investigation results – the Parties
         would have a combined value share of [20-30]%. In such a scenario, a number of
         competitors would remain active. More specifically, the merged entity would
         compete for the sale of these products with all SBMs and all GBMs active in the
         Netherlands. If only SBMs were considered to be part of the relevant market, the
         Parties would have a combined share of [10-20]% at the national level.55
(56)     In addition, in the market investigation, no concerns were raised regarding the retail
         of interior finishing products.
(57)     In light of the above, the Commission concludes that the proposed Transaction does
         not raise serious doubts as to its compatibility with the internal market in relation to
         the market for retail distribution of interior finishing products to professional
         customers via SBM, be it at the national or at the local level.
5.3.     Vertically affected Markets
(58)     SGDN is also active in the wholesale of ceramic tiles (under its TGN and Galvano
         brands) and SHAP products (under its Galvano brand). The Transaction gives rise to
         affected markets with regard to the vertical relation between SGDN’s wholesale
         activities for these products in the Netherlands (upstream) and BME’s activities in
         the retail distribution of building products as a GBM in several local markets in the
         Netherlands (downstream).
53   Case COMP/M.7703 – Pontmeyer/DBS, paragraph 21; Case COMP/M.7107 – Cordes & Graefe/
     POMPAC/COMAFRANC, paragraph 19; Case COMP/M.3184 – Wolseley/Pinault Bois & Materiaux,
     paragraphs 19–22.
54 Form CO, Table 22. The Parties were not able to provide value market shares for their competitors.
55 Form CO, Table 21.
                                                       11
 ---pagebreak--- 5.3.1. Wholesale of ceramic tiles in the Netherlands
(59)   SGDN is the market leader in the wholesale of ceramic tiles in the Netherlands, with
       an estimated market share of [30-40]%. However, considering that a significant part
       of wholesale tiles is sold directly by manufacturers to retailers, this figure may
       overestimate SGDN’s market power. At the retail level, as discussed above in
       sections 5.2.1 to 5.2.2, the Parties have a combined market share of [20-30]% in the
       GBM format nationally, and a market share above 30% in 13 catchment areas, in
       particular market shares of around 40% in five catchment areas.
(60)   With regard to input foreclosure, the Notifying Party argues that the merged entity
       has no ability or incentives to adopt an input foreclosure strategy either at national or
       at local level, based on a number of arguments. First, SGDN makes limited sales to
       GBMs, as it supplies mostly specialist retailers. Second, the majority of brands
       SGDN carries are non-exclusive and therefore available for purchase from other
       wholesalers. Third, none of SGDN’s private label or exclusive brands are must-have
       brands for retailers. Fourth, there are several other alternative wholesale distributors
       of ceramic tiles. Fifth, already today SGDN supplies its GBM brand to Raab Karcher
       and a few other GBMs.
(61)   The Commission finds that the merged entity would most likely not have the ability
       nor the incentive to enter into an input foreclosure strategy. First, post-Transaction,
       GBMs would be able to source from alternative tile wholesalers and tile
       manufacturers. Second, given the Parties’ combined shares in the retail market for
       tiles ([20-30]% in both GBM and SBM stores), the merged entity would most likely
       not be able to recover the loss of wholesales at the retail level. Third, today BME
       sources mostly from tiles manufacturers directly. In addition, in the market
       investigation, most respondents stated that they did not consider that the merged
       entity would have both the ability and the incentive to engage in input foreclosure
       strategies. A large majority of competitors of the Parties indicated that they did not
       expect the Transaction to have any impact on their sourcing of ceramic tiles.56
(62)   With regard to customer foreclosure, the Notifying Party argues that they have no
       ability to adopt a customer foreclosure strategy. First, they claim that BMN is not an
       important route to market for wholesale distributors of ceramic tiles. In 2019, BME’s
       purchases of ceramic tiles accounted for [0-5]% of the total wholesale market
       revenues. Second, they contend that following the Transaction, SGDN’s competitors
       will continue to have access to several specialist retailers and other GBMs. The
       Commission’s investigation confirms that competing wholesalers do not expect that
       the merged entity would have the ability or the incentive to negatively impact their
       ability to sell to customers.
(63)   The Commission finds that the merged entity would most likely not have the ability
       nor the incentive to enter into a customer foreclosure strategy. As mentioned above,
       today BME sources the vast majority of its tile offering from manufacturers directly.
       Therefore, BME is not an important customer for wholesale competitors of SGDN.
       In the market investigation, the majority of respondents stated that they did not
       consider that the merged entity would have both the ability and the incentive to
       engage in customer foreclosure strategies. None of the responding competitors of the
56  Q2 – Questionnaire to Competitors, question 10 and question 12.
                                                        12
 ---pagebreak---        Parties expect the Transaction to have any impact on their ability to sell tiles to
       retailers.57
(64)   In light of the above, the Commission concludes that the proposed Transaction does
       not raise serious doubts as to its compatibility with the internal market in relation to
       the wholesale distribution of ceramic tiles in the Netherlands.
5.3.2. Wholesale of SHAP products in the Netherlands
(65)   SGDN has a small presence in the wholesale market of SHAP products, with a
       market share of [0-5]%. Hence, vertically affected markets arise only due to the
       Parties’ combined market share on the downstream GBM retail market in 13
       catchment areas.
(66)   The Notifying Party argues that in view of SGDN’s very limited presence upstream
       in the SHAP wholesale market, the merged entity would not have the ability or
       incentives to adopt an input or a customer foreclosure strategy.
(67)   The market investigation has widely confirmed that the merged entity would not
       have the ability nor the incentive to engage in input or customer foreclosure. A large
       majority of respondents expects the merger to have no impact on their ability to sell
       or source SHAP products in the Netherlands. 58
(68)   In light of the above, the Commission concludes that the proposed Transaction does
       not raise serious doubts as to its compatibility with the internal market in relation to
       the wholesale distribution of SHAP products in the Netherlands.
6.     CONCLUSION
(69)   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
57  Q2 – Questionnaire to Competitors, question 11 and question 13.
58  Q2 – Questionnaire to Competitors, questions 10, 11, 12 and 13.
                                                         13
 ---pagebreak---         Case M.10154 – BME/ Saint-Gobain Distribution the Netherlands
                            Annex to the Commission decision
Affected potential local markets in the Netherlands for the retail distribution of building
         products to professional customers by generalist builders’ merchants
                   Location         SGDN share      BME share      Combined
                                         (%)            (%)        share (%)
                   Apeldoorn         [5-10]%       [10-20]%       [20-30]%
                   Assen             [5-10]%       [20-30]%       [30-40]%
                   Bergen op Zoom   [10-20]%       [10-20]%       [20-30]%
                   Coevorden        [10-20]%       [20-30]%       [30-40]%
                   Emmeloord        [10-20]%       [10-20]%       [20-30]%
                   Goes             [20-30]%         [0-5]%       [30-40]%
                   Goor             [20-30]%       [10-20]%       [30-40]%
                   Groningen         [5-10]%       [20-30]%       [30-40]%
                   Hengelo          [10-20]%       [10-20]%       [20-30]%
                   Kampen           [10-20]%       [10-20]%       [30-40]%
                   Leeuwarden        [5-10]%       [20-30]%       [30-40]%
                   Nieuwleusen      [20-30]%       [10-20]%       [30-40]%
                   O ldenzaal       [10-20]%       [10-20]%       [20-30]%
                   Raalte           [20-30]%       [10-20]%       [30-40]%
                   Rijssen          [20-30]%       [10-20]%       [40-50]%
                   Vriezenveen      [20-30]%       [10-20]%       [40-50]%
                   Wolvega          [10-20]%       [10-20]%       [30-40]%
                   Zutphen          [10-20]%       [10-20]%       [20-30]%
                   Zwolle           [10-20]%       [10-20]%       [30-40]%
                                  Source: Parties' best estimates
                                                    14