CELEX: 32020M9705
Language: en
Date: 2020-03-30 00:00:00
Title: Commission Decision of 30/03/2020 declaring a concentration to be compatible with the common market (Case No COMP/M.9705 - EXOR / GEDI) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                Brussels, 30.3.2020
                                                                C(2020) 2048 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                                                                 omitted has been replaced by ranges of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.
                                                                To the notifying party
Subject:            Case M.9705 – EXOR/GEDI
                    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 24 February 2020, the European Commission received notification of a proposed
          concentration pursuant to Article 4 of the Merger Regulation by which EXOR N.V.
          (“EXOR” or the “Notifying Party”, the Netherlands) acquires within the meaning of
          Article 3(1)(b) of the Merger Regulation sole control over the whole of GEDI Gruppo
          Editoriale S.p.A. (“GEDI” or “Target”, Italy) (the “Transaction”). EXOR and GEDI
          are collectively referred to as the “Parties”.3
1.        THE PARTIES
(2)       EXOR is a holding company with investments in companies operating in various
          sectors, among which car manufacturing, production of commercial vehicles used for
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 89, 18.03.2020, p.2.
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---          agriculture and industry in general, reinsurance and professional football clubs. Fiat
         Chrysler Automobiles N.V. (“FCA”) is the most prominent company controlled by
         EXOR.
(3)      GEDI is active, directly and/or through its subsidiaries, in the publishing, digital
         communication, radio and television sectors in Italy.4 GEDI, through its subsidiary
         A.Manzoni & C.S.p.A (“Manzoni”), is also active in the sale of advertising space on
         daily and non-daily press, online, on the radio and on television,.
2.       THE CONCENTRATION
(4)      Pursuant to a purchase agreement dated 2 December 2019, EXOR will indirectly
         acquire 43.78% of GEDI’s shareholding currently held by CIR – Compagnie
         Industriali Riunite S.p.A. (“CIR”).5 EXOR already holds a minority shareholding
         which amounts to 5.99% of GEDI’s shares. Accordingly, post-Transaction EXOR will
         hold 49.77% of GEDI’s shareholding.
(5)      Since GEDI holds treasury shares equal to 4.30% of its issued share capital, post-
         Transaction EXOR will de facto hold 52.01% of the voting rights in GEDI.6 EXOR
         will be able to appoint the majority of the members of GEDI’s Board of Directors that
         takes strategic decisions by a simple majority. Therefore, post-Transaction, EXOR
         will exercise sole control over GEDI.7
(6)      The Transaction therefore constitutes a concentration pursuant to Article 3(1)(b) of
         the Merger Regulation.
3.       EU DIMENSION
(7)      The undertakings concerned have a combined aggregate world-wide turnover of more
         than EUR 5 billion8 (EXOR: EUR [130-160] billion, GEDI: EUR [700-800] million).
         Each of them has an EU-wide turnover in excess of EUR 250 million (EXOR: EUR
         [30 000 - 40 000] million, GEDI: EUR [700-800] million). None of the Parties
         achieves more than two-thirds of their aggregate EU-wide turnover within one and the
         same Member State.
4   GEDI is active in the following sectors: daily press, on a national and local basis (e.g., La Repubblica, La
    Stampa); monthly and weekly press (e.g., L’Espresso, National Geographic Italia); distribution of written
    press on a national and local level; radio through the subsidiary Elemedia S.p.A (Radio Deejay, Radio
    Capital and m2o); television (Deejay TV).
5   EXOR will indirectly acquire these shares through a wholly owned special purpose vehicle of new creation
    (“BidCo”).
6   52.01% voting rights corresponds to the pro rata of the operating voting right after deducting from the total
    voting rights the treasury shares (4.30%) which are not outstanding and therefore cannot be used to express
    votes.
7   When the Transaction closes, BidCo will launch a mandatory takeover bid on the outstanding shareholding
    of GEDI. Accordingly, subject to the outcome of the mandatory takeover bid, EXOR could indirectly hold
    the entire shareholding of GEDI. The Notifying Party submits that CIR intends to reinvest in BidCo in order
    to acquire a shareholding equal to 5%.[Corporate governance’s details concerning the potential future
    transaction regarding GEDI’s shareholding].
8   Turnover calculated in accordance with Article 5 of the Merger Regulation.
                                                           2
 ---pagebreak--- (8)      Therefore, the Transaction has an EU dimension pursuant to Article 1(2) of the Merger
         Regulation.
4.       RELEVANT MARKETS
(9)      The Parties’ activities do not lead to any horizontal overlaps. The Transaction only
         gives rise to a vertical relationship between GEDI’s activities in the upstream market
         for the sale of advertising space in Italy and EXOR’s activities, through FCA, as a
         manufacturer and supplier of passenger cars and light commercial vehicles (“LCVs”).9
4.1.     Product market definition
4.1.1. Sale of advertising space
4.1.1.1. Commission’s precedents
(10)     In previous decisions, the Commission considered that the market for advertising
         space may be segmented into (i) online and (ii) offline advertising space.10 Within
         offline advertising space, the Commission found that a further segmentation between
         (i) written press (ii) television and (iii) radio advertising space could be relevant.11 In
         addition, within the written press segment, the Commission considered that (i) daily
         and (ii) non-daily written press may constitute separate markets.12
4.1.1.2. The Notifying Party’s view
(11)     The Notifying Party submits that the precise market definition can be left open in the
         present case as the Transaction does not raise concerns under any plausible product
         market definition.
4.1.1.3. The Commission’s assessment
(12)     The Commission considers that for the purpose of the present decision the exact
         product market definition for the sale of advertising space (whether overall or
         segmented into online and offline advertising which is further sub-segmented into
         advertising in the written press, daily and non-daily, on the radio or on television) can
         be left open as the Transaction does not raise serious doubts as to its compatibility
9   EXOR is not active in any of the segments in which GEDI is active, except for a non-controlling
    shareholding in The Economist Newspaper Ltd. (“The Economist”). EXOR holds 43.40% of the
    shareholding of The Economist Newspaper, in B-shares. According to the Articles of Association of The
    Economist, notwithstanding the actual shareholding ownership, no shareholder is entitled to more than 20%
    of the total voting rights. [Details concerning the corporate governance rules of The Economist]
10 Commission decision of 23 April 2018, Case COMP/M.8944 – Liberty Global/De Vijver Media and Liberty
    Global (SBS)/Mediahuis/JV, para. 70; Commission decision of 6 September 2018, Case COMP/M.8788 –
    Apple/Shazam, rec. 133; Commission decision of 15 June 2018, Case COMP/M.8861 – Comcast/Sky, paras.
    64, 66 and 69.
11 Commission decision of 23 April 2018, Case COMP/M.8944 – Liberty Global/De Vijver Media and Liberty
    Global (SBS)/Mediahuis/JV, para. 65; Commission decision of 15 June 2018, Case COMP/M.8861 –
    Comcast/Sky, paras. 64 and 69; Commission decision of 7 April 2017, Case COMP/M.8354 – FOX/SKY,
    para. 114.
12 Commission decision of 7 April 2017, Case COMP/M.8354 – FOX/SKY, para. 112.
                                                            3
 ---pagebreak---          with the internal market or the functioning of the EEA Agreement under any plausible
         market definition for the sale of advertising space.
4.1.2. Manufacturing and supply of passenger cars and commercial vehicles
4.1.2.1. Commission’s precedents
(13)     In previous decisions, the Commission considered separate markets for the
         manufacturing and supply of passenger cars on the one hand, and of commercial
         vehicles on the other hand.
(14)     For passenger cars, the Commission considered possible separate product markets for
         (i) mini cars (ii) small cars, (iii) medium cars, (iv) large cars, (v) executive cars, (vi)
         luxury cars, (vii) sport coupés, (viii) multipurpose vehicles, and (ix) sport utility
         vehicles (“SUVs”).13
(15)     The Commission has previously considered further sub-segmentation of the possible
         market for SUVs into (i) small, (ii) medium, and (iii) large SUVs but ultimately left
         the precise market definition open. Furthermore, the Commission left open whether
         electric cars constitute a separate product market and whether this possible market
         should be further segmented according to (i) technology (electric battery cars and
         hybrid cars) or, (ii) by category of car, as those defined in paragraph (14) for vehicles
         with combustion engines.14
(16)     In previous decisions, the Commission considered a possible segmentation of the
         market for commercial vehicles into (i) LCVs with a gross weight below 6 tons, (ii)
         medium trucks between 6 and 16 tons, and (iii) heavy trucks above 16 tons.15
(17)     For LCVs, the Commission considered but ultimately left open, whether to further
         sub-segment LCVs into vehicles (i) up to 3.5 tons and (ii) between 3.5 and 6 tons. The
         Commission also ultimately left open whether pick-up trucks can be considered
         passenger cars given that they can be purchased for private use and can transport both
         goods and people.16
4.1.2.2. The Notifying Party’s view
(18)     The Notifying Party submits that the precise market definition can be left open in the
         present case as the Transaction does not raise concerns under any plausible product
         market definition.
13  Commission decision of 10 December 2019, Case COMP/M.9360 – Daimler/Geely/JV, para. 15; of 5 July
    2017, Case COMP/M.8449 – Peugeot/Opel, para. 11; Commission decision of 24 July 2009, Case
    COMP/M.5518 – Fiat/Chrysler, para. 12.
14 Commission decision of 10 December 2019, Case COMP/M.9360 – Daimler/Geely/JV, para. 16;
    Commission decision of 5 July 2017, Case COMP/M.8449 – Peugeot/Opel, paras. 14-16.
15 Commission decision of 26 July 2017, Case M.8309 – Volvo Car Corporation/First Rent a Car, para.13;
    Commission decision of 5 October 2016, Case M.8099 – Nissan/Mitsubishi, para.17; Commission decision
    of 5 December 2006, Case M.4420 – Credit Agricole Fiat Auto/FAFS, para.20.
16 Commission decision of 10 December 2019, Case COMP/M.9360 – Daimler/Geely/JV, paragraph 17;
    Commission decision of 5 July 2017, Case COMP/M.8449 – Peugeot/Opel, paragraphs 21-24.
                                                      4
 ---pagebreak--- 4.1.2.3. The Commission’s assessment
(19)     The Commission considers that for the purpose of the present decision the question
         whether there are separate markets for passenger cars and commercial vehicless17 and
         whether they should be further sub-segmented as indicated at paragraphs (14)-(17) can
         be left open as the Transaction does not raise serious doubts as to its compatibility
         with the internal market or the functioning of the EEA Agreement under any plausible
         market definition for the manufacturing and supply of passenger cars and commercial
         vehicles.
4.2.     Geographic market definition
4.2.1. Sale of advertising space
4.2.1.1. Commission’s precedents
(20)     With regard to the market for advertising space, in previous decisions referenced in
         Section 4.1.1, the Commission considered the market for advertising space to be
         national in scope.18
4.2.1.2. The Notifying Party’s view
(21)     The Notifying Party submits that the precise market definition can be left open in the
         present case as the Transaction does raise any concerns under any plausible geographic
         market definition.
4.2.1.3. The Commission’s assessment
(22)     In view of previous decisions, the Commission takes the view that, for the purpose of
         the present decision, the geographic market is national, i.e., the sale of advertising
         space (and possible sub-segments) in Italy.
4.2.2. Market for manufacture and supply of passenger cars and commercial vehicles
4.2.2.1. Commission’s precedents
(23)     With regard to manufacturing and supply of passenger cars and commercial vehicles,
         in previous decisions referenced in Section 4.1.2, the Commission left open whether
         the geographic scope of the markets for manufacturing and supply of passenger cars
         and commercial vehicles is EEA-wide or national in scope.19
17  The Notifying Party submits that, within the commercial vehicles sector, FCA is active in the manufacturing
    and supply of (i) LCVs of up to 3.5 tons and (ii) LCVs from 3.5 to 6 tons (only to a limited extent). FCA
    does not manufacture commercial vehicles with a gross weight in excess of 6 tons. FCA is thus not active
    in the manufacture and supply of medium trucks and heavy trucks.
18 Commission decision of 15 June 2018, Case COMP/M.8861 – Comcast/Sky, para. 74; Commission decision
    of 7 April 2017, Case COMP/M.8354 – FOX/SKY, para. 118; Commission decision of 12 March 2013, Case
    COMP/M.6840 – Goldman Sachs/TPG Lundy/Romanes Media Group, para. 19; Commission decision of
    21 December 2010, Case COMP/M.5932 – News Corp/BskyB, paras. 269-270.
19 Commission decision of 10 December 2019, Case COMP/M.9360 – Daimler/Geely/JV, para. 21;
    Commission decision of 5 July 2017, Case COMP/M.8449 – Peugeot/Opel, para. 26; Commission decision
    of 24 July 2009, Case COMP/M.5518 – Fiat/Chrysler, para. 20; Commission decision of 5 October 2016,
    Case M.8099 – Nissan/Mitsubishi, para.19-21; Commission decision of 5 December 2006, Case M.4420 –
                                                         5
 ---pagebreak--- 4.2.2.2. The Notifying Party’s view
(24)    The Notifying Party submits that the precise market definition can be left open in the
        present case as the Transaction will not raise any concerns under any plausible
        geographic market definition.
4.2.2.3. The Commission’s assessment
(25)    The Commission considers that for the purpose of the present decision the question
        whether the market for manufacturing and supply of passenger cars and commercial
        vehicles (and possible sub-segments) is EEA-wide or national can be left open. The
        Transaction does not raise serious doubts as to its compatibility with the internal
        market or the functioning of the EEA Agreement under any plausible market
        definition.
5.      COMPETITIVE ASSESSMENT
(26)    The Transaction does not lead to any horizontal overlaps between the Parties’
        activities. The Transaction gives rise to a vertical relationship between GEDI’s
        activities as a supplier of advertising space and EXOR’s activities, through FCA, as a
        manufacturer and supplier of passenger cars and LCVs.
5.1.    Framework for the competitive assessment
(27)    Pursuant to the Non-Horizontal Merger Guidelines, in the context of vertical mergers,
        foreclosure occurs when actual or potential rivals’ access to supplies or markets is
        hampered, thereby reducing those companies’ ability and/or incentive to compete.
        Such foreclosure may discourage entry or expansion of rivals or encourage their exit.20
(28)    The Non-Horizontal Merger Guidelines distinguish between two forms of foreclosure:
        input foreclosure occurs where the merger is likely to raise the costs of downstream
        rivals by restricting their access to an important input and customer foreclosure occurs
        where the merger is likely to foreclose upstream rivals by restricting their access to a
        sufficient customer base.21
(29)    In order for foreclosure to be a concern, three conditions need to be met post- merger:
        (i) the merged entity needs to have the ability to foreclose its rivals22 ; (ii) the merged
        entity needs to have the incentive to foreclose its rivals23; and (iii) the foreclosure
        strategy needs to have a significant detrimental effect on the parameters of competition
        on the downstream market (input foreclosure)24 or on consumers (customer
    Credit Agricole Fiat Auto/FAFS, para.21; Commission decision of 5 July 2017, Case COMP/M.8449 –
    Peugeot/Opel, paragraphs 26; Commission decision of 10 December 2019, Case COMP/M.9360 –
    Daimler/Geely/JV, para. 19;
20    Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of
      concentration between undertakings (the “Non-Horizontal Merger Guidelines”) OJ C 265/6, 18.10.2008,
      paragraphs 29-30.
21    See Non-Horizontal Merger Guidelines, paragraph 30.
22    See Non-Horizontal Merger Guidelines, paragraphs 33 to 39 and 60 to 67.
23    See Non-Horizontal Merger Guidelines, paragraphs 40 to 46 and 68 to 71.
24    See Non-Horizontal Merger Guidelines, paragraphs 47 to 57.
                                                       6
 ---pagebreak---        foreclosure).25 In practice, these factors are often examined together since they are
       closely intertwined.
5.2.   Affected markets
5.2.1. Market shares
(30)   In 2018, GEDI had market shares below 30% in all possible segments of the market
       for the sale of advertising in Italy, as demonstrated in Table 1 below.
       Table 1: GEDI’s Market shares in the market for advertisement space by value (Italy,
       2016 -2018)
          Value                                       2016                  2017              2018
                                                     (in %)               (in %)             (in %)
          Advertisement on daily written             [20-30]              [20-30]            [20-30]
          press
          Advertisement     on      non-daily             -                 [0-5]             [0-5]
          written press
          Online advertisement                        [0-5]                 [0-5]             [0-5]
          Advertising on radio                       [10-20]              [10-20]            [10-20]
          Television Advertising                        0.0                  0.0               0.0
          Advertisement space in Italy                    -                   -               [0-5]
       Source: Form CO
(31)   EXOR (through FCA’s activities) has market shares exceeding 30% in the EEA
       market for the manufacture and supply of mini cars and the Italian markets for the
       manufacture and supply of mini cars and for the manufacture and supply of
       multipurpose vehicles. FCA’s market share remains below 30% in all the other
       possible product and geographic market definitions referred to at paragraphs (19) and
       (25).
       Table 2: Market shares for the manufacture and supply of mini cars (EEA and Italy,
       2016-2018)
                                       2016                       2017                     2018
              Volume
                                      (in %)                     (in %)                   (in %)
                                EEA          Italy         EEA          Italy       EEA           Italy
          FCA                 [30-40]      [60-70]       [30-40]      [60-70]     [30-40]       [50-60]
          PSA                 [20-30]      [10-20]       [10-20]      [10-20]     [10-20]       [10-20]
          Hyundai-Kia         [10-20]       [5-10]       [10-20]       [5-10]     [10-20]        [5-10]
          Volkswagen          [10-20]       [5-10]       [10-20]       [5-10]     [10-20]        [5-10]
          Toyota               [5-10]          -          [5-10]          -        [5-10]           -
          Renault-Nissan-
                               [5-10]          -          [5-10]          -        [5-10]           -
          Mitsubishi
          Daimler              [5-10]       [5-10]        [5-10]       [5-10]      [5-10]        [5-10]
          Others                [0-5]       [5-10]         [0-5]       [5-10]       [0-5]        [5-10]
          Total                  100          100           100          100         100           100
       Source: Form CO
25    See Non-Horizontal Merger Guidelines, paragraphs 72 to 77.
                                                      7
 ---pagebreak---         Table 3: Market shares for the manufacture and supply of multipurpose vehicles (Italy,
        2016-2018)
                                         2016                2017                  2018
                 Volume
                                       (in %)               (in %)                (in %)
          FCA                          [30-40]             [30-40]               [30-40]
          Renault-Nissan-
                                        [5-10]             [10-20]               [10-20]
          Mitsubishi
          Ford                         [10-20]             [10-20]               [10-20]
          PSA                          [10-20]             [10-20]               [10-20]
          Daimler                       [5-10]              [5-10]                [5-10]
          Hyundai-Kia                   [5-10]              [5-10]                [5-10]
          Others                       [10-20]             [10-20]               [10-20]
          Total                          100                  100                   100
        Source: Form CO
(32)    Therefore, on the basis of the information provided by the Notifying Party, the
        Commission considers that the affected markets are:
        -   the upstream market for the sale of advertising space in Italy and its possible sub-
            segments: (i) on daily written press; (ii) on non-daily written press; (iii) online;
            (iv) on radio; and, (v) on television.
        -   the downstream markets for
                 o the manufacture and supply of (a) mini cars and (b) multipurpose vehicles
                    in Italy, and
                 o the manufacture and supply of mini cars in the EEA.
5.3.    Analysis of vertical effects
5.3.1. Input foreclosure
5.3.1.1. The Notifying Party's view
(33)    According to the Notifying Party, the Transaction is not likely to lead to input
        foreclosure with regard to the sale of advertising space for the reasons set out at
        paragraphs (34)-(36) below.
(34)    First, the Notifying Party submits that GEDI would not have the ability to engage in
        input foreclosure. The Notifying Party considers that GEDI does not have the
        necessary market power to engage in an input foreclosure strategy denying access to
        advertising space to competitors of FCA. GEDI has limited market shares, i.e., below
        [5-10]% under all segments except for the Italian market for advertising on daily
        written press ([20-30] %) and the market for radio advertising ([10-20] %) in 2018. In
        the Italian market for advertising on daily written press, alternative suppliers include
        Cairo Communication/RCS ([20-30] %), Montif ([5-10] %), and the Caltagirone
        Group ([5-10] %). In the Italian market for advertising on radio, the market leaders
        are Radio Televisione Italiana (RAI) ([20-30] %) and Fininvest ([10-20] %).
(35)    Second, the Notifying Party submits that the strong presence of specialised advertising
        agencies would also exclude any possible ability of the merged entity to engage in
                                                   8
 ---pagebreak---         input foreclosure. According to the Notifying Party, advertising intermediaries
        manage about 80% of national campaigns on television and in newspapers. In the
        Notifying Party's view, such agencies, which purchase advertising spaces in various
        types of media, thus enjoy a significant countervailing buyer power, which prevents
        small media owners, such as GEDI, from raising prices for the sale of advertising
        space. Furthermore, these intermediation agencies do not only sell advertising space
        to car manufacturers, but also to market players in other sectors. Accordingly, if GEDI
        increased prices for automotive campaigns, the intermediaries could divert demand
        from a significantly larger pool of advertising purchasers to alternative suppliers.
(36)    Third, the Notifying Party submits that GEDI would not have any incentive to adopt
        an input foreclosure strategy as such a strategy would not be profitable for the merged
        entity. The Notifying Party explains that GEDI applies a profit maximising strategy
        by selling advertising space to a mix of customers, including FCA’s competitors. Due
        to GEDI’s lack of market power in the upstream market, denying sales of GEDI’s
        advertising space to FCA’s competitors would result in lost profits but is not likely to
        result in any increased sales of cars in the downstream market. The Notifying Party
        submits that, in view of EXOR’s existing minority shareholding in GEDI pre-
        Transaction, GEDI would have already stopped selling advertising space to FCA’s
        competitors in the downstream market if such a strategy were profitable.
(37)    Furthermore, the Notifying Party submits that GEDI’s hypothetical decision to
        exclusively or substantially sell advertising space only to FCA post-Transaction would
        qualify as a related-party transaction that would require a prior approval from the
        related-party committee, in charge of the protection of the interests of GEDI’s
        minority shareholders. In this respect, the Notifying Party explains that such a strategy
        (excluding sales to a large number of customers) would likely not be approved by the
        related-party committee protecting the interests of minority shareholders.
5.3.1.2. The Commission's assessment
(38)    The Commission considers that for the reasons set out below, the merged entity would
        neither have the ability nor the incentive to foreclose FCA’s competitors in the
        downstream market for manufacturing and supply of cars (and possible sub-segments)
        by exclusively supplying GEDI’s advertising space to FCA and that, in any event, any
        such strategy would not have a significant detrimental effect on competition
        downstream.
(39)    First, with regard to the ability to engage in input foreclosure, the merged entity does
        not have a significant degree of market power in the upstream market to successfully
        deny access to advertising space to FCA’s competitors. As set out at Table 1, in most
        segments GEDI’s market shares are very limited (below [5-10] %). In the segments
        for advertising on daily written press and advertising on radio in Italy, GEDI has a
        market share of [20-30] % and [10-20]%, respectively. Therefore, based on the
        Notifying Party’s submission, GEDI’s market shares in the upstream market for the
        sale of advertising space remain below 30 % in all plausible segments.
(40)    Second, the market investigation results confirm that customers of advertising space,
        including FCA’s competitors in the downstream market for manufacturing and supply
        of cars are not dependent on GEDI’s advertising space and that GEDI does not account
                                                    9
 ---pagebreak---         for a major part of their demand.26 Some respondents to the market investigation
        further indicate that advertising space is also purchased through intermediary
        advertising agencies.27 The Commission considers, based on the Notifying Party’s
        submission, that post-Transaction there will remain a sufficient number of alternative
        suppliers of advertising space in all possible segments, such as Cairo
        Communications/RCS, Montif and Caltagirone Group (advertising on daily written
        press) and Radio Televisione Italiana (RAI) and Fininvest (advertising on radio).
(41)    Third, with regard to the incentive to engage in input foreclosure, the Commission
        notes that GEDI’s limited market shares in all possible segments of the upstream
        market for the sale of advertising space would likely render any input foreclosure
        strategy unprofitable. In particular, the Commission considers that selling GEDI’s
        advertising space only to FCA post-Transaction would likely result in lost sales from
        potential customers (both from the automotive and other sectors) that would not be
        recouped by any increased sales in the downstream market for manufacturing and
        supply of cars.
(42)    Fourth, the Commission considers that even if the merged entity pursued an input
        foreclosure strategy, for the reasons set out at paragraphs (39)-(41) above, such a
        strategy would likely not result in any reduction in the rivals’ ability or in their
        incentive to compete with the merged entity and would not lead to any appreciable
        increase in prices in the downstream market for manufacturing and supply of cars.
(43)    Based on the above, the Commission concludes that the Transaction does not raise
        serious doubts as to its compatibility with the internal market with respect to potential
        input foreclosure.
5.3.2. Customer foreclosure
5.3.2.1.         The Notifying Party’s view
(44)    According to the Notifying Party, the Transaction is not likely to lead to customer
        foreclosure with regard to the sale of advertising space for the reasons set out at
        paragraphs (45)-(48) below.
(45)    First, the Notifying Party submits that the Parties would lack the ability to foreclose
        suppliers of advertising space from access to key customers. The Notifying Party
        argues that from the perspective of a supplier of advertising space, such as GEDI, the
        possibility to advertise FCA’s vehicles is equivalent to the possibility of advertising
        any other products/services offered by third companies.
(46)    Second, the Notifying Party argues that FCA’s expenses for advertising space
        represent a negligible share of the overall market. In 2018, FCA’s expenses accounted
        for less than [0-5] % of the expenses in an overall media advertising market in Italy,
        under all plausible segments, except for the Italian market for radio advertising, in
        which FCA represents [0-5] % of the expenses. Given FCA’s small share of the
        advertising market in Italy, the Notifying Party submits that GEDI’s competitors
        would have sufficient possibilities to sell advertising spaces to all other car
26  Q2 – Questionnaire to Customers (“Q2”), replies to question 4.
27  Q1 – Questionnaire to Competitors (“Q2”), replies to question 3.2; Q2, replies to question 4.1.
                                                         10
 ---pagebreak---         manufacturers (as well as any other company) active in Italy, even if post-Transaction
        FCA only purchased advertising space from GEDI.
(47)    Third, the Notifying Party submits that GEDI would not have the incentive to foreclose
        advertising space suppliers from access to key customers. In the Notifying Party’s
        view, a potential customer foreclosure strategy would not be profitable. [FCA’s
        advertising strategy on Italian media].. According to the Notifying Party, a change in
        this strategy would negatively affect FCA’s profits in the downstream market for
        manufacture and supply of cars which cannot be offset by any hypothetical
        incremental gains in advertising revenues in the upstream market.
(48)    Fourth, the Notifying Party submits that [FCA’s advertising strategy on Italian media].
        Accordingly, due to product differentiation, FCA would not be able to exclusively or
        substantially use GEDI’s limited market position on television and online advertising.
        This is already the case today, despite EXOR owning a minority shareholding in
        GEDI, with GEDI only representing [10-20] % of the overall space advertising
        expenses by EXOR.
5.3.2.2. The Commission's assessment
(49)    The Commission considers that for the reasons set out below, the merged entity would
        neither have the ability nor the incentive to foreclose rivals upstream by exclusively
        relying on GEDI’s advertising space and stopping purchases of advertising space from
        other suppliers and that, in any event, any such strategy would not have a significant
        detrimental effect in the downstream market and harm consumers.
(50)    First, with regard to the ability to engage in customer foreclosure, the Commission
        takes the view that FCA does not constitute an important route to market for suppliers
        of advertising space. The market investigation results confirm that suppliers of
        advertising space (in all possible sub-segments) do not only sell to customers from the
        automotive industry but also to customers from other industries.28 In addition, based
        on the Notifying Party’s submission (see paragraph (46)) and the market investigation
        results, FCA does not account for a large proportion of advertising sales in Italy. 29
        Therefore, the Commission considers that post-Transaction there will remain
        sufficient alternative customers of advertising space.
(51)    Second, with regard to the incentive to engage in customer foreclosure, the
        Commission notes that due to product differentiation, FCA is unlikely to be able to
        solely rely on GEDI’s media for all its advertising needs. Some respondents to the
        market investigation expressed the view that automotive players have specific needs
        in terms of advertising and they can achieve their targets by devising campaigns in
        different media belonging to various suppliers of advertising space. 30 Furthermore,
        due to GEDI’s very limited position in specific sub-segments (e.g., TV and online
        advertising), FCA is likely to continue sourcing advertising space from alternative
        suppliers rather than exclusively relying on GEDI.31
28  Q2 – Questionnaire to Customers (“Q2”), replies to question 4.2.
29  Q2 – Questionnaire to Customers (“Q2”), replies to question 4.2 and 5.1.
30 Q2 – Questionnaire to Customers (“Q2”), replies to question 4.2.
31 Q2 – Questionnaire to Customers (“Q2”), replies to question 6.1.
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 ---pagebreak--- (52) Third, the Commission considers that even if the merged entity pursued a customer
     foreclosure strategy, for the reasons set out at paragraphs (50)-(51) above, such a
     strategy would not adversely affect upstream rivals’ ability to compete in such a way
     as to lead to detrimental effects on competition in the downstream market for the
     manufacture and supply of cars.
(53) Based on the above, the Commission concludes that the Transaction does not raise
     serious doubts as to its compatibility with the internal market with respect to potential
     customer foreclosure.
6.   CONCLUSION
(54) 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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