CELEX: 32018M9070
Language: en
Date: 2018-09-10 00:00:00
Title: Commission Decision of 10/09/2018 declaring a concentration to be compatible with the common market (Case No COMP/M.9070 - Eurocar Italia S.r.l. / Vicentini S.p.A.) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                   Brussels, 10.9.2018
                                                                   C(2018) 5976 final
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                           PUBLIC VERSION
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omitted has been replaced by ranges of figures or a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.9070 – EUROCAR / VICENTINI
                       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 14 August 2018, the European Commission received notification of a
             proposed concentration pursuant to Article 4 of the Merger Regulation by which
             Eurocar Italia S.r.l. ("Eurocar"), controlled by Volkswagen AG ("VW", Germany)
             acquires sole control over the whole of Vicentini S.p.A. ("Vicentini", Italy),
             within the meaning of Article 3(1)(b) of the Merger Regulation, by way of a
             purchase of shares (the "Proposed Transaction").3 Eurocar and Vicentini are
             designated hereinafter as the 'Parties'.
   1.     THE PARTIES
   (2)       Eurocar is active in the retail distribution of new and used passenger cars and
             light commercial vehicles, as well as retail distribution of Original Equipment
             ("OE") spare parts of VW brands in Italy and related repair activities. Eurocar is
             active in a number of provinces in Italy, its focus being the provinces of the Friuli
             Venezia Giulia region in North-Eastern Italy, the Tuscany region in Central Italy
             and Lombardia in North-Western Italy. Eurocar is part of the VW Group ("VW")
             and ultimately controlled by VW AG. VW is active worldwide, including in Italy,
   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 296, 22.8.2018, p.5.
   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---         in the development, manufacture, marketing and sale of passenger cars, light
        commercial vehicles, trucks, buses, coaches, chassis for buses and diesel engines,
        motor bikes, each including spare parts and accessories. VW also engages in
        vehicle distribution. VW includes the vehicles brands Volkswagen Passenger
        Cars, Volkswagen Light Commercial, Porsche, Audi, Skoda, Bentley, Bugatti,
        Lamborghini, SEAT, MAN, Scania and Ducati.
(3)     Vicentini is active in the retail distribution of new and used passenger cars and
        light commercial vehicles, as well as in the retail distribution of OE spare parts of
        VW brands in Italy and related repair activities. Vicentini's activities are limited
        to the province of Verona in the Veneto region.
2.   THE CONCENTRATION
(4)     Pursuant to a share sale and purchase agreement signed on 1 August 2018,
        Eurocar will, in a first tranche, acquire shares representing 35% of the share
        capital of the Target. This transfer will be accompanied by the adoption of new
        by-laws according to which Eurocar will solely operate the Target's daily business
        and solely determine the ordinary and extraordinary management of the Target.
        The other shareholders will only have typical minority shareholders' rights, which
        are accorded in order to protect their financial interests as investors. Vicentini will
        therefore be solely controlled by Eurocar.4
(5)     The Proposed Transaction therefore constitutes a concentration pursuant to
        Article 3(1)(b) of the Merger Regulation.
3.   EU DIMENSION
(6)     The undertakings concerned have a combined aggregate world-wide turnover of
        more than EUR 5 000 million (VW: EUR 231 007 million; Vicentini: EUR […]).5
        Each of them has an EU-wide turnover in excess of EUR 250 million (VW:
        EUR […]; Vicentini: EUR […]) and 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 pursuant to Article 1(2) of the
        Merger Regulation.
4.   MARKET DEFINITION
(7)     The Parties' activities horizontally overlap in a number of markets in Italy,
        namely: (i) retail distribution of new passenger cars; (ii) retail distribution of new
        light commercial vehicles ("LCVs");6 (iii) retail distribution of used motor
        vehicles7; (iv) retail distribution of OE spare parts for passenger cars and LCVs; 8
4   Eurocar, in the context of the same Transaction, will acquire additional shares in Vicentini in two
    additional tranches (2019 and 2023). However, the change of control will already occur with the
    transfer of the shares in the first tranche.
5   Turnover calculated in accordance with Article 5 of the Merger Regulation.
6   Cases COMP/M.7747 – PGA/MSA; COMP/M.5061 – Renault/Russian Technologies/AvtoVaz;
    COMP/M.2832 – General Motors/Daewoo Motors.
7   Case COMP/M.6958 – Cd&R/We Buy Any Car.
8   Cases COMP/M.5709 – Volkswagen/MAHAG; COMP/M.5250 – Porsche/Volkswagen;
    COMP/M.3198 – VW-Audi/VW-Audi Sales Centres.
                                                       2
 ---pagebreak---          (v) retail distribution of non-OE spare parts for passenger cars and LCVs; 9 and
         (vi) car repair and maintenance of motor vehicles.10
(8)      The Proposed Transaction also gives rise to four vertical relationships in Italy
         through the activity of Eurocar’s parent company VW, namely: (i) wholesale
         distribution of new passenger cars and retail distribution of new passenger cars;
         (ii) wholesale distribution of LCVs and retail distribution of LCVs; (iii) wholesale
         distribution of used motor vehicles and retail distribution of used motor vehicles;
         and (iv) wholesale distribution of OE spare parts for passenger cars and LCVs
         and retail distribution of OE spare parts for passenger cars and LCVs. However,
         only one of those vertical relationships involves an affected market, that is VW's
         activity on the upstream market for the wholesale distribution of VW-branded OE
         spare parts for passenger cars and LCVs and Vicentini's activity on the
         downstream market for the retail distribution of such parts.
      4.1.    Product market definition
    4.1.1. Wholesale distribution of OE spare parts for passenger cars and LCVs
(9)      In its previous decisional practice, the Commission found that there are separate
         markets for the wholesale distribution of OE spare parts and of non-OE spare
         parts. In particular, according to the Commission, the wholesale distribution of
         OE spare parts is brand-specific. Therefore, the relevant product markets are
         determined by the brand of the OE spare parts which are distributed. 11 The
         Commission further considered a distinction of the market for the wholesale
         distribution of automotive components between categories of vehicles, i.e. light
         vehicles (passenger cars and LCVs) and heavy vehicles, 12 but without any sub-
         distinction by product.13
(10)     The Notifying Party does not contest the above market definition, which will be
         retained for the purposes of this case. In any event, there is no need to close the
         market definition as the Proposed Transaction will not lead to serious doubts
         under any alternative market definition.
    4.1.2. Retail distribution of OE spare parts for passenger cars and LCVs
(11)     In previous decisions, the Commission has distinguished between the retail
         distribution of OE spare parts and non-OE spare parts. As at the wholesale level,
         the Commission found that the retail distribution of OE spare parts is brand-
         specific, thus defining the market according to the brand of a given spare part, and
         distinguished between light vehicles and heavy vehicles.14
9    Idem.
10   Cases COMP/M.6063 – Itochu/Speedy; COMP/M.2948 – CVC/Kwik-Fit; COMP/M.2087 – Feu
     Vert/Carrefour/Autocenter Delauto.
11   Cases COMP/M.6063 – Itochu/Speedy; COMP/M.5250 – Porsche/Volkswagen; COMP/M.3198 –
     VW-Audi/VW-Audi Sales Centres.
12   Cases COMP/M.8198 – Alliance Automotive Group/FPS Distribution; COMP/M.7401 –
     Blackstone/Alliance BV/Alliance Automotive Group; COMP/M.5250 – Porsche/Volkswagen.
13   Case COMP/M.8198 – Alliance Automotive Group/FPS Distribution.
14   Cases COMP/M.5709 – VW/MAHAG; COMP/M.5250 – Porsche/Volkswagen; COMP/M.3198 – VW-
     Audi/VW-Audi Sales Centres.
                                                     3
 ---pagebreak--- (12)    The Notifying Party does not contest the above market definition, which will be
        retained for the purposes of this case. In any event, the precise market definition
        can be left open as the Proposed Transaction will not lead to serious doubts under
        any alternative product market definition.
     4.2.   Geographic market definition
(13)    In previous decisions, the Commission has considered that the wholesale
        distribution of OE spare parts could be either EEA-wide or national, but
        ultimately left open the exact definition.15
(14)    In previous decisions, the Commission has considered that the retail distribution
        of OE spare parts could be either national or sub-national, but ultimately left open
        the exact definition.16
(15)    The Notifying Party submits that there is no need to decide on the exact
        geographic market definition as the Proposed Transaction does not raise any
        doubts as to its compatibility with the internal market under any plausible market
        definition.
(16)    The Commission considers that the precise market definition can be left open as
        the Proposed Transaction will not lead to serious doubts under any alternative
        geographic market definition.
5.   COMPETITIVE ASSESSMENT
     5.1.   Horizontal effects
(17)    The Proposed Transaction does not lead to horizontally affected markets.
(18)    Based on the narrowest plausible geographic market, being provinces in Italy, the
        Parties overlap in relation to the following markets: (i) retail distribution of new
        passenger cars; (ii) retail distribution of new LCVs; (iii) retail distribution of used
        motor vehicles. However, on all these markets the combined market shares of the
        Parties remain below 20%.
(19)    Based on a broader geographic market definition, i.e. national, the Parties overlap
        in relation to the following additional markets: (iv) retail distribution of OE spare
        parts for passenger cars and LCVs; (v) retail distribution of non-OE spare parts
        for passenger cars and LCVs; and (vi) car repair and maintenance of motor
        vehicles. However, on all these markets the combined market shares remain
        below 20%. If the geographic market definition retained is narrower, i.e.
        provinces in Italy, there would be no overlap on these markets.
     5.2.   Non-horizontal effects
(20)    The Proposed Transaction gives rise to an affected vertical relationship with
        regard to the upstream market for the wholesale distribution of VW-branded OE
        spare parts for passenger cars and LCVs, where VW is active, and the
15   Cases COMP/M.7401 – Blackstone/Alliance BV/Alliance Automotive Group; COMP/M.6718 –
     Toyota Tsusho Corporation/CFAO; COMP/M.5250 – Porsche/ Volkswagen.
16   Cases COMP/M.6718 – Toyota Tsusho Corporation/CFAO; COMP/M.5250 – Porsche/ Volkswagen.
                                                   4
 ---pagebreak---  ---pagebreak---              this be the case, those other VW service partners, competing downstream
             with Vicentini could still buy from [other sources in various geographic
             areas]. The Notifying Party claims that engaging in foreclosure behaviour
             would not constitute a commercially viable or sensible strategy;
     (c)     [Independent repair shops have ways to access VW's-branded spare parts],
             and therefore it has no incentive to engage in a foreclosure strategy.
(27) The Commission considers that the merged entity is unlikely to have an incentive
     to foreclose downstream competitors of Vicentini given the limited geographic
     presence of Vicentini and the nature of VW’s distribution strategy.
(28) First, the Commission takes the view that given the low market share of the
     merged entity in the downstream market on a national level ([5-10]% combined),
     most of which is pre-existent to the Transaction, it would not be profitable for the
     merged entity to engage in a foreclosure strategy.
(29) In light of the limited geographic presence of the merged entity in the
     downstream market, in order to maintain its distribution in all of Italy, VW will in
     any event continue to directly supply VW-branded parts to its service partners in
     regions where Vicentini is not active (including in neighbouring provinces).
     Hypothetically, VW could thus only engage in a foreclosure strategy in a limited
     region in Italy.
(30) Second, the Commission further understands that the contracts in force between
     VW and each of its service partners provides for their right to cross-supply VW-
     branded spare parts across the (European-wide) network. This is also compliant
     with the Commission Regulation (EU) No 330/2010 of 20 April 2010 on the
     application of Article 101(3) of the Treaty on the Functioning of the European
     Union to categories of vertical agreements and concerted practices. Hence,
     downstream competitors of the merged entity will continue to have access to
     spare parts from other service partners located in regions where the merged entity
     is not active.
(31) Accordingly, the Commission takes the view that a foreclosure strategy not to
     directly supply Vicentini's competitors limited to a few specific regions (i.e. the
     area where Vicentini is active) would likely fail as those downstream competitors
     will retain the ability to source spare parts from service partners located in other
     (neighbouring) regions.
(32) The Commission considers that the information provided by the Parties
     concerning the sourcing preferences of service partners in the province Verona,
     further supports the conclusion that service partners do source from entities other
     than VW ([Confidential information]).
(33) The market investigation also supported this conclusion. A competitor of
     Vicentini indicated that it does not expect to have difficulties in obtaining access
     to VW-branded OE spare parts. To the contrary, this competitor indicated that it
     does not expect any change in VW's behaviour on the wholesale market and
                                               6
 ---pagebreak---         believes that VW will continue to operate fairly with respect to its service
        partners.20
Overall likely impact on effective competition
(34)    Therefore, in view of the merged entity’s lack of incentive to foreclose
        downstream competitors, the Commission considers that the Proposed
        Transaction is unlikely to reduce effective competition in the market for the retail
        distribution of VW-branded OE spare parts for passenger cars and LCVs in any
        relevant geographic market.
   5.2.3. Conclusion
(35)    Given the lack of incentive to foreclose downstream competitors, the Commission
        considers that the Proposed Transaction does not raise serious doubts as to its
        compatibility with the internal market as a result of non-horizontal effects.
6.   CONCLUSION
(36)    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
                                                              Member of the Commission
20   Minutes of the call with a competitor on 13 August 2018.
                                                        7