CELEX: 32020M9502
Language: en
Date: 2020-01-15 00:00:00
Title: Commission Decision of 15/01/2020 declaring a concentration to be compatible with the common market (Case No COMP/M.9502 - SYNTHOMER / OMNOVA SOLUTIONS) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                Brussels, 15.1.2020
                                                                C(2020) 241 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                                                                  information omitted has been replaced by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.9502 – SYNTHOMER/OMNOVA SOLUTIONS
                    Commission decision pursuant to Article 6(1)(b) in conjunction with
                    Article 6(2) of Council Regulation No 139/20041 and Article 57 of the
                    Agreement on the European Economic Area2
Dear Sir or Madam,
(1)       On 15 November 2019, the Commission received notification of a proposed
          concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004 and
          following a referral pursuant to Article 4(5) of the Merger Regulation by which
          Synthomer plc (“Synthomer”, UK) acquires within the meaning of Article 3(1)(b) of
          the Merger Regulation sole control of Omnova Solutions, Inc. (“Omnova”, US) (the
          “Transaction”).3 Synthomer is referred to as the “Notifying Party” and, together with
          Omnova, 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 398, 25.11.2019, p.3.
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)  Synthomer develops and manufactures specialty chemicals for use in a variety of
     applications. Its activities are mainly concentrated in Europe, with [60-70]% of
     Synthomer's 2018 worldwide turnover generated in the EEA and sixteen of its
     production facilities located in the EEA (with one in the United States, two in
     Middle East/Africa and six in Asia).
(3)  Omnova develops and manufactures specialty chemicals and thermoplastic films for
     a variety of applications. Omnova’s activities are predominantly based in North
     America, with eight of its thirteen production facilities located in the United States.
     In contrast, its EEA business is smaller, with [10-20]% of its 2018 worldwide
     turnover generated in the EEA and two plants in the EEA (at Le Havre (France) and
     Lisbon (Portugal)).
2.   THE CONCENTRATION
(4)  On 3 July 2019, Synthomer and Omnova entered into an agreement pursuant to
     which Synthomer agreed to acquire sole control of Omnova by purchase of its entire
     issued and to be issued share capital.
(5)  The Transaction is therefore a concentration within the meaning of Article 3(1)(b) of
     the EU Merger Regulation.
3.   SCOPE OF COMMISSION REVIEW
(6)  The Transaction does not have a Union dimension within the meaning of Article 1 of
     the Merger Regulation as it does not meet the thresholds of Article 1(2) or Article
     1(3).
(7)  However, on 6 September 2019, the Notifying Party informed the Commission by
     means of a reasoned submission that the concentration would be notifiable in five
     Member States and would fulfill a number of further criteria for its referral to the
     Commission.4 In particular, the affected markets have a geographic scope that is
     wider than national (EEA-wide or worldwide) and a referral to the Commission
     would avoid multiple national filings, thereby increasing administrative efficiency.
     On that basis, under Article 4(5) of the Merger Regulation, the Notifying Party
     requested the Commission to examine the Transaction.
(8)  The Commission agrees that the referral request meets the legal criteria set out in
     Article 4(5) of the Merger Regulation in that the Transaction is capable of being
     reviewed under the national merger control laws of at least three Member States,
     namely Austria, Germany, Portugal, Spain and the United Kingdom. In addition,
     none of the Member States competent to examine the Transaction under the
     respective national laws expressed their disagreement within 15 working days of
     receiving the reasoned submission.
4   As set out in the Commission Notice on Case Referral in respect of Concentrations (OJ C56,
    05.03.2005 p.2, paragraphs 8-14 and 24-32.
                                               2
 ---pagebreak--- (9)    Therefore, the concentration falls under the scope of review of the Commission
       pursuant to Article 4(5) of the Merger Regulation.
4.     COMPETITIVE ASSESSMENT
4.1.   Analytical framework
(10)   Under Articles 2(2) and 2(3) of the Merger Regulation, 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.
(11)   A merger can entail vertical effects. As illustrated below, in the present case the
       vertical links arising from the Transaction are negligible and accordingly are
       unlikely to give rise to possible impediments of effective competition in the internal
       market or in a substantial part of it. More frequently, a merger can entail horizontal
       effects. In this respect, in addition to the creation or strengthening of a dominant
       position, the Commission Guidelines on the assessment of horizontal mergers under
       the Merger Regulation (“the Horizontal Merger Guidelines”)5 distinguish between
       two main ways in which mergers between actual or potential competitors on the
       same relevant market may significantly impede effective competition, namely (a) by
       eliminating important competitive constraints on one or more firms, which
       consequently would have increased market power, without resorting to coordinated
       behaviour (non-coordinated effects); and (b) by changing the nature of competition
       in such a way that firms that previously were not coordinating their behaviour are
       now significantly more likely to coordinate and raise prices or otherwise harm
       effective competition. A merger may also make coordination easier, more stable or
       more effective for firms which were coordinating prior to the merger (coordinated
       effects).6
(12)   As illustrated below, the horizontal overlaps created by the Transaction with respect
       to certain affected markets are significant and may give rise to concerns as to a
       possible creation or strengthening of a dominant position so that effective
       competition in the internal market or in a substantial part of it may be significantly
       impeded because of the Transaction. Accordingly, this decision will analyse whether
       the Transaction is likely to raise serious doubts as to its compatibility with the
       internal market by the creation of non-coordinated effects in those markets on which
       the Parties’ activities lead to horizontal overlaps.
4.2.   Overview of affected markets
(13)   Synthomer and Omnova manufacture and supply speciality chemicals. Specialty
       chemicals are value-added products manufactured using polymerisation and other
       reactive processes to transform commodity raw materials into polymers and other
       complex chemical outputs that are used as an ingredient by customers who formulate
       finished products for the healthcare, consumer goods, construction and other sectors.
5    Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of
     concentrations between undertakings, OJ C 31, 5.2.2004 p.5.
6    Horizontal Merger Guidelines, paragraph 22.
                                                       3
 ---pagebreak--- (14)    The Parties’ activities horizontally overlap with respect to certain types of synthetic
        latex polymers (also referred to as “latex dispersions”). Latex dispersions are
        produced through the polymerization of one or more monomers and are mainly used
        as binders in the production of materials such as paper, carpets, adhesives, textiles
        and paints. More specifically, the Transaction leads to horizontally affected markets
        in:
        (a)       Vinyl pyridine latex (“VP Latex”);
        (b)       Carboxylated nitrile butadiene latex (“XNBR”);
        (c)       Carboxylated styrene butadiene latex (“XSBR”);
        (d)       Styrene acrylic (“SA”); and
        (e)       High solids styrene butadiene (“HS-SB”).
(15)    Each of these horizontally affected markets will be addressed in turn. There are only
        very limited vertical links arising from the Transaction, which are not analysed in
        detail as they do not give rise to competition concerns.7
4.3.    Vinyl pyridine latex (VP Latex)
4.3.1. Market definition
(16)    VP Latex is an aqueous polymer used in heavy duty rubber goods, primarily tyres, to
        promote the adhesion between reinforcing cords or fabric and rubber compounds.
        The most common use of VP Latex is in the tyre cord application, whereby nylon or
        polyester yarns are dipped or coated in VP Latex before being embedded in a tyre to
        reinforce it against high pressure and temperatures. Both Parties are active in the
        production and sale of VP Latex, primarily for the tyre cord application.
7     For completeness, the upstream markets for styrene and/or butadiene are vertically affected in light of
      the Parties’ combined downstream market shares for certain synthetic latex markets, namely: VP Latex,
      XSBR, XNBR and HS-SB (or relevant plausible segmentations of these products, see Sections 4.3, 4.4,
      4.5 and 4.7). However, input or customer foreclosure concerns are implausible. Only Synthomer is
      active upstream and it does not manufacture these products. Rather, Synthomer procures styrene and
      butadiene from third parties for its own internal use and only has some very limited re-sales of styrene
      and butadiene [business secret regarding sales strategy of Notifying Party] – it estimates its market
      share is around [0-5]% or less worldwide and in the EEA. In addition, there are technically vertically
      affected markets between the Parties’ supply of XSBR and HS-SB (upstream) and Synthomer’s supply
      of certain XSBR compounds and HS-SB compounds (downstream) primarily sold to the carpet
      industry. However, the Transaction will not bring about any change in the market given that (i)
      Synthomer is already vertically integrated pre-Transaction; it does not procure XSBR from third parties
      for use in compound production and [business secret regarding business and procurement strategy of
      Notifying Party], (ii) Omnova is barely active in XSBR and HS-SB in the EEA and already pre-
      Transaction does not pose any competitive constraint on Synthomer for these products in the EEA (see
      Sections 4.5 and 4.7 below), (iii) Omnova does not supply XSBR or HS-SB to compound producers in
      the carpet industry in the EEA, and (iv) post-Transaction there will remain several large producers of
      the relevant inputs (e.g. BASF, Trinseo, Synthos, Versalis, EOC Group, etc.), which will continue to
      constitute an alternative source of supply for independent compounders. In light of the above, the
      Commission considers that the Transaction does not raise serious doubts as regards any of these
      vertically affected markets.
                                                          4
 ---pagebreak--- 4.3.1.1. Product market definition
Commission’s precedents
(17)    In Bayer/Hüls, the Commission identified a separate product market for VP Latex.8
        Since then, the Commission has consistently defined product markets for synthetic
        latex products according to the type of latex dispersion (i.e. chemical composition)
        and also by application.9 The Commission has previously also found that synthetic
        latex products should not be further divided into submarkets according to the grade
        qualities of the latex dispersions.10
The Notifying Party’s view
(18)    The Notifying Party argues that VP Latex forms a separate product market and that it
        is not necessary to segment the market for VP Latex by application or by grade (i.e.
        VP Latex with high and low vinyl pyridine content).11
(19)    First, the Notifying Party notes that VP Latex is used primarily for the tyre cord
        application, but it is also used in the production of mechanical rubber goods. These
        applications should in its view not be considered distinct markets. From a demand
        perspective, the same grades of VP Latex are used across tyre cord and mechanical
        rubber goods. From a supply perspective, the same producers sell, or can sell, into all
        applications. Moreover, the Notifying Party argues that the competitive dynamics for
        VP Latex are driven by the tyre cord application given that the vast majority (around
        85%) of VP Latex sales in the EEA and worldwide are for tyre cords.
(20)    Second, the Notifying Party argues that there is substitution between VP Latexes
        with a high (typically ~15%) and low (typically ~10%) vinyl pyridine content. The
        Notifying Party acknowledges that demand-side substitution may be limited given
        that customers typically require a specific vinyl pyridine content to provide the
        adhesive performance required. However, it argues that there is a high degree of
        supply-side substitutability, as the only difference between high and low content VP
        Latex is the proportion of vinyl pyridine used in the formulation. Accordingly, both
        Parties produce both high and low content VP Latex [business secret regarding the
        production processes of the Parties]. No time or special steps are required to switch
        from producing one to the other; it is a change in recipe rather than process.
The Commission’s assessment
(21)    The majority of respondents to the Commission’s market investigation confirmed
        that VP Latex should be considered a separate product market from other synthetic
        latexes. Customers generally did not consider that VP Latex could be substituted
        with other latexes, with some noting that other latex products do not have the same
        adhesion qualities as VP Latex. Even some of those customers that thought
        switching between VP Latex and other latex products might be possible highlighted
8     See case IV/M.751 - Bayer/Hüls, decision of 03.07.1996.
9     See cases M.5927 - BASF/Cognis, decision of 30.11.2010; M.5355 - BASF/CIBA, decision of
      12.03.2009; M.5424 - Dow/Rohm and Haas, decision of 08.01.2009; and M.1993 - Rhodia/Raisio/JV,
      decision of 20.07.2000.
10    See cases M.5355 - BASF/CIBA, decision of 12.03.2009; M.5424 - Dow/Rohm and Haas, decision of
      08.01.2009; and M.1993 - Rhodia/Raisio/JV, decision of 20.07.2000.
11    Form CO, paragraph 6.72
                                                        5
 ---pagebreak---         that switching between them would require a material and time-consuming change in
        the formulation that customers use to manufacture the end-products.12 Competitors’
        responses were inconclusive as to the degree of supply-side substitution between VP
        Latex and other synthetic latex products.13
(22)    While the market investigation did not provide evidence that a segmentation by
        application was necessary, it nonetheless revealed that customers typically purchase
        a specific grade of VP Latex to be incorporated in the finished products they
        manufacture.14 Most customers that responded to the market investigation
        considered that switching between grades of VP Latex was challenging. In
        particular, customers noted that switching would require a change in the formulation
        used, may impact the adhesion performance of the end product, and would require
        testing and approvals by end-customers.15
(23)    On the other hand, the market investigation clearly confirmed that there is supply-
        side substitution between VP Latex grades. All suppliers that responded indicated
        that they can and do switch production between VP Latex with high and low vinyl
        pyridine content on the same production line with limited effort.16
(24)    For the reasons set out above, the Commission considers that, for the purposes of
        this decision, VP Latex constitutes a distinct product market from other synthetic
        latex products, without the need for further segmentation.
4.3.1.2. Geographic market definition
Commission’s precedents
(25)    The Commission has previously considered the relevant geographic market for all
        types of synthetic latex products (including VP Latex specifically) to be EEA-
        wide.17 In particular, the Commission pointed to differences in price levels between
        continents and the fact that the flow of supply between continents was not
        significant.
The Notifying Party’s view
(26)    The Notifying Party argues that the competitive conditions have changed since the
        Commission’s decision in Bayer/Hüls and that the relevant market for VP Latex is
        worldwide.18
(27)    First, the Notifying Party argues that the costs of shipping VP Latex overseas are
        low and that there are no regulatory barriers to selling in the EEA. For example, the
        Notifying Party estimates that the cost of shipping from a plant in India to a
        customer in the EEA is around [0-5]% of the average final sales price in the EEA
12    Replies to question 8 of Q1 - Questionnaire to VP Latex customers.
13    Replies to question 9 of Q4 - Questionnaire to VP Latex competitors.
14    Replies to question 10 of Q1 - Questionnaire to VP Latex customers and replies to question 7 of Q4 -
      Questionnaire to VP Latex competitors.
15    Replies to question 10 of Q1 - Questionnaire to VP Latex customers.
16    Replies to question 7 of Q4 - Questionnaire to VP Latex competitors.
17    See case M.5355 - BASF/CIBA, decision of 12.03.2009 and case IV/M.751 - Bayer/Hüls, decision of
      03.07.1996.
18    Form CO, paragraph 6.73 et seq.
                                                         6
 ---pagebreak---       and that the cost of shipping from France to Shanghai is around [0-5]% of the
      average final sales price in the EEA.
(28)  Second, the Notifying Party considers that trade flows have increased since the
      Commission’s decision in Bayer/Hüls. It points out that Omnova and Synthomer
      ship a significant proportion of their EEA VP Latex production to customers outside
      of the EEA ([70-80]% and [30-40]% respectively), while some Asian manufacturers
      (e.g. Jubilant of India) have begun selling into the EEA. The Notifying Party also
      explains that all sales to the US are imports given that there are no VP Latex plants
      in the US; [business secret regarding Omnova's sales and production strategies].
(29)  Third, the Notifying Party submits that many VP Latex customers (such as tyre cord
      dippers or tyre manufacturers) are multinational companies with factories
      worldwide. It argues that these customers negotiate supply agreements comparing
      terms and conditions on a worldwide basis, frequently adjust pricing, and can and do
      arbitrage across the globe as they can gradually shift their purchases and production
      across regions.
(30)  Finally, it argues that VP Latex is also imported into the EEA indirectly in the form
      of finished (already-dipped) tyre cord. The Notifying Party estimates that
      [confidential information regarding the Notifying Party's internal analysis/estimate
      regarding the percentage of the total VP Latex demand in the EEA that VP Latex
      imported through finished tyre cord represents].
The Commission’s assessment
(31)  The results of the market investigation did not confirm the view of the Notifying
      Party, but rather pointed to the existence of an EEA-wide market for VP Latex.
(32)  First, while the Parties may export VP Latex outside the EEA, their sales into the
      EEA are very limited. Moreover, imports of VP Latex in the EEA are limited. Very
      few EEA end-customers responding to the market investigation indicated that they
      source VP Latex from suppliers outside the EEA, in line with the Notifying Party’s
      estimate that imports account for a small proportion of sales in the EEA (around or
      less than 10% in 2018, see Table 1 below).19 Moreover, those respondents who do
      procure VP Latex from outside the EEA confirmed that they do not rely on non-EEA
      suppliers as their primary supplier, procuring only a small part of their needs from
      them (typically 10-15%).20
(33)  Second, the majority of EEA end-customers indicated that it was important for their
      supplier’s factory to be close to their production plants to manage costs, lead time
      and business continuity.21 This is supported by the fact that respondents typically
      require just-in-time delivery or hold stock to cover their short-term needs.22
19   Replies to questions 12 and 22 of Q1 - Questionnaire to VP Latex customers. In addition, the non-EEA
     based suppliers who responded confirmed that their sales to the EEA are negligible – see replies to
     question 5 of Q4 - Questionnaire to VP Latex competitors.
20   Replies to question 12 of Q1 - Questionnaire to VP Latex customers.
21   Replies to question 15 of Q1 - Questionnaire to VP Latex customers, as well as the non-confidential
     minutes of three separate calls with VP Latex customers, two on 5 November 2019 and the third on 7
     November 2019.
22   Replies to question 21 of Q1 - Questionnaire to VP Latex customers.
                                                        7
 ---pagebreak--- (34)   Third, a clear majority of EEA end-customers indicated that there were barriers to
       procuring VP Latex from other regions, in particular long delivery periods, sizeable
       transport costs, concerns around ensuring the security of supply, as well as the risk
       that the product may be damaged in transit.23 Suppliers responding to the market
       investigation agreed and identified similar barriers. In particular, transport costs were
       identified as a key barrier to shipping across regions.24
(35)   Fourth, customers were generally sceptical or unsure about the credibility of Asian
       suppliers as an alternative in the EEA, with a number of customers raising
       substantial concerns around security of supply, lead time, transport costs and
       quality.25
(36)   Finally, there is no strong evidence that a hypothetical small but significant and non-
       transitory increase in price in the EEA would be unprofitable due to the constraint
       from suppliers outside Europe. EEA end-customers responding to the market
       investigation were split on whether they would consider importing from outside the
       EEA in the event of such an increase.26 In practice, for the reasons set out in the
       previous recitals, only limited switching seems likely. Moreover, certain suppliers
       who responded noted that a hypothetical 5-10% increase in price in the EEA may not
       be sufficient to offset the high cost of transporting VP Latex from Asia to Europe.27
(37)   In light of the above, the Commission considers that, for the case at hand, the
       relevant geographic market for VP Latex is EEA-wide. Nevertheless, the
       Commission considers that the assessment of the Transaction would not change even
       if the relevant geographic market were considered to be worldwide.
4.3.2. Competitive assessment
(38)   Both Parties supply VP Latex in the EEA and worldwide. Synthomer produces VP
       Latex at its plant in Marl (Germany) and Omnova is active through its plants in Le
       Havre (France) and Caojing (China). The Parties are the only VP Latex
       manufacturers with production plants in the EEA.
The Notifying Party’s view
(39)   The Notifying Party’s estimates of the Parties’ and their largest competitors’ market
       shares worldwide and in the EEA are as follows.
23    Replies to question 16 of Q1 - Questionnaire to VP Latex customers, as well as the non-confidential
      minutes of three separate calls with VP Latex customers, two on 5 November 2019 and the third on 7
      November 2019.
24    Replies to questions 12 and 13 of Q4 - Questionnaire to VP Latex competitors.
25    Replies to question 35 of Q1 - Questionnaire to VP Latex customers, as well as the non-confidential
      minutes of three separate calls with VP Latex customers, two on 5 November 2019 and the third on 7
      November 2019 respectively.
26    Replies to question 17 of Q1 - Questionnaire to VP Latex customers.
27    Replies to question 14 of Q4 - Questionnaire to VP Latex competitors.
                                                         8
 ---pagebreak---  ---pagebreak---        Parties in the market for the supply of VP Latex in the EEA, corresponding to the
       creation or strengthening of a dominant position. The market investigation
       confirmed these estimates – virtually all customers identified either Omnova or
       Synthomer as the largest supplier in the EEA and most identified one of the Parties
       as the largest player worldwide.30
(44)   Second, the Transaction would eliminate an important competitive force as the
       Parties are close competitors. Other than Omnova, Synthomer is the only supplier of
       VP Latex with manufacturing capability in the EEA. The market investigation
       showed that customers and competitors consistently identify Synthomer and
       Omnova as each other’s closest competitor in the EEA and worldwide. Respondents
       cited the grades offered, quality of products, pricing and their location as reasons
       why the Parties are close competitors.31
(45)   Third, other than Synthomer, there is only a limited constraint on Omnova in the
       EEA. As outlined above in recital 35, while Asian suppliers do sell to some
       customers in the EEA, the market investigation did not support the Notifying Party’s
       arguments that they pose a strong constraint on the Parties. Indeed, Asian suppliers
       responding to the market investigation consider that they are only “rarely” or
       “sometimes” able to win business from or against the Parties in the EEA.32 Most
       EEA end-customers confirmed that they did not have suppliers other than Synthomer
       or Omnova qualified and that in the last three years they had not considered sourcing
       VP Latex from any suppliers other than Synthomer or Omnova to meet their EEA
       demand.33 Moreover, there was limited evidence in customers’ responses that dipped
       cord could act as a constraint on the merged entity, and few customers were aware of
       VP Latex suppliers who had recently entered or were intending to enter the market
       for VP Latex in the EEA.34
(46)   Finally, and consistent with all of the above, the results of the market investigation
       showed that customers were concerned about the impact of the Transaction, in
       particular in the EEA. The vast majority of EEA end-customers confirmed that it is
       important to be able to source VP Latex from more than one production plant (and
       supplier), to ensure the security of supply and competitiveness of suppliers’ offers.35
       Accordingly, the majority of EEA end-customers were concerned that there would
       not be sufficient choice of suppliers in the EEA post-Transaction and expected the
       Transaction to result in price increases in the EEA.36 Worldwide, while customers
       considered that there would be a sufficient number of suppliers, most respondents
       that expressed a view considered that price increases were likely.37 Moreover, a
30   Replies to question 28 of Q1 - Questionnaire to VP Latex customers.
31   Replies to questions 30, 31 and 32 of Q1 - Questionnaire to VP Latex customers and to questions 17
     and 18 of Q4 - Questionnaire to VP Latex competitors.
32   Replies to question 19 of Q4 - Questionnaire to VP Latex competitors.
33   Replies to questions 22 and 33 of Q1 - Questionnaire to VP Latex customers as well as the non-
     confidential minutes of two separate calls with VP Latex customers, dated 5 November 2019 and 5
     November 2019.
34   Replies to questions 26, 27, 36 and 37 of Q1 - Questionnaire to VP Latex customers.
35   Replies to questions 23 and 24 of Q1 - Questionnaire to VP Latex customers.
36   Replies to questions 38 and 40 of Q1 - Questionnaire to VP Latex customers. In this regard, end
     customers explained that the sourcing of VP Latex generally represents an important part of their costs,
     replies to question 28 of Q1 - Questionnaire to VP Latex customers.
37   Replies to questions 39 and 41 of Q1 - Questionnaire to VP Latex customers.
                                                        10
 ---pagebreak---         number of EEA end-customers were concerned that the Transaction would endanger
        their security of supply, as there would not be any EEA-based alternative to the
        merged entity and few (if any) credible alternatives for customers requiring VP
        Latex for their plants in the EEA.38
(47)    In light of the above, the Commission considers that the Transaction raises serious
        doubts as to its compatibility with the internal market as regards the market for VP
        Latex in the EEA (and would also do so if the relevant geographic market were
        instead considered to be worldwide).
4.4.    Carboxylated nitrile butadiene latex (XNBR)
4.4.1. Market definition
(48)    XNBR is an aqueous emulsion polymer of acrylonitrile-butadiene, stabilized with
        antioxydants. It is mainly used in the production of rubber gloves, but also in other
        applications such as the binding of nonwoven fabrics and the production of textile
        and rubber goods. Its good resistance to other chemicals (such as water, oils, fats,
        greases, alcohols as well as various solvents), and high abrasion and tear resistance
        make it commonly used in applications requiring the material to perform its
        elastomeric function in the presence of chemical agents.
(49)    Glove dipping39 represents 96% of all XNBR consumption worldwide, with
        customers mainly located in South-East Asia. However, the glove-dipping
        application only represents 25% of the XNBR consumption in the EEA.
(50)    XNBR’s chemical composition is distinct from non-carboxylated nitrile butadiene
        latex (“NBR Latex”) as well as nitrile butadiene rubber (“NBR Solid”), because the
        manufacturing processes of these two products do not involve a carboxylation step.
4.4.1.1. Product market definition
Commission’s precedents
(51)    In Bayer/Hüls, the Commission referred specifically to nitrile butadiene latex but did
        not consider the product market definition in any depth and did not set out whether it
        was referring to NBR (non-carboxylated) latex or XNBR (carboxylated) latex.40
        However, in the context of XSBR (discussed in section 4.5) the Commission has
        drawn a distinction between carboxylated and non-carboxylated products.41
(52)    Moreover, in previous cases, the Commission has consistently defined product
        markets according to the type of latex dispersion (i.e. chemical composition) and
38    Replies to question 42 of Q1 - Questionnaire to VP Latex customers as well as the non-confidential
      minutes of three separate calls with VP Latex customers, two on 5 November 2019 and the third on 7
      November 2019.
39    The manufacturing process for latex gloves involves the dipping of hand-shaped forms into latex. The
      subsequent drying of these dipped forms gives shape to the glove. XNBR is used for this purpose to
      manufacture medical examination gloves with strong resistance to chemicals and a low weight.
40    See case IV/M.751 - Bayer/Hüls, decision of 03.07.1996.
41    See cases M.5927 - BASF/Cognis, decision of 30.11.2010; and M.5355 - BASF/CIBA, decision of
      12.03.2009.
                                                       11
 ---pagebreak---        also by application.42 The Commission found that there was no need to further divide
       the markets according to the grade qualities of the latex dispersions.43
The Notifying Party’s view
(53)   The Notifying Party submits that XNBR is distinct from NBR Latex, because as
       specialty products with different chemical properties they address different specific
       customer needs with no demand-side substitutability between them.44
(54)   In addition, the Notifying Party argues that there is very little supply-side
       substitutability between these two products, because the production of NBR Latex
       requires specific know-how that not all XNBR manufacturers possess. Illustratively,
       [business secret regarding production process and business strategy of Notifying
       Party].
(55)   For the same reason, the Notifying Party also submits that XNBR is distinct from
       NBR Solid (which consists of coagulated, dried and ground NBR Latex).
(56)   In addition, the Notifying Party considers that there is only limited substitutability
       between the different applications of XNBR (glove-dipping, rubber goods,
       nonwovens, textile and others). It claims that demand-side substitutability is limited
       as each customer/application requires specific properties. It explains that there is
       some supply-side substitutability (as all XNBR grades are made on technically
       similar equipment and are produced by tweaking the inputs and process), 45 but that
       this supply-side substitutability can only be effective to the extent that a supplier has
       developed the grades that are needed to fit the specific requirements of customers for
       different applications.46
The Commission’s assessment
(57)   The results of the market investigation confirmed that the vast majority of customers
       do not consider XNBR to be substitutable with any other types of latex dispersion.47
       In particular, none of the customers that considered potential substitutability between
       XNBR and other types of latex dispersions identified NBR as a substitute for XNBR.
(58)   The market investigation also brought some indication that a segmentation by
       application could be relevant in the case of XNBR. In particular, the majority of
42   See cases M.5927 - BASF/Cognis, decision of 30.11.2010; M.5355 - BASF/CIBA, decision of
     12.03.2009; M.5424 - Dow/Rohm and Haas, decision of 08.01.2009; and M.1993 - Rhodia/Raisio/JV,
     decision of 20.07.2000.
43   See case M.5355 - BASF/CIBA, decision of 12.03.2009.
44   Form CO, paragraph 6.136 et seq.
45   However, the Notifying Party submits that not all XNBR suppliers can produce XNBR for the glove-
     dipping industry due to the scale and capacity required to compete for glove-dipping customers and
     very high industry standards set by these customers. Accordingly, the Notifying Party notes that
     Omnova [business secret regarding production process and business strategy of Omnova].
46   The Notifying Party submits, by way of example, that it would take [business secret regarding
     Notifying Party's expected production cost and time required to produce a grade of XNBR].
47   Replies to questions 6 and 7 of Q2 - Questionnaire to XNBR customers.
                                                        12
 ---pagebreak---         customers do not consider that any type of XNBR can be used for the production of
        the end-products they manufacture.48
(59)    Finally, as regards a potential segmentation of the market by grade, the market
        investigation did not bring to light any indication that would contradict the
        Commission's earlier practice not to further segment the market for XNBR according
        to the grade qualities.
(60)    In view of the above, the distinction between XNBR for different applications
        appears relevant. However, for assessing the Transaction, the exact scope of the
        product market definition can be left open since the Transaction does not give rise to
        serious doubts as to its compatibility with the internal market under any of the two
        above-mentioned alternative market definitions (XNBR as a single product or sub-
        segmented by applications, namely: glove dipping, textile, non-woven, rubber goods
        and others).
4.4.1.2. Geographic market definition
Commission’s precedents
(61)    The Commission has previously considered the relevant geographic market for all
        types of synthetic latex products (and more specifically for nitrile butadiene latex) to
        be EEA-wide.49
The Notifying Party’s view
(62)    The Notifying Party argues that the relevant market for XNBR is worldwide since
        the costs of shipping XNBR Latex overseas are low, the shelf life of XNBR (6-12
        months according to the Notifying Party) makes it suitable for worldwide shipment,
        there are no regulatory barriers to selling in the EEA, and the market addresses
        global customers, mainly in the glove-dipping segment, with sophisticated buying
        processes, who have the ability to source worldwide.50
(63)    Moreover, Omnova and Synthomer ship significant volumes of XNBR produced at
        their EEA plants to customers based outside the EEA ([10-20]% and more than [60-
        70]%, respectively). They are also aware that EEA customers purchase (or have
        purchased) imported XNBR for niche applications from various Asian (Japanese,
        Korean and Indian) suppliers.
(64)    The Notifying Party also emphasises that the EEA market for XNBR is very small
        (EUR 14 million, representing around 1% of worldwide sales). It argues that this is
        because major customers (and the glove-dipping industry generally, which accounts
        for the vast majority of XNBR sales) are mainly located in Asia and that these
        customers source globally. This explains the low level of imports of XNBR into the
        EEA. The Notifying Party further argues that the apparent low interest of non-EEA
        suppliers for selling into the EEA might also be a result of the moderate price levels
48    Replies to question 8 of Q2 - Questionnaire to XNBR customers.
49    See case M.5355 - BASF/CIBA, decision of 12.03.2009 and case IV/M.751 - Bayer/Hüls, decision of
      03.07.1996.
50    Form CO, paragraph 6.156 et seq. For example, the cost of shipping from a plant in India to a customer
      in the EEA or vice versa is estimated to be around [0-5]-[5-10]% of the average final sales price.
                                                         13
 ---pagebreak---        for XNBR in the EEA, as the threat of imports acts as a disciplining factor within the
       EEA.
The Commission’s assessment
(65)   The market investigation confirmed that the geographic market is likely to be EEA-
       wide, but also provided indications that the market could be wider in scope. While
       EEA customers currently procure limited quantities of XNBR from outside the
       EEA,51 the majority of them indicated they would consider procuring XNBR from
       outside the EEA in the event of a hypothetical small but significant and non-
       transitory increase in price in the EEA.52 Some customers explained that they are
       price sensitive, so they might instead turn to suppliers in China, Japan, India, Russia,
       Brazil or the US.53
(66)   However, other aspects of the market investigation pointed towards a narrower,
       EEA-wide relevant geographic market.
(67)   First, most XNBR customers that responded to the market investigation consider it
       important to be supplied by a production plant close to their plants, because
       transportation costs, lead-time, security of supply and the shelf-life of XNBR
       (estimated by customers to be 6 months) typically dictate where they procure from.54
(68)   Second, most customers indicated that there are barriers to procuring XNBR across
       regions. Transport costs, long delivery periods, import/export tariffs and security of
       supply were mentioned among such barriers. Regulatory barriers (REACH
       compliance) as well as the product’s technical characteristics (temperature variations
       can affect the quality of XNBR) were also listed among the reasons why EEA
       customers cannot easily procure from outside the EEA.55
(69)   Moreover, most customers that responded to the market investigation were sceptical
       or unsure about whether Asian suppliers are a credible alternative for the supply of
       XNBR in the EEA.56
(70)   In any event, for the purposes of assessing the Transaction, the exact scope of the
       geographic market definition can be left open since under all above-mentioned
       plausible alternative geographic market definitions, (worldwide or EEA-wide), the
       conclusion of the Commission as to the compatibility of the Transaction with the
       internal market will remain unchanged.
4.4.2. Competitive assessment
(71)   Both Parties supply XNBR in the EEA and worldwide. Synthomer produces XNBR
       at its plants in Langelsheim (Germany), Filago (Italy), Pasir Gudang (Malaysia) and
51    Replies to question 11 of Q2 - Questionnaire to XNBR customers.
52    Replies to question 16 of Q2 - Questionnaire to XNBR customers as well as the non-confidential
      minutes of a call with a XNBR customer, dated 12 December 2019.
53    Replies to question 16 of Q2 - Questionnaire to XNBR customers as well as the non-confidential
      minutes of a call with a XNBR customer, dated 12 December 2019.
54    Replies to question 14 of Q2 - Questionnaire to XNBR customers.
55    Replies to question 15 of Q2 - Questionnaire to XNBR customers.
56    Replies to question 34 of Q2 - Questionnaire to XNBR customers.
                                                        14
 ---pagebreak---  ---pagebreak--- (75)   Accordingly, the Notifying Party submits that Omnova only exerts a very limited
       competitive constraint on Synthomer for XNBR in the EEA. It explains that the
       Parties have next to no XNBR customers in common in the EEA – only [redacted]
       customers in 2018 out of the Parties’ combined total of more than [redacted]
       customers in the EEA.58 Indeed, the Notifying Party explains that [business secret
       regarding Omnova's business strategy]. The Notifying Party adds that Omnova’s
       capacity for the manufacture of XNBR at its Le Havre plant is much smaller than
       Synthomer’s capacity and therefore Omnova cannot exert a meaningful constraint on
       Synthomer at EEA level.59 The Notifying Party claims that the fact that Omnova is
       not mentioned among Synthomer’s competitors for XNBR in Synthomer’s internal
       documents supports this view.
(76)   Finally, the Notifying Party claims that, for these applications, Synthomer is
       constrained in the EEA by significant non-EEA XNBR manufacturers. In particular,
       in the textiles application, Synthomer has lost a customer to the South Korean
       chemical manufacturer Kumho in 2019 – the volumes lost to Kumho are twice as big
       as Omnova’s total sales in the textile segment in the EEA in 2018. The Notifying
       Party argues that other major global players such as Nantex, LG Chem, Shin Foong,
       Bangkok Synthetics, Apcotex, Jubilant and Emerald are currently selling or are well-
       placed to sell to customers in the EEA, taking advantage of low production costs and
       low transportation costs and use local distributors to sell their products into the EEA.
The Commission’s assessment
(77)   As can be seen from Table 2, under all plausible product market definitions at
       worldwide level, the Parties’ market shares would remain limited (<[20-30]%) with
       a negligible increment of [0-5]% and a HHI increment of <[redacted]. The market
       investigation supported the Notifying Party’s argument that a number of competitors
       will remain at worldwide level post-Transaction.60 Therefore, the Commission
       considers that the Transaction does not raise competition concerns in relation to
       XNBR (whether or not segmented by application) at worldwide level.
(78)   At EEA level, the market investigation confirmed the Notifying Party’s claim that
       Synthomer and Omnova only exert a limited competitive constraint on each other,
       for the following reasons.
(79)   First, the market investigation revealed that multi-sourcing is not an important factor
       for XNBR customers. Most customers do not consider it important to source XNBR
       from more than one supplier, and hardly any respondents have more than one
       supplier qualified for the supply of this product.61 The very few respondents who do
       procure from more than one supplier source over 90% of their needs from one single
58   For completeness, one further customer discontinued its purchases from Synthomer during the course
     of 2018.
59   Omnova’s Le Havre plant has XNBR capacity of [redacted] kt, of which [redacted] kt is used to supply
     customers in the rubber goods segment in which Synthomer is not active in the EEA. Omnova has no
     other XNBR production facilities worldwide. In contrast, Synthomer’s XNBR capacity is almost 20
     times larger in the EEA ([redacted] kt), and more than 200 times larger worldwide ([redacted] kt).
60   Replies to questions 25 and 26 of Q2 - Questionnaire to XNBR customers.
61   Replies to questions 21, 22 and 23 of Q2 - Questionnaire to XNBR customers.
                                                        16
 ---pagebreak---        supplier, only using the other supplier as a back-up.62 A number of EEA customers
       indicated that the volumes they procure are too low to justify multi-sourcing.63
(80)   Second, the results of the market investigation confirmed that the Parties are not
       close competitors and that they only pose a limited constraint on each other in the
       EEA. When asked to identify the closest alternatives to Synthomer’s products in the
       EEA, the majority of customers that responded explained that there were no close
       alternatives or that they were not aware of any, and that the same is true in relation to
       Omnova’s products.64 This is in line with the Notifying Party’s submissions
       regarding the very different focus of the Parties’ XNBR activities in the EEA (i.e.
       only a minimal overlap by application) and the lack of substitutability across XNBR
       for different applications. Accordingly, customers generally did not express strong
       views regarding the impact of the Transaction on the availability of a sufficient
       number of suppliers or on prices in the EEA.65 Only two customers considered that
       the Transaction may lead to a lack of choice of suppliers for XNBR customers in the
       EEA. However, both of these customers confirmed that they could turn to several
       suppliers based outside the EEA as an alternative to the merged entity.66
(81)   Third, it appears that non-EEA XNBR manufacturers do constrain the Parties to
       some extent. The majority of EEA end-customers stated that they would consider
       procuring XNBR from outside the EEA in the event of a hypothetical small but
       significant and non-transitory increase in price in the EEA.67 A number of global
       competitors have sufficient capacity and are well-placed to supply XNBR to the
       EEA. In particular, Kumho, the largest player worldwide, is already selling in the
       EEA via a European distributor and has won significant business from Synthomer in
       the EEA.68 Moreover, Nippon Zeon until recently (2016) produced XNBR in the UK
       and now supplies EEA customers from Japan,69 as well as having offices,
       warehouses and distributors in Europe.
(82)   In light of the limited increment, the evidence of scarce actual competition between
       the Parties, as well as the lack of concerns expressed in the course of the market
       investigation, the Commission considers that the Transaction does not raise serious
       doubts as to its compatibility with the internal market on the market for XNBR or
       any of its potential sub-segments at either EEA or worldwide level.
62   Replies to questions 11 and 22 of Q2 - Questionnaire to XNBR customers.
63   Replies to question 22 of Q2 - Questionnaire to XNBR customers.
64   Replies to questions 27.1 and 28.1 of Q2 - Questionnaire to XNBR customers as well as the non-
     confidential minutes of a call with a XNBR customer, dated 12 December 2019.
65   Replies to questions 38 and 40 of Q2 - Questionnaire to XNBR customers.
66   Replies to questions 16 and 16.1 of Q2 - Questionnaire to XNBR customers as well as the non-
     confidential minutes of a call with a XNBR customer, dated 12 December 2019.
67   Replies to question 16 of Q2 - Questionnaire to XNBR customers as well as the non-confidential
     minutes of a call with a XNBR customer, dated 12 December 2019.
68   The Notifying Party explains that Synthomer lost a textiles customer to Kumho in 2019, representing c.
     [redacted] wet metric tonnes, i.e. twice the size of all of Omnova’s sales of XNBR in the textile
     application in the EEA in 2018.
69   According to the Notifying Party’s market intelligence.
                                                        17
 ---pagebreak--- 4.5.    Carboxylated styrene butadiene latex (XSBR)
4.5.1. Market definition
(83)    XSBR is an aqueous emulsion polymer of styrene and butadiene used predominantly
        in the paper and carpet-backing industries.
4.5.1.1. Product market
Commission’s precedents
(84)    In previous cases, the Commission identified a separate product market for XSBR,70
        and considered narrower segments by application.71 In these previous cases, the
        Commission based its assessment on XSBR used for paper applications as the
        narrowest plausible market definition, but did not specifically define separate XSBR
        product markets by application as those concentrations did not give rise to serious
        doubts with regards to XSBR regardless of the product market definition used.72 The
        Commission also considered a further sub-segmentation within applications by grade
        qualities, but has in the past concluded against doing so. 73 Finally, the Commission
        has previously considered whether SA and XSBR should be considered to form one
        market, but has concluded against it.74
The Notifying Party’s view
(85)    The Notifying Party considers that XSBR should not be sub-segmented by
        application, because the product is the same across many applications and there is
        strong supply-side substitutability between XSBR products for different
        applications.75
(86)    The Notifying Party further argues that XSBR can be substitutable or face
        constraints from other products with different chemical compositions (such as SA)
        or even other non-chemical technologies (such as thermal or mechanical bonding for
        XSBR in the non-woven application). It therefore submits that XSBR and SA, on the
        one hand, and XSBR and non-chemical bonding technologies for nonwovens, on the
        other, may comprise plausible product markets, while noting that, in any event, the
        precise definition of the relevant product market can be left open.
The Commission’s assessment
(87)    The market investigation provided indications that an overall market for XSBR
        would be appropriate, without the need for further segmentation.76 As regards
70    See cases M.5927 - BASF/Cognis, decision of 30.11.2010; and M.5355 - BASF/CIBA,   decision of
      12.03.2009.
71    See cases M.5927 - BASF/Cognis, decision of 30.11.2010; and M.5355 - BASF/CIBA,   decision of
      12.03.2009.
72    See cases M.5927 - BASF/Cognis, decision of 30.11.2010; and M.5355 - BASF/CIBA,   decision of
      12.03.2009.
73    See case M.5355 - BASF/CIBA, decision of 12.03.2009.
74    See cases M.5927 - BASF/Cognis, decision of 30.11.2010; and M.5355 - BASF/CIBA,   decision of
      12.03.2009.
75    Form CO, paragraph 6.26 et seq.
76    Replies to questions 7- 10 of Q3 - Questionnaire to XSBR, SA and HS-SB customers.
                                                         18
 ---pagebreak---         segmentation by application, the market investigation supported the claim that there
        is a strong supply-side substitutability between different grades and applications of
        XSBR. XSBR of different grades and applications are produced using the same
        manufacturing process, technology, equipment and production lines, with limited
        time required to switch.77 The market investigation was overall inconclusive on
        demand-side substitutability for XSBR across different applications.78
(88)    However, the market investigation did not support the Notifying Party’s claim that
        XSBR faces constraints from other products with different chemical compositions
        (such as SA) or even other non-chemical technologies. The majority of customers
        that responded to the market investigation consider that other latex dispersions
        (including SA) could not be used as a substitute for XSBR.79 Similarly, the market
        investigation did not reveal strong supply-side substitutability between XSBR and
        SA.80
(89)    In any event, for the purposes of assessing the Transaction the exact scope of the
        product market definition can be left open since the Transaction does not give rise to
        serious doubts as to its compatibility with the internal market under any of the two
        above-mentioned alternative market definitions (XSBR as a single product or sub-
        segmented by applications).
4.5.1.2. Geographic market
Commission’s precedents
(90)    The Commission has previously considered the relevant geographic market for all
        types of synthetic latex products to be EEA-wide.81
The Notifying Party’s view
(91)    The Notifying Party submits that there have not been any significant changes in the
        geographic market for XSBR since the Commission’s decision in BASF/CIBA and
        that the relevant geographic market for XSBR is EEA-wide.82
The Commission’s assessment
(92)    The market investigation did not provide the Commission with strong reasons to
        depart from its previous practice.83 Therefore, the Commission considers that, for the
        case at hand, the relevant geographic market for XSBR is EEA-wide. Nevertheless,
        the appropriate geographic market definition can be left open, given that the
        Transaction would not raise serious doubts regarding the market for XSBR
        regardless of whether the market is considered EEA-wide or worldwide.
77    Replies to question 6 of Q6 - Questionnaire to XSBR, SA and HS-SB competitors.
78    Replies to question 9 of Q3 - Questionnaire to XSBR, SA and HS-SB customers
79    Replies to questions 7 and 8 of Q3 - Questionnaire to XSBR, SA and HS-SB customers.
80    Replies to question 9 of Q6 - Questionnaire to XSBR, SA and HS-SB competitors.
81    See M.5355 - BASF/CIBA, decision of 12.03.2009.
82    Form CO, paragraph 6.36 et seq.
83    Replies to question 12 of Q3 - Questionnaire to XSBR, SA and HS-SB customers.
                                                         19
 ---pagebreak---  ---pagebreak---         narrow segmentation the Parties market shares would be less than [30-40]%
        (Synthomer: [5-10]%, Omnova [20-30]%). The HHI post-Transaction will remain
        below [redacted], with a HHI increment below [redacted]. A number of competitors
        will compete with the merged entity, including BASF, Mallard Creek and Trinseo.
        Therefore, under a worldwide geographic market definition, the Transaction would
        not be likely to raise competition concerns irrespective of the product market
        definition considered.
(96)    On the overall market for the supply of XSBR (all applications) in the EEA, the
        Parties would continue to face competition from a number of strong XSBR
        suppliers. Moreover, the increment from the Transaction would remain marginal ([0-
        5]%) with a HHI increment of <[redacted]. Therefore, the Commission considers
        that the Transaction does not raise competition concerns in relation to the overall
        XSBR market in the EEA.
(97)    If the market is segmented by application, the Parties significantly overlap only in
        the market for XSBR for nonwoven applications in the EEA. The market
        investigation confirmed the Notifying Party’s claim that Synthomer and Omnova are
        not close competitors. Most notably, it confirmed that Omnova is considered to be of
        limited importance in the EEA with [business secret regarding Omnova's production
        facilities], and it only supplies one customer, as a result of [business secret
        regarding Omnova's business strategy]. In any event, it is likely that post-
        Transaction a sufficient number of competitors will exercise competitive constraints
        on the merged entity in the market for XSBR for nonwoven applications in the
        EEA.88 The market investigation also confirmed that Synthomer is not a credible
        competitor to Omnova for the sole customer that Omnova supplies in the EEA.89
(98)    In light of the above, the Commission considers that the Transaction does not raise
        serious doubts as to its compatibility with the internal market on the market for
        XSBR or any of its potential sub-segments at either EEA or worldwide level.
4.6.    Styrene acrylic (SA)
4.6.1. Market definition
(99)    SA is a copolymer of styrene monomers with acrylic acid esters. It is mainly used in
        paints and coatings, as well as paper, and is also used in printing inks, floor polishes,
        adhesives (for ceramic tile, laminating, and cold sealing), sealants and caulks,
        cement additives, mortar mixes, self-levelling floor screeds, concrete roof tile and
        fibrocement coatings, flexible roofing membranes, elastomeric crack-bridging wall
        coatings, and nonwoven fabric applications.
88    Replies to questions 15, 17 to 23, 25 and 26 of Q3 - Questionnaire to XSBR, SA and HS-SB customers
      and replies to questions 5, 12-14 of Q6 - Questionnaire to XSBR, SA and HS-SB competitors.
89    Non-confidential minutes of a call with a XSBR customer, dated 7 November 2019.
                                                         21
 ---pagebreak--- 4.6.1.1. Product market
Commission’s precedents
(100) The Commission has previously identified a separate product market for SA,90 and
        considered narrower segments by application, notably the paper application.91 In
        these previous cases, the Commission based its assessment on SA used for paper
        applications as the narrowest plausible market definition, but did not specifically
        define separate product markets by application.92 The Commission also considered a
        further sub-segmentation within applications by grade qualities, but concluded
        against doing so.93 Finally, the Commission previously considered whether SA and
        XSBR are part of the same market, but concluded against it.94
The Notifying Party’s view
(101) The Notifying Party agrees with the previous assessment of the Commission and
        provided market share data on the basis of all plausible market definitions (on the
        basis of an overall market for SA, a segmentation by application and a market
        encompassing both XSBR and SA).95
The Commission’s assessment
(102) The results of the market investigation clearly indicate that SA is not substitutable
        with other types of latex dispersion (including XSBR).96 As regards a segmentation
        by application, while the majority of customers consider that such segmentation is
        not necessary,97 some of them indicate that they could not use another type of SA for
        the manufacture of their end-products. On the supply-side, all competitors that
        expressed a view use the same manufacturing equipment to produce different grades
        of SA, thus suggesting strong supply-side substitutability across different
        applications.98
(103) In any event, the Commission considers that, for the purpose of the present case, the
        exact scope of the product market definition for SA can be left open, since the
        Transaction does not raise serious doubts as to its compatibility with the internal
        market, regardless of the product market definition (i.e. an overall market for SA or a
        segmentation by application).
90    See cases M.5927 - BASF/Cognis, decision of 30.11.2010; and M.5355 - BASF/CIBA, decision of
      12.03.2009.
91    See cases M.5927 - BASF/Cognis, decision of 30.11.2010; and M.5355 - BASF/CIBA, decision of
      12.03.2009.
92    See cases M.5927 - BASF/Cognis, decision of 30.11.2010; and M.5355 - BASF/CIBA, decision of
      12.03.2009.
93    See cases M.5355 - BASF/CIBA, decision of 12.03.2009; and M.5424 - Dow/Rohm and Haas, decision
      of 08.01.2009.
94    See cases M.5927 - BASF/Cognis, decision of 30.11.2010; and M.5355 - BASF/CIBA, decision of
      12.03.2009.
95    Form CO, paragraph 6.181 et seq.
96    Replies to questions 28 and 29 of Q3 - Questionnaire to XSBR, SA and HS-SB customers.
97    Replies to question 31 of Q3 - Questionnaire to XSBR, SA and HS-SB customers.
98    Replies to question 20 of Q6 - Questionnaire to XSBR, SA and HS-SB competitors.
                                                        22
 ---pagebreak--- 4.6.1.2. Geographic market
Commission’s precedents
(104) The Commission has previously considered the relevant geographic market for SA
        to be EEA-wide.99
Notifying Party’s view
(105) The Notifying Party agrees with the previous assessment of the Commission.100
The Commission’s assessment
(106) The market investigation did not provide any indications suggesting that the
        Commission should depart from its past decisional practice.101
(107) In any event, the Commission considers that, for the purpose of the present case, the
        exact scope of the geographic market definition for SA and its sub-segments can be
        left open, since the Transaction does not raise serious doubts as to its compatibility
        with the internal market, regardless of the geographic market definition (i.e. EEA or
        worldwide).
4.6.2. Competitive assessment
(108) Both Parties are active in the production of SA and sell it into the paints and
        coatings, nonwoven and construction applications, amongst others.
(109) The Transaction does not give rise to any affected SA market at worldwide level
        under any plausible product market definition. At EEA level, the Transaction does
        not give rise to an affected market if the relevant product market is considered to be
        SA for all applications, and only gives rise to one horizontally affected market,
        namely the market for the supply of SA for paints and coatings in the EEA, when
        considering SA by applications.
(110) According to the Notifying Party’s estimates, in this market the Parties had a
        combined market share of [20-30]% in volume in 2018, with a limited increment of
        [0-5]% from Omnova and a HHI increment of <[redacted].102 On this market, the
        merged entity would continue to face competition from a number of strong
        competitors, such as BASF ([20-30]%) and Dow Chemical ([10-20]%), as well as
        other smaller players.
(111) More generally, the results of the market investigation confirmed that the Parties are
        not particularly close competitors for the supply of SA,103 both in terms of
99    See cases M.5927 - BASF/Cognis, decision of 30.11.2010; and M.5355 - BASF/CIBA, decision of
      12.03.2009; and M.1467 - Rohm&Haas/Morton, decision of 19.04.1999; and M.1097 - Wacker/Air
      Products, decision of 04.08.1998; and M.751 - Bayer/Hüls, decision of 03.07.1996.
100   Form CO, paragraph 6.188 et seq.
101   Replies to questions 33 and 33.1 of Q3 - Questionnaire to XSBR, SA and HS-SB customers and replies
      to questions 18, 24 and 24.1 of Q6 - Questionnaire to XSBR, SA and HS-SB competitors.
102   According to the Notifying Party’s estimates, the market shares of the Parties did not substantially
      differ in the past three years and market shares in value would not substantially differ from market
      shares in volume.
103   Replies to question 38.1 of Q3 - Questionnaire to XSBR, SA and HS-SB customers.
                                                         23
 ---pagebreak---         geographic coverage and in terms of product offering,104 even within the paints and
        coatings application. The majority of market participants responding to the market
        investigation did not identify Omnova within the top five suppliers of SA for paints
                                      105
        and coatings in the EEA.
(112) Finally, the vast majority of customers who responded to the market investigation
        confirmed that they will continue to have a number of alternative suppliers from
        which to procure SA post-Transaction.106
(113) In light of the above, the Commission considers that the Transaction does not raise
        serious doubts as to its compatibility with the internal market in relation to the
        supply of SA under any plausible definition, including in the supply of SA for paints
        and coatings in the EEA.
4.7.    High solids styrene butadiene (HS-SB)
4.7.1. Market definition
(114) HS-SB is a type of emulsion-polymerised latex. It is primarily used for carpet
        backing and moulded foam products (such as mattresses and pillows), but it can also
        be used in other applications, including footwear (insoles), adhesives and sealants,
        construction, tyres, glove dipping, and other rubber goods (e.g. conveyor belts).
4.7.1.1. Product market
Commission's precedents
(115) The Commission has not previously analysed the market for HS-SB. However, in
        previous cases involving synthetic latexes, the Commission has consistently defined
        product markets according to the type of latex dispersion (i.e. chemical composition)
        and also by application.107 The Commission also found that synthetic latexes should
        not be further segmented according to the grade qualities of the latex dispersions.108
The Notifying Party's view
(116) The Notifying Party claims that the relevant product market is the overall market for
        HS-SB, without the need for any further segmentation.109
The Commission's assessment
(117) The market investigation generally confirmed the Party’s view. Most customers
        consider that HS-SB is not substitutable with other types of latex dispersions, and
        that no further segmentation (e.g. by application or grades) is needed.110 On the
104   Replies to question 38.1.1 of Q3 - Questionnaire to XSBR, SA and HS-SB customers.
105   Replies to question 35 of Q3 - Questionnaire to XSBR, SA and HS-SB customers.
106   Replies to question 39 of Q3 - Questionnaire to XSBR, SA and HS-SB customers.
107   See cases M.5927 - BASF/Cognis, decision of 30.11.2010; M.5355 - BASF/CIBA, decision of
      12.03.2009; M.5424 - Dow/Rohm and Haas, decision of 08.01.2009; and M.1993 - Rhodia/Raisio/JV,
      decision of 20.07.2000.
108   See case M.5355 - BASF/CIBA, decision of 12.03.2009.
109   Form CO, paragraph 6.204 et seq.
110   Replies to questions 42 and 43 of Q3 - Questionnaire to XSBR, SA and HS-SB customers.
                                                         24
 ---pagebreak---         supply-side, competitors that responded to the market investigation generally use the
        same manufacturing equipment to produce different grades of HS-SB, thus
        suggesting strong supply-side substitutability across different HS-SB grades and
        applications.111
(118) In any event, the Commission considers that, for the purpose of the present case, the
        exact scope of the product market definition for HS-SB can be left open, since the
        Transaction does not raise serious doubts as to its compatibility with the internal
        market, regardless of the product market definition (i.e. overall market for HS-SB or
        segmentation by application or grade).
4.7.1.2. Geographic market
Commission's precedents
(119) The Commission has not previously analysed the market for HS-SB. However, the
        Commission has previously considered the relevant geographic market for all types
        of synthetic latex products to be EEA-wide.112
The Notifying Party's view
(120) In accordance with the general approach of the Commission with respect to synthetic
        latex products, the Notifying Party submits that the market for HS-SB should be
        defined as EEA-wide.113
The Commission's assessment
(121) The market investigation confirmed that the geographic market is likely to be EEA-
        wide, but also provided indications that the market could be wider in scope. While
        the majority of EEA customers that responded to the market investigation indicated
        that they do not consider suppliers based outside the EEA to be a credible alternative
        source of supply of HS-SB for their EEA-facilities,114 a number of EEA customers
        do purchase HS-SB from suppliers with production plants outside the EEA for their
        European needs.115
(122) In any event, the Commission considers that, for the purpose of the present case, the
        exact scope of the geographic market definition for HS-SB can be left open, since
        the Transaction does not raise serious doubts as to its compatibility with the internal
        market, regardless of the geographic market definition (i.e. EEA or worldwide).
4.7.2. Competitive assessment
(123) The Transaction gives rise to horizontally affected markets at EEA-level and
        worldwide. The Notifying Party estimates that the Parties’ combined market share in
        the supply of HS-SB in the EEA is [40-50]%, with an increment from Omnova of
111   Replies to question 34 and 36 of Q6 - Questionnaire to XSBR, SA and HS-SB competitors.
112   See cases M.5927 - BASF/Cognis, decision of 30.11.2010; and M.5355 - BASF/CIBA, decision of
      12.03.2009; and M.1467 - Rohm&Haas/Morton, decision of 19.04.1999; and M.1097 - Wacker/Air
      Products, decision of 04.08.1998; and M.751 - Bayer/Hüls, decision of 03.07.1996.
113   Form CO, paragraph 6.208 et seq.
114   Replies to questions 44 and 45 of Q3 - Questionnaire to XSBR, SA and HS-SB customers.
115   Replies to question 46 of Q3 - Questionnaire to XSBR, SA and HS-SB customers.
                                                        25
 ---pagebreak---       less than [0-5]%. At worldwide level, their combined market share is [20-30]%, with
      an increment from Omnova of less than [0-5]%. At both worldwide and EEA level,
      the HHI increment from the Transaction remains below [redacted].
(124) Omnova’s activities are negligible and do not appear to constrain Synthomer. While
      Synthomer produces and sells HS-SB for various applications, Omnova [business
      secret regarding Omnova's supply sources, quantities produced and sales and
      business strategy]. In 2018, Omnova had limited sales of EUR [turnover] to [number
      of HS-SB customers Omnova sold to] EEA customers and only had sales of EUR
      [turnover] worldwide (out of total worldwide sales of HS-SB of EUR [redacted]
      million).116
(125) The results of the market investigation confirmed that the Parties are not close
      competitors, that Omnova is a minor player and that other suppliers will remain
      active in the EEA and worldwide (such as Versalis, Synthos and Goodyear).117
(126) In light of the above, the Commission considers that the Transaction does not raise
      serious doubts as to its compatibility with the internal market in relation to the
      market for HS-SB, regardless of whether the market is considered EEA-wide or
      worldwide or segmented by application.
5.    COMMITMENTS
5.1.  Framework for the assessment of the Commitments
(127) Where a concentration raises serious doubts as regards its compatibility with the
      internal market, the parties may undertake to modify the concentration to remove the
      grounds for the serious doubts identified by the Commission. Pursuant to Article
      6(2) of the Merger Regulation, where the Commission finds that, following
      modification by the undertakings concerned, a notified concentration no longer
      raises serious doubts, it shall declare the concentration compatible with the internal
      market pursuant to Article 6(1)(b) of the Merger Regulation.
(128) As set out in the Commission’s Remedies Notice,118 the commitments have to
      eliminate the competition concerns entirely, and have to be comprehensive and
      effective from all points of view.119
(129) In assessing whether commitments will maintain effective competition, the
      Commission considers all relevant factors, including the type, scale and scope of the
      proposed commitments, with reference to the structure and particular characteristics
      of the market in which the transaction is likely to significantly impede effective
      competition, including the position of the parties and other participants on the
      market.120
116  Form CO, paragraph 6.214
117  Replies to questions 46 to 50 of Q3 - Questionnaire to XSBR, SA and HS-SB customers.
118  Commission Notice on remedies acceptable under Council Regulation (EC) No 139/2004 and under
     Commission Regulation (EC) No 802/2004, the “Remedies Notice” (OJ C 267, 22.10.2008, p. 1-27).
119  Remedies Notice, paragraph 9.
120  Remedies Notice, paragraph 12.
                                                        26
 ---pagebreak--- (130) In order for the commitments to comply with those principles, they must be capable
       of being implemented effectively within a short period of time. Concerning the form
       of acceptable commitments, the Merger Regulation gives discretion to the
       Commission as long as the commitments meet the requisite standard. Structural
       commitments will meet the conditions set out above only in so far as the
       Commission is able to conclude with the requisite degree of certainty, at the time of
       its decision, that it will be possible to implement them, and that it will be likely that
       the new commercial structures resulting from them will be sufficiently workable and
       lasting to ensure that serious doubts are removed.121 Divestiture commitments are
       normally the best way to eliminate competition concerns resulting from horizontal
       overlaps.
5.2.   Proposed Commitments
(131) In order to render the concentration compatible with the internal market, the
       Notifying Party submitted a set of commitments under Article 6(2) of the Merger
       Regulation on 13 December 2019 (the “Initial Commitments”), described below.
(132) The Commission market tested the Initial Commitments to assess whether they are
       sufficient and suitable to remedy the serious doubts identified in Section 4.3 of this
       Decision. The feedback received during the market test confirmed that the Initial
       Commitments could in principle remedy the serious doubts identified by the
       Commission, but subject to modifications so as to address a number of specific
       issues described below in recitals 143 - 156. In order to address these issues, the
       Notifying Party submitted revised commitments under Article 6(2) of the Merger
       Regulation on 14 January 2020 (the “Final Commitments”).
5.2.1. Description of the Initial Commitments
(133) In order to render the Transaction compatible with the internal market, the Notifying
       Party submitted commitments consisting of the divestiture of Synthomer’s global VP
       Latex business, which is currently operated from its plant in Marl (Germany) and
       sold under the Pyratex brand (the “Divestment Business”) to a suitable purchaser
       (the “Purchaser”).
(134) The Initial Commitments would be implemented through a carve-out of the
       Divestment Business from Synthomer's plant in Marl (Germany).
(135) The Divestment Business includes assets necessary to manufacture and sell VP
       Latex. In particular, the Divestment Business includes the following main intangible
       and tangible assets:
       (a)     all tangible manufacturing assets that are exclusively or primarily used by the
               Divestment Business;
       (b)     all intangible assets (including intellectual property rights, know-how, recipes
               and other information) which are exclusively or primarily used by the
               Divestment Business (including the Pyratex brand), and the benefit of
               licenses to other relevant intangible assets currently used by Synthomer (or
121   Remedies Notice, paragraph 10.
                                                   27
 ---pagebreak---               necessary) to manufacture, sell and use VP Latex but which are otherwise not
              exclusively or primarily used by the Divestment Business;
      (c)     all raw materials, stocks, works in progress, and semi-finished and finished
              goods relating exclusively to the Divestment Business (and agreed levels of
              other raw materials needed to operate the business when the sale of the
              Divestment Business is closed in line with the Purchaser’s requirements);
      (d)     all licences, permits and authorisations issued by any governmental
              organisation for the benefit of the Divestment Business;
      (e)     all contracts, commitments and customer orders of the Divestment Business;
      (f)     all customer, credit and other records of the Divestment Business;
      (g)     any other tangible or intangible assets which the purchaser may reasonably
              require to successfully complete the transfer of the Divestment Business to an
              alternative production location; and
      (h)     the personnel needed to run the Divestment Business, namely (i) an employee
              with product/applications knowledge and customer technical service
              knowledge for VP Latex, (ii) an employee with manufacturing/operations
              know-how for VP Latex, and (iii) a sales and marketing/commercial product
              manager for VP Latex, including the Hold Separate Manager.
(136) Furthermore, with the aim of ensuring a smooth transfer of the Divestment Business,
      the Notifying Party committed to offer a number of transitional supply arrangements
      to the Purchaser during the integration process to enable the Divestment Business to
      maintain and grow its sales of VP Latex as well as to facilitate this integration. To
      this end, the Notifying Party will enter into two transitional agreements (together, the
      “Transitional Agreements”):
      (a)     a “Transitional Toll Manufacturing Agreement”, under which the Notifying
              Party will continue to manufacture VP Latex at its Marl plant for the
              Purchaser on a tolling basis [cost basis of Transitional Toll Manufacturing
              Agreement], for a period of up to up to [duration of Transitional Toll
              Manufacturing Agreement] after the sale of the Divestment Business,
      (b)     a “Transitional Services Agreement”, under which the Notifying Party will
              provide sales and marketing, technical, logistical, procurement and
              product/manufacturing support to the purchaser ([cost basis of Transitional
              Services Agreement]) for a period of up to [duration of Transitional Services
              Agreement] (depending on the service) from the sale of the Divestment
              Business.
(137) Each of the Transitional Agreements may be extended for up to [extended duration
      of Transitional Agreements] if needed (depending on the service). The Purchaser
      will be required to use best efforts to complete the transition to its own
      manufacturing as soon as possible.
(138) In addition to the standard purchaser requirements contained in the Commission’s
      template for divestiture remedies, the Initial Commitments provide that the
      Purchaser must (i) have the proven capability and incentive to sell VP Latex directly
                                                 28
 ---pagebreak---         or indirectly, (ii) have the proven knowledge of the relevant chemistry, and (iii)
        demonstrate on the basis of its technical and business plan its ability and incentive to
        establish manufacturing lines for VP Latex (or to integrate it into an existing
        production line) in the EEA in a timely and economic way and continue the
        production of VP Latex in the long run.
(139) The Initial Commitments also provide that the Notifying Party should enter into
        related commitments, inter alia regarding the separation of the Divestment Business
        from its retained businesses, the preservation of the viability, marketability and
        competitiveness of the Divestment Business, including the appointment of a
        monitoring trustee and, if necessary, a divestiture trustee.
(140) Finally, the Initial Commitments provide for a so-called “upfront buyer provision”
        pursuant to which the Transaction cannot be implemented before the Notifying Party
        has entered into a final binding sale and purchase agreement for the sale of the
        Divestment Business and the Commission has approved the Purchaser and the terms
        of sale.
(141) The Notifying Party argues that the Initial Commitments would eliminate the
        Commission’s serious doubts in relation to the supply of VP Latex in the EEA (and
        indeed worldwide). In particular, the Notifying Party is of the view that:
        (a)      the Initial Commitments would remove the overlap between the Parties in VP
                 Latex as Synthomer would divest its worldwide VP Latex business;
        (b)      the Divestment Business is a distinct business that includes the necessary
                 assets and personnel to ensure its viability and competitiveness on a lasting
                 basis in the hands of a suitable purchaser, where it will provide effective
                 competition in the supply of VP Latex in the EEA and worldwide; and
        (c)      the Transitional Agreements will ensure customers’ continued access to VP
                 Latex and the efficient transfer of the Divestment Business to the Purchaser.
5.2.2. Assessment of the Initial Commitments
(142) The Commission launched its market test of the Initial Commitments and sought to
        assess the scope and effectiveness of the Commitments, the viability and
        attractiveness of the Divestment Business, and the appropriateness of the purchaser
        suitability criteria.
5.2.2.1. Suitability of the Initial Commitments to remove serious doubts
(143) As explained in Section 4.3 above, the Commission considers the Transaction raises
        serious doubts as to its compatibility with the internal market as regards the overlap
        between the Parties’ activities in the market for VP Latex.
(144) The Initial Commitments would remove the entire overlap between the Parties in the
        EEA ([volume]kt, EUR [value]) and worldwide ([volume]kt, EUR [value]), thus
        rendering the combined entity’s market share equal to Omnova’s market share pre-
        Transaction, at both EEA ([60-70]%) and worldwide level ([30-40]%).
(145) In addition, by requiring a sale to a purchaser with the ability and incentive to
        establish manufacturing lines for VP Latex (or integrate them) and sell the product in
                                                    29
 ---pagebreak---         the EEA, the Initial Commitments would address the concern expressed by
        customers that post-Transaction there would only remain one supplier of VP Latex
        in the EEA. The divestment would ensure that there is a credible alternative supplier
        close to customers’ European production facilities.
(146) The market test of the Initial Commitments confirmed their suitability. The majority
        of competitors consider that the Initial Commitments would create a credible player
        in the market for VP Latex in the EEA and worldwide and that a suitable purchaser
        should be able to recover the investment in setting up a manufacturing line for VP
        Latex (via the Divestment Business) from the supply of VP Latex in a timely
        manner.122 Respondents expect customers to have the incentive to procure VP Latex
        from the Divestment Business.123
(147) The suitability of the Initial Commitments was also supported by customers’
        responses, in particular as the majority of customers that responded indicated that
        they would consider qualifying the Purchaser of the Divestment Business as a
        supplier of VP Latex, and expected this qualification to be significantly easier than
        qualifying another new supplier they had not used in the past.124
(148) In light of the above, the Commission considers that the Initial Commitments
        proposed by the Notifying Party are suitable to address the serious doubts that the
        Transaction would otherwise give rise to.
5.2.2.2. Viability and competitiveness of the Divestment Business
(149) The Commission considers that the Divestment Business is viable and competitive.
        The Divestment Business achieved sales of EUR [turnover] worldwide in 2018,
        from more than [number of customers] customers located in 21 countries. The
        Notifying Party submits that the Divestment Business is profitable with a profit
        margin of [redacted]% in 2017 and [redacted]% in 2018.
(150) The market investigation confirmed that it is feasible to transfer a VP Latex
        production line as envisaged in the Initial Commitments and that the opportunity
        would be attractive for a suitable purchaser.125 The majority of respondents also
        consider that the Divestment Business contains the necessary assets, personnel and
        contracts for a suitable purchaser to effectively set up a VP Latex production line
        and compete effectively with the merged entity in the long run.126
(151) In addition, most respondents confirmed that the Transitional Agreements proposed
        by the Notifying Party are adequate to ensure a smooth transfer of the Divestment
        Business.127 However, the results of the market test also indicated that, depending
        on the need for and length of customers’ requalification processes, the duration of
122   Replies to questions 2 and 17 of R1 - VP Latex Market Test of the Commitments - Competitors.
123   Replies to question 5 of R1 - VP Latex Market Test of the Commitments - Competitors.
124   Replies to questions 9 and 10 of R2 - VP Latex Market Test of the Commitments - Customers.
125   Replies to questions 2, 18 and 19 of R1 - VP Latex Market Test of the Commitments - Competitors.
126   Replies to questions 1, 3 and 4 of R1 - VP Latex Market Test of the Commitments - Competitors and
      replies to questions 1 and 2 of R2 - VP Latex Market Test of the Commitments - Customers.
127   Replies to questions 11 to 14 and 16 of R1 - VP Latex Market Test of the Commitments – Competitors
      and replies to questions 4, 7 and 8 of R2 - VP Latex Market Test of the Commitments - Customers.
                                                         30
 ---pagebreak---         the Transitional Agreements envisaged in the Initial Commitments may not be
        sufficient to ensure the viability of the Divestment Business.
(152) In light of the above, the Commission considers that the Initial Commitments are
        adequate to ensure the viability and competitiveness of the Divestment Business if it
        is acquired by a suitable purchaser, but that the Initial Commitments should be
        amended to provide for the possibility of an additional extension of the Transitional
        Agreements.
5.2.2.3. Marketability, purchaser criteria and buyers
(153) As outlined in recital 138 above, the Initial Commitments proposed by the Notifying
        Party required that the Purchaser have knowledge of the relevant chemistry and
        prove its ability and incentive to establish manufacturing lines for VP Latex in the
        EEA and to sell VP Latex directly or via distributors, as well as to have the expertise
        and incentive to maintain and develop the Divestment Business as a viable and
        active competitive force.
(154) The majority of respondents to the market investigation confirmed that these criteria
        were appropriate and that no further requirements are needed.128 There was one
        exception – the majority of customers considered that it is important for the
        Purchaser to have an integrated sales network in the EEA. This is necessary to
        ensure the reliability of the supply chain, facilitate an efficient transition to the new
        Purchaser, and to reflect the current practice of the largest customers for a technical
        product such as VP Latex.
(155) The majority of competitors that responded to the market test considered the
        Divestment Business to be an attractive asset, likely to appeal to suitable purchasers.
        Indeed, a few respondents expressed interest in acquiring the Divestment
        Business.129
(156) In light of the above, the Commission considers that the Divestment Business is
        perceived as a marketable business, but that the purchaser criteria in the Initial
        Commitments should be amended to require that the Purchaser have an integrated
        sales network in the EEA.
5.2.3. Description and assessment of the Final Commitments
(157) In response to the Commission's feedback regarding the outcome of the market test
        and its preliminary assessment, the Notifying Party submitted the Final
        Commitments on 14 January 2020.
(158) The Final Commitments remove the possibility of a buyer having only an indirect
        capability to sell VP Latex in the EEA (i.e. via distributors), while preserving the
        remainder of the elements constituting the Initial Commitments. In the Final
        Commitments, the Purchaser must have the proven capability and incentive to sell
        VP Latex via an efficient and integrated sales network in the EEA, which may be
        demonstrated by having such an existing capability for products similar to VP Latex.
128   Replies to questions 7 to 10 of R1 - VP Latex Market Test of the Commitments - Competitors and
      replies to questions 3 to 6 of R2 - VP Latex Market Test of the Commitments - Customers.
129   Replies to questions 18 to 19 of R1 - VP Latex Market Test of the Commitments - Competitors.
                                                         31
 ---pagebreak--- (159) In addition, the Final Commitments provide for a possibility for the Purchaser to
        require an additional [duration of extended Transitional Agreements] extension of
        the Transitional Agreements [cost basis of extended Transitional Agreements].130
(160) The Commission deems the Final Commitments are sufficient to eliminate the
        serious doubts as to the compatibility of the concentration with the internal market.
5.2.4. Conclusion on the Final Commitments
(161) For the reasons outlined above, and in view of the results of the market test, the
        Commission considers the Final Commitments to be sufficient in scope and suitable
        to eliminate the serious doubts as to the compatibility of the Transaction with the
        internal market in relation to VP Latex.
6.      CONDITIONS AND OBLIGATIONS
(162) Under the first sentence of the second subparagraph of Article 6(2) of the Merger
        Regulation, the Commission may attach to its decision conditions and obligations
        intended to ensure that the undertakings concerned comply with the commitments
        they have entered into vis-à-vis the Commission with a view to rendering a notified
        concentration compatible with the internal market.
(163) The achievement of the measure that gives rise to the structural change of the market
        is a condition, whereas the implementing steps which are necessary to achieve this
        result are generally obligations on the Parties. Where a condition is not fulfilled, the
        Commission’s decision declaring the concentration compatible with the internal
        market no longer stands. Where the undertakings concerned commit a breach of an
        obligation, the Commission may revoke the clearance decision in accordance with
        Article 8(6) of the Merger Regulation. The undertakings concerned may also be
        subject to fines and periodic penalty payments under Articles 14(2) and 15(1) of the
        Merger Regulation.
(164) In accordance with the distinction described above, the decision in this case is
        conditioned on the full compliance with the requirements set out in Section B of the
        Final Commitments (including the Schedule), which constitute conditions. The
        remaining requirements set out in the other Sections of the Final Commitments
        constitute obligations on the Parties.
(165) The full text of the Final Commitments is annexed to this decision and forms an
        integral part thereof.
7.      CONCLUSION
(166) For the above reasons, the Commission has decided not to oppose the notified
        operation as modified by the Final Commitments and to declare it compatible with
        the internal market and with the functioning of the EEA Agreement, subject to full
        compliance with the conditions in section B (including the Schedule) of the
130   The Final Commitments also included certain clarificatory modifications that were not of major
      significance and so are not discussed in this decision.
                                                           32
 ---pagebreak--- commitments annexed to the present decision and with the obligations contained in
the other sections of the said commitments. This decision is adopted in application of
Article 6(1)(b) in conjunction with Article 6(2) of the Merger Regulation and Article
57 of the EEA Agreement.
                                              For the Commission
                                              (Signed)
                                              Margrethe VESTAGER
                                              Executive Vice-President
                                         33
 ---pagebreak---          CASE No. COMP/M. 9502
    SYNTHOMER / OMNOVA SOLUTIONS
COMMITMENTS TO THE EUROPEAN COMMISSION
             14 January 2020
                      1
 ---pagebreak--- Pursuant to Article 6(2) of Council Regulation (EC) No 139/2004 (the “Merger
Regulation”), Synthomer plc ("Synthomer" or the “Notifying Party”) hereby enters into
the following Commitments (the “Commitments”) vis-à-vis the European Commission (the
“Commission”) with a view to rendering the acquisition by Synthomer of Omnova
Solutions, Inc. ("Omnova") (the “Concentration”) compatible with the internal market and
the functioning of the EEA Agreement.
This text shall be interpreted in light of the Commission’s decision pursuant to Article
6(1)(b) of the Merger Regulation to declare the Concentration compatible with the internal
market and the functioning of the EEA Agreement (the “Decision”), in the general
framework of European Union law, in particular in light of the Merger Regulation, and by
reference to the Commission Notice on remedies acceptable under Council Regulation (EC)
No 139/2004 and under Commission Regulation (EC) No 802/2004 (the “Remedies
Notice”).
SECTION A. DEFINITIONS
1.      For the purpose of the Commitments, the following terms shall have the following
        meaning:
        Affiliated Undertakings: undertakings controlled by the Parties and/or by the
        ultimate parents of the Parties, whereby the notion of control shall be interpreted
        pursuant to Article 3 of the Merger Regulation and in light of the Commission
        Consolidated Jurisdictional Notice under Council Regulation (EC) No 139/2004 on
        the control of concentrations between undertakings (the "Consolidated
        Jurisdictional Notice").
        Agreements: the Transitional Toll Manufacturing Agreement and the Transitional
        Services Agreement.
        Assets: the assets that contribute to the current operation or are necessary to ensure
        the viability and competitiveness of the Divestment Business as indicated in Section
        B, paragraph 8 and described more in detail in the Schedule at paragraph 3.
        Best Efforts: Best effort obligations shall be interpreted in light of the Commission's
        decision pursuant to Article 6(1)(b) of the Merger Regulation to declare the
        Concentration compatible with the internal market and the functioning of the EEA
        Agreement, the Merger Regulation and the general principles of EU law. Any
        interpretation that may be given to this term under the law of other jurisdictions is
        not relevant solely for the purpose of interpreting and/or implementing the
        Commitments.
        Closing: the transfer of the legal title to the Divestment Business to the Purchaser.
        Closing Period: the period of […] from the approval of the Purchaser and the terms
        of sale by the Commission.
        Confidential Information: any business secrets, know-how, commercial
        information, or any other information of a proprietary nature that is not in the public
        domain.
                                                     2
 ---pagebreak--- Conflict of Interest: any conflict of interest that impairs the Trustee's objectivity
and independence in discharging its duties under the Commitments.
Divestment Business: the business or businesses as defined in Section B and in the
Schedule which the Notifying Party commits to divest.
Divestiture Trustee: one or more natural or legal person(s) who is/are approved by
the Commission and appointed by Synthomer and who has/have received from
Synthomer the exclusive Trustee Mandate to sell the Divestment Business to a
Purchaser at no minimum price.
Effective Date: the date of adoption of the Decision.
Fast-Track Dispute Resolution Procedure: shall have the meaning given to that
term in paragraph 49.
First Divestiture Period: the period of […] from the Effective Date.
Hold Separate Manager: the person appointed by Synthomer for the Divestment
Business to manage the day-to-day business under the supervision of the Monitoring
Trustee.
Key Personnel: all personnel necessary to maintain the viability and
competitiveness of the Divestment Business, as listed in the Schedule, including the
Hold Separate Manager.
Monitoring Trustee: one or more natural or legal person(s) who is/are approved by
the Commission and appointed by Synthomer, and who has/have the duty to monitor
Synthomer's compliance with the conditions and obligations attached to the
Decision.
Omnova: Omnova Solutions, Inc., an Ohio corporation.
Parties: the Notifying Party/Notifying Parties and the undertaking that is the target
of the concentration.
Purchaser: the entity approved by the Commission as acquirer of the Divestment
Business in accordance with the criteria set out in Section D.
Purchaser Criteria: the criteria laid down in paragraph 22 of these Commitments
that the Purchaser must fulfil in order to be approved by the Commission.
Retained Business: The businesses of Synthomer and Omnova other than the
Divestment Business.
Schedule: the schedule to these Commitments describing more in detail the
Divestment Business.
Synthomer: Synthomer plc, a public limited company incorporated under the laws
of England and Wales, with its registered office at Temple Fields, Harlow, Essex,
CM20 2BH and registered with the Company Register at Companies House under
number 00098381.
Transitional Services Agreement: shall have the meaning given to that term in
paragraph 9.
                                            3
 ---pagebreak---       Transitional Toll Manufacturing Agreement: shall have the meaning given to that
      term in paragraph 10.
      Trustee(s): the Monitoring Trustee and/or the Divestiture Trustee as the case may
      be.
      Trustee Divestiture Period: the period of […] from the end of the First Divestiture
      Period.
      VP Latex: vinyl pyridine latex.
      VP Latex Business: Synthomer's VP Latex business as defined in Section B and the
      Schedule, which Synthomer commits to divest.
      VP Latex Products: all of Synthomer's VP Latex products, including Pyratex 221,
      Pyratex 240, Pyratex 241.
SECTION B: THE COMMITMENT TO DIVEST AND THE DIVESTMENT BUSINESS
      Commitment to divest
2.    In order to maintain effective competition, Synthomer commits to divest, or procure
      the divestiture of, the Divestment Business by the end of the Trustee Divestiture
      Period as a going concern to a purchaser and on terms of sale approved by the
      Commission in accordance with the procedure described in paragraph 23 of these
      Commitments.
3.    To carry out the divestiture, Synthomer commits to find a purchaser and to enter into
      a final binding sale and purchase agreement for the sale of the Divestment Business
      within the First Divestiture Period. If Synthomer has not entered into such an
      agreement at the end of the First Divestiture Period, Synthomer shall grant the
      Divestiture Trustee an exclusive mandate to sell the Divestment Business in
      accordance with the procedure described in paragraph 36 in the Trustee Divestiture
      Period.
4.    The proposed Concentration shall not be implemented before Synthomer or the
      Divestiture Trustee has entered into a final binding sale and purchase agreement for
      the sale of the Divestment Business and the Commission has approved the Purchaser
      and the terms of sale in accordance with paragraph 23.
5.    Synthomer shall be deemed to have complied with this commitment if:
      5.1     by the end of the Trustee Divestiture Period, Synthomer or the Divestiture
              Trustee has entered into a final binding sale and purchase agreement and the
              Commission approves the proposed purchaser and the terms of sale as being
              consistent with the Commitments in accordance with the procedure described
              in paragraph 23; and
      5.2     the Closing of the sale of the Divestment Business to the Purchaser takes
              place within the Closing Period.
                                                 4
 ---pagebreak--- 6. In order to maintain the structural effect of the Commitments, the Notifying Party
   shall, for a period of […] after Closing, not acquire, whether directly or indirectly,
   the possibility of exercising influence (as defined in paragraph 43 of the Remedies
   Notice, footnote 3) over the whole or part of the Divestment Business, unless,
   following the submission of a reasoned request from the Notifying Party showing
   good cause and accompanied by a report from the Monitoring Trustee (as provided
   in paragraph 64 of these Commitments), the Commission finds that the structure of
   the market has changed to such an extent that the absence of influence over the
   Divestment Business is no longer necessary to render the proposed concentration
   compatible with the internal market.
   Structure and definition of the Divestment Business
7. The Divestment Business consists of the VP Latex Business that is operated by
   Synthomer. The legal and functional structure of the Divestment Business as
   operated to date is described in the Schedule. The Divestment Business, described in
   more detail in the Schedule, includes all assets that contribute to the current
   operation or are necessary to ensure the viability and competitiveness of the
   Divestment Business and all staff that are necessary to ensure the viability and
   competitiveness of the Divestment Business, in particular:
   7.1     all tangible manufacturing assets that are exclusively or primarily used by the
           VP Latex Business, including reactors […] and […] at Synthomer's […]
           plant;
   7.2     all intangible assets (including intellectual property rights, know-how, recipes
           and other information) which are exclusively or primarily used by the
           Divestment Business (including the "Pyratex" brand), and the benefit of
           licences to other relevant intangible assets currently used by Synthomer (or
           necessary) to manufacture, sell and use the VP Latex Products but which are
           otherwise not exclusively or primarily used by the Divestment Business;
   7.3     all raw materials, stocks, works in progress, and semi-finished and finished
           goods relating exclusively to the Divestment Business; and agreed levels of
           other raw materials needed to operate the business on Closing in line with the
           Purchaser’s requirements;
   7.4     all licences, permits and authorisations issued by any governmental
           organisation for the benefit of the Divestment Business;
   7.5     all contracts, commitments and customer orders of the Divestment Business;
           all customer, credit and other records of the Divestment Business;
   7.6     any other tangible or intangible assets which the Purchaser may reasonably
           require to successfully complete the transfer of the Divestment Business to an
           alternative production location; and
   7.7     the Key Personnel.
8. To assist the transfer of the Divestment Business to the Purchaser, in addition the
   Divestment Business includes the benefit, for a transitional period of […]
   (extendable at the option of the Purchaser with agreement of the Commission), of a
   transitional toll manufacturing agreement and a transitional services agreement.
   These Agreements are summarised below. Strict firewall procedures will be adopted
                                               5
 ---pagebreak---     so as to ensure that any competitively sensitive information related to, or arising
    from the operation of these Agreements will not be shared with, or passed on to,
    anyone not involved with these Agreements.
9.  Synthomer commits to provide toll manufacturing services in relation to the VP
    Latex Products for the Purchaser at Synthomer's […] manufacturing facility at Marl,
    Germany (the "Transitional Toll Manufacturing Agreement", or "TTMA"). The
    TTMA will be […], for a transitional period of up to […] after Closing, and can be
    extended at the option of the Purchaser with agreement of the Commission for a
    period not exceeding […]. At the option of the Purchaser it can be extended for a
    further period not exceeding […], on a […]. The Purchaser shall use best efforts to
    complete the transition to its own manufacturing as quickly as possible. Synthomer
    commits that it will continue to operate VP Latex production at […] in the way in
    which it is operated at the date of these Commitments for the duration of the TTMA,
    to ensure the continued supply of the VP Latex Products to the Purchaser under the
    same costs structure and of the same quality and consistency as at the date of these
    Commitments.
10. To facilitate the efficient transfer of the Divestment Business to the Purchaser,
    Synthomer commits to provide to the Purchaser, the following transitional services
    relating to the Divestment Business […] (the "Transitional Services Agreement" or
    "TSA"). This shall be for a period of up to […] after Closing, and can be extended at
    the option of the Purchaser with agreement of the Commission for a period not
    exceeding […]. At the option of the Purchaser it can be extended for a further period
    not exceeding […], on a […]. The Purchaser shall use best efforts to complete the
    transition as quickly as possible.
    10.1    Sales and marketing. Synthomer commits to provide training and technical
            assistance to the Purchaser, to the extent necessary to ensure the viability
            and/or competitiveness of the Divestment Business, to enable the Purchaser
            to assume responsibility for the sale (including distribution) and marketing of
            the VP Latex Products at a level similar to that currently provided by
            Synthomer in relation to the VP Latex Products for a period of up to […]
            from the date of Closing (which can be extended at the option of the
            Purchaser with agreement of the Commission for a period not exceeding
            […]);
    10.2    Technical customer service. Synthomer commits to provide training and
            assistance with customer qualification proceedings and troubleshooting, to
            the extent necessary to ensure the viability and/or competitiveness of the
            Divestment Business, for the duration of the TSA. This shall include the
            provision of data or information which a customer may require to compare
            the VP Latex product(s) manufactured and sold by the Divestment Business
            after Closing with the VP Latex product(s) previously manufactured and sold
            by Synthomer to that customer (or that the customer has qualified from
            Synthomer, even if it has not been sold the product);
    10.3    Logistics. Synthomer commits to provide for the continuation of current
            customer service and logistics services to the Purchaser, covering all aspects
            of processing a customer’s orders and ensuring delivery of the VP Latex
            Products to customers, for a period of up to […] from the date of Closing
            (which can be extended at the option of the Purchaser with agreement of the
                                               6
 ---pagebreak---            Commission for a period not exceeding […]). For the avoidance of doubt,
           […];
    10.4   Procurement. To the extent necessary to ensure the viability and/or
           competitiveness of the Divestment Business, Synthomer commits to provide
           support (including technical assistance) to the Purchaser on the transfer of
           procurement arrangements (including to facilitate the procurement of raw
           materials necessary for the manufacture of the VP Latex Products and to
           transition supplier relationships during the TSA period), for a period of up to
           […] from Closing. If the Purchaser is not able to source such raw materials in
           a cost-effective manner, Synthomer commits to enter, at the option of the
           Purchaser and with agreement of the Commission, into back-to-back supply
           agreements with raw materials suppliers and to make such raw materials
           available to the Purchaser […];
    10.5   Product and manufacturing transfer. Synthomer commits to provide training
           and reasonable technical assistance to support the Purchaser with scale-up
           and production trials at the Purchaser's facilities for the duration of the TSA,
           i.e. to put the know-how into practice, both in terms of following the recipe
           (product know-how) and understanding and applying the manufacturing
           techniques (process and manufacturing know-how). Synthomer will also
           provide reasonable technical assistance for the design and the commissioning
           of a new production facility for the production of the VP Latex Products or
           the adjustment of an existing production facility at the Purchaser’s premises,
           on the basis of the know-how and technical documentation included in the
           Divestment Business. Synthomer will provide reasonable technical assistance
           to the Purchaser to obtain all licences, permits or authorisations issued by any
           governmental organisation that are required to produce and market VP Latex
           and are necessary for the viability or competitiveness of the Divestment
           Business.
11. For the avoidance of doubt, the Divestment Business shall, inter alia, not include:
    11.1   any manufacturing facilities or physical production assets of the Parties or
           Affiliated Undertakings, other than Synthomer's assets exclusively or
           primarily used for VP Latex production;
    11.2   intellectual property, know-how or other confidential information which does
           not contribute to the current operations and/or is not necessary to ensure the
           viability and competitiveness of the Divestment Business;
    11.3   transfer of any brand other than “Pyratex”;
    11.4   the Synthomer and Omnova names or logos in any form, save for the right to
           use Synthomer’s or Omnova’s names or logos to the extent strictly necessary
           to ensure the smooth transition of the Divestment Business;
    11.5   any personnel currently involved in Synthomer's VP Latex business other
           than the Key Personnel;
    11.6   books and records required to be retained pursuant to any statute, rule,
           regulation or ordinance, provided that a Purchaser shall obtain a copy of the
           same and shall be permitted access to the original of such books and records
           upon reasonable request during normal business hours;
                                               7
 ---pagebreak---       11.7    general books of account and books of original entry that comprise
              Synthomer's or an Affiliated Undertaking’s permanent accounting or tax
              records; and
      11.8    monies owed to Synthomer or Affiliated Undertakings by customers, or
              monies owed by Synthomer or Affiliated Undertakings to suppliers.
SECTION C: RELATED COMMITMENTS
      Preservation of viability, marketability and competitiveness
12.   From the Effective Date until Closing, the Notifying Party shall preserve or procure
      the preservation of the economic viability, marketability and competitiveness of the
      Divestment Business, in accordance with good business practice, and shall minimise
      as far as possible any risk of loss of competitive potential of the Divestment
      Business. In particular, Synthomer undertakes:
      12.1    not to carry out any action that might have a significant adverse impact on the
              value, management or competitiveness of the Divestment Business or that
              might alter the nature and scope of activity, or the industrial or commercial
              strategy or the investment policy of the Divestment Business;
      12.2    to make available, or procure to make available, sufficient resources for the
              development of the Divestment Business, on the basis and continuation of the
              existing business plans and maintain the marketing and sales efforts devoted
              to the Divestment Business at their current level; and
      12.3    take all reasonable steps, or procure that all reasonable steps are being taken,
              including appropriate incentive schemes (based on industry practice), to
              encourage all Key Personnel to remain with the Divestment Business, and not
              to solicit or move any Key Personnel to the Retained Business prior to
              Closing. Where, nevertheless, individual members of the Key Personnel
              exceptionally leave the Divestment Business, shall provide a reasoned
              proposal to replace the person or persons concerned to the Commission and
              the Monitoring Trustee. Synthomer must be able to demonstrate to the
              Commission that the replacement is well suited to carry out the functions
              exercised by those individual members of the Key Personnel. The
              replacement shall take place under the supervision of the Monitoring Trustee,
              who shall report to the Commission;
13.   In addition, from the Effective Date until the expiry of the Transitional Toll
      Manufacturing Agreement and the Transitional Services Agreement, the Notifying
      Party shall take all reasonable steps, or procure that all reasonable steps are being
      taken, including appropriate incentive schemes (based on industry practice), to
      encourage all personnel providing support to the Divestment Business pursuant to
      the Transitional Toll Manufacturing Agreement and Transitional Services
      Agreement to remain in their role with the Retained Business. Where, nevertheless,
      such personnel leave the Retained Business or their roles are modified, Synthomer
      shall ensure that sufficient personnel are allocated to providing the support required
      under the Transitional Toll Manufacturing Agreement and Transitional Services
      Agreement to the Divestment Business, and that any replacement is well suited to
                                                 8
 ---pagebreak---     carry out the required functions. Such changes shall take place under the supervision
    of the Monitoring Trustee, who shall report to the Commission.
    Hold-separate obligations
14. The Notifying Party commits, from the Effective Date until Closing, to keep the
    Divestment Business separate from the Retained Business, and to ensure that unless
    explicitly permitted under these Commitments (i) management and staff of the
    Retained Business have no involvement in the Divestment Business; and (ii) the Key
    Personnel have no involvement in any part of the Retained Business and do not
    report to any individual outside the Key Personnel for any matters related to the
    Divestment Business.
15. Until Closing, Synthomer shall assist the Monitoring Trustee in ensuring that the
    Divestment Business is managed as a distinct and saleable business separate from
    the Retained Business. Immediately after the adoption of the Decision, Synthomer
    shall appoint a Hold Separate Manager. The Hold Separate Manager shall manage
    the Divestment Business independently and in the best interest of the business with a
    view to ensuring its continued economic viability, marketability and competitiveness
    and its independence from the Retained Business. The Hold Separate Manager shall
    be entitled to request from Synthomer all the operational support, also in terms of
    involvement of Key Personnel, that he deems necessary for the preservation of the
    viability of the Divestment Business. Key Personnel shall prioritise the Divestment
    Business over the Retained Business and Synthomer shall not refuse any request
    from the Hold Separate Manager, unless it is considered unreasonable under the
    supervision of the Monitoring Trustee and the Commission. During this period, the
    Hold Separate Manager will not have any responsibilities with respect to the
    Retained Business and will be bound by appropriate non-disclosure obligations to
    prevent the flow of commercially sensitive information with respect to the
    Divestment Business.
16. The Hold Separate Manager shall closely cooperate with and report to the
    Monitoring Trustee and, if applicable, the Divestiture Trustee. Any replacement of
    the Hold Separate Manager shall be subject to the procedure laid down in paragraph
    12.3 of these Commitments. The Commission may, after having heard Synthomer,
    require Synthomer to replace the Hold Separate Manager.
    Ring-fencing
17. Synthomer shall implement, or procure to implement, all necessary measures to
    ensure that it does not, after the Effective Date, obtain any Confidential Information
    relating to the Divestment Business and that any such Confidential Information
    obtained by Synthomer before the Effective Date will be eliminated and not be used
    by Synthomer. In particular, the participation of the Divestment Business in any
    central information technology network shall be severed to the extent possible,
    without compromising the viability of the Divestment Business. Synthomer may
    obtain or keep information relating to the Divestment Business which is reasonably
    necessary for the divestiture of the Divestment Business and/or the disclosure of
    which to Synthomer is required by law.
18. Synthomer shall ensure that the Synthomer personnel involved in the transfer of the
    Divestment Business shall not use any confidential information from the Purchaser
    other than information strictly required to assist in the transfer of the Divestment
                                                9
 ---pagebreak---       Business concerned, and they shall disclose such information to other Synthomer
      personnel only to the extent strictly required to assist in the transfer of the
      Divestment Business concerned.
      Non-solicitation clause
19.   The Notifying Party undertakes, subject to customary limitations, not to solicit, and
      to procure that Affiliated Undertakings do not solicit, the Key Personnel transferred
      with the Divestment Business for a period of […] after Closing.
      Due diligence
19.1  In order to enable potential purchasers to carry out a reasonable due diligence of the
      Divestment Business, Synthomer shall, subject to customary confidentiality
      assurances and dependent on the stage of the divestiture process:
      19.1.1    provide to potential purchasers sufficient information as regards the
                Divestment Business;
      19.1.2    provide to potential purchasers after the Effective Date, a version of the
                Commitments (including the Schedule and its Annexes) without undue
                delay and no later than at the signing of a Non-Disclosure Agreement by the
                potential purchaser, or at the opening of a data-room, whichever is earlier.
                Any redaction to the Commitments should be agreed in advance with the
                Commission; and
      19.1.3    provide to potential purchasers sufficient information relating to the Key
                Personnel and allow them reasonable access to the Key Personnel.
      Reporting
20.   Synthomer shall submit written reports in English on potential purchasers of the
      Divestment Business and developments in the negotiations with such potential
      purchasers to the Commission and the Monitoring Trustee no later than 10 days after
      the end of every month following the Effective Date (or otherwise at the
      Commission’s request). Synthomer shall submit a list of all potential purchasers
      having expressed interest in acquiring the Divestment Business to the Commission at
      each and every stage of the divestiture process, as well as a copy of all the offers
      made by potential purchasers within five days of their receipt.
21.   Synthomer shall inform the Commission and the Monitoring Trustee on the
      preparation of the data room documentation and the due diligence procedure and
      shall submit a copy of any information memorandum to the Commission and the
      Monitoring Trustee before sending the memorandum out to potential purchasers.
SECTION D: THE PURCHASER
22.   In order to be approved by the Commission, the Purchaser must fulfil the following
      criteria:
      22.1    The Purchaser shall be independent of and unconnected to the Notifying
              Party and its Affiliated Undertakings (this being assessed having regard to
              the situation following the divestiture);
                                                  10
 ---pagebreak---       22.2    The Purchaser shall have the financial resources, proven expertise and
              incentive to maintain and develop the Divestment Business as a viable and
              active competitive force in competition with the Parties and other
              competitors;
      22.3    The Purchaser shall have the proven capability and incentive to sell VP Latex
              via an efficient and integrated sales network in the EEA (this capability may
              be proven by having the existing capability to sell products similar to VP
              Latex in the EEA);
      22.4    The Purchaser shall have the proven knowledge regarding the relevant
              chemistry (either based on pre-existing production activities of similar
              chemicals or otherwise);
      22.5    The Purchaser shall demonstrate on the basis of its technical and business
              plan its ability and incentive to establish manufacturing lines for VP Latex
              (or integrate this product into an existing production line) in the EEA in a
              timely and economical way and to continue the production of VP Latex in the
              long run; and
      22.6    The acquisition of the Divestment Business by the Purchaser must neither be
              likely to create, in light of the information available to the Commission,
              prima facie competition concerns nor give rise to a risk that the
              implementation of the Commitments will be delayed. In particular, the
              Purchaser must reasonably be expected to obtain all necessary approvals
              from the relevant regulatory authorities for the acquisition of the Divestment
              Business.
23.   The final binding sale and purchase agreement (as well as ancillary agreements)
      relating to the divestment of the Divestment Business shall be conditional on the
      Commission’s approval. When Synthomer has reached an agreement with a
      purchaser, it shall submit a fully documented and reasoned proposal, including a
      copy of the final agreement(s), within one week to the Commission and the
      Monitoring Trustee. Synthomer must be able to demonstrate to the Commission that
      the purchaser fulfils the Purchaser Criteria and that the Divestment Business is being
      sold in a manner consistent with the Commission's Decision and the Commitments.
      For the approval, the Commission shall verify that the purchaser fulfils the Purchaser
      Criteria and that the Divestment Business is being sold in a manner consistent with
      the Commitments including their objective to bring about a lasting structural change
      in the market. The Commission may approve the sale of the Divestment Business
      without one or more Assets or parts of the Key Personnel, or by substituting one or
      more Assets or parts of the Key Personnel with one or more different assets or
      different personnel, if this does not affect the viability and competitiveness of the
      Divestment Business after the sale, taking account of the proposed purchaser.
SECTION E: TRUSTEE
      I. Appointment procedure
24.   Synthomer shall appoint a Monitoring Trustee to carry out the functions specified in
      these Commitments for a Monitoring Trustee. The Notifying Party commits not to
      close the Concentration before the appointment of a Monitoring Trustee.
                                                 11
 ---pagebreak--- 25. If Synthomer has not entered into a binding sale and purchase agreement regarding
    the Divestment Business one month before the end of the First Divestiture Period or
    if the Commission has rejected a purchaser proposed by Synthomer at that time or
    thereafter, Synthomer shall appoint a Divestiture Trustee. The appointment of the
    Divestiture Trustee shall take effect upon the commencement of the Trustee
    Divestiture Period.
26. The Trustee shall:
    26.1    at the time of appointment, be independent of the Notifying Party and its
            Affiliated Undertakings;
    26.2    possess the necessary qualifications to carry out its mandate, for example
            have sufficient relevant experience as an investment banker or consultant or
            auditor; and
    26.3    neither have nor become exposed to a Conflict of Interest.
27. The Trustee shall be remunerated by the Notifying Party in a way that does not
    impede the independent and effective fulfilment of its mandate. In particular, where
    the remuneration package of a Divestiture Trustee includes a success premium
    linked to the final sale value of the Divestment Business, such success premium may
    only be earned if the divestiture takes place within the Trustee Divestiture Period.
    Proposal by Synthomer
28. No later than two weeks after the Effective Date, Synthomer shall submit the name
    or names of one or more natural or legal persons whom Synthomer proposes to
    appoint as the Monitoring Trustee to the Commission for approval.
29. No later than one month before the end of the First Divestiture Period or on request
    by the Commission, Synthomer shall submit a list of one or more persons whom
    Synthomer proposes to appoint as Divestiture Trustee to the Commission for
    approval. The proposal shall contain sufficient information for the Commission to
    verify that the person or persons proposed as Trustee fulfil the requirements set out
    in paragraph 26 and shall include:
    29.1    the full terms of the proposed mandate, which shall include all provisions
            necessary to enable the Trustee to fulfil its duties under these Commitments;
    29.2    the outline of a work plan which describes how the Trustee intends to carry
            out its assigned tasks;
    29.3    an indication whether the proposed Trustee is to act as both Monitoring
            Trustee and Divestiture Trustee or whether different trustees are proposed for
            the two functions.
    Approval or rejection by the Commission
30. The Commission shall have the discretion to approve or reject the proposed
    Trustee(s) and to approve the proposed mandate subject to any modifications it
    deems necessary for the Trustee to fulfil its obligations. If only one name is
    approved, Synthomer shall appoint or cause to be appointed the person or persons
    concerned as Trustee, in accordance with the mandate approved by the Commission.
                                               12
 ---pagebreak---     If more than one name is approved, Synthomer shall be free to choose the Trustee to
    be appointed from among the names approved. The Trustee shall be appointed
    within one week of the Commission’s approval, in accordance with the mandate
    approved by the Commission.
    New proposal by Synthomer
31. If all the proposed Trustees are rejected, Synthomer shall submit the names of at
    least two more natural or legal persons within one week of being informed of the
    rejection, in accordance with paragraphs 24 and 30 of these Commitments.
    Trustee nominated by the Commission
32. If all further proposed Trustees are rejected by the Commission, the Commission
    shall nominate a Trustee, whom Synthomer shall appoint, or cause to be appointed,
    in accordance with a trustee mandate approved by the Commission.
    II. Functions of the Trustee
33. The Trustee shall assume its specified duties and obligations in order to ensure
    compliance with the Commitments. The Commission may, on its own initiative or at
    the request of the Trustee or Synthomer, give any orders or instructions to the
    Trustee in order to ensure compliance with the conditions and obligations attached to
    the Decision.
    Duties and obligations of the Monitoring Trustee
34. The Monitoring Trustee shall:
    34.1    propose in its first report to the Commission a detailed work plan describing
            how it intends to monitor compliance with the obligations and conditions
            attached to the Decision.
    34.2    oversee, in close co-operation with the Hold Separate Manager, the on-going
            management of the Divestment Business with a view to ensuring its
            continued economic viability, marketability and competitiveness and monitor
            compliance by Synthomer with the conditions and obligations attached to the
            Decision. To that end the Monitoring Trustee shall:
              (A)    monitor the preservation of the economic viability, marketability and
                     competitiveness of the Divestment Business, and the keeping
                     separate of the Divestment Business from the business retained by
                     the Parties, in accordance with paragraphs 12, 13 and 14 of these
                     Commitments;
              (B)    supervise the management of the Divestment Business as a distinct
                     and saleable entity, in accordance with paragraph 15 of these
                     Commitments;
              (C)    with respect to Confidential Information:
                     (1)     determine all necessary measures to ensure that Synthomer
                             does not after the Effective Date obtain any Confidential
                             Information relating to the Divestment Business;
                                                13
 ---pagebreak---                (2)     in particular strive for the severing of the Divestment
                       Business’ participation in a central information technology
                       network to the extent possible, without compromising the
                       viability of the Divestment Business;
               (3)     make sure that any Confidential Information relating to the
                       Divestment Business obtained by Synthomer before the
                       Effective Date is eliminated and will not be used by
                       Synthomer;
               (4)     make sure that any confidential information of the Purchaser
                       received by Synthomer is used in accordance with
                       paragraphs 17 and 18; and
               (5)     decide whether such information may be disclosed to or kept
                       by Synthomer as the disclosure is reasonably necessary to
                       allow Synthomer to carry out the divestiture and/or as the
                       disclosure is required by law;
34.3 monitor the splitting of assets and, where applicable, the allocation of
     personnel between the Divestment Business and Synthomer or Affiliated
     Undertakings;
34.4 propose to Synthomer such measures as the Monitoring Trustee considers
     necessary to ensure Synthomer’s compliance with the conditions and
     obligations attached to the Decision, in particular the maintenance of the full
     economic viability, marketability or competitiveness of the Divestment
     Business, the holding separate of the Divestment Business and the non-
     disclosure of competitively sensitive information;
34.5 review and assess potential purchasers as well as the progress of the
     divestiture process and verify that, dependent on the stage of the divestiture
     process:
       (A)     potential purchasers receive sufficient and correct information
               relating to the Divestment Business and the Key Personnel in
               particular by reviewing, if available, the data room documentation,
               the information memorandum and the due diligence process, and
       (B)     potential purchasers are granted reasonable access to the Key
               Personnel;
34.6 act as a contact point for any requests by third parties, in particular potential
     purchasers, in relation to the Commitments;
34.7 provide to the Commission, sending Synthomer a non-confidential copy at
     the same time, a written report within 15 days after the end of every month
     that shall cover the operation and management of the Divestment Business as
     well as the splitting of assets and the allocation of Key Personnel so that the
     Commission can assess whether the business is held in a manner consistent
     with the Commitments and the progress of the divestiture process as well as
     potential purchasers;
                                         14
 ---pagebreak---     34.8    promptly report in writing to the Commission, sending Synthomer a non-
            confidential copy at the same time, if it concludes on reasonable grounds that
            Synthomer is failing to comply with these Commitments;
    34.9    within one week after receipt of the documented proposal referred to in
            paragraph 23 of these Commitments, submit to the Commission, sending
            Synthomer a non-confidential copy at the same time, a reasoned opinion as to
            the suitability and independence of the proposed purchaser and the viability
            of the Divestment Business after the sale and as to whether the Divestment
            Business is sold in a manner consistent with the conditions and obligations
            attached to the Decision, in particular, if relevant, whether the sale of the
            Divestment Business without one or more Assets or not all of the Key
            Personnel affects the viability of the Divestment Business after the sale,
            taking account of the proposed purchaser;
    34.10   assume the other functions assigned to the Monitoring Trustee under the
            conditions and obligations attached to the Decision; and
    34.11   in the event of a disagreement between Synthomer and the Purchaser, assess
            the reasonableness of any request made by the Purchaser for the inclusion of
            any tangible or intangible assets in the Divestment Business in accordance
            with the requirements of the Commitments, where necessary consulting with
            a relevant industry expert.
35. If the Monitoring and Divestiture Trustee are not the same legal or natural persons,
    the Monitoring Trustee and the Divestiture Trustee shall cooperate closely with each
    other during and for the purpose of the preparation of the Trustee Divestiture Period
    in order to facilitate each other's tasks.
    Duties and obligations of the Divestiture Trustee
36. Within the Trustee Divestiture Period, the Divestiture Trustee shall sell at no
    minimum price the Divestment Business to a purchaser, provided that the
    Commission has approved both the purchaser and the final binding sale and purchase
    agreement (and ancillary agreements) as in line with the Commission's Decision and
    the Commitments in accordance with paragraphs 22 and 23 of these Commitments.
    The Divestiture Trustee shall include in the sale and purchase agreement (as well as
    in any ancillary agreements) such terms and conditions as it considers appropriate
    for an expedient sale in the Trustee Divestiture Period. In particular, the Divestiture
    Trustee may include in the sale and purchase agreement such customary
    representations and warranties and indemnities as are reasonably required to effect
    the sale. The Divestiture Trustee shall protect the legitimate financial interests of
    Synthomer, subject to the Notifying Party's unconditional obligation to divest at no
    minimum price in the Trustee Divestiture Period.
37. In the Trustee Divestiture Period (or otherwise at the Commission’s request), the
    Divestiture Trustee shall provide the Commission with a comprehensive monthly
    report written in English on the progress of the divestiture process. Such reports shall
    be submitted within 15 days after the end of every month with a simultaneous copy
    to the Monitoring Trustee and a non-confidential copy to the Notifying Party.
                                               15
 ---pagebreak---     III. Duties and obligations of the Parties
38. Synthomer shall provide and shall cause its advisors to provide the Trustee with all
    such co-operation, assistance and information as the Trustee may reasonably require
    to perform its tasks. The Trustee shall have full and complete access to any of
    Synthomer's or the Divestment Business’ books, records, documents, management or
    other personnel, facilities, sites and technical information necessary for fulfilling its
    duties under the Commitments and Synthomer and the Divestment Business shall
    provide the Trustee upon request with copies of any document. Synthomer and the
    Divestment Business shall make available to the Trustee one or more offices on their
    premises and shall be available for meetings in order to provide the Trustee with all
    information necessary for the performance of its tasks.
39. Synthomer shall provide the Monitoring Trustee with all managerial and
    administrative support that it may reasonably request on behalf of the management
    of the Divestment Business. This shall include all administrative support functions
    relating to the Divestment Business which are currently carried out at headquarters
    level. Synthomer shall provide and shall cause its advisors to provide the Monitoring
    Trustee, on request, with the information submitted to potential purchasers, in
    particular give the Monitoring Trustee access to the data room documentation and all
    other information granted to potential purchasers in the due diligence procedure.
    Synthomer shall inform the Monitoring Trustee on possible purchasers, submit lists
    of potential purchasers at each stage of the selection process, including the offers
    made by potential purchasers at those stages, and keep the Monitoring Trustee
    informed of all developments in the divestiture process.
40. Synthomer shall grant or procure Affiliated Undertakings to grant comprehensive
    powers of attorney, duly executed, to the Divestiture Trustee to effect the sale
    (including ancillary agreements), the Closing and all actions and declarations which
    the Divestiture Trustee considers necessary or appropriate to achieve the sale and the
    Closing, including the appointment of advisors to assist with the sale process. Upon
    request of the Divestiture Trustee, Synthomer shall cause the documents required for
    effecting the sale and the Closing to be duly executed.
41. Synthomer shall indemnify the Trustee and its employees and agents (each an
    “Indemnified Party”) and hold each Indemnified Party harmless against, and
    hereby agrees that an Indemnified Party shall have no liability to Synthomer for, any
    liabilities arising out of the performance of the Trustee’s duties under the
    Commitments, except to the extent that such liabilities result from the wilful default,
    recklessness, gross negligence or bad faith of the Trustee, its employees, agents or
    advisors.
42. At the expense of Synthomer, the Trustee may appoint advisors (in particular for
    corporate finance, cost analysis or legal advice) as well as industry experts, subject
    to Synthomer's approval (this approval not to be unreasonably withheld or delayed)
    if the Trustee considers the appointment of such advisors and/or experts necessary or
    appropriate for the performance of its duties and obligations under the Mandate,
    provided that any fees and other expenses incurred by the Trustee are reasonable.
    Should Synthomer refuse to approve the advisors and/or experts proposed by the
    Trustee the Commission may approve the appointment of such advisors and/or
    experts instead, after having heard Synthomer. Only the Trustee shall be entitled to
    issue instructions to the advisors and/or experts. Paragraph 41 of these Commitments
    shall apply mutatis mutandis. In the Trustee Divestiture Period, the Divestiture
                                               16
 ---pagebreak---      Trustee may use advisors and/or experts who served Synthomer during the
     Divestiture Period if the Divestiture Trustee considers this in the best interest of an
     expedient sale.
43.  Synthomer agrees that the Commission may share Confidential Information
     proprietary to Synthomer with the Trustee. The Trustee shall not disclose such
     information and the principles contained in Article 17(1) and (2) of the Merger
     Regulation apply mutatis mutandis.
44.  The Notifying Party agrees that the contact details of the Monitoring Trustee are
     published on the website of the Commission's Directorate-General for Competition
     and they shall inform interested third parties, in particular any potential purchasers,
     of the identity and the tasks of the Monitoring Trustee.
45.  For a period of 10 years from the Effective Date the Commission may request all
     information from the Parties that is reasonably necessary to monitor the effective
     implementation of these Commitments.
     IV. Replacement, discharge and reappointment of the Trustee
46.  If the Trustee ceases to perform its functions under the Commitments or for any
     other good cause, including the exposure of the Trustee to a Conflict of Interest:
     46.1    the Commission may, after hearing the Trustee and Synthomer, require
             Synthomer to replace the Trustee; or
     46.2    Synthomer may, with the prior approval of the Commission, replace the
             Trustee.
47.  If the Trustee is removed according to paragraph 46 of these Commitments, the
     Trustee may be required to continue in its function until a new Trustee is in place to
     whom the Trustee has effected a full hand over of all relevant information. The new
     Trustee shall be appointed in accordance with the procedure referred to in
     paragraphs 24 to 32 of these Commitments.
48.  Unless removed according to paragraph 46 of these Commitments, the Trustee shall
     cease to act as Trustee only after the Commission has discharged it from its duties
     after all the Commitments with which the Trustee has been entrusted have been
     implemented. However, the Commission may at any time require the reappointment
     of the Monitoring Trustee if it subsequently appears that the relevant remedies might
     not have been fully and properly implemented.
SECTION F: FAST-TRACK DISPUTE RESOLUTION MECHANISM
49.  In the event that the Purchaser claims that Synthomer is failing to comply with its
     obligations arising from the Commitments, the Purchaser may invoke the "Fast-
     Track Dispute Resolution Procedure" described in this Section F.
50.  If the Purchaser wishes to avail itself of the Fast-Track Dispute Resolution
     Procedure, it must notify Synthomer in writing (with a copy to the Monitoring
     Trustee) setting out in detail the reasons leading that the Purchaser to believe that
     Synthomer is failing to comply with the requirements of the Commitments (the
     "Notice"). The Purchaser and Synthomer (the “Dispute Parties”) will use their best
                                               17
 ---pagebreak---     efforts to resolve all differences of opinion and settle all disputes that may arise
    through cooperation and consultation within a reasonable period of time which shall
    not exceed fifteen (15) business days after receipt of the Notice, which may be
    extended by mutual consent.
51. The Monitoring Trustee shall present its own proposal for resolving the dispute
    within eight (8) business days, specifying in writing the action, if any, to be taken by
    Synthomer and/or the Purchaser to ensure compliance with the Commitments and be
    prepared, if requested, to facilitate the settlement of the dispute.
52. Should the Dispute Parties fail to resolve their differences of opinion through
    cooperation and consultation as provided for in the previous paragraph, the
    Purchaser shall nominate an arbitrator.
53. Synthomer shall, within two (2) weeks of receiving notification in writing of the
    appointment of the Purchaser’s arbitrator, nominate its arbitrator and provide to the
    Purchaser in writing detailed reasons for their challenged conduct.
54. The arbitrators nominated by the Dispute Parties shall, within one (1) week of the
    nomination of the former, agree to appoint a third arbitrator. If the arbitrators
    nominated by the Dispute Parties cannot agree on the nomination of a third
    arbitrator, they shall ask the President of the International Chamber of Commerce
    (ICC) to appoint the third arbitrator.
55. The arbitrators shall be instructed to establish an arbitration tribunal and to make a
    preliminary ruling on the contested issues within one (1) month of the appointment
    of the third arbitrator, which may be extended, if necessary, by the unanimous
    agreement of all three arbitrators. The preliminary ruling shall be applicable
    immediately and until the final decision is issued. The final decision shall be taken
    by the arbitrators within six (6) months of the appointment of the third arbitrator,
    which may be extended, if necessary, by the unanimous agreement of all three
    arbitrators.
56. Any of the arbitrators shall be entitled to request any relevant information from the
    Dispute Parties in order to enable them to reach a decision.
57. The burden of proof in any dispute under the Fast-Track Dispute Resolution
    Procedure shall be borne as follows: (i) the Purchaser must produce evidence of a
    prima facie case, and (ii) if the Purchaser produces evidence of a prima facie case,
    the arbitrator must find in favour of the Purchaser unless Synthomer can produce
    evidence to the contrary.
58. The arbitrators shall be instructed not to disclose confidential information and to
    apply the standards attributable to confidential information and business secrets by
    European Union competition law.
59. The arbitration shall be in English and conducted pursuant to ICC rules. The
    arbitration award shall, in addition to dealing with the merits of the claim, impose
    the fees and costs of the prevailing Dispute Party upon the Dispute Party that is
    unsuccessful.
60. In the event of disagreement between the Dispute Parties regarding the interpretation
    of the Commitments, the arbitrators shall inform the Commission, and may seek the
    Commission’s interpretation of the Commitments before finding in favour of any
                                                 18
 ---pagebreak---        Dispute Party and shall be bound by the Commission’s interpretation. The
       Monitoring Trustee and the Commission may, at any time, submit a proposal during
       the arbitration procedure.
61.    The arbitrators shall decide the dispute on the basis of the Commitments and the
       Decision. The Commitments shall be construed in accordance with the Merger
       Regulation, EU law and general principles of law common to the legal orders of the
       Member States without a requirement to apply a particular national system. The
       Arbitral Tribunal shall take all decisions by majority vote.
62.    Nothing in the arbitration procedure shall affect the powers of the Commission to
       take decisions in relation to the Commitments in accordance with its powers under
       the Merger Regulation and the EC Treaty.
SECTION G: THE REVIEW CLAUSE
63.    The Commission may extend the time periods foreseen in the Commitments in
       response to a request from Synthomer or, in appropriate cases, on its own initiative.
       Where Synthomer requests an extension of a time period, it shall submit a reasoned
       request to the Commission no later than one month before the expiry of that period,
       showing good cause. This request shall be accompanied by a report from the
       Monitoring Trustee, who shall, at the same time send a non-confidential copy of the
       report to the Notifying Party. Only in exceptional circumstances shall Synthomer be
       entitled to request an extension within the last month of any period.
64.    The Commission may further, in response to a reasoned request from the Notifying
       Party showing good cause waive, modify or substitute, in exceptional circumstances,
       one or more of the undertakings in these Commitments. This request shall be
       accompanied by a report from the Monitoring Trustee, who shall, at the same time
       send a non-confidential copy of the report to the Notifying Party. The request shall
       not have the effect of suspending the application of the undertaking and, in
       particular, of suspending the expiry of any time period in which the undertaking has
       to be complied with.
SECTION H: ENTRY INTO FORCE
65.    The Commitments shall take effect upon the date of adoption of the Decision.
Duly authorised for and on behalf of Synthomer plc
Name:
Title:
Date:
                                                  19
 ---pagebreak---                                           SCHEDULE
THE DIVESTMENT BUSINESS
1.   The Divestment Business consists of the VP Latex Business. The Divestment
     Business as operated to date has the following legal and functional structure: The VP
     Latex Business:
            1.1.1     is currently owned and operated by Synthomer and its Affiliated
                      Undertakings; and
            1.1.2     is not currently operated as a stand-alone business held by distinct
                      legal entities within the Synthomer group of companies, and does
                      not have dedicated management, production, sales and marketing
                      personnel. In particular,
                      (A)     Synthomer produces all its VP Latex Products at its […]
                              plant in Marl, Germany, which […]. Two reactors at […] are
                              dedicated to the production of VP Latex;
                      (B)     the "Pyratex” brand is dedicated to VP Latex;
                      (C)     VP Latex is part of Synthomer's "Functional Solutions"
                              business unit; and
                      (D)     no management, production, technical, or sales and
                              marketing personnel are dedicated to VP Latex.
2.   The VP Latex Business is currently a distinct business line of Synthomer and will be
     carved-out from Synthomer's XSBR and other businesses on divestment.
3.   In accordance with paragraph 7 of these Commitments, the Divestment Business
     includes, but is not limited to:
     3.1    all tangible manufacturing assets that are exclusively or primarily used for
            manufacture of the VP Latex Products, including reactors […] and […] at
            Synthomer's […] plant. Reactors […] and […] each have the following
            specifications: […];
     3.2    all intangible assets (including intellectual property rights, know-how, recipes
            and other information) which are exclusively or primarily used by the
            Divestment Business, and the benefit of licences to other relevant intangible
            assets currently used by Synthomer (or necessary) to manufacture, sell and
            use the VP Latex Products but which are otherwise not exclusively or
            primarily used by the Divestment Business, including either a full transfer or
            an exclusive, irrevocable, assignable, royalty-free, perpetual licence of all
            trade mark rights for the "Pyratex" brands owned by Synthomer (as further
            described in Annex 1);
     3.3    the assignment of all of Synthomer's VP Latex know-how that is used by
            Synthomer and its Affiliated Undertakings exclusively to develop,
            manufacture, sell and use the VP Latex Products and any intellectual property
                                                20
 ---pagebreak---      rights in such know-how (the "Exclusively Used Technology" as detailed in
     Annex 1;
3.4  the assignment of all of Synthomer's VP Latex know-how that is used by
     Synthomer and its Affiliated Undertakings primarily to develop,
     manufacture, sell and use the VP Latex Products and any intellectual property
     rights, recipes and other information in such know-how (the "Primarily
     Used Technology" as detailed in Annex 1). The Divestment Business will
     grant back to Synthomer a royalty-free, irrevocable, non-exclusive, global
     licence for the Primarily Used Technology solely for use in products other
     than VP Latex;
3.5  a royalty-free, irrevocable, non-exclusive, global licence under Synthomer’s
     other intellectual property rights to use all know-how currently used by
     Synthomer to manufacture, sell and use the VP Latex Products but which is
     also used on other products or is otherwise not exclusively used for
     production of the VP Latex Products, in each case solely for the manufacture,
     sale, development and use of VP Latex (the “Licensed Technology” as
     detailed in Annex 1);
3.6  the transfer of all technical commercial materials exclusively or primarily
     used to develop, manufacture, sell and use the VP Latex Products and any
     intellectual property rights in such materials;
3.7  all raw materials, stocks, work in progress, and semi-finished and finished
     goods relating exclusively to the VP Latex Products held by Synthomer at the
     date of Closing, and agreed levels of other raw materials needed to operate
     the business on Closing in line with the Purchaser’s requirements, would be
     held separate and sold over time to the Purchaser under the terms of the
     TTMA;
3.8  to the extent applicable and transferable, the transfer of all licences, permits
     and authorisations issued by any governmental organisation which contribute
     to the current operation or are necessary to ensure the viability and
     competitiveness of the Divestment Business (including those listed in Annex
     2);
3.9  a list of all customers for the VP Latex Products for 2017, 2018, 2019 and
     2020 until Closing (as set out up to Q3 2019 in Annex 3) as well as, where
     applicable, the assignment of any supply arrangements, contracts, contract
     rights, customer records, customer reports, transactional data, and other
     customer documentation for such customers which contribute to the current
     operation or are necessary to ensure the viability and competitiveness of the
     Divestment Business provided however, that Synthomer shall not be required
     to transfer any such supply arrangements, contracts, contract rights, customer
     records, customer reports, transactional data or other customer documentation
     that do not form part of the Divestment Business;
3.10 to the extent applicable, the transfer of: (i) all records of customers and
     suppliers, price lists, catalogues and mailing lists related to the Divestment
     Business; and (ii) all advertising, marketing, sales, publicity and
     presentational materials related to the Divestment Business, or copies thereof,
                                        21
 ---pagebreak---          where any items covered by (i) and (ii) of this paragraph 3.10 also relate to a
         product retained by Synthomer;
   3.11  the goodwill relating to the VP Latex Business at the time of the divestment
         together with the exclusive right for the Purchaser to represent itself as
         carrying on the VP Latex Business in succession to Synthomer;
   3.12  any other tangible or intangible assets which the Purchaser may reasonably
         require to successfully complete the transfer of the Divestment Business to an
         alternative production location; and
   3.13  the following Key Personnel: the named personnel and/or personnel fulfilling
         the functions listed in Annex 4, namely, for each of the VP Latex Business, at
         least (i) an employee with product/applications knowledge and customer
         technical service knowledge; (ii) an employee with manufacturing/operations
         know-how; and (iii) a sales and marketing/ commercial product manager;
         including the Hold Separate Manager. The Key Personnel shall be transferred
         to the Purchaser, provided that Synthomer and Affiliated Undertakings will
         use their best efforts, including implementing appropriate incentive schemes
         (based on industry practice) to encourage such employees to move to a
         Purchaser. The Key Personnel fulfilling these functions shall be identified by
         the Hold Separate Manager upon appointment.
4. The Divestment Business shall not include:
   4.1   any right to any manufacturing equipment, facilities, warehouses, or other
         facilities owned or controlled by Synthomer or Affiliated Undertakings
         including, for the avoidance of doubt, Synthomer's […] equipment and
         production facilities other than the reactors currently dedicated to VP Latex
         and any other tangible manufacturing assets that are exclusively or primarily
         used for manufacture of the VP Latex Products;
   4.2   intellectual property, know-how or other confidential information which does
         not contribute to the current operations and/or is not necessary to ensure the
         viability and competitiveness of the Divestment Business, including in
         relation to the manufacture of raw materials;
   4.3   transfer of any brand other than “Pyratex";
   4.4   the Synthomer and Omnova names or logos in any form, save for the right to
         use Synthomer’s and Omnova’s names or logos to the extent strictly
         necessary to ensure the smooth transition of the Divestment Business;
   4.5   any names or logos in any form used by Synthomer for products other than
         the VP Latex Products;
   4.6   any personnel currently involved in the Synthomer's VP Latex business other
         than the Key Personnel;
   4.7   books and records required to be retained pursuant to any statute, rule,
         regulation or ordinance, provided that a Purchaser shall obtain a copy of the
         same and shall be permitted access to the original of such books and records
         upon reasonable request during normal business hours;
                                            22
 ---pagebreak---     4.8     general books of account and books of original entry that comprise
            Synthomer's permanent accounting or tax records;
    4.9     monies owed to Synthomer by customers for the purchase of the VP Latex
            Products, and monies owed by Synthomer to suppliers for materials used in
            the production of the VP Latex Products.
5.  If there is any asset or personnel which is not covered by paragraph 4 of this
    Schedule but which is both used (exclusively or not) in the Divestment Business and
    necessary for the continued viability and competitiveness of the Divestment
    Business, that asset or adequate substitute will be offered to potential purchasers by
    transfer or licence as appropriate, as overseen by the Monitoring Trustee, and subject
    to the Commission’s approval.
TRANSITIONAL TOLL MANUFACTURING AGREEMENT
6.  The Divestment Business will be divested together with a transitional toll
    manufacturing arrangement (the TTMA), on the basis of which Synthomer will
    provide toll manufacturing services of the VP Latex Products for the Purchaser at
    Synthomer's […] manufacturing facility at Marl, Germany for supply to the
    Purchaser in sufficient volumes to allow the Purchaser to maintain and expand the
    Divestment Business’ existing market position in the VP Latex Products. The TTMA
    will have the following characteristics:
    6.1     Synthomer will continue to operate VP Latex production at […] in the way in
            which it is operated at the date of these Commitments for the duration of the
            TTMA, to ensure the continued supply of the VP Latex Products to the
            Purchaser under the same costs structure and of the same quality and
            consistency during that period as at the date of these Commitments (it being
            understood that the production volumes of the VP Latex Products produced
            at […] may fluctuate as long as it does not affect the cost structure as agreed
            with the Purchaser);
    6.2     the Purchaser will grant Synthomer a royalty-free licence for the use of the
            relevant intellectual property, know-how and technical documentation
            required for the production of the VP Latex Products at its plant in […],
            Germany, allowing Synthomer to use the same to the extent necessary to
            transfer and/or supply the Divestment Business;
    6.3     Synthomer will produce and supply the VP Latex Products at quantity levels
            to be agreed with the Purchaser, which for the avoidance of doubt shall not in
            total exceed Synthomer's actual manufacturing capability at the Effective
            Date of VP Latex at […];
    6.4     the VP Latex Products shall be produced in accordance with the product
            specifications that will be determined in the TTMA and will reflect the
            specifications currently used and quality currently supplied by Synthomer for
            the production of the VP Latex Products;
    6.5     for safety and quality control, raw materials procured by the Purchaser for
            use by Synthomer under the TTMA must be compatible with the raw
            materials used by Synthomer at the relevant manufacturing facility;
                                               23
 ---pagebreak---     6.6     Synthomer will supply the Purchaser with the above-mentioned volumes of
            the VP Latex Products […] in return for a tolling cost (the "Tolling Cost")
            for each tonne of the VP Latex Products off-taken by the Purchaser under the
            TTMA. […] Synthomer shall provide an estimate of the monthly Tolling
            Cost to the Purchaser prior to the time of signing of the TTMA for the
            Purchaser’s approval (not to be unreasonably withheld). Unless otherwise
            agreed with the Purchaser, this estimate shall reflect the Tolling Cost for each
            of the first six months of the TTMA, and the Tolling Cost charged shall not
            vary by more than […]% from the estimate without the approval of the
            Commission. Synthomer will provide an estimate for each subsequent six-
            monthly period of the TTMA under the same conditions. For volumes of VP
            Latex in excess of […] kt per annum (which is around […]% more than
            current production), the Tolling Cost shall be renegotiated (and approved by
            the Commission) to reflect additional costs and long term liabilities which
            may be required;
    6.7     any variable costs such as raw materials, packaging, utilities and direct labour
            incurred by Synthomer will be compensated for by the Purchaser […]; and
    6.8     the term of the TTMA shall be for a transitional period of up to […] after
            Closing. The Purchaser shall use best efforts to complete the transition to its
            own manufacturing as quickly as possible. The Purchaser shall have the
            option to extend the term for a period not exceeding […], with agreement of
            the Commission. The Purchaser shall have the option to extend the term for a
            further period not exceeding […], on a […].
7.  For the avoidance of doubt, Synthomer may obtain, keep or use information related
    to the Divestment Business which is reasonably necessary for the sole purpose of
    providing toll manufacturing or other transitional services to the Purchaser and shall
    adopt strict firewall procedures to ensure that such information is not available to its
    Retained Business. Synthomer shall implement all necessary measures not to retain
    nor use any such information after the termination of the TTMA or TSA.
TRANSITIONAL SERVICES AGREEMENT
8.  To facilitate the efficient transfer of the Divestment Business to the Purchaser,
    Synthomer commits to provide to the Purchaser the following transitional services
    relating to the Divestment Business, […]. This shall be for a period of up to […]
    after Closing, and can be extended at the option of the Purchaser with agreement of
    the Commission for a period not exceeding […]. At the option of the Purchaser it
    can be extended for a further period not exceeding […], on a […]. The TSA shall
    provide that the Purchaser shall use best efforts to complete the transition as quickly
    as possible.
    8.1     Sales and marketing. Synthomer shall provide training and technical
            assistance to the Purchaser, to the extent necessary to ensure the viability
            and/or competitiveness of the Divestment Business, to enable the Purchaser
            to assume responsibility for the sale (including distribution) and marketing of
            the VP Latex Products at a level similar to that currently provided by
            Synthomer in relation to the VP Latex Products for a period not to exceed
            […] from the date of Closing, which can be extended at the option of the
            Purchaser with agreement of the Commission for a period not exceeding […].
                                              24
 ---pagebreak---    8.2    Technical customer service. Synthomer shall provide training and technical
          assistance in relation to customer qualification proceedings and
          troubleshooting, to the extent necessary to ensure the viability and/or
          competitiveness of the Divestment Business, for the duration of the
          Transitional Services Agreement. This shall include the provision of data or
          information which a customer may require to compare the VP Latex
          product(s) manufactured and sold by the Divestment Business after Closing
          with the VP Latex Product(s) previously manufactured and sold by
          Synthomer to that customer (or that the customer has qualified from
          Synthomer, even if it has not been sold the product).
   8.3    Logistics. Synthomer shall enter into transitional arrangements for the
          continuation of current customer service and logistics services, covering all
          aspects of processing a customer’s orders and ensuring delivery of the VP
          Latex Products to customers, for a period not to exceed […] from the date of
          Closing, which can be extended at the option of the Purchaser with
          agreement of the Commission for a period not exceeding […]. For the
          avoidance of doubt, […].
   8.4    Procurement. To the extent necessary to ensure the viability and/or
          competitiveness of the Divestment Business, Synthomer shall provide
          support (including technical assistance) to the Purchaser on the transfer of
          procurement arrangements (including to facilitate the procurement of raw
          materials necessary for the manufacture of the VP Latex Products and to
          transition supplier relationships during the TSA period), for a period not to
          exceed […] from Closing. If the Purchaser is not able to source such raw
          materials in a cost-effective manner, Synthomer commits to enter, at the
          option of the Purchaser and with agreement of the Commission, into back-to-
          back supply agreements with raw material suppliers and to make such raw
          materials available […], […].
   8.5    Product and manufacturing transfer. Synthomer shall provide training and
          reasonable technical assistance to support the Purchaser with scale-up and
          production trials at the Purchaser's facilities for the duration of the
          Transitional Services Agreement, i.e. to put the know-how into practice, both
          in terms of following the recipe (product know-how) and understanding and
          applying the manufacturing techniques (process and manufacturing know-
          how). Synthomer shall also provide reasonable technical assistance for the
          design and the commissioning of a new production facility for the production
          of the VP Latex Products or the adjustment of an existing production facility
          at the Purchaser’s premises, on the basis of the know-how and technical
          documentation included in the Divestment Business. Synthomer will provide
          reasonable technical assistance to the Purchaser to obtain all licences, permits
          or authorisations issued by any governmental organisation that are required to
          produce and market VP Latex and are necessary for the viability or
          competitiveness of the Divestment Business.
9. Without limitation of the above-mentioned TSA commitments, the scope and
   elements of the technical assistance referred to at paragraph 8 of this Schedule will
   have to be negotiated with the Purchaser, as this will largely depend on the
   requirements of the Purchaser. Synthomer envisages that technical assistance could
   include one or more of the following elements: advising on technical knowledge
   documentation, supporting the Purchaser in acquiring specific equipment, providing
                                            25
 ---pagebreak--- access to staff with suitable experience and skills to assist and/or advise on technical
issues, assisting in trainings for the Purchaser's staff; and a service back-up for the
duration of the TSA for frequently asked questions and one defined "go-to" person
(who will be the person in charge of managing delivery of the TSA). The TSA shall
include appropriate provisions to ensure that Synthomer provides the technical
assistance to the Purchaser in accordance with good industry practice including in
relation to the timing and responsiveness with which this assistance is provided
through the different stages of the transition.
                                            26
 ---pagebreak---                                      ANNEX 1
      Detailed description of the trademarks; Exclusively Used Technology;
              Primarily Used Technology; and Licensed technology
Trademarks
                  Figure 1: Pyratex Trademark Family Report
                                          27
 ---pagebreak---  ---pagebreak---     Reactor to storage design (P&IDs)
    Manufacturing records to include cycle times, batch size – SAP download
    Manufacturing quality statistics
    Raw material approvals and specifications
Primarily Used Technology
Synthomer has not currently identified any Primarily Used Technology.
Licensed technology
    Regulatory assessment – inventory status (includes the countries that Synthomer can
       export the VP Latex Products to currently)
    Hazards from SHE
    Reactor to storage design (P&IDs)
    Storage and handling procedures
    Filtration procedures
    Biocide protection systems
    Test methods for final products (Non ISO standards)
    Raw material approvals and specifications
                                               29
 ---pagebreak---                                        ANNEX 2
                          Licences, Permits and Authorisations
Synthomer has not identified any transferable licences, permits and authorisations relating
to the VP Latex Business.
                                               30
 ---pagebreak---            ANNEX 3
    Customers, 2017 to Q3 2019
[…]
                  31
 ---pagebreak---                                          ANNEX 4
                                       Key Personnel
Hold Separate Manager
      an employee with degree level education, managerial level experience of 3 – 5 years,
        general chemical industry knowledge and understanding of VP Latex, commercial
        skill set including product management, and good communication and inter-personal
        skills
Personnel, identified by the Hold Separate Manager upon appointment:
      an employee with product/applications knowledge and customer technical service
        knowledge for VP Latex
      an employee with manufacturing/operations know-how for VP Latex
      a sales and marketing/ commercial product manager for VP Latex
For the avoidance of doubt, the Hold Separate Manager may be one of the three employees
listed above.
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