CELEX: 32020M9815
Language: en
Date: 2020-06-18 00:00:00
Title: Commission Decision of 18/06/2020 declaring a concentration to be compatible with the common market (Case No COMP/M.9815 - ADVENT / CINVEN / THYSSENKRUPP ELEVATOR) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                Brussels, 18.06.2020
                                                                C(2020) 4175
                                                                                 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                                                                 information omitted has been replaced by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 parties
Subject:            Case M.9815 – Advent/Cinven/thyssenkrupp Elevator
                    Commission decision pursuant to Article 6(1)(b) of Council Regulation
                    No 139/20041 and Article 57 of the Agreement on the European Economic
                    Area2
Dear Sir or Madam,
(1)       On 12 May 2020, the European Commission received notification of a concentration
          pursuant to Article 4 of the Merger Regulation which would result from a proposed
          transaction by which Advent International Corporation (US, “Advent”) and Cinven
          Capital Management (VII) General Partner Limited (UK, “Cinven”) intend to
          acquire joint control of the whole of thyssenkrupp Elevator AG (Germany, “tkE”).
          (Advent and Cinven are designated hereinafter as the 'Notifying Parties' and together
          with tkE as the “Parties”.)3
1.        THE PARTIES
(2)       Advent is an investment company active in the acquisition of equity stakes and the
          management of investment funds in various sectors, including business and financial
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 C174 of 25.5.2020, p. 7.
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---          services. Advent controls Rubix4, a distributor of industrial maintenance and repair
         products and services.
(3)      Cinven is an investment company active in the provision of investment management
         and investment advisory services to a number of investment funds.
(4)      tkE is a wholly-owned subsidiary of thyssenkrupp AG, active in the installation and
         servicing of elevators, escalators, passenger boarding bridges and stairlifts, as well as
         directly related ancillary activities.
2.       THE CONCENTRATION
(5)      Pursuant to a share sale and purchase agreement dated 27 February 2020, Advent
         and Cinven will acquire tkE through a consortium5 with co-investors
         (the “Transaction”). tkE will be jointly controlled by Advent and Cinven, in
         particular by virtue of their veto rights over key strategic matters such as the budget
         and business plan. Hence, the Transaction qualifies as a concentration within the
         meaning of Article 3(1)(b) of the EUMR.
3.       UNION DIMENSION
(6)      The undertakings concerned have a combined aggregate world-wide turnover of
         more than EUR 5 000 million [Cinven: EUR […], Advent: EUR […];
         tkE: EUR […]]. Each of them has a Union-wide turnover in excess of
         EUR 250 million [Cinven: EUR […], Advent: EUR […]; tkE: EUR […]], but they
         do not achieve more than two-thirds of their aggregate Union-wide turnover within
         one and the same Member State. The notified operation therefore has a Union
         dimension pursuant to Article 1(2) of the Merger Regulation.
4.       RELEVANT MARKETS
4.1.     Introduction
(7)      The Transaction gives rise to a vertical link due to the activities of Advent’s
         portfolio company Rubix upstream and those of tkE downstream.
(8)      In particular, this vertical link relates to the supply by Rubix of bearings used in the
         repair and maintenance of elevators and escalators.
(9)      Bearings are the main item among a number of products and services that tkE
         procures from Rubix, totalling EUR […] out of less than EUR […]. Each of the
         other product groups are typically immaterial. The relevant upstream market
         therefore relates to the wholesale supply of bearings.
4   Rubix was previously known as Advent portfolio company IPH/Brammer. The acquisition of IPH by
    Advent was approved by the European Commission in 2017 (Case M.8524 – Advent International
    Corporation/Industrial Parts Holding). Advent’s acquisition of Brammer was approved by the European
    Commission in 2017 (Case M.8316 – Advent/Brammer).
5   […].
                                                        2
 ---pagebreak--- (10)    As Rubix is a supplier of industrial maintenance, repair and overhaul (“MRO”)
        products, its bearings are typically not incorporated into new installations of elevators
        or escalators but are used in the repair or maintenance of elevators and escalators. The
        relevant downstream markets therefore relate to elevator and escalator repair and
        maintenance.
4.2.    Market Definition
4.2.1. Upstream market: the wholesale supply of bearings
4.2.1.1. Product market definition
(11)    Bearings are components that facilitate movement and reduce friction in machines.
        They have three key functions: (i) guiding motion, by supporting and guiding
        components that turn relative to one another (e.g. wheels, shafts, pivots),
        (ii) transmitting forces, and (iii) reducing friction.
(12)    Bearings are used in various parts of elevator and escalator installations, such as
        motors, traction machines, drive wheels, gears and rollers, in order to guide motion
        and reduce friction. For both production and repair purposes, some of those bearings
        are procured as a pre-assembled part of an entire unit, while others are procured
        separately, depending on the manufacturer.
(13)    The Parties suggest that the relevant product market is rolling bearings, with possible
        further sub-segments for ball and roller bearings, possibly also further sub-
        segmented for industrial use6.
(14)    The Parties submit that there should not be a separate market for bearings used for
        the elevators and escalators applications, as the bearings used for these products are
        standard industrial parts7. Also, the Parties consider that there should be no
        distinction between original equipment manufacturers (OEM)/original equipment
        suppliers (OES) and independent aftermarket (IAM) customers, because both types
        of customers provide maintenance and repair services8.
(15)    A significant proportion of bearings incorporated in elevators and escalators are used
        in rollers, in particular step rollers, chain rollers, handrail rollers and guide rollers.
        Such rollers, which consist of a bearing around which a rubber or plastic ring is fitted
        by injection moulding, are procured as full units for both production and repair
        purposes. When asked about the use of bearings in escalators, several escalator MRO
        providers replied in terms of rollers. One escalator MRO provider stated in this
        respect: “as regards bearings for escalators, the Company understands this term to
        refer to rollers for chains and steps”.9 Even though such rollers are components that
        are closely related to, but separate from, bearings, the Parties state that Rubix does not
        supply such products. They claim that these components are generally supplied
        directly by manufacturers such as faigle (rather than distributors such as Rubix) to
        escalator maintenance providers10. This was supported by feedback from a bearings
        manufacturer, who stated: “the Company is not aware of any European
6   Form CO, paragraph 81, 84 and 99.
7   Form CO, paragraph 79.
8   Form CO, paragraph 80.
9   Minutes of call with Escalator MRO provider, 14 May 2020.
10 Form CO, paragraph 101, Response of 20 May 2020 to RFI 4, paragraph 2.1.
                                                       3
 ---pagebreak---         manufacturers offering rollers for escalators and considers it unlikely that Rubix has
        a significant offer of such products”.11
(16)    The Commission has not previously assessed product markets for bearings used in
        the maintenance and repair of elevators or escalators specifically. In previous
        decisions, the Commission considered that there may be separate sub-segments for
        different types of bearings, including ‘plain’ and ‘rolling’ bearings12. The
        Commission has found that ‘rolling’ bearings may include two large sub-categories,
        namely (i) ball bearings, and (ii) roller bearings, which can be further
        sub-segmented.13
(17)    The Commission has also considered that the above markets could be divided into
        separate markets according to the application for which the bearings are used or the
        type of customers purchasing those bearings (e.g. automotive vs industrial
        applications; OEM/OES vs Independent Aftermarket (“IAM”))14.
(18)    The feedback from market participants confirmed that bearings used in elevator and
        escalator applications are typically multi-purpose products15. A bearings
        manufacturer stated: “the Company manufactures bearings as standard industrial
        products, and is not aware of special bearings being offered for escalators”.16
(19)    The Commission’s investigation has indicated that a segmentation between OEM
        and MRO supply channels may be relevant. Rubix annual reports refer to its market
        share for bearings in the MRO segment, while a bearings manufacturer distinguished
        between the MRO and the OEM channel when explaining its competitive
        relationship with Rubix in the supply of bearings17.
(20)    In any event, for the purpose of this Decision, it can be left open whether the market
        for the wholesale supply of bearing may be segmented based on the type of bearing,
        application or customer, as the Transaction does not give rise to serious doubts as to
        its compatibility with the internal market or the functioning of the EEA Agreement
        regardless of the precise product market definition.
4.2.1.2. Geographic market definition
(21)    The Parties submit that the relevant geographic market is at least EEA-wide in
        scope.
(22)    In a previous decision, the Commission considered that the geographic market of
        bearings sold to independent aftermarket service providers (IAM) in the automotive
11  Minutes of call with bearings manufacturer, 15 May 2020.
12  See e.g. Commission decision of 11 October 2011, INA/FAC (M.2608).
13  Commission decision of 27 March 2007, NTN/SNR (M.4346), Commission decision of
    19 December 2008, Schaeffler/Continental (M.5294).
14  Commission decision of 11 October 2011, INA/FAC (M.2608), recital 13.
15  Minutes of call with MRO provider, 14 May 2020, paragraph 15; Minutes of call with MRO provider,
    19 May 2020, paragraph 13; Minutes of call with Bearings Supplier, 15 May 2020, paragraph 3.
16  Minutes of call with bearings manufacturer, 15 May 2020, paragraph 3.
17  Minutes of call with bearings manufacturer, 15 May 2020.
                                                        4
 ---pagebreak---         and industrial sectors is (at least) an EEA–wide in scope but left the relevant
        geographic market open18.
(23)    Feedback from market participants indicated that bearings may be sourced from
        China, but that delivery times and quality standards may be an issue, depending on
        the urgency and type of repair. An escalator MRO provider stated: “spare parts are
        offered in various standards of quality and most can also be sourced from Chinese
        suppliers. In general, customers are not against sourcing from China; it is a just a
        matter of how urgent the repair is, as delivery times from China can run up to 2-3
        weeks”19. A bearings manufacturer stated20: “the company considers that the
        escalator business, compared with the elevator business, is less quality-oriented and
        more often uses bearings from low-cost countries such as China, in particular
        rollers […] However, European supplies of bearings are used for the more
        sophisticated parts of escalators such as gears boxes or e-motors”.
(24)    In any event, for the purpose of this Decision, the Commission considers the
        geographic market to be at least EEA-wide in scope, but leaves the precise
        geographic market definition open, as the Transaction does not give rise to serious
        doubts as to its compatibility with the internal market or the functioning of the EEA
        Agreement under any of these plausible geographic market definitions.
4.2.2. Downstream market: repair and maintenance of elevators and escalators
4.2.2.1. Product market definition
(25)    An elevator is a car that moves in a vertical shaft to carry passengers or freight up
        and down. Elevators are typically powered by electric motors that drive traction
        cables and counterweight systems. Elevators have a life span of up to 50 years.
(26)    An escalator is made up of a set of interlocking steps, powered by an electric motor.
        The steps are moved along by a rotating pair of chains, looped around two pairs of
        gears. Escalators have a life span of up to 50 years.
(27)    In view of the long life spans of elevators and escalators, a significant proportion of
        the value chain consists of maintenance and repair which can either be done by the
        companies installing the equipment, or by alternative maintenance and repair
        operators.
(28)    The Parties consider that there are two plausible alternative product market
        definitions: (i) a global market for the supply of maintenance services for elevators
        and escalators (combined); or (ii) two separate markets differentiating between
        maintenance services for each of (a) elevators; and (b) escalators21.
(29)    In previous decisions, the Commission considered (i) a broad market for elevator
        installation services comprising elevator installation, modernisation, and repair and
18  Commission decision of 19 December 2008, Schaeffler/Continental (M.5294).
19  Minutes of call with MRO provider, 19 May 2020, paragraph 11.
20 Minutes of call with Bearings Supplier, 15 May 2020, paragraph 10.
21 Form CO, paragraph 70.
                                                       5
 ---pagebreak---         maintenance services22 and (ii) separate markets for (a) the sale and installation of
        elevators and escalators, (b) maintenance services, and (c) modernisation services.23
(30)    The Commission has found that maintenance services reflect a separate, broad
        category including all maintenance and repair services provided with varying
        content, for instance monitoring and prevention services as well as repair and
        replacements of spare parts24.
(31)    As regards any potential subsegments within escalator repair and maintenance,
        feedback from market participants indicates that companies usually provide all the
        services related to escalators, namely installation, repair, maintenance and
        modernization. An escalator MRO provider stated: “the Company regards the
        market for the maintenance of escalators as one overall market as most providers
        offer the full range of services, from testing to repair, and contracts typically include
        a wide range of such services”25.
(32)    In light of the feedback from market participants and the information available to it,
        the Commission concludes that the product market for the repair and maintenance of
        elevators and escalators could be segmented into (i) repair and maintenance services
        for elevators and escalators (combined); and (ii) repair and maintenance services for
        each of: (i) elevators; and (ii) escalators.
(33)    In any case, for the purpose of this Decision, it can be left open whether the relevant
        market for the repair and maintenance of elevators and escalators may be
        subsegmented based on the number and types of portfolio services, as the
        Transaction does not give rise to serious doubts as to its compatibility with the
        internal market regardless of the precise product market definition.
4.2.2.2. Geographic market definition
(34)    The Parties agree with the geographic market definition set out in the Commission’s
        prior decisional practice26.
(35)    In a previous decision, the Commission found the geographic market of maintenance
        and modernisation services for escalators to be national in scope.27
(36)    Feedback from market participants indicated that customer preferences and
        regulations for services provided on escalators vary among countries and that
        national presence is required. An escalator MRO provider stated: “the Company
        regards the market for maintenance of escalators as different on a national basis as
        customer preferences and regulations vary from country to country and market
        presence in each country is necessary to make the business profitable”28.
22  Commission decision of 2 December 2010, Triton III Holding 6/Wittur Group (M.5991).
23  Commission decision of 21 February 2007, PO/Elevators and Escalators (COMP/E-1/38.823).
24  Ibidem.
25  Minutes of call with MRO provider, 19 May 2020, paragraphs 2 and 10; Minutes of call with MRO
    provider, 14 May 2020, paragraph 5.
26  Form CO, paragraphs 57-61.
27  Case COMP/E-1/38.823, PO/Elevators and Escalators.
28  Minutes of call with MRO provider, 14 May 2020, paragraph 7; Minutes of call with MRO provider, 19
    May 2020, paragraph 2; Minutes of call with MRO provider, 13 May 2020, paragraph 2.
                                                       6
 ---pagebreak--- (37)   In any event, for the purpose of this Decision, the Commission considers the
       geographic market for the repair and maintenance of escalators and elevators to be
       national in scope, but leaves the precise geographic market definition open, as the
       Transaction does not give rise to serious doubts as to its compatibility with the
       internal market or the functioning of the EEA Agreement under any of these
       plausible geographic market definitions.
5.     COMPETITIVE ASSESSMENT
(38)   None of Advent’s or Cinven’s portfolio companies have a direct presence in any of
       the markets in which tkE operates, namely the installation and servicing of elevators,
       escalators, passenger boarding bridges and stairlifts, as well as directly related
       ancillary activities in the EEA. Rubix provides repair and maintenance services, but
       not for elevators or escalators. The Parties' relationship is therefore only vertical,
       through Advent’s ownership interest in Rubix.
(39)   In view of the vertical links between Rubix and tkE, the Commission will assess in
       this Section the relation between the upstream wholesale of bearings where Rubix is
       active and the downstream market for the repair and maintenance of elevators and
       escalators in which tkE will remain active.
5.1.   Market structure in upstream markets
(40)   The Parties estimate Rubix’ market share in EEA in bearings sold to elevator and
       escalator customers at respectively [0-5]%. For the narrower segment of bearings
       used only for escalator repair and maintenance, Rubix’ market share in EEA
       is [20-30]% according to the Parties. According to the latest annual reports available
       from Brammer, the Rubix business unit making up the bulk of the group’s activity in
       bearings, the company’s market share in bearings sold to the MRO channel was
       around 10%. The Parties state that they cannot calculate precise market share
       estimates for Rubix’s competitors in relation to a narrow segment for the supply of
       bearings for elevator and escalator applications, let alone for an even narrower sub-
       segment for the supply of bearings for escalator repair and maintenance.
(41)   However, the Parties estimate that the largest manufacturers of bearings, in particular
       SKF (including Cooper), Schaeffler, NTN SNR, NSK and Timken, have larger
       market shares than Rubix via their direct sales in relation to elevator and escalator
       applications overall and escalator repair and maintenance specifically. They submit
       that a wide range of other distributors of bearings are also active throughout the
       relevant markets in the EEA, including Acorn, BDI, the Bianchi Group, the
       Blässinger Group and the Descours & Cabaud Group.
(42)   Feedback from a bearings supplier29 shows that the escalators market is not the focus
       of Rubix’s usual activity: “Rubix distributes around 5000 different products to
       various industries such as cement and steel plants. The Company does not consider
       the escalator market to be a usual target area for industrial distributors in general”.
29  Minutes of call with Bearings Supplier, 15 May 2020, paragraph 8.
                                                        7
 ---pagebreak--- 5.2.   Market structure in downstream markets
(43)   If a global market for the repair and maintenance of both escalators and elevators is
       considered, tkE’s markets shared would be lower than 30% both EEA-wide and on a
       national basis and would therefore not give rise to any affected markets.
(44)   If a separate market only for repair and maintenance of escalators is considered, a
       number of national market will be affected, for instance: Austria [30-40]%,
       Croatia [30-40]%, Denmark [40-50]%, France [30-40]%, Germany [30-40]%,
       Hungary [30-40]%, Netherlands [30-40]%, Norway [60-70]%, Spain [40-50]% and
       Sweden [30-40]%, with an EEA-wide market share of around [30-40]% in 2019.
       These national markets will therefore be considered affected markets.
(45)   In the EEA market for escalator repair and maintenance services, the main tkE’s
       competitors are Kone, Schindler, and Otis. In escalator repair and maintenance on an
       EEA basis, Otis has a [20-30]% market share, Kone [10-20]%, Schindler [10-20]%
       and other competitors [10-20]%. These competitors are also tkE’s main rivals in the
       various Member States in which tkE’s share exceeds 30%, please see Table 1 below.
       Referring to the national markets for for escalator repair and maintenance services a
       MRO provider stated: “In smaller countries the big companies do not have the local
       personnel for installing, repairing and maintaining the escalators, choosing to
       subcontract such services to smaller companies except for some limited maintenance
       services. In the markets for services for escalators there several more companies
       competing with the big players. In the Netherlands there are 6-7 such companies,
       including Structon and Orona”30.
                                       Table 1 – Market shares %31
        Member States             Schindler               Kone               Otis     tkE
       EEA                        [10-20]%              [10-20]%          [20-30]% [30-40]%
       Austria                    [40-50]%              [10-20]%           [5-10]% [30-40]%
       Croatia                    [10-20] %             [10-20]%          [20-30]% [30-40]%
       Denmark                      [0-5]%              [30-40]%          [10-20]% [40-50]%
       France                     [10-20]%              [10-20]%          [20-30]% [30-40]%
       Germany                    [10-20]%              [20-30]%          [10-20]% [30-40]%
       Hungary                    [10-20]%              [10-20]%          [20-30]% [30-40]%
       Netherlands                [20-30]%              [20-30]%          [10-20]% [30-40]%
       Norway                      [5-10]%              [20-30]%            [0-5]% [60-70]%
       Spain                      [10-20]%               [0-5]%           [30-40]% [40-50]%
       Sweden                      [5-10]%              [30-40]%           [5-10]% [30-40]%
30  Minutes of call with MRO provider, 14 May 2020, paragraphs 11 and 12.
31  Form CO, Annex 29.
                                                      8
 ---pagebreak--- 5.3.     Vertical assessment
5.3.1. Input foreclosure
(46)     The Parties submit32 that even on the wholesale of bearings to escalator repair and
         maintenance services on a national basis, Rubix’s share of supply is not significant
         and as such cannot raise any input foreclosure concerns given its lack of market
         power. This is particularly so as Rubix is a distributor and not a manufacturer of
         bearings and both direct sales from manufacturers and a variety of other distributors
         would remain available to customers seeking bearings for elevator and escalator
         applications following the Transaction. According to the Parties, bearings represent
         only an insignificant cost factor for elevator and escalator companies, including tkE.
         tkE estimates that bearings represented approximately […]% of its total purchase
         volume in FY 2018/2019, and that bearings represent approximately […]% of the
         total cost of an elevator or escalator.33
(47)     The outcome of the market investigation shows that the risk of input foreclosure
         through the notified concentration appears limited. It seems unlikely that, post-
         merger, Rubix would restrict access to its products by other escalator repair and
         maintenance providers competing against tkE in any of the EEA countries. The
         outcome of the investigation indicates that the Transaction in general does not seem
         to raise any input foreclosure concerns34: “the Company considers that the
         transaction will have a positive impact on the market and will be good for tkE. […]
         Although it anticipates that tkE under new ownership will try to lower the price for
         Mulder Montage, the company does not consider that the transaction will have a
         negative impact on its business”. None of the escalator maintenance providers
         participating to the investigation (in Spain, the Netherlands and Germany) was aware
         of Rubix as a potential supplier of bearings for their activities: “the Company is not
         familiar with Rubix/Brammer as a potential supplier of escalator parts”35.
(48)     Rubix’ market share in bearings sold to escalator repair and maintenance companies
         is not significant, estimated at [20-30]% in the EEA. In addition, the market in which
         Rubix operates is fragmented, which means that rival escalator repair and
         maintenance companies would have many alternative sources for the procurement of
         bearings after the merger. The main source remain the manufacturers of bearings, in
         particular SKF (including Cooper), Schaeffler, NTN SNR, NSK and Timken, but
         also other distributors of bearings are also active throughout the relevant markets in
         the EEA, including Acorn, BDI, the Bianchi Group, the Blässinger Group and the
         Descours & Cabaud Group.
(49)     Furthermore, it appears that bearings are largely commoditised products that can be
         sourced from a wide range of suppliers. Feedback from market participants has
         confirmed that manufacturers such as SKF also sell directly36 to escalator and
         elevator maintenance companies. A MRO provider indicated in this respect that “the
32  Form CO, paragraph 130.
33  Form CO, paragraph 140.
34 Minutes of call with MRO provider, 19 May 2020, paragraph 17; Minutes of call with MRO provider,
    14 May 2020, paragraph 19; Minutes of call with MRO provider, 13 May 2020, paragraph 15; Minutes of
    call with Bearings Supplier, 15 May 2020, paragraph 13.
35 Minutes of call with MRO provider, 14 May 2020, paragraph 9.
36 Minutes of call with MRO provider, 19 May 2020, paragraph 12; Minutes of call with MRO provider,
    13 May 2020, paragraphs 8 and 10.
                                                        9
 ---pagebreak---        Company buys most of its rollers from Chinese trading companies and occasionally
       from SKF when required”37, even though some manufacturers, such as Schaeffler38,
       seem to be more focused on the OEM rather than the MRO (Maintenance, Repair
       and Overhaul) channel. In any case, a wide range of other distributors of bearings
       seem to be active throughout the relevant markets. Feedback from market
       participants has indicated that spare parts used in escalator repair and maintenance
       tend to be more lower-end products compared to elevator repair and maintenance
       and that bearings for escalator repair and maintenance are often sourced from
       Chinese suppliers, depending on the urgency of the repair39. A MRO provider stated
       that “The Company procures most of its spare parts from Chinese manufacturers
       and distributors, except when end customers insist on original OEM replacement
       parts, which the Company then procures from the manufacturers or specialised
       suppliers. 90%-95% of escalator parts can be bought freely on the market”40.
(50)   In addition, more than […]% of Rubix’ sales of bearings for repair and maintenance
       for escalators are made with tkE’s competitors. Stopping its sales to those companies
       and selling exclusively to tkE is likely to lead to reduced sales of Rubix’ products as
       it seems unlikely that tkE could take over a large part of the sales of its competitors
       due to such strategy. Moreover, bearings represent a small share of escalator repair
       and maintenance providers’ costs, estimated at less than 5%41: “Rollers make up
       around 5-10 % of all replaced spare parts, and so only 2%-5% of the overall
       cost”42; “Bearings are not often replaced in escalators if they are of good quality
       and they represent less than 5% of overall cost. Bearings are not in the top 5 of
       spare parts in terms of average cost”43.
(51)   As stated above in paragraph 45, tkE competes downstream with Kone, Schindler,
       and Otis in each Member State where it exceeds 30% market share in downstream
       markets, and particularly: Austria [30-40]%, Croatia [30-40]%, Denmark [40-50]%,
       France [30-40]%, Germany [30-40]%, Hungary [30-40]%, Netherlands [30-40]%,
       Norway [60-70]%, Spain [40-50]% and Sweden [30-40]%. Therefore, the merged
       entity would face enough competition pressure post-Transaction and no competition
       concerns should arise in any of the affected national markets.
(52)   In the light of the above considerations and taking the information available to it and
       the results of the market investigation into account, the Commission considers it is
       unlikely that Advent would have the ability or the incentive to successfully raise
       rivals’ costs in relation to the products supplied by Rubix. Therefore, the Transaction
       does not raise serious doubts as to its compatibility with the internal market or the
       functioning of the EEA Agreement as the Parties will have neither the ability nor the
       incentive for input foreclosure in relation to the markets for the repair and
       maintenance services for escalators.
37 Minutes of call with MRO provider, 14 May 2020, paragraph 18.
38 Minutes of call with Bearings Supplier, 15 May 2020, paragraph 12.
39 Minutes of call with MRO provider, 19 May 2020, paragraph 11; Minutes of call with MRO provider,
   13 May 2020, paragraphs 8 and 9.
40 Minutes of call with MRO provider, 14 May 2020, paragraph 14.
41 Minutes of call with MRO provider, 13 May 2020, paragraph 13.
42 Minutes of call with MRO provider, 14 May 2020, paragraph 18.
43 Minutes of call with MRO provider, 19 May 2020, paragraph 15.
                                                      10
 ---pagebreak--- 5.3.2. Customer foreclosure
(53)    The Parties submits44 that any customer foreclosure concerns would be negated by
        the structure of the Transaction - namely, the acquisition of tkE through a
        consortium. Even if Advent had the incentive to favour Rubix over other suppliers,
        Cinven would have an incentive for tkE Elevator and Escalator Business to continue
        sourcing its supply of the products offered by Rubix from whichever suppliers are
        most competitive (on price, quality, or other factors).
(54)    The Commission finds, based on the market investigation, that the risk of customer
        foreclosure appears to be limited as it seems unlikely that, post-merger, tkE would
        be able to affect the competitiveness of Rubix’ competitors by foreclosing suppliers
        of bearings. The outcome of the investigation indicates that the transaction in general
        does not seem to raise any customer foreclosure concerns45: “The Company
        considers that the transaction will have a positive impact on the market and will be
        good for competition. The Company considers that the industry has seen little
        innovation for some time and has been very much dominated by the four main
        players in the market (Otis, tkE, Schindler and Kone). It considers that new owners
        and new management for tkE may modernise the industry and bring new
        opportunities also for other market players such as the Company”46.
(55)    As bearings seem to be largely commoditised products with multiple applications,
        they can be supplied to customers in various industries. If Rubix’ competitors lost
        potential sales it would be doubtful that this would impact their competitiveness,
        given that they could keep selling to all alternative customers, not only in escalator
        repair and maintenance but in all other sectors requiring bearings.
(56)    In addition, any customer foreclosure concerns would most likely be mitigated by
        the transaction structure, namely the fact that Advent would share control over tkE
        with Cinven. If Advent had any incentive to favour Rubix over other suppliers,
        Cinven would have an incentive for tkE to continue sourcing its supply of the
        products offered also by Rubix from the most competitive suppliers in terms of price
        and quality.
(57)    Therefore, it is unlikely that customer foreclosure will arise from the transaction in
        relation to the markets for the repair and maintenance services for escalators in
        Austria, Croatia, Denmark, France, Germany, Hungary, Netherlands, Norway, Spain
        and Sweden.
(58)    In light of the considerations in paragraphs (38) to (57) above as well as all evidence
        available to it, the Commission considers that, the Transaction will not give rise to
        serious doubts as to its compatibility with the internal market or the functioning of
        the EEA Agreement due to vertical non-coordinated effects under any plausible
        market definition.
44  Form CO, paragraph 142.
45  Minutes of call with MRO provider, 19 May 2020, paragraph 17; Minutes of call with MRO provider,
    14 May 2020, paragraph 19; Minutes of call with Bearings Supplier, 15 May 2020, paragraph 13.
46 Minutes of call with MRO provider, 13 May 2020, paragraph 15.
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 ---pagebreak--- 6.   CONCLUSION
(59) For the above reasons, the European Commission has decided not to oppose the
     notified operation and to declare it compatible with the internal market and with the
     EEA Agreement. This Decision is adopted in application of Article 6(1)(b) of the
     Merger Regulation and Article 57 of the EEA Agreement.
                                                   For the Commission
                                                   (Signed)
                                                   Margrethe VESTAGER
                                                   Executive Vice-President
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