CELEX: 32021M10118
Language: en
Date: 2021-03-19 00:00:00
Title: Commission Decision of 19/03/2021 declaring a concentration to be compatible with the common market (Case No COMP/M.10118 - INVESTINDUSTRIAL / GUALA CLOSURES) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                               Brussels, 19.03.2021
                                                               C(2021) 1971 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                                                                 information omitted has been replaced by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.
                                                               Special Packaging Solutions Investments
                                                               S.à.r.l.
                                                               23, Avenue Monterey
                                                               2163 Luxembourg
                                                               Grand Duchy of Luxembourg
Subject:            Case M.10118 – Investindustrial/Guala Closures
                    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 17 February 2021, the European Commission received notification of a proposed
          concentration pursuant to Article 4 of the Merger Regulation by which Special
          Packaging Solutions Investments S.à.r.l. (‘SPSI’ or the ‘Notifying Party’,
          Luxembourg), controlled by Investindustrial S.A. (‘Investindustrial’, Luxembourg),
          acquires within the meaning of Article 3(1)(b) of the Merger Regulation sole control
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’).
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---         over Guala Closures S.p.A. (‘Guala’, Italy) (the ‘Transaction’).3 SPSI and Guala are
        referred to hereinafter as the ‘Parties’.
1.      THE PARTIES
(2)     SPSI is an independently managed investment subsidiary of Investindustrial.
        Investindustrial is active in the management of investment, holding and financial
        advisory companies mainly operating in the following sectors: consumer and leisure,
        healthcare and services and industrial manufacturing. Amongst Investindustrial’s
        portfolio companies, Benvic SAS (‘Benvic’) develops, produces and markets
        PVC-based thermoplastic solutions in the form of powders and compounds that are
        used across a wide range of end-applications, including the production of PVC liners
        for bottle closures.
(3)     Guala is active in the production of bottle closures made from different materials,
        such as metal, aluminium, plastic and recyclable materials and for a variety of end-
        uses, including for spirits, wine, oil and vinegar, water and other beverages.
2.      THE CONCENTRATION
(4)     The Transaction is realised through a series of acquisitions of shares taking place in
        and outside the stock market and a public bid on Guala’s ordinary shares, which will
        lead to Investindustrial acquiring all outstanding Guala shares.
(5)     Investindustrial is in the process of acquiring Guala’s shares with the goal of
        reaching just under 30% of the voting rights in Guala, the level at which Italian law
        requires the launch of a mandatory tender offer. Moreover, Investindustrial has
        entered into various agreements to purchase further shares in Guala that would bring
        it to hold 40.8% of the voting rights in Guala (and 45.5% of Guala’s share capital).
        The acquisition of these further shares would likely lead to Investindustrial having
        de facto control over Guala because, based on the attendance level to Guala’s recent
        shareholders meetings, Investindustrial would have the majority of the voting rights
        at such meetings. The acquisition of these additional shares has not been completed
        and is subject to several conditions, including clearance by the European
        Commission. Once Investindustrial would hold at least 30% of the voting rights in
        Guala,4 it will launch a public tender offer to acquire the remaining outstanding
        share capital in Guala.
3.      UNION DIMENSION
(6)     The undertakings concerned have a combined aggregate worldwide turnover of more
        than         EUR          5 000        million5       (Investindustrial:        EUR […] million;
        Guala: EUR 605.5 million). Each of the undertakings concerned has an EU-wide
        turnover in excess of EUR 250 million (Investindustrial: EUR […] million;
        Guala: EUR […] million) and they do not achieve more than two-thirds of their
3   Publication in the Official Journal of the European Union No C 65, 25.2.2021, p. 14–15.
4   Currently, Investindustrial holds approximately […]% of Guala’s voting rights.
5   Turnover calculated in accordance with Article 5 of the Merger Regulation and the Commission
    Consolidated Jurisdictional Notice (OJ C 95, 16.4.2008, p. 1).
                                                          2
 ---pagebreak---          aggregate EU-wide turnover within one and the same Member State. The
         Transaction therefore has an EU dimension.
4.       RELEVANT MARKETS
(7)      The Transaction does not give rise to horizontal overlaps.
(8)      There is a vertical link in the EEA between the upstream activities of one of
         Investindustrial’s portfolio companies, Benvic, which is active in the manufacture
         and supply of suspension PVC (‘S-PVC’) compounds, and Guala’s downstream
         activities in the manufacture and supply of aluminium closures.6
4.1.     Relevant product markets
4.1.1. Manufacture and supply of S-PVC compounds (upstream)
(9)      Investindustrial is active in the manufacture and supply of gelled and dry blend S-
         PVC compounds that are used to produce PVC liners. These are obtained by
         blending additives (such as pigments, stabilisers or plasticisers) with S-PVC and are
         further processed to produce PVC end-products. In particular, S-PVC compounds
         are sourced by Guala as an input in the production of PVC liners, which are used to
         manufacture some of Guala’s aluminium closures. Guala uses PVC liners to avoid
         any contact between the liquid and the bottle cap, which ensures the preservation and
         protection of the liquid contained in the bottle and prevents oxygenation.
4.1.1.1. The Notifying Party’s view
(10)     The Notifying Party submits that it is possible to identify a single market for the
         manufacture and supply of S-PVC compounds, without distinguishing between
         gelled and dry blend S-PVC compounds. However, given the very limited vertical
         relation between the Parties, the Notifying Party submits that it is not necessary to
         define the exact scope of the market for the purpose of the Transaction.7
6   Investindustrial is also marginally active in the manufacture and supply of thermo plastic elastomers
    (‘TPE’) compounds which are an input used in certain closures. Guala uses […] TPE compounds in the
    production of […] closures. In 2020, Guala’s purchases of TPE for use in the EEA amounted to […].
    Moreover, Investindustrial has only recently become active in the production of TPE and estimates its
    share to be below [0-5]% at EEA, regional and national level. Therefore, the potential vertical relationship
    between TPE and […] closures will not be further discussed in this decision. Investindustrial and Guala
    are also active in two markets that are to some extent related. Namely, Investindustrial, through its
    subsidiary Della Toffola, is active in the manufacture of capping machines used to fix closures onto
    beverage bottles. Della Toffola has de minimis sales of capping machines in the EEA (EUR […] million)
    and holds an estimated share well below [0-5]% at the EEA level under all plausible market definitions.
    Therefore, the potential relationship between capping machines and closures will not be further discussed
    in this decision.
7   Form CO, para. 106.
                                                         3
 ---pagebreak--- 4.1.1.2. Previous cases and Commission’s assessment
(11)    In past decisions, the Commission defined a separate market for the manufacture and
        supply of S-PVC compounds.8 The Commission left open a possible segmentation of
        this market into dry blend compounds and gelled compounds.9
(12)    Because the Transaction does not raise serious doubts as to its compatibility with the
        internal market under any plausible product market definition, it can be left open for
        the purpose of this case whether the market for the manufacture and supply of
        S-PVC compounds constitutes a single market or whether distinct markets should be
        identified for dry blend compounds and gelled compounds.
4.1.2. Manufacture and supply of closures (downstream)
(13)    Guala is active in the manufacture and supply of closures for beverages and food. In
        particular, Guala produces aluminium closures for wine and other beverages that use
        PVC liners produced with gelled and dry blend S-PVC compounds. Guala is
        moreover active in the manufacture and supply of non-refillable closures that use
        valves or internal devices to make difficult the counterfeiting of beverages. Figure 1
        – Example of Guala’s roll-on aluminium closures for wine bottlesshows an example of
        Guala’s aluminium closures for wine bottles.
                   Figure 1 – Example of Guala’s roll-on aluminium closures for wine bottles
                Source: Guala’s catalogue for aluminium closures for wine bottles (available at
       https://www.gualaclosures.com/wp-content/uploads/2013/02/ESE-Guala-Brochure english.pdf)
8   See Cases M.4734 - Ineos/Kerling, para. 41; M.6218 - Ineos/Tessenderlo Group S-PVC Assets, para. 73;
    M.7132 - Ineos/Doeflex, para. 10; and M.7572 - Og Capital/Kem- One Innovative Vinyls, para. 15.
9   See Cases M.4734 - Ineos/Kerling, paras. 40-41; M.6218 - Ineos/Tessenderlo Group S-PVC Assets,
    para. 73; M.7132 - Ineos/Doeflex, paras. 10-15; and M.7572 - Og Capital/Kem- One Innovative Vinyls,
    paras. 15-17.
                                                         4
 ---pagebreak--- 4.1.2.1. The Notifying Party’s view
(14)    The Notifying Party submits that all closures belong to the same product market
        without the need for further segmentations based on their material (metal,
        aluminium, plastic, etc.), intended use (food and beverages, cosmetics and
        fragrances, pharma, etc.) or degree of sophistication (safety closures and regular
        closures).10
4.1.2.2. Previous cases and Commission’s assessment
(15)    In past decisions, the Commission distinguished separate product markets depending
        on the closures’ (i) material; and (ii) end-use. In particular, concerning the closures’
        material, the Commission previously found a separate market for metal crown
        closures, on the one hand, and aluminium and threaded plastic crowns, on the other
        hand.11 It also considered, although ultimately left open, a further segmentation of
        the latter market into aluminium closures, on the one hand, and plastic closures, on
        the other hand.12 With regard to the closures’ end-use, the Commission’s precedents
        also concluded that closures for beverages constitute a separate market and left open
        further segmentations for other end-uses.13 Some Commission precedents also
        considered that separate markets may exist based on a combination of the closures’
        material and end-use (e.g., plastic beverage closures or aluminium beverage
        closures).14
(16)    In the present case, the market investigation suggests that it may be appropriate to
        distinguish closures made from different materials and, in particular, that aluminium
        and plastic closures may belong to separate markets. Several market participants
        have indicated that closures made of plastic, on the one hand, and aluminium, on the
        other, are not in direct competition with one another and that different production
        lines are normally used to manufacture them.15
(17)    Concerning the segmentation of the closures’ market per end-use, the market
        investigation suggests that, as regards aluminium closures, there is a strong supply
        side substitutability and aluminium closures made for different end-uses are
        generally all manufactured on the same production lines. The main differentiating
        factor among aluminium closures is the measurement of the bottleneck in which the
        closure will be inserted. In this regard, production lines may, easily and in a short
        period of time, be adapted to produce closures of different height and width such as
        narrower and longer aluminium closures for wine bottles or wider and shorter
10  Form CO, paras. 111 and 113.
11  See Cases M.2843 - Amcor/Schmalbachlubeca, para. 24, M.6665 - Sun Capital/Rexam Personal and
    Home Care Packaging Business, paras. 21-23, M.603, Crown Cork & Seal/CarnaudMetalbox,
    paras. 32-36.
12  See Cases M.2843 - Amcor/Schmalbachlubeca, para. 24, M.6665 - Sun Capital/Rexam Personal and
    Home Care Packaging Business, paras. 21-23, M.603, Crown Cork & Seal/CarnaudMetalbox,
    paras. 32-36.
13  See Case M.603, Crown Cork & Seal/CarnaudMetalbox, paras. 32-36; M.6665 - Sun Capital/Rexam
    Personal and Home Care Packaging Business, paras. 23-24.
14  See Case M.603, Crown Cork & Seal/CarnaudMetalbox, paras. 34-36.
15  See minutes of the calls with global competitors of Guala of 25 February 2021 (para. 4) and 4 March 2021
    (para. 7).
                                                          5
 ---pagebreak---         aluminium closures for spirits.16 This has also been confirmed by Guala, […].17 On
        the contrary, one manufacturer of cork closures has suggested the existence of a
        separate market for closures for wine bottles since, in its view, all closures for wine
        bottles compete for the same bottlenecks, irrespective of the material they are
        made of.18
(18)    In any event, because the Transaction does not raise serious doubts as to its
        compatibility with the internal market under all plausible market definitions, it can
        be left open for the purpose of this case whether the market for the manufacture and
        supply of aluminium closures constitutes a separate market from other types of
        closures. It can moreover be left open whether it is appropriate to consider a
        segmentation of closures on the basis of their end-use.
4.2.    Relevant geographic markets
4.2.1. Manufacture and supply of S-PVC compounds (upstream)
(19)    The Notifying Party submits that, while there is no need to define the exact scope of
        the market in this case, the geographic dimension of the market is at least EEA-wide.
(20)    In previous decisions, the Commission considered, although ultimately left open,
        whether the market is EEA-wide or regional in scope.19
(21)    Nothing in the market investigation has called into question the Commission’s
        previous decision-making practice as regards the geographic definition of the
        relevant market. Because the Transaction does not raise serious doubts as to its
        compatibility with the internal market under all plausible market definitions, it can
        be left open for the purpose of this case whether the geographic scope of this market
        is EEA-wide or regional.
4.2.2. Manufacture and supply of closures (downstream)
(22)    The Notifying Party agrees with the previous Commission decisions20 finding that
        the market for the production and supply of closures is at least EEA-wide if not
        worldwide.21
16  See minutes of the calls with global competitors of Guala of 24 February 2021 (para. 7) and 4 March 2021
    (para. 9).
17  See response to RFI 2 to Guala, question 2.
18  See minutes of the call with a global competitor of Guala of 24 February 2021 (para. 6).
19  See Cases M.4734 - Ineos/Kerling, para. 153; M.6218 - Ineos/Tessenderlo Group S-PVC Assets,
    paras. 23-26; M.7132 - Ineos/Doeflex, paras. 16-21; M.7572 - Og Capital/Kem One Innovative Vinyls,
    paras. 18-22.
20  See Cases M.2843 - Amcor/Schmalbachlubeca, paras. 31-32, M.6665 - Sun Capital/Rexam Personal and
    Home Care Packaging Business, para. 47, M.603, Crown Cork & Seal/CarnaudMetalbox, para. 50.
21  Form CO, para. 115.
                                                          6
 ---pagebreak--- (23)   This definition is supported by the market investigation, which suggests that the
       market for the manufacture and supply of closures is at least EEA-wide.22 This is
       particularly the case for aluminium closures, which are generally sold across the
       EEA.23
(24)   Because the Transaction does not raise serious doubts as to its compatibility with the
       internal market under all plausible market definitions, it can be left open for the
       purpose of this case whether the geographic scope of this market is EEA-wide or
       broader.
5.     COMPETITIVE ASSESSMENT
(25)   The activities of Guala and those of Investindustrial do not give rise to any
       horizontal overlap. However, the Transaction gives rise to a vertical link in the EEA
       between: (i) the activities of one of Investindustrial’s portfolio companies, Benvic,
       which is active upstream in the manufacture and supply of gelled and dry blend S-
       PVC compounds; and (ii) Guala’s downstream activities in the manufacture and
       supply of aluminium closures. In particular, as mentioned above, Guala purchases
       gelled and dry blend S-PVC compounds24 and […] process them into PVC liners.
       The resulting PVC liners are then used by Guala in the production of some of its
       aluminium closures for beverages, including beers, wines and, in some cases,
       spirits.25
(26)   Investindustrial’s shares for the manufacture and supply of S-PVC compounds are
       well below 30% under all plausible market definitions. Likewise Guala’s shares are
       below 30% for the production of aluminium closures (across all end-uses) as well as
       for the production of closures for specific end-uses (across all materials). Therefore,
       on this basis, the Transaction does not give rise to vertically affected markets.
(27)   The Transaction would give rise to vertically affected markets only if the segment of
       aluminium closures for wine bottles is considered, because in this segment Guala
       would hold a share of [30-40]%26 in the EEA in 2019.27
(28)   The Notifying Party submits that the vertical relationship between S-PVC
       compounds and aluminium closures does not raise competition problems for the
       following reasons: (i) Investindustrial’s S-PVC compounds are only indirectly in a
       vertical relationship with aluminium closures; (ii) Investindustrial’s S-PVC
       compounds are not an important input for the closures market, since the use of PVC
       in the food sector is declining, to the benefit of liners made from other materials;
       (iii) Guala is a very small customer of S-PVC compounds; and (iv) Investindustrial
22 See minutes of the calls with global competitors of Guala of 24 February 2021 (para. 9) and 4 March 2021
   (para. 10).
23 See minutes of the calls with global competitors of Guala of 25 February 2021 (para. 7) and 4 March 2021
   (para. 10).
24 Guala […] purchases gelled S-PVC compounds. The Parties however were not in a position to provide
   estimated shares for the market of gelled S-PVC compounds.
25 Response to RFI 2 to Guala, question 2.
26 Guala would hold a share of [30-40]% in an EEA market including the UK.
27 Form CO, Table 22 and response to RFI 2 to SPSI, Table 3.2.
                                                         7
 ---pagebreak---         is not an important supplier of S-PVC compounds for the production of closures,
        which constitute a […].28
(29)    According to the Non-Horizontal Merger Guidelines, foreclosure occurs when actual
        or potential rivals’ access to supplies or markets is hampered, thereby reducing those
        companies’ ability and/or incentive to compete. Such foreclosure may discourage
        entry or expansion of rivals or encourage their exit.29 The Non-Horizontal Merger
        Guidelines distinguish between two forms of foreclosure: input foreclosure occurs
        where the merger is likely to raise the costs of downstream rivals by restricting their
        access to an important input, while customer foreclosure occurs where the merger is
        likely to foreclose upstream rivals by restricting their access to a sufficient customer
        base.30
(30)    Three conditions need to be met post-merger in order for concerns about potential
        foreclosure to arise: (i) the merged entity needs to have the ability to foreclose its
        rivals;31 (ii) the merged entity needs to have the incentive to foreclose its rivals;32
        and (iii) the foreclosure strategy needs to have a significant detrimental effect on the
        parameters of competition on the downstream market (input foreclosure)33 or have
        an adverse impact in the downstream market and harm consumers (customer
        foreclosure).34 In practice, these factors are often examined together since they are
        closely intertwined.
5.1.    Input foreclosure
5.1.1. Ability
(31)    The Commission considers that the merged entity would not have the ability to
        engage in input foreclosure post-Transaction. This is for the following reasons.
(32)    First, Investindustrial […]. Investindustrial […].35
(33)    Second, as shown in Table 1 below, Investindustrial holds at the EEA-level a share
        of approximately [10-20]% in the production of overall S-PVC compounds and faces
        competition from a number of sizeable competitors (including Ineos, Westlake,
        MCPP, Begra, Mexichem and Anvil).36 Therefore, should Investindustrial engage in
        an input foreclosure strategy, a high number of potential suppliers of S-PVC
        compounds would remain, to which Guala’s competitors could resort.
28  Form CO, paras. 169 to 172.
29  Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of
    concentrations between undertakings (‘Non-Horizontal Merger Guidelines’), OJ C 265/6, 18.10.2008,
    para. 29.
30  Non-Horizontal Merger Guidelines, para. 30.
31  Non-Horizontal Merger Guidelines, paras. 33 to 39 and 60 to 67.
32  Non-Horizontal Merger Guidelines, paras. 40 to 46 and 68 to 71.
33  Non-Horizontal Merger Guidelines, paras. 47 to 57.
34  Non-Horizontal Merger Guidelines, paras. 72 to 77.
35  Form CO, para. 97.
36  Form CO, Table 15.
                                                        8
 ---pagebreak---  ---pagebreak--- 5.2.    Customer foreclosure
(41)    It appears unlikely that post-Transaction the merged entity would have the ability to
        foreclose access to downstream markets. In this regard, Guala represents only […] of
        the total demand for S-PVC compounds in the EEA40 and, as such, there would be
        sufficient alternative customers for suppliers of S-PVC compounds to sell their
        products. It follows that a customer foreclosure strategy, if implemented post-
        Transaction, would not have an appreciable effect on Investindustrial’s competitors
        for the supply of S-PVC compounds. This appears all the more true considering that
        pre-Transaction Guala was already purchasing […]% of its demand for S-PVC
        compounds from Investindustrial.41
(42)    As a consequence, the Commission considers that the merged entity is unlikely to
        engage in a customer foreclosure strategy post-Transaction.
5.3.    Conclusion on vertical effects
(43)    For the reasons set out above and in light of the results of the market investigation
        and of all the evidence available, the Commission concludes that the Transaction
        does not raise serious doubts as to its compatibility with the internal market as
        regards the vertical relationship between the upstream manufacture and supply of
        S-PVC compounds and the downstream manufacture and supply of closures.
6.      CONCLUSION
(44)    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
40  Form CO, Table 24 and response to RFI 2 to SPSI, question 3.
41  Response to RFI 1 to Guala, question 1.
                                                       10