CELEX: 32021M10157
Language: en
Date: 2021-04-21 00:00:00
Title: Commission Decision of 21/04/2021 declaring a concentration to be compatible with the common market (Case No COMP/M.10157 - AURUBIS / TSR RECYCLING / JV) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                Brussels, 21.4.2021
                                                                C(2021) 2956 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                                                                  possible the information omitted has been
                                                                  replaced by ranges of figures or a general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.
                                                                Aurubis AG
                                                                Hovestraße 50
                                                                20539 Hamburg
                                                                Germany
                                                                TSR Recycling GmbH & Co. KG
                                                                Brunnenstraße 138
                                                                44536 Lünen
                                                                Germany
Subject:             Case M.10157 – Aurubis/TSR Recycling/JV
                     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 March 2021, the European Commission received notification of a proposed
           concentration pursuant to Article 4 of the Merger Regulation by which Aurubis AG,
           (“Aurubis”, Germany) and TSR Recycling GmbH & Co. KG (“TSR”, Germany),
           intend to acquire within the meaning of Articles 3(1)(b) and 3(4) of the Merger
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 (the ‘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---          Regulation joint control of newly incorporated joint venture (“the JV”, Germany)
         (the ‘proposed transaction’).3 Aurubis and TSR are designated hereinafter as the
         'Notifying Parties' and Aurubis, TSR and the JV as the ‘Parties’.
1.         THE PARTIES
(2)      Aurubis is a vertically integrated worldwide provider of non-ferrous metals and one
         of the main copper producers in Europe. The core business of Aurubis is the
         production of copper cathodes from copper concentrates and copper scrap.
         Furthermore, Aurubis processes copper cathodes into wire rods and shapes.
(3)      TSR, belonging to Remondis SE & Co. KG (Germany), ultimately controlled by
         Rethmann SE & Co. KG (Germany), is active in trading and processing secondary
         raw material (mainly scrap) for steel producers and the foundry industry. TSR
         collects, stores and processes metal, including ferrous and non-ferrous metal scrap,
         and to a limited extent electronic scrap. Moreover, TSR offers waste disposal
         services and environmental services.
(4)      The JV is intended to be active in cable scrap recycling. The Notifying Parties plan
         to pool their own cable dismantling facilities at Fehrbellin (Aurubis’ subsidiary
         CABLO Metall Recycling & Handel GmbH, “Cablo”) and Gelsenkirchen (TSR).
         The JV’s output will be copper scrap no. 1 (used for direct melt), copper scrap no. 2
         and copper scrap used for smelting and refining (“CSSR”), as well as aluminium
         granules and marginal quantities of lead and cast iron chips. The cable processing
         plant in Fehrbellin has a capacity of […]t/a cable scrap and the plant in
         Gelsenkirchen has a capacity of […]t/a cable scrap in total, this is to say […]t/a
         regarding Line 1 and […]t/a regarding Line 2, a new production line which will
         extend capacity as from 2022. From the cables, the JV will extract approximately
         […]t/a copper granules with different qualities.4
      i.          TSR will provide approximately […]t/a ([…]%) of the JV’s total inputs of
                  […]t/a in cables scrap. TSR will continue to provide […]% of the scrap
                  copper cable to the plant in Gelsenkirchen and TSR’s overall supplies will
                  represent approximately […]% of the JV’s total input volumes. TSR will
                  increase its supplies to the plant in Fehrbellin from […]% in 2019 to […]%
                  of the JV’s copper cable scrap input, whereas third parties will supply [90-
                  100]% of aluminium cable scrap.
     ii.          Aurubis will purchase approximately […]% of the JV’s output volume in
                  2021; notably Aurubis will buy […]% of copper scrap no.2 and CSSR, the
                  other output materials will be mainly sold to third parties. Copper scrap no.2
                  and CSSR are currently mainly produced in Fehrbellin. […], Aurubis will
                  purchase approximately […]% of the JV’s total output.5
3   Publication in the Official Journal of the European Union No C 93, 19.3.2021, p. 36.
4   Form CO, paragraphs 19 and 29.
5   Form CO, paragraph 84.
                                                          2
 ---pagebreak--- 2.         THE CONCENTRATION
(5)      The joint venture agreement (“JVA”) was executed on 13 November 2020.
2.1.       Joint control
(6)      Under the JVA, Aurubis holds [40-50]% and TSR [60-70]% of the shares in the JV.
         As a rule, shareholders’ resolutions are passed with a majority of more than […]%.
         However, the shareholders’ meeting shall pass resolutions [….] on a number of
         strategic decisions,6 which gives Aurubis de facto veto rights on strategic decisions
         on business policy and decisions on budget, the business plan, major investments as
         well as the appointment of senior management. 7 The Notifying Parties will therefore
         jointly control the JV.
2.2.       Full-Functionality
(7)      The JV will be responsible for day-to-day operations, with a dedicated management,
         and will be autonomous in operational respect. The parents will transfer their own
         plants for dismantling and processing cable scrap in Fehrbellin, Cablo and in
         Gelsenkirchen (owned by TSR), including staff, to the JV. Moreover, the JV will be
         equipped with equity (EUR […] million) and will receive shareholder loans from
         Aurubis and TSR (EUR […] million), as well as loans from banks, as specified in
         the JVA.8 Therefore the JV will have access to sufficient resources including
         finance, staff, and assets (tangible and intangible) to conduct the business activities
         of the two plants.9
(8)      The JV will buy inputs from and sell to its parents, but it will nonetheless have an
         active role on the market and will be economically autonomous from an operational
         point of view.10
(9)      With regard to the proportion of sales made to its parents (compared with the total
         production of the JV), the JV will not exclusively depend on its parents. The JV will
         have business relations with third parties for at least […]% of its sales11 (Aurubis
         will purchase approx. […]% of the JV’s total output in 2021, and approx. […]% as
         of 2022).
(10)     Even if sales to one of the parent companies will be […], this does not remove the
         full-functional character of the JV, since those sales will be commercial in character
         and done on an arm’s length basis (commercial terms will be based on standard
         market terms and therefore on arm’s length; contracts will be based on market
6    Adoption and binding declaration of the business plan including the budge t; appropriation of the
     company’s profit, collection of payments on the capital contributions assumed by the shareholders;
     adoption of resolutions in the appointment and dismissal of managing directors as well as on their
     discharge; acquisition or disposal of assets with a market value exceeding EUR […]; and business policies
     and strategy of the company as well as any changes in this respect.
7    Form CO, paragraphs 71 et seq.
8    Reply to request for information 3 of 21 April 2021. See also Annex 3.1.3 to th e Form CO in Sections 6.2.
     and 6.3.
9    Form CO, paragraph 80.
10 Commission Consolidated Jurisdictional Notice under Council Regulation (EC) No 139/2004 on the
     control of concentrations between undertakings (“CJN”), OJ C 95, 16.4.2008, p. 1-48, paragraph 98.
11 Form CO, paragraph 83.
                                                           3
 ---pagebreak---         standards e.g., LME copper price, treatment and refining charges, quality and
        penalties for impurities, deliveries etc.; the contracts’ duration will be […] years and
        will subsequently be re-negotiated; and the JV’s supply and sales will be in
        competition to other market participants).12 The purchase of inputs from its parent
        companies will also be done under normal commercial conditions. TSR will supply
        the plant in Gelsenkirchen with input materials, primarily copper cable scrap at
        market-standard terms and on an arm’s-length basis. The plant in Fehrbellin will
        continue purchasing copper cable scrap and aluminium cable scrap from third parties
        (which will account for approximately […]% of its inputs), in addition to receiving
        supplies from TSR.13 The JV will therefore be fully functional.
2.3.      Conclusion
(11)    Therefore, the Commission concludes the proposed transaction constitutes a
        concentration within the meaning of the Merger Regulation since the JV will
        perform on a lasting basis all the functions of an autonomous economic entity.
3.        UNION D IMENSION
(12)    The undertakings concerned have a combined aggregate world-wide turnover of
        more than EUR 5 000 million (TSR (Rethmann Group): EUR […] million; Aurubis:
        EUR […] million).14 Each of them has a Union-wide turnover in excess of EUR 250
        million (TSR (Rethmann Group): […] EUR million; Aurubis: EUR […] million),
        and they do not achieve more than two-thirds of their aggregate Union-wide turnover
        within one and the same Member State. The proposed transaction therefore has a
        Union dimension within the meaning of Article 1(2) of the Merger Regulation.
4.        M ARKET DEFINITION
(13)    The area of recycling ferrous and non-ferrous metals involves various activities
        including the collection of scrap, its trade and its processing for further supply
        downstream to smelters and refiners.
(14)    The proposed transaction mainly involves the area of copper scrap recycling from
        end-of-life cables from used electronic devices, appliances, buildings and vehicles.
(15)    At the top of the value chain, scrap collectors, like TSR, and traders (intermediaries
        not involved in collection nor recycling) collect, process and trade cables (primarily
        end-of-life cables but also some industrial scrap) for dismantling.
(16)    At the intermediary level, cable dismantlers, like the JV, remove the plastic coating
        of these end-of-life cables (which is reused or discarded as waste) and process and
        recuperate copper scrap in the form of granules.
(17)    Downstream, smelters and refiners of copper scrap, like Aurubis, source the copper
        granules from dismantlers to produce pure copper in the form of cathodes. Unlike
12   Form CO, Section 3.
13   Form CO, paragraph 82.
14 Turnover calculated in accordance with Article 5 of the Merger Regulation.
                                                         4
 ---pagebreak---         other copper scrap where trade takes place directly between collectors/traders
        upstream and smelters downstream, copper cables require the intermediary step in
        which dismantlers remove the plastic. “Dismantling” is different from “processing”
        for the purpose of this decision: dismantling describes the removal of plastic from
        cables, whereas processing describes less technically complex treatment of all types
        of scrap, such as sorting and shredding.
(18)    On the demand side, Aurubis’ market share for copper scrap exceeds 30% in the
        markets for copper scrap no.2 and CSSR in the EEA, which leads to two vertically
        affected markets as the JV will be active in the upstream market for copper cable
        dismantling.
(19)    On the basis of these considerations, the Commission will analyse the following four
        markets: the market for the collection and processing of copper scrap, the market for
        copper cable dismantling and the markets for the demand for copper scrap no.2 and
        CSSR respectively.
4.1.       Market for the collection and processing of metal scrap
(20)    Scrap metal is provided by various companies, including large industrial companies,
        scrap metal suppliers, commercial firms, local authorities and private customers.
        Suppliers store their scrap metals, production residue and faulty batches and then
        have it recuperated by collecting companies, such as TSR, processed (sorted and
        shredded) and sold directly to refiners and smelters, or – in the case of cables –
        transported to dismantling facilities who remove the plastic components and sell the
        metal components of the cables to smelters and refiners.
4.1.1.     Product market
4.1.1.1. The Commission’s decisional practice
(21)    The Commission has in the past identified a market for trade in metal scrap, which it
        has divided into a separate market for trade in (i) ferrous scrap and a separate market
        for trade in (ii) non-ferrous scrap.15 Within the market for non-ferrous scrap, the
        Commission also considered potential sub-segments for trade in (a) aluminium
        scrap, (b) copper scrap and (c) zinc scrap, but left this open in most cases,16 also
        noting that suppliers are flexible in collecting and trading different types of metal
        scrap.17
(22)    In previous decisions, the Commission considered whether, within the overall
        market for trade in metal scrap, the market segment for collecting and processing
        constitutes a separate market or whether the collection, processing and trade of
        processed metal belong to one single market, but ultimately left the question open. 18
15   See e.g. COMP/M.5714 – Scholz/Scholz Austria/Kovosrot, paragraph 8, COMP/M.4469 –
     Scholz/Voestalpine/Scholz Austria, paragraphs 10, COMP/ECSC.1358 – Scholz/Alba/Elsa.
16 See e.g. COMP/M.5714 – Scholz/Scholz Austria/Kovosrot, paragraph 8; COMP/M.4469 –
     Scholz/Voestalpine/Scholz Austria, paragraph 13.
17 COMP/M.4469 – Scholz/Voestalpine/Scholz Austria, paragraph 13.
18 COMP/M.5714        – Scholz/Scholz Austria/Kovosrot, paragraph 9, COMP/M.4495 – Alfa
     ACCIAI/Cronimet/Remondis/ TSR Group, paragraphs 16 et seq.
                                                         5
 ---pagebreak--- 4.1.1.2. The Notifying Parties’ view
(23)    The Notifying Parties consider the market for copper scrap to include all trading
        activities in copper scrap on the supply and demand side. 19
4.1.1.3. The Commission’s assessment
(24)    First, as to the question whether a distinction between different types of metals is
        warranted, a majority of respondents in the market investigation agreed with the
        Commission’s practice to distinguish the market segment for collecting, processing
        and trading ferrous scrap from the market segment for collecting and processing and
        trading non-ferrous scrap.20 Respondents explained that different recycling
        technologies such as shredding and separating machines are needed in ferrous and
        non-ferrous scrap recycling respectively. There are also differences in the
        importance of logistic costs and the networks necessary to conduct business.
        Moreover, customer groups and market dynamics are different. For instance, in
        ferrous scrap markets, price-setting mechanisms are driven by supply and demand of
        steel companies, while prices for non-ferrous scrap are set by the London Metal
        Exchange (LME).21 Therefore, for the purposes of this decision, a distinction should
        be made between the markets for collecting, processing and trading ferrous scrap
        from the market segment for collecting, processing and trading non-ferrous scrap.
(25)    Second, within non-ferrous scrap, a majority of respondents who gave their views on
        whether the market for the collection, processing and trading of non-ferrous scrap
        should be further sub-segmented, argued for a further sub-segmentation between
        copper and aluminium.22 Those who explained their view argued that customers and
        consumers are different. One respondent also noted that “copper scrap is mainly
        used in the limited application at downstream market more than aluminum. A market
        of aluminum downstream has more wide application.”23 According to another
        respondent, “different product know-how and different networks/access to customers
        is required. In addition, even though many traders trade all types of scrap, the
        "specialists" (e.g. only aluminium) often trade the largest volumes which is an
        indication for the segmentation.”24 This indicates that different types of non-ferrous
        scrap might constitute separate markets in the market for collection, processing and
        trading.
(26)    Third, as to the question whether a further distinction applies between the activities
        of collecting and processing on the one hand and trading on the other hand, a
        majority of respondents supports a broad market definition with respect to metal
        recycling in general.25 According to a respondent, “collecting and processing always
        includes trading of metals (the regained granules through recycling have to be
19  Form CO, paragraph 138.
20  Replies to question 4 of the eQuestionnaire.
21  Replies to question 4.1 of the eQuestionnaire.
22  Replies to question 4.1 of the eQuestionnaire.
23  Replies to question 4.1 of the eQuestionnaire.
24  Replies to question 6.1 of the eQuestionnaire.
25  Replies to question 5 of the eQuestionnaire.
                                                   6
 ---pagebreak---         traded/sold)”. Other respondents noted that many companies in the Union collect
        scrap, process and trade it within the same business unit. 26
(27)    Fourth, the Commission also investigated whether a sub-segmentation for cables as
        opposed to other types of scrap might be warranted for the purposes of this decision.
        However, none of the replies in the market investigation indicated that cables and
        other scrap constitute separate sub-segments of the market for collection, processing
        and trading of scrap.
(28)    For the purpose of this decision, the Commission considers that the exact product
        market definition for the non-ferrous scrap market can be left open, as the proposed
        transaction does not raise serious doubts as to its compatibility with the internal
        market or the functioning of the EEA Agreement under any plausible market
        definition (as under wider market definitions both market shares and market power
        would be even lower), whether the market is (i) sub-segmented by type of non-
        ferrous scrap or (ii) sub-segmented by activity (between collecting and processing on
        the one hand and trading on the other hand). In conclusion, in line with the
        Commission’s precedents and the findings of the market investigation, for the
        purposes of this decision, the Commission will analyse the narrowest plausible
        market which is the market for the collection and processing of copper scrap.
4.1.2.    Geographic market
4.1.2.1. The Commission’s decisional practice
(29)    The Commission found the market for trade in metal scrap and its sub-segments to
        be at least EEA-wide and possibly worldwide.27
(30)    As regards the geographic scope of the market for collecting and processing of metal
        scrap, the Commission indicated that the geographic dimension is smaller than that
        of the trading market. It left open whether the markets are national or regional, in
        particular with respect to collection activities, which might only take place within a
        catchment radius (of approximately 200 km) of each facility.28
4.1.2.2. The Notifying Parties’ view
(31)    The Notifying Parties submit that the geographic market for the collection and
        processing of non-ferrous scrap (including sub segments) is EEA-wide. The
        Notifying Parties submit that the distances that the scrap is transported by the
        collecting and processing companies depend on the location of the companies, the
        density of customers and collection points in the regional area, the transport
        connection, the means of transport and the availability of a suitable return freight.
        Moreover, the transport distances also depend on the weight and the composition of
        scrap. Depending on market conditions and market reality, scrap is regularly also
        collected over distances of more than 200-300 km. Moreover, the transport costs for
26  Replies to question 5.1 of the eQuestionnaire.
27  See e.g. COMP/M.5714 – Scholz/Scholz Austria/Kovosrot, paragraph 11, COMP/M.4781 –Norddeutsche
    Affinerie/Cumerio, paragraphs 25 et seq., COMP/M.6541 –Glencore/Xstrata, paragraphs 246 et seq.,
    COMP/M.4469 –Scholz/Voestalpine/Scholz Austria, paragraphs 14 and 15.
28 COMP/M.5714         –     Scholz/Scholz    Austria/Kovosrot, paragraph    11,    COMP/M.4469   –
    Scholz/Voestalpine/Scholz Austria, para. 15; COMP/ECSC.1358 – Scholz/Alba/Elsa.
                                                        7
 ---pagebreak---         different distances do not differ significantly from each other and scrap can be
        transported easily over long distances.29
4.1.2.3. The Commission’s assessment
(32)    The market investigation was inconclusive whether the market for collection and
        processing of copper scrap (including cables) should be defined as regional, national
        or EEA-wide.30 A majority of respondents in the market investigation replied that
        companies active in the collection of copper cables collect throughout Germany as
        well as other EEA Contracting Parties.31 Prices for copper cable scrap are broadly
        the same across at least Germany, with some minor differences reflecting transport
        costs.32 However, several replies indicated that collection usually takes place within
        a radius that grows and shrinks depending on the copper price. In fact, it appears that
        copper cables may be transported over shorter distances than other types of copper
        scrap, as a market participant explained: “As copper cables consist of about 60%
        plastic waste it is not economical to transport them over large distances.”33
(33)    A majority of respondents also replied that they trade copper scrap, including cables,
        for dismantling in all of Germany as well as in other European countries.34 Transport
        costs play an important role, which means that copper scrap and cables are
        transported over longer distances when the copper price is higher and shorter
        distances when the copper price is lower.35
(34)    In conclusion, in line with the Commission’s precedents and the findings of the
        market investigation, the geographic market definition can be left open, as the
        proposed transaction does not raise serious doubts as to its compatibility with the
        internal market or the functioning of the EEA Agreement under any plausible
        geographic market definition. No affected markets arise regardless of whether (i) the
        market for collection and processing of copper scrap is defined as regional (within
        catchment areas of 200 km), national or EEA-wide and whether (ii) the market for
        trade in copper scrap is defined as national, EEA-wide or worldwide.36 Given some
        concerns by market participants related to the market for collection of copper scrap,
        the Commission will analyse the market for collection and processing of copper
        scrap at regional, national and EEA-wide level.
29  Form CO, paragraph 129.
30  Replies to question 9.1 of the eQuestionnaire. “Smaller companies tend to buy more regionally. Larger
    and traditionally supra-regional companies (such as TSR, EMR, Nordschrott) are buying throughout
    Germany and abroad also.” “Collection of copper cables is a more regional/lo cal market whereas
    dismantling can be national or even international. Then larger the company then more international its
    sourcing of material will be. Depending on the type of cable and the supply and demand situation prices
    may vary internationally.”
31  Replies to question 9 of the eQuestionnaire.
32  Replies to question 11 of the eQuestionnaire.
33  Reply to question 9.1 of the eQuestionnaire.
34  Replies to question 12 of the eQuestionnaire.
35  Replies to question 9.1 of the eQuestionnaire. “The higher the price of scrap metal, the less transport
    costs matter, but generally transport costs are an important factor influencing the decision how far from
    the dismantling facility cables for dismantling are collected.”
36  The proposed transaction does not lead to affected markets if a separate market for trade in copper scrap is
    considered (TSR’s market share is [0-5]% at worldwide level, [0-5]% EEA-wide and [5-10] % in
    Germany, see Form CO table 8). Therefore this market will not be further discussed in this dec ision.
                                                           8
 ---pagebreak--- 4.2.       Market for copper cable dismantling
(35)     Cable dismantling plants receive end-of-life-cables from collectors and traders.
(36)     They then use various types of shredding and cutting systems in order to separate the
         different qualities of ferrous and non-ferrous metals from the other cable materials
         (e.g. removing the outer layer of plastic and recovering the copper content, usually in
         the form of granules).
(37)     The recycled raw materials are purchased downstream by steelworks, smelters and
         foundries, or by metal scrap traders who, in turn, resell the inputs for further
         processing.
4.2.1.     Product market
4.2.1.1. The Commission’s decisional practice
(38)     The Commission has not yet considered a separate market for copper cable
         dismantling.
4.2.1.2. The Notifying Parties’ view
(39)     The Notifying Parties consider that there is a separate market for copper cable
         dismantling, which is distinct from the market for CSSR, and distinct from
         aluminium cable dismantling. The Notifying Parties submit that cable dismantling
         requires special equipment and know-how. It is only after dismantling that cables
         can be recycled and provided for metallurgical processes further down the value
         chain. Therefore, not all market players active in the copper scrap market also buy
         copper cable scrap for dismantling, but only cable dismantling companies.37
4.2.1.3. The Commission’s assessment
(40)     The market investigation supports the Notifying Parties’ view that the dismantling of
         copper cables constitutes a separate product market, distinct from the collection,
         processing and trading of other copper scrap.38 Some respondents explained that not
         every processor can dismantle copper cables, as dismantling requires special
         equipment and facilities.39
(41)     The results of the market investigation also supported the Notifying Parties’
         argument that copper cable scrap for dismantling constitutes a separate market from
         CSSR. A majority of respondents view these as not interchangeable or
         substitutable.40 In the words of a respondent, “the scrap for dismantling requires a
         processing step (shredding/sorting) that the smelters typically do not have in-house”
         and although copper granules derived from copper cable scrap are the same material
         as can be derived from copper scrap other than cables, “refiners typically do not buy
         cable scrap but only the dismantled granulates.”41 A few respondents also argued
         that market entry is relatively easy in the market for collection and processing of
37   Form CO, paragraph 146.
38   Replies to question 8 of the eQuestionnaire.
39 Replies to question 8.1 of the eQuestionnaire.
40 Replies to question 7 of the eQuestionnaire.
41 Replies to question 7.1 of the eQuestionnaire.
                                                    9
 ---pagebreak---          scrap, but that more complex recycling steps (such as dismantling) make it more
         difficult to enter the market for cable dismantling.42
(42)     The Commission considers that for the purposes of analysing the markets involved
         in cable recycling, a distinction between collection and processing on the one hand
         and dismantling on the other hand is warranted, as cable collectors collect and
         process all types of scrap and cable dismantlers are much more specialised and only
         dismantle cables, and in consequence, only some scrap collectors also offer cable
         dismantling, which translates into different competitive dynamics in these two
         markets.
(43)     Therefore, in line with the Notifying Parties’ submission and the findings of the
         market investigation, for the purposes of this decision, the Commission will analyse
         the impact of the proposed transaction on a separate market for copper cable
         dismantling.
4.2.2.     Geographic market
4.2.2.1. The Commission’s decisional practice
(44)     The Commission has not yet considered a separate market for copper cable
         dismantling.
4.2.2.2. The Notifying Parties’ view
(45)     The Notifying Parties consider the market for copper cable dismantling to be
         worldwide, given that cable scrap can be transported over long distances due to the
         high value of metals contained in the cables, demonstrated by the high export
         volumes of copper cable scrap from the Union.43
4.2.2.3. The Commission’s assessment
(46)     In the market investigation, a majority of respondents replied that companies active
         in the dismantling of copper cables source copper cables at an at least national level,
         often also in other EEA contracting parties.44
(47)     The Commission’s           investigation showed that in recent years, copper cables were
         only collected and        traded within the EEA, since China and other South East Asian
         countries imposed         an import ban on different types of waste, including cables.45
         Before this import         ban, exports of end-of-life cables, in particular to China, were
         significant.
42  Replies to question 4.1 of the eQuestionnaire. “The market for the collection of scrap needs to be
    distinguished from the market for the processing of scrap. While market entry to the former is relatively
    easy and accordingly a lot of small and medium size players offer collec tion services, market entry to the
    latter is relatively difficult because processing (if it consists in more than mere manual sorting) requires
    equipment and thus capital, know-how, staff and access to purchasers of processed scraps. For this
    reason the suppliers of processing services are often also active as collectors but not the other way
    around.”
43 Form CO, paragraph 150.
44 Replies to question 10 of the eQuestionnaire.
45 Call with a market participant on 11 February 2021.
                                                             10
 ---pagebreak--- (48)     In conclusion, in line with the Notifying Parties’ submission and the findings of the
         market investigation, the geographic market definition can be left open between
         national and EEA-wide, as the proposed transaction does not raise serious doubts as
         to its compatibility with the internal market or the functioning of the EEA
         Agreement under any plausible market definition.
4.3.        Market for copper scrap products
4.3.1.      Product market
4.3.1.1. The Commission’s decisional practice
(49)     As for the demand-side of the market for copper scrap, the Commission found in
         Aurubis/Metallo Group Holding that a further segmentation of the market for copper
         scrap by purity grade is warranted. The Commission found distinct markets for (i)
         copper scrap for direct melt (copper scrap no.1), (ii) copper scrap no. 2, (iii) copper
         scrap for smelting and refining (“CSSR”) and (iv) e-scrap.
(50)     Copper scrap no.1 comprises scrap that is not used for the production of cathodes,
         but is melted directly into products further down the copper value chain, such as
         copper rod and copper shapes. Its copper content is particularly high and it is
         generally more expensive and follows a different price setting formula. 46
(51)     Copper scrap no. 2 is defined as scrap with copper content of 94%-96% and with
         little or no non-metallic impurities.47
(52)     CSSR comprises different types of copper scrap materials, which are non-standard
         and require special metallurgical know-how and equipment to process, and therefore
         is highly differentiated in terms of material composition and origin.48
(53)     E-scrap is copper scrap from electronic equipment, consists mainly of printed circuit
         boards and is always low grade.49 The JV will not be active in e-scrap.
4.3.1.2. The Notifying Parties’ view
(54)     While they do not generally contest the Commission’s market definition practice, the
         Notifying Parties submit that their purchases of copper cable scrap do not form part
         of the purchasing side of the CSSR market, but constitute a separate market (see
         Section 4.2.1.2).
4.3.1.3. The Commission’s assessment
(55)     The findings of the market investigation were in line with the findings of the
         Commission in Aurubis/Metallo Group Holding: a majority of respondents
         considered that copper scrap and copper concentrate are not substitutable from a
46   COMP/M.9409 – Aurubis/Metallo Group Holding, para. 159 et seq.
47   COMP/M.9409 – Aurubis/Metallo Group Holding, para. 166 et seq.
48 COMP/M.9409 – Aurubis/Metallo Group Holding, para. 159 et seq.
49 COMP/M.9409 – Aurubis/Metallo Group Holding, paras. 166 et seq. Since the JV will not be active in e-
     scrap, no overlaps or vertical relationships arise from the proposed transaction. Therefore, this market will
     not be further discussed in this decision.
                                                            11
 ---pagebreak---         demand-side point of view, or at least not completely interchangeable, as is the case
        for copper scrap no. 1, copper scrap no. 2 and CSSR.50
(56)    In line with the Commission’s precedents and the submission of the Notifying
        Parties, the Commission considers it appropriate to analyse the markets under the
        narrowest plausible product market definition, as the proposed transaction does not
        raise serious doubts as to its compatibility with the internal market or the functioning
        of the EEA Agreement under any plausible market definition (as under wider market
        definitions both market shares and market power would be even lower). The
        Commission will therefore consider separately the markets for (i) copper scrap no.1,
        (ii) copper scrap no.2 and (iii) CSSR.
4.3.2.     Geographic market
4.3.2.1. The Commission’s decisional practice
(57)    Specifically, the Commission found the markets for copper scrap no. 2 and CSSR to
        be EEA-wide.51 As for the market for copper scrap no.1, the Commission did not
        assess its geographic scope in Aurubis/Metallo Group Holding. In previous decisions
        which analysed a broader product market including all copper scrap, the
        Commission found such market for copper scrap or secondary copper products to be
        at least EEA-wide and in some cases worldwide. 52
4.3.2.2. The Notifying Parties’ view
(58)    In the opinion of the Notifying Parties the geographic scope of the market for copper
        scrap no.1 is worldwide.53 In the Notifying Parties’ view, the markets for copper
        scrap no. 2 and CSSR are worldwide due to the intensive international copper scrap
        trade.54
4.3.2.3. The Commission’s assessment
(59)    As for the buyers of copper scrap such as Aurubis, a majority of respondents buy
        copper scrap (no.1, copper scrap no.2 and CSSR) in the EEA or worldwide.55 From
        the point of view of Aurubis and its competitors, transport costs of copper scrap play
        a role when the material is purchased outside the EEA. Although Aurubis and its
        competitors do not pay the transport costs themselves, the relation between transport
        costs and metal price determine how far suppliers will transport the copper scrap, as
        some participants in the market investigation explained. 56
(60)    In line with the Commission’s precedents and the submission of the Notifying
        Parties, the Commission considers it appropriate to analyse the markets under the
        narrowest plausible geographic market definition, as the proposed transaction does
50  Replies to question 7 of the eQuestionnaire.
51  COMP/M.9409 – Aurubis/Metallo Group Holding, paras. 250 et seq. and 333 et seq.
52  See e.g. COMP/M.6541 – Glencore/Xstrata, paragraphs 246 et seq,                 COMP/M.4469 –
    Scholz/Voestalpine/Scholz Austria, paragraphs 14, 15.
53  Form CO, paragraph 158.
54  Form CO, paragraph 214.
55  Replies to question 13 of the eQuestionnaire.
56  Replies to question 13.2 of the eQuestionnaire.
                                                        12
 ---pagebreak---          not raise serious doubts as to its compatibility with the internal market or the
         functioning of the EEA Agreement under any plausible market definition (as under
         wider market definitions both market shares and market power would be even
         lower). In conclusion, for the purposes of this decision, the relevant markets are the
         EEA-wide or worldwide market for demand for copper scrap no.1,57 and the EEA-
         wide markets for copper scrap no.2 and CSSR.
5.         COMPETITIVE ASSESSMENT
(61)     The proposed transaction gives rise to two vertically affected markets, as Aurubis’
         market share as a purchaser in the downstream market for two types of copper scrap
         exceeds [30-40]% in the EEA: [30-40]% with regard to copper scrap no. 2 and [30-
         40]% with regard to CSSR. The upstream market is the market for copper cable
         dismantling, where the JV is active with an expected market share at national level
         of [10-20]% and [0-5]% at EEA level.
(62)     A further vertical relationship resulting from the proposed creation of the JV can be
         found between the upstream market for the collection and processing of copper
         scrap, where TSR is active and the downstream market for copper cable dismantling,
         where the JV will be active. In the market investigation, some participants voiced
         concerns that the Parties might foreclose access of copper scrap collectors to the
         cable dismantling facilities of the JV. Some cable dismantlers and scrap traders
         voiced concerns that TSR might stop supplying them with cables.
(63)     However, this market is not technically affected, as TSR’s market share in the
         upstream market for collecting and processing copper scrap, TSR’s market share was
         [0-5]% EEA-wide, [5-10]% in Germany, [10-20]% in a 200 km radius around
         Fehrbellin and [5-10]% in a 200 km radius around Gelsenkirchen.58 In the
         downstream market, the JV’s expected market share will be [10-20]% in the German
         market and [0-5]% in an EEA-wide market. In light of the concerns raised, the
         vertical relationships will nevertheless be discussed below.
5.1.       Legal test for the assessment of vertical effects
(64)     The legal test for the assessment of vertical effects is set out in the Merger
         Regulation. In addition, the Commission will base its assessment on the principles
         set out in the Guidelines on the assessment of non-horizontal mergers (‘Non-
         Horizontal Merger Guidelines’).59
(65)     A vertical merger may result in anti-competitive effects due to foreclosure.
         Foreclosure concerns a situation where actual or potential rivals’ access to supplies
57   TSR’s market share on the supply side amounted to [0-5]% worldwide and [0-5]% EEA-wide in 2019.
     The JV’s market share on the supply side is expected to be [0-5]% worldwide and [0-5]% EEA-wide. On
     the demand side, Aurubis reached a market share of [0-5]% worldwide and [0-5]% EEA-wide in 2019.
     (Form CO, paragraph 208). Therefore, no affected markets arise for copper scrap no.1, so this market will
     not be further discussed in this decision.
58 Response to RFI 2 of 9 April 2021.
59 Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of
     concentrations between undertakings (OJ C 265, 18.10.2008, p. 6)
                                                        13
 ---pagebreak---         or markets is hampered or eliminated as a result of the vertical merger, thereby
        reducing these companies’ ability and/or incentive to compete. 60
(66)    Two forms of foreclosure can be distinguished in a vertical relationship: input and
        customer foreclosure:
(67)    Input foreclosure arises where, post-transaction, the new entity would be likely to
        restrict access to the products or services that it would have otherwise supplied to
        downstream competitors, thereby raising its downstream rivals’ costs by making it
        harder for them to obtain supplies of the input under similar prices and conditions as
        absent the vertical merger.61 For input foreclosure to be a concern, the vertically
        integrated firm resulting from the merger must have a significant degree of market
        power in the upstream market. Only in such a case can the merged firm be expected
        to have a significant influence on the conditions of competition in the upstream
        market and, in consequence, potentially on prices and supply conditions in the
        downstream market.62 By reducing access to its own upstream products or services,
        the merged entity would only have the ability to foreclose downstream competitors if
        it could negatively affect the overall availability of inputs for the downstream market
        in terms of price or quality. This might happen in case the remaining upstream
        suppliers are less efficient, or lack the ability to expand output in response to the
        supply restriction, for example because they face capacity constraints.63
(68)    Customer foreclosure may occur when a supplier integrates with an important
        customer in the downstream market. Because of this downstream presence, the
        integrated company may foreclose access to a sufficient customer base to its actual
        or potential rivals in the upstream market (the input market) and reduce their ability
        or incentive to compete. This in turn may raise downstream rivals’ costs as obtaining
        supplies of the input under similar prices and conditions as absent the vertical
        merger might become more difficult.64 For customer foreclosure to be a concern, the
        vertical merger must involve a company which is an important customer with a
        significant degree of market power in the downstream market. If, on the contrary,
        there is a sufficiently large customer base, at present or in the future, that is likely to
        turn to independent suppliers, the Commission is unlikely to raise competition
        concerns on that ground.65
(69)    The Non-Horizontal Merger Guidelines note that Commission is unlikely to find
        concern in non-horizontal mergers where the market share post-merger of the new
        entity in each of the markets concerned is below [30-40]% and the post-merger HHI
        is below 2 000.66
5.2.      The Notifying Parties’ view
(70)    The Notifying Parties submit that no customer foreclosure or input foreclosure
        concerns arise as a result of the proposed transaction.
60   Non-Horizontal Merger Guidelines, paragraph 29.
61   Non-Horizontal Merger Guidelines, paragraph 31.
62   Non-Horizontal Merger Guidelines, paragraph 35.
63   Non-Horizontal Merger Guidelines, paragraph 37.
64   Non-Horizontal Merger Guidelines, paragraph 58.
65   Non-Horizontal Merger Guidelines, paragraph 61.
66   Non-Horizontal Merger Guidelines, paragraph 25.
                                                     14
 ---pagebreak--- (71)    First, Aurubis and TSR have insignificant customer and supplier relationships and
        exchanges are limited to small quantities of mainly non-ferrous metals.67
(72)    Second, sufficient competitors who purchase copper cable scrap and recycle copper
        cable scrap remain active in the market. In Germany, these competitors include
        Zirec, KMR, Alba, Loacker, Lewandowski, Zimmer, Schrott-Bosch, MVM, Phönix,
        SK-Metals, MKV-Nordenham and Prossmann. In the EEA, examples include KMT,
        SMK, GP-Eco, Gruba, Manera Silvio SRL, Nexans, Suez, Salzburger
        Metallverwertung and Recytel.68
(73)    Third, the JV is not an important provider of an essential input product for Aurubis.
        The JV will supply approximately […]% of all copper scrap sourced by Aurubis per
        year.69 Even under a further segmentation of the market for copper scrap, the JV as a
        supplier has a marginal position on all plausible segments (below […]%).70
(74)    Fourth, a sufficient number of suppliers remain active on the market from which
        copper processing companies can purchase copper scrap no. 1, copper scrap no. 2
        and CSSR.71 The Notifying Parties estimate that copper cable recyclers who will
        compete with the JV generally have spare capacity, on average roughly 10-20%. In
        addition to long-term contracts and thus have medium-term planning capability, a
        part of the existing capacities is reserved for spot business, so that copper cable
        dismantlers can promptly react to changes in the copper price, also by introducing
        additional night and weekend shifts. 72
(75)    Fifth, CSSR, copper scrap no. 2 and copper scrap no. 1 are recycled not only from
        copper cable scrap, but from various sources and types of copper scrap. This means
        that not only the JV, but all cable dismantlers as suppliers of scrap are easily
        substitutable from the perspective of the demand side. 73
(76)    Finally, scrap volumes, which need to be processed in the EEA, continue to rise and
        will further expand the involved markets in the upcoming years.74
5.3.      The Commission’s assessment
5.3.1.    No customer foreclosure in relation to copper scrap no.2 and CSSR
(77)    The Commission         considers that the Parties will not have the ability or incentive to
        foreclose access       to customers of copper scrap no.2 and CSSR for other cable
        dismantlers, nor      would a foreclosure strategy have a significant detrimental effect,
        for the following     reasons:
(78)    First, although Aurubis is the largest buyer of copper scrap no.2 and CSSR in the
        EEA, its market shares in 2019 were [30-40]% for copper scrap no.2 and [30-40]%
67   Form CO, paragraph 199.
68   Form CO, paragraph 199.
69   Form CO, paragraph 199.
70   Form CO, paragraph 246.
71   Form CO, paragraph 199.
72   Response to request for information 1 of 29 March 2021.
73   Form CO, paragraph 246.
74   Form CO, paragraph 39.
                                                         15
 ---pagebreak---         for CSSR. This leaves copper cable dismantlers the possibility to sell to Aurubis’
        competitors which represent nearly [60-70]% of demand for copper scrap no.2 and
        nearly [60-70]% of demand for CSSR.
(79)    Second, cable dismantlers would have a number of different alternative customers to
        which they could switch in case Aurubis stopped buying from them. Although the
        main competitors in the EEA are relatively small compared to Aurubis, each with
        market shares below 10% in terms of demand in the last three years, there is
        nevertheless a number of them with an appreciable size. In addition, a number of
        these main competitors is active on the market: Brixlegg, Boliden, KGHM and
        Atlantic Copper are the main buyers for copper scrap no.2 and Brixlegg, Boliden,
        KGHM are the main buyers for CSSR. A large share of demand for copper scrap
        no.2 and CSSR is accounted for by exports to non-EU countries.75 Moreover, the
        market investigation indicated that there are sufficient buyers of copper cable
        scrap.76 Therefore, it is unlikely that the Parties would have the ability to foreclose
        access to customers for copper scrap no.2 and CSSR.
(80)    Third, Aurubis could not exclusively rely on the JV and TSR to source copper scrap,
        as the JV will only be able to provide […]% of Aurubis’ needs ([…]% of its needs
        for copper scrap no.2 and […]% of its needs for CSSR).77 Although scrap volumes
        might continue to rise, the Parties have no plans to expand the JV’s capacity in the
        coming years apart from the planned ramp-up of Line 2 in Gelsenkirchen, a new
        production line which will result in extended capacity, but has already been included
        in the expected output of the JV. The JV will first aim at fully utilising this new
        capacity in addition to the already existing capacities.78 Even once line 2 in
        Gelsenkirchen is in full operation, Aurubis will have to continue buying the vast
        majority of its copper scrap needs (ca. […]%) from other dismantlers, and the very
        small proportion of copper scrap that it will acquire from the JV will not
        substantially alter its current market position vis a vis other cable dismantlers.
        Therefore, it is unlikely that the Parties would have the incentive to foreclose access
        to customers for copper scrap no.2 and CSSR.
(81)    Fourth, also in the future, it is unlikely that the Parties would have the incentive to
        foreclose access to copper scrap no.2 and CSSR for Aurubis’ competitors, as it
        would require a significant investment in the JV’s capacity. The market investigation
        was inconclusive regarding the Notifying Parties’ claim that the involved markets
        are likely to grow in the coming years. 79 Rather, the market investigation suggested
        that the market dynamics are uncertain. Some participants expect some growth in the
        short-term because higher availability of end-of-life cables and because of higher
        demand due to the electrification in several sectors, especially automotive. On the
        other hand, if China’s import restrictions are lifted, European sites will probably
        have lots of spare capacity. Also, supply will depend on environmental regulations
        and demand may decrease due to alternative technologies available (e.g. glass fibre
        cables), and due to tighter requirements for plastic disposal. Some companies also
75  Annex 7 to the Form CO.
76  Replies to question 16 of the eQuestionnaire: […], etc.
77 Form CO, Table 21.
78 Form CO, paragraph 21.
79 Replies to question 21 of the eQuestionnaire.
                                                         16
 ---pagebreak---         pointed out to large fluctuations in the market in the past.80 Against this background,
        an investment to significantly increase the JV’s capacity beyond the planned ramp-
        up of Line 2 in Gelsenkirchen would appear to be unlikely.
(82)    Finally, even if the JV further increased its capacity in the future, any foreclosure
        attempt would incite other cable dismantlers to increase their capacity in order to
        offer dismantling services to the foreclosed market participants. The results of the
        market investigation indicate that barriers to entry in the market for the dismantling
        of copper scrap are relatively high, as cable dismantling requires special equipment,
        regulatory approvals, industrial know-how, experienced staff, and it takes more than
        one year to start operating.81 However, existing suppliers can expand their capacity
        more easily. In the market investigation, most companies expressed that currently
        excess capacity for copper cable dismantling in Europe is available. Some
        respondents noted that capacity was initially insufficient when China stopped
        sourcing cables in 2018, but that capacity has been adjusted by now. 82 Moreover, in
        response to the import ban on end-of-life cables by China, new capacity has been
        built in the EEA as well (e.g. in Poland and the Benelux countries), according to a
        respondent in the market investigation.83 This indicates that cable dismantlers are
        able to adjust capacity to changes in supply and demand. Therefore any customer
        foreclosure attempt by the JV would incite cable dismantlers to increase capacity in
        order to dismantle the cables collected by TSR’s competitors. Hence, it is unlikely
        that the Parties will have the ability or incentive to foreclose access to the JV as an
        expansion of capacity would incite competitors to react, leading to overall more
        available capacity which would be a procompetitive effect.
5.3.2.    No input foreclosure in relation to copper scrap no.2 and CSSR
(83)    The Commission considers that the Parties will not have the ability or incentive to
        foreclose access to inputs of copper scrap no.2 and CSSR for other smelters and
        refiners, nor would a foreclosure strategy have a significant detrimental effect, for
        the following reasons:
(84)    First, as outlined in paragraph (67), for input foreclosure to be a concern, the
        vertically integrated firm resulting from the merger must have a significant degree of
        market power in the upstream market, which is not the case here. The JV’s market
        share in copper cable dismantling is expected to be at [0-5]% EEA-level and [10-
        20]% in Germany. The Notifying Parties estimate the HHI for copper cable
        dismantling in the EEA to be [100-200] in the EEA and [300-400] in Germany.84 As
        the JV has no significant market power in the upstream market, although Aurubis
        plans to buy […]% of the JV’s output of copper scrap no.2 and CSSR, Aurubis’
        competitors would still have access to the JV’s competitors which represent [80-
        90]% of the market for copper cable dismantling in Germany and [90-100]% in the
        EEA.
80  Replies to question 21 of the eQuestionnaire.
81  Replies to question 18 and 18.1 of the eQuestionnaire.
82 Replies to question 20 of the eQuestionnaire.
83 Replies to question 18 of the eQuestionnaire.
84 Response to request for information 2 of 9 April 2021.
                                                         17
 ---pagebreak--- (85)    Second, the results of the market investigation indicated that there are numerous
        companies active in the dismantling of copper cables, even for the narrowest
        plausible geographic market limited to Germany,85 from which Aurubis’ competitors
        could source. In fact, only three competitors of Aurubis who replied to the market
        investigation currently source from the JV’s cable dismantling facilities, compared to
        eight who do not source from the JV. 86 All competitors of Aurubis who replied to the
        market investigation stated that they would still have sufficient supplies even in case
        Aurubis bought all output of copper scrap no.2 and CSSR produced by the JV. 87
        Therefore, although Aurubis plans to buy […]% of the JV’s output of copper scrap
        no.2 and CSSR produced by the JV, it is unlikely that the Parties would have the
        ability to foreclose the access to copper scrap no.2 and CSSR for its competitors, as
        the JV has no significant degree of market power in the upstream market.
(86)    Third, is not planned and unlikely that the JV further expands its capacity in the
        future, see paragraph (81).
(87)    Fourth, even in this unlikely case, such an expansion of capacity of the overall
        market would have a procompetitive effect, as explained in paragraph (82).
(88)    Finally, the market investigation moreover indicated that end-of-life cables only
        account for 30-40% of all copper scrap, so that the majority of copper scrap supply
        would not be significantly affected by changes in the market for copper cables
        dismantling.88 Therefore, a foreclosure strategy by the JV would not be successful,
        as Aurubis’ competitors would be able to buy copper scrap no.2 and CSSR from
        other cable dismantlers as well as copper scrap suppliers other than cable
        dismantlers.
5.3.3.    Conclusion on input and customer foreclosure in relation to copper scrap no.2 and
          CSSR
(89)    In view of the above, the Commission concludes that the proposed transaction does
        not raise serious doubts as to its compatibility with the internal market and the
        functioning of the EEA Agreement in relation to the vertical link between the
        national or EEA-wide market for copper cable dismantling upstream and the EEA-
        wide markets for copper scrap no.2 and CSSR downstream.
5.3.4.    No customer foreclosure in relation to copper cables dismantling
(90)    The Commission considers that the Parties will not have the ability or incentive to
        foreclose access to customers of copper cables for dismantling, i.e. cable
        dismantlers, for TSR’s competitors active in the collection and processing of copper
        scrap, nor would a foreclosure strategy have a significant detrimental effect, for the
        following reasons:
(91)    First, for customer foreclosure to be a concern, the company in the downstream
        market must have a significant degree of market power, as outlined in paragraph
        (68). This is not the case here, as the JV only has an [10-20]% market share at
85  Replies to question 15 of the eQuestionnaire: […], etc.
86  Replies to question 22 of the eQuestionnaire.
87 Replies  to question 22 of the eQuestionnaire.
88 Replies  to question 17 of the eQuestionnaire.
                                                         18
 ---pagebreak---         national level and [0-5]% at EEA level. The Notifying Parties estimate the HHI for
        copper cable dismantling in the EEA to be [100-200] in the EEA and [300-400] in
        Germany.89 As the JV has no significant market power in the downstream market,
        although TSR plans to increase its supplies of copper scrap to the JV, the JV’s
        competitors would still have access to the JV’s competitors which represent [80-
        90]% of the German market for copper cables dismantling and [90-100]% at EEA
        level.
(92)    Second, collectors of copper scrap would still have access to numerous other cable
        dismantlers (see paragraph (78)). Also, according to a majority of respondents in the
        market investigation, in case TSR became the exclusive supplier of copper cables of
        the JV, competitors of TSR would still have sufficient customers to which they could
        sell copper cables for dismantling.90
(93)    Third, TSR currently already supplies its cable dismantling facilities in
        Gelsenkirchen and will continue to do so post-transaction, so the proposed
        transaction does not have an impact on supply structures there. The Notifying Parties
        expect that the Fehrbellin dismantling facility will continue to retain its existing
        suppliers in the future, assuming that the commercial conditions remain unchanged.
        TSR’s share in supply of copper cables dismantling will be [40-50]%.91 Therefore, it
        is unlikely that the Parties would have the ability to foreclose access to customers for
        copper cable dismantling.
(94)    Fourth, it is not planned and unlikely that the JV further expands its capacity in the
        future, see paragraph (81).
(95)    Finally, even in this unlikely case, such expansion of capacity of the overall market
        would have a procompetitive effect, as explained in paragraph (82).
5.3.5.    No input foreclosure in relation to copper cables dismantling
(96)    The Commission considers that the Parties will not have the ability or incentive to
        foreclose access to inputs             of copper cables for dismantling for other cable
        dismantlers which compete with the JV, nor would a foreclosure strategy have a
        significant detrimental effect, for the following reasons:
(97)    First, as outlined in paragraph (67), for input foreclosure to be a concern, the
        vertically integrated firm resulting from the merger must have a significant degree of
        market power in the upstream market, which is not the case here. TSR’s market
        share in the upstream market for collecting and processing copper scrap, TSR’s
        market share was [0-5]% EEA-wide, [5-10]% in Germany, [10-20]% in a 200 km
        radius around Fehrbellin and [5-10]% in a 200 km radius around Gelsenkirchen. 92
        This leaves cable dismantlers the possibility to buy from TSR’s competitors, which
        represent nearly [90-100]% of the market even at the narrowest plausible geographic
        market definition.
89  Response to request for information 2 of 9 April 2021.
90  Replies to question 24 of the eQuestionnaire.
91 Form CO, paragraph 82 and 83.
92 Response to RFI 2 of 9 April 2021.
                                                         19
 ---pagebreak--- (98)    Second, the market investigation showed that there are numerous companies offering
        the collection and processing of copper cables even in Germany,93 as well as at local
        level.94 In the EEA and Germany, TSR’s main competitors in the area of collecting
        copper scrap are Scholz Recycling (with approx. [0-5]% market share at EEA level
        and approx. [0-5]% in Germany), DEUMU (with approx. [0-5]% at EEA-level and
        approx. [0-5]% in Germany) and European Metals Recycling (approx. [5-10]% at
        EEA-level and approx. [0-5]% in Germany). Other competitors are Derichebourg (at
        EEA-level, with approx. [0-5]%) and Alba (in Germany, with approx. [0-5]%).95
        Considering a 200 km radius around Fehrbellin, the main competitors of TSR with
        regard to collecting and processing copper scrap are Alba (approx. market share of
        [5-10]%), Theo Steil (approx. market share of [5-10]%) and KMR Kabelmetall-
        Recycling (approx. market share of [0-5]%). Considering a 200 km radius around
        Gelsenkirchen, main competitors of TSR and Remondis with regard to collecting
        and processing copper scrap are Siegfried Jacob Metallwerke (approx. market share
        of [0-5]%), Müller & Sohn (approx. market share of [0-5]%) and Grafenberg-Metall
        (approx. market share of [0-5]%). Furthermore, a large number of smaller
        competitors is active both at national and regional level. TSR’s competitors do not
        appear to be less efficient (see paragraph (67)), or to lack the ability to expand output
        in response to the supply restriction. The Notifying Parties confirmed that the
        storage capacities for copper scrap of TSR do not differ significantly from other
        competitors.96 Therefore, it is unlikely that the Parties would have the ability to
        foreclose access to inputs for copper cable dismantling.
(99)    Third, it is unlikely that TSR would have an incentive to stop supplying competitors
        of the JV, given that the JV’s capacity only allows it to offtake a small fraction of the
        cables TSR collects. Therefore, other buyers of copper cables scrap for dismantling
        will continue to have sufficient suppliers, including TSR and various other
        competitors.
(100) Fourth, it is not planned and unlikely that the JV further expands its capacity in the
        future, see paragraph (81). The Commission also investigated whether TSR is likely
        to increase its capacity and upstream market share. The results of the market
        investigation show that entry barriers in the market for collection and processing of
        cables are low. A majority of respondents considered entry “relatively easy”,
        explaining that requirements for entry are limited to a licence, basic infrastructure
        and some knowledge of the market.97 Therefore, the Commission considers that a
        significant increase in TSR’s market share is unlikely in the short term.
(101) Finally, even in the unlikely case that the JV further expands its capacity, such
        expansion of capacity of the overall market would have a procompetitive effect, as
        explained in paragraph (82). Therefore, a future foreclosure strategy would not have
        a significant detrimental effect on competition in the market.
93  Replies to question 14 of the eQuestionnaire: […], etc.
94  Replies to question 14 of the eQuestionnaire, for the Fehrbellin area: […]; for the Gelsenkirchen area:
    […].
95 Response to request for information 2 of 9 April 2021.
96 Form CO, paragraph 14. Form CO, paragraph 258.
97 Replies to question 18 and 18.1 of the eQuestionnaire. “For the collection of cables you need a licence, a
    yard, a financial background and knowledge about product and market.” (Reply to question 18.1)
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 ---pagebreak--- 5.3.6.     Conclusion on input and customer foreclosure in relation to copper cables
           dismantling
(102) In view of the above, the Commission concludes that the proposed transaction does
         not raise serious doubts as to its compatibility with the internal market and the
         functioning of the EEA Agreement in relation to the vertical link between the
         regional, national or EEA-wide market for collection and processing of copper scrap
         upstream and the national or EEA-wide market for copper cable dismantling
         downstream.
5.3.7.     No conglomerate non-coordinated effects
(103) Pursuant to the Non-Horizontal Merger Guidelines, conglomerate mergers may lead
         to competition problem in the form of foreclosure effects. This may be the case when
         the combination of products in related markets may confer on the integrated
         company the ability and incentive to leverage a strong market position from one
         market to another closely related market by means of tying or bundling or other
         exclusionary practices. 98 In the context of the proposed transaction, the Parties might
         offer both cable collection and processing and dismantling as a bundle. However, the
         Commission considers that the proposed transaction is unlikely to lead to
         conglomerate effects. For the reasons outlined in Section 5.3.1 to 5.3.5, foreclosure
         effects do not arise. The Notifying Parties also confirmed that there are no other
         markets in which the proposed transaction may have a significant impact according
         to the definition in Section 6.4 of the Form CO.99
6.         CONCLUSION
(104) For the above reasons, the European Commission decides not to oppose the
         proposed transaction 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
98  Non-horizontal Merger Guidelines, paragraph 93.
99  Form CO, paragraph 249. Markets under Section 6.4 of the Form CO are markets where (i) any of the
    Parties has a market share larger than 30% and any other party to the concentration is a potential
    competitor into that market, (ii) any of the Parties has a market share larger than 30% and any other party
    to the concentration holds important intellectual property rights for that market, (iii) any of the Parties has
    a market share larger than 30% in neighbouring markets, i.e. markets for products which are
    complementary to each other/belong to a range of products gen erally purchased by the same set of
    customers for the same end use.
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