CELEX: 31996M0836
Language: en
Date: 1996-11-08 00:00:00
Title: COMMISSION DECISION of 08/11/1996 declaring a concentration to be compatible with the common market (Case No IV/M.836 - Gillette / Duracell) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31996M0836

COMMISSION DECISION of 08/11/1996 declaring a concentration to be compatible with the common market (Case No IV/M.836 - Gillette / Duracell) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 364 , 04/12/1996 P. 0004

 COMMISSION DECISION of 08/11/1996 declaring a concentration to be  compatible with the common market (Case No IV/M.836 - Gillette / Duracell)  according to Council Regulation (EEC) No 4064/89  (Only the English text is authentic) The paper version of the decision is available through the sales offices  of the Office of Official Publications of the European Communities. PUBLIC VERSION MERGER PROCEDURE ARTICLE 6(1)(b) DECISION Registered with advice of delivery To the notifying parties Dear Sirs, Subject :<ind> Case No IV/M.836  GILLETTE / DURACELL <ind> <ind> Notification of 04.10.1996 pursuant to Article 4 of Council  Regulation (EEC) No 4064/89 1.<ind> On 04.10.1996, the Commission received a notification of a  proposed concentration pursuant to Article 4 of Council Regulation (EEC)  No 4064/89 by which the undertaking The Gillette Company (Gillette) will  acquire sole control of the whole of Duracell International Inc.  (Duracell). According to the Agreement and Plan of Merger, a vehicle  company whollyowned by Gillette ("Alaska") will be merged with and into  Duracell, and cease immediately to exist. All shares in Duracell will then  be cancelled and converted into rights to receive new shares in Gillette.  As a result of the proposed operation, Duracell's largest current  shareholder (Kohlberg, Kravis, Roberts & Co.) will hold 7% of Gillette. 2.<ind> On 25.10.1996, the Commission decided provisionally, pursuant to  Articles 7(2) and 18(2) of Council Regulation (EEC) No 4064/89, to  continue the suspension of the whole of the proposed concentration, until  the adoption of a final decision. After complete examination of the  notification, the Commission has concluded that the notified operation  falls within the scope of Council Regulation (EEC) No 4064/89 and does not  raise serious doubts as to its compatibility with the common market and  with the functioning of the EEA Agreement. I.<tab> THE PARTIES' ACTIVITIES AND THE OPERATION 3.<ind> Gillette is a US internationally focused consumer products group,  currently active worldwide in the following main sectors: a) personal  grooming products (razors and razor blades, toiletries and cosmetics, oral  care products); b) stationery products (writing instruments like pens,  pencils, crayons, markers and highlighters); c) small electrical and  electronic appliances (including electric shavers and beardtrimmers, hair  care products, food processors, electric toothbrushes, irons and clocks).  The company is listed on the New York  Stock Exchange and its largest  shareholder is Berkshire Hathaway Inc. (controlled by Mr. Warren Buffett)  which holds a 11% common stock interest. 4.<ind> Duracell is a US company competing worldwide in the manufacture  and marketing of consumer batteries of any type and size. The company is  listed on the New York Stock Exchange and its largest shareholder is  Kohlberg, Kravis, Roberts & Co., a merchant banking firm which holds 34%. II.<ind> COMMUNITY DIMENSION  5.<ind> Gillette and Duracell have a combined aggregate worldwide turnover  in excess of ECU 5,000 million (Gillette, ECU 5,194.7 million; and  Duracell, ECU 1,775.3 million). Each of them has a Communitywide turnover  in excess of ECU 250 million  (Gillette, ECU 1,807.3 million; and  Duracell, ECU 463.4 million), but they do not achieve more than twothirds  of their aggregate Communitywide turnover within one and the same Member  State. The notified operation therefore has a Community dimension, but  does not constitute a cooperation case under the EEA Agreement, pursuant  to Article 57 of that Agreement. III.<tab>  COMPATIBILITY WITH THE COMMON MARKET <tab> A.<ind> Relevant product market 6.<ind> The notifying party states that there is a relevant product market  for the supply of consumer batteries, comprising a number of different  types and sizes of batteries (such as zinc carbon and alkaline general  purpose batteries, lithium round and button cells,nickel metal hydride and  nickel cadmium rechargeable batteries) all used to power different types  of consumer appliances. However, it is not necessary to further delineate  the relevant product markets because, even in the narrowest product market  definition the proposed operation would not significantly impede effective  competition in the EEA or any substantial part of that area. <ind> B.<ind> Relevant geographic market 7.<ind> The notifying party states that the relevant geographic market for  consumer batteries is (at least) Europeanwide. However, it is not  necessary further to delineate the relevant geographic markets because, in  all alternative geographic market definitions considered, effective  competition would not be significantly impeded in the EEA or any  substantial part of that area. <tab> C.<ind> Assessment  8.<ind> Since Gillette and Duracell are currently operating in unrelated  fields, the proposed concentration will not result in any horizontal nor  vertical overlap between their business activities. Therefore, however the  relevant market is defined in terms of both product and geographic  dimensions, there are no affected markets within the meaning of Form CO.  9.<ind> Duracell is the largest supplier of batteries in the EEA, with a  market share of between 30% and 40%, whereas its three main competitors  (Ralston Purina, Varta and Philips) account for an aggregate share of  between 40% and 50%. Gillette is by far the major supplier of razors and  razor blades in Europe, with market shares exceeding 50% and 70%  respectively. Warner Lambert and Bic are its main competitors. Within the  EEA, both Gillette and Duracell products are mostly sold direct to major  retail chains (such as Promodes, Intermarché, Kingfisher, Metro,  Carrefour, Rewe, Boots and Leclerc), whereas smaller retail outlets in  different areas are serviced mainly through wholesalers.  10.<ind> In view of the strong market positions already held by both  Gillette and Duracell in their respective businesses, and also taking into  account the fact that to a large extent their products are sold to the  same customers, the Commission has deemed it necessary to analyze the  likely competitive impact of the proposed concentration. In this respect,  the issue for consideration has been whether the combination of these two  leading manufacturers of branded fast moving consumer goods might unfairly  reduce third parties' legitimate opportunities of access to markets and  supplies. In particular, the Commission's main concern was related to the  possibility that the stronger joint negotiating power of Gillette and  Duracell might allow them to obtain from customers a privileged allocation  of selling spaces (especially at strategic locations such as at  supermarket checkout counters) to the detriment of their competitors'  products, thereby significantly restricting consumers' freedom of choice  in the long run. 11.<ind> With reference to the above mentioned issues, the parties' main  competitors, as well as a large number of customers throughout the  individual European countries, have been requested to provide information  on the likely consequences of the proposed operation.  Some competitors  have expressed concerns about the likely negative effect on their business  resulting from the strengthening of Gillette and Duracell's bargaining  power visàvis distributors and retailers. However, most customers have  pointed out that they do not expect any significant modification of either  their current purchasing conditions or retailing strategies following the  proposed acquisition. 12.<ind> In the light of this information, the Commission considers that  most customers remain able to face the strengthened bargaining power of  the merged undertaking. Moreover, the link between products of a different  nature currently supplied by Gillette and Duracell appears extremely  tenuous. Thus, there is insufficient evidence to conclude that the  notifying party would be capable of exercising influence on distribution,  to an extent which would have a significant adverse impact on competition.  <tab> Therefore, the Commission has concluded that the proposed  concentration <tab> does not <tab> <tab> <tab> <tab> <tab> <tab> <tab>  create or strengthen a dominant position as a result of which effective  <tab> competition would <tab> be significantly impeded in the EEA or any  substantial part of that <tab> area. IV.<ind> CONCLUSION 13.<ind> For the above reasons, the Commission has decided not to oppose  the notified operation and to declare it compatible with thecommon market  and with the functioning of the EEA Agreement. This decision is adopted in  application of Article 6(1)(b) of Council Regulation (EEC) No 4064/89. For the Commission,