CELEX: 32016M7862
Language: en
Date: 2016-01-14 00:00:00
Title: Commission Decision of 14/01/2016 declaring a concentration to be compatible with the common market (Case No COMP/M.7862 - TDR CAPITAL / EURO GARAGES) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

                                        Brussels, 14/01/2016
                                        C(2016) 214 final

                                        [pic]

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|To the notifying party:                      |                                                                         |

Dear Sir/Madam,

Subject:    Case M.7862 – TDR/ Euro Garages
         Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/2004[1] and Article 57 of the Agreement on the European
         Economic Area[2]

    1) On 1/12/2015, the Commission received a notification of a proposed concentration pursuant to Article  4  of  Council  Regulation  (EC)  No
       139/2004  by which the TDR Capital ("TDR", United Kingdom) acquires within the meaning of Article 3(1)(b) of the Merger Regulation control
       of Euro Garages ("Euro Garages", United Kingdom) by way of purchase of shares.

       THE PARTIES

    2) TDR is a private equity firm incorporated under the laws of England and Wales. TDR invests in a number of  sectors  such  as  motor  fuels
       retail, gyms and health clubs, conveyor  car  washes,  vacant  property  services,  UK  social  housing  refurbishment  services,  modular
       construction, pubs and restaurants, debt purchasing, logistic pallet return, coastal transport, life insurance and  UK  retirement  income
       products.

    3) Euro Garages (Jersey) Limited is a company incorporated in Jersey and currently owned by […] and […] (the "Founders") each of  whom  holds
       50% of its shares. Euro Garages (Jersey) Limited conducts its business through its subsidiary in the United Kingdom, Euro Garages  Limited
       ("Euro Garages").

    4) Euro Garages is an operator of forecourt services based in the United Kingdom. Euro Garages has a portfolio of 338 petrol filling stations
       mainly situated in high-density residential locations, business parks or on main/trunk roads carrying a high volume of passing traffic.

       THE OPERATION

    5) The proposed transaction consists in  acquisition  of  joint  control  over  Euro  Garages  (Limited)  Jersey  by  the  Founders  and  TDR
       ("Transaction"). Particularly, the Transaction will be carried out as follows:

a. the Founders will each sell their 50% shares in Euro Garages (Jersey) Limited to Bidco, a newly incorporated private  limited  company,  which
   will, following the Transaction, be the ultimate parent company of Euro Garages (Jersey) Limited;

b. Optima Group, ultimately beneficially owned by the investment funds managed by TDR, will be issued (i) […] of  non-voting  preference  shares,
   and (ii) […]; and,

c. the Founders will each hold 50% of the ordinary share capital in Bidco which will entitle each of them to […].

       THE CONCENTRATION

    6) Pursuant to the shareholders agreement entered into between the Founders and TDR, […]. Hence, the Commission concludes that the  agreement
       of both TDR and the Founders will be needed to resolve upon the strategic decision of Euro Garage and  therefore  both  exercise  decisive
       influence over it.

    7) In light of the foregoing, the transaction consists in the acquisition of  joint  control  over  Eurogarages  by  the  Founders  and  TDR.
       Therefore, the Transaction constitutes a concentration according to Article 3(1)(b) of the Merger Regulation.

       EU DIMENSION

    8) The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 000 million[3]  (TDR  EUR  […]  million,  Euro
       Garages EUR […] million). Each of them has an EU-wide turnover in excess of EUR 250 million (TDR EUR […] million,  Euro  Garages  EUR  […]
       million), but they do not achieve more than two-thirds of their aggregate EU-wide turnover within one  and  the  same  Member  State.  The
       notified operation therefore has an EU dimension.

       COMPETITIVE ASSESSMENT

    9) The activities of the portfolio companies managed by TDR do not horizontally overlap  with  the  activities  of  Euro  Garages,  with  the
       exception of the provision of car washing services, where both TDR, through its portfolio company "IMO", and Euro Garages are active.

   10) IMO’s key business is in the operation of 836 conveyor car washing sites in 12 European  countries  (mainly  in  Germany  and  the  United
       Kingdom) and in Australia and the USA. IMO has 271 conveyor car washing sites in the United Kingdom.

   11) Some of Euro Garages forecourts include the provision of car wash facilities. Euro Garages operates on its own accord (with the  exception
       of one of its sites at which the car wash is operated by a third party) both roll-over car washes and jet washes. One  or  both  of  these
       facilities are present at 140 of its United Kingdom sites (or approximately 40% of its sites in total). 57 of  Euro  Garages’  sites  have
       roll-over washes, 51 sites have jet washes, and 32 sites have both a roll-over and jet wash. In addition, a  small  number  of  additional
       Euro Garages sites have vacuum-only facilities (with no car wash).

1 Market definition

1 Product Market definition

   12) Commercial car washing can be distinguished from private hand car washing, and the prevalence of the latter largely depends on whether the
       relevant country has particularly stringent environmental regulations. While  commercial  hand  washing  is  of  limited  significance  in
       countries where environmental regulations are particularly stringent such as Germany, it is of  substantial  significance  in  the  United
       Kingdom where environmental regulations are less stringent.

   13) The Parties claim that car washing services constitute a separate product market and that this should not be further  segmented  according
       to the type of service.

   14) The Commission did not analyse this market in the past.

   15) The market investigation carried out broadly indicated that, with regards to the United Kingdom, hand car wash compete  on  equal  footing
       with automated car washes and customers tend to use both type of services alternatively. According to the competitors contacted, generally
       customers do not have a preference for one type of car wash over the other. Also, hand car wash and automatic car  wash  compete  for  the
       same costumers.

   16) Also, the market investigation – with reference to the UK market - indicated that in terms of pricing a basic hand car wash is  comparable
       to an automated car wash. However hand car wash provider may also provide additional services, such as washing the interior of a  vehicle,
       which increases the prices.

   17) With regards to a possible segmentation according to the type of automated car wash service offered (i.e. jet wash, roll over car  washes,
       conveyor car washes), the market investigation indicated that competitors offer a variety  of  services  at  their  location  and  do  not
       specialise in only one type. Also, in terms of prices, the various automated car wash services are comparable.

2 Geographic Market definition.

   18) The Notifying Party submits that the market for car washing services is national in scope for the following reasons:

a. First, there is prevalence in the car washing services market of national chains, such as large oil companies, or indeed other specialist  car
   wash companies, such as IMO;

b. Second, many car washing facilities  have  largely  overlapping  catchment  areas,  thereby  creating  “knock-on”  pricing  effects/chains  of
   substitution.

c. Third, for dedicated car wash companies such as IMO, certain competitive parameters tend to be decided  at  a  national  level,  for  example:
   product ranges, product sourcing, quality and service levels and branding/promotional activities.

   19) The Parties however submitted a sectorial study which indicates that this market might have a narrower geographic scope: according to this
       study, customers travel approximately [0-10]km for a commercial car wash.

   20) The market investigation indicated that it might be appropriate to regard this market as local in  scope.  According  to  the  competitors
       responding to the market investigation, customers tend to  usually go to a car wash that is close to home or along one of their  commuting
       routes (e.g. to work, to the supermarket or at the supermarket, etc) and will normally not drive more than 15-20 minutes (approximately  8
       km) just to get to the car wash. However, depending on the radius of their commuting routes, their usual car wash might not necessarily be
       close to their home but might instead be closer to their work or other destinations.

   21) Competitors responding to the market investigation also indicated that albeit big chains (such as oil companies operating forecourts)  set
       the price for car wash services at a national level, local competitive conditions might be  taken  into  account  for  setting  prices  at
       individual locations.

   22) Therefore, whilst is plausible to regard the geographic scope of this  market  to  be  narrower  than  national  in  scope,  it  might  be
       inappropriate to define it as having a radius of [0-10]km from each car wash site.

3 Conclusion on market definition.

   23) For the purpose of the assessment of the Transaction the exact product and geographic market definition can be left open  given  that  the
       Transaction does not raise serious doubts as to its  compatibility  with  the  internal  market  under  any  plausible  geographic  market
       definition.

2 Competitive Assessment

   24) If the market for car wash services was to be defined as national in scope, the Transaction would not give rise to any affected market. On
       this broad market, in fact, the combined market share of the Parties will be of [0-5]% in number of sites.[4] If hand car washes  were  to
       be excluded for the product market, than the combined market share of the Parties would be of [5-10]% in number of sites.[5] If the market
       was to be further segmented according to the specific type of automatic car wash (jet wash, roll over car washes,  conveyor  car  washes),
       than the activities of the Parties would not overlap.

   25) On the contrary, if the market was to be defined as local in scope with a catchment area of  [0-10]km  around  each  car  wash  site,  the
       Parties claim that their combined market share would be below 20% in volume. However, due to the intransparency of  the  market  (both  in
       terms of volume, value and number of sites) they cannot provide any estimate in this respect.

   26) In any event, the Parties claim that the Transaction will not create any competition concern as post transaction the Parties  can  confirm
       that for each area in which there is an IMO site and a Euro Garages site with a car wash within [0-10]km driving distance of  each  other,
       there will remain at least […] other independent car wash providers within that same radius.

   27) If the geographic scope of the market was to be defined narrower than national, taking into account a catchment area of a  few  kilometres
       around each car wash site, the market investigation  indicated  that  the  market  for  car  wash  services  is  very  fragmented.  Market
       participants face competition from a number of players, such as car wash chains, oil companies running petrol stations, supermarkets and a
       multitude of small independent operators.

   28) According to the competitors responding to the market investigation hand car washes are the  main  competitors  on  this  market  and  are
       extremely numerous. In general terms there is always at least one hand car wash in a radius of 1-2 Km from each automated car  wash  site,
       and more if considering a wider radius.

   29) If hand car wash service providers were to be excluded from the relevant product market,  the  merged  entity  will  continue  to  face  a
       significant number of competitors (such as filling stations, supermarkets and car washes chains) located along  the  customer's  commuting
       routes.

   30)  Therefore, even in the absence of reliable market share data on a local level, the Commission concludes that post Transaction the  merged
       entity will continue to face significant competitive pressure from a number of players, including independent car wash services operators.

   31) The market investigation also indicated that there are no significant barriers to entry for hand car wash. In fact there are  no  specific
       requirements regarding the location and no significant investment is needed. This is also confirmed by the fact that many  hand  car  wash
       operators enter (and leave) the market each year.

   32) Finally, competitors responding to the market investigation indicated that customers are not brand loyal or loyal to a specific  car  wash
       service provider, being more important the quality of the service provided.

   33) In light of the above, the Commission concludes that post transaction the merged entity will not have any market power on the  market  for
       car wash services, irrespective of how the product and geographic market is defined.

3 Conclusion

   34) In light of the above, the Commission considers that the Transaction does not give rise to serious doubts as to its compatibility with the
       internal market as a result of non-horizontal non-coordinated effects.

       CONCLUSION

35) 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
                                        Member of the Commission

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[1]   OJ L 24, 29.1.2004, p. 1 ('the Merger Regulation'). With effect from 1 December 2009, the Treaty on the Functioning of the  European  Union
      ('TFEU') has introduced certain changes, such as the replacement of 'Community' by 'Union' and 'common market' by  'internal  market'.  The
      terminology of the TFEU will be used throughout this decision.

[2]   OJ L 1, 3.1.1994, p.3 ("the EEA Agreement").

[3]   Turnover calculated in accordance with Article 5 of the Merger Regulation.

[4]   Market share for 2014. The Parties indicated that market shares have not substantially changed in the past 3 years.

[5]   Market share for 2014.

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                                                                  PUBLIC VERSION

                                                                 MERGER PROCEDURE