CELEX: 31995M0646
Language: en
Date: 1995-10-30 00:00:00
Title: COMMISSION DECISION of 30/10/1995 declaring a concentration to be compatible with the common market (Case No IV/M.646 - Repola / Kymmene) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31995M0646

COMMISSION DECISION of 30/10/1995 declaring a concentration to be compatible with the common market (Case No IV/M.646 - Repola / Kymmene) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 318 , 29/11/1995 P. 0003

 COMMISSION  DECISION of 30/10/1995 declaring a concentration to be compatible with the common market (Case No IV/M.646  - Repola  / Kymmene) 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 To the notifying parties Dear Sirs, Subject:<ind> Case No. IV/M.646  REPOLA/KYMMENE <ind>  :<ind> Notification of 27.09.1995 pursuant to Article 4 of Council Regulation No. 4064/89 1.<ind> On 27 September 1995 Repola Corporation (Repola) and Kymmene    Corporation   (Kymmene)   notified   a   proposed concentration by which the two companies enter into  a  full merger. I <ind> THE PARTIES 2.<ind>  Both  companies  are  Finnish  and  internationally active primarily in the forest products industry.  3.<ind> Repola is in particular active in the production and sale  of printing papers, packaging materials and mechanical woodworking.  Repola  is  also  active  in  the  engineering industry, in particular in the production and sale of forest machines,  industrial valves, fibre technology and  crushing systems. In addition, Repola also has a majority interest in W.  Rosenlew Ltd., Finland, which produces flexible  plastic packaging products. 4.<ind>  Kymmene is in particular  active in the  production and sale of printing papers, office and packaging papers and plywood and sawn timber. II <ind> THE CONCENTRATION 5.<ind>  The proposed operation is a full merger within  the meaning of Article 3(1)a of the Merger Regulation. <ind> III<ind> COMMUNITY DIMENSION 6.<ind> The combined aggregate worldwide turnover of  Repola and Kymmene amounts to more than 5 billion Ecu (Repola 4,635 million  Ecu and Kymmene 3,058 million Ecu). Each party  has an  aggregate Communitywide turnover exceeding  250  million Ecu  (Repola  2,988  million Ecu and Kymmene  2,458  million Ecu).  Neither  Repola nor Kymmene achieved  more  than  two thirds of their turnover in any Member State of the EU.  The concentration therefore has a Community dimension within the meaning of Article 1 of the Merger Regulation.  IV <ind> COMPATIBILITY WITH THE COMMON MARKET <ind> A. Relevant product markets 7.<ind>  The  parties have identified the following  product markets where the proposed merger will result in an addition of  market  shares: newsprint;  magazine paper;   industrial wrappings;  sack paper;  paper sacks;  pulp;  sawn timber. <ind> Newsprint 8.<ind>  Newsprint is generally defined as paper  containing not  less than 65% mechanical pulp by weight. It is  chiefly used  for  publication of newspapers.  There  are  different grades  of newsprint such as standard, lightweight, coloured and  special  newsprint. However, according to the  parties, all these different grades belong to the same product market due   to   a   high  degree  of  supplyside  and  demandside substitutability and because of similarity of price  levels.  <ind>  9.<ind>  As to demandside substitutability, it appears  that all  grades  are  used for the printing of newspapers,  free sheets and inserts. Moreover, most of the  printers who  use newsprint  are  capable of using the various grades  without significant  alterations  or  adjustment  of  the   printing machinery. 10.<ind> As to supply side substitutability,  account should be  taken of the similar technical characteristics and  size of the different grades  which are produced on the same kind of  machinery  providing there are the necessary  premachine facilities   like  colour  kitchens  and  bleaching/additive systems. 11.<ind>   There  are  differences  in  price  between   the different  grades. The price of standard grade newsprint  is comparable to lightweight newsprint. There is a  5%  to  10% difference  between standard and coloured paper and  between 3%   and  20%  with  regard  to  improved  newsprint.  These differences reflect extra production costs to provide colour or  whiteness and are regarded as a supplement  or  a  extra charge  with  regard  to  standard newsprint.  Printers  may change   easily   from  one  grade  to  another   on   price considerations. 12.<ind> Taking into account the high degree of demand  side and  supply  side  substitutability,  and  since  the  price differences  are  not  significant enough  to  separate  the grades  into separate markets,  newsprint can be  considered as a single product market.  <ind> Magazine paper  13.<ind>  Magazine  paper  is  used  for  the  printing   of magazines,   catalogues,  inserts  and  general  advertising material. There are four main grades of magazine paper: <ind>  supercalendered mechanical printing paper(SC) <ind>  lightweight coated mechanical printed paper (LWC) <ind>  machine finished coated printing paper (MFC) <ind>  mediumweight coated mechanical printing paper (MWC) 14.<ind> In addition to those grades, magazine printers  and publishers have traditionally used large volumes of woodfree coated papers in reels (WFC). 15.<ind> It is the opinion of the parties that, although the technical  specifications and prices for those grades  vary, they all belong to one single market for magazine paper. 16.<ind>  There  is a degree of supply side substitutability between  some  of the grades but, according  to  information from producers,  generally new machines are designed for one grade only. 17.<ind>  As to demand side substitutability, SC,  LWC,  MFC and  MWC  are  more  used  for large  circulation  print  of magazines.  By comparison, WFC is more used for  nonmagazine products  like books, annual reports and mainly for  shorter run,   high  quality  advertising  applications  (commercial printing). 18.<ind> The different prices reflect different qualities in terms of grammage, brightness level and printing properties. SC has the lowest price while the prices of MFC, LWC and MWC are  up to 20% higher. WFC has the highest price, up to  40% higher than the price of SC. 19.<ind>  The Commission has asked competitors and customers if  they consider the different grades of magazine paper  as forming one single product market. Basically, all agree that SC,  MFC,  LWC  and MWC belong to the same  product  market. However,  as  to  the question whether the  WFC  grade  also belongs to that market the answers are ambiguous.   20.<ind> Conclusion: A distinction could be made between  on the one hand SC, MFC, LWC and MWC, and on the other hand WFC because  of the different characteristics, end uses and  the price  difference  between the two product groups.  However, according   to  information  provided  by  competitors   and customers this distinction is not evident. In any  case,  it is  not necessary to decide whether WFC belongs to the  same product  market as SC, MFC, LWC and MWC, since even  if  the WFC  grade  is considered to form a separate product  market the  operation does not raise doubts as to its compatibility with the common market.  <ind> Industrial wrappings  made from paper 21.<ind> Industrial wrappings made from paper  are used for, among  others,  wrappings of paper reels and sheets,  lumber and  sawn  goods  for industrial purposes.  These  packaging materials  are  designed to preserve  the  wrapped  products which  are  often  transported  over  long  distances   from physical damage, including damage caused by unusual  climate conditions. 22.<ind> According to the parties, industrial wrappings made from   paper  are  partially  interchangeable  with  plastic industrial  wrappings.  Since  paper  is  more  porous  than plastic,  it  is  used  to  wrap industrial  products  which require a flow of air. However, for those products which  do not  require  a  constant  flow of air,  plastic  industrial wrappings  are  used interchangeably with  paper  industrial wrappings. 23.<ind>  Conclusion:  The fact that for  specific  purposes plastic  wrappings cannot replace industrial wrappings  made from  paper  may  not  be  a  sufficient  justification  for considering  paper wrappings as a separate marked.  However, even  if  paper wrappings are considered to form a  separate market   the  operation  will not raise  doubts  as  to  its compatibility with the common market. <ind> Sack paper 24.<ind>  Sack paper is strong brown paper made from  virgin pulp  or recycled fibre and used for the production of paper sacks. It is not substitutable with other materials (such as corrugated case materials) either on the demand side  or  on the  supply  side, and accordingly forms a distinct  product market  as  held by the Commission in a previous case   (see IV/M.499   Jefferson Smurfit/St.Gobain). Users of  the  sack paper are the sack and bag manufactures. <ind> Paper sacks     25.<ind> Paper sacks are made of sack paper and are used  in particular  for the transportation of cement, gypsum,  other construction  materials, fertilizers, animal foodstuffs  and similar products. 26.<ind>  Paper  sacks are either single or multiwalled  and bleached  or unbleached. However, according to the  parties, these  do  not formseparate product markets because  of  the high  degree of demand side and supply side substitutability between them. 27.<ind>  As  to  single and multiwalled  paper  sacks,  the degree  of  demand side substitutability is low  because  of different  end  uses.   On  the  supply  side,  single   and multiwalled sacks are made by the same producers,  the  same machines  can  be  used and, in addition, single  and  multi walled  sacks  are made from the same types of  sack  paper. This supply side substitution could be expected to happen in practice because the main industrial clients often pursue  a policy of multiple sourcing.  <ind>  28.<ind> According to the parties, there is a high degree of demand side substitutability between bleached and unbleached paper  sacks. On a functional level, both types can be  used for precisely the same purposes and therefore, although some customers  prefer  one  type over another,  customers  would switch  to  the  other if there was a small but  significant increase in the price of one type.  29.<ind>  Conclusion: Although all paper sacks are  produced and  purchased  to fulfil the same  function, a  distinction could  be  made  between singlewalled and multiwalled  paper sacks because of different end use of the products. However, this  distinction is not necessary since both types are made by   the  same  producers  which  can  easily  switch   from production  of  one  type to another. As  to  a  distinction between  bleached and unbleached paper sacks, the  existence of   a high degree of similarity in end use, as pointed  out by  the  parties, means that customers would switch  to  the other  type  if prices on one type increase. Therefore,  all four types of paper sacks belong to the same product market.  <ind> Pulp 30.<ind> Pulp is made from either wood or waste paper  or  a combination of both. It is then used  by paper producers  to make  various  types of paper products. About  half  of  the pulp  produced in EEA is sold on the open market. The  other half  is produced by vertically integrated undertakings  for use   in  there  own  paper  mills.  Although  pulp  reveals different properties depending on the type of wood used, and although  there  are several main types  depending  on  uses rather than wood type, the Commission has in previous  cases held  that  pulp  forms  a single product  market  (see  for example IV/M.210 Mondi/Frantschach) <ind> Sawn timber 31.<ind>  Sawn  timber  is used in  construction,  e.g.  for flooring  and  staircases. It is also  used  for  furniture, interior walls, doors, window frames, civil engineering  and packaging.The parties find, that because of  a  high  degree of supplyside interchangeability the  market for sawn timber cannot be divided depending on the type of timber.  32.<ind> Since the type of sawn timber is determined by  the type  of  forrests  available to the producer,  supply  side substitution is not in the short run a possibility. From the demand  side  the  existence of different  wood  types  with specific  qualities and high price variations  depending  on wood  type  suggest that sawn timber cannot be considered  a single  market but rather that there exists several  markets depending  on  wood types. However, it is not  necessary  to define   the  product  market  more  precisely  since   even considering  narrow product sectors, for example  pine,  the operation does not raise doubts as to its compatibility with the common market. <ind> B. Geographic market <ind> Newsprint and magazine paper 33.<ind>  The  Commission has in a previous case  held  that competition in newsprint takes place at least at a community level (Case No. IV/M.210  Mondi/Frantschach).  Newsprint and magazine  paper  can  be transported efficiently  over  long distances   and  there is a substantial intraEuropean  trade in these products.  Finland, Sweden and Norway are the major European traders of newsprint and magazine paper due to  the fact that those countries have a huge surplus production  of the  products. Consequently, companies from Finland,  Sweden and Norway supply large quantities of newsprint and magazine paper to the rest of Western Europe. However,  there is also substantial  trade of newsprint and magazine paper   between countries in the rest of the EEA area.  In addition,  import of  newsprint  from  nonEEA countries,  in  particular  from Canada,   takes  place.  In  1994  Canadian  producers   had considerable market shares in the UK (approximately 20%), in France and in Italy  (approximately 10% respectively). 34.<ind>  Nearly  all  major  producers  of  newsprint   and magazine paper sell the products  in almost all major Member States.  However, large European manufactures tend  to  have pockets  of strength in their respective "home" territories. This is in particular true in Finland, Sweden and Norway  in which  countries  national manufacturers supply  nearly  all newsprint  and  magazine  paper. Such  a  pattern  might  be evidence  of  the existence of separate geographic  markets. However,  this  situation with low import volumes  does  not necessarily imply barriers to entry. Account has to be taken of  the  fact, that the Nordic countries are large exporters of  the products in question and that the size of their  own markets  are  relatively small. In the case of Finland,  the total  volume  of  sales  of newsprint  and  magazine  paper represents  approximately 2% of the entire EEA market.  This may  be the reason why other Nordic and Continental European suppliers  have not focused on the Finnish market.  35.<ind> According to information provided by competitors as well as the parties' customers in Finland and in the rest of Europe, the markets for newsprint and magazine paper are  at least  Community wide.  Most if not all major  customers  of newsprint pursue a policy of multiple sourcing from national and/or international suppliers. Replies from customers  have given  no  indication  of  barriers  to  entry  which  could prevent major customers to purchase from suppliers operating paper  mills in other EEA countries. Information about sales prices  in several major EU countries as well as in Finland, which the parties have provided, indicates the existence  of competition on a EEA level. 36.<ind> In conclusion, information provided by the parties, the  main competitors and the customers indicates, that  the markets  for newsprint and magazine paper are at  least  EEA wide. <ind>  Industrial wrappings made of paper 37.<ind> According to the parties, the market for industrial wrappings  made of paper is at least EEA wide.  It  appears, that  there  is  an extensive European trade  of  industrial wrappings made of paper  since  transport costs do not  pose a  significant  hurdle  for  companies  to  sell  throughout Europe.   Most  producers of industrial  wrappings  made  of paper   have  sales  operations  throughout  several  Member States  and the product is shipped directly from the factory to  the customer. In the case of Repola, some of its largest customers  are  in  Austria, the  Netherlands  and  Germany. Consequently,  the market for industrial wrappings  made  of paper can be considered as at least EEA wide.  <ind>  Sack paper  38.<ind>  The geographical scope of sack paper is  at  least the  EEA  wide as recognized by the Commission in a previous case  (IV/M.499  Jefferson Smurfit/St. Gobain). In this case the Commission held that  because of extensive European wide trade  of  sack  paper  the market for  sack  paper  can  be considered to be at least the EEA area. <ind>  <ind> Paper sacks  39.<ind>  The parties find, that the market for paper  sacks must  be considered European wide. They argue that there  is an  increasing crossborder trade in paper sacks and refer to the  fact,  that currently a Swedish company  exports  paper sacks  into Finland. In addition, according to the  parties, the major customers of paper sacks pursue a policy of global sourcing.  40.<ind>  However,  a national market  for  paper  sacks  is indicated in the case of Finland by the fact that, according to  the  parties, in Finland both Kymmene and Repola produce primarily for Finnish customers and sell directly  to  those customers  from their production plants. The  two  companies operate three paper sacks plants in Finland from which  they supply  [Deleted; business secret: between 85% and 95%.]  of the  total Finnish consumption of paper sacks. The remaining [Deleted; business secret: between 5% and 15%.] is  supplied by  a Swedish producer. While, according to the parties,  in the  last several months, Russian and Swedish producers have begun  making inroads into the Finnish market,  the  parties estimate that the total sales from foreign producers in 1995 will  amount to a market share of [Deleted; business secret: less than 15%.]. (Repola also operates paper sack plants  in Spain  and Holland, from which the company produce primarily for national customers).   41.<ind>  In  a  previous Commissiondecision from  1994  the Commission found  that paper sacks have low density and thus incur  relatively high transport costs which limit  delivery ranges  to  a  radius  of  between 200  and  300  kilometres (IV/M.499  Jefferson Smurfit/St.Gobain). This confirms, that in a relatively remote country such as Finland the market is national. 42.<ind>  In  conclusion, as held  in  the  above  mentioned Commissiondecision, the geographical scope of paper sacks is limited  because  of  relatively high transport  costs.  The national  nature of this market is supported  by  the  fact, that in several years Finnish producers have been nearly the sole  providers of paper sacks to the Finnish market.  Thus, there is a separate Finnish market for paper sacks. <ind> Pulp 43.<ind>  As the Commission recognized in several decisions, to  the extent that pulp is traded on the open market, it is an  internationally  traded  product  and  the  geographical dimension  of  the product market is at least  Communitywide (see  for  example  IV/M.166  Torras/Sarrio).  The  question whether  the market is broader, can be left open since  even on  an  EEAwide  basis the operation does not raise  serious doubts as to its compatibility with the common market. <ind> Sawn timber 44.<ind>  According to the parties, the geographic dimension of  the sawn timber market is at least EEAwide. Because sawn timber  is  flat,  it  can be transported  efficiently  over significant  distances.  In addition,  due  to  the  durable nature  of the product, special treatment of the product  or particular fast means of transport are not necessary.  Thus, the  market for sawn timber can be considered to be at least EEA wide. V <ind> ASSESSMENT <ind> Newsprint and magazine paper  45.<ind>  Currently, Repola is a major  player  on  the  EEA market  for  newsprint  with a share of  [Deleted;  business secret: less than 15%.] while Kymmene is a relatively  minor European player with at share of [Deleted; business  secret: less  than  5%.].  Thus,  on the market  for  newsprint  the parties' combined market share in 1994 amounts to  [Deleted; business secret: less than 20%.] (volume).  46.<ind> On the EEA market for newsprint, although Kymmene's market  share  is small the new company will  be  the  major European  player with a share of [Deleted; business  secret: less  than 20%.] (in 1994). However, several other companies obtain   strong  positions:  Stora  Kopparbergs  (a  Swedish company)  with [Deleted; business secret: more  than  10%.], Haindl  Papier  (a  German company) with [Deleted;  business secret:  more than 10%.]; Norske Skogindustrier (a Norwegian Company)  with [Deleted; business secret: more  than  10%.]. Next  come  two  other Nordic companies each with  [Deleted; business secret: more than 10%.].   47.<ind>  On  the EEA market for magazine paper the  parties combined share in 1994 amounts to [Deleted; business secret: less  than 25%.] (Repola [Deleted; business secret:  between 8%  and 15%.]; Kymmene [Deleted; business secret: between 8% and  15%.]).  If  the  WFC grade is  considered  to  form  a separate  market, Kymmene's share on such an EEA market  for WFC  magazine paper is [Deleted; business secret: less  than 15%.].  Repola does not produce the WFC grade. The  parties' shares  on  an EEA market for magazine paper from which  the WFC  grade  is  separated will not be substantial  different from the above mentioned overall  market shares.    48<ind> Also in magazine paper,  the new company will be the major  European  player with a share of  [Deleted;  business secret: less than 25%.] (in 1994). According to the parties, on   this   market    their  main  competitors   are   Stora Kopparbergs,   Norske  Skogindustrier,   Svenska   Cellulosa Aktiebolaget  SCA  and   Haindl  Papier  (each  with  shares approximately  [Deleted; business  secret:  between  5%  and 15%.]).  In  addition, there are several  other  significant European   manufactures  of  magazine  paper,  for   example KNPLeykam and Enso.  49.<ind> All the above mentioned competitors on the  markets for  newsprint and magazine paper are large companies  which operate in at least several Member States. 50.<ind> According to the parties, a considerable bargaining pressure   is  exercised  by  customers  due  to  increasing concentration  in  the  publishing  industry.   Furthermore, according to information provided by the parties and by  the major customers, multiple sourcing is a must in the printing industry  in order to reduce the risk of shortage of  paper. Thus, a high transparency of prices exists and the customers could  in  principle easily switch their purchase  from  one supplier to another in order to obtain a competitive  price.  51.<ind>  As  Finnish producers the parties have  particular strong  positions in Finland. In newsprint, in  1994  Repola had  a  share of [Deleted; business secret: between 40%  and 60%.]  while Kymmene was a less important player in  Finland with  a  [Deleted;  business secret: between  5%  and  15%.] share.  In  magazine paper, in 1994 Repola had  a  share  of [Deleted; business secret: between 25% and 35%.] and Kymmene a share of [Deleted; business secret: between 25% and 35%.]. Thus,  on  the markets for newsprint and magazine paper  the parties'  combined shares in Finland amounted  to  [Deleted; business  secret:  between 50% and 70%.]  on  both  markets. However,  because these markets are at least EEA wide,  high local  market  shares do not  translate into  market  power. There  are many European producers of newsprint and magazine paper,  including  large and financially  strong  companies, from  which  Finnish customers could purchase newsprint  and magazine paper if they wish to do so.   52.<ind>   In   conclusion  ,   on   these   markets     the concentration  does  not  raise serious  doubts  as  to  its compatibility with the common market since the markets   are EEA  wide and the parties' postmerger market shares will not exceed  [Deleted; business secret: less than 25%] on any  of the  markets. Furthermore, the parties will face competition from  several  competitors and large  customers  can  easily switch their purchase from one supplier to another.  <ind> Distribution of newsprint and magazine paper 53.<ind>  Repola  is  one  of  six  members  of  the   sales organisation  Finnpap Marketing Association.  Finnpap  is  a joint sales organisation which markets the paper products of the  members (newsprint, magazine paper, etc.)  on  a  world wide  basis.  Kymmene markets its products through  its  own sales network and is not a member of Finnpap.  54.<ind> In the notification the parties had not made  clear their plans as to whether the marketing of paper produced by Repola  will  remain  in Finnpap or whether  all  the  paper products  of  the  new  company  will  be  marketed  through Kymmene's   own  distribution  network.   If    Repola   had continued  to  distribute  its  products  through  Finnpap's network,  a link between Kymmene's paper marketing  and  the other  producers represented by Finnpap would have  emerged. In  such  a  situation  the scope of  the  merger  would  be extended  to  include the combined sales of the new  company together  with  the other Finnish producers selling  through Finnpap.  Given this background, in order to  eliminate  any possible  concerns  about the role of  Finnpap  due  to  the operation, the parties have decided to commit themselves not to  sell  paper  products through the  Finnpap  joint  sales agency.   In  a  letter to the Commission the  parties  have confirmed   that they will cease to market or  sell  any  of their  products  through Finnpap. This  decision  will  take effect [Deleted; business secret.]. The Commission has taken note of the content of this  letter.   <ind> Industrial wrappings made from paper 55.<ind>  On  the EEA market for industrial  wrappings  made from  paper the parties' combined market share is  [Deleted; business secret: less than 25%.] (in 1994 [Deleted; business secret:  less  than 20%.], of which Repola and  Kymmene  had shares  of  [Deleted; business secret: less than  15%.]  and [Deleted; business secret: less than 10%.] respectively).   56.<ind>  As  was the case on the markets for newsprint  and magazine paper, as Finnish producers of industrial wrappings made  from  paper   the  parties have  strong  positions  in Finland.  In  1994 Repola had a share of [Deleted;  business secret:  between  35%  and 45%.]  and  Kymmene  a  share  of [Deleted;business secret: between 20% and 30%.].   Thus,  on this market the parties' combined shares in Finland amounted to   [Deleted;  business  secret:  between  55%  and  75%.]. However,  for the same reasons as in newsprint and  magazine paper,  because the market is at least EEA wide, high  local market shares do not translate into market power. There  are many  European producers of industrial wrappings  made  from paper  of which several currently are active on the  Finnish market.  These include Assi Doman /Orebro (a swedish company with  an EEA market share of [Deleted; business secret: less than 15%.], PWA  Duffel (a Belgian company with an EEA share of  [Deleted; business secret: less than 10%.]) and  Fiskeby (a  Swedish  company with an EEA market share of   [Deleted; business secret: less than 10%.]).  57.<ind>  In  conclusion, on this market the operation  does not  raise serious doubts as to its compatibility  with  the common market since the parties'  postmerger market share on the  EEA  market will not exceed 20% and because the parties will face competition from several large competitors. <ind> Sack paper  58.<ind>  On  this  market  no competition  problem  can  be expected   since   the   parties'  EEA   market   share   is insignificant ([Deleted; business secret: less than 6%.]). <ind> Pulp 59.<ind>  On the market for pulp no competition problem  can be expected since  on the open market the parties postmerger market share in the EEA are far below 15%.  <ind> Sawn timber 60.<ind>  The parties postmerger market shares on   the  EEA market  is approximately [Deleted; business secret:  between 3%  and  7%.].  Even if the product markets  are  considered very  narrowly, (the parties are primarily active  in  pine, and  even  if this product sector was considered a  separate market  the parties combined market shares on the EEA market would  not exceed 10%)  the operation does not raise serious doubts as to its compatibility with the common market <ind> Paper sacks  61.<ind>  Repola  operates paper sack plants  in  Spain  and Holland  but  since  Kymmen does  not  operate  sack  plants outside  Finland  the  operation will not  add  to  Repola's market shares in these countries. 62.<ind>  On the Finnish market for paper sacks the parties' shares are as follows(volume):  <tab> 1992 <tab> 1993 <tab> 1994 Repola  <tab>   [Deleted; business secret: between  35%  and 55%.]  <tab>   [Deleted; business secret:  between  35%  and 55%.]  <tab>  [Deleted;  business secret:  between  35%  and 55%.] Kymmene  <tab>  [Deleted; business secret: between  35%  and 55%.]  <tab>   [Deleted; business secret:  between  35%  and 55%.]  <tab>  [Deleted;  business secret:  between  35%  and 55%.] Combined  <tab> [Deleted; business secret: between  70%  and 100%.]  <tab>  [Deleted; business secret:  between  70%  and 100%.]  <tab>   [Deleted; business secret: between  70%  and 100%.] 63.<ind>  As  shown, Repola and Kymmene have  in  all  three years  nearly shared the Finnish market for paper sacks.  By the  operation, the parties will be  the sole  providers  of paper  sacks  on  that  market.  Considering  (1)  that  the parties  have dominated this market for several  years,  (2) that  there  is  spare capacity left on the existing  plants owned by the parties and (3) that it is a mature market  (4) in   which  a  significant  increase  in  demand  cannot  be expected,  it is not likely  that  new companies will  enter this market.  <ind>  Modifications to the original concentration  plan  on the market for paper sacks 64.<ind> On the basis of the above, the Commission has  come to  the  conclusion that the proposed operation  will  raise serious  doubts  as  to its compatibility  with  the  common market,  because it will lead to the creation of a  dominant position  on the Finnish market for paper sacks as a  result of which effective competition will be significantly impeded in  the  common  market. However, Repola  and  Kymmene  have entered  into commitments vis à vis the Commission  relating to  the  market  for  paper sacks which remove  the  serious doubts in the manner described below:  65.<ind>  Repola  operates in Finland  two  plants  for  the production of paper sacks, a plant located at Pori (the Pori plant)  and  a  plant  located at Ikaalinen  (the  Ikaalinen plant).  Kymmene operates one plant located at Karhula  (the Karhula plant). The Karhula plant is a joint venture between Kymmene (65%) and Enzo Gutzeit (35%).  The capacity  of  the plants and their production in 1994 are as follows: <tab> Capacity (mio sacks/y) <tab> Prod. ( mio sacks 1994) The  Pori plant <tab> [Deleted; business secret: between 20% and  30%.] <tab> [Deleted; business secret: between 20%  and 30%.] The Ikaalinen plant <tab> [Deleted; business secret: between 10%  and 20%.] <tab> [Deleted; business secret: between  10% and 20%.] The  Karhula plant <tab> [Deleted; business secret:  between 30%  and 40%.] <tab> [Deleted; business secret: between  30% and 40%.] Total <tab> [Deleted; business secret: between 60% and 85%.] <tab>  [Deleted; business secret: between 60% and 85%.] 66.<ind>  Concerning these plants, Repola and  Kymmene  have entered into commitments vis à vis the Commission. The  text of  these commitments is annexed to the present decision and forms an integral part thereof.   67.<ind> Briefly, the commitments involve the divestiture of [Deleted;  business secret.]. Consequently,  the  effect  of thecommitment will be that the operation will not result  in an  addition  of  market  shares  since  [Deleted;  business secret.]  will  be divested.  If the parties should  not  be able  to fulfil the undertaking to divest by the end of  the aforesaid  period,  conditions as  to  the  timing  and  the execution   of  the  divestiture  are  laid  down   in   the commitments. Furthermore,  the parties undertake to keep the plants as ongoing concerns until the date of divestiture.   VI<ind> CONCLUSION 68.<ind> For the above mentioned reasons, and especially  in light  of  the commitments given by Repola and Kymmene,  the Commission  has  concluded that the notified operation  does not  raise serious doubts as to its compatibility  with  the common  market.  This decision is adopted in application  of Article 6(1)(b) of Council Regulation No 4064/89.   For the Commission ANNEX  CONTAINING  COMMITMENTS  BY  REPOLA  CORPORATION  AND KYMMENE   CORPORATION  is  considered  as   being   business secrets.