CELEX: 32018M9059
Language: en
Date: 2018-10-19 00:00:00
Title: Commission Decision of 19/10/2018 declaring a concentration to be compatible with the common market (Case No COMP/M.9059 - CVC Capital Partners SICAV-FIS S.A. / Messer Group GmbH) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
              DG Competition
Case M.9059 - CVC / MESSER GROUP / DIVESTMENT
                                                              BUSINESS
                               Only the English text is available and authentic.
                          REGULATION (EC) No 139/2004
                                     MERGER PROCEDURE
                           Article 6(1)(b) NON-OPPOSITION
                                                     Date: 19/10/2018
      In electronic form on the EUR-Lex website under
                              document number 32018M9059
 ---pagebreak---                                 EUROPEAN COMMISSION
  In the published version of this decision, some               Brussels, 19.10.2018
  information has been omitted pursuant to Article              C(2018) 7010 final
  17(2) of Council Regulation (EC) No 139/2004
  concerning non-disclosure of business secrets and
  other confidential information. The omissions are                     PUBLIC VERSION
  shown thus […]. Where possible the information
  omitted has been replaced by ranges of figures or a
  general description.                                          To the notifying parties:
Subject:            Case M.9059 - CVC / Messer Group / Divestment Business
                    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 14 September 2018, the European Commission received notification of a
          proposed concentration pursuant to Article 4 of the Merger Regulation by which
          CVC Capital Partners SICAV-FIS S.A. ("CVC") (of Luxembourg) and Messer
          Group GmbH ("Messer") (of Germany) would acquire joint control of the
          Divestment Business, by way of purchase of shares (the "Transaction").3 The
          Divestment Business consists of industrial gas assets and businesses of Praxair,
          Inc. ("Praxair") and Linde AG ("Linde") in North and South America, as well as
          global helium sourcing contracts of Linde and Praxair and related assets. CVC
          and Messer are designated hereinafter as the "Notifying Parties" and, together with
          the Divestment Business, the "Parties".
1.        THE PARTIES
(2)       Messer is a supplier of gases used in a variety of industries (including the steel,
          chemical, healthcare, food, and electronics industries). Messer is based in
          Germany and mainly active in Europe and Asia.
(3)       CVC is a private equity and investment advisory firm based in Luxembourg.
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       Publication in the Official Journal of the European Union No C 335, 20.9.2018, p. 23.
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--- (4)   The Divestment Business (the "Target") consists of industrial gas assets and
      businesses of Praxair and Linde in North and South America, as well as global
      helium sourcing contracts to which Linde or Praxair are a party and related assets.
      These assets are divested in the context of the proposed merger between Praxair
      and Linde. In particular, the helium sourcing contracts and related assets included
      in the Divestment Business are divested as part of the commitments submitted to
      the Commission in Case M.8480 – Praxair/Linde.4
2.    THE OPERATION
(5)   The Transaction consists of the acquisition of 100% of the shares in each of the
      companies that together constitute the Divestment Business by Messer and CVC
      through a newly-created company, Messer Industries GmbH ("Messer
      Industries").5 Post-Transaction, CVC and Messer will respectively (indirectly)
      hold […]% and […]% of the shares in Messer Industries.6 Pursuant to the agreed
      Term Sheet, the shareholders will jointly develop a common roadmap on how
      Messer Industries will be operated, defining key strategic matters for Messer
      Industries, including the corporate strategy, the business plan and the
      management structure. Moreover, [description of the governance structure in
      relation to the adoption of strategic decisions].7 It follows that, post-Transaction,
      Messer and CVC will exercise joint control over the Divestment Business.
(6)   The Transaction therefore constitutes a concentration within the meaning of
      Article 3(1)(b) of the Merger Regulation.
3.    EU DIMENSION
(7)   The undertakings concerned have a combined aggregate world-wide turnover of
      more than EUR 5 000 million8 (CVC: EUR […] million; Messer: […] million;
      Divestment Business: EUR 1 485 million). Two of them have an EU-wide
      turnover in excess of EUR 250 million (CVC: EUR […] million; Messer: EUR
      […] million). The undertakings concerned do not achieve more than two-thirds of
      their aggregate EU-wide turnover within one and the same Member State.
4   See the Commitments annexed to the Commission decision of 20 August 2018 in case M.8480 –
    Praxair/Linde. The Commitments provide for the divestment of (i) Praxair's entire gas business in
    the EEA (excluding its stake in SIAD), (ii) Praxair's controlling shareholding in SIAD to the joint
    venture partner Flow Fin S.p.A. (of Italy), and (iii) helium sourcing contracts and related assets to
    one or more buyers to be agreed with competition authorities other than the European Commission
    (in particular the US Federal Trade Commission and the Chinese State Administration for Market
    Regulation) (the "Helium Sourcing Commitments"). The helium sourcing contracts and related
    assets included in the Divestment Business constitute the lion share of the Helium Sourcing
    Commitments.
5   On 16 July 2018, Messer Industries entered into a sale and purchase agreement with Linde and
    Praxair, pursuant to which it agreed to acquire 100% of the shares in each of the companies that
    together constitute the Divestment Business. In addition, following further discussions with
    regulatory authorities in relation to the merger between Linde and Praxair, the above sale and
    purchase agreement was subsequently amended on 22 September 2018 to include additional assets
    in the Divestment Business.
6   Messer will contribute to Messer Industries some assets including notably its Western European
    operations. Based on the signed agreements, Messer’s operations in Asia, Central and Eastern
    Europe will not be transferred ([…]) to Messer Industries.
7   [Detailed information on the governance structure].
8   Turnover calculated in accordance with Article 5 of the Merger Regulation.
                                                      2
 ---pagebreak--- (8)     The notified operation therefore has an EU dimension pursuant to Article 1(2) of
        the Merger Regulation.
4.      RELEVANT MARKETS
(9)     Given the different geographic footprint of Messer and the Divestment Business,9
        the overlaps between the Parties' activities are very limited and only concern the
        supply of helium.
  4.1. Product Markets
(10)    Helium is a scarce and high value product, with a very specific sourcing modality.
        It is a by-product of natural gas extraction from a very limited number of sources
        worldwide, located in the US, Qatar, Algeria, Poland, Russia, Canada, and
        Australia. Helium producers are, consequently, natural gas producers, which are
        typically not active in the commercialisation of helium but rather enter into long-
        term contracts or joint-ventures with integrated gas companies (such as Messer)
        that bring helium to the market. Helium is used in a wide range of industries,
        including the medical, research, diving, automotive, electronics, balloon and
        aerospace industries.
(11)    Helium is sourced globally and then supplied at wholesale and retail levels:
        i.      at wholesale level, helium is transported worldwide, from the production
                site to transfill centres located in the areas of consumption, in liquid form in
                special low temperature containers ("cryogenic portable tanks");
        ii.     at retail level, the supply of helium to end-customers is made from transfill
                centres by retailers that are either (i) vertically integrated with wholesalers
                or (ii) independent players which buy helium on the wholesale market. At a
                transfill centre, helium is removed from the cryogenic portable tanks and
                transferred into smaller containers called cryogenic dewars for deliveries of
                liquid helium to end-customers, or into high-pressure cylinders or tube
                trailers for supplies of helium in compressed gaseous form. At retail level,
                helium may also, to a much more limited extent, be delivered in cryogenic
                portable tanks to end-customers.
(12)    In previous decisions10, the Commission found that the wholesale and retail
        supply of helium constitute distinct product markets. The Commission considered
        that the market for the wholesale supply of helium also included the sourcing of
        helium. At retail level, the Commission envisaged to further segment the market
        depending on the modes of supply (cryogenic portable tanks, tube trailers,
        dewars, and cylinders) and also considered the existence of a distinct retail market
9     The activities of CVC (and its portfolio companies) do not horizontally overlap with the activities of
      Messer and the Divestment Business. There may be potential vertical links between Messer's
      activities in the supply of medical gases in the EEA and the activities of two portfolio companies of
      CVC (namely […]), which are private hospital operators. However, any such relationships would
      only have a marginal nature (i.e. with market shares well below 30%) and, thus, would not give rise
      to vertically affected markets.
10    Commission's decision of 20 August 2018 in case M.8480 – Praxair/Linde, Commission's decision
      of 6 June 2006 in Case M.4141 – Linde/BOC, and Commission's decision of 28 November 2007 in
      Case M.4823 – Yara/Praxair/JV.
                                                         3
 ---pagebreak---        for the supply of high purity helium (that is to say helium with a purity grade of
       6.0 and above11), but ultimately left open the exact scope of the market in this
       respect.
(13)   The Notifying Parties agree with the previous assessment of the Commission,
       which is also in line with the results of the in-depth investigation recently carried
       out by the Commission in case M.8480 – Praxair/Linde.12
(14)   In light of the above, and given that the Transaction does not give rise to
       competition concerns under any plausible market definitions, the Commission
       considers that, for the purposes of the assessment of this case, there is no reason
       to depart from the product market definitions retained in previous decisions as
       regards the helium wholesale market and that the exact scope of the helium retail
       market can be left open.
 4.2. Geographic Markets
(15)   The in-depth investigation recently carried out by the Commission in case
       M.8480 – Praxair/Linde has largely confirmed the geographic market definitions
       retained in previous decisions as regards the supply of helium.13 The latter are not
       contested by the Notifying Parties and can be summarized as follows:
       i.     national scope for the retail supply of helium (with the exception of the
              retail supply of helium in cryogenic portable tanks);
       ii.    global scope for the wholesale supply of helium, as well as for the potential
              market for the retail supply of helium in cryogenic portable tanks.
(16)   In light of the above, the Commission considers that, for the purposes of the
       assessment of the Transaction, there is no reason to depart from the geographic
       market definitions retained in previous decisions.
5.     COMPETITIVE ASSESSMENT
(17)   As previously indicated, the overlaps between the activities of the Parties are very
       limited. Based on the Parties' estimates, the Transaction only gives rise to the
       following vertically affected markets:
        i. the (upstream) market for the wholesale supply of helium at global level; and
       ii. the (downstream) market for the retail supply of helium in Latvia (and
            potential sub-markets).
(18)   The above markets have recently been reviewed by the Commission in case
       M.8480 – Praxair/Linde.14 Consequently, the assessment of the impact of the
11   In the gas industry, purity is expressed by two digits separated by a dot to express the percentage of
     the relevant gas in the product. The first digit indicates the number of 9s, the second the digit after
     the 9s. Purity 6.0 means 99.9999%; purity 3.5 means 99.95%.
12   Commission's decision of 20 August 2018 in case M.8480 – Praxair/Linde.
13   Commission's decision of 20 August 2018 in case M.8480 – Praxair/Linde, Commission's decision
     of 6 June 2006 in Case M.4141 – Linde/BOC, and Commission's decision of 28 November 2007 in
     Case M.4823 – Yara/Praxair/JV.
14   Commission's decision of 20 August 2018 in case M.8480 – Praxair/Linde.
                                                         4
 ---pagebreak---        Transaction in the affected markets will take into account the results of the in-
       depth investigation carried out by the Commission in that case.
(19)   Upstream, at wholesale level, the Parties have a moderate combined sales market
       share ([10-20]% in 2017) and net capacity share ([10-20]% in 2017), well below
       the 30% threshold.15 The Parties also face a number of competitors with higher
       sales/capacity shares (such as Linde/Praxair, Air Products, and Air Liquide).
       Moreover, the Divestment Business does not currently make any sales of helium
       in the EEA.
(20)   Downstream, among the Parties, only Messer is active at retail level in the EEA.
       Its market share exceeds 30% only in Latvia ([30-40]% on the overall helium
       retail market in 2017).16 Post-Transaction, the merged entity will face several
       actual and potential competitors on that market (including vertically integrated
       players with direct access to helium sources), such as the market leader, Linde
       ([50-60]%). While Messer's market share in Latvia is above the 30% threshold, it
       mainly reflects the small size of the market(s) concerned (e.g. Messer's sales were
       below […] in 2017). Moreover, pre-Transaction, Messer is already vertically
       integrated to a large extent, sourcing most of its demand directly from helium
       producers, rather than on the wholesale market.
(21)   The Commission considers that the Transaction is unlikely to result in any risks
       of input or customer foreclosure. In particular, neither of the Parties appears to
       hold a sufficiently high degree of market power at upstream or downstream level.
       On the one hand, the existence of credible alternative upstream (wholesale)
       suppliers will limit the ability of the Parties to foreclose access to helium to
       downstream rivals and thus make any input foreclosure unlikely. On the other
       hand, the Transaction does not bring any meaningful change on the downstream
       retail markets since Messer is already vertically integrated pre-Transaction.
       Therefore, customer foreclosure is also unlikely to arise as a result of the
       Transaction.
(22)   In light of the above, the Commission concludes that the Transaction does not
       give rise to serious doubts as to its compatibility with the internal market in
       relation to the vertical link between the global supply of helium at wholesale level
       (upstream) and the supply of helium at retail level in Latvia (downstream).
6.     CONCLUSION
(23)   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.
(24)   This decision is without prejudice to the Commission's approval of CVC and
       Messer as suitable purchasers of the helium sourcing contracts and related assets
15   The Divestment Business' sales market share and net capacity share are based on the set of helium
     sourcing contracts and related assets to be transferred pursuant to the sale and purchase agreement
     dated 16 July 2018, subsequently amended on 22 September 2018.
16   To the best of the Parties' knowledge, the market shares of Messer on any potential retail sub-
     markets (depending on the purity level and mode of supply) in Latvia would not vary significantly.
                                                       5
 ---pagebreak--- included in the Divestment Business, which are divested as part of the
commitments submitted in case M.8480 – Praxair/Linde, and of the
Commission's assessment of whether the terms of the divestiture are consistent
with the Commission's decision and the commitments in that case.
                                           For the Commission
                                           (Signed)
                                           Margrethe VESTAGER
                                           Member of the Commission
                                       6