CELEX: 32020M9677
Language: en
Date: 2020-12-07 00:00:00
Title: Commission Decision of 07/12/2020 declaring a concentration to be compatible with the common market (Case No COMP/M.9677 - DIC / BASF COLORS & EFFECTS) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                 Brussels, 07.12.2020
                                                                 C(2020) 8877 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                                                                  omitted has been replaced by ranges of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.
                                                                 DIC Corporation
                                                                 DIC Building, 7-20, Nihonbashi 3-chome
                                                                 Chuo-ku, Tokyo 103-8233
                                                                 Japan
Subject:            Case M.9677 — DIC/BASF Colors & Effects
                    Commission decision pursuant to Article 6(1)(b) in conjunction with
                    Article 6(2) of Council Regulation No 139/20041 and Article 57 of the
                    Agreement on the European Economic Area2
Dear Madam or Sir,
(1)       On 16.10.2020, the European Commission received notification of a proposed
          concentration pursuant to Article 4 of the Merger Regulation by which the DIC
          Corporation (together with the entities it directly or indirectly controls referred to as
          “DIC”) acquires within the meaning of Article 3(1)(b) of the Merger Regulation sole
          control of the whole of BASF SE’s (“BASF”, Germany) BASF Colors & Effects
          (together with the entities it directly or indirectly controls referred to as “BCE”), (“the
          Transaction”).3 DIC is designated hereinafter as the “Notifying Party” and, together
          with BCE, as the “Parties”.
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 358, 26.10.2020, p. 10.
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--- 1.  THE PARTIES
(2) DIC is a publicly listed company headquartered in Japan, active in the production and
    sale of printing inks, organic pigments and synthetic resins. As regards pigments and
    other colourants, DIC is mainly active through its wholly-owned subsidiary
    SunChemical Corporation (“SunChemical”, US).
(3) BCE’s business includes the manufacture and sale of pigments and other colourants.
    BASF is a publicly listed international chemical and industrial company
    headquartered in Ludwigshafen am Rhein, Germany. BCE represented less than
    [small percentage] of BASF’s worldwide turnover in 2018.
2.  THE OPERATION
(4) In August 2019, DIC Corporation and BASF concluded a Sale and purchase
    Agreement setting out the terms of the Transaction, by which DIC will acquire the
    entirety of the shares of 19 individual entities as well as certain assets, jointly
    constituting BCE, from BASF. Following completion of the Transaction, DIC will
    thus acquire sole control of BCE. The Transaction is therefore a concentration within
    the meaning of Article 3(1)(b) of the EU Merger Regulation.
3.  UNION DIMENSION
(5) The undertakings concerned have a combined aggregate world-wide turnover of more
    than EUR 5 000 million (DIC: EUR [...], BCE: EUR [...]).4 Each of them has an EU-
    wide turnover in excess of EUR 250 million (DIC: EUR [...], BCE: EUR [...]), 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.
4.  THE PROCEDURE
(6) The Transaction was previously notified on 15.05.2020 and subsequently withdrawn
    on 23.06.2020. It was notified again on 16.10.2020.
(7) As a consequence, the Commission’s market investigation was twofold, with one set
    of questionnaires sent on 15.05.2020, and an additional, more targeted, set of
    questionnaires sent on 16.10.2020. The Commission considers that both sets of
    questionnaires constitute informative and relevant information for the purpose of
    assessing the present Transaction. As a result, both sets of questionnaires will be
    referred to in the present Decision, and both will be referred to under the terms “the
    Commission’s market investigation” or “the market investigation”.
4   Turnover calculated in accordance with Article 5 of the Merger Regulation.
                                                     2
 ---pagebreak--- 5.   COMPETITIVE ASSESSMENT
5.1. Analytical framework
(8)  Under Articles 2(2) and 2(3) of the Merger Regulation, the Commission must assess
     whether a proposed concentration would significantly impede effective competition
     in the internal market or in a substantial part of it, in particular through the creation or
     strengthening of a dominant position.
(9)  A merger can entail horizontal effects. In this respect, the Commission Guidelines on
     the assessment of horizontal mergers under the Merger Regulation (“the Horizontal
     Merger Guidelines”)5 distinguish between two main ways in which mergers between
     actual or potential competitors on the same relevant market may significantly impede
     effective competition, namely (a) by eliminating important competitive constraints on
     one or more firms, which consequently would have increased market power, without
     resorting to coordinated behaviour (non-coordinated effects); and (b) by changing the
     nature of competition in such a way that firms that previously were not coordinating
     their behaviour are now significantly more likely to coordinate and raise prices or
     otherwise harm effective competition. A merger may also make coordination easier,
     more stable or more effective for firms which were coordinating prior to the merger
     (coordinated effects).6
(10) In addition, a merger can also entail vertical effects when it involves companies
     operating at different levels of the same supply chain. Pursuant to the Commission
     Guidelines on the assessment of non-horizontal mergers under the Council Regulation
     on the control of concentrations between undertakings (the “Non-Horizontal Merger
     Guidelines”),7 vertical mergers do not entail the loss of direct competition between
     merging firms in the same relevant market and provide scope for efficiencies.
     However, there are circumstances in which vertical mergers may significantly impede
     effective competition. This is in particular the case if they give rise to foreclosure.8
     The Non-Horizontal Merger Guidelines distinguish between two forms of foreclosure:
     input foreclosure, where the merger is likely to raise costs of downstream rivals by
     restricting their access to an important input, and customer foreclosure, where the
     merger is likely to foreclose upstream rivals by restricting their access to a sufficiently
     large customer base.9
5.2. Overview of affected markets
(11) The Transaction combines the activities of two global suppliers of (primarily organic)
     pigments. The focus of the Transaction is on combining the parties’ capabilities in the
     supply of certain types of pigments. Pigments are compounds that provide colour to a
     given material either by covering its surface (paints, coatings, printing inks) or by
     mixing with it (plastic applications). Pigments are distinct from dyes, which engage
     in chemical reactions with the material they are supposed to colour.
5    Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of
     concentrations between undertakings, OJ C 31, 5.2.2004 p.5.
6    Horizontal Merger Guidelines, paragraph 22.
7    OJ C 265, 18.10.2008, p. 6.
8    Non-Horizontal Merger Guidelines, para 18.
9    Non-Horizontal Merger Guidelines, para 30.
                                                     3
 ---pagebreak---  ---pagebreak---        (downstream). This relationship is affected within the meaning of EU merger control14
       because upstream the Parties’ market shares would exceed 30% in the sales of certain
       pigment chemistries which are used to produce printing inks. Moreover, the
       relationship is also affected because DIC’s market share for the manufacture of
       printing inks downstream exceeds 30% in one potential sub-segment, namely the
       manufacture of gravure liquid inks in the EEA.
5.3.   Market definitions
5.3.1. Pigments
(14)   As explained above, a distinction can be drawn between organic pigments, whose
       chemical formula contain carbon atoms in covalent bonding, and inorganic pigments.
       Aside from these, effect pigments can be considered as forming a category of their
       own, in the sense that their main function is not to provide a given colour, but rather
       an effect (such as a metallic or a pearlescent effect).
(15)   As shown above in Table 1, the main overlaps between the Parties’ activities relate to
       organic pigments. There are around 20 chemical classes of organic pigments, covering
       a range of colour shades. Each chemical class of pigments requires a different
       manufacturing process and often requires dedicated equipment. Within a chemical
       class, there are typically several different pigments, with different chemical
       composition, providing different colours and shades. For instance, the perylene class
       complex processing steps from pigments. In addition, both activities are performed by both Parties as
       an ancillary complement to their pigment activities, in particular when end-customer require that
       additional finishing/dispersion steps are performed on the pigments which are manufactured by the
       Parties, in order for them to be able to use them more readily. Therefore, for the purposes of the present
       case, the Commission considers that the competitive dynamics of the pigment markets determine to a
       very large extent the competitive dynamics for preparations and masterbatches. As regards preparations
       in particular, the Notifying Party provided for each chemical class market shares for a hypothetical
       market encompassing all pigments sold in dry form as well as in mono-pigment preparations. These
       figures do not differ materially for any chemical class compared to the figures for pigments per chemical
       class alone.
14     An affected market consist of all relevant product and geographic markets, as well as plausible
       alternative relevant product and geographic markets, if in the EEA territory (a) two or more of the
       parties to the concentration are engaged in business activities in the same relevant market (“horizontal
       relationships”) and where the concentration will lead to a combined market share of 20% or more; or
       (b) one or more of the parties to the concentration are engaged in business activities in a relevant market,
       which is upstream or downstream of a relevant market in which any other party to the concentration is
       engaged (vertical relationships), and any of their individual or combined market shares at either level
       is 30% or more, regardless of whether there is or is not any existing supplier/customer relationship
       between the parties to the concentration. (See Section 6.3, Annex 1, Commission Regulation (EC) No
       802/2004 of 21 April 2004 implementing the Merger Regulation). The Commission may presume that
       concentrations where the market share of the undertakings concerned does not exceed 25% either in the
       common market or in a substantial part of it are not liable to impede effective competition and are
       compatible with the common market. (See recital 32 of the Merger Regulation and paragraph 18 of the
       Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of
       concentrations between undertakings (OJ C 31, 5.2.2004, p. 5). The Commission is unlikely to find
       concerns in non-horizontal mergers, be it of a coordinated or of a non-coordinated nature, where the
       market share post-merger of the new entity in each of the markets concerned is below 30% and the
       post-merger HHI is below 2 000. Where a merged entity would have a market share just above the 30%
       threshold on one market but substantially below on other, related, markets competition concerns will
       be less likely. (See paragraph 25 of the 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).
                                                            5
 ---pagebreak---         contains red, maroon, violet and black pigments. These individual pigments are
        usually referred to using their so-called colour index (for instance Pigment Red 179 –
        abbreviated PR179 – refers to a specific red shade within perylene pigments).
        However, some chemical classes, such as quinophthalone, only contain one colour
        index. Pigments can be mixed together (irrespective of their chemical class) to obtain
        even more colours.
5.3.1.1. Product market definition
Commission’s precedents
(16)    In Clariant/Hoechst,15 the Commission considered organic and inorganic pigments as
        distinct product markets. In BASF/CIBA,16 the Commission considered a further
        potential sub-segmentation of organic and inorganic pigments by chemical class, and
        considered a potential further sub-segmentation into the following categories of
        pigment applications: (i) coatings, (ii) plastics and (iii) others, with the coatings
        category potentially split further into: (i) automotive, (ii) industrial and (iii) decorative
        coatings, ultimately leaving both questions open.
(17)    As regards pigments other than organic pigments, in BASF/CIBA,17 the Commission
        treated bismuth vanadate and pearlescent effect pigments as separate chemical classes,
        and the potential segmentations by application described in paragraph (15) were also
        applied to them.
(18)    In more recent pigment-related cases (Huntsman/Equity Interests18 and
        Tronox/Cristal19), the Commission suggested further sub-segmentations of each of the
        three categories of pigment applications (coatings, plastics and others). More
        particularly, with respect to TiO2,20 the Commission also considered potential
        segmentation by crystalline form (rutile vs anatase), as well as production process
        (sulphate-based vs chloride-based). However, both these cases analysed the market
        for TiO2, which is a white inorganic pigment, and which significantly differs from the
        broader range of primarily organic pigments being combined as a result of the
        Transaction in present case.
The Notifying Party’s view
(19)    The Notifying Party submits that the appropriate market definition is by colour space,
        and that all red pigments, all blue pigments and all yellow pigments form three distinct
        relevant product markets. The Notifying Party considers that pigments within these
        classes exhibit similar properties, and can be substituted without changing the final
        product’s features.21
15      See Case IV/M.911, Clariant/Hoechst, decision of 10 June 1997.
16      See Case COMP/M.5355, BASF/CIBA, decision of 12 March 2009.
17      See Case COMP/M.5355, BASF/CIBA, decision of 12 March 2009.
18      See Case M.7061, Huntsman Corporation/Equity Interests held by Rockwood Holdings, decision of 10
        September 2014.
19      See M.8451, Tronox/Cristal, decision of 4 July 2018.
20      See M.8451, Tronox/Cristal, decision of 4 July 2018.
21      Form CO, paragraphs 230, as well as 232-239.
                                                         6
 ---pagebreak--- (20) First, the Notifying Party argues that it is colour rather than the chemical composition
     of the pigment that is most important to customers, and that, with this respect,
     manufacturers can rely on different chemistries to meet the customers’ colour and
     property requirements.22 The Notifying Party submits that the chemical classes can be
     categorised in colour spaces as indicated in Table 3 below and that the pigments
     categorised to each colour space have similar physical properties.
(21) Second, the Notifying Party stresses that switching pigments/formulation while
     conserving the final product’s precise colour and characteristics has become
     increasingly easy thanks to the recent improvements of colour matching software.23
(22) Third, the Notifying Party exhibits several examples of colour points that can be
     attained through different alternative formulations, using pigments from different
     chemical classes, as well as a few examples of products (in automotive coating or
     consumer goods) for which the precise colour can be matched exactly using alternative
     pigments formulations, all approved by their owner company (for example the
     automotive manufacturer who sells the vehicle).24 The Notifying Party also provides
     some examples of customers of the Parties switching between pigments belonging to
     different chemistries for the same application/need.25
(23) With respect to the possibility of finding alternatives in different chemical class for a
     given pigment, the Notifying Party provides the specific example of lead chromate
     pigments, a class of yellow pigments that was progressively removed from the market
     from 2010 onwards, due to its toxicity. The Notifying Party explains that several
     alternatives/substitutes/replacement solutions for lead chromate pigments, based on
     different chemistries. While presenting these elements, the Notifying Party however
     acknowledges that finding alternatives for lead chromates had been difficult and
     technically challenging due to these products’ high quality and cost-effectiveness.26
(24) Fourth, the Notifying Party further explains that pigment finder tools on pigment
     manufacturer’s websites usually allow customers to filter the searches by colour and
     applications, but not by chemical class. The Notifying Party submits that these tools
     are designed to reflect the customer’s expectations and criteria.27
(25) Fifth, in relation to a potential sub-segmentation of each chemical class by colour
     index (see above paragraph (14)), the Notifying Party argues that there is enough
     supply-side substitution, within each chemical class, between different colour indices,
     for them to be considered as forming part of the same product market, and that, despite
     requiring extensive washing of the production pipes, switching between colour indices
     is feasible, [...].28
(26) Finally, with respect to potential substitution across applications, the Notifying Party
     considers that pigments within each chemical class exhibit similar properties that
     make them suitable for use across applications, and that they are priced [...] across
22   Form CO, paragraphs 207-208.
23   Form CO, paragraphs 240-305.
24   Form CO, paragraphs 213-216 and 223-224.
25   Form CO, paragraph 231.
26   Form CO, paragraphs 225-228.
27   Form CO, paragraphs 217-222.
28   Form CO, paragraphs 306-337.
                                                  7
 ---pagebreak---  ---pagebreak---      as important criteria.33 Therefore, in case of a SSNIP, only a small minority of
     customers would be able to substitute a pigment of another chemical class in a short
     period of time.
(31) Moreover, the majority of customers indicated that within chemical classes they
     cannot easily switch between pigment products within the same colour index, with the
     majority claiming that it is either not possible or possible only for some applications,
     and indicating that testing and requalification would be required. 34 Some customers
     point out, that different products, even within the same colour index, can have different
     qualities and characteristics.35 One customer points out that generally, “the more
     demanding the application, the harder it is to switch / qualify a new supplier” for a
     given colour index.36
(32) A majority of customers indicate they have used colour-matching software in the past
     five years. While many indicate that it can be helpful when selecting pigments or even
     replacing a pigment in an existing formulation, some say it is just a start as it only
     matches the colour. Significant qualification and testing processes may therefore still
     be required to confirm whether other technical specifications are met.37 One pigment
     competitor specifically mentioned that colour matching is not particularly relevant for
     high-performance pigments.38
(33) The same argument applies to pigment finder tools on supplier websites. While these
     may give a general indication of colour and performance characteristics, it is not
     conclusive on whether a pigment meets a customer’s needs – particularly for
     demanding applications.
(34) In summary, the market investigation provides evidence that there is only very limited
     demand-side substitutability between chemical classes, and even between different
     products within a colour index. In situations where substitution is possible, it is often
     a time-consuming and costly process.39
(35) On the supply side, there appears to be very limited substitutability between chemical
     classes and even between colour indices within a chemical class. A competitor
     indicates that each chemical class has dedicated production lines. As different process
     steps are involved for each chemical class, switching will entail significant delays and
     investments and so it is not typically possible within the short period of time required
     to consider them to belong to the same relevant market from a supply side
     perspective.40 41
(36) With regard to supply side substitutability between colour indices within a chemical
     class, the Notifying Party argues this is possible and [...] for certain colour indices
     within quinacridones and phthalocyanines. However, the results of the market
33   Responses to questions 30, 62, 94 of Q1 – Questionnaire to pigments customers.
34   Responses to questions 13, 45, 78, 110 of Q1 – Questionnaire to pigments customers.
35   Responses to questions 13, 45, 78, 110 of Q1 – Questionnaire to pigments customers.
36   Response to question 45 of Q1 – Questionnaire to pigments customers.
37   Responses to question 5, 5.1, 5.2, 5.3, 5.4 of Q1 – Questionnaire to pigments customers.
38   Non-confidential minutes of call with a pigments competitor dated 6 April 2020.
39   Responses to questions 35, 67, 99, 123, 147 of Q1 – Questionnaire to pigments customers.
40   Non-confidential minutes of call with a competitor dated 15 April 2020.
41   Note [...].
                                                        9
 ---pagebreak---      investigation gave clear indications that supply side substitutability is only possible
     for some chemical classes, and within these chemical classes for some colour indices
     only. For perylenes, all competitors indicate that switching production from one colour
     index to another within the chemical class costs considerable time and effort and
     constitutes a strategic decision.42 When asked for an example of such a switch for
     perylenes, one competitor notes: “I have not seen a switch in colour index as it does
     not make business sense.”43 For quinacridones and phthalocyanines, the vast majority
     of competitors indicate that switching production from one colour index to another
     within the chemical class costs considerable time and effort and constitutes a strategic
     decision.44 With regard to quinacridones, a competitor states: “Quinacridones are
     manufactured via two different technologies, namely Acidic ring closure (PPA route)
     and Thermal ring closure (Solvent route). We can switch CI [colour index] from one
     to another if the technology used to make the final CI is the same.” As for
     phthalocyanines, a competitor explains that while it is possible to switch between
     blues (i.e. various types of blue), it is not possible to switch between a blue and a
     green.
(37) A product market definition by application, as has been considered in Commission
     precedents, appears to be less appropriate and to yield a less clear market definition
     than a product market definition by chemical composition.
(38) First, pigments can be used for multiple applications. While the more high
     performance chemical classes are typically used for more demanding applications,
     none of the chemical classes is only used for specific applications. 45 Within the
     chemical class, while some products are particularly suited to a specific application,
     individual products may also be suitable for multiple applications and are marketed as
     such.46 In the market investigation, customers explained that they used all chemical
     classes in a variety of applications.47 The majority of customers also agreed that some
     applications may use the same pigments.48
(39) Second, average price by application [...].49
(40) In summary, the Commission considers it likely that the specific application matters
     less than the specific customer’s need in terms of product quality and characteristics
     (e.g. in terms of light fastness, weather fastness and other characteristics). While a
     correlation between specific applications (e.g. automotive) and specific product
     characteristics (e.g. light and weather fastness) can be observed, this does not mean
     that the market should necessarily be distinguished by application, rather than the
     characteristics of the pigment. Indeed, pigments are distinguishable by chemical class
     or even within class by narrower colour indices. Expensive and high performance
     chemical classes, such as perylenes, will typically be used for a variety of demanding
42   Responses to question 7 of Q2 – Questionnaire to pigments competitors.
43   Response to question 7 of Q2 – Questionnaire to pigments competitors.
44   Responses to question 26 and 45 of Q2 – Questionnaire to pigments competitors.
45   Form CO, paragraph 339.
46   Form CO, paragraph 341 and Figure 95.
47   Responses to questions 9, 41, 73, 105 of Q1 – Questionnaire to pigments customers.
48   Responses to questions 11.3, 43.3, 75.3, 107.3 of Q1 – Questionnaire to pigments customers.
49   Form CO, Figure 99-101.
                                                      10
 ---pagebreak---         applications. For the purposes of this decision, the Commission will therefore assess
        the markets […] the level of chemical class and colour index.
(41)    In light of the above, the Commission considers that, for the purposes of the present
        decision, the appropriate definition of the relevant product market for pigments
        corresponds to at least the level of chemical class, and possibly to the narrower level
        of the colour index within each chemical class.
(42)    However, even within colour indices, products differ in their characteristics and are
        not easy to substitute. Therefore, the Commission considers that certain segmentations
        within colour indices should be retained for the purposes of the competitive analysis,
        as there may be significant product differentiations.
(43)    Ultimately, the question whether the product market definition is by chemical class or
        colour index can be left open for the purposes of the present decision, as it does not
        materially affect the Commission’s assessment since serious doubts arise as to the
        compatibility of the Transaction with the internal market due to horizontal effects in
        perylene and quinacridone pigments under any plausible product market definition
        relating to colour index level and no serious doubts arise as to the compatibility of the
        Transaction with the internal market as a result of non-horizontal effects or horizontal
        effects in chemical classes of pigments other than perylene and quinacridone under
        any plausible product market definition relating to colour index level.
5.3.1.2. Geographic market definition
Commission’s precedents
(44)    The Commission has previously considered that the relevant geographic market for
        pigments is at least EEA-wide and possibly worldwide in scope.
(45)    In case M.5355 – BASF / CIBA, the Commission’s market investigation showed that
        customers in the EEA were supplied from plants outside the EEA for pigments such
        as perylenes, suggesting a worldwide market.50 For some other pigments, such as
        bismuth vanadate, the Commission found that differences in regulation and prices
        suggested an EEA-wide market. Ultimately, the question was left open.
 The Notifying Party’s view
(46)    The Notifying Party submits that the geographic scope of the pigment sector is
        global.51
(47)    Firstly, the Notifying Party argues that the Parties and their competitors supply their
        customers globally from a limited number of production locations. For example, DIC
        produces perylene pigments [...] in its Bushy Park (South Carolina, US) plant, and
        sells it globally.52
       Should read: “at”
50      See Case COMP/M.5355, BASF/CIBA, decision of 12 March 2009, paragraph 116.
51      Form CO, paragraph 358.
52      Form CO, paragraphs 359-364.
                                                   11
 ---pagebreak--- (48)  Secondly, the Notifying Party submits that the pigment sector is characterised by
      significant global trade flows, particularly from China and India into the Western
      hemisphere.53 By way of illustration, the Notifying Party indicates that the volume of
      pigments imported into the EEA correspond to [80-90]% of the total estimated
      demand in the EEA. Out of these volumes imported into the EEA, [80-90]% originates
      in Asia, with China representing [40-50]% and India representing [30-40]%.54 Finally,
      the Parties stress that Chinese and Indian producers continue to expand production
      capacities and build distribution and warehousing facilities in the EEA to facilitate
      export and sales.55
(49)  Finally, the Notifying Party argues that the pigments sector is not subject to significant
      transportation costs and not subject […] significant regulatory barriers. As an
      indication, the Parties submit that transportation and related costs, such as packaging
      and freight, represent well below [small percentage] of total costs.56 In terms of
      regulation, the Notifying Party indicates that pigments are subject to the EU-wide
      REACH regulation.57 According to this regulation, manufacturers and importers of
      chemicals, including pigments, are obliged to register substances they produce and
      market. The Notifying Party considers that this does not form a barrier for non-EEA
      companies, evidenced by the significant amount of REACH registrations made by
      non-EU companies. The Notifying Party illustrates this further by supplying multiple
      examples of Chinese and Indian pigment suppliers showcasing their REACH
      compliance.58
The Commission’s assessment
(50)  The Commission’s market investigation gave sufficient evidence to conclude that the
      market for pigments is global.
(51)  First, the market investigation confirmed the Notifying Party’s claim that pigments
      are non-hazardous and easy to transport materials, and that transports costs are low
      compared to pigments cost per unit of weight.59
(52)  Second, a majority of pigments manufacturers either already supply their EEA
      customers from plants outside the EEA or consider that plants outside the EEA could
      credibly do so,60 and a majority of customers either already purchase their pigments
      globally or would consider doing so in case of a SSNIP within the EEA.61 As such, it
53    Form CO, paragraph 367.
54    Form CO, paragraph 371.
55    Form CO, paragraph 369.
     Should read: “to”
56    Form CO, paragraph 375.
57    EU Regulation (EC) No 1907/2006.
58    Form CO, paragraphs 377-382.
59    Responses to questions 17, 49, 81, 112 and 136 of Q1 – Questionnaire to pigments customers.
60    Responses to questions 8, 7, 27, 28, 46, 47, 65, 66, 84 and 85 of Q2 – Questionnaire to pigments
      competitors.
61    Responses to questions 14, 15, 46, 47, 78, 79, 110, 111, 134 and 135 of Q1 – Questionnaire to pigments.
      customers.
                                                        12
 ---pagebreak---         does not appear important for customers that their supplier’s factory be close to their
        production plants.62
(53)    Third, a majority of customers consider non-EEA manufacturers to be credible
        alternatives for EEA customers.63 This last element should however be considered in
        light of the mixed feedback from customers regarding the ability of Chinese and Indian
        suppliers to meet their requirements for high quality pigments or to match the Parties’
        products in terms of quality and consistency; especially for perylene pigments, as set
        out in section 5.4.1 below.
(54)    In light of the above, the Commission considers that, to the effect of the present
        decision, the relevant geographic market for pigments is worldwide, however with a
        geographic differentiation between Chinese and Indian suppliers and the rest of the
        world, in particular as regards perylene and quinacridone. Accordingly, the
        Commission considers that the assessment of the Transaction would not change under
        a possible relevant geographic market definition as EEA-wide.
5.3.2. Printing inks
(55)    Printing inks are mixtures of colourants (pigments, preparations or dyes), binders,
        solvents and additives for use in printing processes. Printing inks have numerous
        applications, such as print media products, packaging products, newspaper and books.
5.3.2.1. Product market definition
Commission’s precedents
(56)    In previous decisions, the Commission considered segmentations of printing inks both
        on the demand side, into publication and packaging inks as well as on the supply side,
        into paste and liquid inks. The Commission noted that the majority of publication inks
        are paste inks and most packaging inks are liquid inks. The Commission found that on
        the demand side, there is limited substitutability between liquid and paste inks and that
        on the supply side, different equipment is required for manufacturing of liquid inks
        and paste inks.64
(57)    The Commission has additionally considered a further segmentation of paste inks into
        heatset ink, coldset ink and sheetfed ink, and of liquid inks into gravure and
        flexographic inks.65
(58)    The Commission concluded that a segmentation based on physical characteristics, i.e.
        liquid inks and paste inks, provides a clearer market delineation than a segmentation
        based on application. However, finally it left the question open.66
62      Responses to questions 14.1, 46.1, 78.1, 110.1 and 134.1 of Q1 – Questionnaire to pigments customers.
63      Responses to questions 16, 48 and 80 of Q1 – Questionnaire to pigments customers.
64      Case No. COMP/M.1742 – Sun Chemical / Totalfina / Coates, paragraph 9; COMP/M.3564 – CV / Ani
        Printing Inks, paragraph 8; COMP/M.3886 – Aster 2 / Flint Ink, paragraph 8.
65      Case No. COMP/M.3886 – Aster 2 / Flint Ink, paragraph 9.
66      Case No. COMP/M.3886 – Aster 2 / Flint Ink, paragraph 12.
                                                         13
 ---pagebreak--- The Notifying Party’s view
(59)  The Notifying Party submits that a segmentation based on the physical characteristics
      of the ink, i.e. liquid and paste inks, is sufficient and no further segmentation would
      be appropriate.67
(60)  The Notifying Party argues that there is a high degree of supply-side substitutability
      among different types of liquid and paste inks. It further argues that the main
      difference between paste and liquid inks is the pigment load, with paste inks having a
      higher proportion of pigments.68 Despite the differences in pigment loads, the
      Notifying Party submits that same results can be achieved with liquid inks and paste
      inks and that the only difference is the amount of ink required. As paste inks contains
      more pigment, a thinner layer will achieve the same result as a thicker layer of liquid
      ink.69 The Notifying Party finally submits that paste and liquid inks do not require
      different chemistries of pigments; all pigments are suited for use in all types of printing
      inks.70
(61)  However, if a subdivision of printing inks based on their physical characteristics
      (liquid or paste) and their type (between heatset ink, coldset ink and sheetfed ink
      within paste inks, and between gravure and flexographic inks within liquid inks) was
      to be applied, the Notifying Party submits that DIC produces a third type of liquid inks
      that was not examined under any Commission precedent, which is jet inks.71
The Commission’s assessment
(62)  From a demand-side perspective, the market investigation did not provide any
      indications suggesting that the Commission should depart from its past decisional
      practice.
(63)  From the supply-side, while the market investigation provided strong indications that
      switching between paste and liquid ink constitutes a major strategic decision,
      involving considerable costs and efforts,72 it was inconclusive as to whether printing
      inks manufacturers had the ability to switch easily and in a timely manner between
      heatset, coldset and sheetfed inks within paste inks.73 In a similar fashion, the feedback
      received from the market investigation did not allow the Commission to form a
      conclusion as to whether there would be a sufficient degree of supply-side
      substitutability between gravure, flexographic and jet inks within liquid inks to
      consider these three types of liquid inks as forming a single product market.74
(64)  In any event, the Commission considers that, for the purpose of the present case, the
      exact scope of the product market definition for printing inks can be left open, since
      no serious doubts as to the compatibility of the Transaction with the internal market
67    Form CO, paragraph 982.
68    The Notifying Party explains that in general, paste inks have a pigment load of approximately 10-15%,
      while liquid inks have a pigment load of 8% or lower, with small variations between the different sub-
      segments. See also footnote 672 of the Form CO.
69    Form CO, paragraph 979.
70    Form CO, paragraph 980.
71    Form CO, paragraph 982.
72    Responses to question 6 of Q3 – Questionnaire inks competitors.
73    Responses to question 7 of Q3 – Questionnaire inks competitors.
74    Responses to question 8 of Q3 – Questionnaire inks competitors.
                                                        14
 ---pagebreak---         arise under any plausible product market definition (i.e. segmented between liquid and
        paste inks or further segmented between heatset, coldset and sheetfed inks within paste
        inks and between gravure, flexographic and jet inks within liquid inks).
5.3.2.2. Geographic market definition
Commission’s precedents
(65)    The Commission has previously defined the market for printing inks as EEA-wide.
        The Commission found that transport costs are comparatively low, there is a
        significant level of cross-border trade and all major competitors have a multinational
        presence. Considering the minimal level of imports into the EEA, the Commission
        excluded a global market.75
The Notifying Party’s view
(66)    The Notifying Party submits that the liquid and paste ink markets are global. It argues
        that the Commission established in its previous decisions that transportation costs are
        low, price levels in different continents are comparable, major competitors have
        multinational presence and local production is not a prerequisite to compete and that
        those characteristics are indicative of a global market.76
The Commission’s assessment
(67)    From a demand-side perspective, the market investigation did not provide any
        indications suggesting that the Commission should depart from its past decisional
        practice.
(68)    From the supply-side, while the vast majority of printing inks manufacturers indicated
        that suppliers from outside the EEA could credibly supply customers within the
        EEA,77 the market investigation proved inconclusive as to whether the respondents
        themselves would have the ability to supply customers within the EEA from plants
        outside the EEA without incurring additional costs and efforts.78 Some respondents,
        though a minority, even suggested that they primarily supplied their customers from
        manufacturing facilities close to their customer’s plant in South-West Europe or the
        Mediterranean area.79 Some respondents also suggested that the geographic market
        could be wider for paste inks than for liquid inks, since liquid inks are more
        voluminous and transport costs per unit of value would are more important.80
(69)    In any event, the Commission considers that, for the purpose of the present case, the
        exact scope of the geographic market definition for printing inks can be left open,
        since the Transaction does not raise serious doubts as to its compatibility with the
        internal market, regardless of the precise geographic market definition (i.e. EEA-wide
        or worldwide).
75      Case No. COMP/M.3886 – Aster 2 / Flint Ink, paragraphs 13-14.
76      Form CO paragraph 984.
77      Responses to question 10 of Q3 – Questionnaire inks competitors.
78      Responses to question 9 of Q3 – Questionnaire inks competitors.
79      Responses to question 9 of Q3 – Questionnaire inks competitors.
80      Responses to question 11 of Q3 – Questionnaire inks competitors.
                                                       15
 ---pagebreak---  ---pagebreak---  ---pagebreak--- The Notifying Party’s view
(76)  The Notifying Party’s arguments are twofold: the Notifying Party first presents
      general arguments that apply to all categories of pigments under review, and then
      moves on to presenting arguments which are specific to each of the three colour
      spaces, which it submits should be considered as separate relevant product markets.
      In this section the Notifying Party’s general arguments will be presented first,
      followed by the arguments that apply more specifically to perylene pigments. In the
      following sections, the Commission lays down the specific arguments relating to each
      specific chemical class.
      General considerations on all chemical classes
(77)  With respect to all categories of pigments, the Notifying Party first explains that the
      Parties as well as their western competitors face increased competitive pressure from
      Chinese and Indian pigment manufacturers, who have progressively acquired
      sufficient know-how over the course of the years to be presently in a situation to
      supply pigments belonging to all chemical classes at very competitive rates thanks to
      cheap labour and lower investment in R&D, and with a quality that matches
      customers’ requirements.82 The Notifying Party argues that, doing so, Chinese and
      Indian pigments manufacturers have benefitted from the expertise of former
      employees from western pigment manufacturers,83 as well as government support,84
      allowing them to enter these markets without incurring the significant developments
      costs that were necessary to develop the specifications used to manufacture the
      pigments, as well as the industrial production of these pigments,85 and to progressively
      commoditise all chemical classes of pigments, including high performance
      pigments.86 As an illustration, the Notifying Party indicates that after the expiration of
      the relevant patent in 2014, the average selling price of DPP pigments fell from EUR
      [...] / kg in 2005 to EUR [...] / kg as of today.87 The Notifying Party also provides
      extracts from communications made by Chinese and Indian suppliers on their strategy
      to expand their pigment portfolio from low-end markets and commodity pigments to
      specialised markets and speciality pigments, and to develop their footprint in western
      countries88, [...].89
(78)  The Notifying Party also emphasises the fact that Chinese and Indian manufacturers
      take advantage of their better cost position to increase their production capacity and
      capacity shares, to the effect that the market is currently characterised by over-capacity
      at worldwide level,90 and that these manufacturers expand in western markets.91 In
      support of this statement, the Notifying Party provides [...],92 [...].93 The Notifying
82    Form CO, paragraphs 384 – 390 and 442 – 457.
83    Form CO, paragraph 429.
84    Form CO, paragraphs 426 – 428.
85    Form CO, paragraphs 391 – 393.
86    Form CO, paragraphs 403 – 408.
87    Form CO, paragraph 409.
88    Form CO, paragraphs 410 – 413.
89    Form CO, paragraphs 414 – 425.
90    Form CO, paragraphs 430 – 436.
91    Form CO, paragraphs 437 – 438, 440 – 441 and 458 – 463.
92    Form CO, paragraph 439.
93    Form CO, paragraphs 464 – 472.
                                                   18
 ---pagebreak---  ---pagebreak--- (81) The Notifying Party also explains that the Parties’ customers [...],102 [...].103 [...].104
     [...].105
(82) Regarding closeness of competition, the Notifying Party explains that the Parties are
     not close competitors, given that for most chemical classes, either only BCE
     manufactures this product (DIC [...]) or the increment brought by the Transaction is
     small.106 The Notifying Party also explains that research and development is of limited
     importance for pigments.107
(83) In a paper regarding the impact of COVID-19 on the competitive assessment of the
     Proposed Transaction, the Notifying Party also explains that the COVID-19 pandemic
     has drastically reduced the demand for pigments,108 mainly from coating
     manufacturers active in the automotive industry, because the production of cars was
     stopped in many plants throughout the world, and sales of cars have collapsed in
     particular in the EEA,109 as well as in the printing industry, because advertising
     materials represent 40% of all printing products in Europe and companies have cut
     their advertising expenses because of the crisis.110 The Notifying Party further
     explains that as a result of this situation, [...],111 [...],112 [...],113 while Chinese pigments
     manufacturers have resumed operations thanks to the earlier improvement of the
     sanitary situation in China, and have taken advantage of this situation to further expand
     their operations.114
(84) Finally, in a paper on buyer power of the Parties’ customers annexed to the Form CO,
     the Notifying Party provides additional argumentation on why buyer power would
     make attempted price increases unsuccessful. The Paper on Buyer Power describes
     that for perylene and quinacridone, [...].115[...].116 [...].117 [...].118
     Considerations specific to the perylene chemical class
(85) More specifically with respect to perylene pigments, the Notifying Party argues that
     the Parties are facing increasingly aggressive competition119 from a number of strong
     Chinese and Indian suppliers, such as LianGang, HongGang, Gaoyou, Pidilite, Trust
102  Form CO, paragraphs 686 – 710.
103  Form CO, paragraphs 711 – 717.
104  Form CO, paragraphs 718 and 728 – 735.
105  Form CO, paragraphs 719 – 727.
106  Form CO, paragraphs 736-754.
107  Form CO, paragraphs 757-762.
108  Annex 32 to the Form CO, page 2.
109  Annex 32 to the Form CO, pages 3-7.
110  Annex 32 to the Form CO, pages 2-3.
111  Annex 32 to the Form CO, page 2.
112  Annex 32 to the Form CO, page 2.
113  Annex 32 to the Form CO, pages 7 – 8.
114  Annex 32 to the Form CO, page 9.
115  Annex 33 to the Form CO, page 3.
116  Annex 33 to the Form CO, page 4.
117  Annex 33 to the Form CO, pages 5-8.
118  Annex 33 to the Form CO, page 9.
119  Form CO, paragraph 438.
                                                   20
 ---pagebreak---      Chem, Union Colours, Anshan Hifi, as well as others,120 including in the most
     demanding applications such as automotive coating applications 121 and that Chinese
     manufacturers are able to match the quality offered by western producers.122 The
     Notifying Party explains that both Liaoning Lian Gang’s and Liaoning Hong Gang’s
     production capacity for perylene pigments [...], and will continue to increase in the
     future due to planned capacity expansions. Due to these capacity expansions, the
     Parties’ global capacity share for perylene pigments decreased [...], from [40-50]% to
     [30-40]%.123
(86) In addition, the Notifying Party provides a list of recent entries in the perylene market,
     mainly from the two Chinese manufacturers: Riwa (who claims to export 80% of its
     pigment production) and Anshan Hifi, both vertically integrated with respect to
     naphthalic anhydride (see paragraph (87) below), as well as the Czech manufacturer
     Synthesia.124 The Notifying Party submits that Chinese companies that entered into
     the perylene market benefitted in doing so from the support of Chinese governmental
     bodies such as the Shenyang Institute of Chemical Engineering and the Tianjin
     University Chemical Engineering Institute.125
(87) In order to illustrate the aggressiveness of Chinese competition with respect to [...],126
     [...].127 [...]. Finally, the Notifying Party explains that DPP pigments, for which prices
     have decreased sharply over the past years (see paragraph (61) above) represent a very
     attractive alternative to perylenes and quinacridones pigments.128
(88) The Notifying Party also emphasises the importance of naphthalic anhydride as an
     input for the production of perylene pigments (see paragraph (63) above), a product
     which is only produced in China, for which some of the Parties’ largest Chinese
     competitors for perylene products (Liaoning Lian Gang, Liaoning Hong Gang and
     Anshan Hifi) are vertically integrated, and in relation to which the 25% import tariffs
     imposed by the American administration on several products imported from China
     puts DIC at a further [...] disadvantage compared to its Chinese competitors.129
(89) The Notifying Party also points out that [...]. [...].130 The Notifying Party explains that
     this provides its customers with countervailing buying power, [...].
(90) Finally, in the Notifying Party’s paper regarding the impact of COVID-19, [...].131
120  Form CO, paragraphs 412 and 777.
121  Form CO, paragraph 439.
122  Form CO, paragraph 442.
123  Form CO, paragraphs 433, 438 and 440.
124  Form CO, paragraph 780.
125  Form CO, paragraph 428.
126  Form CO, paragraph 425.
127  Form CO, paragraph 439.
128  Form CO, paragraph 456.
129  Form CO, paragraphs 394, 398, 477 and 480.
130  Form CO, paragraphs 691, 703 and 792-795.
131  The Notifying Party’s submission regarding the impact of COVID-19, page 2.
                                                     21
 ---pagebreak--- The Commission’s assessment
(91)  For the reasons set out in this section, the Commission considers that the Transaction
      raises serious doubts as to its compatibility with the internal market with respect to
      perylene pigments. The Commission considers that serious doubts would also arise if
      the product market were instead considered at colour index level, as set out below.
(92)  First, as regards the Notifying Party’s claim that Chinese and Indian competitors
      represent a significant competitive pressure on the Parties’ activities, while this
      argument was partly confirmed by the market investigation with respect to several
      other chemical classes, it was strongly contradicted by the results of the market
      investigation with respect to perylene pigments. In particular, despite the fact that a
      small majority of EEA customers would consider switching to a non-EEA supplier in
      case of a price increase for perylenes in the EEA,132 less than half of the EEA
      customers that expressed a view consider that Chinese and Indian suppliers are
      credible for the supply of perylene pigments to EEA customers.133 Moreover, a
      majority of customers procure their perylene pigments exclusively from inside the
      EEA.134 When asked to rate perylene manufacturers according to their competitive
      strength for the supply of perylene pigments in the EEA, customers respond in such a
      way that no Indian or Chinese manufacturer ranks among the top 5 suppliers.135 When
      asked to perform the same exercise for the supply of perylene pigments worldwide,
      only one Chinese or Indian perylene pigments manufacturer ranks among the top 5
      suppliers worldwide, as number 5.136 These elements should be read in conjunction
      with the fact that virtually all customers consider that there are less than 5 credible
      suppliers for perylenes overall,137 and, based on customers’ comments, it is likely that
      there is in fact an even more limited number of close competitors to the Parties for
      perylenes, at least for the highest quality grades.138
(93)  Beyond the average rating received by each competitors, the Commission also
      considered the number of times they were rated. Since customers only rated
      competitors they are aware of, have looked into in the past, or have considered as
      potential suppliers in the past, this is also a good indication of the degree of
      information customers have regarding the existence of various perylene suppliers,
      from around the world. While DIC, BCE and Clariant all get above 45 ratings, the
      number four supplier, Synthesia, gets rated 27 times, and the number one Chinese
      supplier, Liaoning LianGang, only 24 times.139
(94)  The fact that a majority of perylene suppliers that the Commission asked customers to
      rate (based on a list of top perylene competitors provided by the Parties, a majority of
      which were Chinese suppliers) were unknown to customers is also reflected in the
      customers’ comments. As one customer explains, “As a customer it is very
      intransparent whether the a.m. suppliers are really producers.” Another top customer
132   Responses to question 15 of Q1 – Questionnaire to pigments customers.
133   Responses to question 16 of Q1 – Questionnaire to pigments customers.
134   Responses to question 14 of Q1 – Questionnaire to pigments customers.
135   Responses to question 24 of Q1 – Questionnaire to pigments customers.
136   Responses to question 25 of Q1 – Questionnaire to pigments customers.
137   Responses to question 21 of Q1 – Questionnaire to pigments customers.
138   Responses to questions 24 and 25 of Q1 – Questionnaire to pigments customers.
139   Responses to question 25 of Q1 – Questionnaire to pigments customers.
                                                     22
 ---pagebreak---      of the Parties states that “[Customer] is generally aware that Clariant has limited
     participation in perylenes, but does not purchase perylene from Clariant and is not in
     a position to comment on its competitive strength. [Customer] does not have
     information on the competitive strength of any of the other suppliers listed and does
     not purchase perylene from any of them.” A Japan-based top customer of the Parties
     also mentions that “we don't know about such many suppliers mentioned above besides
     BCE, Clariant and DIC, we don't hear so much about reputation or evaluation about
     such non-traditional suppliers in our Japanese market.”140
(95) It should also be noted, in addition, that while the volume of pigments imported into
     the EEA corresponds to [80-90]% of the total estimated demand in the EEA (with
     Chinese and Indian suppliers representing [80-90]% of these imports – see also
     paragraph (77) above), this proportion is significantly lower for perylene pigments,
     namely around [30-40]% in volume and [20-30]% in value. Perylene is in fact, with
     azo condensation and pyrazoloquinazolone, among the chemical classes for which
     imports into the EEA represent the smallest fraction of EEA consumption of all
     organic pigments. Given the apparent lack of obstacles to trade pigments around the
     world, as well as the fact that [80-90]% of all pigment imports to the EEA are from
     Asia, this would seem to indicate that a substantial proportion of non-EEA competition
     for perylenes is considered a less credible source of supply by EEA customers. As
     such, these elements indicate that there is a degree of geographic differentiation in the
     market, where Chinese and Indian pigments manufacturers are more distant
     competitors that do not exert a strong competitive pressure on the Parties’ perylene
     activities.
(96) Second, with respect to the Parties’ arguments that their perylene customers can and
     do switch [...]141 [...] while the result of the market investigation clearly evidenced the
     fact that the most demanding applications for perylene are automotive coating
     applications, and in particular automotive refinish applications, which are mainly
     driven by western customers.142 This distinction is important inasmuch as the
     Commission considers this to be a heterogeneous product market, where the specific
     demands of customers will dictate the characteristics of products supplied and the
     proximity of suppliers in competitive terms. [...]143 [...].144
(97) The fact that the Notifying Party was not in a position to provide multiple and
     meaningful examples of EEA customers switching away their perylene business to
     Chinese or Indian pigments manufacturers is suggestive of the fact that perylene
     products manufactured by suppliers other than the Parties are not considered either
     close or as credible alternatives as the Parties’ own perylene products.
(98) In addition, while the Commission acknowledges that [...]145 [...]146. [...] results of the
     market investigation, evidencing that a majority of perylene customers consider that
     prices have increased by 5% or more in the last 5 years relative to the raw materials
140  Responses to question 25 of Q1 – Questionnaire to pigments customers.
141  Form CO, paragraph 439.
142  Responses to question 11 of Q1 – Questionnaire to pigments customers.
143  Form CO, paragraph 439.
144  Form CO, paragraph 439.
145  Form CO, paragraph 425.
146  Form CO, paragraph 425.
                                                    23
 ---pagebreak---       used for their production.147 Observing a [...] and increase in sales price suggests that
      while some of the Parties’ less demanding customers, accounting for roughly [...]% of
      the Parties’ sales, were able to switch away from them, the vast majority of the Parties’
      customers had no choice [...] over the period. This is supported by results of the market
      investigation, evidencing the fact that virtually none of the Parties’ customers have
      qualified a new supplier for their perylene pigments over the past three years, 148 as
      well as the fact virtually none of the Parties’ customers have switched supplier for
      their perylene pigments over the past three years.149
(99)  Third, as regards the Notifying Party’s arguments that the perylene market is
      characterised by overcapacity, the Commission acknowledges the fact that the figures
      provided by the Notifying Party can indeed be considered as indicative of a situation
      of over-supply for perylene pigments overall. However, according to the information
      provided by the Notifying Party, the vast majority of this overcapacity is due to
      capacity expansions by Chinese perylene pigments manufacturers,150 which cannot be
      considered close competitors to the Parties. As a result, such over-capacity is likely to
      have little bearing on the Parties’ activities and competitive interactions.
(100) Fourth, with respects to the Notifying Party’s arguments on the importance of
      naphthalic anhydride, which is only produced in China by some of the Parties’ largest
      perylene competitors, as an input for the production of perylene pigments, the
      Commission notes that the fact that one of the major inputs for perylene production is
      controlled by Chinese competitors of the Parties does not appear to put the Parties, or
      their EEA competitors, at a disadvantage compared to other perylene manufacturers.
      As mentioned above in paragraph (91), when asked to rate perylene manufacturers
      according to their competitive strength for the supply of perylene pigments in the EEA,
      customers respond in such a way that no Indian or Chinese manufacturer ranks among
      the top 5 suppliers in terms of average rate;151 and when asked to perform the same
      exercise for the supply of perylene pigments worldwide, only one Chinese or Indian
      perylene pigments manufacturer ranks among the top 5 suppliers worldwide, as
      number 5.152 Moreover, [...] data [...]153 [...]. It therefore appears quite clearly that,
      even assuming that the current supply situation with respects to naphthalic anhydride
      is putting the Parties at a [...] disadvantage compared to their Chinese competitors, the
      Parties’ position, as well as the performance and uniqueness of the products they
      manufacture, [...].
(101) Fifth, as regards the constraints posed to the Parties by EU and US manufacturers, the
      Commission notes that when asked to rate perylene manufacturers according to their
      competitive strength for the supply of perylene pigments either in the EEA, or
      worldwide, customers respond in such a way that BCE and DIC are consistently
      ranked number one and number two respectively.154 A competitors also comments in
      this respect that “BCE and DIC are the leaders, others like Clariant are distant
147   Responses to question 31 of Q1 – Questionnaire to pigments customers.
148   Responses to question 33 of Q1 – Questionnaire to pigments customers.
149   Responses to question 34 of Q1 – Questionnaire to pigments customers.
150   Form CO, paragraphs 430 – 436.
151   Responses to question 24 of Q1 – Questionnaire to pigments customers.
152   Responses to question 25 of Q1 – Questionnaire to pigments customers.
153   Form CO, Annexes 18.1, 18.2 and 18.3.
154   Responses to questions 24 and 25 of Q1 – Questionnaire to pigments customers.
                                                     24
 ---pagebreak---       seconds.”155 This conclusion would apply to competition from both EEA and non-
      EEA perylene pigments manufacturers.
(102) Sixth, as regards the Parties’ arguments regarding the absence of barriers to enter the
      perylene market, the Commission notes that the manufacturing process described by
      the Notifying Party for the synthesis of perylene pigments from naphthalic anhydride
      involves seven different steps, and the Notifying Party acknowledges that the
      production process is “comparably complex”.156 Moreover, the vast majority of
      customers and competitors were unable to name perylene manufacturers who had
      recently entered (in the past 5 years)157 or were intending to enter (in the next 2 years)
      the market for perylenes.158 Therefore, contrary to what the Notifying Party submits,
      barriers to enter the perylene market appear to exist.
(103) Seventh, as regards the Parties’ argument [...] customers, who enjoy significant
      bargaining power, this argument was largely contradicted by the market investigation,
      that evidenced that the majority of customers consider that they have either little or
      very little bargaining power compared to the strongest suppliers for perylenes.159
      [...].160 [...]161 [...].
(104) Eighth, as regards the Notifying Party’s arguments that they are not close competitors
      in perylene pigments, when asked specifically to name who DIC’s top competitors are
      on the one side, and who BCE’s top competitors are on the other side, while other
      EEA competitors such as Clariant and DCC are mentioned a number of times, the
      Parties are by far more often mentioned to be each other’s closest competitors.162
      Moreover, in relation to the potential impact of the Transaction, several customers
      suggest that the perylene market is already, as of today, rather concentrated, with very
      few alternative suppliers. One customer states: “Actual number of EEA suppliers are
      reduced, so additional reduction will bring to even less competition”.163 Another
      comments: “The choice was already limited”.164 A third one explains: “Not enough
      serious competitioners (sic) for BCE/DIC left in the market, just 1 or 2”.165 In
      summary, as a customer of the Parties puts it, “Alternative suppliers with a quality
      level of BASF and DIC/Sun are very rare.”166 These elements support the conclusion
      that, contrary to what the Notifying Party claims, DIC and BCE are closely competing
      in the perylene market.
(105) Ninth, as regards the impact of the COVID-19, the Commission acknowledges the
      scale and importance of the very serious disruptions the COVID crisis created in the
      automotive industry as well as the printing industry, and estimates that in all likelihood
155   Responses to question 16 of Q2 – Questionnaire to pigments competitors.
156   Form CO, paragraph 156.
157   Responses to question 36 of Q1 – Questionnaire to pigments customers and question 21 of Q2 –
      Questionnaire to pigments competitors.
158   Responses to question 37 of Q1 – Questionnaire to pigments customers and question 22 of Q2 –
      Questionnaire to pigments competitors.
159   Responses to question 27 of Q1 – Questionnaire to pigments customers.
160   Form CO, paragraphs 691, 693 and 698.
161   Form CO, paragraphs 693 and 698.
162   Responses to question 26 of Q1 – Questionnaire to pigments customers.
163   Responses to question 38 of Q1 – Questionnaire to pigments customers.
164   Responses to question 38 of Q1 – Questionnaire to pigments customers.
165   Responses to question 38 of Q1 – Questionnaire to pigments customers.
166   Responses to question 13 of Q1 – Questionnaire to pigments customers.
                                                     25
 ---pagebreak---       this crisis may indeed have lasting consequences in these industries, thus affecting the
      demand for pigments in general, and perylene pigments in particular in the short and
      even medium terms. Nevertheless, in its assessment, the Commission also needs to
      take into account the fact that a merger creates a structural changes in a market, which
      are likely to have long-lasting consequences. In addition, the Commission’s initial
      market investigation was carried out between May-June 2020 and the market
      investigation following re-notification in October-November 2020, at a time when the
      COVID-19 and its potential consequences were already known to all market players.
      The Commission therefore considers that the impact of this crisis taken into account
      by respondents, in particular when answering questions about the effects of the
      Transaction and its impact on prices, quality, choice of products and innovation.
(106) Finally, and consistent with all of the above, the results of the market investigation
      showed that customers were concerned about the impact of the Transaction. While a
      small majority of customers considered that there would remain a sufficient number
      of suppliers post-Transaction,167 a significant majority considered that either slight or
      significant price increases were likely.168 Moreover, close to half of the customers that
      expressed a view expected either a small or a large decrease in the choice of products
      available to them.169 This is indicative of the fact that a majority of perylene customers
      expect a significant negative impact of the Transaction.
(107) In conclusion, based on the above findings, the Commission considers that the
      Transaction raises serious doubts as to its compatibility with the internal market in
      respect of perylene pigments.
(108) If the relevant product market were instead considered to be at colour index level, only
      two colour indices would be affected at worldwide level, namely PR179 and PV29.
      The findings set out above in paragraphs (90) to (106) hold true for PR179 and PV29
      individually as well.
(109) In the first market investigation, the majority of concerns voiced by respondents that
      were specific to a single colour index pertained to PR179. PV29, which is a smaller
      product market in terms of volume, was mentioned less frequently. Therefore,
      following the second notification of the Transaction, the Commission performed a
      targeted market investigation on, among others, perylene colour index PV29. This
      targeted market investigation further confirmed that the findings for perylene apply to
      PV29 as well. In particular, the lack of credible alternative suppliers for perylene
      pigments would appear to be even more critical for PV29 (in addition to PR179).
(110) The main competitors for PR179 and PV29 identified by the Parties are Chinese
      companies Liaoning Hong Gang and Liaoning Liang Gang, which in fact appear to
      belong to the same group, Liaoning Companies according to some respondents. The
      large majority of respondents to the market investigation indicated that they are not
      familiar with either of the Liaoning Companies. 170 Those that did indicate to be
167   Responses to question 38 of Q1 – Questionnaire to pigments customers.
168   Responses to question 39 of Q1 – Questionnaire to pigments customers.
169   Responses to question 39 of Q1 – Questionnaire to pigments customers.
170   See question 3 of Q6 – Questionnaire to pigments customers and question 3 of Q7 – Questionnaire to
      pigments competitors.
                                                     26
 ---pagebreak---  ---pagebreak---  ---pagebreak--- (117) As mentioned above in section 5.4.1, the Notifying Party argues that all red pigments
      with similar physical properties form a single product market. Quinacridone pigments
      would be part of this hypothetical combined market. In this combined market, the
      Parties’ combined market shares amounts to [20-30]% worldwide (with a [5-10]%
      increment from DIC).The Notifying Party’s estimates of the Parties’ and their largest
      competitors’ market shares for red pigments overall worldwide are as laid out above
      in Table 7.
The Notifying Party’s view
(118) As described in section 5.4.1, the Notifying Party presents arguments in its
      competitive assessment that apply broadly to all pigments, as well as arguments
      specific to quinacridone. Arguments that apply to all pigments have been laid out in
      section 5.4.1; arguments specific to quinacridones are presented in this section.
(119) The Notifying Party submits that quinacridone customers have significant
      countervailing buyer power. To evidence this, [...].178 The Notifying Party also
      submits that customers have plenty of credible alternative suppliers of quinacridone
      they can switch to, as will be detailed below.
(120) The Notifying Party indicates that [...].179 [...].180
(121) As described in paragraphs (76) and (77), the Notifying Party argues that the Parties
      experience significant competition, particularly from Chinese and Indian entrants for
      all pigments. For quinacridones specifically, the Notifying Party submits that the
      Parties’ global capacity shares are falling due to capacity expansions of competitors,
      from [20-30]% in 2017 to [20-30]% in 2020. By way of illustration, the Notifying
      Party mentions a capacity expansion [...] by Pidlite [...], as well as capacity expansions
      [...] by Ami Pigments [...], [...] by Gharda [...] and [...] by Sudarshan [...].181 The
      Notifying Party’s estimates of global quinacridone production capacities are provided
      in Table 12, and show that according to the Notifying Party, six out of the top
      manufacturers are from China or India.182
(122) The Notifying Party indicates that because of the capacity expansions, global
      production capacities exceeded demand by [more than 20]% in 2018, putting pressure
      on prices.183 Additionally, it indicates that DPP, since its patent expiry, has become a
      lower-cost alternative to quinacridone, putting further downward pressure on prices.184
178   Form CO, paragraph 796-797.
179   Form CO, paragraph 798.
180   Form CO, Figure 105.
181   Form CO, paragraph 434. [...].
182   Form CO, paragraph 454.
183   Form CO, paragraph 455.
184   Form CO, paragraph 456.
                                                  29
 ---pagebreak---  ---pagebreak---       EEA. A small majority of customers indicate that they already source part of their
      quinacridones from Chinese and Indian suppliers today.190
(129) Despite these results, a majority of customers indicated there are barriers for suppliers
      from outside the EEA to supply EEA customers. One of the barriers named most
      frequently are regulatory barriers, notably REACH certification. 191 However, as the
      Notifying Party indicates, a significant number of non-EEA pigments suppliers have
      obtained REACH certification.192 These non-EEA suppliers include Chinese and
      Indian suppliers of quinacridone pigments.193
(130) Nevertheless, overall, a majority of customers and competitors expect no impact on
      their business with respect to quinacridones in general as a result of the Transaction.
      Some mention that if the merged entity rationalises its product portfolio post-
      Transaction, this may lead to requalification cost and effort.194 Notably, one customer
      states: “The situation with [q]uinacridones is much better than with the perylenes.
      Especially because Clariant remains as second market leader and there are already
      existing alternative capacities in Asia.”195
(131) However, with regard to specific colour indices within quinacridone, some customers
      mention that competition is less credible for specific colour indices because
      competitors to the Parties do not meet the required quality standards. Notably, one
      large customer states: “PR 202 in suitable qualities is currently only offered by the
      two parties, a Chinese manufacturer is currently developing an alternative product,
      PR 122 today available qualities from Chinese and Indian suppliers can substitute the
      products of the parties, for PV 019 substitution is difficult as each product vary in its
      content of beta- and gamma crystal phase which leads to different technical
      performance”.196
(132) Contrary to the Notifying Party’s claim that customers exercise significant
      countervailing buyer power, the majority of customers indicate that they experience
      their buyer power as equal or lower than that of the Parties. This includes large
      customers, one of which indicates that bargaining power is specifically low for colour
      indices for which there are few or no alternatives to the Parties, such as PR 202: “For
      P R 122 bargaining power is significant. For P R 202 and For P V 019 lower
      bargaining power.” Another customer points to the difficulty to substitute pigments:
      “Main reason for low negotiation power rate is the difficulty to substitute a pigment
      by an other one from a competitor. We often are in a kind of "captive" commercial
      situation.” 197
(133) Both customers and competitors consider Clariant as the strongest player in
      quinacridone pigments. The Parties are considered as the second and third strongest,
190   Responses to question 46 of Q1 – questionnaire to pigments customers.
191   Responses to question 49 of Q1 – questionnaire to pigments customers.
192   See Form CO, paragraph 380.
193   See Form CO, paragraph 382.
194   Responses to question 72 of Q1 – questionnaire to pigments customers and question 43 of Q2 –
      questionnaire to pigments competitors.
195   Responses to question 70 of Q1 – questionnaire to pigments customers.
196   Responses to question 48 of Q1 – questionnaire to pigments customers.
197   Responses to question 59 of Q1 – questionnaire to pigments customers.
                                                      31
 ---pagebreak---       followed by Sudarshan of India.198 However, one competitor indicates the picture is
      different for some colour indices, indicating that PR202 is only supplied by the
      Parties.199
(134) Finally, the large majority of customers consider that sufficient suppliers of
      quinacridone pigments in general remain post-Transaction.200 A small majority of
      customers expect a small increase in price, while most expect quality and innovation
      to be unaffected. Results on product choice are inconclusive, with no strong majority
      for any option.201 The majority of competitors expect no impact on price, quality or
      product innovation and a slight decrease in choice.202 However, some customers
      mention that too few alternative suppliers would remain for colour index PR202.203
(135) Because of the mixed feedback on quinacridone colour indices PR202 and PV19 in
      the initial market investigation, the Commission focused, among others, specifically
      on these two colour indices in its targeted market investigation following re-
      notification of the Transaction.
(136) For PR202, the only competitors identified by the Notifying Party, are Wenzhou
      Jinyuan and Zhejiang Yongquan of China. The majority of the respondents to the
      targeted market investigation following re-notification indicated not to be familiar
      with either of those competitors. The large majority of those that were familiar with
      them, indicated not to consider either of them as a credible PR202 supplier that is able
      to meet quality requirements. 204 Additionally, respondents were not familiar with
      alternative suppliers of PR202 besides the Parties, Wenzhou Jinyuan and Zhejiang
      Yongquan.205
(137) Customers indicated it is difficult to switch from PR202 to an alternative supplier of
      PR202 quickly and without significant cost.206 As a result, the majority of customers
      consider that insufficient suppliers remain post-Transaction and that the Transaction
      will have a negative impact on price.207
198   Responses to question 57 of Q1 – questionnaire to pigments customers and question 36 of Q2 –
      questionnaire to pigments competitors.
199   Responses to question 36 of Q2 – questionnaire to pigments competitors.
200   Responses to question 70 of Q1 – questionnaire to pigments customers and question 36 of Q2 –
      questionnaire to pigments competitors.
201   Responses to question 71 of Q1 – questionnaire to pigments customers.
202   Responses to question 42 of Q2 – questionnaire to pigments competitors.
203   Responses to question 70 of Q1 – questionnaire to pigments customers.
204   For example, on the customer side one explained that explained that “ …. For "ideological" reasons we
      prefer to avoid any supplies from Chinese suppliers - potential troubles with quality standards, no trust
      in their declarations, governmental influence on their business ….”, another said that “ The quality of
      this products is not acceptable. And the delivery time is very long. Don't have any profesional technical
      support. ”; while a competitor said that “..Wenzhou Jinyuan is mainly focussed on China in general and
      regarding PR 202, they are small. Zhejiang Yongquan is not known to us as a PR 202 producer …”,
      while another one said that “ …As per best of our knowledge only Wenzhou Jinyuan is producing PR202
      in smaller quantities. Zhejiang Yongquan is not known as a manufacturer of PR202...”.
205   Responses to questions 13, 14, 16 and 17 of Q6 – Questionnaire to pigments customers and responses
      to questions 11, 12, 13 and 14 of Q7 – Questionnaire to pigment competitors.
206   Responses to question 19 of Q6 – Questionnaire to pigments customers.
207   Responses to questions 20 and 21 of Q6 – Questionnaire to pigments customers.
                                                         32
 ---pagebreak---  ---pagebreak---  ---pagebreak---  ---pagebreak--- (151) The Notifying Party argues that the Parties’ customers [...] have countervailing buyer
      power [...].214
The Commission’s assessment
(152) For the reasons set out in this section, the Commission considers that serious doubts
      can be excluded for phthalocyanine pigments (in case of a product market definition
      by chemical class, with product differentiation within the product market) as well as
      for colour indices within the phthalocyanines chemical class (in case of a product
      market definition by colour index).
(153) If the product market for phthalocyanine pigments was considered at chemical class
      level, the Parties’ combined market shares for phthalocyanine pigments would be [10-
      20]% worldwide, well below the 20% threshold for a market to be considered as
      affected.
(154) If the product market for phthalocyanine pigments was further segmented by colour
      indices, it would be affected only for the colour indices PB15-4 and PG36.
(155) For PG36, the increment from the Transaction would remain marginal ([0-5]%) with
      a HHI increment of <150. Therefore, in the absence of any additional specific motive
      for concern (see also paragraph (136) below), the Commission considers that the
      Transaction does not raise competition concerns in relation to the market for PG36.
(156) For PB15-4, the Parties’ combined market shares are [20-30]% worldwide, with a [10-
      20]% increment from BCE and an HHI increment of [390-400]. However, the market
      investigation didn’t reveal any general concerns with respect to phthalocyanine
      pigments, nor did it reveal any specific concern with respect to the PB15-4 colour
      index.
(157) With respect to phthalocyanine pigments overall, which is not an affected market, the
      market investigation confirmed the Notifying Parties’ claim that the phthalocyanine
      pigments are a commoditised class of pigments, with a competitive market as well as
      strong and credible competitors. A vast majority of respondents consider that there
      will remain a sufficient choice of credible phthalocyanine suppliers post-Transaction
      at both EEA and worldwide level,215 and the majority of customers expected either no
      impact or a decrease in the price of phthalocyanine pigments as a result of the
      Transaction at both worldwide and EEA level.216
(158) PB 15-4 specifically is mentioned on very few occasions by either customers or
      competitors. While a number of customers emphasised for instance the very specific
      tint and properties of PB15-1 and PB15-6,217 this was not the case for PB15-4. One of
      the very few occasions where PB15-4 are mentioned explicitly is to emphasise the
      ability of switching supplier for this particular colour index: “Changing the supplier
      for PB15:4 gave remarkable savings”218 For these reasons, the Commission considers
214   Form CO, paragraph 823-826.
215   Responses to question 102 of Q1 – Questionnaire to pigments customers.
216   Responses to question 103 of Q1 – Questionnaire to pigments customers.
217   Responses to question 84 of Q1 – Questionnaire to pigments customers.
218   Responses to question 91 of Q1 – Questionnaire to pigments customers.
                                                     36
 ---pagebreak---  ---pagebreak--- The Notifying Party’s view
(163) In addition to the general arguments (applying to all pigments) summarised in
      paragraphs (75) - (80) of the present decision, the Notifying Party submits that the
      increment brought by the Transaction is minimal,219 that the Parties are facing the
      competition of several strong suppliers, including Chinese and Indian suppliers, such
      as Clariant, Anshan Hifi, Cinic, Sudarshan, Baihe/Lily,220 but also Vijay and Trust
      Chem,221 and that, as a result of the fierce competition in the isoindoline market,
      [...].222
(164) The Notifying Party also emphasises the importance of o-phthalodinitrile, gaseous
      ammonia, solvents, diiminoisoindoline, methylene compounds and acids that are used
      as inputs for the production of isoindoline pigments. The Notifying Party claims that
      these products are controlled by Chinese manufacturers, including some of the Parties’
      Chinese competitors for isoindoline products.223
(165) The Notifying Party also points out that both Parties’ customer bases for isoindoline
      pigments [...]. [...].224 The Notifying Party explains that this provides its customers
      with countervailing buying power, [...].225
The Commission’s assessment
(166) For the reasons set out in this section, the Commission considers that serious doubts
      can be excluded for isoindoline pigments (in case of a product market definition by
      chemical class, with product differentiation within the product market) as well as for
      colour indices within the isoindolines chemical class (in case of a product market
      definition by colour index).
(167) If the product market for isoindoline pigments were considered at chemical class level,
      the Parties’ combined market shares for isoindoline pigments would be [20-30]%
      worldwide, just over the 20% threshold for a market to be considered as affected. The
      increment from DIC would be marginal, at [0-5]%, with a HHI increment of less than
      150.
(168) If the product market for isoindoline pigments were to be further segmented by colour
      indices, it would be affected only for the colour index PY185, for which the Parties’
      combined market shares are [40-50]% worldwide (with a [0-5]% increment from
      DIC). It should be noted that the other colour index within isoindolines, PY139,
      represents [high percentage] of all isoindoline pigments, and is not affected. As for
      PY185, the Commission notes that the increment from DIC would be marginal, at [0-
      5]%, with a HHI increment of less than 150.
219   Form CO, paragraphs 737-740 as well as paragraph 833.
220   Form CO, paragraph 839.
221   Form CO, paragraphs 411 and 412.
222   Form CO, paragraphs 416, 419, 425 and 469.
223   Form CO, paragraphs 477 – 479.
224   Form CO, paragraph 845.
225   Form CO, paragraph 847.
                                                    38
 ---pagebreak---  ---pagebreak--- The Notifying Party’s view
(174) In addition to the general arguments (applying to all pigments) summarised in
      paragraphs (75) - (80) of the present decision, the Notifying Party submits that the
      increment brought by the Transaction is minimal,229 that the Parties are facing the
      competition of several strong Chinese and Indian suppliers, such Gharda, Trust Chem,
      Vijay-Digichem, Atul and Mallak,230 and that, as a result of the fierce competition in
      the quinophthalone market, [...].231
(175) In addition, the Notifying Party stresses the fact that [...].232
(176) The Notifying Party also points out that part of the competition it faces results from
      recent entries on the quinophthalone market, such as the entry of Vijay in 2015,233 and
      that the quinophthalone market is nowadays characterised by overcapacity.234
The Commission’s assessment
(177) For the reasons set out in this section, the Commission considers that serious doubts
      can be excluded for quinophthalone pigments (in case of a product market definition
      by chemical class, with product differentiation within the product market) as well as
      for colour indices within the quinophthalone chemical class (in case of a product
      market definition by colour index).
(178) If the product market for isoindoline pigments was considered at chemical class level,
      the Parties’ combined market shares for quinophthalone pigments would be [30-40]%
      worldwide, with only a small increment from DIC ([0-5]%). Moreover, account
      should be taken of the fact that [...]. The same argument also holds true if the product
      market for quinophthalone pigments was further segmented by colour indices,
      considering that there is only one colour index within quinophthalones (PY138).
(179) Most importantly, a vast majority of respondents consider that there will remain a
      sufficient choice of credible quinophthalone suppliers post-Transaction,235 and the
      majority of customers expected either no impact or a decrease in the price of
      quinophthalone pigments as a result of the Transaction.236 Similarly, a majority of
      customers expect either no impact or an increase in the quality, choice and innovation
      for quinophthalone pigments as a result of the Transaction. 237 These elements also
      hold true at colour index level, as the Commission specifically asked respondents to
      the market investigation for every question to explain whether their reply would
      change based on a narrower market definition.
(180) In light of the above, the Commission considers that the Transaction does not raise
      serious doubts as to its compatibility with the internal market on the market for
      quinophthalones due to non-coordinated horizontal effects, irrespective of whether the
229   Form CO, paragraphs 737-740 as well as paragraph 867.
230   Form CO, paragraph 880.
231   Form CO, paragraphs 425 and 883.
232   Form CO, paragraphs 868, 876 and 877.
233   Form CO, paragraph 882.
234   Form CO, paragraph 884.
235   Responses to question 150 of Q1 – Questionnaire to pigments customers.
236   Responses to question 151 of Q1 – Questionnaire to pigments customers.
237   Responses to question 151 of Q1 – Questionnaire to pigments customers.
                                                    40
 ---pagebreak---  ---pagebreak---       (see paragraph (78) above).245 In addition the Notifying Party explains that [...],246 that
      BCE is facing significant competitive pressure, noticeably from Anshan, […],247
      [...].248
(186) For isoindolinone, the Notifying Party submits that isoindolinone is among the
      products [...],249 that [...],250 and that the isoindolinone market is characterised by
      overcapacity.251
(187) For pyrazoloquinazolone, the Notifying Party does not mention any other argument,
      either as an addition or as a complement, to the ones summarised in paragraphs (75) -
      (80) of the present decision, beside the fact that [...] and that the isoindolinone market
      is characterised by overcapacity.252
(188) For bismuth vanadate pigments, the Notifying Party submits that that [...].253
      Moreover, the Notifying Party explains that [...], to such an extent that these would
      now be qualified as commoditised pigments.254
The Commission’s assessment
(189) For all five chemical classes considered under section 5.4.6, market shares estimates
      of the Parties, as well as their competitors, allowed the Commission to compute HHI
      as well as HHI increment estimates in support of its assessment.
(190) For DPP, at worldwide level, the Parties’ combined market share in the overall market
      for DPP in 2019 was [20-30]%, with a small increment of [0-5]% from DIC, and a
      HHI increment of less than 150. The Parties’ shares in each of the potential sub-
      segments are also modest. Moreover, the Commission’s assessment should take into
      account the fact that [...]. Finally, no material concerns were raised in the course of
      the market investigation regarding the Parties’ horizontal overlap in DPP. In light of
      the above, the Commission considers that the Transaction does not raise serious doubts
      as to its compatibility with the internal market due to non-coordinated horizontal
      effects in relation to the market for DPP.
(191) For azo condensation, at worldwide level, the Parties’ combined market share in the
      overall market for azo condensation in 2019 was [20-30]%, with a negligible
      increment of [0-5]% from DIC, and a HHI increment of less than 150. The Parties’
      shares in each of the potential sub-segments are also modest. Moreover, the
      Commission’s assessment should take into account the fact that [...]. Finally, no
      material concerns were raised in the course of the market investigation regarding the
      Parties’ horizontal overlap in azo condensation. In light of the above, the Commission
      considers that the Transaction does not raise serious doubts as to its compatibility with
245   Form CO, paragraph 395.
246   Form CO, paragraph 738.
247   Form CO, paragraphs 416 and 419.
248   Form CO, parahraph 425.
249   Form CO, paragraph 420. See also Annex A of Form CO, paragraph 24.
250   Form CO, paragraph 738. See also Annex A of Form CO, paragraph 13.
251   Annex A of Form CO, paragraph 25.
252   Annex A of Form CO, paragraph 35.
253   Form CO, paragraph 738. See also Annex A of Form CO, paragraph 59.
254   Annex A of Form CO, paragraph 66.
                                                   42
 ---pagebreak---        the internal market due to non-coordinated horizontal effects in relation to the market
       for azo condensation.
(192) For isoindolinone, at worldwide level, the Parties’ combined market share in the
       overall market for isoindolinone in 2019 was [30-40]%, with a small increment of [0-
       5]% from DIC, and a HHI increment of less than 150. The Parties’ shares in each of
       the potential sub-segments are also modest. Moreover, the Commission’s assessment
       should take into account the fact that [...]. Finally, no material concerns were raised in
       the course of the market investigation regarding the Parties’ horizontal overlap in
       isoindolinone. In light of the above, the Commission considers that the Transaction
       does not raise serious doubts as to its compatibility with the internal market due to
       non-coordinated horizontal effects in relation to the market for isoindolinone.
(193) For pyrazoloquinazolone, at worldwide level, the Parties’ combined market share in
       the overall market for pyrazoloquinazolone in 2019 was [30-40]%, with a small
       increment of [0-5]% from DIC, and a HHI increment just above 150 ([150-160]). The
       Parties’ shares in each of the potential sub-segments are also modest. Moreover, the
       Commission’s assessment should take into account the fact that [...], DIC is likely to
       have a market power even lower than suggested by its (already modest) market shares.
       Finally, no material concerns were raised in the course of the market investigation
       regarding the Parties’ horizontal overlap in pyrazoloquinazolone. In light of the above,
       the Commission considers that the Transaction does not raise serious doubts as to its
       compatibility with the internal market due to non-coordinated horizontal effects in
       relation to the market for pyrazoloquinazolone.
(194) For bismuth vanadate pigments, at worldwide level, the Parties’ combined market
       share in the overall market for bismuth vanadate pigments in 2019 was [20-30]%, with
       a negligible increment of [0-5]% from DIC, and a HHI increment of less than 150. At
       EEA level, the Parties’ combined market share in the overall market for bismuth
       vanadate pigments in 2019 was [20-30]%, with a negligible increment of [0-5]% from
       DIC, and a HHI increment of less than 150. The Parties’ shares in each of the potential
       sub-segments are also modest. Moreover, the Commission’s assessment should take
       into account the fact that [...], DIC is likely to have a market power even lower than
       suggested by its (already modest) market shares at both EEA and worldwide level.
       Finally, no material concerns were raised in the course of the market investigation
       regarding the Parties’ horizontal overlap in bismuth vanadate pigments. In light of the
       above, the Commission considers that the Transaction does not raise serious doubts as
       to its compatibility with the internal market due to non-coordinated horizontal effects
       in relation to the market for bismuth vanadate pigments.
5.5.   Competitive assessment of the vertical relationships
5.5.1. Pigments (upstream) with printing inks (downstream)
(195) Both Parties are active in the manufacture of pigments. Only DIC is active in the
       manufacture of printing inks. The link is vertically affected because the Parties’
       combined market shares in the sales of certain pigments (namely perylenes,
       quinacridones,      pyrazoloquinazolone,        isoindolinone,     quinophthalone,    azo
       condensation, bismuth vanadate and DPP) and certain colour indexes are above 30%
       (see Section 5.4 above).
                                                    43
 ---pagebreak---  ---pagebreak--- (199) The Notifying Party also submits that there is no risk of customer foreclosure given
      DIC’s reasonable market shares downstream (except in gravure liquid inks), as well
      as the fact that colourants have multiple uses other than the manufacture of printing
      inks, so that colourant manufacturers have multiple customers outside the printing
      industry.260
The Commission’s assessment
(200) As regards a potential input foreclosure strategy, the Commission first notes that
      the Parties’ ability to put in place such an input foreclosure strategy should be put into
      perspective in light of the significance of resales between pigments competitors in the
      industry, as is evidenced by the significant number of purchases, resales and even
      contractual relationships among pigment manufacturers.261 This is also evidenced by
      the fact that for five classes of pigments among the ten chemical classes that are
      affected as a result of the Transaction, [...] (see Table 20 above). The relatively high
      number of pigment distributors active on the market262 further enriches the picture, to
      such an extent that customers are often not aware of whether the pigment they
      purchase from a given supplier was actually manufactured by that supplier or not. As
      an illustration, only a small minority of customers that responded to questions
      regarding quinophthalones were aware of the fact that [...].263 For all these reasons, it
      appears unlikely that the Parties would have the ability to put in place a foreclosure
      strategy that would enable them to target printing ink manufacturers specifically,
      because any product they sell to a distributor or a competitor, as a result of a supply
      agreement for instance, might end up eventually being sold to any end-customer,
      including printing ink manufacturers.
(201) Moreover, the Commission notes that given the worldwide nature of the market for
      pigments, the Parties would most likely lack the ability to put in place such an input
      foreclosure strategy for any pigment for which their combined market share
      worldwide is lower than 30%. This leaves only perylenes, quinophthalones,
      isoindolinones and pyrazoloquinazolone, as well as some colour indices within these
      chemical classes, as potential candidates for input foreclosure. These represent only
      four chemical classes out of over twenty, and, as the Notifying Party sets out, less than
      [small percentage] in volume of all of DIC’s sales of pigments to printing inks
      manufacturers, and [small percentage] in volume of all BCE’s sales of pigments to
      printing inks manufacturers (see paragraph (195) above). As such, the Parties would
      therefore assuredly lack the ability to foreclose access to all pigments that are used as
      an input for the manufacture of printing inks.
(202) Most importantly, even for pigment classes where the Parties’ combined market share
      level is above 30% at worldwide level, a majority of printing inks manufacturers that
      expressed a view consider that there would remain sufficient sources of pigments for
      them to manufacture printing inks if the combined entity decided to stop supplying
      this input product to them.264
260   Form CO, paragraphs 997-1 001.
261   Responses to question 2 of Q2 – Questionnaire to pigments competitors.
262   Responses to question 1 of Q1 – Questionnaire to pigments customers.
263   Responses to questions 129 – 152 of Q1 – Questionnaire to pigments customers.
264   Responses to question 21 of Q3 – Questionnaire to inks competitors.
                                                     45
 ---pagebreak--- (203) For the reasons set out above, the Commission concludes that the Parties would lack
      the ability to foreclose access to pigments as an input for the manufacture of printing
      inks.
(204) As regards incentive and effects of a potential input foreclosure strategy, it is not
      necessary for the Commission to conclude on whether the Parties would have an
      incentive to engage in a potential input foreclosure strategy aiming at foreclosing
      access to pigments or whether such a foreclosure strategy would have effects, as the
      lack of ability would already prevent the Parties to engage in such a potential
      foreclosure strategy in the first place.
(205) As regards potential customer foreclosure, the Commission first notes that DIC’s
      ability to engage in such a foreclosure strategy does not change because of the
      Transaction, since only DIC is active in the manufacture of printing inks. It is recalled
      that DIC’s market share in printing inks overall is moderate (below the 30%
      threshold), and only exceeds the 30% threshold for gravure inks in the EEA. However,
      the potential sub-divisions of printing inks do not appear to be relevant for the analysis
      of potential customer foreclosure, given that all pigments are suited to be used in all
      types of printing inks and that the manufacture of different types of printing inks do
      not require significantly different amounts of pigments. Therefore, any upstream
      competitor of the Parties in the market for pigments would likely be indifferent to
      whether DIC is stronger in the production of certain types of printing inks rather than
      others, because their main interest with respect to potential customer foreclosure
      would be whether DIC is an important buyer of pigments for the manufacture of inks
      overall. In a similar way, the fact that DIC’s market share for printing inks exceed the
      30% threshold only for gravure inks in the EEA, but not at worldwide level does not
      appear to be relevant in the context of the analysis of potential customer foreclosure,
      given the worldwide nature of the market for pigments. Therefore, any upstream
      competitor of the Parties in the market for pigments would likely be indifferent to
      whether DIC is stronger in the production of printing inks in certain geographic areas
      rather than others, because their main interest with respect to potential customer
      foreclosure would be whether DIC is an important buyer of pigments at worldwide
      level for the manufacture of inks overall.
(206) As a consequence, the most relevant metric to assess the Parties’ ability to foreclose
      access to DIC as a customer for pigments for the manufacture of printing inks appears
      to be DIC’s market share in printing inks overall, at worldwide level, insofar as this
      market share is indicative of DIC’s importance as a purchaser of pigments for the
      manufacture of inks. This market share being relatively low ([20-30]%), it would
      therefore appear unlikely that the Parties would have the ability to foreclose access to
      DIC as a customer for pigments for the manufacture of printing inks.
(207) This is even more the case in view of the fact that DIC’s market share downstream in
      the manufacture of printing inks overall, at worldwide level actually provide an over-
      estimated indication of DIC’s importance as a purchaser of pigments for the
      manufacture of inks, given that DIC is already at least partially vertically integrated
      with respect to its needs for pigments in the manufacture of inks, and that part of the
      pigments used in the manufacture of that [...]. Finally, pigments have a number of uses
      other than the manufacture of inks, which is an additional reason why DIC’s market
      share downstream in the manufacture of printing inks overall, at worldwide level
      actually provide an over-estimated indication of DIC’s importance as a purchaser of
      pigments overall.
                                                 46
 ---pagebreak--- (208) For the reasons set out above, the Commission concludes that the Parties would lack
      the ability to foreclose access to DIC as a customer for pigments for the manufacture
      of printing inks.
(209) As regards incentive and effects of a potential customer foreclosure strategy, it is not
      necessary for the Commission to conclude on whether the Parties would have an
      incentive to engage in a potential customer foreclosure strategy aiming at foreclosing
      access to DIC as a pigment customer active in the manufacture of inks, or whether
      such a foreclosure strategy would have effects, as the lack of ability would already
      prevent the Parties to engage in such a potential foreclosure strategy in the first place.
(210) In light of the above, taking account of the results on the market investigation and of
      all the evidence available to it, the Commission considers that the Transaction does
      not raise serious doubts as to its compatibility with the internal market in relation to
      the vertical link between pigments (upstream) and printing inks (downstream).
6.    PROPOSED REMEDIES
6.1.  Framework for the assessment of the commitments
(211) Where a concentration raises serious doubts as regards its compatibility with the
      internal market, the merging parties may undertake to modify the concentration to
      remove the grounds for the serious doubts identified by the Commission. Pursuant to
      Article 6(2) of the Merger Regulation, where the Commission finds that, following
      modification by the undertakings concerned, a notified concentration no longer raises
      serious doubts, it shall declare the concentration compatible with the internal market
      pursuant to Article 6(1)(b) of the Merger Regulation.
(212) As set out in the Commission Notice on remedies acceptable under Council
      Regulation (EC) No 139/2004 and under Commission Regulation (EC) No 802/2004
      (the “Remedies Notice”),265 the commitments have to eliminate the competition
      concerns entirely, and have to be comprehensive and effective from all points of
      view.266
(213) In assessing whether commitments will maintain effective competition, the
      Commission considers all relevant factors, including the type, scale and scope of the
      proposed commitments, with reference to the structure and particular characteristics
      of the market in which the transaction is likely to significantly impede effective
      competition, including the position of the parties and other participants on the
      market.267
(214) In order for the commitments to comply with those principles, they must be capable
      of being implemented effectively within a short period of time. Concerning the form
      of acceptable commitments, the Merger Regulation gives discretion to the
      Commission as long as the commitments meet the requisite standard. Structural
      commitments will meet the conditions set out above only in so far as the Commission
      is able to conclude with the requisite degree of certainty, at the time of its decision,
265   OJ C 267, 22.10.2008, p. 1.
266   Paragraph 9 of the Remedies Notice.
267   Paragraph 12 of the Remedies Notice.
                                                47
 ---pagebreak---         that it will be possible to implement them, and that it will be likely that the new
        commercial structures resulting from them will be sufficiently workable and lasting to
        ensure that serious doubts are removed.268 Divestiture commitments are normally the
        best way to eliminate competition concerns resulting from horizontal overlaps.
6.2.    Proposed commitments
(215) On 16 November 2020, the Notifying Party submitted a set of commitments under
        Article 6(2) of the Merger Regulation (the “Initial Commitments”), in order to render
        the concentration compatible with the internal market.
(216) The Commission market tested the Initial Commitments to assess whether they are
        sufficient and suitable to remove the serious doubts identified in Section 5 of this
        decision. The feedback received from customers and competitors during the market
        test confirmed that the Initial Commitments could in principle remedy the serious
        doubts identified by the Commission, subject to modifications to address a number of
        specific issues described below in Section 6.2.2 of this decision. On 3 December 2020,
        the Parties submitted revised Commitments under Article 6(2) of the Merger
        Regulation (the “Final Commitments”) that aim to address the issues identified by
        the Commission.
6.2.1. Description of the Initial Commitments
(217) In order to address the competition concerns identified by the Commission and render
        the Transaction compatible with the internal market, the Notifying Party submitted
        commitments consisting of the divestiture to a suitable purchaser (the “Purchaser”)
        of DIC’s manufacturing facility located in Bushy Park (US) (the “Divestment
        Business”).
(218) The Commitments provide for a so-called “upfront buyer provision” pursuant to which
        the Transaction cannot be implemented before the Notifying Party has entered into a
        final binding sale and purchase agreement for the sale of the Divestment Business and
        the Commission has approved the Purchaser and the terms of sale. The Purchaser shall
        be an industry participant with experience in the pigment or colourants business.
6.2.1.1. Scope of the Divestment Business
(219) The Divestment Business consists of DIC’s global business for:
                the Divestment Products, comprising of
                (i)       Perylene pigment products under the colour indices PR179, PV29,
                          PR123, PR190 and PR224 manufactured at the Bushy Park Facility
                          and sold by DIC globally (“Bushy Park Perylene Products”);
                (ii)      Quinacridone pigment products under the colour indices PR122,
                          PR202, PV19 and PV55 manufactured at the Bushy Park Facility and
                          sold by DIC globally (“Bushy Park Quinacridone Products”);
268     Paragraph 10 of the Remedies Notice.
                                                   48
 ---pagebreak---              the Bushy Park Other Products, comprising of
             (i)        Isoindoline (colour index PY139);
             (ii)       Azo (colour index PR188); and
             (iii)      Carbon Black (PBl7) pigment products
             manufactured at the Bushy Park Facility and sold by DIC globally (“Bushy
             Park Other Products”);
(220) The Divestment Business will contain the following tangible assets:
             the Bushy Park Facility, including, but not limited to:
            -     all tangible manufacturing assets owned by DIC, regardless of location,
                  used to manufacture or contributing to the manufacture of the Divestment
                  Products and the Bushy Park Other Products in the Bushy Park Facility,
                  [...];
            -     the real estate owned by DIC and housing, the tangible manufacturing
                  assets used for the manufacturing of the Divestment Products and the
                  Bushy Park Other Products, as well as the related ground leases at the
                  Bushy Park Facility;
             any inventory of Divestment Products and Bushy Park Other Products, raw
             materials used in the production of the Divestment Products and Bushy Park
             Other Products, and the Divestment Products and Bushy Park Other Products;
             the transfer of all advertising, marketing, sales, publicity and presentational
             materials designed for and used in connection with the Divestment Products
             and Bushy Park Other Products, or copies of any such materials designed for
             and used in connection with the Divestment Products and Bushy Park Other
             Products for a time period to be agreed by DIC and the Purchaser, subject to
             reprinting the Purchaser’s name, and any copyrights owned by DIC in such
             materials;
(221) The Divestment Business will contain the following intangible assets:
             the assignment of all of DIC’s know-how and intellectual property rights, if
             any, that is used by DIC exclusively or primarily to develop, manufacture, test,
             market the Divestment Products and Bushy Park Other Products at the Bushy
             Park Facility,
             an indefinite, royalty-free, irrevocable, non-exclusive, global license under
             DIC’s other intellectual property rights, if any, to use all know-how and other
             intellectual property rights not exclusively or primarily used by DIC to
             develop, manufacture, test, market the Divestment Products and Bushy Park
             Other Products at the Bushy Park Facility;
             to the extent it concerns solely or predominantly the Divestment Products or
             the Bushy Park Other Products, the Parties shall transfer all R&D and pipeline
             projects and related information existing at the Effective Date to the Purchaser.
             To the extent they do not concern solely or predominantly the Divestment
             Products or the Bushy Park Other Products, the Parties will provide a royalty-
                                                  49
 ---pagebreak---              free, irrevocable, non-exclusive, global license to these R&D and pipeline
             projects;
             all historic production and quality control data gathered by DIC and held by
             DIC of the Divestment Products and Bushy Park Other Products and historic
             records on compliance with applicable regulations; provided, however, that
             any parts of such records that do not relate to the Divestment Products and
             Bushy Park Other Products may be redacted from the records delivered to the
             Purchaser;
             the QuindoTM and PerrindoTM brand and any associated trademarks and
             product names;
             at the option of the Purchaser, a transitional, non-exclusive, royalty-free
             licence for the trademarks SunPlastTM, SunBriteTM and FanchonTM for a
             transitional period up to [...].
(222) The Divestment Business will contain the following contracts, agreements,
      commitments and understandings:
             where applicable, and to the extent contractually possible, the transfer of any
             supply arrangement, customer contracts, contract rights, commitments, and
             customer orders of the Divestment Products and Bushy Park Other Products
             which contribute to the current operation or are necessary to ensure the
             viability and competitiveness of the Divestment Business and all related
             prepayments, prepaid expenses, credits, etc.; for contracts that are legally not
             transferable (if any), DIC will undertake its best efforts to novate written
             contracts for the supply of the Divestment Products; DIC will take
             commercially reasonable steps to encourage Customers to move their
             Divestment Products and Bushy Park Other Products purchasing volumes to
             the Purchaser;
             where applicable, and to the extent contractually possible, the transfer of any
             contracts, agreements commitments and understandings with the Divestment
             Business’ suppliers for the period of time between 2015 and closing;
             for the contracts where DIC will be a counterparty, DIC commits to give the
             option to the Purchaser [...].
(223) The Divestment Business will include the following customer, credit and other
      records:
             the transfer of a list of all customers for the Divestment Products and Bushy
             Park Other Products, including pending contacts or negotiations with potential
             new Customers, provided, however, that DIC may continue to use such lists to
             the extent they relate to its retained businesses;
             where applicable, the transfer of any customer records and transactional data
             which contribute to the current operation or are necessary to ensure the
             viability and competitiveness of the Divestment Business, provided, however,
             that DIC may continue to use such records and transactional data to the extent
             they relate to its retained businesses; and provided further, that any parts of
             such documentation that do not relate to the Divestment Business may be
             redacted from the versions delivered to the Purchaser; and provided further,
                                                  50
 ---pagebreak---                   that to the extent that DIC is obliged to retain such documents in support of
                  legal obligations, DIC shall be entitled to do so; and, provided further, that
                  DIC shall not be required to transfer any such customer records and
                  transactional data that do not relate to the Divestment Business; where third-
                  party consent is required for customer documentation to be transferred, DIC
                  undertakes to make all best efforts to obtain such consent;
                  a list of all current suppliers of raw materials for the production of the
                  Divestment Products and Bushy Park Other Products.
(224) The Divestment Business includes the relevant personnel, i.e. [...] employees,
        currently employed at the Bushy Park Facility to the extent engaged in operations
        relating to the Divestment Products, subject to employee consent and applicable
        labour laws and other relevant legislation, that are necessary to ensure the viability
        and competitiveness of the Divestment Business.
(225) The Divestment Business includes, to the extent transferable, all licences, permits and
        authorisations specific to the Bushy Park Facility which contribute to the current
        operation or are necessary to ensure the viability and competitiveness of the
        Divestment Business.
6.2.1.2. Other elements of the Initial Commitments
(226) To reinforce the structural effect of the Initial Commitments, the Notifying Party
        commits not to reacquire influence over the Divestment Business for a period of [...]
        as from Closing.
(227) Furthermore, with the aim of ensuring a smooth transfer of the Divestment Business,
        the Notifying Party committed to provide transitional services (the “Transitional
        Services Agreement”), for a period of up to [...] after Closing at [...], extendable for
        [...], for the supply of services necessary for the viability and competitiveness of the
        Divestment Business to the Purchaser. The transitional services include, subject to the
        Purchaser’s requirements, IT, HR and payroll, finance, purchasing, supply chain,
        customer service, treasury, regulatory, EHS, IP, insurance services and tax.
(228) The Initial Commitments also provide that the Notifying Party should enter into
        related commitments, inter alia regarding the separation of the Divestment Business
        from its retained businesses, the preservation of the viability, marketability and
        competitiveness of the Divestment Business, including the appointment of a
        monitoring trustee and, if necessary, a divestiture trustee.
6.2.1.3. Notifying Party’s views
(229) The Notifying Party argues that the Initial Commitments would eliminate the
        Commission’s serious doubts as to the compatibility of the Transaction with the
        internal market. In particular, the Notifying Party is of the view that:
                  The Initial Commitments would address the Commission’s concerns as they:
                  (i) remove the large majority of the overlap between the Parties for all perylene
                  pigments (ii) remove the large majority of the overlap between the Parties
                  quinacridone colour index PR202;
                                                     51
 ---pagebreak---                  The Divestment Business is comprehensive and effective, allowing the
                 Purchaser to compete effectively in the relevant markets on a lasting basis; and
                 The other elements of the Initial Commitments ensure that the Commitments
                 are capable of being implemented effectively within a short period of time.
6.2.2. Assessment of the Initial Commitments
(230) The Commission conducted a market test of the Initial Commitments to investigate
        the scope and effectiveness of the Commitments, the viability and competitiveness of
        the Divestment Business, and the appropriateness of the Purchaser Requirements. The
        Commission’s assessment of each of these elements in light of the results of the market
        test is as follows.
6.2.2.1. Suitability of the Initial Commitments to remove serious doubts
(231) As explained in Section 5 above, the Commission finds that the Transaction gives rise
        to serious doubts as to the compatibility of the concentration with the internal market
        in respect of each of: (i) perylene pigments overall and specifically perylene pigments
        colour indices PR179 and PV29, and (ii) quinacridone pigment colour index PR202.
(232) For each pigment, the Initial Commitments entail the divestment of (at least) the vast
        majority of the overlap in the markets in which serious doubts result from the
        Transaction. The Initial Commitments would therefore ensure that in each of these
        markets the Transaction maintains effective competition at the level in effect pre-
        Transaction. More specifically:
                 For perylenes overall, the Divestment Business comprises a volume of [...],
                 with a value of EUR [...] in 2019. This represents almost the entirety ([high
                 percentage]) of DIC’s sales of perylenes, and therefore removes almost the
                 entire overlap between the Parties. [...].
                 For PR179, the Divestment Business comprises a volume of [...] with a value
                 of [...] in 2019. This represent almost the entirety ([high percentage]) of DIC’s
                 sales of PR179, and therefore removes almost the entire overlap between the
                 Parties. [...].
                 For PV29, the Divestment Business comprises a volume of [...], with a value
                 of EUR [...] in 2019. This represents the entirety of DIC’s sales of PV29, and
                 therefore removes entire overlap between the Parties. [...].
                 For PR202, the Divestment Business comprises a volume of [...] with a value
                 of EUR [...] in 2019. This represent almost the entirety ([high percentage]) of
                 DIC’s sales of PR202, and therefore removes almost the entire overlap
                 between the Parties.
(233) The market test confirmed the suitability of the Initial Commitments to address the
        Commission’s serious doubts.
(234) The vast majority of customers and competitors that expressed a view considered that
        the Initial Commitments are suitable to effectively remove the competitive concerns
                                                     52
 ---pagebreak---         relating to the overall perylenes’ market, 269 as well as for the markets for perylene
        colour indexes PR179270 and PV29271 and for quinacridone colour index PR202 272.
(235) Responses of competitors of the Parties, overall indicate that the Initial Commitments
        contain all the necessary tangible and intangible assets to restore effective competition
        in all markets under consideration and that Bushy Park is considered as an efficient
        and cost competitive facility.273
6.2.2.2. Viability and competitiveness of the Divestment Business
(236) Customers overwhelmingly indicate that the Divestment Business constitutes an
        effective setup allowing for the emergence of a viable alternative supplier for
        customers274 for perylenes overall, as well as for perylene colour indexes PR179 and
        PV29 and for quinacridone colour index PR202. They also confirm to a great extent
        that the Divestment Business is likely to retain the current customers of DIC served
        from Bushy Park for all of these products.275 Moreover, the majority of customers of
        the Divestment Business indicated that the change of ownership of the Divestment
        Business would not force them to requalify the products they procure from the
        Divestment Business.276 Among the customers who mentioned that they would have
        to requalify the products they procure from the Divestment Business, the vast majority
        nonetheless indicated that they were either very likely, or likely to do so.277 In the
        same vein, customers of DIC, BCE or both, indicated to a great extent that they would
        consider the Divestment Business as a suitable alternative supplier to the merged
        entity DIC/BCE, 278 but also that the Divestment Business is likely to find suitable
        new customers to sell its products to.279
(237) However, the Commission notes that some respondents indicated that additional
        assets280 would need to be included in the Divestment Business assets because they
        are deemed necessary to ensure the viability of the divestment business. These include
        innovations / development products,281 as well as personnel which is not transferred
        with the Divestment Business under the text of the Initial Commitments,282 such as
        personnel exclusively or predominantly involved in the sales of, or with production
        and management expertise in, the products of the Divestment Business. Additionally,
269     See question 2, Questionnaire R1 Market test to pigments customers and question 2 Questionnaire R2
        Market test to pigments competitors.
270     See question 3, Questionnaire R1 Market test to pigments customers and question 3 Questionnaire R2
        Market test to pigments competitors.
271     See question 4, Questionnaire R1 Market test to pigments customers and question 4 Questionnaire R2
        Market test to pigments competitors.
272     See question 5, Questionnaire R1 Market test to pigments customers and question 5 Questionnaire R2
        Market test to pigments competitors.
273     See questions 6 - 15, Questionnaire R2 Market test to pigments competitors.
274     See questions 6-9, Questionnaire R1 Market test to pigments customers.
275     See questions 10-13, Questionnaire R1 Market test to pigments customers.
276     See question 15, Questionnaire R1 Market test to pigments customers.
277     See question 15.1 Questionnaire R1 Market test to pigments customers.
278     See question 17 Questionnaire R1 Market test to pigments customers.
279     See question 18 Questionnaire R1 Market test to pigments customers.
280     See question 8, Questionnaire R2 Market test to pigments competitors.
281     See questions 8 & 9, Questionnaire R2 Market test to pigments competitors.
282     See questions 8, 12 & 13, Questionnaire R2 Market test to pigments competitors.
                                                         53
 ---pagebreak---         the market test indicated283 that a broadening of the scope of the intangible assets
        transferred to the Divestment Business (customer records, licencing agreements)
        would be necessary. Finally, competitors indicated that a broadening of the scope and
        of the services included in the Transitional Services Agreement would be necessary
        as well. 284
6.2.2.3. Purchaser Requirements and potential purchasers
(238) Customers and competitors clearly indicated that the purchaser criteria were sufficient
        to guarantee that the Divestment Business would attract credible purchasers.285
        However, both customers and competitors strongly opposed286 the idea that a potential
        buyer could have experience only in colourants but not in pigments (see paragraph
        (216) above).
6.2.2.4. Conclusion on the Initial Commitments
(239) In light of the above, the Commission informed the Notifying Party that the Initial
        Commitments needed to be improved along the lines described above, in order to be
        considered adequate in scope and suitable to address the serious doubts the
        Transaction would otherwise give rise to, and to ensure that the Divestment Business
        will be an effective competitor for each of the relevant markets in the hands of a
        suitable Purchaser.
6.2.3. Description of the Final Commitments
(240) In response to the Commission's feedback regarding the outcome of the market test
        and its preliminary assessment, the Parties submitted the Final Commitments on 3
        December 2020. The Final Commitments represent an amended version of the Initial
        Commitments, with the following changes.287
(241) The customer records and transactional data pertaining to the Divestment Business
        provided to the purchaser shall cover the time period from [...] to present, instead of
        only from [...] to present, as was provided by the Initial Commitments. In addition this
        information will be extended to “potential new or targeted” customers (instead of only
        “potential new customers”). In a similar fashion, the transfer to the purchaser of
        contracts, agreements, commitments and understandings with the Divestment
        Business’ suppliers will be extended to cover the time period from [...] to present,
        instead of only from [...] to present as was provided by the Initial Commitments.
(242) The transitional, non-exclusive, royalty-free licence for the trademarks SunPlastTM,
        SunBriteTM and FanchonTM will be offered to the purchaser for a period […] [...],
        extendable for [...], instead of [...] as initially foreseen.
283     See questions 8 & 15, Questionnaire R2 Market test to pigments competitors.
284     See questions 24 & 25, Questionnaire R2 Market test to pigments competitors.
285     See questions 19 & 21 Questionnaire R1 Market test to pigments customers and questions 19 & 22,
        Questionnaire R2 Market test to pigments competitors.
286     See question 22 Questionnaire R1 Market test to pigments customers and question 23, Questionnaire
        R2 Market test to pigments competitors.
287     The Final Commitments also included certain clarifications and other modifications that are not of
        major significance and are not discussed in this decision.
       Should read: “of”
                                                          54
 ---pagebreak--- (243) The non-solicit clause was extended to all of the personnel being transferred to the
       Divestment Business (instead of being applicable to Key Personnel only), and its
       duration was extended to [...] after closing (instead of [...]).
(244) As regards the transferred personnel, the Final Commitments provide that it shall also
       include (i) any sales personnel predominantly or entirely dedicated to the Divestment
       Business, even if not working in the Bushy Park Facility and (ii) any           product
       management and product expert roles predominantly or exclusively dedicated the
       Divestment business.
(245) The suitable purchaser criterion in the Final Commitments now excludes industry
       participants with experience in colourants but not in pigments. Therefore only industry
       participants with experience in the pigment business can be considered as a suitable
       purchaser.
(246) Innovations and development products shall be transferred along with R&D pipeline
       projects.
(247) The Transitional Services Agreement shall cover in addition (i) sales & marketing
       support and (ii) technical services (e.g. product experts and product management).
       Moreover, it was clarified that with respect to supply chain considerations, the
       Transitional Services Agreement shall cover among other warehousing and logistics.
(248) DIC proposes to include the entire water management facilities288 which belong to
       DIC and are adjacent to the Divestment Business within the scope of the Divestment
       Business.
(249) All of these changes have been incorporated into and form an integral part of the Final
       Commitments annexed to this decision.
6.2.4. Assessment and conclusion on the Final Commitments
(250) The amendments introduced by the Parties into the Final Commitments resolve all of
       the concerns raised in the course of the market testing of the Initial Commitments.
       Accordingly, based on the information available to it, the Commission is satisfied that
       the Final Commitments are capable of eliminating the competition concerns entirely;
       are comprehensive and effective from all points of view; proportionate; and capable
       of being implemented effectively within a short period of time.
(251) In particular, for the reasons outlined above, and in view of the results of the market
       test, the Commission concludes that the Final Commitments entered into by the
       undertakings concerned and as submitted to the Commission on 3 December 2020 are
       sufficient to eliminate the serious doubts as to the compatibility of the concentration
       with the internal market in respect of each of: (i) perylene pigments overall and
       specifically perylene pigments colour indices PR179 and PV29, and (ii) quinacridone
       pigment colour index PR202.
6.3.   Conclusion on remedies
(252) Under the first sentence of the second subparagraph of Article 6(2) of the Merger
       Regulation, the Commission may attach to its decision conditions and obligations
288    Including a [...].
                                                  55
 ---pagebreak---       intended to ensure that the undertakings concerned comply with the commitments they
      have entered into vis-à-vis the Commission with a view to rendering a notified
      concentration compatible with the internal market.
(253) The achievement of the measure that gives rise to the structural change of the market
      is a condition, whereas the implementing steps which are necessary to achieve this
      result are generally obligations on the Parties. Where a condition is not fulfilled, the
      Commission’s decision declaring the concentration compatible with the internal
      market no longer stands. Where the undertakings concerned commit a breach of an
      obligation, the Commission may revoke the clearance decision in accordance with
      Article 8(6) of the Merger Regulation. The undertakings concerned may also be
      subject to fines and periodic penalty payments under Articles 14(2) and 15(1) of the
      Merger Regulation.
(254) In accordance with the distinction described in the previous paragraph, the decision in
      this case is conditioned on the full compliance with the requirements set out in Section
      B of the Final Commitments (including the Schedule), which constitute conditions.
      The remaining requirements set out in the other Sections of the Final Commitments
      constitute obligations, as they concern the implementing steps that are necessary to
      achieve the modifications sought in a manner compatible with the internal market.
(255) The full text of the Final Commitments is annexed to this decision and forms an
      integral part thereof.
7.    CONCLUSION
(256) For the above reasons, the Commission has decided not to oppose the notified
      operation as modified by the commitments and to declare it compatible with the
      internal market and with the functioning of the EEA Agreement, subject to full
      compliance with the conditions in Section B (including the Schedule) of the
      Commitments annexed to the present decision and with the obligations contained in
      the other sections of the said commitments. This decision is adopted in application of
      Article 6(1)(b) in conjunction with Article 6(2) of the Merger Regulation and Article
      57 of the EEA Agreement.
                                                     For the Commission
                                                     (Signed)
                                                     Margrethe VESTAGER
                                                     Executive Vice-President
                                                 56
 ---pagebreak---  COMMITMENTS TO THE EUROPEAN COMMISSION
CASE COMP/M.9677 – DIC / BASF COLORS & EFFECTS
                3 December 2020
 ---pagebreak--- Pursuant to Article 6(2) of Council Regulation (EC) No 139/2004 (the “Merger Regulation”),
DIC Corporation (“DIC” or the “Notifying Party”) hereby enters into the following Commitments
(the “Commitments”) vis-à-vis the European Commission (the “Commission”) with a view to
rendering the acquisition of BASF Colors & Effects (“BCE”) by DIC (the “Concentration”)
compatible with the internal market and the functioning of the EEA Agreement.
This text shall be interpreted in light of the Commission’s decision pursuant to Article 6(1)(b) of
the Merger Regulation to declare the Concentration compatible with the internal market and the
functioning of the EEA Agreement (the “Decision”), in the general framework of European Union
law, in particular in light of the Merger Regulation, and by reference to the Commission Notice on
remedies acceptable under Council Regulation (EC) No 139/2004 and under Commission
Regulation (EC) No 802/2004 (the “Remedies Notice”).
[…].
                                                 2
 ---pagebreak---                                      SECTION A DEFINITIONS
1. For the purpose of the Commitments, the following terms shall have the following
   meaning:
   Affiliated Undertakings: undertakings controlled by the Parties and/or by the ultimate
   parents of the Parties, whereby the notion of control shall be interpreted pursuant to
   Article 3 of the Merger Regulation and in light of the Commission Consolidated
   Jurisdictional Notice under Council Regulation (EC) No 139/2004 on the control of
   concentrations between undertakings (the “Consolidated Jurisdictional Notice”).
   Assets: the assets that contribute to the current operation or are necessary to ensure the
   viability and competitiveness of the Divestment Business as indicated in Section B,
   paragraph 6 and described more in detail in the Schedule.
   BCE: BASF Colors & Effects, a group of companies and selected assets jointly
   constituting BASF SE’s global pigment business and which is the target of the
   Concentration (precise scope of the target described in Annex 5 to the Form CO).
   Bushy Park Other Products: isoindoline (C.I. P.Y.139), azo (C.I. P.R.188) and carbon
   black (C.I. P.Bl.7) pigment products manufactured at the Bushy Park Facility and sold by
   DIC globally (in order of appearance each individually referred to as the “Bushy Park
   Isoindoline Products”, “Bushy Park Azo Products” and the “Bushy Park Carbon
   Black Products”).
   Bushy Park Facility: Sun Chemical’s pigment manufacturing facility located at 1506
   Bushy Park Road, Goose Creek, SC 29445, South Carolina, U.S.
   C.I.: Colour Index.
   Closing: the transfer of the legal title to the Divestment Business to the Purchaser.
   Closing Period: the period of […] from the approval of the Purchaser and the terms of sale
   by the Commission.
   Confidential Information: any business secrets, know-how, commercial information, or
   any other information of a proprietary nature that is not in the public domain.
   Conflict of Interest: any conflict of interest that impairs the Trustee’s objectivity and
   independence in discharging its duties under the Commitments.
   Customers: DIC’s customers that have purchased the Divestment Products and the Bushy
   Park Other Products from DIC at any time between 2010 and the Closing.
   DIC: DIC Corporation, incorporated under the laws of Japan, with its registered office at
   35-58, Sakashita 3-chome, Itabashi-ku, Tokyo 103-8233, Japan and registered under no.
   0114-01-003807 including its Affiliated Undertakings.
   Divestment Business: the business or businesses as defined in Section B and in the
   Schedule which the Notifying Party commits to divest.
                                             3
 ---pagebreak--- Divestment Products: perylene pigment products under the C.I.s P.R.179, P.V.29,
P.R.123, P.R.190 and P.R.224 manufactured at the Bushy Park Facility and sold by DIC
globally (“Bushy Park Perylene Products”); quinacridone pigment products under the
C.I.s P.R.122, P.R.202, P.V.19 and P.V.55 manufactured at the Bushy Park Facility and
sold by DIC globally (“Bushy Park Quinacridone Products”).
Divestiture Trustee: one or more natural or legal person(s) who is/are approved by the
Commission and appointed by DIC and who has/have received from DIC the exclusive
Trustee Mandate to sell the Divestment Business to a Purchaser at no minimum price.
Effective Date: the date of adoption of the Decision.
First Divestiture Period: the period of […] from the Effective Date.
Hold Separate Manager: the person appointed by DIC for the Divestment Business to
manage the day-to-day business under the supervision of the Monitoring Trustee.
Inventory: DIC’s inventory of Divestment Products and Bushy Park Other Products, raw
materials used in the production of the Divestment Products and Bushy Park Other
Products, and the Divestment Products and Bushy Park Other Products in production at the
time of Closing.
Key Personnel: all personnel necessary to maintain the viability and competitiveness of
the Divestment Business, as listed in the Schedule, including the Hold Separate Manager.
Monitoring Trustee: one or more natural or legal person(s) who is/are approved by the
Commission and appointed by DIC, and who has/have the duty to monitor DIC’s
compliance with the conditions and obligations attached to the Decision.
Parties: DIC and BCE and their Affiliated Undertakings.
Personnel: all staff currently employed by the Divestment Business, including staff
seconded to the Divestment Business.
Purchaser: the entity approved by the Commission as acquirer of the Divestment Business
in accordance with the criteria set out in Section D.
Purchaser Criteria: the criteria laid down in paragraph 17 of these Commitments that the
Purchaser must fulfil in order to be approved by the Commission.
Schedule: the schedule to these Commitments describing more in detail the Divestment
Business.
Sun Chemical: Sun Chemical Group Coöperatief U.A., Leeuwenveldseweg 3-t, 1382 LV
Weesp, the Netherlands.
Transitional Agreements: Transitional Services Agreement.
Trustee(s): the Monitoring Trustee and/or the Divestiture Trustee as the case may be.
Trustee Divestiture Period: the period of […] from the end of the First Divestiture Period.
                                         4
 ---pagebreak---            SECTION B THE COMMITMENT TO DIVEST AND THE DIVESTMENT BUSINESS
1.1 Commitment to divest
2.  In order to maintain effective competition, DIC commits to divest, or procure the
    divestiture of the Divestment Business by the end of the Trustee Divestiture Period as a
    going concern to a purchaser and on terms of sale approved by the Commission in
    accordance with the procedure described in paragraph 18 of these Commitments. To carry
    out the divestiture, DIC commits to find a purchaser and to enter into a final binding sale
    and purchase agreement for the sale of the Divestment Business within the First Divestiture
    Period. If DIC has not entered into such an agreement at the end of the First Divestiture
    Period, DIC shall grant the Divestiture Trustee an exclusive mandate to sell the Divestment
    Business in accordance with the procedure described in paragraph 30 during the Trustee
    Divestiture Period.
3.  The proposed concentration shall not be implemented before DIC or the Divestiture
    Trustee has entered into a final binding sale and purchase agreement for the sale of the
    Divestment Business and the Commission has approved the purchaser and the terms of sale
    in accordance with paragraph 18.
4.  DIC shall be deemed to have complied with this commitment if:
            by the end of the Trustee Divestiture Period, DIC or the Divestiture Trustee has
            entered into a final binding sale and purchase agreement and the Commission
            approves the proposed purchaser and the terms of sale as being consistent with the
            Commitments in accordance with the procedure described in paragraph 18; and
            the Closing of the sale of the Divestment Business to the Purchaser takes place
            within the Closing Period.
5.  In order to maintain the structural effect of the Commitments, DIC shall, for a period of
    ten (10) years after Closing, not acquire, whether directly or indirectly, the possibility of
    exercising influence (as defined in paragraph 43 of the Remedies Notice, footnote 3) over
    the whole or part of the Divestment Business, unless, following the submission of a
    reasoned request from DIC showing good cause and accompanied by a report from the
    Monitoring Trustee (as provided in paragraph 44 of these Commitments), the Commission
    finds that the structure of the market has changed to such an extent that the absence of
    influence over the Divestment Business is no longer necessary to render the Concentration
    compatible with the internal market.
1.2 Structure and definition of the Divestment Business
6.  The Divestment Business consists of DIC’s global business for:
                                            5
 ---pagebreak--- the Divestment Products, comprising:
(i)    Perylene pigment products under the C.I.s P.R.179, P.V.29, P.R.123,
       P.R.190 and P.R.224 manufactured at the Bushy Park Facility and sold by
       DIC globally (“Bushy Park Perylene Products”);
(ii)   Quinacridone pigment products under the C.I.s P.R.122, P.R.202, P.V.19
       and P.V.55 manufactured at the Bushy Park Facility and sold by DIC
       globally (“Bushy Park Quinacridone Products”);
the Bushy Park Other Products, comprising:
(i)    Isoindoline (C.I. P.Y.139),
(ii)   Azo (C.I. P.R.188) and
(iii)  Carbon black (C.I. P.Bl.7) pigment products
manufactured at the Bushy Park Facility and sold by DIC globally; and
the Bushy Park Facility, where the Divestment Products and the Bushy Park Other
Products are manufactured, described in more detail in the Schedule, including, but
not necessarily limited to:
(i)    all tangible assets owned by DIC and used to manufacture the Divestment
       Products and the Bushy Park Other Products at the Effective Date (including
       manufacturing assets, the buildings housing these assets and the related
       ground leases at the Bushy Park Facility);
(ii)   any Inventory;
(iii)  all intangible assets (including Exclusively Used Technology, Primarily
       Used Technology and Licensed Technology as defined in the Schedule,
       R&D);
(iv)   the QuindoTM and PerrindoTM brands and any associated trademarks and
       product names;
(v)    at the option of the Purchaser, a transitional, non-exclusive, royalty-free
       licence for the trademarks SunPlastTM, SunBriteTM and FanchonTM for a
       transitional period of up to […] from Closing, extendable for […] periods
       (i.e., up to a maximum licence duration of […] in total);
(vi)   all contracts, leases, commitments and Customer orders of the Divestment
       Business; all Customer, credit and other records of the Divestment
       Business;
(vii)  all licences, permits and authorisations issued by any governmental
       organisation for the benefit of the Divestment Business;
(viii) the Personnel currently employed at the Bushy Park Facility to the extent
       engaged in operations relating to the Divestment Products and Bushy Park
                                6
 ---pagebreak---                      Other Products, as well as any sales personnel, product management, and
                     product expert roles, and any other personnel exclusively or predominantly
                     dedicated to the Divestment Business (if any), even if not located at the
                     Bushy Park Facility, subject to employee consent and applicable labour
                     laws and other relevant legislation, who are necessary to ensure the viability
                     and competitiveness of the Divestment Business as described in the
                     Schedule;
             (ix)    the Key Personnel currently employed at the Bushy Park Facility to the
                     extent engaged in operations relating to the Divestment Products and Bushy
                     Park Other Products, subject to employee consent and applicable labour
                     laws and other relevant legislation;
             (x)     a Transitional Services Agreement (“TSA”) for a transitional period of up
                     to […] after Closing at […], extendable for […] periods at […], as described
                     in the Schedule.
7.  Strict firewall procedures will be adopted so as to ensure that any competitively sensitive
    information related to, or arising from these Transitional Agreements (for example, product
    roadmaps) will not be shared with, or passed on to, anyone, outside the DIC business unit
    providing the relevant services.
8.  The legal and functional structure of the Divestment Business as operated to date is
    described in the Schedule.
                                SECTION C RELATED COMMITMENTS
1.3 Preservation of viability, marketability and competitiveness
9.  From the Effective Date until Closing, DIC shall preserve or procure the preservation of
    the economic viability, marketability and competitiveness of the Divestment Business, in
    accordance with good business practice, and shall minimise as far as possible any risk of
    loss of competitive potential of the Divestment Business. In particular, DIC undertakes:
             not to carry out any action that might have a significant adverse impact on the value,
             management or competitiveness of the Divestment Business (including regarding
             manufacturing activity, inventory management, and sales volumes and prices) or
             that might alter the nature and scope of activity, or the industrial or commercial
             strategy or the investment policy of the Divestment Business;
             to make available, or procure to make available, sufficient resources for the
             development of the Divestment Business, on the basis and continuation of the
             existing business plans;
             to take all reasonable steps, or procure that all reasonable steps are being taken,
             including appropriate incentive schemes (based on industry practice), to encourage
             all Key Personnel to remain with the Divestment Business, and not to solicit or
                                               7
 ---pagebreak---             move any Personnel to DIC’s remaining business. Where, nevertheless, individual
            members of the Key Personnel exceptionally leave the Divestment Business, DIC
            shall provide a reasoned proposal to replace the person or persons concerned to the
            Commission and the Monitoring Trustee. DIC must be able to demonstrate to the
            Commission that the replacement is well suited to carry out the functions exercised
            by those individual members of the Key Personnel. The replacement shall take
            place under the supervision of the Monitoring Trustee, who shall report to the
            Commission.
1.4 Hold-separate obligations
10. The Notifying Party commits, from the Effective Date until Closing, to procure that the
    Divestment Business is kept separate from the business(es) that the Notifying Party will be
    retaining and, after closing of the notified transaction to keep the Divestment Business
    Separate from the business that the Notifying Party is retaining and to ensure that unless
    explicitly permitted under these Commitments: (i) management and staff of the business
    retained by DIC have no involvement in the Divestment Business; (ii) the Key Personnel
    and Personnel of the Divestment Business have no involvement in any business retained
    by DIC and do not report to any individual outside the Divestment Business.
11. Until Closing, DIC shall assist the Monitoring Trustee in ensuring that the Divestment
    Business is managed as a distinct and saleable entity separate from the business which DIC
    is retaining. Immediately after the adoption of the Decision, DIC shall appoint a Hold
    Separate Manager. The Hold Separate Manager, who shall be part of the Key Personnel,
    shall manage the Divestment Business independently and in the best interest of the business
    with a view to ensuring its continued economic viability, marketability and
    competitiveness and its independence from the businesses retained by DIC. The Hold
    Separate Manager shall closely cooperate with and report to the Monitoring Trustee and,
    if applicable, the Divestiture Trustee. Any replacement of the Hold Separate Manager shall
    be subject to the procedure laid down in paragraph 9(c) of these Commitments. The
    Commission may, after having heard DIC, require DIC to replace the Hold Separate
    Manager.
1.5 Ring-fencing
12. DIC shall implement, or procure to implement, all necessary measures to ensure that it does
    not, after the Effective Date, obtain any Confidential Information relating to the
    Divestment Business and that any such Confidential Information obtained by DIC before
    the Effective Date will be eliminated and not be used by DIC, unless required for financial
    reporting purposes until Closing. This includes measures vis-à-vis DIC’s representatives
    on any supervisory or management bodies of the Divestment Business. In particular, the
    participation of the Divestment Business in any central information technology network
    shall be severed to the extent possible, without compromising the viability of the
    Divestment Business. DIC may obtain or keep information relating to the Divestment
                                             8
 ---pagebreak---     Business which is reasonably necessary for the divestiture of the Divestment Business or
    the disclosure of which to DIC is required by law.
1.6 Non-solicitation clause
13. The Parties undertake, subject to customary limitations, not to solicit, and to procure that
    Affiliated Undertakings do not solicit, the Key Personnel or Personnel transferred with the
    Divestment Business for a period of […] after Closing.
1.7 Due diligence
14. In order to enable potential purchasers to carry out a reasonable due diligence of the
    Divestment Business, DIC shall, subject to customary confidentiality assurances and
    dependent on the stage of the divestiture process:
            provide to potential purchasers sufficient information as regards the Divestment
            Business; and
            provide to potential purchasers after the Effective Date, a version of the
            Commitments (including the Schedule and its Annexes) without undue delay and
            no later than at the signing of a Non-Disclosure Agreement by the potential
            purchaser, or at the opening a data-room, whichever is earlier. Any redaction to the
            Commitments should be agreed in advance with the Commission and
            provide to potential purchasers sufficient information relating to the Personnel and
            allow them reasonable access to the Personnel.
1.8 Reporting
15. DIC shall submit written reports in English on potential purchasers of the Divestment
    Business and developments in the negotiations with such potential purchasers to the
    Commission and the Monitoring Trustee no later than 10 days after the end of every month
    following the Effective Date (or otherwise at the Commission’s request). DIC shall submit
    a list of all potential purchasers having expressed interest in acquiring the Divestment
    Business to the Commission at each and every stage of the divestiture process, as well as a
    copy of all the offers made by potential purchasers within five days of their receipt.
16. DIC shall inform the Commission and the Monitoring Trustee on the preparation of the
    data room documentation and the due diligence procedure and shall submit a copy of any
    information memorandum to the Commission and the Monitoring Trustee before sending
    the memorandum out to potential purchasers.
                                   SECTION D THE PURCHASER
17. In order to be approved by the Commission, the Purchaser must fulfil the following criteria:
                                             9
 ---pagebreak---             The Purchaser shall be independent of and unconnected to DIC and its Affiliated
            Undertakings (this being assessed having regard to the situation following the
            divestiture).
            The Purchaser shall have the financial resources, proven expertise and incentive to
            maintain and develop the Divestment Business as a viable and active competitive
            force in competition with the Parties and other competitors.
            The Purchaser shall be an industry participant with experience in the pigment
            business.
            The Purchaser shall have the ability to distribute the Divestment Products and
            Bushy Park Other Products globally and in the EEA or to have procured such
            services from a third party.
            The acquisition of the Divestment Business by the Purchaser must neither be likely
            to create, in light of the information available to the Commission, prima facie
            competition concerns nor give rise to a risk that the implementation of the
            Commitments will be delayed. In particular, the Purchaser must reasonably be
            expected to obtain all necessary approvals from the relevant regulatory authorities
            for the acquisition of the Divestment Business.
18. The final binding sale and purchase agreement (as well as ancillary agreements) relating to
    the divestment of the Divestment Business shall be conditional on the Commission’s
    approval. When DIC has reached an agreement with a purchaser, it shall submit a fully
    documented and reasoned proposal, including a copy of the final agreement(s), within one
    week to the Commission and the Monitoring Trustee. DIC must be able to demonstrate to
    the Commission that the purchaser fulfils the Purchaser Criteria and that the Divestment
    Business is being sold in a manner consistent with the Commission's Decision and the
    Commitments. For the approval, the Commission shall verify that the purchaser fulfils the
    Purchaser Criteria and that the Divestment Business is being sold in a manner consistent
    with the Commitments including their objective to bring about a lasting structural change
    in the market. The Commission may approve the sale of the Divestment Business without
    one or more Assets or parts of the Personnel, or by substituting one or more Assets or parts
    of the Personnel with one or more different assets or different personnel, if this does not
    affect the viability and competitiveness of the Divestment Business after the sale, taking
    account of the proposed purchaser.
                                        SECTION E TRUSTEE
1.9 Appointment procedure
19. DIC shall appoint a Monitoring Trustee to carry out the functions specified in these
    Commitments for a Monitoring Trustee. DIC commits not to close the Concentration
    before the appointment of a Monitoring Trustee.
                                            10
 ---pagebreak--- 20.   If DIC has not entered into a binding sale and purchase agreement regarding the
      Divestment Business one month before the end of the First Divestiture Period or if the
      Commission has rejected a purchaser proposed by DIC at that time or thereafter, DIC shall
      appoint a Divestiture Trustee. The appointment of the Divestiture Trustee shall take effect
      upon the commencement of the Trustee Divestiture Period.
21.   The Trustee shall:
              at the time of appointment, be independent of the DIC and its Affiliated
              Undertakings;
              possess the necessary qualifications to carry out its mandate, for example have
              sufficient relevant experience as an investment banker or consultant or auditor; and
              neither have nor become exposed to a Conflict of Interest.
22.   The Trustee shall be remunerated by DIC in a way that does not impede the independent
      and effective fulfilment of its mandate. In particular, where the remuneration package of a
      Divestiture Trustee includes a success premium linked to the final sale value of the
      Divestment Business, such success premium may only be earned if the divestiture takes
      place within the Trustee Divestiture Period.
1.9.1 Proposal by DIC
23.   No later than two weeks after the Effective Date, DIC shall submit the name or names of
      one or more natural or legal persons whom DIC proposes to appoint as the Monitoring
      Trustee to the Commission for approval. No later than one month before the end of the
      First Divestiture Period or on request by the Commission, DIC shall submit a list of one or
      more persons whom DIC proposes to appoint as Divestiture Trustee to the Commission for
      approval. The proposal shall contain sufficient information for the Commission to verify
      that the person or persons proposed as Trustee fulfil the requirements set out in paragraph
      21 and shall include:
              the full terms of the proposed mandate, which shall include all provisions necessary
              to enable the Trustee to fulfil its duties under these Commitments; and
              the outline of a work plan which describes how the Trustee intends to carry out its
              assigned tasks;
              an indication whether the proposed Trustee is to act as both Monitoring Trustee and
              Divestiture Trustee or whether different trustees are proposed for the two functions.
1.9.2 Approval or rejection by the Commission
24.   The Commission shall have the discretion to approve or reject the proposed Trustee(s) and
      to approve the proposed mandate subject to any modifications it deems necessary for the
      Trustee to fulfil its obligations. If only one name is approved, DIC shall appoint or cause
                                                11
 ---pagebreak---        to be appointed the person or persons concerned as Trustee, in accordance with the mandate
       approved by the Commission. If more than one name is approved, DIC shall be free to
       choose the Trustee to be appointed from among the names approved. The Trustee shall be
       appointed within one week of the Commission’s approval, in accordance with the mandate
       approved by the Commission.
1.9.3 New proposal by DIC
25.    If all the proposed Trustees are rejected, DIC shall submit the names of at least two more
       natural or legal persons within one week of being informed of the rejection, in accordance
       with paragraphs 19 and 24 of these Commitments.
1.9.4 Trustee nominated by the Commission
26.    If all further proposed Trustees are rejected by the Commission, the Commission shall
       nominate a Trustee, whom DIC shall appoint, or cause to be appointed, in accordance with
       a trustee mandate approved by the Commission.
1.10   Functions of the Trustee
27.    The Trustee shall assume its specified duties and obligations in order to ensure compliance
       with the Commitments. The Commission may, on its own initiative or at the request of the
       Trustee or DIC, give any orders or instructions to the Trustee in order to ensure compliance
       with the conditions and obligations attached to the Decision.
1.10.1 Duties and obligations of the Monitoring Trustee
28.    The Monitoring Trustee shall:
                propose in its first report to the Commission a detailed work plan describing how it
                intends to monitor compliance with the obligations and conditions attached to the
                Decision.
                oversee, in close co-operation with the Hold Separate Manager, the on-going
                management of the Divestment Business with a view to ensuring its continued
                economic viability, marketability and competitiveness and monitor compliance by
                DIC with the conditions and obligations attached to the Decision. To that end the
                Monitoring Trustee shall:
                (i)    monitor the preservation of the economic viability, marketability and
                       competitiveness of the Divestment Business, and the keeping separate of
                       the Divestment Business from the business retained by the Parties, in
                       accordance with paragraphs 9-10 of these Commitments.
                (ii)   supervise the management of the Divestment Business as a distinct and
                       saleable entity, in accordance with paragraph 11 of these Commitments;
                (iii)  with respect to Confidential Information:
                                                  12
 ---pagebreak---         (A)     determine all necessary measures to ensure that DIC does not after
                the Effective Date obtain any Confidential Information relating to
                the Divestment Business, unless required for financial reporting
                purposes until Closing,
        (B)     in particular strive for the severing of the Divestment Business’
                participation in a central information technology network to the
                extent possible, without compromising the viability of the
                Divestment Business,
        (C)     make sure that any Confidential Information relating to the
                Divestment Business obtained by DIC before the Effective Date is
                eliminated and will not be used by DIC, unless required under
                applicable records retention laws, and
        (D)     decide whether such information may be disclosed to or kept by DIC
                as the disclosure is reasonably necessary to allow DIC to carry out
                the divestiture or as the disclosure is required by law;
(iv)    monitor the splitting of assets and the allocation of Personnel between the
        Divestment Business and DIC or Affiliated Undertakings;
propose to DIC such measures as the Monitoring Trustee considers necessary to
ensure DIC’s compliance with the conditions and obligations attached to the
Decision, in particular the maintenance of the full economic viability, marketability
or competitiveness of the Divestment Business, the holding separate of the
Divestment Business and the non-disclosure of competitively sensitive
information;
review and assess potential purchasers as well as the progress of the divestiture
process and verify that, dependent on the stage of the divestiture process:
(i)     potential purchasers receive sufficient and correct information relating to
        the Divestment Business and the Personnel in particular by reviewing, if
        available, the data room documentation, the information memorandum and
        the due diligence process, and
(ii)    potential purchasers are granted reasonable access to the Personnel;
act as a contact point for any requests by third parties, in particular potential
purchasers, in relation to the Commitments;
provide to the Commission, sending DIC a non-confidential copy at the same time,
a written report within 15 days after the end of every month that shall cover the
operation and management of the Divestment Business as well as the splitting of
assets and the allocation of Personnel so that the Commission can assess whether
the business is held in a manner consistent with the Commitments and the progress
of the divestiture process as well as potential purchasers;
                                 13
 ---pagebreak---                 promptly report in writing to the Commission, sending DIC a non-confidential copy
                at the same time, if it concludes on reasonable grounds that DIC is failing to comply
                with these Commitments;
                within one week after receipt of the documented proposal referred to in paragraph
                18 of these Commitments, submit to the Commission, sending DIC a non-
                confidential copy at the same time, a reasoned opinion as to the suitability and
                independence of the proposed purchaser and the viability of the Divestment
                Business after the divestiture and as to whether the Divestment Business is sold in
                a manner consistent with the conditions and obligations attached to the Decision,
                in particular, if relevant, whether the divestiture of the Divestment Business without
                one or more Assets or not all of the Personnel affects the viability of the Divestment
                Business after the divestiture, taking account of the proposed purchaser;
                assume the other functions assigned to the Monitoring Trustee under the conditions
                and obligations attached to the Decision.
29.    If the Monitoring and Divestiture Trustee are not the same legal or natural persons, the
       Monitoring Trustee and the Divestiture Trustee shall cooperate closely with each other
       during and for the purpose of the preparation of the Trustee Divestiture Period in order to
       facilitate each other's tasks.
1.10.2 Duties and obligations of the Divestiture Trustee
30.    Within the Trustee Divestiture Period, the Divestiture Trustee shall sell at no minimum
       price the Divestment Business to a purchaser, provided that the Commission has approved
       both the purchaser and the final binding sale and purchase agreement (and ancillary
       agreements) as in line with the Commission's Decision and the Commitments in
       accordance with paragraphs 17 and 18 of these Commitments. The Divestiture Trustee
       shall include in the sale and purchase agreement (as well as in any ancillary agreements)
       such terms and conditions as it considers appropriate for an expedient sale in the Trustee
       Divestiture Period. In particular, the Divestiture Trustee may include in the sale and
       purchase agreement such customary representations and warranties and indemnities as are
       reasonably required to effect the sale. The Divestiture Trustee shall protect the legitimate
       financial interests of DIC, subject to DIC’s unconditional obligation to divest at no
       minimum price in the Trustee Divestiture Period.
31.    In the Trustee Divestiture Period (or otherwise at the Commission’s request), the
       Divestiture Trustee shall provide the Commission with a comprehensive monthly report
       written in English on the progress of the divestiture process. Such reports shall be submitted
       within 15 days after the end of every month with a simultaneous copy to the Monitoring
       Trustee and a non-confidential copy to DIC.
                                                 14
 ---pagebreak--- 1.11 Duties and obligations of the Parties
32.  DIC shall provide and shall cause its advisors to provide the Trustee with all such co-
     operation, assistance and information as the Trustee may reasonably require to perform its
     tasks. The Trustee shall have full and complete access to any of DIC’s or the Divestment
     Business’ books, records, documents, management or other personnel, facilities, sites and
     technical information necessary for fulfilling its duties under the Commitments and DIC
     and the Divestment Business shall provide the Trustee upon request with copies of any
     document. DIC and the Divestment Business shall make available to the Trustee one or
     more offices on their premises and shall be available for meetings in order to provide the
     Trustee with all information necessary for the performance of its tasks.
33.  DIC shall provide the Monitoring Trustee with all managerial and administrative support
     that it may reasonably request on behalf of the management of the Divestment Business.
     This shall include all administrative support functions relating to the Divestment Business
     which are currently carried out at headquarters level. DIC shall provide and shall cause its
     advisors to provide the Monitoring Trustee, on request, with the information submitted to
     potential purchasers, in particular give the Monitoring Trustee access to the data room
     documentation and all other information granted to potential purchasers in the due
     diligence procedure. DIC shall inform the Monitoring Trustee on possible purchasers,
     submit lists of potential purchasers at each stage of the selection process, including the
     offers made by potential purchasers at those stages, and keep the Monitoring Trustee
     informed of all developments in the divestiture process.
34.  DIC shall grant or procure Affiliated Undertakings to grant comprehensive powers of
     attorney, duly executed, to the Divestiture Trustee to effect the sale (including ancillary
     agreements), the Closing and all actions and declarations which the Divestiture Trustee
     considers necessary or appropriate to achieve the sale and the Closing, including the
     appointment of advisors to assist with the sale process. Upon request of the Divestiture
     Trustee, DIC shall cause the documents required for effecting the sale and the Closing to
     be duly executed.
35.  DIC shall indemnify the Trustee and its employees and agents (each an “Indemnified
     Party”) and hold each Indemnified Party harmless against, and hereby agrees that an
     Indemnified Party shall have no liability to DIC for, any liabilities arising out of the
     performance of the Trustee’s duties under the Commitments, except to the extent that such
     liabilities result from the wilful default, recklessness, gross negligence or bad faith of the
     Trustee, its employees, agents or advisors.
36.  At the expense of DIC, the Trustee may appoint advisors (in particular for corporate finance
     or legal advice), subject to DIC’s approval (this approval not to be unreasonably withheld
     or delayed) if the Trustee considers the appointment of such advisors necessary or
     appropriate for the performance of its duties and obligations under the Mandate, provided
                                              15
 ---pagebreak---      that any fees and other expenses incurred by the Trustee are reasonable. Should DIC refuse
     to approve the advisors proposed by the Trustee the Commission may approve the
     appointment of such advisors instead, after having heard DIC. Only the Trustee shall be
     entitled to issue instructions to the advisors. Paragraph 35 of these Commitments shall
     apply mutatis mutandis. In the Trustee Divestiture Period, the Divestiture Trustee may use
     advisors who served DIC during the Divestiture Period if the Divestiture Trustee considers
     this in the best interest of an expedient sale.
37.  DIC agrees that the Commission may share Confidential Information proprietary to DIC
     with the Trustee. The Trustee shall not disclose such information and the principles
     contained in Article 17 (1) and (2) of the Merger Regulation apply mutatis mutandis.
38.  DIC agrees that the contact details of the Monitoring Trustee are published on the website
     of the Commission's Directorate-General for Competition and shall inform interested third
     parties, in particular any potential purchasers, of the identity and the tasks of the
     Monitoring Trustee.
39.  For a period of […] from the Effective Date the Commission may request all information
     from DIC that is reasonably necessary to monitor the effective implementation of these
     Commitments.
1.12 Replacement, discharge and reappointment of the Trustee
40.  If the Trustee ceases to perform its functions under the Commitments or for any other good
     cause, including the exposure of the Trustee to a Conflict of Interest:
              the Commission may, after hearing the Trustee and DIC, require DIC to replace the
              Trustee; or
              DIC may, with the prior approval of the Commission, replace the Trustee.
41.  If the Trustee is removed according to paragraph 40 of these Commitments, the Trustee
     may be required to continue in its function until a new Trustee is in place to whom the
     Trustee has effected a full hand over of all relevant information. The new Trustee shall be
     appointed in accordance with the procedure referred to in paragraphs 19-26 of these
     Commitments.
42.  Unless removed according to paragraph 40 of these Commitments, the Trustee shall cease
     to act as Trustee only after the Commission has discharged it from its duties after all the
     Commitments with which the Trustee has been entrusted have been implemented.
     However, the Commission may at any time require the reappointment of the Monitoring
     Trustee if it subsequently appears that the relevant remedies might not have been fully and
     properly implemented.
                                              16
 ---pagebreak---                                   SECTION F THE REVIEW CLAUSE
43. The Commission may extend the time periods foreseen in the Commitments in response to
    a request from DIC or, in appropriate cases, on its own initiative. Where DIC requests an
    extension of a time period, it shall submit a reasoned request to the Commission no later
    than one month before the expiry of that period, showing good cause. This request shall be
    accompanied by a report from the Monitoring Trustee, who shall, at the same time send a
    non-confidential copy of the report to DIC. Only in exceptional circumstances shall DIC
    be entitled to request an extension within the last month of any period.
44. The Commission may further, in response to a reasoned request from DIC showing good
    cause waive, modify or substitute, in exceptional circumstances, one or more of the
    undertakings in these Commitments. This request shall be accompanied by a report from
    the Monitoring Trustee, who shall, at the same time send a non-confidential copy of the
    report to DIC. The request shall not have the effect of suspending the application of the
    undertaking and, in particular, of suspending the expiry of any time period in which the
    undertaking has to be complied with.
                                  SECTION G ENTRY INTO FORCE
45. The Commitments shall take effect upon the date of adoption of the Decision.
             […]                                      […]
            duly authorised for and on behalf of DIC
                                            17
 ---pagebreak---                                               SCHEDULE
1.      The Divestment Business as operated to date has the following legal and functional
structure: the Divestment Business is currently owned and operated by DIC’s Affiliated
Undertaking Sun Chemical and is not incorporated separately.
2.      The Divestment Business, described and specified in more detail in the Schedule of the
        Commitments, consists of DIC’s global business for:
               the Divestment Products, comprising:
               (i)     Perylene pigment products under the C.I.s P.R.179, P.V.29, P.R.123,
                       P.R.190 and P.R.224 manufactured at the Bushy Park Facility and sold by
                       DIC globally (“Bushy Park Perylene Products”);
               (ii)    Quinacridone pigment products under the C.I.s P.R.122, P.R.202, P.V.19
                       and P.V.55 manufactured at the Bushy Park Facility and sold by DIC
                       globally (“Bushy Park Quinacridone Products”);
               the Bushy Park Other Products, comprising:
               (i)     Isoindoline (C.I. P.Y.139),
               (ii)    Azo (C.I. P.R.188) and
               (iii)   Carbon black (C.I. P.Bl.7) pigment products
               manufactured at the Bushy Park Facility and sold by DIC globally (“Bushy Park
               Other Products”); and
               the Bushy Park Facility, where the Divestment Products and Bushy Park Other
               Products are manufactured, representing the entirety of DIC’s production capacity
               for the Divestment Products and Bushy Park Other Products, as described in more
               detail below.
3.      The Divestment Business includes:
               the following main tangible assets:
               (i)     the Bushy Park Facility, including, but not limited to:
                       (A)    all tangible manufacturing assets owned by DIC used to
                              manufacture or contributing to the manufacture of the Divestment
                              Products and the Bushy Park Other Products in the Bushy Park
                              Facility, […];
                       (B)    the real estate owned by DIC and housing the tangible
                              manufacturing assets used for the manufacturing of the Divestment
                              Products and the Bushy Park Other Products, as well as the related
                              ground leases at the Bushy Park Facility (a map showing the
                                               18
 ---pagebreak---                 location of buildings of the Bushy Park Facility to be divested is
                included in Annex C1);
(ii)    any Inventory;
(iii)   the transfer of all advertising, marketing, sales, publicity and
        presentational materials designed for and used in connection with the
        Divestment Products and Bushy Park Other Products, or copies of any such
        materials designed for and used in connection with the Divestment Products
        and Bushy Park Other Products for a time period to be agreed by DIC and
        the Purchaser, subject to reprinting the Purchaser’s name, and any
        copyrights owned by DIC in such materials;
the following main intangible assets:
(i)     the assignment of all of DIC’s know-how and intellectual property rights,
        if any, that is used by DIC exclusively to develop, manufacture, test,
        market the Divestment Products and Bushy Park Other Products at the
        Bushy Park Facility (the “Exclusively Used Technology”); for the
        avoidance of doubt, following the assignment, DIC will be able to use
        know-how and other intellectual property rights used by BCE in connection
        with BCE’s products;
(ii)    if applicable, the assignment of all of DIC’s know-how and intellectual
        property rights, if any, that is used by DIC primarily to develop,
        manufacture, test, market the Divestment Products and Bushy Park Other
        Products at the Bushy Park Facility (the “Primarily Used Technology”);
        the purchaser of the Divestment Business shall grant back to DIC an
        indefinite, royalty-free, irrevocable, non-exclusive, global licence to use
        all know-how and other intellectual property rights related to the Primarily
        Used Technology;
(iii)   if applicable, an indefinite, royalty-free, irrevocable, non-exclusive,
        global licence under DIC’s other intellectual property rights, if any, to use
        all know-how and other intellectual property rights not exclusively or
        primarily used by DIC to develop, manufacture, test, market the
        Divestment Products and Bushy Park Other Products at the Bushy Park
        Facility, in each case solely for the development, manufacture, testing and
        marketing of the Divestment Products or Bushy Park Other Products (the
        “Licensed Technology”);
(iv)    to the extent it concerns solely or predominantly the Divestment Products
        or the Bushy Park Other Products, the Parties shall transfer all R&D and
        pipeline projects (including innovations and development products), and
        related information existing at the Effective Date to the Purchaser. To the
        extent they do not concern solely or predominantly the Divestment Products
        or the Bushy Park Other Products, the Parties will provide a royalty-free,
        irrevocable, non-exclusive, global licence to these R&D and pipeline
        projects;
                                 19
 ---pagebreak--- (v)     all historic production and quality control data gathered by DIC prior to
        Closing and held by DIC of the Divestment Products and Bushy Park Other
        Products and historic records on compliance with applicable regulations;
        provided, however, that any parts of such records that do not relate to the
        Divestment Products and Bushy Park Other Products may be redacted from
        the records delivered to the Purchaser;
(vi)    the QuindoTM and PerrindoTM brand and any associated trademarks and
        product names;
(vii)   at the option of the Purchaser, a transitional, non-exclusive, royalty-free
        licence for the trademarks SunPlastTM, SunBriteTM and FanchonTM, in
        each case solely for the marketing of the Bushy Park Quinacridone Products
        or Bushy Park Other Products for which they are currently used, for a
        transitional period up to […] from Closing to allow the Purchaser to re-
        brand the relevant products to one of its other brands. This […] transitional
        period can be extended […];
the following contracts, agreements, commitments and understandings:
(i)     where applicable, and to the extent contractually possible, the transfer of
        any supply arrangement, Customer contracts, contract rights,
        commitments, and Customer orders of the Divestment Products and
        Bushy Park Other Products which contribute to the current operation or are
        necessary to ensure the viability and competitiveness of the Divestment
        Business; for contracts that are legally not transferable (if any), DIC will
        undertake its best efforts to novate written contracts for the supply of the
        Divestment Products; DIC will take commercially reasonable steps to
        encourage Customers to move their Divestment Products and Bushy Park
        Other Products purchasing volumes to the Purchaser;
(ii)    where applicable, and to the extent contractually possible, the transfer of
        any contracts, agreements commitments and understandings with the
        Divestment Business’ suppliers for the period of time between 2010 and
        Closing;
(iii)   all prepayments, prepaid expenses, credits, etc. relating to 3(c)(i); and
(iv)    for the contracts where DIC will be a counterparty, DIC commits to give
        the option to the Purchaser […];
the following customer, credit and other records:
(i)     the transfer of a list of all Customers for the Divestment Products and
        Bushy Park Other Products, including pending contacts or negotiations with
        potential new Customers, provided, however, that DIC may continue to use
        such lists to the extent they relate to its retained businesses (Annex C6);
(ii)    where applicable, the transfer of any Customer records and transactional
        data which contribute to the current operation or are necessary to ensure
                                  20
 ---pagebreak---                   the viability and competitiveness of the Divestment Business, provided,
                  however, that DIC may continue to use such records and transactional data
                  to the extent they relate to its retained businesses; and provided further, that
                  any parts of such documentation that do not relate to the Divestment
                  Business may be redacted from the versions delivered to the Purchaser; and
                  provided further, that to the extent that DIC is obliged to retain such
                  documents in support of legal obligations, DIC shall be entitled to do so;
                  and, provided further, that DIC shall not be required to transfer any such
                  customer records and transactional data that do not relate to the Divestment
                  Business; where third-party consent is required for customer documentation
                  to be transferred, DIC undertakes to make all best efforts to obtain such
                  consent;
         (iii)    a list of all current suppliers of raw materials for the production of the
                  Divestment Products and Bushy Park Other Products (listed in Annex C2);
         the Personnel currently employed at the Bushy Park Facility to the extent engaged
         in operations relating to the Divestment Products and Bushy Park Other Products,
         as well as any sales personnel, product management, and product expert roles, and
         any other personnel exclusively or predominantly dedicated to the Divestment
         Business (if any), even if not located at the Bushy Park Facility, subject to employee
         consent and applicable labour laws and other relevant legislation, who are
         necessary to ensure the viability and competitiveness of the Divestment Business
         (including employees listed in Annex C3);
         the Key Personnel currently employed at the Bushy Park Facility to the extent
         engaged in operations relating to the Divestment Products and Bushy Park Other
         Products, subject to employee consent and applicable labour laws and other
         relevant legislation (including employees listed in Annex C4);
         to the extent transferable, the transfer of all licences, permits and authorisations
         specific to the Bushy Park Facility which contribute to the current operation or are
         necessary to ensure the viability and competitiveness of the Divestment Business
         (listed in Annex C7); and
         to facilitate the efficient and smooth transfer of the Divestment Business to the
         Purchaser a Transitional Services Agreement, for a period of up to […] after
         Closing at […], extendable for […], for the supply of services necessary for the
         viability and competitiveness of the Divestment Business to the Purchaser.
         Transitional services include, to the extent technically feasible, IT, purchasing,
         sales and marketing, technical services (e.g., product experts and product
         management), supply chain (e.g., warehousing and logistics) and customer service
         (as further described in Annex C8).
4. The Divestment Business shall not include:
         any rights to the phthalocyanine pigment products manufactured at assets operated
         by third parties and sold by DIC globally (“Bushy Park Phthalocyanine
         Products”) as defined and further described in Annex C9;
                                           21
 ---pagebreak---            any rights to the Ultra Fine Preparation Skid Equipment, Products and Technology
           as defined and further described in Annex C9;
           any rights to the Nano-Silver Skid Equipment, Products and Technology as defined
           and further described in Annex C9;
           any rights to the non-pigment materials manufactured at the Bushy Park Facility
           […] as defined and further described in Annex C9;
           certain personnel currently employed at the Bushy Park Facility listed as excluded
           personnel in Annex C10 […] that are not necessary for the viability and
           competitiveness of the Divestment Business;
           any right to DIC’s manufacturing or other facilities or equipment not described
           above and not necessary for the Divestment Business’ viability and
           competitiveness.
5. The Divestment Business shall not include any divestiture of BCE’s tangible or intangible
   assets.
6. If there is any asset or personnel which is not covered by paragraph 2 of this Schedule but
   which is both used (exclusively or not) in the Divestment Business and is necessary for the
   continued viability and competitiveness of the Divestment Business, that asset or adequate
   substitute will be offered to potential purchasers.
                                            22
 ---pagebreak---  ---pagebreak---                                           ANNEX C1
                                Overview of the Bushy Park Facility
[…]
                                          ANNEX C2
               List of suppliers of raw materials to the Divestment Business
[…]
                                          ANNEX C3
                        List of Personnel in the Divestment Business
[…]
                                          ANNEX C4
                     List of Key Personnel in the Divestment Business
[…]
                                          ANNEX C5
                                List of brands and trademarks
[…]
                                          ANNEX C6
                   List of current customers of the Divestment Business
[…]
                                          ANNEX C7
  List of key licences, permits and authorisations required for the Divestment Business
[…]
 ---pagebreak---                      ANNEX C8
    List of transitional services under the TSA
[…]
                     ANNEX C9
                  Excluded Assets
[…]
                    ANNEX C10
                Excluded Personnel
[…]