CELEX: 32015M7763
Language: en
Date: 2015-11-09 00:00:00
Title: Commission Decision of 09/11/2015 declaring a concentration to be compatible with the common market (Case No COMP/M.7763 - TCCC / COBEGA / CCEP) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

                                        Brussels, 9.11.2015
                                        C(2015) 7880 final

                                        |In the published version of this decision, some information |           |Public version                                                 |
|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|omitted has been replaced by ranges of figures or a general |           |                                                               |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.                                                |           |                                                               |
|                                                            |           |                                                               |
|                                                            |           |MERGER PROCEDURE                                               |

                                        |                                                                       |To the notifying party                                                 |

Dear Sir/Madam,

Subject:    Case M.7763 - TCCC / COBEGA / CCEP
         Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/2004[1] and Article 57 of the Agreement on the European
         Economic Area[2]

    1) On 2 October 2015, the European Commission received notification of  a  proposed  concentration  pursuant  to  Article  4  of  the  Merger
       Regulation by which The Coca-Cola Company ("TCCC", the United States) and Cobega, S.A. ("Cobega", Spain) jointly acquire  control  over  a
       newly formed entity Coca-Cola European Partners Plc. ("CCEP", the United Kingdom) by way of acquisition of shares. CCEP will  combine  the
       activities of the following bottlers: Coca-Cola Erfrischungsgetränke AG ("CCEAG", Germany), Coca-Cola Enterprises, Inc. ("CCE", the United
       States), Coca-Cola Iberian Partners S.A. ("CCIP", Spain) and Vífilfell hf. ("Vífilfell", Iceland) (all four are  jointly  referred  to  as
       "Merged Bottlers").[3] TCCC, Cobega and Merged Bottlers are collectively referred to as "Parties", while TCCC and Cobega are  referred  to
       as "Notifying Parties".

       THE PARTIES

    2) TCCC is a brand owner, licensor of various trademarks, as well as a producer of soft drink concentrates, syrups, fountain soft drink syrup
       and finished beverages. TCCC sells its products to bottlers. TCCC wholly owns and controls CCEAG.

    3) Cobega is active in several sectors, including bottling and distribution of beverages. It controls CCIP and Vífilfell.

    4) CCEAG is a licensed bottler of TCCC branded beverages in Germany. CCIP is a licensed bottler of TCCC branded beverages in Spain,  Portugal
       and Andorra. Vífilfell is a licensed bottler of TCCC beverages in Iceland. Finally CCE is a licensed bottler of TCCC branded beverages  in
       Belgium, France, Great Britain, Luxembourg, the Netherlands, Norway and Sweden.  All  of  these  licensed  bottlers  purchase  soft  drink
       concentrates and syrups from TCCC and use them to make finished beverages.

       THE OPERATION

    5) The principal agreement bringing about the transaction is the Transaction Master Agreement ('TMA'), signed on 6 August  2015.  The  Merged
       Bottlers will be combined into a new publicly listed company CCEP. TCCC and [entity controlled by Cobega] will hold respectively  18%  and
       34% of CCEP's shares, while the remaining shares will be held by private investors.

    6) As regards the governance of CCEP, [entity controlled by Cobega] will appoint five members of CCEP's Board, TCCC will appoint two members,
       nine members will be non-executive directors and the remaining one the  Chief  Executive  Officer.  Following  the  initial  period,  TCCC
       (provided it continues to hold at least 10% of the ordinary shares of CCEP) and [entity controlled by Cobega] (provided  it  continues  to
       hold at least 25% of the ordinary shares of CCEP) will be entitled to continue to nominate two and five directors, respectively.

    7) CCEP's Board will take its decisions by a single majority. However, for decisions concerning approval of the annual  budget  and  business
       plan of CCEP, appointment of its senior managers and entry into material transactions, the consent of at  least  one  of  the  CCEP  Board
       members appointed by each of TCCC and [entity controlled by Cobega] will be required. Therefore TCCC and Cobega will jointly control CCEP.

    8) Following the transaction CCEP will be a stand-alone bottling entity under the supervision of an  independent  management  team.  It  will
       perform all the functions, which are currently carried out by the Merged Bottlers, that is, it will produce, market, distribute  and  sell
       non-alcoholic beverages under the trademarks of TCCC and for third-party brand owners. There are no provisions in the TMA that  limit  the
       duration of TCCC and [entity controlled by Cobega]'s governance rights in CCEP, save that these governance rights are tied to the level of
       their respective shareholdings in CCEP.

    9) Thus the proposed transaction constitutes a concentration within the meaning of Article 3(1)(b) and 3(4) of the Merger Regulation.

       EU DIMENSION

   10) The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5  000  million[4]  (in  2014,  TCCC's  revenues
       amounted to around EUR 35 billion, Cobega's around EUR 3.9 billion). Each of them has an EU-wide turnover in excess of EUR 250 million (in
       2014, TCCC achieved approximately EUR 5.6 billion, Cobega approximately EUR [3-4] billion in the EEA) 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.

       ASSESSMENT

1 Relevant Markets

   11) The supply of non-alcoholic beverages consists of two interrelated activities:  brand  ownership  (including  creation  and  promotion  of
       beverage brand together with production of  concentrate  and/or  finished  beverages)  and  bottling  (including  preparation,  packaging,
       marketing, sale and distribution of beverages).

   12) The Notifying Parties consider that the relevant market for this case is that  for  non-alcoholic  beverages,  including  carbonated  soft
       drinks, packaged water, still drinks, iced/ready-to-drink teas, fruit juices, waters as well as sports and energy drinks.

   13) In its previous decisions related to non-alcoholic beverages, the Commission distinguished between the upstream supply  of  concentrate[5]
       and downstream bottling combined with distribution.[6] Within the  downstream  market  for  non-alcoholic  beverages  the  Commission  has
       considered the various beverages, such as bottled water, carbonated soft drinks (and within it a segment of cola carbonated soft  drinks),
       juices, still drinks or iced teas to fall into distinct categories.[7]

   14) The geographic scope of these markets was considered national due to  inter  alia  differences  in  consumption  patterns,  logistics  and
       distribution networks, and marketing strategies.[8]

   15) In the present case the precise definition of the relevant product and geographic markets can be left open, as the competitive  assessment
       remains the same, regardless of the market definition.

2 Competitive Assessment

1 Horizontal overlaps

   16) First, there are no horizontal overlaps between the Merged Bottlers and TCCC or Cobega at the brand  level,  as  the  Merged  Bottlers  in
       principle do not own beverage brands. The only exception is Vífilfell, which owns a brand for protein beverages and  for  still  water  in
       Iceland. However, TCCC does not own a protein beverage brand, and its still water brand in Iceland (Pure Icelandic) accounts for less than
       5% share. Therefore, the combined share of the Parties in still water in Iceland would be less than [20-30]%. The market leader  in  still
       water in Iceland is Ölgeroin Egils Skallagrimssonar, with its brand Kristall which has a share of [40-50]%. Other players are Hagar  ([10-
       20]%) and a fringe of smaller rivals with market shares below 5%.

   17) Secondly, the Merged Bottlers operate in different EEA countries on the basis of their agreements with TCCC, which  confer  them  with  an
       exclusive licence to market, distribute, bottle and sell TCCC branded beverages in their respective territories.  Therefore  there  is  no
       horizontal overlap between the Merged Bottlers at the bottling level. Moreover, the Merged Bottlers serve different  customers  (that  is,
       retailers in their respective territories) because agreements are typically negotiated on a national basis.

2 Vertical links

   18) The Commission has assessed the new vertical links created by the transaction between the Merged Bottlers and the Notifying  Parties.  The
       assessment shows that the transaction will not lead to a change in the current relationship between  TCCC  and  the  Merged  Bottlers  (in
       particular those not currently owned by TCCC), because the Merged Bottlers are currently already focused on TCCC branded beverages,  which
       constitute [90-100]% of their sales.

   19) Further, as regards third-party brands distributed by the Merged Bottlers, CCEP intends to continue to bottle their brands, in  particular
       because for the majority of these brands TCCC does not have a comparable offering.

   20) Finally, no third-party brand owner relying on the Merged  Bottlers  and  competing  with  a  TCCC  brand  expressed  concerns  about  the
       transaction. Respondents to the market investigation carried out by the Commission in order to verify the impact  of  the  transaction  on
       third-party brand owners whose beverages are bottled by the Merged Bottlers have indicated that there are alternative bottlers  which  are
       likely to provide an alternative to these Merging Bottlers should that be necessary. Respondents have notably mentioned DIS  and  Refresco
       as potential alternative bottlers.[9]

       CONCLUSION

   21) For the above reasons, the European Commission has decided not to oppose the notified operation and to  declare  it  compatible  with  the
       internal market and with the EEA Agreement. This decision is adopted in application of  Article  6(1)(b)  of  the  Merger  Regulation  and
       Article 57 of the EEA Agreement.

                                        For the Commission
                                        (Signed)
                                        Margrethe VESTAGER
                                        Member of the Commission

-----------------------
[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 333, 9.10.2015, p. 6.

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

[5]   See for example M.2276 the Coca-Cola Company/Nestlé/JV or  M.6439 Agrana/RWA/JV

[6]   See for example M.5633 Pepsico/the Pepsico Bottling Group.

[7]   M.5633 Pepsico/the Pepsico Bottling Group.

[8]   See for example M.2276 the Coca-Cola Company/Nestlé/JV

[9]   Reply to Question 5 of questionnaire sent to customers on 5 October 2015.