CELEX: 32020M9985
Language: en
Date: 2020-11-30 00:00:00
Title: Commission Decision of 30/11/2020 declaring a concentration to be compatible with the common market (Case No COMP/M.9985 - GARDAWORLD / G4S) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                 Brussels, 30.11.2020
                                                                 C(2020) 8610 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                                                                  information omitted has been replaced by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.
                                                                 To the notifying party
Subject:             Case M.9985 – GARDAWORLD / G4S
                     Commission decision pursuant to Article 6(1)(b) of Council Regulation
                     No 139/20041 and Article 57 of the Agreement on the European Economic
                     Area2
Dear Sir or Madam,
(1)       On 23 October 2020, the European Commission received notification of a proposed
          concentration pursuant to Article 4 of the Merger Regulation by which Garda World
          Security Corporation (“GardaWorld”, Canada), controlled by BC Partners LLP
          (United Kingdom) and Mr. Stephan Crétier, a Canadian citizen, acquires within the
          meaning of Article 3(1)(b) of the Merger Regulation indirect sole control of the
          whole of G4S plc (“G4S”, United Kingdom) (“the Transaction”).3 The concentration
          is accomplished by way of public bid announced on 14 September. GardaWorld is also
          designated hereinafter as the “Notifying Party” and G4S also as “the Target”.
          GardaWorld and G4S are together designated as “the Parties” to the Transaction.
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 369, 3.11.2020, p. 19.
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)      GardaWorld is a security services and cash services company, offering physical
         security services, end-to-end cash management solutions and security risk
         management. It employs more than 102 000 professionals who serve a diverse
         clientele in North America, Africa, Asia and the Middle East. It is indirectly jointly
         controlled by BC Partners LLP, an international equity investment firm from the
         United Kingdom and Mr Stephan Crétier, a Canadian citizen.4
(3)      G4S is a global integrated security business offering a broad range of security
         services around the world. It is a public company listed on the London Stock
         Exchange. G4S operates across Europe, Asia Pacific, Africa, the Middle East and the
         Americas and has approximately 533 000 employees working globally.5
2.       THE OPERATION
(4)      On 14 and 30 September 2020,6 GardaWorld announced its offer to acquire the
         entirety of the shares in G4S. Completion is subject to, among others, the condition
         that GardaWorld would acquire shares representing more than 50% of the voting
         rights in G4S. Assuming a successful completion of the public bid, GardaWorld will
         acquire indirect sole control over G4S within the meaning of Article 3(1)(b) of the
         Merger Regulation.
(5)      The case was initially notified to the European Commission under the simplified
         review procedure. However, following submissions from the Target indicating that,
         in its view, the Transaction gave rise to affected markets with regard to manned
         guarding security services in high-risk regions, the Commission reverted to a normal
         first phase merger procedure.7
3.       UNION DIMENSION
(6)      The undertakings concerned have a combined aggregate world-wide turnover of
         more than EUR 5 000 million (GardaWorld: EUR […] million, G4S: EUR [...]
         million).8 Each of them has an EU-wide turnover in excess of EUR 250 million
         (GardaWorld: EUR […] million, G4S: EUR [...] million), but they do not achieve
         more than two-thirds of their aggregate EU-wide turnover within one and the same
         Member State.
(7)      The notified operation therefore has a Union dimension pursuant to Art. 1(2) of the
         Merger Regulation.
4   See Form CO, paragraphs 11 and 13.
5   See G4S’ submission of 23 October 2020 (hereinafter also “the First Submission”).
6   On 14 September 2020, GardaWorld published a 2.4 Announcement regarding its intention to acquire the
    entire issued and to be issued share capital of G4S pursuant to Rule 2.4 of the Code on Takeovers and
    Mergers, which is administered by the United Kingdom’s Panel on Takeovers and Mergers. On 30
    September 2020, in accordance with Rule 2.6 (a) of the Code, GardaWorld announced its firm intention to
    make an offer pursuant to Rule 2.7 of the Code (Rule 2.7 Announcement).
7   In line with paragraph 26 of the Commission Notice on a simplified procedure for treatment of certain
    concentrations under Council Regulation (EC) No 139/2004. OJ C 366, 14.12.2013, p. 5.
8   Turnover calculated in accordance with Article 5 of the Merger Regulation.
                                                          2
 ---pagebreak--- 4.       MARKET DEFINITION
(8)      Both Parties are active worldwide in the provision of security services such as
         manned guarding services, cash services and other security services. The
         Commission has examined the sector of security and investigation services in the
         past. For instance, it has examined services such as manned guarding, alarm services
         and systems, care and justice and cash-in-transit services. The Commission
         considered the geographic scope of these services to be national, largely because of
         the regulatory differences between the Member States.9
(9)      While GardaWorld does not provide these services in the EEA and there is no
         overlap or competitive relationship between the Parties’ activities in the EEA leading
         to affected markets within the meaning of the EU merger control rules, the Target
         has submitted that there is an overlap between the Parties’ activities leading to an
         affected market in the market for the provision of manned guarding high-risk
         security services in high-threat/risk regions (also referred to as ‘high-risk security
         services’ in this decision). This decision therefore deals with high-risk security
         services only.
4.1.     Manned guarding security services in high-risk regions
4.1.1. Product market
(10)     In prior decisions, the Commission made a distinction within the market for security
         services between i) manned guarding services ii) alarm installation and maintenance
         (that is, electronic guarding equipment), iii) alarm monitoring and response and
         iv) aviation security service. It considered that they constituted distinct product
         markets.10
(11)     With regard to manned guarding security services, in particular, the Notifying Party
         in case M.599311 submitted that manned guarding would encompass services such
         as: (a) uniformed on-site guards and retail guards (static manned guarding);
         (b) mobile manned guarding services; (c) key-holding services; (d) contract project
         security, (e) events security and crowd management; and (f) associated security
         consultancy services.12 The great majority of respondents to the market investigation
         in that case considered that these services are part of the same market.13 While
9   See further below under section 4.1.1 and section 4.1.2.2 for case references.
10  See, among others, Commission decision in case M.3396 – Group 4 Falck/Securicor, paragraphs 29
    and 31; M.4986 – EQT V/Securitas Direct, paras 10-11; M.6292 – Securitas/ Niscayah Group, paragraph
    8; M.9559 – Telefonica/Prosegur/Prosegur Alarmas Espana, paragraph 14.
11  See Commission decision in case M.5993 – Securitas/ Reliance Security Services/ Reliance Security
    Services Scotland.
12  See also the Parties’ submission in case M.3396 – Group 4 Falck/Securicor, para 18 where the Parties
    submitted that manned guarding would encompass services such as: (i) uniform on-site guards; (ii) guard
    patrols; (iii) retail guards and plain clothes store detective; (iv) key-holding; (v) vehicle escort services;
    (vi) dog patrol; (vii) anti-terrorist and diplomatic security; (viii) information security services; (ix) training
    and security methods; (x) consultancy and risk management and auditing. Further, they submitted that
    services of remote security monitoring and response would be part of the manned guarding segment and
    not electronic guarding.
13  The Notifying Party in case M.5993 had also argued that the provision of scheduled patrols, key holding
    and alarm response services are part of the market for manned guarding services; however, this was not
    entirely confirmed by the market investigation as some respondents submitted that key holding and alarm
                                                             3
 ---pagebreak---          leaving the product market definition open in case M.5993, the Commission also
         referred to these services as being part of the manned guarding services market in a
         subsequent decision in case M.6292 – Securitas/Niscayah Group.14
4.1.1.1. The Parties’ views
         (A)        The Target’s views
(12)     The Target15 submitted that the Parties’ activities overlap in the market for the
         provision of “high-risk security services” which, it submits, constitutes a distinct
         relevant market from the overall market for “more generalised” manned guarding
         security services.16
(13)     According to G4S, high-risk security services are a separate and distinct group of
         services provided in volatile and dangerous environments where there is a need for
         professionally trained security personnel, with three to five years of police or
         military experience (and typically specially trained in enhanced weapon capability).
         The personnel provide safeguarding services to the people, facilities and critical
         infrastructure of customers such as multi-national corporations and government /
         embassies or multinational organisations who operate in these environments.17
(14)     G4S submits that high-risk security services can be clearly distinguished from
         general, standard manned guarding services both from a supply and demand side
         perspective.18
(15)     On the demand side, G4S submits that, first, clients for high-risk security services
         have different requirements and procurement processes from customers for other
         security services such as standard manned guarding. G4S notes that most diplomatic
         security programmes have a high profile and require a high level of decision-making
         from operators. As such, most governments distinguish between low-risk embassies
         (that only require standard manned guarding) and high-risk embassies located in
         countries where the threat level and protection requirements are much higher.
(16)     According to G4S, major oil, gas and mining clients also clearly differentiate
         between the specialist high-risk security services needed to protect their staff and
         operations in conflict and hostile zones and the more basic security packages
         required elsewhere.19
(17)     Second, G4S submits that customers for high-risk security services are typically
         large and sophisticated entities, who procure the services by means of competitive
         tender processes. G4S submits that the main consideration for the customers is the
    response services together may form a distinct product market. The Commission left the exact scope of
    the relevant product market definition open in that case.
14  See Commission decision of 2 August 2011, paragraph 8.
15  See email of 21 October 2020 and subsequent submissions of 23 October and 30 October 2020
    (hereinafter also “the Second Submission”).
16  See, for instance, “First Submission’’ of G4S of 23 October 2020, paragraph 11 and “Third Submission”
    of G4S of 18 November 2020 where it indicates that “The provision of high-risk security services forms a
    distinct and separate market from the provision of more generalised security services.’’, paragraph 4.
17  See, for instance, “Second Submission” of G4S of 30 October 2020.
18  See, for instance, “First Submission” of G4S of 23 October 2020.
19  See, for instance, “First Submission” of G4S of 23 October 2020.
                                                           4
 ---pagebreak---         reputation of the provider, followed closely by price. It submits that clients look for
        one of the “prime providers”, who have a reputation in the industry and the
        experience to take on such contracts. Next, the contracts are awarded based on cost
        and who can offer the best price. The prime providers often sub-contract to local
        providers in order to further drive down costs. 20
(18)    Third, G4S submits that the sector is characterised by much higher and rigorous
        compliance and governance standards required by clients compared to “more
        generalised” manned security services, with audited adherence to standards,
        including the International Code of Conduct for Private Security Service Providers,
        membership of the International Code of Conduct Association (the governance and
        oversight mechanism of the former), ISO standards for private security providers,
        and the Montreux Document on Private Military and Security Companies.21
(19)    On the supply side, G4S submitted, first, that the skills and experience required to
        provide these specialist high-risk services exceed greatly those required in standard
        manned guarding services, who are only required to have a bodyguard licence.22
(20)    Second, G4S submits that providers of high-risk security services must have a
        supply of or access to weapons and other relevant equipment, including armoured
        vehicles.
(21)    Third, according to G4S, the distinction with other security services is also reflected
        in G4S's business structure: G4S RMG is a separate business unit within G4S, with a
        separate management structure and operates in a distinct competitive environment
        from the rest of the G4S business.23
(22)    Fourth, G4S submits that high-risk security services are offered by a different
        competitor set and considered separate from more general security services in the
        industry. This is, in its view, illustrated by an Industry Study of Global Security
        Services published in July 2020, where "private security guards providing military-
        type services, which are most common in underdeveloped countries with unstable
        security environments" were explicitly excluded from the scope of the study.24
20 According to G4S, the tenders/RFPs are issued by the relevant governments or companies with a
   description of the scope of services that are required. The main technical aspect that is requested is how
   the provider will mitigate the threat for the client at the relevant location(s). There are approximately
   30-40 tenders for high-risk security services per year, which range in value from several hundred thousand
   USD to USD 100m. The normal range of a tender in terms of value is approximately USD 1-10 million.
   See, for instance, “First Submission” of G4S of 23 October 2020.
21 See, for instance, “Second Submission” of G4S of 30 October 2020 and its submission of
   18 November 2020 (hereinafter also “the Third Submission”).
22 See, for instance “First Submission” of G4S of 23 October 2020, G4S’ response to RFI-3 and its “Third
   Submission” of 18 November where it submits that “On the supply side, the skills and experience required
   of operators greatly exceeds those required for general security services”.
23 According to G4S, G4S RMG is a specialist protective services business within G4S, operating across its
   entire international network of around 85 countries. G4S RMG is active in providing professionally
   trained security specialists to safeguard people, facilities and critical infrastructure located in “high-risk”
   environments such as Iraq and Afghanistan, in addition to providing specialist consulting and intelligence
   services. See “First Submission” of G4S of 23 October 2020.
24 The other types of security services discussed in the market report are those in the traditional manned
   guarding market: stationary guards and mobile patrols; bodyguards; private guards used at publicly
                                                           5
 ---pagebreak--- (23)   G4S submits that it competes routinely for tenders with three other major providers
       globally: GardaWorld, Constellis and Control Risks. According to G4S, these three
       competitors, together with G4S, are considered as “prime” providers of high-risk
       security services (hereinafter the four companies are referred to as “the Prime
       Providers”). There are also local providers of high-risk security services. However,
       according to G4S, governments and large corporates do not generally contract
       directly with those local providers. Rather, G4S notes that the Prime Providers will
       tender for the main contract and then sub-contract certain elements to local
       providers. The prime provider takes on the risk that the customer has outsourced to
       them.
(24)   At a later stage of the procedure,25 G4S also submitted that, within high-risk security
       services, there is a distinction between large-scale, complex, high-value (or
       “complex, high-end”) contracts (which according to G4S is set to a value above
       EUR [...] million annual contract value (“ACV”)) and smaller, non-complex (or
       “simple, low-end”) contracts. According to G4S, greater scale, reputation and
       standards are required by the international customers (governments and corporates)
       from the Prime Providers that typically tender for complex large-scale high-risk
       security services contracts. G4S also submitted that, in its view, competition for
       large-scale complex high-risk security services typically takes place where the
       customer is headquartered and the decision to award the contracts are taken.
       Normally, according to G4S, the procurement team will be located in the home
       country (i.e. UK, Germany, Netherlands, Italy) and decisions for large-scale complex
       high-risk security services contracts are either taken or are ratified in the home
       country.
(25)   According to G4S, decision-making and thus competition for many smaller, non-
       complex high-risk security services contracts often takes place on the ground where
       the services are delivered. It also submitted that competition from local providers for
       large-scale complex high-risk security services contracts is limited because local
       high-risk security services providers are generally not able to compete for the same
       breadth of contracts as international companies, such as G4S RMG, GardaWorld and
       Constellis.
(26)   G4S submitted that most governments and large western corporate organisations do
       not generally contract directly with local providers for large-scale complex projects,
       as they do not have the requisite scale, reputation and standards required by
       international customers to address the risk appetite of these customers for such
       projects.26
       (B)       The views of the Notifying Party
(27)   GardaWorld does not consider that there is a relevant distinct market for the
       provision of security services in high-risk regions which is separate from the
       standard manned guarding services that the Commission has examined in the past.27
   operated prisons and immigration detention facilities; and aviation security operations. See “First”
   Submission of G4S of 23 October 2020 as well as G4S’ response to RFI-3.
25 See “Third Submission” of G4S of 18 November 2020.
26 See "Third Submission” of G4S of 18 November 2020.
27 See, among others, the Notifying Party’s response to question 1 of RFI-1.
                                                         6
 ---pagebreak---         GardaWorld rather considers that such capabilities are part of the array of armed
        security services offered to customers seeking manned guarding services more
        generally and are offered by local and international companies.
(28)    According to GardaWorld, from the supply side, there is no such service market that
        would include a set of security services specifically dedicated to “high threat
        regions.” The services that providers such as GardaWorld offer in “sensitive areas”
        or “conflict affected states” primarily consist of static security and mobile patrol
        security (that is, the furnishing of guards and security personnel). GardaWorld
        submits that these services are not different from the “manned guarding services”
        previously assessed by the Commission and which the Commission defined as a
        relevant service market.28
(29)    GardaWorld notes that suppliers of manned guarding services in these regions may
        advertise themselves or customize their offer on the basis of the regions where they
        provide their services or the type of customers they want to reach, but ultimately the
        services concerned primarily remain the furnishing of static security and mobile
        security. In this respect, customization is based on, for instance, an individualized
        threat assessment for that customer which determines the proposed mix/number of
        armed versus unarmed guards; the services to be provided (static versus mobile
        security); the type of vehicles needed (armoured or not), etc. As all suppliers have
        that capability, they are all able to “customize” these services.
(30)    GardaWorld also submits that there is also no specific demand from customers for a
        set of specific security services or solutions to be provided in “high threat regions.”
        GardaWorld provides manned guarding services consisting primarily of static
        security and mobile patrol security services and there are no differences between
        these services when provided to customers in “high threat regions” versus the same
        services provided elsewhere. Customers ask for a mix of armed and non-armed
        guards, as they will frequently do in non high-risk locations, though the density and
        mix of guards may change depending on the anticipated risk. GardaWorld believes
        that the same is true for G4S and its competitors.29
(31)    For example, GardaWorld notes that out of […] countries where it provides manned
        guarding services (outside of the USA and Canada), there are […] countries where it
        only supplies unarmed guards. In the remaining […] countries, armed guards
        represent […]% or less of GardaWorld’s guards in […] countries, just […]% in […]
        country and over […]% in just […] countries, that is, in […].30
4.1.1.2. The Commission’s view
(32)    As mentioned above in paragraph 10, the Commission has in the past considered
        manned guarding services as constituting a distinct product market from the
        provision of other security services, such as, for instance, alarm installation and
        maintenance, alarm monitoring and response, cash-in-transit services etc., but it has
        not so far analysed a distinct market for the provision of “high-risk security
        services”.
28  See Form CO, paragraph 135.
29  See Form CO, paragraph 136.
30  See the Notifying Party’s response to RFI-1.
                                                    7
 ---pagebreak--- (33)    The market investigation seems to indicate that the provision of high-risk security
        services could be considered as distinct from the provision of other manned guarding
        security services.
(34)    A market participant noted during the market investigation that: “high-risk security
        services are distinct from other security services, such as, for instance, security
        services provided in a shopping mall, standard cash-in-transit services etc.” This
        market participant noted that “high-risk security services are more specialised and
        the employees are mainly drawn either from the military or the armed police” and
        that “those working in the provision of such services must have special
        qualifications, including knowledge of use of different types of weapons and how to
        operate in hostile environments.”31
(35)    This was confirmed by the majority of market participants who noted that security
        services in high-risk countries is a different business from “standard” manned
        guarding services outside of high-risk areas32 and it is not easy from a supply side
        perspective to scale up from “standard” to “high-risk” security services for various
        reasons.33
(36)    First, it would indeed appear that the skills and experience required in order to
        provide such services differ from those of manned guarding services in non high-risk
        environments. High-risk security services include protection (static and mobile) with
        armed guards as well as mobile protection using armoured vehicles and intelligence
        feed to assess risks.34 The security personnel would in general have either police or
        military training and previous experience as well as special training on using
        weapons. The weapons training would be either on small firearms or different types
        of high velocity firearms and long distance shooting. Normally each security
        member would carry at least one long rifle and a pistol.35 The security personnel
        would also receive tactical training to handle battle-like emergencies.36 This would
        include training on how to safely embark and disembark from vehicles, how to
        operate while in transit for mobile protection and driving techniques. The security
        personnel will be trained and capable of operating for long periods on hostile
        environments far away from home. Personnel will also receive medical training and
31 See minutes of a call of 12 November 2020 with a customer (ID228), paragraph 4
32 See, for instance, minutes of a call of 31 October 2020 with a customer (ID215), paragraph 8 and minutes
   of a call of 29 October 2020 with a competitor (ID353), paragraph 9 or minutes of a call of
   13 November 2020 with a customer (ID370), paragraph 4. Security services in high-risk countries could
   include: a) static protection provided to corporations, for example, oil fields; this represents the large
   majority of the work of security companies in high-risk countries; b) static protection provided to
   embassies, which is a higher protection level that under a) above; and finally, provision of mobile security
   services, considered as the most complex type of assignment, where security providers are required to
   accompany individuals as they move from one location to another (for example, in order to escort convoys
   or provide secured transport for officials between locations). See minutes of a call of 29 October 2020
   with a competitor (ID353), paragraph 7.
33 See minutes of a call of 17 November 2020 with a customer (ID387), paragraph 3.
34 See minutes of a call of 2 November 2020 with a customer (ID218), paragraph 2.
35 See minutes of a call of 12 November with a customer (ID228), paragraph 4 and 13 as well as minutes of
   a call of 29 October 2020 with a competitor (ID353), paragraph 8.
36 See minutes of a call of 31 October 2020 with a customer (ID215), paragraph 8.
                                                         8
 ---pagebreak---         training on how to deal with the local population. Teams would also include
        paramedics and translators.37
(37)    Second, in order to provide such services, a security company would need to obtain
        various types of licences (for its personnel, the use of weapons etc.) from the local
        government and comply with often stringent local rules that vary from country to
        country. These procedures are often burdensome, can take a lot of time and are
        costly. As noted by G4S, for instance, entry into the high-risk territories of Iraq and
        Afghanistan is impossible at the current time for foreign private security companies
        and the authorities in these jurisdictions have not awarded any new licences to
        foreign private security providers in the last five years.38
(38)    For instance, a licence is normally needed to provide armed security services and
        licences are also often needed for equipment such as weapons, armoured vehicles,
        personal protection equipment and sometimes uniforms.39 For instance, in Iraq, a
        private security company would need a licence from the Ministry of Interior to
        operate, the Ministry of Trade in order to be able to import equipment (such as
        armoured vehicles), a licence to carry weapons as well as a communications licence
        from the Ministry of Communications.40 The financial compliance burden to meet all
        the various ministerial regulations can be very demanding. Consequently, in order to
        provide high-risk security services a company would need very specialised know
        how, that is also country specific, as well as high capital requirements.41 As, in
        addition, the regulations change frequently, there is a significant financial risk,
        which some companies may not be able to bear.
(39)    Third, in terms of equipment, security providers in high-risk environments would
        normally need a fleet of armoured vehicles, typically B642 armoured vehicles
        (mainly Toyota Land Cruisers) that cost more than USD 100 000. These cannot in
        general be bought from other suppliers already in the country and need to be
        imported to the country, be registered and comply with stringent local regulation. In
        addition, it could sometimes be difficult to import equipment into a high-risk country
        because of export restrictions in the country where the equipment originates from.43
        Building a fleet therefore represents a significant investment and having the
        appropriate infrastructure to maintain and run a fleet of specialised vehicles in high-
        risk environments poses complex logistical challenges and requires expertise in
        managing it.44
(40)    Fourth, security companies providing high-risk security services need to also abide
        by various international standards45 also with regard to the respect of human rights
37 See minutes of a call of 29 October 2020 with a competitor (ID353), paragraph 8.
38 See “Third Submission” of G4S of 18 November 2020, paragraph 16.
39 See minutes of a call of 29 October 2020 with a competitor (ID353), paragraph 11.
40 See minutes of a call of 17 November 2020 with a customer (ID387), paragraph 7.
41 For instance, in Iraq, there is also an additional requirement of depositing a high value bond (hundreds of
   thousands of USD). See also under section 4.1.2.2 of this decision.
42 This would refer to the ballistic protection level and B6 rating has a high level of security and is meant to
   stop armor-piercing rounds.
43 See, for instance, minutes of a call of 28 October 2020 with G4S, paragraph 10.
44 See, for instance, minutes of a call of 30 October 2020 with a competitor (ID276), paragraph 5.
45 Such as ANSI/PSI:1 2012 (developed by a Technical Committee of over two hundred people from twenty
   six countries) and ISO 18788.
                                                            9
 ---pagebreak---         such as, for instance, the Montreux Document on Private Military and Security
        Companies.46 GardaWorld is, for instance, a member of the following trade
        associations: the International Code of Conduct Association (“ICoCA”),47 the
        Security in Complex Environments Group (“SCEG”)48 and the International
        Stability Operations Association (“ISOA”).49
(41)    In view of the above, the Commission considers that there is currently a complex
        process to qualify as provider of such high-risk security services, with the relevant
        requirements being determined at national level and being different from country to
        country. This means that the services are not directly exportable from one country to
        the next; consequently, it could take a number of years to build a system and relevant
        procedures50 and it is very difficult for a new provider to enter the industry and
        operate in these complex environments.51
(42)    From the demand side, first, customers for these security services in high-risk
        environments, which include, among others, embassies and oil or gas companies,52
        face greater risks and require different procedures, equipment and weapons than in
        other non high-risk environments. The higher risk is also reflected, according to a
        market participant, in the price for these services, which varies a lot from other
        manned security services.53
(43)    Second, the majority of market participants contacted by the Commission noted that
        customers are looking for security companies that are already established in the
        country of operation because of the strict licensing requirements and the
        infrastructure that is required in order to provide the services. One market participant
        noted that customers generally require providers to show a proven track record54 and
        this was confirmed by several customers of such services who said that they require
        high qualifications and skills from the personnel employed by high-risk security
        companies. On the highest level, for security management positions, one market
        participant said that it would require military or law enforcement experience and
        commercial management experience. On the lowest level, typically local static
        guards, the company would insist on pre-vetted personnel with appropriate language
        skills (that is, English on top of the local language) and extensive training in
        firearms, driving armoured vehicles, physical protection duties, ethical and human
        rights norms.55 Another market participant indicated, for instance, that the security
46 See, for instance, minutes of a call of 12 November 2020 with a customer (ID228), paragraph 5.
47 ICoCA is a multi-stakeholder initiative formed in 2013 to ensure that providers of private security services
   respect human rights and humanitarian law. It serves as the governance and oversight mechanism of the
   International Code of Conduct for Private Security Service Providers. See Form CO, paragraph 195.
48 SCEG is a Special Interest Group of ADS, for security and risk companies committed to the development
   and implementation of international standards for the private security and crisis management sector. See
   Form CO, paragraph 195.
49 ISOA is a worldwide association representing the stability sector. Through its partnerships, engagement,
   and advocacy, members work together with key organizations and government policy makers for long-
   term stability and growth in the world’s most unstable places. See Form CO, paragraph 195.
50 See, for instance, also minutes of a call of 12 November with a customer (ID228), paragraph 6.
51 See, for instance, minutes of a call of 28 October 2020 with G4S paragraph 7.
52 See minutes of a call of 30 October 2020 with a competitor (ID276), paragraph 12.
53 See, for instance, minutes of a call of 13 November 2020 with a customer (ID370), paragraph 4.
54 See minutes of a call of 29 October 2020 with a competitor (ID353), paragraph 9.
55 See minutes of a call of 2 November 2020 with a customer (ID218), paragraph 8.
                                                         10
 ---pagebreak---        personnel it requires would need to have at least five to eight years of military
       experience. 56
(44)   Third, when choosing a provider, customers for high-risk security services in general
       carry out tenders or requests for proposal. The majority of customers during the
       market investigation indicated that they would need to be satisfied that the provider
       has a licence to operate in the country and abides by the various international
       standards referred to above. Customers would often only consider companies that
       have passed the due diligence standards set by the customer as being eligible to
       participate in the tender.57 There is normally only one tender and one contract per
       country58 and contracts are always country specific even if the same security
       company works with the same customer in different countries.59
(45)   Finally, with regard to the argument put forward by G4S at a later stage of the
       procedure, that is, that there is a distinction within high-risk security services
       between large-scale, complex, high-value contracts (which according to G4S is set to
       above EUR [...] million ACV) and smaller, non-complex contracts, the Commission
       considers that this distinction is not warranted for the following reasons:
(46)   First, the Commission notes that, while contracts of different value exist, during the
       market investigation, market participants, which included some of the Parties’
       largest customers, did not point to any need for further segmentations of the market,
       in particular along the lines of complexity or contract value which would lead to a
       distinction between large complex high value contracts and smaller non-complex
       contracts.
(47)   Second, the Commission notes that, the nature of the service provided does not
       appear to be materially different between the two. Differently to the provision of
       “standard” manned security services, the high-risk security services provided for
       large complex high value contracts and those provided for the smaller non-complex
       contracts as referred to by G4S, are provided by using the same infrastructure, and
       the level of skills required by the security providers is the same irrespective of the
       contract value. Other than size, large and small manned security service contracts
       may deploy similarly experienced personnel using similar vehicles or other assets
       even when the value falls below EUR [...] million. Also from a demand side
       perspective, and apart from the scale of the service demanded, the requirements of
       customers of high-risk security services would not appear to differ, as far as the
       nature of the services and the standards to be met are concerned, depending on the
       value of the contract.
(48)   Third, the Commission notes that, those competitors belonging to the list of “prime
       providers” as suggested by G4S, are able to also provide what G4S refers to as
       “smaller non-complex” contracts.
(49)   Specifically, the Commission understands that, for instance GardaWorld has many
       contracts of a short length for small amounts (a few thousands), including with EEA
56 See minutes of a call of 31 October 2020 with a customer (ID215), paragraph 8.
57 See, for instance, minutes of a call of 12 November 2020 with a customer (ID228), paragraph 9 and
   minutes of a call of 31 October 2020 with a customer (ID215), paragraph 10.
58 See, for instance, minutes of a call of 29 October 2020 with a customer (ID294), paragraph 3.
59 See minutes of a call of 30 October 2020 with a competitor (ID276), paragraph 8.
                                                         11
 ---pagebreak---         customers, that GardaWorld and other security companies, including the local
        security companies, provide to customers in Afghanistan and Iraq. These contracts
        ordinarily require exactly the same personnel and equipment given that the threat
        levels are the same but the scope of services are merely smaller in scale. For
        example, GardaWorld provided such services to […] EEA customers (such as […])
        in Afghanistan in the last financial year for total revenues of USD […]. Similarly,
        GardaWorld provided such services to […] EEA customers (such as […]) in Iraq in
        the latest financial year for total revenues of USD […].60
(50)    Fourth, the Commission understands from the market investigation that local
        companies also bid for high value contracts and that the reputation of local
        companies has been growing over the last few years and many clients have indicated
        that they would be willing to consider them in the future. Indeed, the Commission
        understands that, with regard to Iraq for example, Taaz, a local Iraqi company, has
        been regularly invited to participate in tenders organised by a large customer, along
        with other “international” companies.61 As the high-risk security services market
        appears to be mainly based on tenders, this continuous improvement to the quality of
        local suppliers is an indication that customers could consider them as alternatives to
        what G4S refers to as the Prime Providers.62
(51)    Fifth, during the market investigation, market participants explained that some
        customers may prefer not to deal with large international companies and would
        prefer to deal with smaller mid-range security services providers who can give them
        a more personalised service, attention to detail and higher quality services than some
        of the bigger companies.63 For instance, a market participant who could be in general
        considered as a “high value” customer, noted during the market investigation that
        “large international companies that are hierarchical and whose management is
        located far from Iraq do not provide the best services in the Iraqi dynamic high-risk
        environment.”64 Indeed, the Commission understands that mid-sized companies have
        been successful when participating in tenders against the “prime providers” and have
        won the relevant contracts.65
(52)    Sixth, G4S argued that different security companies respond to demand in the
        “complex, high-end” segment (the Prime Providers) and in the “smaller, non-
        complex” segment (according to G4S, a large group of other international and local
        security companies operate in this segment). However, this argument is not
        supported by the bidding data provided by the Parties. According to the bidding data
        provided by the Parties for the years 2018-2020,66 more than half of the tenders in
60 See the Notifying Party’s response to question 1 of RFI-4.
61 See, for instance, minutes of a call of 30 October 2020 with a customer (ID247), paragraph 10.
62 See also paragraphs 20-22 of the Commission market definition notice. Specifically, para 21 states that:
   when companies market a wide range of qualities or grades of one product “even if, for a given final
   customer or group of customers, the different qualities are not substitutable, the different qualities will be
   grouped into one product market, provided that most of the suppliers are able to offer and sell the various
   qualities immediately and without the significant increases in costs described above”.
63 See, for instance, minutes of a call of 13 November 2020 with a competitor (ID368), paragraph 15 and a
   call of 17 November 2020 with a competitor (ID391), paragraph 4.
64 See minutes of a call of 2 November 2020 with a customer (ID218), paragraph 9.
65 See minutes of a call of 13 November 2020 with a competitor (ID368), paragraph 15.
66 The Parties submitted separately bidding data that reflects their understanding of tenders in Iraq and
   Afghanistan, the bidding and winning companies and the contracts’ value.
                                                         12
 ---pagebreak---         Iraq and Afghanistan were tenders G4S qualifies as “smaller, non-complex”.67 In
        practically all of the smaller, non-complex tenders identified by the Parties at least
        one of the “prime providers” participated.68 GardaWorld for example participated in
        […] and won […]; other international security companies participated in dozens of
        tenders.69 In more than half of the “smaller, non-complex” tenders for which the
        competitors are known, at least two Prime Providers competed against each other.70
        Similarly, other international and local security companies participate in (what G4S
        would qualify as) “complex high-end” tenders. In more than two third of the
        complex high-end tenders identified by the Parties other international and local
        security companies participated.71 The total number of other international and local
        security companies competing on complex high-end was close to 30 [...]. More than
        a dozen [...] of them won such a tender.72 There is therefore no supply-side basis to a
        distinction between the two segments.
(53)    Finally, the Commission notes that also with regard to the “standard” manned
        guarding security services, the Commission has not in its past practice subdivided
        the market according to whether the security contracts were complex high value or
        smaller contracts.
4.1.1.3. Conclusion on the product market
(54)    Based on the above, the Commission considers that there are strong indications that
        the provision of manned guarding security services in “high-risk” environments can
        be distinguished from the provision of “standard” manned guarding services.
        Regarding a subdivision of the market for high-risk security services distinguishing
        between large-scale, complex, high-value contracts and smaller, noncomplex
        contracts, the Commission considers that, for the reasons mentioned above, this
        further distinction is not warranted.
4.1.2. Geographic market
4.1.2.1. The Parties’ views
        (A)        The Target’s views
(55)    According to G4S, the geographic scope of the market for high-risk security services
        should be considered as global. G4S notes that the customers for high-risk security
        services are the major oil, gas, engineering and telecoms corporates or governments
        across the world and that a distinction has to be made between the location where the
        services are delivered (for instance, high-risk locations such as Iraq or Afghanistan)
        and the location where the services are procured (for instance, London, Brussels or
67  See Table 1 in the Commission Bidding Analysis.
68  See Table 2 in the Commission Bidding Analysis.
69  See Table 2 and Table 3 in the Commission Bidding Analysis.
70  See Paragraphs 21 and 24 in the Commission Bidding analysis.
71  See Paragraph 21 and 25 in the Commission Bidding Analysis.
72  See Table 4 and Table 5 in the Commission Bidding Analysis.
                                                      13
 ---pagebreak---        Washington). According to G4S, the suppliers and customers are generally not
       headquartered in the jurisdictions where the services are delivered.73
(56)   On the demand side, G4S submits that competition for high-risk security service
       contracts often takes place where the customer is headquartered and the decision
       made, which does not necessarily correspond to where the services are actually
       provided.74 According to G4S, the procurement processes of the major European
       embassies (UK, Germany, Netherlands, Italy) vary. However, it submits that in each
       case a substantial element of the decision takes place in Europe.
(57)   G4S submits that the decisions to award contracts by large corporations including oil
       majors are also often taken centrally at their head offices but can include input from
       the business on the ground in the relevant hostile location.75
(58)   On the supply side, G4S submits that the location of where the service is to be
       supplied is no barrier to any of the providers competing for these contracts.
       According to G4S, capability is not location specific. G4S submits that having won
       the tender with a given government, or having contracted with an oil and gas
       company, G4S RMG then sends its operators and equipment to the relevant location
       to supply the high-risk security services. G4S submits that there is no need to have
       any presence already on the ground in a locality in order to demonstrate its level of
       service during the tender process. For example, according to G4S, G4S RMG was
       awarded a contract despite having had no previous presence in the relevant country
       prior to the award of the contract.
(59)   Therefore, G4S submits that as, i) the decisions to award contracts for high-risk
       security contracts are typically taken in the home country of the relevant government
       or the country where the corporate entity is headquartered; ii) the services performed
       under the contracts are provided in different countries to those where the decision is
       made; and iii) the capability to perform the contracts is not location-specific,
       competition, in its view, takes place on a global market for high-risk security
       services.76
       (B)         The views of the Notifying Party
(60)   GardaWorld submits that, by definition, any potential market for the provision of
       manned guarding services in “high threat regions” is national, rather than a global
       market combining all “high threat regions” worldwide.77
(61)   From a demand side perspective, GardaWorld notes that, first, in terms of
       geographic pattern of customers’ purchases, customers of manned guarding services
       in “high threat regions” source their services in the same manner as they do for other
       regions. Specifically, such customers send requests for proposals to both
       (i) companies active worldwide, such as GardaWorld, and (ii) local or regional
73 See, for instance, “Third Submission” of G4S of 18 November and “Second Submission” of G4S of
   30 October 2020.
74 See, for instance, “First Submission” of G4S of 23 October and “Third Submission” of G4S of
   18 November.
75 See “First Submission” of G4S of 23 October 2020.
76 See, for instance, “First Submission” of G4S of 23 October 2020.
77 See, for instance, Form CO, paragraph 137.
                                                        14
 ---pagebreak---        security firms. Similarly, such customers use the same main criteria to decide upon
       their security supplier for “high-threat regions” as they do for other regions: price,
       past performance in the geography in question, licensing (at the country and State or
       regional level). Virtually all of these contracts are tendered and awarded individually
       on a country-by-country basis (that is, not as part of a global contractual framework).
(62)   Second, customers for manned guarding services in “high threat regions” choose
       their suppliers on the basis of proximity to the specific country or narrow regions
       where customers need such services and not because a supplier may have
       international capabilities or can provide services across a range of high-threat
       countries that do not include the country the customer is targeting.
(63)   Third, there is also a need for a local presence from the customers’ perspective as
       many customers (i) require payments to be made locally, which in turn necessitates
       that suppliers open a local bank account, and (ii) favour dealing with locally
       registered entities and “in country” management teams.78
(64)   From a supply side perspective, GardaWorld notes that, first, to provide manned
       security services in “high threat regions”, all providers of such services require
       contractors, local employees and infrastructure present in the country where the
       services are provided; visas for expatriate workers (which can be complex to obtain
       and can represent a lengthy process), quotas or requirements to use local employees,
       and the necessity to provide local training are also barriers to using expatriate
       employees. Thus, in most instances, GardaWorld and its competitors employ local
       personnel to provide manned guarding services. Suppliers of manned guarding
       services in these regions also must deploy assets (that is, vehicles, uniforms,
       communication equipment) locally as well, as it would represent a logistical
       challenge to move these assets through customs in a timely manner and very often,
       by law, vehicles need to be locally procured. Together, these factors limit the
       geographic scope of a potential market for the provision of manned guarding
       services to individual countries and exclude the existence of a collective “high threat
       regions” geographic market spanning multiple countries.79
(65)   Second, GardaWorld notes that although a company may enter the market provided
       that personnel are local employees and assets are deployed locally, there are legal
       and regulatory considerations, which vary by type of services and by country, that
       also sharply limit the geographic scope of the market. Regulations impacting
       manned guarding services include experience with local geography, government
       officials, language and training requirements to address the specific threat
       requirements of the country or customer in question, the carrying and use of
       firearms, uniform requirements, licensing mandates and procedures, badge and
       identification requirements.
(66)   Third, GardaWorld notes that the Parties compete for the provision of manned
       guarding services not only with worldwide providers of manned guarding services,
       but also with local or regional players. GardaWorld submits that it has recently lost
78 See Form CO, paragraph 138.
79 See, for instance, Form CO, paragraph 139 a).
                                                  15
 ---pagebreak---          certain customer opportunities to local providers in various “high threat regions” or
         elsewhere in the Middle East / Africa.80
(67)     Fourth, according to GardaWorld, providers of manned guarding services in “high
         threat regions” do not serve their customers from “hubs” which consolidate the
         personnel required to perform such services.81
(68)     Finally, the notifying party also notes that pricing of such services is also set
         depending on where the services are provided.
4.1.2.2. The Commission’s view
(69)     In its past practice, the Commission has considered that the geographic scope for the
         provision of manned guarding security services is national.
(70)     For instance, in its decision in case M.339682 the Commission noted that the markets
         appears to be national due to the existence of specific national regulations and
         standards, such as licences for both the companies and their employees, language
         differences and national preferences derived from the reputation of each of the
         players at the national level. The Commission observed that such national
         requirements impede securities companies to expand to new geographic markets by
         simple organic growth; this is why there is a tendency to acquire already existing
         small or medium size companies to enter new markets.83
(71)     The results of the market investigation in this case suggest that this would be the
         same also with regard to the provision of high-risk security services. Indeed, the
         market investigation has demonstrated, among others, the need for local presence (in
         order to gain contracts and provide the relevant services), the presence of, for
         instance, regulatory barriers, arising from requirements for administrative
         authorisations as well as price differences among different countries relating to the
         provision of such services. These are all elements pointing strongly towards national
         geographic markets.84
(72)     First, from a supply side perspective, the Commission understands that security
         companies must comply with all national regulatory requirements in the country of
         operation including, but not limited to, licensing.
(73)     The Notifying Party notes, for instance, that to offer manned guarding services in a
         “high threat region” requires in particular: a) setting up a locally registered entity; b)
         a local bank account as many customers require local payments; c) a local
80  See Form CO, paragraph 139 c).
81  See Form CO, paragraph 139 d).
82  See paragraph 49 of the Commission decision in case M.3396.
83  The Commission also noted that this could be one of the reasons why the geographic presence of the main
    security companies within the EU is highly fragmented: a company can have a strong presence in one
    Member State while being completely inexistent in a neighbouring geographic market. This provides a
    strong indication that the markets for manned guarding, including alarm monitoring and response,
    electronic guarding equipment and aviation security services are national in scope. See paragraph 49 of
    the Commission decision in case M.3396.
84  See also the Commission Notice on the definition of relevant market for the purposes of Community
    competition law (the market definition notice) OJ C 372, 9 December 1997, p.5; in particular
    paragraphs 29-30 and 45-50.
                                                        16
 ---pagebreak---        infrastructure: physical office and in-country management team; d) assets deployed
       locally (i.e., armoured vehicles, body armour, communication equipment), as it
       would represent a logistical challenge to move these assets through customs in a
       timely manner and very often, by law, vehicles need to be locally procured; e) visas
       for expatriation workers can be complex to obtain and can represent a lengthy
       process, favouring the use of local companies; f) local workforce engagement and
       local training.85
(74)   Market participants stressed that the provision of high-risk security services is highly
       regulated in the countries of operation. Consequently, the nature and scope of the
       services depends to a large extent on the country of operation and varies significantly
       between countries.86 Regulatory compliance is a significant challenge because
       security companies must adapt their procedures and equipment to local requirements.
       As one market participant put it, “a service provider needs to know the country very
       well to be able to operate and be competitive.”87 G4S also noted, for instance, that
       following all necessary administrative steps to establish a high-risk security services
       business is a lengthy and costly process and that it is very difficult for a new
       provider to enter the industry and operate in these complex environments.88
(75)   Another market participant noted that in some countries only local companies can
       provide armed security services and international companies have to find a local
       partner in order to obtain a licence. This market participant noted that licensing
       processes are very complex and local regulation tends to strongly favour local
       companies. In Iraq, for example, private foreign companies can provide armed
       security services. The companies would typically import their firearms but those
       must comply with strict local regulation and licensing obligations. There is also an
       additional requirement of depositing a high value bond in Iraq (hundreds of
       thousands of USD).89 In Libya, only local companies can provide armed security and
       therefore international companies must work with local partners. Mozambique also
       requires a local partner but the arms are provided by the army. In Nigeria, only state
       officials can carry firearms.90 Regulatory compliance is therefore a significant
       challenge because security companies must every time adapt their procedures and
       equipment to local requirements in each country they operate.
(76)   Second, the local element of the service, either by directly hiring locals or through
       local sub-contractors is very important for the provision of these services for several
       reasons. In the first place, it is essential in order to be competitive because foreign
       staff is expensive. In the second place, it is usually a national regulatory requirement
       in order to receive a licence to operate in a country.91 In addition, insisting on the
85 See Form CO, paragraph 180.
86 See, for instance, minutes of a call of 30 October 2020 with a competitor (ID276), paragraph 6; minutes of
   a call of 30 October 2020 with a customer (ID247), paragraph 2 and minutes of a call of
   13 November 2020 with a competitor (ID368), paragraph 4.
87 See minutes of a call of 29 October 2020 with a customer (ID294), paragraph 6.
88 See minutes of a call of 28 October 2020 with G4S, paragraph 7.
89 See minutes of a call of 30 October 2020 with a competitor (ID276), paragraph 9.
90 See, for instance, minutes of a call of 30 October 2020 with a competitor (ID276), paragraph 6 and
   minutes of a call of 30 October 2020 with a customer (ID247), paragraph 2.
91 See, for instance, minutes of a call of 30 October with a competitor (ID276), paragraph 11.
                                                          17
 ---pagebreak---         participation of locals in the provision of the service is a way to build local security
        capabilities.92
(77)    Third, the majority of market participants indicated that, in order to win contracts the
        security company must already be able to show that it has a national licence to
        operate in the country as well as the required equipment. Licensing processes are
        very complex and time consuming and local regulation tends to strongly favour local
        companies. As explained above, in some countries only local companies can provide
        armed security services and international companies have to find a local partner in
        order to obtain a licence. A market participant highlighted that a provider would
        need in-country licence provided by the government of each country and this would,
        for instance, take at least one year in Iraq. A local name may also need to be
        included on the licence and there are administrative and legal fees to consider and
        often companies employ specific people to carry out the negotiations.93 Also, G4S
        has indicated that the authorities in Iraq and Afghanistan are very reluctant to issue
        any new licences to foreign private security providers and have not done so
        recently.94
(78)    Moreover, regarding the armoured vehicles, market participants noted that in Iraq,
        for instance, the terms of the licence for armoured vehicles do not allow the security
        company to re-export the vehicles or even re-sell them locally. Therefore, the
        provision of a fleet of vehicles is a high barrier to enter a country of operation.95
(79)    Consequently, based on the above, the Commission considers that in order to
        provide high-risk security services a company would need very specialised know
        how that is also country specific and to abide by national regulations and strict
        licensing requirements which differ from country to country. Local presence and a
        sufficient local partner with local management in the country are crucial for any
        high-risk security service provider to be chosen to win a tender process and start
        providing services in one of the relevant countries, which is a strong indication that
        the geographic scope of the market must be considered as national.96
(80)    In addition, the Commission notes that, fourth, the majority of the market
        participants indicated that prices for these services would differ, depending on the
        country where they are provided. For instance, market participants noted that prices
        in Afghanistan are higher than those in Iraq because Afghanistan is considered to be
        more dangerous and because the market is smaller and composed mostly by
        diplomatic delegations rather than commercial companies.97 The armoured B6
92 See minutes of a call of 29 October 2020 with a competitor (ID353), paragraph 13.
93 See minutes of a call of 12 November with a customer (ID228), paragraph 6.
94 See, for instance, the “Third Submission” of G4S of 18 November 2020 where it submits that entry into
   high-risk territories of Iraq and Afghanistan is impossible at the current time for foreign private security
   companies and that the authorities in these jurisdictions have not awarded any new licences to foreign
   private security providers in the last five years.
95 See, for instance, minutes of a call of 30 October 2020 with a competitor (ID276), paragraph 5.
96 See also paragraph 30 of the Commission market definition notice.
97 See, for instance, minutes of a call of 12 November 2020 with a customer, paragraph 15 and minutes of a
   call of 17 November 2020 with a customer (ID387), paragraph 16.
                                                         18
 ---pagebreak---         vehicles are also more expensive in Afghanistan because it is more difficult to bring
        them into the country and their availability is limited.98
(81)    In Afghanistan, for example, armoured vehicles cannot be bought but must be rented
        from local providers and they set the rates. In Iraq, Somalia and Mozambique it is
        possible to buy and own armoured vehicles and amortise the cost. Large security
        companies can also use their buying power to lower costs. In Iraq, armoured vehicles
        must be replaced every three years, a requirement that adds additional costs. Once
        bought, it is very difficult to re-sell armoured vehicles or to move them out of the
        country.99 Somalia would appear to have similar cost dynamics to Afghanistan.100
(82)    Another market participant noted that prices for subcontracting high-risk security
        services differ widely depending on local conditions. For instance, prices differ
        greatly between Iraq or Afghanistan and other regions such as Africa. In addition,
        prices are driven also by the local circumstances at a specific point in time and the
        level of risk in a country or region.101 For example, when an armed conflict is
        escalating, prices can rapidly increase from one week to the next as demand
        outweighs supply. Prices can then differ not only between countries but also between
        regions of the same country.102 Prices would also depend on the type of protection
        mix needed. In some countries, less (expensive) mobile protection is needed while in
        Iraq, for example, mobile protection for long journeys is common. Local regulation
        would also influence costs: in Libya, expats cannot provide mobile protection so it is
        based on locals who are not as expensive. By contrast, in Afghanistan, even the
        driver is an (expensive) expat. In Iraq, mobile details are usually mixed expats and
        locals while the team leader and medical staff within the teams are expats.103
(83)    The Notifying Party explained that the manned guarding services it provides in “high
        threat regions” which include primarily mobile patrol and static security services, are
        typically priced locally.104 It noted that virtually all contracts are tendered and
        awarded individually on a country-by-country basis (that is, not as part of a global
        contractual framework) and pricing is based on the location where the services are
        provided. For example, GardaWorld charges […] for B6 armoured vehicles in
        Afghanistan compared to Iraq and […] in Somalia.105 It explained that these rates are
        influenced by differences in import duties, lifespan of the vehicle that varies
        significantly between countries because of the conditions and requirements of their
        operation in each country and supply availability in the country of operations.106
        Price dynamics are different for local guards. The rate of a local guard in Iraq is
        approximately […] than Afghanistan and […] than Somalia, reflecting differences in
98  See, for instance, minutes of a call of 17 November 2020 with a competitor (ID391), paragraph 12 or
    minutes of a call of 12 November 2020 with a customer (ID228), paragraph 15.
99  See minutes of a call of 17 November with a competitor (ID391), paragraph 12.
100 See minutes of a call of 12 November 2020 with a customer (ID228), paragraph 15.
101 See minutes of a call of 17 November 2020 with a customer (ID387), paragraph 16.
102 See minutes of a call of 13 November with a customer (ID370), paragraph 12.
103 See minutes of a call of 17 November 2020 with a customer (ID387), paragraph 16.
104 In addition to the examples above, see also the Notifying Party’s response to RFI-2, paragraph 5.
105 See Form CO, paragraph 161.
106 See the Notifying Party’s response to RFI-2, paragraph 22.
                                                          19
 ---pagebreak---          local labour costs.107 Expat guards are […] expensive in Iraq and […] expensive in
         Afghanistan compared to Somalia.108
(84)     The cost information provided by G4S supports this conclusion. G4S explained that
         cost differs between countries due to in the first place, market practices regarding
         leave provision that differ between countries (shorter rotations require more
         personnel and higher costs). In the second place, the costs of international flights to
         and from the country, taxation, visas and work permits etc. can vary. In the third
         place, the infrastructure on the ground can impact costs (e.g. the immature road
         network in South Sudan can increase transport costs). In the fourth place, the specific
         threat associated with the project can affect risk premiums offered to employees and
         the level of protective equipment necessary for delivery.109
(85)     Finally, the Commission notes that there are local players who are active in the
         national markets and who provide high-risk security services. As indicated above by
         GardaWorld, some of these local players (who are different according to the specific
         country) compete against the bigger international companies during the tender
         process and have been able to also win tenders against these larger competitors. The
         majority of market participants noted that in general local high-risk security services
         companies have improved significantly in past years and compete with international
         companies.110 In Iraq, for instance, market participants consider companies like
         Taaz, Al Hurrea, Al Murabit or Iraq Land as potentially meeting the necessary
         qualification criteria to be approved to provide such services.111
(86)     From a demand side perspective, first, the market investigation has demonstrated
         that customers such as, for instance, large multinational enterprises would in general
         look for security companies that already have the licence and necessary equipment
         and are already established in the country of operation because of the strict licensing
         requirements and the infrastructure that is required in order to provide the services.
         Being already established in the country of operations and having local expertise is a
         significant advantage and clients have a strong preference for already established
         security companies.112
(87)     For instance, one market participant noted that they would be very reluctant to
         consider security companies that do not already have the necessary equipment (for
         example, weapons, ammunition, armoured vehicles, radio communication systems)
         in the country of operation because it is very difficult to procure the equipment in
107 See the Notifying Party’s response to RFI-2, paragraph 24.
108 See the Notifying Party’s response to RFI-2, paragraph 25.
109 See response of G4S to RFI-3, question 3.
110 See, for instance, minutes of a call of 31 October 2020 with a customer (ID215), paragraph 13and minutes
    of a call of 29 October 2020 with a competitor (ID353), paragraph 14. The latter market participant also
    noted that customers may have preferences and, for instance, Chinese and Russian companies tend to
    work almost exclusively with security companies from their respective countries.
111 See, for instance, minutes of a call of 30 October 2020 with a customer (ID247), paragraph 10; minutes of
    a call of 12 November 2020 with a customer (ID228), paragraph 12; minutes of a call of 17 November
    2020 with a customer (ID387), paragraph 6 or minutes of a call of 12 November 2020 with a customer
    (ID377), paragraph 6.
112 See, for instance, minutes of a call of 2 November 2020 with a customer (ID218), paragraphs 6-7; minutes
    of a call of 30 October with a customer (ID247), paragraph 5; minutes of a call of 12 November 2020 with
    a customer (ID228), paragraph 9; minutes of a call of 13 November 2020 with a competitor (ID368),
    paragraph 11.
                                                          20
 ---pagebreak---         some countries. In Iraq, for instance, licences for armoured vehicles are valid only
        with the specific security company that applied for them and are not transferable.
        The equipment would have to be imported which is a complex and lengthy process.
        Therefore, customers would sometimes require a 100% guarantee that a security
        company has all necessary equipment at mobilisation (that is, the day the company
        takes responsibility for security)113 and will prefer companies that have proved their
        ability to operate in the country. One market participant indicated that they would
        only consider a company without an already existing licence if the company could
        prove that it had taken the required steps and was close to obtaining the licence.114
(88)    In the Commission’s understanding, there have been instances where an international
        security company had failed to have all licences and equipment in place at
        mobilisation and consequently could not fulfil all its security tasks. From the point of
        view of the customer, it would therefore be an unnecessary risk to contract a security
        company that does not have all the necessary equipment already in the country of
        operations.115 This was confirmed by another market participant who stressed they
        would prefer a company that has already proved their ability to work in a certain
        high-risk country because if the security company could not be ready on time,
        activities would have to be stopped in the unsecured facilities and would create
        losses for the client.116
(89)    The Commission also understands that, as indicated by the Target, where equipment
        has already been in use in Iraq or Afghanistan, that equipment cannot be sold or
        transferred to another country (regardless of whether G4S RMG117 has an established
        presence there). In such circumstances, due to local export laws, the equipment must
        be surrendered to the Ministry of Interior in the host country according to the terms
        and conditions of the private security company licences. Therefore, equipment will
        need to be imported from other not high-risk countries.118
(90)    Second, in the Commission’s understanding, the contracts are country specific even
        if the same security company is working with the same customer in different
        countries.119 For instance, according to market participants, different tenders would
        be run for high-risk security services in Iraq and in Afghanistan120 and the
        requirements in the contracts (and tenders) are tailored to the specific circumstances
        of the location and country of operation. One market participant indeed noted that
        “there is only one tender and one contract per country”.121
(91)    Third, the Commission notes that the high-risk security services market is a market
        where customers get offers from multiple suppliers (through tenders, for instance)
        with contracts that last anywhere between one year or more (in general up to six
        years but typically for three years). Regarding the tender procedure, the Commission
113 See minutes of a call of 2 November 2020 with a customer (ID218), paragraph 7.
114 See minutes of a call of 9 November with a customer (ID345), paragraph 12.
115 See minutes of a call of 2 November 2020 with a customer (ID218), paragraph 7.
116 See minutes of a call of 31 October 2020 with a customer (ID215), paragraph 11.
117 As mentioned above, see under paragraph 21 of this decision, G4S RMG is the business unit within G4S
    which provides high-risk security services.
118 See G4S’ response to question 5 of RFI 3.
119 See minutes of a call of 30 October 2020 with a competitor (ID276), paragraph 8.
120 See minutes of a call of 12 November 2020 with a customer (ID228), paragraph 8.
121 See minutes of a call of 29 October 2020 with a customer (ID294), paragraph 3.
                                                         21
 ---pagebreak---         understands that the technical aspects are determined on the ground in each country
        and mainly by the local company entity operating in the country. This local company
        would also normally sign the contract with the security company. The tenders lay out
        the scope of work and set the prerequisites for international certificates and quality
        management standards. The evaluation of the tender is also generally performed in
        the country where the service will be provided, as it requires local technical
        expertise.122
(92)    For instance, one customer also noted that it procures high-risk security services
        through tenders that are sent to a group of pre-vetted security companies. Their
        responses are examined in parallel by its technical security team and a financial
        team. The company’s headquarters located in Europe may provide some assistance
        with respect to the financial side but overall tenders are run locally. The regional
        security team of the company that is based outside the EEA is responsible for
        determining the technical security requirements in tenders and for assessing the
        responses to tenders. The contract is signed with the company’s subsidiary in Iraq.123
(93)    Another market participant indicated that tenders would start with a discussion with
        the relevant posts in the country at stake to identify their security needs in order to
        prepare the technical specification in collaboration between the local posts and the
        headquarters.124 While a customer indicated that tenders are usually run by the EU
        location,125 another customer also confirmed that it procures high-risk security
        services through tenders that are run from its regional headquarters outside the EEA.
        Depending on the entity bidding for the work, the company subsidiary formally
        signing the contract will be either the one located in the UAE or Iraq. The
        company’s regional security team would audit the facility and determine the security
        needs that would later be published in the tender.126
(94)    Consequently, the Commission notes that the role of the local business on the ground
        in the relevant hostile location would appear to be central in the preparation of the
        tender process, its evaluation as well as when signing the relevant contracts.
(95)    Finally, the tender documents are complex and the majority of market participants
        indicated that the company would need to show that they already have a licence to
        operate in the specific country. Only a few market participants would consider a
        company without a licence and this would be only if the company could satisfy them
        that it had taken the required steps and could show a clear path to obtaining the
        licence.127
(96)    Based on the above, the Commission considers that high-risk security services are
        subject to regulatory regimes and customers choose suppliers based on their location
        and ability to provide services in the specific country rather than on their ability to
        provide services internationally.
122 See, for instance, minutes of a call of 17 November 2020 with a customer (ID387), paragraph 10 and
    minutes of a call of 12 November 2020 with a customer (ID228), paragraph 8.
123 See minutes of a call of 2 November with a customer (ID218), paragraph 5.
124 See minutes of a call of 9 November 2020 with a customer (ID345), paragraph 6.
125 See minutes of a call of 29 October 2020 with a customer (ID294), paragraph 4.
126 See minutes of a call of 31 October 2020 with a customer (ID215), paragraph 10.
127 See minutes of a call of 9 November 2020 with a customer (ID345), paragraph 13.
                                                         22
 ---pagebreak--- 4.1.2.3. Conclusion on the geographic market
(97)    Based on the above considerations and, in particular the presence of specific national
        regulations and licensing requirements, national standards as well as the need for
        local presence to be able to provide high-risk security services, the Commission
        concludes that there are strong indications that the geographic scope of the market
        for high-risk security services is national. However, it can be left open, whether the
        geographic market is national or worldwide, as under both market definitions the
        Transaction would not raise serious doubts.
5.      COMPETITIVE ASSESSMENT
(98)    The Commission considers that irrespective of the appropriate market definition the
        Transaction does not give rise to competition concerns.
(99)    As a preliminary observation however, the Commission considers that in view of the
        discussion above on market definition, in the present case it is unlikely that the
        competitive situation resulting from the Transaction relating to the provision of high-
        risk security services in third countries such as Afghanistan and Iraq, can constitute a
        significant impediment to effective competition (“SIEC”) within the meaning of the
        Merger Regulation. In any case, even assuming that this is possible, in practice, in
        this particular case, this is not the case for the reasons explained below.
5.1.    Market shares do not raise concerns
(100) The Parties have provided several sets of market share estimations according to the
        different possible product and geographic market definitions. In the absence of a
        commonly recognised definition of high-risk countries, the Notifying Party provided
        market shares estimations for manned security services, the product market it
        considers relevant, for (i) the countries considered high-risk under the US
        government’s World Protective Services framework for purchasing security services
        abroad (ii) a wider geographic market that includes all of Africa and the Middle
        East128 and (iii) a geographic market that includes Africa, the Middle East and
        Afghanistan but excludes countries that are not considered as high-risk.129 According
        to the Notifying Party’s estimates, the Parties’ combined shares of these potential
        markets are between 10 to 20%, well below the 25% ceiling up to which competition
        concerns are presumed not to arise.130
(101) The narrowest possible geographic markets on which both Parties overlap are Iraq,
        Afghanistan and a combination of both. These are the only countries in which G4S is
        proving high-risk security services131 and they are therefore also the only two
        countries regarding which G4S provided extensive market share data in its different
        submissions. These two countries represent […]% of the revenues of the Notifying
        Party from the provision of manned guarding services (including high-risk security
128 See Form CO, paragraph 151.
129 See the Notifying Party’s response to RFI-2, paragraph 17.
130 See Commission guidelines on the assessment of horizontal mergers, recital 18.
131 See “Second Submission” of G4S of 30 October 2020, paragraph 10.
                                                         23
 ---pagebreak---         services) outside of North America.132 Iraq and Afghanistan are generally the largest
        markets for international security companies for the provision of high-risk security
        services.133 According to G4S, market shares in Iraq and Afghanistan “are the best
        available proxy for the impact of the Transaction on the [worldwide] market for the
        provision of high-risk security services.”134
(102) In the absence of external sources for market shares, each of the Parties provided its
        best estimates that it compiled on the basis of the market intelligence available to it.
        The Parties’ market share estimates may overstate their shares as they are mostly
        based on the opportunities they are aware of and may not cover the whole market.
        According to the estimates of the Notifying Party, the Parties’ combined market
        share for the provision of manned guarding (including high-risk services) is
        below 20% in Iraq. In Afghanistan the Parties’ combined market share is estimated
        to be at [30-40]%, (G4S: [0-5]%) well below the 40% ceiling above which a
        concentration may typically raise competition concerns.135 In addition, the increment
        in the Notifying Party’s market share post-Transaction in Afghanistan would be
        modest. The Notifying Party estimates that the Parties’ combined market share in a
        market encompassing both countries would be [20-30]% (G4S: [5-10]%), that is at
        the ceiling up to which competition concerns are presumed not to arise. Furthermore,
        according to the Notifying Party, the Transaction would represent a modest increase
        in its market share.
(103) G4S provided its own estimates of market shares in Iraq and Afghanistan referring
        only to the provision of high-risk security services. The market share calculations of
        G4S are based on the bidding data it was able to collect. G4S considers its estimates
        to be highly confidential. It provided non-confidential ranges (that can be cited in
        this decision) regarding only its estimates of GardaWorld’s market share. It did not
        provide ranges for its estimates of its own market share and insisted that they remain
        confidential.
(104) G4S estimates GardaWorld’s market shares in the market for the provision of high-
        risk security services to be in the range of 70-80% [...] in Afghanistan, 30-40% [...]
        in Iraq and 40-50% [...] in both countries combined. G4S’ estimates its own market
        shares to be modest [...].136 In a later submission, G4S updated its estimates for the
        market combining the two countries, providing a slightly higher estimate for the
        market share of GardaWorld [...] and a higher estimate of its own market share
        [...].137
(105) Although G4S estimates the market shares of the Notifying Party to be high, the
        increment in the market share of the Notifying Party post-Transaction (that is G4S’
        estimates of its own market shares) is small and incapable of bringing about a
        significant change in the position of the Notifying Party in Iraq and Afghanistan. In
        addition, the position of the two other “Prime Providers”, Constellis and Control
        Risks, would remain essentially unchanged in the markets post-Transaction.
132 See the Notifying Party’s response to RFI-1, paragraph 19.
133 See “Third Submission” of G4S of 18 November 2020, paragraph 14.
134 See “Second Submission” of G4S of 30 October 2020, paragraph 11.
135 Commission guidelines on the assessment of horizontal mergers, recital 17.
136 “Second Submission” of G4S of 30 October 2020, Table 1 and Annex 2.
137 See response of G4S to RFI-4, figure 1.
                                                         24
 ---pagebreak---          Furthermore, G4S also refers to a group of other/local high-risk security companies
         representing together a significant market share [...] responding to substantial part of
         demand. Overall, even according to G4S’ own estimates, a large share [...] of high-
         risk security services in Afghanistan and Iraq are offered by security companies
         other than the Parties.
(106) In a later stage of the procedure, G4S provided new estimates of market shares in
         Iraq and Afghanistan based on its proposal to identify two separate markets, one for
         complex, high-end high-risk security services and another for smaller, non-complex
         high-risk security services.138
(107) Although G4S identified the relevant market as complex, high-end high-risk security
         services, it argued that contracts with the US government, a significant customer in
         terms of number and value of contracts, should be excluded from the market share
         estimates (although they are part of the market) because G4S cannot compete on
         them as it is not a US registered company.139 G4S estimated that with respect to
         contracts for complex, high-end high-risk security services excluding US
         government contracts, the share of the Notifying Party would be 60-70% [...] and
         that of G4S [...] slightly higher than estimated in its earlier estimates noted in
         paragraph 104 above at footnote 137.
(108) Moreover, G4S considered that the contracts in the segment for complex, high-end
         high-risk security services with local customers should also be excluded from the
         market shares estimates because they are served exclusively by local security
         companies (again, although they are part of the market as defined by G4S).140 G4S’
         position was therefore that “the most appropriate proxy for assessing the full impact
         of the proposed transaction is the provision of high-risk security services to EEA
         customers in Iraq and Afghanistan with an ACV above EUR [...] million.”141 [...]. In
         that delineation, G4S estimates of the Parties’ individual and combined market
         shares are very similar to its estimates cited in paragraph 107 above [...].142
         According to the estimates of G4S only the Prime Providers provide services to EEA
         customers.
(109) As noted above (as of paragraph 45), the Commission does not agree with G4S’
         view that the market should be segmented between complex, high-end services and
         smaller, non-complex contracts. Furthermore, it finds inconsistencies in G4S’
         presentation of market shares even within the terms of its own submission.
         According to the market definition proposed by G4S, US government contracts
         belong to the market for complex, high-end high-risk security services. The fact that
         G4S is unable to compete on the contracts of the US Government is not enough by
         itself to exclude them from the market share calculations. The US government is an
138 See response of G4S to RFI-4 and its “Third Submission” of 18 November 2020.
139 See response of G4S to RFI-4, paragraph 9 and figure 2. US government contracts are open only to
    security companies that can show that they are not under foreign ownership, control or influence (FOCI).
    However, foreign companies, such as GardaWorld for example, can overcome this constraint by
    establishing proxy boards or government approved Special Security Agreement that enable them to bid on
    this work. See the Notifying Party’s response to RFI-4, paragraphs 16-17 and minutes of a call of 29
    October 2020 with a competitor (ID353), paragraph 5.
140 See response of G4S to RFI-4, paragraph 18.
141 See response of G4S to RFI-4, paragraph 19.
142 See response of G4S to RFI-4, figure 3.
                                                        25
 ---pagebreak---         important customer of high-risk security services that has significant effect on
        demand for these services. Competitors of G4S in this market compete for US
        government contracts and consequently supply in the market is affected.
(110) In the same vein, it is not clear why local customers should be excluded from the
        market share estimates only on the basis that they are served by local security
        companies, moreover when considering that foreign customers would also operate in
        these countries through a local entity. In fact, the bidding data provided by the
        Parties shows that both of them and other international security companies compete
        for local costumers.143
(111) Finally, it is not convincing to examine, as G4S suggests, market shares only with
        respect to EEA customers even though the market definition proposed by G4S is
        wider. According to the estimates of G4S, only the four “prime providers” have won
        complex high-end high-risk security contracts with EEA customers. However, the
        bidding data provided by the Parties as well as respondents to the market
        investigation described below confirm that other international and local security
        companies compete on contracts with EEA customers. About 20 [...] other
        international and local security companies have won contracts with EEA customers
        to provide such services in Iraq and Afghanistan, four of which won, what G4S
        refers to as complex high-end contracts.144 About ten [...] additional companies
        competed on complex high-end contracts with EEA customers.145 Therefore, other
        international and local security companies operating in the same market as the Prime
        Providers exert a competitive constraint also with respect to EEA customers.
(112) As will be explained in detail below, the results of the Commission’s market
        investigation, including the opinions of respondents, both customers and competitors
        active in the potential complex, high-end segment of the market and including EEA
        and non-EEA customers, did not confirm G4S’ views.
(113) Based on the bidding data provided by the two Parties, therefore allowing a more
        complete view of the market, the Commission calculated market shares for the years
        2018-2020 for the different market delineations. In all delineations, G4S has
        negligible shares in Afghanistan [...].146 In a delineation including all high-risk
        security contracts, which the Commission considers to be the relevant delineation to
        examine the Transaction, the Parties’ combined market share is below 30% in Iraq
        [...] and below 50% [...] in both countries combined with a modest increment [...].147
        In a delineation relating only to complex high-end contracts, the Parties’ combined
        market share is also below 30% [...] in Iraq, below 50% in both countries combined
        [...] and the increment is modest [...].148
(114) In conclusion, the different market shares estimates examined by the Commission do
        not raise by themselves competition concerns either because of the Parties’ modest
        combined shares or because of the small increment that the Transaction would
143 See Table 6 and Table 7 in the Commission Bidding Analysis.
144 See Table 8 and Table 9 in the Commission Bidding Analysis.
145 See Table 10 in the Commission Bidding Analysis.
146 See Table 11 and 12 in the Commission Bidding Analysis.
147 See Table 11 in the Commission Bidding Analysis.
148 See Table 12 in the Commission Bidding Analysis.
                                                      26
 ---pagebreak---          represent. It is only under the far-reaching assumptions and overly narrow market
         definitions advanced by the G4S that market shares estimates and increments may
         give rise to competition concerns. However, G4S’ views were not sufficiently
         substantiated and in any case were not confirmed by the market investigation.
5.2.     Competition will remain strong post-Transaction
(115) The Transaction is not likely to change significantly the competitive position of
         GardaWorld in the market. The majority of respondents to the Commission’s market
         investigation having expressed an opinion on the matter considered that the
         Transaction would not represent significant synergies or economies of scale that
         would strengthen the position of the merged entity in the provision of high-risk
         services. In fact, several respondents were of the view that with respect to high-risk
         security services, which are provided in complex environments, larger security
         companies may lack the flexibility and responsiveness to tailor the services to
         specific customer needs.149 This view is also confirmed by the Parties themselves,
         submitting that there are limited economies of scale in the provision of high-risk
         security services across different countries.150
(116) Second, the Notifying Party and respondents to the Commission market
         investigation have confirmed that post-Transaction a number of international
         security companies providing high-risk security services would remain active and
         would be able to compete on tenders. Among them are the two remaining Prime
         Providers, Constellis and Control Risks, but also Caliburn, SOC, Hart International,
         Pilgrims, Amarante, Erinys, and Reed.151 Customers responding to the
         Commission’s market investigation considered that post-Transaction a sufficient
         number of competitors will remain.152
(117) In addition, competition from local companies appears to be intensifying. There is a
         large number of local security companies in Iraq and Afghanistan.153 A number of
         respondents to the market investigation explained that the quality of services
         provided by local security companies has improved significantly during recent years.
         Currently there are several local security companies that compete directly with the
         international security companies and which, according to various respondents to the
149 See minutes of a call of 31 October 2020 with a customer (ID215), paragraph 13; minutes of a call of
    13 November 2020 with a competitor (ID368) paragraph 15; minutes of the call of 2 November with a
    customer (ID218), paragraph 9; minutes of the call of 30 October 2020 with a competitor (ID276),
    paragraph 13; minutes of a call of 30 October 2020 with a customer (ID247), paragraph 11; minutes of a
    call of 12 November 2020 with a customer (ID228), paragraph 16.
150 See the Notifying Party’s response to RFI-2, paragraph 21; consolidated non-confidential response of G4S
    to RFI-3, paragraph 72.
151 See Form CO, paragraphs 151-153; minutes of a call of 9 November 2020 with customer (ID345),
    paragraph 13; minutes of a call of 13 November 2020 with customer (ID403), paragraph 11; minutes of a
    call of 12 November 2020 with customer (ID377), paragraph 9; minutes of a call of 12 November 2020
    with a customer (ID228), paragraphs 9 and 16.
152 See minutes of a call of 31 October 2020 with a customer (ID215), paragraph 13; minutes of a call of
    9 November 2020 with customer (ID345), paragraphs 12 and 14; minutes of a call of 13 November 2020
    with customer (ID403), paragraph 11; minutes of a call of 30 October 2020 with a customer (ID247),
    paragraph 10.
153 See Form CO, paragraph 174.
                                                         27
 ---pagebreak---          market investigation will be considered by customers.154 Among the names that were
         mentioned are Taaz, Al Murabit, Al Hurrea, Iraq Land and Falcon in Iraq; and
         Saladin and Premiere in Afghanistan.155
(118) Local security companies are considered cheaper than international companies and
         also benefit from policies of the local governments that favour them over
         international security companies. For example, it is easier and cheaper for local
         security companies to obtain licences. Consequently, prices went down in recent
         years and international security companies face strong competition from local
         companies. As a result, the position of international companies in the local markets
         is expected to erode in the coming years.156
(119) Furthermore, high-risk security contracts are concluded for a relatively short period,
         from one to six years (including the option years) but typically for three years.157
         When the term of a contract comes to an end, customers arrange a competitive
         bidding process to choose a security company for the next term. Competing security
         companies have the opportunity to obtain the new contract and the incumbent
         security company is required to compete again in order to keep it.158 Customers are
         sophisticated and well informed, employing in-house security experts. Tender
         conditions are demanding and customers vet the responding security companies
         closely.159 Customers can and do switch between security companies.160 The bidding
154 See the Notifying Party’s response to RFI-4, paragraph 13-14; minutes of the call of 2 November with a
    customer (ID218), paragraph 4; minutes of a call of 29 October 2020 with a competitor (ID353),
    paragraph 14; minutes of the call of 30 October 2020 with a competitor (ID276), paragraph 4; minutes of
    a call of 30 October 2020 with a customer (ID247), paragraphs 7 and 10 ; minutes of a call of
    12 November 2020 with a customer (ID228),paragraph 11; minutes of a call of 31 October 2020 with a
    customer (ID215), paragraphs 5-7; minutes of a call of 12 November 2020 with a competitor (ID374),
    paragraph 10; minutes of a call 12 November 2020 with a customer (ID377), paragraph 6; minutes of a
    call of 17 November 2020 with a competitor (ID391), paragraph 10.
155 See section on closeness of competition below as well as minutes of a call of 12 November 2020 with a
    customer (ID228), paragraph 12; minutes of a call of 31 October 2020 with a customer (ID215) ,
    paragraph 5; minutes of the call of 17 November 2020 with a customer (ID387), paragraph 5; response of
    G4S to RFI-4, paragraph 20; Form CO, paragraph 174; the Notifying Party’s response to RFI-4,
    paragraph 13-14.
156 See minutes of a call of 3 November 2020 with a competitor (ID355), paragraph 5; minutes of the call of
    30 October 2020 with a (ID276), paragraphs 9; minutes of a call of 30 October 2020 with a (ID247),
    paragraphs 7 and 11; minutes of a call of 31 October 2020 with a customer (ID215), paragraph 13;
    minutes of the call of 17 November 2020 with a customer (ID387), paragraphs 9, 15, 17; minutes of a call
    of 29 October 2020 with a customer (ID294), paragraph 6.
157 See minutes of a call of 31 October 2020 with a customer (ID215), paragraph 10; Minutes of a call of
    9 November 2020 with customer (ID345), paragraph 2; minutes of the call of 17 November 2020 with a
    customer (ID387), paragraph 14, minutes of the call of 2 November with a customer (ID218),
    paragraph 5; minutes of a call of 29 October 2020 with a customer (ID294), paragraph 3; minutes of a call
    of 30 October 2020 with a customer (ID247), paragraph 8; minutes of a call of 12 November 2020 with a
    customer (ID228), paragraph 14.
158 See minutes of a call of 29 October 2020 with a customer (ID294), paragraph 5; minutes of a call of
    9 November 2020 with customer (ID345), paragraph 10.
159 See minutes of the call of 17 November 2020 with a customer (ID387), paragraphs 4 and 10; minutes of
    the call of 2 November with a customer (ID218), paragraphs 5 and 8; minutes of a call of 29 October 2020
    with a customer (ID294), paragraphs 2 and 5; minutes of a call of 30 October 2020 with a customer
    (ID247), paragraph 5; minutes of a call of 9 November 2020 with customer (ID345), paragraphs 6-12;
    minutes of a call of 12 November 2020 with a customer (ID228), paragraph 8; minutes of a call of
    31 October 2020 with a customer (ID215), paragraphs 9 and 10; minutes of a call of 13 November 2020
    with customer (ID403), paragraphs 3 and 5.
                                                        28
 ---pagebreak---         data for the years 2018-2020 provided by the Parties shows that in close to two
        thirds of tenders where it can be said with certainty whether the incumbent was
        changed or remained, customers switched security companies.161 GardaWorld itself
        was replaced in […] [...] of contracts in which it was the incumbent.162
5.3.    The Parties are not close competitors
(120) The bidding data provided by the Notifying Party shows that various security
        companies can be considered closer competitors to the Notifying Party and that G4S
        exerts only a limited constraint on it. In Afghanistan, G4S is only the sixth closest
        competitor in terms of number of tenders participated.163 From a total of […]
        tenders, G4S only participated in […], fewer than Constellis (at least […]), Reed
        ([…]), Caliburn ([…]), SOC ([…]) and Hart Security ([…]). GardaWorld also
        competed in tenders against a local company, Premiere ([…]). Furthermore,
        Constellis won […]% of the estimated value of the contracts which GardaWorld lost
        in Afghanistan, while G4S did not win any. In Iraq, from a total of […] tenders, the
        closest competitor of the Notifying Party is Constellis ([…]), followed by Control
        Risks ([…]), Caliburn ([…]), Reed ([…]), SOC ([…]) and G4S (it participated in
        […] of those tenders) as sixth closest competitor. Furthermore, various local
        suppliers participate such as Al Murabit ([…]), Falcon ([…]) and VSC Security
        ([…]). Of the contracts lost by the Notifying Party ([…]), less than […]% of the lost
        contract value went to G4S. Therefore, in a market encompassing both Iraq and
        Afghanistan G4S is only the sixth closest competitor to GardaWorld based on the
        number of tenders in which they have participated.
(121) The Commission also received bidding data from G4S. The addition of this data
        provides a more complete picture of the tenders in which G4S also competed.
        Analysis of the two bidding data sets together, shows that with respect to the tenders
        on which GardaWorld competed there were several security companies that
        competed with GardaWorld significantly more times than G4S. Other security
        companies, including local companies, competed with GardaWorld on a similar
        number of tenders as G4S. This holds true when examining each of Afghanistan and
        Iraq separately and when examining both countries combined. [...]164
(122) The above analysis of the bidding data shows that there is a limited restraint of G4S
        on GardaWorld and post-Transaction there will remain other, closer and strong
        competitors that will constrain the merged entity.
5.4.    Respondents did not raise concerns
(123) Overall, respondents to the market investigation were not concerned about the
        Transaction. None of the customers responding to the market investigation raised
        specific competition concerns with respect to the Transaction. Half of the customers
        expressed the view that the Transaction will not adversely affect competition. They
160 See minutes of a call of 30 October 2020 with a customer (ID247), paragraph 8; minutes of a call of 9
    November 2020 with customer (ID345), paragraph 7; minutes of a call of 3 November 2020 with a
    competitor (ID355), paragraph 11.
161 See Table 13 in the Commission Bidding Analysis.
162 See Table 14 and Table 15 in the Commission Bidding Analysis.
163 See the Notifying Party’s response to RFI-1, paragraphs 17 to 29.
164 See Table 16 in the Commission Bidding Analysis.
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 ---pagebreak---         explained that they do not believe that the Transaction will improve GardaWorld’s
        ability to compete in the provision for high-risk security services, that they believe
        that there will remain a sufficient number of competitors and that local security
        companies backed by their governments are increasingly competitive.165 The other
        half of customers did not express an opinion on the effects of the Transaction on
        competition.166 The majority of competitors responding to the market investigation
        also confirmed that the Transaction would not affect their ability to compete.167
5.5.    Conclusion on competitive assessment
(124) In view of the above considerations and all evidence available to it, the Commission
        considers that the Parties will face sufficient competition in the market for high-risk
        security services post-Transaction and that the competitive constraints on the Parties
        would be sufficient. The Commission therefore concludes that the Transaction does
        not raise serious doubts as to its compatibility with the internal market with respect
        to the horizontal effects in the market for high-risk security services under any of the
        plausible geographic market definitions considered.
6.      CONCLUSION
(125) 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
                                                             Executive Vice-President
165 See minutes of a call of 2 November with a customer (ID218), paragraph 9; minutes of a call of
    30 October 2020 with a customer (ID247), paragraph 11; minutes of a call of 31 October 2020 with a
    customer (ID215), paragraph 13; Minutes of a call of 9 November 2020 with customer (ID345), paragraph
    14; minutes of a call of 13 November 2020 with customer (ID403), paragraph 11.
166 See minutes of a call of 29 October 2020 with a customer (ID294), paragraph 7; minutes of a call of
    12 November 2020 with a customer (ID228), paragraph 16; minutes of a call of 13 November 2020 with
    customer (ID370), paragraph 13; Minutes of a call of 12 November 2020 with customer (ID377),
    paragraph 11; minutes of the call of 17 November 2020 with a customer (ID387), paragraph 17.
167 See minutes of a call of 13 November 2020 with a competitor (ID368), paragraph 15; minutes of a call of
    3 November 2020 with a competitor (ID355), paragraph 6; minutes of the call of 30 October 2020 with a
    competitor (ID276), paragraph 13, minutes of a call of 29 October 2020 with a competitor (ID353),
    paragraph 16.
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