CELEX: 32014M7342
Language: en
Date: 2014-11-12 00:00:00
Title: Commission Decision of 12/11/2014 declaring a concentration to be compatible with the common market (Case No COMP/M.7342 - ALCOA / FIRTH RIXSON) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

Brussels, 12.11.2014
C(2014) 8546 final

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|To the notifying party:                                                |                                                                       |

Dear Sirs,

Subject:    Case M.7342 – Alcoa/ Firth Rixson
Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/2004[1]

    1) On 8 October 2014, the European Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation
       (EC) No 139/2004 by which Alcoa Inc. ("Alcoa" or the "Notifying Party", USA) acquires within the meaning of Article 3(1)(b) of the  Merger
       Regulation control of the whole of Firth Rixson ("FR", United Kingdom) by way of purchase of shares.[2] Alcoa and FR will be  collectively
       referred to as the "Parties".

       THE PARTIES AND THE OPERATION

    2) Alcoa is active in lightweight metals engineering and manufacturing –  including  aluminium,  titanium,  nickel  and  cobalt  products  at
       different levels of the value chain – for aerospace, automotive, power generation and other applications.

    3) FR manufactures engineered products primarily for the aerospace industry but also for other sectors including power  generation,  oil  and
       gas and mining. It supplies specialty metals, seamless rolled and flash-welded rings and disks, as well as closed and  open  die  forgings
       and extruded forgings.

    4) FR is currently controlled by the private equity group Oak Hill Capital Partners. Through  a  share  purchase  agreement,  Alcoa  and  its
       subsidiary Alcoa IH Limited will purchase all the shares of FR and its affiliates. As a consequence, Alcoa will acquire sole control  over
       FR within the meaning of Article 3(1)(b) of the Merger Regulation.

       EU DIMENSION

    5) The undertakings concerned have a combined aggregate worldwide turnover of more than EUR 5 000 million[3] (Alcoa: EUR 17 631 million;  FR:
       EUR 737 million). Each of them has an EU-wide turnover in excess of EUR 250 million (Alcoa: EUR […] million; FR:  EUR  […]  million),  and
       they do not achieve more than two-thirds of their aggregate EU-wide turnover within one and the same Member State. The notified  operation
       therefore has an EU dimension.

       COMPETITIVE ASSESSMENT

    6) The Parties are both active at different steps of the value chain for the production of forged and cast metal parts for various industrial
       applications. The value chain can be illustrated as follows:

                                      (1) Metal raw materials → (2) Alloys → (3) Forged or cast metal parts

    7) The first step concerns the procurement of metal raw materials in the form of primary or secondary metal. Primary metals are  produced  by
       processing and refining metal ores and can have different purity grades. Secondary metal is derived from the recycling of used metal parts
       or from the re-use of scrap resulting from the production of alloys or from the production of metal parts (sometimes known as 'revert').

    8) The second step is the production of specific alloys[4] that enhance the properties of a certain metal. Alloys are produced  by  combining
       the alloy components in a molten state, generally through the use of a dedicated furnace. Depending on their intended end use, alloys  are
       produced in different shapes, such as ingots and billets (long products) or plates and sheets (flat products). A specific type of ingot is
       a cast stick[5] which is used in the production of investment castings[6].

    9) The cobalt- and nickel-based cast sticks produced by the Parties  are  manufactured  in  Vacuum  Induction  Melting  ("VIM")  furnaces.[7]
       Suppliers can switch production from one type of cast stick to another but have to sequence melts in order to  avoid  cross  contamination
       between nickel and cobalt.[8]

   10) In the third step, the alloys are used to produce cast and forged metal parts. Casting is the process of producing parts by re-melting the
       alloy and pouring cut charges into a mould. Castings are generally used for the production  of  more  complex  parts  with  finer  detail.
       Forging is the process of producing parts by using localised compressive forces to deform ingots of metal, often at high temperature, into
       the desired shape. A specific form of forging is ring rolling which uses a ring mill to transform metal into a ring shape. The  forged  or
       cast metal parts can be used in various applications, including aerospace, power generation, medical and automotive.[9]

   11) The main customers for cast and forged metal parts are original equipment manufacturers (OEMs), in particular in the aerospace, automotive
       and industrial gas turbines (IGT) sectors.[10] OEMs play an important  role  because  they  often  provide  specifications  for  both  the
       component they source and the alloy from which it is made.[11] In particular, in the aerospace sector, OEMs are involved in the choice  of
       the cast stick used to manufacture a particular  casting  and  require  that  the  cast  stick  meets  certain  specifications.  When  the
       specifications are met, the OEM provides a certification to the cast stick manufacturer for the specific  alloy.  There  is  no  need  for
       certification in the IGT and other non-aerospace applications.[12] Some large OEMs also have their own foundries and therefore compete, to
       a certain extent, with their suppliers of cast and forged metal parts.[13]

   12) As explained in paragraph (9) above, the Parties are producers of nickel-  and  cobalt-based  cast  sticks.[14]  In  addition,  there  are
       potential vertical relationships between the Parties' activities since: (i) FR produces nickel- and cobalt-based cast sticks  while  Alcoa
       produces investment castings; and (ii) FR produces rolled rings using  aluminium  billets[15]  as  an  input  and  Alcoa  sells  aluminium
       billets.[16] This horizontal overlap and the vertical relationships, together with the relevant market definitions, will  be  examined  in
       detail in the following sections.

1 Cast sticks and Investment castings

1 Market definition – Cast sticks

   13) The Notifying Party submits that the relevant product market for alloys should be defined  broadly  and  that  there  is  no  need  for  a
       segmentation based on the downstream processing stage of the alloy (i.e. forging or casting). As regards cast sticks, which are  the  only
       alloy input products used for castings, the Notifying Party considers that there is no need to segment by metal type (i.e. cobalt-  versus
       nickel-based cast sticks) or by end-application (e.g. aerospace, IGT and other applications). Likewise, the Notifying Party  submits  that
       it is not appropriate to define the relevant market by individual type of alloy. In any  event,  the  Notifying  Party  submits  that  the
       precise market definition can be left open as it will not change the assessment of the proposed transaction.

   14) The Notifying Party submits that the geographic scope of the cast sticks market is worldwide but that this point can be left open  as  the
       proposed transaction does not raise competition concerns regardless of whether the market is worldwide or EEA-wide.

   15) The Commission has not analysed the market for cobalt-based and nickel-based cast sticks in any of its previous  decisions.  However,  for
       certain metals (e.g. titanium), the Commission has previously considered a distinction on the  basis  of  the  form  of  the  alloys,  for
       instance between bars and billets or ingots, slabs and electrodes, and potentially even by alloy,  whilst  ultimately  leaving  the  exact
       market definition open.[17]

   16) A majority of respondents to the market investigation indicated that alloy input products for castings and forgings  belong  to  different
       markets. On the demand side, the specifications of customers are different. On the supply side,  the  production  of  input  products  for
       forgings requires different assets compared to the production of inputs for castings.[18]

   17) As regards a possible segmentation by end-application (e.g. IGT and aerospace), a majority of OEMs and  casters  that  have  knowledge  of
       different end-applications and that responded to the market investigation stated that there are differences between end  uses,  especially
       in terms of certification requirements that suppliers need to meet in order to operate in a specific segment.[19] This therefore speaks in
       favour of defining distinct markets by end-application.

   18) At the same time, other elements go against defining distinct markets by end-application. First, a majority of cast sticks producers  that
       responded to the market investigation indicated that the production process remains the same irrespective  of  the  cast  sticks'  end-use
       is.[20]

   19) Second, many alloys are used for more than one end-application. For instance, in 2014  year-to-date[21],  several  superalloys  have  been
       specified by Alcoa customers for the production of investment cast components for both  aerospace  and  IGT  applications.[22]  Similarly,
       customers to whom FR supplies cast sticks can use the same specific alloys in the IGT, aerospace and the automotive sectors,  or  both  in
       the IGT and aerospace sectors.[23]

   20) Third, cast stick suppliers generally have limited knowledge of the end-application for which customers use the cast sticks  supplied.[24]
       For instance, FR is unable to specify in detail the end-applications for which its cast sticks are used, because  the  investment  casting
       customers typically order cast sticks of a particular specification without providing any details of the precise components to be produced
       from such cast sticks.[25] As a consequence, cast sticks suppliers have limited ability to price  discriminate  between  cast  sticks  for
       different end-applications.[26]

   21) As regards a possible segmentation by technology, producers of cast sticks that responded to the market investigation indicated that  they
       can only use VIM furnaces to produce cast sticks.[27] At the same time, certain casters and OEMs mentioned that the different technologies
       used in the investment casting process[28] might have an impact on the requirements set on cast sticks. The Parties  have  indicated  that
       some technologies require alloys of a better quality or additional elements such as rhenium or tantalum.[29] However,  elements  submitted
       by the Parties indicate that some alloys may be used across the different technologies and that suppliers of cast  sticks  generally  have
       the ability to produce cast sticks suitable for every technology.[30]

   22) As regards a possible segmentation by metal type between cobalt-based and nickel-based cast sticks or by type  of  alloy,  a  majority  of
       respondents to the market investigation suggested that  different  types  of  cast  sticks  are  not  substitutable  from  the  customer's
       perspective but that suppliers can switch relatively easily between the various  products  as  they  are  usually  produced  in  the  same
       facilities, and suppliers do not tend to specialise in a particular type.[31]

   23) In relation to the geographic scope of the market, a majority of respondents to the market investigation indicated that the  market  might
       be at least EEA-wide. In fact, whereas all the suppliers of cast stick operate at worldwide level and prices are to a large extent similar
       across different areas of the world, some EEA cast stick customers expressed a preference for sourcing at regional  level,  when  that  is
       possible.[32]

   24) For the purpose of the present case, the precise product  and  geographic  market  definition  can  be  left  open  because  the  proposed
       transaction does not raise serious doubts as to its compatibility with the internal market regardless of the exact market definition.

2 Market definition – Castings

   25) The Notifying Party considers that the precise product and geographic market definition can be left open.

   26) The Commission has previously considered defining separate product markets for cast and forged (titanium) parts based on a lack of demand-
       side and supply-side substitutability.[33] This question was, however, ultimately left open. The Commission has also considered, but  left
       open the question, whether an additional segmentation could be made according to the end use  application  such  as  aerospace  and  other
       industrial uses.[34]

   27) Within parts for aerospace applications, the Commission has considered  additional  sub-segmentations  for  castings  into  (i)  aerospace
       airfoil castings; (ii) aerospace engine structural castings and (iii) aerospace airframe structural  castings.  Similarly  the  Commission
       envisaged segmenting the product market for forgings into (i) rotating engine components; (ii) non-rotating engine  components  (including
       forged rings), (iii) airframe structures, (iv) aero structures, and (v) fasteners. However, the product market definition  was  ultimately
       left open.[35]

   28) The Commission also previously left open whether the markets were global or EEA-wide in scope.[36]

   29) Forged rings are a type of non-rotating engine component which can be manufactured through a seamless forging process[37] or through flash
       welding.[38] In a previous decision, the Commission left open whether flash-welded and seamless rings belong to the same relevant  product
       market.[39] The Commission concluded in the same decision that the market was worldwide.[40]

   30) The appropriateness of drawing a  distinction  between  castings  and  forgings  has  been  confirmed  by  the  responses  to  the  market
       investigation. From a demand-side point of view, different casting components are clearly not substitutable as each component is used  for
       different purposes.[41] However, the responses to the market investigation were mixed regarding the degree of supply-side substitutability
       between (i) different types of casting components within each industry (i.e. IGT  and  aerospace)  and  (ii)  the  same  type  of  casting
       component across different end-applications (i.e. airfoils for IGT and aerospace).

   31) Certain respondents to the market investigation  also  mentioned  distinctions  between  castings  produced  on  the  basis  of  different
       technologies. In particular: (i) equiax technology (the standard and cheapest  process  with  the  lowest  technology);  (ii)  directional
       solidification; and (iii) single crystal technology (expensive with high quality) could be distinguished due to the significant price  and
       quality differences.[42] At the same time, there also seems to be a certain degree  of  substitutability  between  the  castings  produced
       according to the different technologies.[43]

   32) In relation to the geographic scope of the market(s), the Commission considers that, based on the responses to the  market  investigation,
       the relevant market(s) could be at least EEA-wide. Whilst a majority of castings customers source at worldwide level,  a  number  of  them
       claimed that there are price differences between the different areas of the world. [44]

   33) For the purpose of the present case, the precise product  and  geographic  market  definition  can  be  left  open  because  the  proposed
       transaction does not raise serious doubts as to its compatibility with the internal market regardless of the exact market definition.

3 Competitive assessment

1 Horizontal overlap in upstream cast stick market

1 Market shares

   34) According to the Commission's Guidelines on the assessment  of  horizontal  mergers  under  the  Council  Regulation  on  the  control  of
       concentrations between undertakings,[45] very large market shares - 50 % or more - may in themselves be evidence of  the  existence  of  a
       dominant market position. Conversely, there is an indication that the concentration will not impede effective competition where the market
       share of the undertakings concerned does not exceed 25 % either in the internal market or in a substantial part  of  it.  However,  market
       shares only provide a first indication of market power and other important  factors  should  also  be  taken  into  account  such  as  the
       constraining influence of competitors, especially if they have  the  ability  and  incentive  to  increase  their  supplies,  whether  the
       concentration removes an important competitive force, or whether the parties to the concentration are close competitors.[46]

   35) According to the Parties' estimates, the combined market share of the merged entity in 2013 would have  been  [10-20]%  in  the  worldwide
       market for cobalt- and nickel-based cast sticks for all applications and [10-20]% in the EEA. Even if the markets were to  be  defined  by
       end-application or by technology, the combined market share of the merged entity in 2013 would  have  been  below  50%  in  all  potential
       markets[47].

   36) According to the Parties, they will continue to face a number of  competitors  after  the  proposed  transaction.  The  Commission  notes,
       however, that a number of smaller companies listed as cast sticks producers in the Form CO, such as KBM Affilips B.V. and Aubert  &  Duval
       amongst others, are not active in this sector.[48]

   37) The Commission has therefore undertaken an extensive market reconstruction exercise which  showed  that,  despite  the  absence  of  these
       smaller companies, the Parties will continue to face a number of competitors and have overestimated their market shares, especially in the
       IGT sector. As a consequence, the Commission considers the market shares provided in the Form CO can be used as a relevant proxy to assess
       the competitive landscape.

                                 Table 1: Market shares in cobalt- and nickel-based cast sticks – Source: Form CO

|Cobalt- and nickel-based cast sticks (2013, by volume [kg])                                                                            |
|                                                                                                                                       |
|                                                                                                                                  |
|                |                             |                          |Aerospace engine          |Aerospace airframe structural|
|                |IGT Airfoils                 |Aerospace Airfoils        |structural castings       |castings                     |
|                |                             |                          |                          |IGT                          |
|Alcoa           |[40-50]%                     |[50-60]%                  |[5-10]%                   |<1%                          |
|PCC             |[30-40]%                     |[30-40]%                  |[50-60]%                  |[50-60]%                     |
|Doncasters      |[10-20]%                     |N/A                       |N/A                       |N/A                          |
|Others[75]      |[5-10]%                      |[5-10]%                   |[40-50]%                  |[40-50]%                     |
|Total           |100%                         |100%                      |100%                      |100%                         |

   38) According to its estimates, Alcoa had approximately similar market shares in 2013 if the IGT airfoils and aerospace airfoils are segmented
       by technologies.

Table 4: Market shares in Investment castings for aerospace airfoils split by technology (Worldwide) – Source: Reply to the  RFI  of  17  October
       2014 [76]

 [Alcoa’s estimate of total market volume and competitors’ share for aero airfoils split by  technology  (equiax,  directionally  solidified  and
 single crystal) showing that Alcoa’s position in the downstream aero airfoil segment leads to an affected market for the purposes  of  the  Form
 CO]

Table 5: Market shares in Investment castings for IGT airfoils split by technology (Worldwide) – Source: Reply to the  RFI  of  17  October  2014
       [77]

 [Alcoa’s estimate of total market volume and competitors’ share for IGT airfoils split  by  technology  (equiax,  directionally  solidified  and
 single crystal) showing that Alcoa’s position in the downstream IGT airfoil segment leads to an affected market for the purposes of the Form CO]

   39) A few market players have submitted that, as a result of the proposed transaction, the last significant independent cast  sticks  supplier
       (FR) will disappear from the market leaving only three vertically integrated suppliers: PCC, Doncasters and Alcoa. Most  of  these  market
       players also do not consider that Treibacher, despite its recent entry on the cast sticks market, is a real alternative supplier. Equally,
       they do not consider IHI – another vertically integrated competitor - to be a credible alternative  supplier  mainly  because  of  alleged
       quality reasons and its location in Japan.

   40) The same market players also argue that as a consequence of the removal of the last  significant  independent  cast  stick  supplier,  the
       investment castings producers will only be able to source cast sticks from integrated suppliers (i.e. from their own  competitors).  These
       market players fear that the prices of cast sticks will increase, that supply conditions will deteriorate, and/or  that  fewer  quantities
       will be available on the market as Alcoa could internally use the cast sticks to produce investment castings. One of those market  players
       also expressed a concern that Alcoa could decrease FR's production or even shut down FR's facilities which would lead to a price  increase
       of cast sticks.[78]

   41) As a preliminary point, the Commission recalls that the fact that the proposed transaction concerns the  most  significant  non-vertically
       integrated cast sticks supplier (FR), leaving mostly vertically integrated  suppliers,  will  not  significantly  change  the  competitive
       dynamics on the cast stick market(s). This is because, as mentioned in paragraph (44), vertically  integrated  companies  have  sold  cast
       sticks to third parties in the past and there are no indications that they will cease to do so in the future.

   42) Furthermore, for the reasons set out in paragraphs (71) to (87) below, the Commission considers that the merged entity will  have  neither
       the ability nor the incentive to foreclose access to cast sticks.

2 Ability to foreclose

   43) According to the Guidelines on the assessment of non-horizontal mergers under the Council Regulation  on  the  control  of  concentrations
       between undertakings ('the Non-Horizontal Merger Guidelines'), for input foreclosure to be  a  concern,  the  vertically  integrated  firm
       resulting from the merger must have a significant degree of market power in the upstream market. It is only in  these  circumstances  that
       the merged firm can be expected to have a significant influence on the  conditions  of  competition  in  the  upstream  market  and  thus,
       possibly, on prices and supply conditions in the downstream market.[79]

   44) The Commission considers that the merged entity will not have the ability to foreclose access to cast sticks.

   45) First, as set out in section 3.1.3.1, the merged entity will not have a significant degree of market power due to:  its  limited  combined
       market share on the upstream market(s) for cast sticks, the existence of  alternative  competitors,  the  possible  counter-strategies  of
       investments casters and OEMs, and the fact that FR is not exercising more influence than its market share suggests.

   46) Second, respondents to the market investigation indicated that the merged entity will not be able to exercise market power in the upstream
       cast sticks market(s). Most of the casting companies and OEMs contacted in the course of the market  investigation  did  not  express  any
       concern as to the consequences of the proposed transaction on their businesses. Most  respondents  consider  that  there  are  alternative
       suppliers.[80]

   47) The Commission's conclusion on the inability by the merged entity to engage in input foreclosure means that the question  of  whether  the
       merged entity will face incentives to engage in this strategy can ultimately  left  open.  However,  for  the  reasons  given  below,  the
       Commission also considers that the merged entity is unlikely to have the incentive to engage in input foreclosure.

3 Incentive to foreclose

   48) According to the Non-Horizontal Merger Guidelines, the incentive to foreclose  depends  on  the  degree  to  which  foreclosure  would  be
       profitable. The vertically integrated firm will take into account how its supplies of inputs to competitors  downstream  will  affect  not
       only the profits of its upstream division, but also of its downstream division. Essentially, the merged entity faces a  trade-off  between
       the profit lost in the upstream market due to a reduction of input sales to (actual or potential) rivals and the profit gain, in the short
       or longer term, from expanding sales downstream or, as the case may be, being able to raise prices to consumers.[81]

   49) For the reasons set out in paragraphs (78) to (87) below, the Commission considers that the merged entity will not have the  incentive  to
       engage in either a complete foreclosure strategy (i.e. the merged entity fully stops supplying independent casting companies) or a partial
       foreclosure strategy (i.e. the merged entity increases prices of cast sticks to independent casting companies).

       1 Complete foreclosure strategy

   50) The Commission has analysed the profitability of a complete foreclosure strategy by comparing the potential losses in  the  upstream  cast
       sticks market with the potential gains in the downstream investment casting market.

   51) As regards potential losses on the upstream market, the Commission considers there is no reason to  believe  that  post-transaction  Alcoa
       will change its own strategy of using excess capacity of its Exeter or Dover facility for external sales. Alcoa's sales strategy has  been
       consistent over the past ten years as regards internal versus external sales of cast sticks produced in its two facilities,  namely  Alcoa
       Dover s and Alcoa Exeter[82]. Alcoa Dover Alloy was established to be the primary supplier of cast sticks  to  the  North  American  Alcoa
       investment casting foundries. Alcoa Dover Alloy has consistently used [a significant amount] of its cast sticks for  internal  consumption
       over the past ten years. Alcoa Exeter Alloy was built in 1975 with the intention of supporting  the  requirements  of  Alcoa’s  investment
       casting foundries in Europe and Japan. Excess capacity was always used for external sales. Over the past ten years,  internal  sales  have
       consistently represented [a significant amount] of the total amount of cast sticks sold[83]. […] Alcoa considers that  external  sales  of
       cast sticks constitute an important revenue stream for Alcoa Exeter Alloy[84]. Withholding this capacity  would,  in  any  event,  not  be
       merger specific.

   52) As for whether Alcoa will have the incentive to stop using FR's cast sticks production for external sales, the Commission  considers  that
       Alcoa is unlikely to have such an incentive as: (i) Alcoa would forego significant profits in the  upstream  market[85];  and  (ii)  Alcoa
       would not achieve gains downstream as withholding FR's cast sticks from the market[86] would unlikely impact the price downstream  because
       of the presence of downstream competitors[87] and, Alcoa would not be in a position to absorb internally the cast sticks produced by FR so
       as to realise gains downstream, in light of the current trends for the demand of cast sticks and of the  spare  cast  sticks  capacity  of
       Alcoa.

   53) First, the expected increase in demand for investment castings for aerospace applications will most likely be offset to a large extent  by
       the reduced demand for alloy intensive IGT products[88]. Alcoa explained that IGT spare parts demand is being negatively impacted  by  the
       power market, particularly in Europe, where gas-fired power generation has been negatively impacted by  low  priced  coal  and  subsidised
       renewables[89]. The decline in demand for IGT components has important repercussions on the demand for cast sticks  since  IGT  components
       have large diameters and therefore require significant amounts of input material (i.e. superalloy cast sticks).

   54) Second, [description of Alcoa’s expansion plans].

   55) Third, Alcoa is expecting to have even more  spare  cast  sticks  capacity  in  the  near  future.  [description  of  Alcoa’s  contractual
       relationship with a third party][90].

   56) It results from the above that, if, post-transaction, the merged entity were to decide to no longer  supply  cast  sticks  to  independent
       casting companies, it would lose gains in the upstream cast sticks market (as explained in paragraphs (79) to  (80)),  and  it  would  not
       achieve gains in the downstream investment casting market as it would be unable to absorb internally  the  production  currently  sold  to
       independent casting companies (as explained in paragraphs (80) to (83)).

2 Partial foreclosure strategy

   57) The Commission has also assessed the profitability of a partial foreclosure strategy by comparing the potential  losses  in  the  upstream
       cast stick market with the potential gains in the downstream investment casting market.

   58) The Commission considers that increasing the cast stick price charged to independent casting companies would not be a profitable  strategy
       for the merged entity because:

    a. The merged entity would lose business upstream to its vertically integrated competitors. Following a small but significant increase in the
       price of cast sticks, independent casting companies would most likely switch away from the merged entity and start buying from the  merged
       entity's competitors which are competing with each other to attract independent  cast  sticks  customers.  While  Alcoa’s  external  sales
       accounted for […] of total cast stick sales in 2013, the vertically integrated competitors PCC and Doncasters  supplied  30-50%  to  third
       parties in 2013[91]. In addition, as mentioned above in paragraph (47)(46), these vertically integrated competitors have excess capacity.

    b. The merged entity would unlikely benefit downstream from a price increase  as  its  vertically  integrated  competitors  which  are  self-
       supplied[92] (and are therefore unaffected by the upstream price increase) compete downstream and have excess capacity downstream.

   59) As a consequence, the Commission considers that the merged entity has no incentive to engage in a partial foreclosure strategy.

       4 Conclusion

   60) Based on the above, the Commission considers that the merged entity does not have the ability and is also unlikely to have  the  incentive
       to engage in a complete or partial input foreclosure strategy. The Commission therefore considers that the proposed transaction  does  not
       raise serious doubts as to its compatibility with the internal market with respect to  the  vertical  relationship  between  the  Parties'
       activities in nickel- and cobalt-based cast sticks and investment castings.

2 Aluminium alloys/Forged rings

1 The Parties' activities

   61) Alcoa produces and sells aluminium alloys in billet form. FR purchases aluminium alloys in billet form for the  production  of  aluminium-
       based forged rings. More precisely, FR sources the aluminium alloys [C, D, E, A, B and F] in billets.[93] Alcoa sells aluminium alloys [A,
       C, D, B and F], but only alloys [A and B] are sold in billet form. The other alloys are sold in ingot form.

2 Market definition – Aluminium alloys

   62) In previous decisions,[94] the Commission has distinguished between primary aluminium products (i.e. produced  by  smelting  alumina)  and
       secondary aluminium products (i.e. produced by re-melting  and  reconverting  used  aluminium  products).  Moreover,  the  Commission  has
       considered that standard primary aluminium may be further segmented on the basis of  its  shape  into  (i)  standard  ingots/T-bars,  (ii)
       extrusion billets, (iii) rolling slabs, (iv) wire rod and (v) foundry alloys.[95] As regards the geographic scope of  these  markets,  the
       Commission has considered that they are worldwide.[96]

   63) The Parties submit that in the present case there is no need to distinguish between the various aluminium alloys and/or forms of aluminium
       alloys and that the precise market definition can be left open.[97] The Parties submit that the relevant geographic market is worldwide in
       scope.

   64) A majority of respondents to the market investigation indicated that there is limited supply-side and demand-side substitutability between
       alloys in ingot and billet form.[98] There is limited demand-side substitutability  between  the  different  types  or  groups  of  alloys
       although from the supply-side perspective, alloy manufacturers do not generally specialise in one type or group of alloys.[99]

   65) A majority of respondents to the market investigation also show that, at least from the demand-side, alloys based on  secondary  aluminium
       (i.e. re-melted aluminium) are to a certain extent substitutable for alloys based on primary aluminium.[100] According to the  replies  to
       the market investigation, alloys are mostly supplied and sourced at worldwide level[101] even  if  there  are  price  differences  between
       certain regions (EEA, North America, Asia).[102]

   66) For the purpose of the present case, the precise product  and  geographic  market  definition  can  be  left  open  because  the  proposed
       transaction does not raise serious doubts as to its compatibility with the internal market regardless of the exact market definition.

3 Market definition – Forged Rings

   67) In previous decisions analysing forged rings,[103] the Commission considered that a segmentation based on  the  manufacturing  process  of
       forged rings, namely seamless forging process (which essentially consists in punching a hole in a thick metal disc) and by  flash  welding
       (which is the bending of a metal bar and welding of the two ends of the bar) could be appropriate, although it ultimately  left  open  the
       precise product market definition. As for geographic scope, the Commission found that these markets are global.

   68) The Parties submit that a further segmentation could be based on the metal type used to produce the different forged parts.  However,  the
       Parties consider that the precise market definition in relation to seamless rings  can  be  left  open.  In  line  with  the  Commission's
       precedents, the Parties submit that these markets are global.[104]

   69) As regards forged rings, a majority of respondents to the market investigation suggested that seamless rolled rings and flash welded rings
       do not belong to the same product market due to the limited supply-side and demand-side substitutability.[105] A majority  of  respondents
       to the market investigation also indicated that the relevant geographic market is worldwide.[106]

   70) For the purpose of the present case, the precise product  and  geographic  market  definition  can  be  left  open  because  the  proposed
       transaction does not raise serious doubts as to its compatibility with the internal market regardless of the exact market definition.

4 Competitive assessment

   71) There is no actual vertical link between the Parties as FR does not source aluminium alloys  in  the  form  of  billets  from  Alcoa.  The
       transaction gives rise only to a potential vertical link in relation to two alloys, namely [alloy A] and [alloy  B]  ("the  two  alloys"),
       which are bought by FR in billet form and supplied also by Alcoa in billet form.

   72) Alcoa's share of a potential upstream market for all types of aluminium-based alloys in the form of billets was [10-20]% in  2013  at  the
       worldwide level:

                Table 6: Competitive landscape of the worldwide market for aluminium-based alloys in the form of billets – Form CO

|Market shares in aluminium-based alloys in the form of billets (2013)                             |
|Company                                               |Market share - Worldwide                   |
|Emirates Global Aluminium                             |[20-30]%                                   |
|Hydro                                                 |[10-20]%                                   |
|Alcoa                                                 |[10-20]%                                   |
|Rusal                                                 |[10-20]%%                                  |
|Rio Tinto Alcan                                       |[10-20]%%                                  |
|Aluminium Bahrain                                     |[10-20]%%                                  |
|Vedanta                                               |[0-5]%                                     |
|Century                                               |[0-5]%                                     |
|Total                                                 |100%                                       |

   73) Even in hypothetical markets defined by alloy type, Alcoa's share in 2013 would  have  remained  below  [0-5]%  respectively  at  EEA  and
       worldwide level for each of the two alloys.[107]

   74) FR had market shares up to [40-50]% in the different potential downstream products markets for forged  rings  in  2013  at  the  worldwide
       level.[108]

                          Table 7: Competitive landscape of the worldwide market for forged rings (all metals) – Form CO

|Market shares in forged rings (all metals) – Worldwide (2013)                                                                         |
|Company             |Forged rings                         |Seamless rolled rings                |Flash-welded rings                   |

                                          |All[109] |AS[110] |IGT |All |AS |IGT |All |AS |IGT | |FR |[30-
                                                                    40]% |[30-
                                                                    40]% |[20-
                                                                    30]% |[40-
                                                                    50]% |[40-
                                                                    50]% |[20-
                                                    30]% |[0-5]% |[0-5]% |[0-5]% | |PCC |[30-
                                                                    40]% |[30-
                                                                    40]% |[10-
                                                                    20]% |[20-
                                                                    30]% |[30-
                                                                    40]% |[5-
                                                                    10]% |[60-
                                                                    70]% |[60-
                                                                    70]% |[40-
                                                              50]% | |Forgital |[5-
                                                                    10]% |[5-
                                                                    10]% |[5-
                                                                    10]% |[5-
                                                                    10]% |[5-
                                                                    10]% |[10-
                                                    20]% |[0-5]% |[0-5]% |[0-5]% | |Frisa |[5-
                                                                    10]% |[5-
                                                                    10]% |[20-
                                                                    30]% |[5-
                                                                    10]% |[5-
                                                                    10]% |[30-
                                         40]% |[0-5]% |[0-5]% |[0-5]% | |Doncasters |[0-5]% |[0-5]% |[10-
                                                            20]% |[0-5]% |[0-5]% |[10-
  20]% |[0-5]% |[0-5]% |[0-5]% | |Mattco |[0-5]% |[0-5]% |[0-5]% |[0-5]% |[0-5]% |[0-5]% |[0-5]% |[0-5]% |[0-5]% | |Anda |[0-5]% |[0-5]% |[0-5]%
               |[0-5]% |[0-5]% |[0-5]% |[0-5]% |[0-5]% |[0-5]% | |Welded Ring |[0-5]% |[0-5]% |[0-5]% |[0-5]% |[0-5]% |[0-5]% |[5-
                                                                    10]% |[10-
                                                          20]0% |[0-5]% | |Others |[10-
                                                                    20]% |[10-
                                                                    20]% |[20-
                                                                    30]% |[5-
                                                                    10]% |[5-
                                                                    10]% |[10-
                                                                    20]% |[20-
                                                                    30]% |[5-
                                                                    10]% |[50-
                                        60]% | |Total |100% |100% |100% |100% |100% |100% |100% |100% |100
 | |
   75) Based on the Parties' estimates, Alcoa accounted in 2013 for a [10-20]% share of the total market for aluminium billets. In 2013,  Alcoa's
       sales of the two alloys represented about [10-20]% of Alcoa's overall sales of aluminium billets.[111]

   76) For the reasons set out below, the Commission considers that the merged entity will not have the ability to foreclose access to aluminium-
       based alloys in billet form.

   77) First, there will be at least five alternative suppliers of aluminium billets with at least 10% market  share  each  post-transaction.  As
       shown in Table 6 and 7, none of the major alternative suppliers of aluminium-based alloys in the form of billets appears to be  vertically
       integrated downstream in the production of forged rings.

   78) Second, a majority of respondents to the market investigation indicated that post-transaction there  will  continue  to  be  a  number  of
       alternative suppliers of aluminium billets, such as Vista Metals, Rio  Tinto  Alcan,  Alba,  Kaiser  Aluminium  and  Hydro.[112]  All  the
       customers of aluminium billets that  replied  to  the  market  investigation  indicated  that  they  currently  multisource  from  several
       suppliers.[113]

   79) Third, while certain respondents to the market investigation suggested that switching  might  not  be  easy  when  only  one  supplier  of
       aluminium is certified by the customer[114] or in relation to certain sectors, such as aerospace and space markets, where switching  might
       be longer and more costly than in other industrial markets,[115] the vast majority of  customers  considered  that  switching  can  happen
       quickly and does not entail significant costs.[116]

   80) There will therefore be sufficient alternative suppliers of aluminium-based alloys in  the  form  of  billets  to  counter-act  any  input
       foreclosure strategy pursued by the merged entity.

   81) Even when considering narrower hypothetical markets defined by  individual  aluminium-based  alloys,  an  input  foreclosure  strategy  is
       unlikely. As explained in paragraph (101), Alcoa's market shares in 2013 in the hypothetical markets for [alloy  A]  and  [alloy  B]  were
       insignificant and several alternative suppliers will remain on these markets.

   82) If a broader market for billets and ingots were to be considered, there would be a potential vertical relationship regarding alloys [C,  D
       and F] that are sold by Alcoa in ingot form and purchased by FR in billet form. However, this vertical relationship would not lead to  any
       input foreclosure concern because of Alcoa's limited market share in each of these alloys.[117]  In  addition,  a  number  of  alternative
       suppliers will remain on these markets.

   83) Finally, a large majority of respondents to the market investigation did not consider that the proposed acquisition will raise competition
       concerns[118] because alternative suppliers of aluminium-based alloys in the form of billets  will  remain[119]  (making  potential  input
       foreclosure unlikely) and because FR's purchases of aluminium-based alloys are of limited significance on the overall market[120]  (making
       potential customer foreclosure unlikely).

   84) Based on the above, the Commission therefore considers that the proposed transaction does not raise serious doubts as to its compatibility
       with the internal market with respect to the vertical relationship between the Parties' activities in aluminium alloys and forged rings.

       CONCLUSION

   85) 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.

For the Commission
(signed)

Margrethe VESTAGER
Member of the Commission
-----------------------
[1]   OJ L 24, 29.1.2004, p. 1 ('the Merger Regulation'). With effect from 1 December 2009, the Treaty on the Functioning of the  European  Union
('TFEU') has introduced certain changes, such as the replacement of 'Community'  by  'Union'  and  'common  market'  by  'internal  market'.  The
terminology of the TFEU will be used throughout this decision.

[2]   Publication in the Official Journal of the European Union No C 366, 16.10.2014, p. 7.

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

[4]   An alloy is a mixture or compound of two or more elements, at least one of which is a metal, called the  primary  or  base  metal  (source:
Form CO, page 8). Superalloys are alloys which have superior mechanical strength, good surface stability and corrosion resistance, and  may  have
the ability to withstand high temperature without oxidizing or losing mechanical properties (see replies to the request for information (RFI)  of
10 October 2014).

[5]   The cobalt- and nickel-based cast sticks manufactured by Alcoa and FR are all superalloys (see replies to the RFI of 10 October  2014).  In
the rest of the decision, the terms alloys and superalloys will be used interchangeably.

[6]   Products or components manufactured through the investment casting process. This process involves the design and manufacture of  a  ceramic
mould, into which the desired metal is poured, after which the mould is removed in order to release the  final  product  or  investment  casting.
(source: Form CO, page 9).

[7]   VIM uses electric currents to melt metals within a vacuum. By melting the alloys inside a vacuum, the  alloy  can  be  protected  from  the
atmosphere and residuals. Many alloys contain elements which, if air melted, react with oxygen to form oxides. Oxides  are  detrimental  to  high
quality melted alloys required by the aerospace, energy, medical and automotive industries. Source: Form CO, paragraph 81 and footnote 36.

[8]   See replies to Questionnaire Q1 – Competitors – Cast sticks, question 11.

[9]   Source: Form CO, paragraph 152. Blayson, World Investment Casting Market Review - EICF 28th International Congress, June 2014.

[10]  Source: Form CO, paragraph 123.

[11]  Source: Form CO, paragraph 83. See replies to Questionnaire Q2 – Customers – Cast sticks, question 39.1.

[12]  Source: Form CO, paragraph 162.

[13]  Source: Form CO, paragraph 260. See replies to Questionnaire Q2 – Customers – Cast sticks, question 4.

[14]  In addition, the Parties both manufacture (i) nickel-based closed die forged disks for IGT applications (Alcoa produces forged  disks  that
have a diameter of at least […] inches, FR's forged disks have a diameter of maximum […]  inches),  (ii)  rings  for  space  launch  applications
(Alcoa manufactures aluminium open die forged disks with an outer diameter of at least […] inches and a thickness of  at  least  […]  inches  and
FR's seamless rolled rings for space launch and missile applications have an outer diameter of up to […] inches and a  thickness  of  up  to  […]
inches) and (iii) landing gear components. The overlaps in these activities will, however, not lead to any affected market  under  any  plausible
market definition. Regarding nickel-based closed die forged disks for IGT applications, the combined market share of the Parties  in  2013  would
be below [10-20]% under any plausible market definition. Regarding rings for space launch applications, the  highest  combined  market  share  in
2013 would have been below [5-10]%. Regarding landing gear components, the majority of Alcoa’s landing gear components are aluminium based  while
FR does not produce aluminium based landing gear components. FR does produce components for landing gear (including main landing gear)  based  on
steel while Alcoa does not produce any steel-based landing gear components. There is therefore no overlap in  either  aluminium-  or  steel-based
landing gear components between the Parties. Conversely the  Parties  both  produce  titanium-based  landing  gear  components:  FR  manufactures
titanium-based nose landing gear components and Alcoa manufactures titanium-based main landing gear components. As regards titanium landing  gear
components, the combined market shares in 2013 would have been below [0-5]%  on  a  hypothetical  worldwide  market  for  titanium  landing  gear
components. The Parties also both purchase: (i) nickel, cobalt and other metals, and (ii) nickel-based ingots. The overlaps  in  those  purchases
will, however, not lead to any affected market under any plausible market definition. Regarding nickel, cobalt, and other  metals,  the  Parties'
combined purchase shares were below [10-20]% at worldwide level in 2013. Regarding nickel-based ingots, the  Parties'  combined  purchase  shares
were below [10-20]% in 2012 regardless of the end application. As a consequence,  none  of  the  above-mentioned  activities  will  be  discussed
further in this decision.

[15]  Billets are one of the two types of input products for forgings, the other one being ingots. Billets are in the form of a bar  and  have  a
smaller size than ingots. See Form CO, glossary. Ingots and billets have different thicknesses, as the former usually  have  a  diameter  greater
than or equal to about 9 inches and the latter a diameter below 9 inches. See Questionnaire Q4 for customers of aluminium-based alloys in  billet
form, question 6.1.

[16]  In addition, the proposed transaction gives rise to affected markets with respect to the following  vertical  relationships:  (i)  sale  of
titanium and nickel scrap by FR and manufacture of titanium and nickel melting by Alcoa; and (ii) sale of titanium,  iron  and  nickel  scrap  by
Alcoa and manufacture of titanium and steel seamless rolled rings, other titanium forgings and  nickel-based  close  die  forging  by  FR.  These
vertical relationships are, however, only virtual as the upstream products manufactured by Alcoa and FR cannot be used by the other party due  to
differences in the alloy formulations produced by the Parties. In 2013 and 2014, FR  also  purchased  some  extruded  rods  made  of  a  specific
aluminium alloy ([F]) from Alcoa for one of its products that represents annual sales of below USD […]. Alcoa estimates its share of  a  separate
market for aluminium [F] extruded rods to amount to less than [5-10]% worldwide and less than [0-5]% in the EEA in 2013. As a  consequence,  none
of these vertical relationships will be discussed further in this decision.

[17]  Case M.6765 – Precision Castparts/Titanium Metals, paragraphs 20, 23 and 25.

[18]  See replies to Questionnaire Q1 – Competitors – Cast sticks, questions 14, 15 and 16, and replies to Questionnaire Q2 –  Customers  –  Cast
sticks, questions 9 and 10.

[19]  See replies to Questionnaire Q2 – Customers – Cast sticks, question 12.

[20]  See replies to Questionnaire Q1 – Competitors – Cast sticks, question 18.

[21]  From the beginning of the year 2014 up until the date of the Response to the RFI of 22 October 2014.

[22]  These are alloys […]. See reply to the RFI of 22 October 2014.

[23]  These are alloys […]. See reply to the RFI of 22 October 2014.

[24]  See reply to the RFI of 22 October 2014.

[25]  See reply to the RFI of 22 October 2014.

[26]  See Commission Notice on the definition of relevant market for the purposes of Community competition  law,  OJ  C  372,  9.12.1997,  p.  5,
paragraph 43.

[27]  See replies to Questionnaire Q1 – Competitors – Cast sticks, question 17.

[28]  See for instance minutes of the conference call with a market player of 7 October 2014, at 5:00 pm. There are three  main  technologies  to
produce investment castings. In response to customer demand to further increase the resistance of investment castings,  various  changes  to  the
production processes have been developed. The aim of these developments is to strengthen the  grain  boundaries  (which  are  the  weak  link  in
investment cast parts) or to remove grain boundaries altogether. The equiax technology  is  the  conventional  method  for  producing  investment
castings. It leads to parts with a randomly orientated grain structure. The directional solidification process arranges the  grain  structure  of
the superalloy in a single direction, thereby leading to more  resistant  parts.  The  single  crystal  technology  eliminates  grain  boundaries
altogether: the investment cast part consists of a single grain  (crystal).  This  requires  a  special  solidification  technique  at  the  part
production stage (i.e., when casting the final component). Removing the grain boundary strengthening elements (i.e., producing a single  crystal)
raises the melting point of the superalloy, which allows them to be used at higher temperatures. See reply to RFI of 10 October 2014.

[29]  See reply to RFI of 10 October 2014.

[30]  See reply to RFI of 10 October 2014 and reply to RFI of 17 October 2014.

[31]  See replies to Questionnaire Q1 – Competitors – Cast sticks, questions 9, 10, 11, 12 and replies to Questionnaire Q2  –  Customers  –  Cast
sticks, questions 7 and 8.

[32]  See replies to Questionnaire Q1 – Competitors – Cast sticks, questions 20, 22 and 23, and replies to Questionnaire Q2 –  Customers  –  Cast
sticks, questions 20, 21 and 22.

[33]  Case M.6765 – Precision Castparts/Titanium Metals, decision of 19 December 2012, paragraph  38;  see  also  Case  M.1919  –  Alcoa/Cordant,
decision of 19 May 2000, paragraph 10.

[34]  Case M.1919 - Alcoa/Cordant, decision of 19 May 2000, paragraph 10.

[35]  Case M.6765 – Precision Castparts/Titanium Metals, decision of 19 December 2012, paragraphs 37-44; Case M.1919  -  Alcoa/Cordant,  decision
of 19 May 2000, paragraphs 10, 17 and 25.

[36]  Case M.6765 – Precision Castparts/Titanium Metals, decision of 19 December 2012, paragraphs 45-47.

[37]  For the production of a seamless rolled ring a hole is punched in a piece of metal prior to being rolled into the desired shape.

[38]  To make flash welded rings, a rolled or extruded bar is cold formed to make a ring. The ends are flash butt welded which involves  applying
an electric current across the interface of the two ends to bring the metals to a plastic state. The two ends are subsequently  brought  together
under very high force sufficient to weld them into one.

[39]  Case M.4561 - GE/Smiths Aerospace, decision of 23 April 2007, paragraph 45.

[40]  Case M.4561 - GE/Smiths Aerospace, decision of 23 April 2007, paragraph 46.

[41]  See replies to Questionnaire Q2 – Customers – Cast sticks, questions 14 to 15.

[42]  See for instance minutes of the conference call with a market player of 8 October 2014 at 4:15 pm,.

[43]  See for instance minutes of the conference call with a market player of 8 October 2014 at 4:15 pm.

[44]  See replies to Questionnaire Q2 – Customers – Cast sticks, questions 23 and 24.

[45]  Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of concentrations between undertakings OJ  C
31, 5.2.2004 ("Horizontal Merger Guidelines"), p. 3, paragraphs 17 and 18.

[46]  Horizontal Merger Guidelines, paragraphs 17, 28, and 37.

[47]  Form CO, page 52 and 53. It should be noted that the market shares presented in this  section  consider  only  the  market  shares  of  the
different suppliers in the external sales market. The cast sticks used for internal consumption by the vertically integrated parties (Alcoa,  PCC
and Doncasters) are excluded. The external sales of Alcoa accounted for […]% of their total cast sticks sales in  2013,  for  PCC  […]%  and  for
Doncasters […]% (Substantive Assessment submitted on 23 October 2014, paragraph 39).

[48]  See replies to Questionnaire Q1 – Competitors – Cast sticks, questions 5.1 and 10.

[49]  See reply to the RFI of 17 October 2014.

[50]  Source: Form CO, paragraph 163.

[51]  See for instance minutes of the conference call with a market player of 1 October 2014 at 5.00 pm.

[52]  See reply to the RFI of 17 October 2014.

[53]  See for instance minutes of the conference call with a market player of 8 October 2014 at 3.15 pm.

[54]  IHI's subsidiary in charge of producing cast sticks is called IHI Masters Metal (IMM).

[55]  See for instance minutes of the conference call with a market player of 1 October 2014 at 5.00 pm.

[56]  Treibacher recently won significant orders from PBS (customer active in IGT) in an internet auction held in April 2014 in which up to  five
suppliers competed for various lots of IN713LC cast sticks. See Annex 6 to FR’s response to the RFI of 3 October 2014.

[57]  See for instance replies to Questionnaire Q2 – Customers – Cast sticks, question 38.

[58]  Cast sticks for internal consumption have been excluded from the relevant market as explained  in  footnote  47.  Even  assuming  that  the
vertically integrated suppliers PCC and Doncasters would not make the internally consumed cast sticks available in the  upstream  external  sales
market, the internally consumed cast sticks by PCC and Doncasters would still limit the merged entity’s ability to raise  cast  stick  prices  to
independent casters. Indeed, the independent casters would no longer  be  competitive  compared  to  PCC's  and  Doncasters'  downstream  casting
companies if prices of cast sticks were too high.

[59]  See replies to Questionnaire Q2 – Customers – Cast sticks, question 26.

[60]  This is based on data regarding cast sticks collected by the consultancy Steel & Metal Research for Alcoa (Form CO, paragraph 160).

[61]  Substantive Assessment submitted on 23 October 2014, paragraph 35.

[62]  See for instance minutes of the conference call with a market player of 6 October 2014 at 4.00 pm., minutes of the conference call  with  a
market player of 8 October 2014, at 3:15 pm.

[63]  See reply to question 7f of the RFI of 3 October 2014.

[64]  These are Alcoa's two cast sticks production facilities located in the United States and the United Kingdom respectively. See reply to  RFI
of 3 October 2014.

[65]  See for instance minutes of the conference call of 8 October 2014 at 3.15 pm, and minutes of the conference call with a market player of  1
October 2014 at 5.00 pm.

[66]  See reply to RFI of 10 October 2014.

[67]  See reply to RFI of 10 October 2014.

[68]     See    Annex    6.4    to    the    Form    CO:    Chromalloy    press    release    of     7     November     2013     retrieved     at
http://www.chromalloy.com/files/newspressrelease/ce4flbfe-f719-4c9b-b41a-ca35f0253875.pdf

[69]  See for instance minutes of the conference call with a market player of 29 August 2014 at 3.00 pm.

[70]  See for instance replies to Questionnaire Q2 – Customers – Cast sticks, question 34.

[71]  See for instance replies to Questionnaire Q2 – Customers – Cast sticks, questions 27 and 28. See for instance  minutes  of  the  conference
call with a market player of 26 September 2014, at 4:30 pm and of 7 October 2014, at 5:00 pm.

[72]  Alcoa's market shares in 2013 were slightly lower at EEA level with an estimated [30-40]% market share in IGT  airfoils  and  an  estimated
[50-60]% market share in aerospace airfoils.

[73]  These numbers exclude the sales produced by the foundries owned by OEMs.

[74]  Alcoa's market shares in structural castings in 2013 are provided Table 3 for the sake of completeness.  Given,  however,  that  they  were
below [10-20]%, structural castings will not be discussed further in this decision.

[75]  This category includes independent casters such as Precicast, Chromalloy, Hitchiner, CPP and Zollern.

[76]  These numbers exclude the sales produced by the foundries owned by OEMs. Alcoa's market shares in 2013 were lower at EEA level  where  they
were […] for equiax, directional solidification and single crystal respectively.

[77]  These numbers exclude the sales produced by the foundries owned by OEMs. Alcoa's market shares in 2013 were lower at EEA level  where  they
were […] for equiax, directional solidification and single crystal respectively.

[78]  A specific concern was also raised as regards the supply of cast sticks made of GTD 111, which is a  nickel-based  alloy  over  which  G.E.
holds a US patent. A market player argued that US-based cast stick suppliers are bound by the patent for their EEA sales and can thus  only  sell
GTD 111 cast sticks to investment casters acting for G.E. equipment suppliers. Being EEA-based, FR's supplies of cast  sticks  made  of  GTD  111
alloy will not be restricted in that way. The proposed transaction will allegedly put an end to such leeway and  investment  casters'  access  to
GTD 111 cast sticks will be foreclosed. The Commission considers, however, that such a concern is unjustified. First, GE  has  confirmed  in  the
course of the market investigation that the patent covers only US-based production plants, and not EEA-based ones.  Second,  both  FR  and  Alcoa
operate production plants in the EEA. Third, the market player raising the concern has confirmed that it favoured supply of cast  sticks  at  the
EEA level.

[79]  Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of concentrations  between  undertakings
("Non-Horizontal Merger Guidelines"), OJ C 265, 18.10.2008, p. 6, paragraph 35.

[80]  See for instance replies to Questionnaire Q2 – Customers – Cast sticks, question 30.

[81]  Non-Horizontal Merger Guidelines, paragraph 40.

[82]  Response to question 11 of the RFI of 10 October 2014

[83]  Response to question 11 of the RFI of 10 October 2014.

[84]  Response to question 11 of RFI of 10 October 2014.

[85]  FR has always sold 100% of its cast sticks to independent casting companies because it has no downstream casting operations of its own.  In
2013, FR made a profit margin of […] See response to question 1 of RFI of 3 October 2014.

[86]  As explained in paragraph (55), FR's production capacity accounts for only a very limited part of the total production capacity.

[87]  See paragraphs (65) and (66).

[88]  Response to question 16 of RFI of 15 October 2014.

[89]  Response to question 16 of RFI of 15 October 2014.

[90]  Response to question 12 of RFI of 15 October 2014.

[91]  Substantive Assessment submitted on 23 October 2014, paragraph 39.

[92]  This would include Chromalloy who will start self-supplying as of 2015, see paragraph (60) above.

[93]  Source: Form CO, paragraph 225.

[94]  See e.g. Case M.4827, Rio Tinto/Alcan and M.7019 – Trimet/EDF/NewCO.

[95]  See e.g. Case M.4441, EN+ / Glencore / Sual / UC Rusal and M.7019 – Trimet/EDF/NewCO.

[96]  See e.g. Case M.7019 – Trimet/EDF/NewCO, paragraph 25.

[97]  Form CO, paragraph 87-89.

[98]  See replies to Questionnaire Q4 for customers of aluminium-based alloys in billet form, questions 6 and 8. See replies to Questionnaire  Q3
for competitors – aluminium, question 8, 9 and 10.

[99]  See replies to Questionnaire Q4 for customers of aluminium-based alloys in billet form, questions 9, 10. See replies  to  Questionnaire  Q3
for competitors – aluminium, question 12.

[100]       See replies to Questionnaire Q4 for customers of aluminium-based alloys in billet form, question 11. See replies to Questionnaire  Q3
for competitors – aluminium, questions 6 and 7.

[101]       See replies to Questionnaire Q4 for customers of aluminium-based alloys in billet form, question 16. See replies to Questionnaire  Q3
for competitors – aluminium, question 13

[102]       See replies to Questionnaire Q4 for customers of aluminium-based alloys in billet form, question 17. See replies to Questionnaire  Q3
for competitors – aluminium, question 14.

[103]       Case M.4561 - GE/Smiths Aerospace, paragraph 37-46.

[104]       Form CO, paragraph 96 – 105.

[105]       See replies to Questionnaire Q4 for customers of aluminium-based alloys in billet form, questions 12, 13, 14 and 15.

[106]       See replies to Questionnaire Q4 for customers of aluminium-based alloys in billet form, questions 18 and 19.

[107]       Replies to question 1 of RFI of 22 October 2014; question 4 of 27 October 2014 and question 3 of RFI of 30 October 2014.

[108]       The Parties have not been able to provide market shares for aluminium-based forged rings  only.  They  submit,  however,  that  their
combined 2013 market shares would be similar in that potential sub-market.

[109]       All refers to all applications.

[110]       AS refers to aerospace.

[111]       Response to question 1 of RFI of 22 October 2014, annex Q1. Form CO, paragraph 227-228.

[112]       See replies to Questionnaire Q4 for customers of aluminium-based alloys in billet form, question 23.

[113]       See replies to Questionnaire Q4 for customers of aluminium-based alloys in billet form, question 5.1 and 21.

[114]       See replies to Questionnaire Q4 for customers of aluminium-based alloys in billet form, question 22.1.

[115]       See replies Questionnaire Q4 for customers of aluminium-based alloys in billet form, question 22.1.

[116]       See replies to Questionnaire Q4 for customers of aluminium-based alloys in billet form, question 22.

[117]       Alcoa's market share for alloys [C] and [F] would have been below [0-5]% and [5-10]% at the EEA  and  worldwide  level  respectively.
Alcoa's market share for [alloy D] would have been below [5-10]% and [0-5]% at the EEA and worldwide level respectively. See replies  to  RFI  of
22 October 2014 and RFI of 30 October 2014.

[118]       See replies to Questionnaire Q3 for competitors – aluminium, questions 16, 17 and 18. See replies to Questionnaire Q4  for  customers
of aluminium-based alloys in billet form, question 26.

[119]       See replies to Questionnaire Q4 for customers of aluminium-based alloys in billet form, questions 23

[120]       In 2013, FR's total purchases of all aluminium-based alloys in billet form amounted to approximately […] metric tons which  according
to Alcoa’s internal estimates represented less than [0-5]% of the worldwide sales of all aluminium-based alloys in billet form. Source: Form  CO,
paragraph 230.

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                                                                  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.

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