CELEX: 31999M1533
Language: en
Date: 1999-06-21 00:00:00
Title: COMMISSION DECISION of 21/06/1999 declaring a concentration to be compatible with the common market (Case No IV/M.1533 - ARTEMIS/SANOFI BEAUTE) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31999M1533

COMMISSION DECISION of 21/06/1999 declaring a concentration to be compatible with the common market (Case No IV/M.1533 - ARTEMIS/SANOFI BEAUTE) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 231 , 13/08/1999 P. 0006

COMMISSION DECISION of 21/06/1999 declaring a concentration to be compatible with the common market (Case No IV/M.1533 - ARTEMIS/SANOFI BEAUTE) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)Brussels, 21.06.1999       To the notifying partiesDear Sirs,Subject: Case No IV/M.1533 - ARTEMIS/SANOFI BEAUTE1.	On 19/05/1999, the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EEC) No 4064/89 [1] by which the undertaking Artémis S.A. ("Artémis") will acquire the shares and assets in the Sanofi Beauté Division ("Sanofi Beauté") from Sanofi S.A. ("Sanofi"). [1] 	OJ L 395, 30.12.1989 p. 1; corrigendum OJ L 257 of 21.9.1990, p. 13; Regulation as last amended by Regulation (EC) No 1310/97 (OJ L 180, 9. 7. 1997, p. 1, corrigendum OJ L 40, 13.2.1998, p. 17).I.  THE PARTIES2.	Artémis is a holding company, which is mainly active in the retail and distribution sector. It also has activities in auction, financial services, insurance and real estate. 3.	Sanofi Beauté is active in the production and sale of luxury fragrances, cosmetics and fashion articles.II.  THE OPERATION AND THE CONCENTRATION4.	The notification concerns the acquisition by Artémis of the assets and interests in companies comprising Sanofi Beauté which consists of (a) luxury fragrances and cosmetic activities, which include Yves Saint Laurent Parfums, Parfums Van Cleef & Arpels, Oscar de la Renta parfums, Roger & Gallet, Krizia and Fendi; and (b) fashion activities carried out by Yves Saint Laurent Couture. The operation constitutes a concentration within the meaning of Article 3 of the Merger Regulation. III.  COMMUNITY DIMENSION5.	The undertakings concerned have a combined aggregate world-wide turnover of more than EURO 5000 million (Artémis EURO 16.773,Sanofi Beauté EURO 578). Artémis (EURO 13.720), and Sanofi Beauté (EURO 338) each have a Community-wide turnover in excess of MECU 250 and they do not achieve more than two-thirds of their aggregate Community-wide turnover within one and the same Member State. The notified operation therefore has a Community dimension according to Article 1(2) of the Merger Regulation. It does not constitute a co-operation case under the EEA Agreement.IV.  COMPATIBILITY WITH THE COMMON MARKET The relevant product markets6.	The proposed concentration concerns the markets of production and sale of luxury products as well as the distribution of such products. 7.	Luxury products are high quality articles with a relatively high price, marketed under a prestige trademark. From the demand-side point of view, it is quite clear that luxury products have a low degree of substitutability with other products falling within other segments of the same sector (namely, within cosmetic products, at least women's perfumes and men's perfumes, other beauty products-, designer clothes -haute couture, furs, men's luxury ready-to-wear clothes, women's luxury ready-to-wear clothes-, leather goods -for example, suitcases, handbags, belts, wallets-, other accessories). The notifying party claims that, from a supply-side point of view, there is a single market for all luxury products. For this particular case, it is not necessary to take a definitive view on the precise market definition to be adopted, since the proposed operation does not create or strengthen a dominant position irrespective of the definition followed.8.	Retail of luxury products includes a number of outlets through which luxury products are sold to the final consumer. For the purpose of this decision it is not considered necessary to check which are the precise retail distribution channels, which are used or are potentially to be used for the sale of luxury products, as the proposed operation does not create or strengthen a dominant position, irrespective of the precise definition adopted. The relevant geographic markets9.	Luxury Products: the notifying party considers that factors such as the presence of large operators in different countries and the importance of infra-European trade imply that the relevant geographic market for luxury products is at least EC-wide. On the other hand, it could be argued that, given that most distribution networks are organised on a national level, the geographic market is of national dimension. It is however not necessary to take a definitive view on this issue, since the proposed operation does not create or strengthen a dominant position irrespective of the precise definition adopted.10.	Distribution of Luxury Products: in retailing the catchment area for a distribution outlet is often delimited by a boundary within which the distribution outlet can be reached by car in no more than about twenty minutes [2]. From the consumers' viewpoint, depending on the geographic area under consideration, a twenty-minute car journey might offer a choice of one, two, or more outlets, which offer luxury products. a "basket of goods", depending on his and their location. However, there may be a certain overlap between outlet catchment areas, which will not only determine the competitive interactions between geographically proximate outlets, but will also, to some extent, have "knock-on" or "chain-reaction" effects on more distant outlets. In addition, some parameters of competition, such as range of products, service level (opening hours etc), advertising, promotion and prices may not be decided on the local level, but on a regional or national level. In any event, in the present case it is not necessary to decide whether the relevant geographic market is a local, regional or national market, since the proposed operation does not create or strengthen a dominant position irrespective of the precise definition adopted.[2]  There are a number of Commission decisions dealing with the retail sector: see for example M.1086 Promodès/S21/Gruppo GS, M.998 OBSI Denmark; M.784 Kesko/Tuco; M.558 La Rinascente/Cedis Migliarini. Assessment11.	There are virtually no markets in which the parties to the proposed operation have horizontally overlapping activities. As to luxury products, only Sanofi Beauté is active in this market; as a result, there is no increment of market shares following the proposed operation. As to distribution of luxury products, Sanofi Beauté is active in this market only through 12 boutiques for men's and women's ready-to-wear clothing which are wholly dedicated to the Yves Saint Laurent brand. As a result, the proposed operation does not produce any conceivable significant increment in market shares at this level.12.	Given that Sanofi Beauté is basically active in the upstream market of luxury products, and that Artémis is basically a retailer and distributor, inter alia of luxury products, the Commission has to assess the effects of the proposed operation as far as the vertical links are concerned. 13.	According to the notifying party, Sanofi Beauté's market share in any of the possible relevant markets is below 25%. For each of these possible markets, Sanofi Beauté faces competition from a number of important players. In addition, Artémis's market share appears to be well below 25%, also having regard to the region where it is more present, that is "la région parisienne". Artémis faces competition from a number of important competitors, like the Galéries Lafayette, Saresco, Sephora, Le Bon Marché and Marie-Jeanne Godard (these last three chains belonging to the LVMH group).14.	It is therefore concluded that the proposed operation will not result either in the possibility for the new entity to foreclose the market, upstream or downstream, or in the possibility to discriminate against rival upstream and downstream suppliers.  Ancillary restraints15.	Sanofi and Sanofi Beauté have agreed that, in the pre-closing period, the activities of Sanofi Beauté will be limited to the ordinary course of business. To the extent that this clause relates to the period prior to the acquisition of control, this clause cannot be considered as necessary and directly related to the implementation of the concentration.16.	In Article 6.8 (a) of the Contrat d'Acquisition, the parties have agreed that Sanofi will maintain, for a period of six months renewable once, some of the services it currently provides to Sanofi Beauté at arm's length basis. These services include office management services, research activities as well as the supply of two specific active ingredients. To the extent that these provisions constitute restrictions of competition, they can be considered as directly related and necessary to the implementation of the operation, as they are intended to minimize the disruption of traditional lines of internal procurement and supply.VI. CONCLUSION17.	For the above reasons, the Commission has decided not to oppose the notified operation and to declare it compatible with the common market and with the functioning of the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of Council Regulation (EEC) No. 4064/89, as amended by Regulation 1310/97, and Article 57 of the EEA Agreement.    For the Commission,