CELEX: 31995M0660
Language: en
Date: 1995-12-07 00:00:00
Title: COMMISSION DECISION of 07/12/1995 declaring a concentration to be compatible with the common market (Case No IV/M.660 - RTZ / CRA) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31995M0660

COMMISSION DECISION of 07/12/1995 declaring a concentration to be compatible with the common market (Case No IV/M.660 - RTZ / CRA) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 022 , 26/01/1996 P. 0010

 COMMISSION  DECISION of 07/12/1995 declaring a concentration to be compatible with the common market (Case No IV/M.660  - RTZ  / CRA) according to Council Regulation (EEC) No 4064/89  (Only the English text is authentic).  The  paper version of the decision is available through  the sales offices of the Office of Official Publications of  the European Communities PUBLIC VERSION MERGER PROCEDURE ARTICLE 6(1)(b) DECISION To the notifying parties Dear Sirs, Subject :<ind> Case No IV/M.660  RTZ/CRA <ind>  <ind> Notification of 6.11.95  pursuant to Article  4 of Council Regulation No 4064/89 1.<ind>  The  above  mentioned  notification  concerns   the binding agreements between RTZ Corporation PLC (RTZ) and CRA Limited  (CRA),  to  combine their business  in  an  unified structure. 2.<ind>   After   examination  of  the   notification,   the Commission  has concluded that the notified operation  falls within  the  scope of application of Council  Regulation  No 4064/89  and  does  not  raise  serious  doubts  as  to  its compatibility   with  the  common  market   and   with   the functioning of the EEA Agreement. I.<ind> THE PARTIES 3.<ind>  RTZ  is an international mining and metal  producer based  in  the  United Kingdom and operating worldwide.  Its principal  mining  interests are in copper,  gold,  borates, titanium,  steaming  coal, talc, zircon and  uranium.  These interests  are  primarily located in  North  America,  South America, Southern Africa and Europe. 4.<ind>  CRA  is  a  mining  and metals  producer  based  in Australia. Its principal mining and processing interests are in   iron   ore,  coal,  bauxite  (including   alumina   and aluminium),  diamonds, gold and salt.  In  addition  to  its major  operations in Australia, the group has  interests  in mines,  smelters  and  fabrication  plants  principally   in Indonesia, New Zealand and Italy. II.<ind> THE OPERATION 5.<ind>  The  Implementation Agreement between RTZ  and  CRA dated 3 November 1995 sets out the terms and conditions  for the implementation of the operation in a dual listed company structure  (DLC). DLCs are corporate entities  whose  shares are  traded  not as a single group but through two  separate publicly quoted companies. The structure retains RTZ and CRA as  separate publicly quoted legal entities, retaining their corporate  identities. The structure  does not  involve  any change in the legal or beneficial ownership of any assets of RTZ  or  CRA. Rather, the DLC operation is to be effected by the  entering into of contractual arrangements  designed  to ensure  that  so far as possible, RTZ and CRA operate  as  a single  economic enterprise. The relative values of the  two companies  are  such  that the combined  public  shareholder ownership will be approximately in the proportion  of  76.5% RTZ shareholders and 23.5% CRA shareholders. 6.<ind>  The  notified concentration is  exempted  from  the requirement  of prior authorization by the Commission  under Article 66 ECSC according to Article 4 of decision 2567 ECSC of   22   June  1967  as  amended  by  Commission   Decision 3654/91/ECSC of 13 December 1991. II.<ind> CONCENTRATION 7.<ind>  Until 1978, RTZ controlled CRA. In accordance  with the  terms of an agreement of naturalisation of CRA with the Australian  government,  RTZ's  shareholding  in   CRA   was gradually reduced from over 70% to its current level of  49% .  As  result  of  the  agreement RTZ only  has  a  minority presence on the CRA's board and no veto rights. It has  only insignificant  vote rights at shareholders  meetings:  on  a show  of hands, RTZ's vote counts as one vote.Attendance  at such meetings during the last five years has been an average of  458 shareholders, and no poll has been demanded for  the past  five years. Thus, prior to the operation, RTZ was  not able  to  control  CRA.  In 1992, the Australian  government announced  a  relaxation  in  its  policy  towards   foreign investments  so that the 1978 agreement will be  discharged. This  enables RTZ and CRA to combine their business  without detriment to any Australian operations. 8.<ind>  The  proposed  structure of ownership  and  control after completion of the concentration will be based on: <tab>  <tab> (1)<tab> common boards of directors and unified management structure; <tab>  <tab> (2)<ind> identity of economic interest  in  the unified structure for all shareholders, through equalisation of  dividends and capital distribution, as a result of which all shareholders will be effectively in the same position as if  they  held shares in a single group which owned all  the assets of both companies; <ind>  <ind> (3)<ind> a joint electoral procedure for taking key  decisions, the public shareholders of both RTZ and  CRA effectively having equivalent voting rights per share <ind>  The  mechanism  through  which  the  joint  electoral procedure  will be achieved will involve the issue  by  each company  of a special share, to be held by a special purpose company.  Each special share will hold voting rights  to  be exercised  in accordance with the votes cast by shareholders of  the other company. As a result, the resolutions of  both companies will be the same and the shareholders will act  as a  single  group.  Provisions will also  be  made  with  the intention  of  ensuring  that any  takeover  offer  for  one company will require a comparable offer for the other. 9.<ind>  RTZ and CRA will constitute a single group for  the purposes of presenting merged accounts. Crossguarantees will be  given by each company. There will be one head office, in London. 10.<ind>  Thus,  the operation constitutes  a  concentration according to Article 3(1)(a) of the Merger Regulation.  III.<ind>  COMMUNITY DIMENSION  11.<ind> The combined aggregated worldwide turnover  of  RTZ and  CRA,  exceeded 5,000 million ECU in the last  financial year.  The turnover of RTZ amounted to 2,949.1 million   ECU in  1994. The turnover of CRA amounted 3,683 million ECU for the  same  period.  Both  RTZ  and  CRA  have  communitywide turnover  in  excess of 250 million ECU but do  not  achieve more   than   twothirds  of  their  aggregate  communitywide turnover  in  one and the same Member State.  The  operation therefore has a Community dimension. IV.<ind> COMPATIBILITY WITH THE COMMON MARKET Relevant product market 12.<ind>  The parties activities comprise mining  and  metal producing activities in the following fields: copper,  gold, iron  ore,  bauxite, alumina and aluminium, diamonds,  salt, borates,  titanium,  coal, talc,  zircon  and  uranium.  The Commission,   in   a  previous  case  (Case   No.   IV/M.470 Gencor/Shell),  has    defined separate  markets  for  these activities. Relevant geographic market  13.<ind>   Metals  and  minerals  are  actively  traded   as commodities    on   global   basis   (Case   No.    IV/M.470 Gencor/Shell). Prices are tied to the prices quoted  on  the London  Metal Exchange. The relevant geographic  market  is, therefore, worldwide. Assessment 14.<ind> Overlap of operations outside the EU exists in  the following  business  areas: gold (2.1% Worldwide  production share),  iron ore (5.4% of world production), steaming  coal (1.7% of hard coal world production) and aluminium (2.5%  of world  production).  RTZ is the second largest  producer  of mined  copper (6.5% of worldwide mine output) in the  world, next  to Codelco of Chile (12%) and followed by Phelps Dodge (6.1%),  BHP  (5.6%)  and Asarco (5.1%).  However  CRA  only produces  small  quantities  of copper  concentrate  (16.000 tonnes). Neither RTZ nor CRA is involved in trading minerals or metals on behalf of third parties.  15.<ind> Overlap of operations in the EU only exits  on  the following   business  areas:  Steaming  coal   and   primary aluminium.  The parties'  shares of total sales of  steaming coal  to  customers in the EU in 1993 were  1.29%  on  total consumption  and  2.88% on total imports to  EEA  for  1994. Based  on  European  Aluminium  Association  statistics  and Eurostat  data for 1994, the parties' shares of total  sales to  customers were 1.76% of EU consumption and 3.68%  of  EU imports. 16.<ind>  The  parties' operations, interests and  expertise are  essentially complementary. RTZ's operations are focused on  upstream  mining  in the western hemisphere,  mainly  in North and South America, Europe and Southern Africa; and CRA operations  are  focused on upstream mining in  the  eastern hemisphere, mainly in Australia, New Zealand and  Indonesia. The  parties' principal mining activities and expertise  are also  complementary.  The new entity  will  compete  in  the mining  and  metal producing sector with other international mining  groups  with substantial resources  such  as  Alcan, Alcoa,  American  Barrick, Anglo American, Billiton,  Broken Hill  Propriety,  Cominco,  CVRD,  De  Beers,  Falconbridge, FreeportMcMoran, Minorco, etc.  17.<ind>   In  view of this, the operation  does  not  raise serious  doubts  about  its compatibility  with  the  common market. V<tab> CONCLUSION 18.<ind>  It  follows  from  the  above  that  the  proposed concentration  would  not create or  strengthen  a  dominant position   as  a  result  of  which  competition  would   be significantly  impeded  in  the  common  market  or   in   a substantial part of it. <ind> 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  No 4064/89. For the Commission