CELEX: 32020M9810
Language: en
Date: 2020-09-30 00:00:00
Title: Commission Decision of 30/09/2020 declaring a concentration to be compatible with the common market (Case No COMP/M.9810 - NATIXIS INVESTMENT MANAGERS / LA BANQUE POSTALE / JV) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                Brussels, 30.9.2020
                                                                C(2020) 6817 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                                                                 information omitted has been replaced by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 parties
Subject:            Case M.9810 – Natixis Investment Managers/La Banque Postale/JV
                    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 26 August 2020, the European Commission received notification of a proposed
          concentration pursuant to Article 4 of the Merger Regulation and following a referral
                                                              3
          pursuant to Article 4(5) thereof by which Natixis Investment Managers (“NIM”,
          France) and La Banque Postale (“LBP”, France) acquire within the meaning of
          Articles 3(1)(b) and 3(4) of the Merger Regulation joint control of a newly created
          joint venture (the “JV”) that will consist in the combination of a large part of the
          asset management activities of (i) Ostrum Asset Management (“Ostrum AM”,
          France) and (ii) La Banque Postale Assets Management (“LBPAM”, France), (the
          “Transaction”). NIM and LBP, along with the group of companies to which they
          respectively belong, are designated hereinafter as “the Notifying Parties” and,
          together with the JV as “the Parties”.
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 289, 01.09.2020, p. 5.
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)     NIM is a wholly owned subsidiary of the corporate and investment bank Natixis,
        active in asset management and fund administration. NIM owns Ostrum AM, an
        asset management company, which primarily offers its services to institutional and
        corporate clients. NIM and Natixis are ultimately controlled by Banque Populaire
        Caisse d’Epargne (“BPCE”, France). BPCE is primarily active in three main lines of
        business, namely (i) retail banking and financial services, (ii) investment banking
        and (iii) asset management and insurance.
(3)     LBP is a credit institution active in the banking sector, through the offering of (i)
        retail banking, (ii) commercial banking and (iii) asset management. LPB controls
        LBPAM, an asset management company primarily active in France. LBP is also
        active in the insurance sector (life and non-life insurance), notably through its
        subsidiary CNP Assurances (“CNP”, France). LBP is a wholly-owned subsidiary of
        La Poste, which is controlled by the Caisse des Dépôts et Consignations (“CDC”,
        France), a French public financial institution.
(4)     The JV will consist in the combination of a large part of the asset management
        activities of (i) Ostrum AM and (ii) LBPAM. It will be active in asset management
        and fund administration, primarily in France.
2.      THE OPERATION
(5)     On 26 July 2019, the Notifying Parties entered into an agreement providing for the
        creation of a JV, combining a large part of the asset management activities of
        (i) Ostrum AM and (ii) LBPAM. The Transaction will be carried out in several steps,
        through (i) a carve-out of LBPAM’s activities not to be transferred to the JV, (ii) a
        carve-out, within Ostrum AM of the activities excluded from the perimeter of the JV,
        (iii) the absorption, by Ostrum AM, of LBPAM, together constituting the JV, and
        (iv) the acquisition by LBP of 55% of the shares in the newly created JV.
(6)     Pursuant to the Shareholders’ Agreement signed on 28 June 2020, NIM will hold the
        majority of shares and voting rights of the JV, with a 55% share, while LBP will
                                               4
        own the remaining 45% share. Nevertheless, the initial business plan for 2021-2025
        will be commonly agreed between LBP and NIM, and LPB’s approval is de facto
        required for the adoption of all subsequent business plans, and notably the next
                                             5
        business plan for 2026-2030. Furthermore, LBP will also have specific veto rights
        over a number of strategic commercial decisions of the JV, namely (i) the annual
        budget, in case it deviates by at least 22.5% from the budget provided for in the
        business plan, and (ii) strategic IT decisions, being noted that the IT system
                                                                  6
        constitutes a key feature of the JV’s activities. Lastly, LBP will appoint the JV’s
        deputy managing director.
4   In addition, NIM will appoint the majority of the JV’s board members (namely six) out of eleven, while
    the Board’s decisions will be adopted by simple majority as a basic principle.
5   Under the Shareholders’ Agreement, in case of a deadlock, the Board could adopt the business plan with a
    simple majority. […] However, in practice, this casting vote appears to be of limited relevance and
    effectiveness, in particular because […]
6   Pursuant to the Shareholders’ Agreement, strategic IT decisions include […].
                                                         2
 ---pagebreak--- (7)     The JV will therefore be jointly controlled by NIM and LBP.
(8)     Furthermore, each of Ostrum AM and LBPAM will transfer to the JV their existing
        asset management activities, including management strategies regarding (i) direct
        rate insurance, (ii) rate and currency, (iii) credit (excluding convertibles), (iv) multi-
        strategy, (v) monetary and (vi) share insurance, including for each of these
        management strategies the outstanding amounts under dedicated mandates and funds
        as well as those under open funds. The functions of fund administration (middle
        office and back office) and the employees affected to the activities attributed to the
        JV will also be transferred.7 The JV will also have a direct relationship with some of
        its clients and when providing services to its parents, the JV will charge such
        services at market price.8 In addition, the JV will operate on a lasting basis, as the
        terms of the agreement establishing its creation provide for an initial duration of
        operation until 31 December 2030, renewable for three-year periods. The JV will
        therefore be fully functional.9
(9)     In light of the elements set out above, the Commission considers that the Transaction
        involves the acquisition of joint control of a newly created full-function JV by NIM
        and LBP, within the meaning of Articles 3(1)(b) and 3(4) of the EU Merger
        Regulation.
3.      EU DIMENSION
(10)    The Transaction does not meet the thresholds laid down in Article 1(2) and Article
        1(3) of the Merger Regulation. In accordance with Article 4(5) of the Merger
        Regulation, the Notifying Parties requested a referral to the Commission on the
        grounds that the case would be reviewable under the national merger control laws of
        21 Member States, namely Austria, Belgium, Bulgaria, Croatia, Cyprus, Czechia,
        Finland, France, Germany, Hungary, Ireland, Italy, Lithuania, Netherlands, Poland,
        Portugal, Romania, Slovakia, Slovenia, Spain and Sweden. No Member State
        expressed disagreement with this request and the case was referred to the
        Commission on 12 August 2020.
4.      DEFINITION OF THE RELEVANT MARKETS
4.1.    Introduction
(11)    The JV will be active in asset management and fund administration, while (i) NIM
        will retain some activities in asset management and fund administration, (ii) LBP
        will retain some activities in asset management, and (iii) both are active at group
        level (i.e. BPCE for NIM and CDC for LBP) in a wide range of activities, some of
        which are vertically linked with asset management and fund administration.
7   See paragraph 94 of the Consolidated Jurisdictional Notice under Council Regulation (EC) No 139/2004
    on the control of concentrations between undertakings (“CJN”); OJ C95, 16.04.2008, p.5.
8   See paragraph 98 of the CJN.
9   See paragraph 103 of the CJN.
                                                         3
 ---pagebreak--- 4.2.    Market definitions
4.2.1. Product market definitions
4.2.1.1. Asset management
(12)    Asset management encompasses the provision and potential implementation of
        investment advice.
        Notifying Parties’ view
(13)    The Notifying Parties generally agree with the Commission precedents defining a
        market for asset management, but submit with respect to a potential segmentation by
        type of customer, i.e. between retail customers (e.g. collective investment schemes)
        and institutional clients, that large corporations could also be akin to institutional
        clients, as they both tend to source asset management services directly.
(14)    In addition, the Notifying Parties argue that it is not necessary to further segment the
        market according to the type of product, i.e. between the creation and management
        of mutual funds for retail clients and tailor-made funds for institutional customers,
        and portfolio management for private investors, pension funds and institutions.
        According to the Notifying Parties, on the supply-side the methodology, the know-
        how and the IT tools required to carry out such activities are identical, and on the
        demand-side, despite some costs differences, there is a certain degree of
        substitutability between the different types of products so that customers do not
        always specify the type of product sought in tenders.
        Commission’s assessment
(15)    In its decisional practice, the Commission considered a relevant product market for
        asset management overall, including the creation and management of mutual funds
        which are then marketed on an “off-the-shelf” basis (including to retail customers),
        the provision of portfolio management services to institutional investors (pension
        funds, institutions and international organisations), and the provision of custody
        services related to asset management.10
(16)    The Commission also envisaged the possibility of there being narrower relevant
        product markets for asset management which would include the creation and
        management of mutual funds for retail clients and tailor-made funds for corporate
        and institutional customers, and portfolio management for private investors, pension
        funds and institutions.11 The Commission further considered the possible existence
        of separate relevant product markets for each of the types of products mentioned
        above.12
10  M.8837 – Blackstone/Thomson Reuters F&R Business, M.8359 – Amundi/Credit Agricole/Pioneer
    investments, M.8257 – NN Group/Delta Lloyd, M.6812 – SFPI/Dexia.
11 Ibid.
12 Ibid, M.3894 – Unicredito/HVB.
                                                     4
 ---pagebreak--- (17)    Within the market of asset management for retail customers, the Commission
        considered several sub-segmentations:13 (i) between open and closed retail funds;14
        (ii) between mutual funds sold within a life insurance envelope and mutual funds
        sold on a standalone basis; (iii) between money market funds and other short term
        saving agreements, and within money market funds between (a) those sold to
        corporate investors and (b) those sold to retail investors and (iv) a possible
        distinction of the so-called Fonds Communs de Placement d'Entreprise (“FCPE”)
        from open retail mutual funds.15
(18)    Within the segment of asset management for institutional clients, the Commission
        considered the possibility of further sub-segmenting the institutional asset
        management based upon a distinction between active asset management and passive
        asset management.16
(19)    In the present case, the results of the market investigation did not highlight any
        elements that would contradict the Commission’s earlier findings.
(20)    In any event, the precise definition of the product market for asset management can
        be left open, as the Transaction does not raise serious doubts as to its compatibility
        with the internal market concerning the asset management market, or any other
        plausible segment previously envisaged by the Commission.
4.2.1.2. Fund Administration
(21)    Fund administration services include various services such as acting as trustee,
        depositary or depot bank of mutual funds, accounting services etc.
        Notifying Parties’ view
(22)    The Notifying Parties are in line with Commission’s precedents defining a market
        for fund administration, and specify that fund administration services include back
        office activities, such as accounting and portfolio performance analysis, and middle
        office activities, e.g. the management of securities transactions.
        Commission’s assessment
(23)    In previous cases, the Commission considered fund administration to constitute a
        distinct product market, notably because all activities are subject to the same legal
        and business environment.17
(24)    The results of the market investigation conducted in this case did not provide any
        elements which would justify departing from the Commission’s previous findings.
13  M.5728 – Crédit Agricole/Société Générale Asset Management.
14  M.8359 – Amundi/Credit Agricole/Pioneer investments and M.5728 – Crédit Agricole/Société Générale
    Asset Management.
15 M.5728 – Crédit Agricole/Société Générale Asset Management.
16 M.8359 – Amundi/Credit Agricole/Pioneer investments, M.5728 – Crédit Agricole/Société Générale Asset
    Management, and M.5580 – BlackRock/Barclays GIH.
17 M.8359 – Amundi/Credit Agricole/Pioneer investments, M.5728 – Crédit Agricole/Société Générale Asset
    Management and M.3781 – Crédit Agricole/Caisse d’Epargne/JV.
                                                      5
 ---pagebreak--- 4.2.1.3. Provision of insurance
         Notifying Parties’ view
(25)     The Notifying Parties do not challenge the Commission’s decisional practice relating
         to the provision of insurance products, and simply underline that both non-life and
         life insurers may procure asset management services for the purpose of their
         activities.
         Commission’s assessment
(26)     In previous decisions relating to the insurance sector, the Commission has
         distinguished between a product market for insurance provision and a product
         market for insurance distribution.18
(27)     Within the upstream market for insurance provision, the Commission has
         distinguished the market for the provision of insurance into three broad product
         categories: life insurance, non-life insurance and reinsurance.19
(28)     As regards life insurance, the Commission has further segmented the market
         according to the purpose served by the product, distinguishing between: (i) pure risk
         protection products; (ii) savings and investment products; and (iii) pension
         products.20 In addition, the Commission has considered a possible segmentation of
         these product markets between group and individual products.21
(29)     As regards non-life insurance, the Commission has distinguished as a starting point
         between the following segments: (i) accident and sickness, (ii) motor vehicle,22 (iii)
         property, (iv) liability, (v) marine, aviation and transport, (vi) credit and suretyship,
         (vii) travel, (viii) cargo, (ix) specialty and (x) aerospace.23
(30)     With respect specifically to the potential segment for credit and suretyship, in its past
         decisional practice, the Commission has found that this segment could be further
         segmented between (i) delcredere insurance, (ii) capital goods insurance, (iii)
         consumer credit insurance, (iv) fidelity insurance and (v) guarantee insurance,
         although the precise market definition has been left open.24
(31)     In the case at hand, the market investigation did not provide any indications that
         would contradict the Commission’s previous findings.
18  M.8257 – NN Group/Delta Lloyd; M.6957 – If P&C/TopDanmark; M.6053 – CVC / Apollo / Brit
    Insurance.
19  M.9056 – Generali CEE/AS, M.8617 – Allianz / LV General Insurance Businesses.
20  M.4701 – Generali/PPF Insurance business and M.6521 – Talanx International/Meiji Yasuda Life
    Insurance/Warta.
21  M.5075 – Vienna Insurance Group/EBV and M.4701 – Generali/PPF Insurance business.
22  The Commission considered further segmenting the motor vehicle insurance market between (i) third
    party liability (“TPL”) motor insurance, and (ii) non-TPL (or “Casco”) insurance. See M.6521 – Talanx
    International/Meiji Yasuda Life Insurance/Warta, M.4701 – Generali/PPF Insurance business and
    M.4284 – AXA/Winterthur. The Commission also considered segmenting the motor vehicle insurance
    market between (i) large vehicle (e.g. trucks and buses) insurance, and (ii) automobile and/or small
    commercial vehicle insurance. See M.6521 – Talanx International/Meiji Yasuda Life Insurance/Warta.
23  See M.9531 – Assicurazioni Generali/Seguradoras unidas/Advancecare and M.9056 – Generali CEE/AS.
24  M.3786 – BP/Euler Hermes/Cosec; M.2602 – Gerling/NCM; M.4701 – Generali/PPF Insurance
    Business.
                                                          6
 ---pagebreak--- (32)    In any event, for the purpose of this decision the exact scope of the product market
        can be left open, as the Transaction does not raise serious doubts as to its
        compatibility with the internal market, regardless of the precise product market
        definition.
4.2.2. Geographic market definitions
4.2.2.1. Asset management
        Notifying Parties’ view
(33)    The Notifying Parties submit that the geographic market for asset management is at
        least EEA-wide, if not worldwide.
        Commission’s assessment
(34)    The relevant geographic market for asset management, or any narrower segment, has
        previously been considered to be either national or EEA wide.25 Furthermore, the
        Commission has deemed it likely that some parts of the asset management market, in
        particular asset management for institutional customers, are wider than national,26
        which the results of the market investigation in the present case tended to confirm,27
        as several customers underlined that French players compete with various
        international players and stressed the international scale of the provision of such
        services.
(35)    In any event, the precise geographic market definition regarding asset management
        can be left open, as the Transaction does not raise any doubts as to its compatibility
        with the internal market, irrespective of the exact geographic market definition.
4.2.2.2. Fund administration
        Notifying Parties’ view
(36)    The Notifying Parties put forward that the market for fund administration should be
        defined as worldwide.
        Commission’s assessment
(37)    In previous decisions, the Commission considered and left open whether the
        geographic market should be considered national or wider in scope (e.g.
        worldwide).28
(38)    In any case, the precise geographic scope of the market for fund administration can
        be left open for the purpose of this case, as the Transaction does not raise
        competition concerns under any plausible geographic definition of the market for
        fund administration services.
25  M.8837 – Blackstone/Thomson Reuters F&R Business; M.8257 – NN Group/Delta Lloyd; M.6812 –
    SFPI/Dexia; M.4844 – Fortis/ABN Amro Assets.
26 M.8359 – Amundi/Credit Agricole/Pioneer investments, M.8257 – NN Group/Delta Lloyd, M.5728 –
    Crédit Agricole/Société Générale Asset Management.
27 See replies to question 5 – Questionnaire to asset management customers.
28 M.8359 – Amundi/Credit Agricole/Pioneer investments, M.5728 – Crédit Agricole/Société Générale Asset
    Management and M.3781 – Crédit Agricole/Caisse d’Epargne/JV.
                                                         7
 ---pagebreak--- 4.2.2.3. Provision of insurance
         Notifying Parties’ view
(39)     The Notifying Parties do not challenge the Commission’s precedents and submit that
         the relevant geographic markets for the assessment of life and non-life insurance
         should both be defined as national.
         Commission’s assessment
(40)     The Commission previously considered the geographic market for the provision of
         life insurance and its respective segments to be national in scope.29 Regarding the
         non-life insurance market and its segments, the Commission considered that they are
         generally national in scope. Within non-life insurance, the Commission has however
         found that the insurance of large commercial risks, or so-called speciality insurance,
         is most likely to be at least EEA-wide in scope.30 The geographic scope of the
         reinsurance market has in the past been considered as global due to the need to pool
         risks on a worldwide basis.31
(41)     For the purpose of the present decision, the exact geographic market definition for
         the provision of life and non-life insurance can be left open as the Transaction does
         not raise serious doubts as to its compatibility with the internal market under any
         plausible geographic market definition of all plausible markets identified in
         paragraphs (26) to (30).
5.       COMPETITIVE ASSESSMENT
5.1.     Overview of the affected markets
(42)     In view of the product and geographic market definitions set out above, the
                                                                                             32
         Transaction results in a limited number of affected markets, namely one
         horizontally affected market, on the potential segment of active asset management
         for institutional customers in France,33 and two vertically affected links with respect
         to (i) asset management, upstream, and the provision of insurance, downstream, and
29  M.4701 – Generali/PPF Insurance business and M.6521 – Talanx International/Meiji Yasuda Life
    Insurance/Warta.
30  M.9531 – Assicurazioni Generali/Seguradoras unidas/Advancecare and M.9056 – Generali CEE/AS.
31  M.6053 – CVC/Apollo/Brit Insurance; M.5925 – MetLife/Alico/Delam; M.5083 – Groupama/OTP
    Garancia and M.4059 – Swiss Re/GE Insurance Solutions.
32  Further to the affected markets identified above, the JV’s activities also overlap horizontally with those of
    the Notifying Parties on some markets and/or segments relating to (i) asset management, and (ii) fund
    administration, and result as well in the creation of vertical relationship between the provision of custody
    services (upstream) and asset management (downstream). Nevertheless, considering that the Transaction
    does not give rise to any horizontally or vertically affected markets on any of the plausible markets and/or
    segments previously identified by the Commission, these markets and/or segments will not be further
    discussed in the present decision.
33  The Notifying Parties were not able to provide any data separating large corporate clients from
    institutional clients. Therefore, the market shares as provided by the Notifying Parties for the segment of
    active asset management for institutional customers in France also includes large corporate customers.
    Nevertheless, the Notifying Parties put forward that (i) large corporate clients account for only 5 to 10%
    of their overall asset management portfolio, and (ii) that this proportion is equivalent to those of their
    competitors, so that the Parties’ share would not significantly vary if large corporate clients were to be
    included with retail clients.
                                                             8
 ---pagebreak---          (ii) fund administration, upstream, and the provision of insurance, downstream.
5.2.     Assessment of horizontal effects: Asset management
5.2.1. Introduction
(43)     Article 2 of the Merger Regulation requires the Commission to examine whether
         notified concentrations are compatible with the internal market, by assessing whether
         they would significantly impede effective competition in the internal market or in a
         substantial part of it.
(44)     The Commission Guidelines on the assessment of horizontal mergers under the
         Merger Regulation (the “Horizontal Merger Guidelines”) distinguish between two
         main ways in which mergers between actual or potential competitors on the same
         relevant market may significantly impede effective competition, namely non-
         coordinated effects and coordinated effects.34
5.2.2. Asset management
(45)     In the present case, the Transaction gives rise to an affected market at national level,
         on a plausible segment of the market for asset management, namely the segment of
         active asset management for institutional customers in France.
(46)     On this segment, the Parties’ combined market share would amount to
         approximately [20-30]%, with respective market shares of [10-20]% for the JV, [0-
         5]% for CDC and [0-5]% for BPCE. This sub-segment, which is one of the
         narrowest plausible markets, is thus only marginally affected due to the Parties’
         relatively modest market shares, just above 20%.35
         Notifying Parties’ view
(47)     The Notifying Parties submit that the JV will only be active on the market for
         institutional customers which, in line with the Commission’s prior decisional
         practice,36 may be wider than national considering the ability and propensity of
         institutional customers to procure asset management services beyond their national
         borders. In this respect, the Notifying Parties underline that if the relevant
         geographic market were to be considered as wider than national, e.g. EEA-wide, the
         Transaction would not give rise to any horizontally affected market.
(48)     The Notifying Parties further explain that it is not relevant to combine the JV’s
         market share with those of its parents for the purpose of the competitive assessment,
         since the JV will pursue its own commercial strategy, and each of the Parties will
         operate on the market independently from each other.
34  OJ C 31, 05.02.2004, p. 5.
35  For completeness, the Commission notes that the methodology used by the Notifying Parties to calculate
    their market shares is rather conservative since they relied on their overall sales, regardless of whether
    such sales were achieved with French customers, while taking as a benchmark for the total market size the
    activities of French asset managers for French customers only. The Notifying Parties argue on this basis
    that these figures fail to take into account the competitive pressure of foreign competitors and are
    necessarily over-estimated.
36 M.5728 – Crédit Agricole/Société Générale Asset Management.
                                                         9
 ---pagebreak--- (49)    The Notifying Parties also argue that customers frequently use tenders, in which an
        important average number of asset management firms participate, in order to set up
        or renew their contracts, which contributes to ensure that the offers on the markets
        remain competitive and prices do not rise.
        Commission’s assessment
(50)    The Commission notes the relatively fragmented nature of the overall segment of
        asset management for institutional customers in France, which has an HHI below
        2 000,37,38 and over 600 players active in France. As a result, the JV will continue to
        face the competitive constraint of a significant number of competitors post-
        Transaction, including large players such as Amundi and Axa Investments
        Managers.39
(51)    This was confirmed by the results of the market investigation. All customers that
        contributed indicated that they considered that a sufficient number of players would
        remain on the market post-Transaction, among which Amundi, Axa Investments
        Managers, BNPP Asset Management, Covéa Finance and Groupama Asset
        Management.40
(52)    The market investigation also highlighted that, although the Notifying Parties are
        both active in asset management, they are not particularly close competitors. In
        particular, several respondents explained that the range of services offered by NIM is
        more diversified than LBP’s.41
(53)    Furthermore, the results of the market investigation tend to confirm the Notifying
        Parties’ assertion that institutional clients have the ability to procure asset
        management services beyond national borders. Several customers pointed out that a
        number of international players directly compete with French players for the
        provision of asset management services,42 one customer even referring to asset
        management as a “very international market”.43 A competitor indicated likewise that
        dozens of French and international companies, such as Blackrock, JP Morgan AM,
        Invesco, Aviva, actively compete with the Parties on this segment.44
37 Under paragraph 20 of the Horizontal Merger Guidelines, “the Commission is also unlikely to identify
   horizontal competition concerns in a merger with a post-merger HHI between 1000 and 2000”.
38 This figure relates to the overall segment of asset management for institutional customers in France,
   without distinguishing between active and passive asset management. The Notifying Parties were not able
   to provide competitors’ market share data allowing to compute the HHI level on the segment of active
   asset management for institutional customers in France. Nevertheless, in view of the fact that this sub-
   segment represents 95% of the overall segment of asset management for institutional customers in France,
   for which the Notifying Parties provided competitors’ market share data, the Commission was able to
   compute an upper bound for the HHI level of this segment.
39 As mentioned above in footnote 38, the Notifying Parties were only able to provide market share data for
   their competitors on the segment combining both active and passive asset management for institutional
   customers in France. Nevertheless, on this overall segment of which 95% consist of active asset
   management, Amundi and Axa Investments Managers respectively hold a market share of 19% and 10%.
40 See replies to question 5 – Questionnaire to customers – Asset management.
41 See replies to question 3 – Questionnaire to customers – Asset management. See replies to question 5 –
   Questionnaire to competitors – Asset management and fund administration.
42 See replies to question 5 – Questionnaire to customers – Asset management.
43 See replies to question 5 – Questionnaire to customers – Asset management.
44 See replies to question 4 – Questionnaire to competitors – Asset management and fund administration.
                                                         10
 ---pagebreak--- (54)    Given the Parties’ position on the market, the Transaction does not appear to result
        in the elimination of a significant player on the market, especially in view of the
        highly competitive dynamics of the market and the large number of remaining
        competitors, including international players.
(55)    Lastly, concerning the potential impact of the Transaction, the Commission notes
        that customers that contributed to the market investigation unanimously indicated
        that they did not foresee any significant impact on the market and its different sub-
        segments, with several of them mentioning a highly competitive market.45
        Competitors on the other hand provided a more mixed set of replies, with certain
        respondents indicating that the Transaction could have a significant impact, and
        more largely will reinforce the Parties’ position, particularly on the segment of asset
        management for institutional customers.46 The Commission nevertheless notes that
        respondents providing a negative view substantiated their reply to a very limited
        extent, and that most of their reservations lie in the fact that they anticipate an
        improvement of the competitiveness of the Parties –in comparison to theirs–
        accompanied by an enhanced price competition on the market as a result of the
        Transaction.
(56)    In view of the elements set out above, the Commission considers that the
        Transaction does not raise serious doubts as to its compatibility with the internal
        market on the segment of active asset management for institutional customers in
        France, nor on any other plausible segments in relation to asset management.
5.3.    Assessment of vertical effects
5.3.1. Introduction
(57)    Pursuant to the Commission’s Guidelines on the assessment of non-horizontal
        mergers under the Merger Regulation47 (the “Non-Horizontal Merger Guidelines”), a
        merger is said to result in foreclosure where actual or potential rivals’ access to
        supplies or markets is hampered or eliminated as a result of the merger, thereby
        reducing these companies’ ability and/or incentive to compete.
(58)    Such foreclosure may discourage entry or expansion of rivals or encourage their exit,
        and is regarded as anti-competitive where the merged entity –and, possibly, some of
        its competitors as well– are able to profitably increase the price charged to
                                   48
        consumers as a result.
(59)    Two forms of vertical foreclosure can be distinguished. The first is where the merger
        is likely to raise the costs of downstream rivals by restricting their access to an
        important input (input foreclosure). The second is where the merger is likely to result
        in foreclosure of upstream rivals by restricting their access to a sufficiently large
        customer base (customer foreclosure).49
45  See replies to question 6 – Questionnaire to customers – Asset management.
46  See replies to question 5 – Questionnaire to competitors – Asset management and fund administration.
47 OJ L 24, 29.1.2004, p. 1.
48 Non-horizontal Merger Guidelines, paragraph 29.
49 Non-horizontal Merger Guidelines, paragraph 30.
                                                          11
 ---pagebreak--- 5.3.2. Asset management and the provision of insurance
(60)    The Transaction gives rise to an affected vertical relationship with respect to asset
        management (upstream), where the JV will be active (and would have a market share
        of [10-20]%),50 and a sub-segment of the insurance provision market (downstream),
        namely the provision of consumer credit insurance, where both parents of the JV are
        active. On this sub-segment of the provision of consumer credit insurance, CDC and
        BPCE have a combined market share of [40-50]%.
        Notifying Parties’ view
(61)    The Notifying Parties submit that the Transaction is not likely to create any vertical
        effects for three main reasons. First, the Notifying Parties explain that the vertical
        links existing between the JV and each of its parents, with respect to asset
        management and insurance provision, already existed pre-Transaction and are not
        affected by it. Second, the Notifying Parties put forward that all insurers procure
        asset management services, regardless of the type of risk covered, so that the overall
        market for the provision of insurance – where the Notifying Parties’ combined
        market share does not exceed 30% – should be taken into account. Third, the
        Notifying Parties argue that the Parties would not have the ability to engage into
        either input or customer foreclosure due to their relatively limited presence on both
        the upstream and downstream markets.
        Commission’s assessment
(62)    The Commission considers that the Notifying Parties will have neither the ability nor
        the incentive post-Transaction to engage in either input foreclosure or customer
        foreclosure.
(63)    With respect to input foreclosure, as mentioned above in paragraph (50), the market
        for asset management is rather fragmented with both large French competitors, and
        international competitors active in France.
(64)    The Parties’ combined market share comes to at most [20-30]% on the narrow
        segment of active asset management for institutional customers in France and does
        not exceed [10-20]% in the overall market for asset management if the market is
        considered to be national, and [0-5]% if the market is considered to be EEA-wide.
        As such, the Commission considers it rather unlikely that this position would allow
        the Parties to exert any significant market power given the presence of other strong
        upstream asset management players on the market.
(65)    Regarding customer foreclosure, the Commission notes that (i) the Transaction gives
        rise to a vertically affected market downstream only with regard to one of the many
        potential sub-segments for the provision of insurance (i.e. the Notifying Parties’
        market share in the provision of insurance and any of its other potential segments
        remains below 30%), and that (ii) all insurance segments require asset management
        services in similar proportions.51
50  On this segment, the Parties’ combined market share would amount to approximately [20-30]%, with
    respective market shares of [10-20]% for the JV, [0-5]% for CDC and [0-5]% for BPCE.
51 The exception to this is life insurance, which requires more asset management services compared to other
    plausible sub-segments of insurance provision. Nevertheless, as the combined market shares of CDC and
                                                          12
 ---pagebreak--- (66)     As such, the overall market for insurance provision constitutes a more relevant proxy
         to assess the importance of both of the JV’s parents as asset management customers.
         In this regard, the information provided by the Notifying Parties shows that on the
         overall market of insurance provision, the combined market share of CDC and
         BPCE does not exceed 30%.52
(67)     Furthermore, pre-Transaction each parent to the JV already sources a proportion of
         its needs in asset management services internally, for the purpose of their insurance
         activities.53 This internal sourcing accounts for […]% of asset management needs
         within BPCE, and for […]% within CDC and will remain unaffected by the
         merger.54 In addition and in any event, even if the Parties were to internalise their
         entire procurement of asset management services, a large number of insurance
         groups sourcing asset management services for the purpose of their activities –
         representing more than 70% of the French market for insurance provision– would
         remain.
(68)     The position of the Notifying Parties on the overall market for the provision of
         insurance, therefore make it unlikely that the Notifying Parties would have the
         ability, as customers active in the provision of insurance, to exert a significant
         market power over asset management companies and proceed to customer
         foreclosure. Additionally, any foreclosure strategy would be unlikely to have an
         impact on upstream competitors, as considering that they already source part of their
         needs internally, only a part of BPCE and CDC demand for asset management
         services could be diverted from rivals upstream to the combined entity.
(69)     For the reasons set out above, the Commission considers that the Transaction does
         not raise serious doubts as to its compatibility with the internal market as regards
         potential vertical non-coordinated effects on the market and all plausible segments
         for asset management, upstream, and the provision of insurance, downstream.
5.3.3. Fund administration and the provision of insurance
(70)     The Transaction gives rise to an affected vertical relationship with respect to the
         provision of fund administration services (upstream), where the JV will be active,
         and the segment of the provision of consumer credit insurance (downstream), where
         both parents of the JV are active. On this sub-segment of the provision of consumer
         credit insurance, CDC and BPCE together have a combined market share of [40-
         50]%.
         Notifying Parties’ view
(71)     The Notifying Parties submit that the Transaction is not likely to create any vertical
         effects for three main reasons. First, the Notifying Parties underline that their
         combined market share on the market for fund administration is limited and that on
         the market for the provision of insurance, it is only when combined that their share
    BPCE on the segment of life insurance and any plausible sub-segments do not exceed 15%, any customer
    foreclosure scenario appears very unlikely.
52 For completeness, the Commission notes that the Notifying Parties also confirmed that their combined
    market share on the overall market for insurance provision, excluding the life-insurance segment, would
    not exceed 30%.
53 From Ostrum AM for BPCE and from LBPAM for CDC.
54 Percentages expressed in terms of value of assets under management.
                                                        13
 ---pagebreak---         exceeds 30%, while post-Transaction each of BPCE and CDC will keep on operating
        on an autonomous and independent basis on this market. Second, the Notifying
        Parties explain that the vertical links existing between the JV and each of its parents,
        with respect to fund administration and insurance provision, already existed pre-
        Transaction and are not affected by it. Third, the Notifying Parties argue that the
        Parties would not have the ability to engage into either input or customer foreclosure
        due to their relatively limited presence on both the upstream and downstream
        markets.
        Commission’s assessment
(72)    The Commission considers that the Notifying Parties will have neither the ability nor
        the incentive post-Transaction to engage in either input foreclosure or customer
        foreclosure.
(73)    Concerning input foreclosure, considering that the Parties’ combined market share
        does not exceed 20% on any plausible market or market segment upstream, the
        Commission considers it extremely unlikely that this position would allow the
        Parties to exert any significant market power given the presence of other strong
        upstream fund administrators on the market.
(74)    Regarding customer foreclosure, similarly to what is exposed above with respect to
        the vertical link between asset management and the provision of consumer credit
        insurance, downstream, the Commission notes that (i) the Transaction gives rise to a
        vertically affected market only with regard to one (the segment for consumer credit
        insurance) of the many potential sub-segments for the provision of insurance (i.e. the
        Notifying Parties’ market share in the provision of insurance and any of its other
        potential segments remains below 30%), and that (ii) all insurance segments of the
        provision of insurance require fund services in similar proportions.55
(75)    For this reason, the overall market for insurance provision provides a more relevant
        proxy to assess the importance of the Notifying Parties as fund administration
        customers. In this respect, as the market share of the Notifying Parties in the overall
        segment of insurance provision remain below 30%,56 rival fund administrators will
        continue, post-Transaction, to have access to at least 70% of the customer base.
(76)    The position of the Notifying Parties on the overall market for the provision of
        insurance makes it unlikely that they would have the ability, as customers active in
        the provision of insurance, to exert a significant market power over fund
        administrators and proceed to customer foreclosure.
(77)    For the reasons set out above, the Commission considers that the Transaction does
        not raise serious doubts as to its compatibility with the internal market as regards
        potential vertical non-coordinated effects.
55 The exception to this is unit-linked life insurance, which require more fund administration services than
   other plausible sub-segments within insurance provision. Nevertheless, as the combined market share of
   CDC and BPCE on the possible sub-segment of unit-linked life insurance do not exceed 20%, any
   customer foreclosure scenario appears very unlikely.
56 As previously stated in footnote 52, the Commission notes that the Notifying Parties also confirmed that
   their combined market share on the overall market for insurance provision, excluding the life-insurance
   segment, would not exceed 30%.
                                                         14
 ---pagebreak--- 6.   CONCLUSION
(78) 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
                                              15