CELEX: 31995M0585
Language: en
Date: 1995-07-07 00:00:00
Title: COMMISSION DECISION of 07/07/1995 declaring a concentration to be compatible with the common market (Case No IV/M.585 - Voest Alpine Industrieanlagenbau GMBH / Davy International Ltd) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31995M0585

COMMISSION DECISION of 07/07/1995 declaring a concentration to be compatible with the common market (Case No IV/M.585 - Voest Alpine Industrieanlagenbau GMBH / Davy International Ltd) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 246 , 22/09/1995 P. 0002

  COMMISSION DECISION of 07/07/1995 declaring a concentration  to be compatible with the common market (Case No IV/M.585 -  VAI / DAVY)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.585  Voest Alpine  Industrieanlagenbau GmbH/Davy International Ltd  <tab> <ind> Notification of 6 June 1995 pursuant to Article  4 of Council Regulation No. 4064/89 (Merger Regulation)  1.<ind> On 6 June 1995 Voest Alpine Industrieanlagenbau GmbH  (VAI) and DAVY International Ltd (Davy) notified to the  Commission their proposed creation in Austria of CONROLL  Technology GmbH (CONROLL), a joint venture company which  will supply engineering and construction management services  in connection with the supply and construction of equipment  for hot connect systems for steel manufacturing plants.  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> VAI is a member of the Austrian corporate group  controlled by VA Technologie AG. (VATech). The group acts as  a systems supplier for largescale industrial plants  throughout the world, particularly in metallurgical  technology, energy and environmental technology and general  erection and technical services. VAI provides turnkey  plants, engineering and contracting services, consulting  services, research studies, knowhow transfer, personnel  training, operational assistance, spare parts and aftersales  services in respect of a wide variety of steel production  plants.  4.<ind> The ultimate parent of DAVY is Trafalgar House plc  (United Kingdom). The Trafalgar House corporate group is  engaged in engineering and construction, commercial and  residential property, passenger shipping and hotels. DAVY  provides engineering and contracting services including the  design, supply, erection and construction of different types  of steel production plant.  II.<ind> THE OPERATION  <ind> Object  5.<ind> A hot connect system is a complete system for the  casting and rolling of steel slabs. The system covers the  entire hot steel strip production process from ladle teeming  to hot strip coiling and hot coil discharge, including all  automation processes entailed therein. It therefore  constitutes the entire plant and equipment necessary for hot  strip steel production.  The technology of a hot connect  system involves two particular expertises  slab casting and  rolling mills. VAI possesses the first of these expertises  and DAVY the second. The combination of their specialities  will enable CONROLL to supply the necessary services for hot  connect systems.  <ind> Joint control  6.<ind> VAI and DAVY will each hold 50 per cent of the  issued shares in the CONROLL. The company will have an  executive committee of six directors, three nominated by VAI  and three by Davy. The nomination of the chairman will  alternate annually between the parties; he will not have a  casting vote. The executive committee will decide the broad  policy of CONROLL. Implementation of the policy and  management of the company will be under the control of the  joint managing directors, one nominated by VAI and one by  DAVY, who may by invitation attend but cannot vote at  meetings of the executive committee. The agreement  constituting the joint venture does not define broad policy;  but the omission is unimportant, since any dispute between  the managing directors can be referred to the executive  committee.  The quorum required for meetings of the  shareholders and of the executive committee ensures that one  party cannot outvote the other.  7.<ind> CONROLL will accordingly be subject to the joint  control of VAI and DAVY.  <ind> Fullfunction  8.<ind> CONROLL will have its own management,  accounting,secretarial and other staff. The parties will  contribute to the company experienced personnel, the  necessary exclusive royaltyfree intellectual property  licences and capital of [Deleted; business secret.]. During  its initial period CONROLL will receive from the parties  whatever expertise and staff it requires. Unless [Deleted;  business secret.] Conroll will remain in existence for ten  years and thereafter from year to year unless terminated by  either party. This provision for earlier determination does  not preclude the conclusion that the joint venture is  established on a lasting basis.  9.<ind> CONROLL will accordingly perform on a lasting basis  all the functions of an autonomous economic entity.  <ind> Absence of coordination  10.<ind> The parties will cease to operate in the field of  activity of CONROLL. They agree not to supply major  components to other suppliers of hot connect systems. The  parties will not be active upstream or downstream of  CONROLL. CONROLL will accordingly not be a supplier or a  customer of the parties. Although VAI and DAVY remain active  in other engineering fields (such as the erection of plants  in the chemical, petrochemical and powergenerating  industries), the technology involved in each of those  markets and the potential customers are entirely distinct  from those in the market for the supply of hot connect  systems. The only specific overlap in the activities of the  parties is in the field of iron and steel plant engineering;  the most significant aspect of this activity, hot connect  systems, will be performed by CONROLL to the exclusion of  VATech and DAVY. Their participation in CONROLL does not  appear likely to lead to the coordination of their other  activities in iron and steel plant engineering.  11.<ind> The operation accordingly does not give rise to the  coordination of competition between the parties or between  them and CONROLL.  <ind> Conclusion  12.<ind> The operation accordingly constitutes a  concentration within the meaning of article 3(1)b of the  Regulation.  III.<ind> CONCENTRATION OF COMMUNITY DIMENSION  13.<ind> The VATech and Trafalgar House groups have a  combined aggregate worldwide turnover in excess of 5000  million ECU. Each group has a Communitywide turnover in  excess of 250 million ECU, but neither of them achieves more  than twothirds of its aggregate Communitywide turnover  within one Member State.  14.<ind> The operation therefore has a Community dimension  within the meaning of Article 3(1)(b) of the Regulation.  IV.<ind> COMPATIBILITY WITH THE COMMON MARKET  <ind> a)<tab> Relevant product market  15.<ind> As described in paragraph 5, a hot connect system  comprises all the equipment necessary for hot steel strip  productions.  Although it is possible to purchase the  elements of a hot steel strip plant separately, it can be  argued from the demand side that a hot connect system  performs a unique function and that the relevant product  market is the design and installation of such systems. Since  however even on this narrowest definition no competition  problem arises the definition of the product market can be  left open.  <tab> b)<ind> Geographic reference market  16.<ind> The other companies which design and install hot  connect systems are located in Germany, Italy, the United  States of America, Japan and South Korea. They each design  and install such systems for steel producers throughout the  world. The geographic reference market is therefore global.  <tab> c)<tab> Competitive assessment  17.<ind> At present about [Deleted; business secret: more  than 40 per cent.] of the global market for the design and  installation of hot connect systems is held by  SchloemannSiemag AG (Germany). The proposed operation will  accordingly not create or enhance a dominant position even  on the narrowest definition of the product market. On the  contrary the overall effect will be to enhance competition,  since only by creating CONROLL can VAI and DAVY compete  effectively in the market.  V.<ind> ANCILLARY RESTRAINTS  18.<ind> The parties have requested that certain  restrictions be considered as ancillary to the  concentration.  <ind> <ind> The parties agree that for the duration of the  joint venture they will not design, manufacture and install  hot connect systems.  <ind> <ind> The parties will procure the grant to CONROLL  ofexclusive intellectual property rights necessary for its  activities  <ind> <ind> Each of the parties and CONROLL will not use any  knowhow which it obtains from another party to design, use  and sell plant other than hot connect systems and will not  disclose the knowhow.  <ind> <ind> The parties and CONROLL will not sublicense the  design or manufacture of hot connect systems except for the  purpose of the joint venture agreement and will not  sublicence the design and manufacture of components without  the approval of the executive committee.  <tab>   <tab> <ind> The parties agree that, for the duration of the  joint venture, they will not supply specified components to  other companies which design, manufacture or supply hot  connect systems.   19.<ind> Insofar as these provisions constitute restrictions  the first four are directly related to and necessary for the  successful implementation of the concentration. They can  therefore be treated as ancillary to the concentration. The  last provision is not necessary for the successful  implementation of the concentration and therefore cannot be  treated as ancillary to it.  VI<ind> CONCLUSION  20.<ind> For the foregoing reasons, the proposed  concentration does not raise serious doubts as to its  compatibility with the common market and with the  functioning of the EEA Agreement.  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