CELEX: 32013M6695
Language: en
Date: 2013-01-18 00:00:00
Title: Commission Decision of 18/01/2013 declaring a concentration to be compatible with the common market (Case No COMP/M.6695 - AZOTY TARNÓW / ZAK?ADY AZOTOWE PU?AWY) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

Important legal notice

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32013M6695

Commission Decision of 18/01/2013 declaring a concentration to be compatible with the common market (Case No COMP/M.6695 - AZOTY TARNÓW / ZAK?ADY AZOTOWE PU?AWY) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)  

          |EUROPEAN COMMISSION |
            Brussels , 18.1.2013
             C(2013) 321 final 
            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 Where possible the information omitted has been replaced by ranges of figures or a general description. | |Public version |
             | | |
             | |MERGER PROCEDURE ARTICLE 6(1)(b) DECISION |
              |To the notifying party |
             Dear Sir/Madam,
             Subject: Case No COMP/M.6695 – AZOTY TARNÓW/ ZAKŁADY AZOTOWE PUŁAWY Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/2004 [1]  
            1.  On 4 December 2012, the European Commission received a notification of a proposed concentration pursuant to Article 4 and following a referral pursuant to Article 4(5) of the Merger Regulation by which the undertaking Zakłady Azotowe w Tarnowie-Mościcach S.A. ("ATT", Poland) acquires, within the meaning of Article 3(1)(b) of the Merger Regulation, sole control of Zakłady Azotowe "Puławy" S.A. ("ZAP", Poland) and its subsidiaries (the “ZAP Group”), currently controlled by the Polish State, by way of purchase of shares.  [2]  ATT and ZAP are hereinafter referred to as "the Parties", while ATT is referred to as the "Notifying Party".
            1.  THE PARTIES
            2.  ATT is a Polish joint-stock company listed on the Warsaw Stock Exchange and is the ultimate holding company of a group comprising mainly Polish companies. The ATT Group is primarily active in the chemical sector. Its operations concentrate on areas concerning mineral fertilizers (compound fertilizers and nitrogen fertilizers), plastics, OXO alcohols and plasticizers and pigments. Its production sites are located in Poland. 
            3.  ZAP is also a Polish joint-stock company listed on the Warsaw Stock Exchange. ATT currently holds 10.29% of the shares of ZAP. [3]   The Polish State Treasury is the largest single shareholder in ZAP holding 50.67% of the shares and thus exercises sole control of the company. [4]   The ZAP Group is primarily active in the chemical sector. The operations of ZAP are divided into: agro industry, chemical industry, power industry and other operations. ZAP's production is located in Poland. 
            2.  THE OPERATION AND THE CONCENTRATION
            4.  The proposed transaction consists of the acquisition of sole control over ZAP by ATT by way of a public offering of the shares in ATT addressed to the shareholders of ZAP in exchange for an in-kind contribution in the form of the shares in ZAP. [5]  
            5.  The offer is conditional on 60% acceptance, although this condition may be waived by ATT. The proposed transaction has not been previously agreed with ZAP's shareholders. However, the Polish State Treasury, which is a major shareholder in ATT (32.05%) [6]   and the largest shareholder in ZAP has publicly confirmed its intention to take part in the intended transaction.  In addition, the Parties have also publicly announced their intention to proceed with the transaction and the offer to ZAP's shareholders has been opened. [7]  
            6.  Under the Polish Commercial Companies Code [8]  , as a general rule, the resolutions of the meeting of the shareholders are adopted by an absolute majority of votes. In accordance with Article 19 of ZAP’s Articles of Association, subject to the Commercial Companies Code and other exceptions set forth in other provisions of the Articles of Association, all decisions of the company’s bodies (the general meeting of the shareholders, the supervisory board and the management board) must be adopted by an absolute majority. This means that holding a 60% stake in ZAP would give ATT the power to influence ZAP’s strategic commercial decisions, i.e. this would give it sole control over ZAP. Thus, the shares acquired through the present transaction, together with the previously acquired 10.3% of the shares, will give ATT sole control over ZAP, under the condition that the public offering is successful.
            7.  Therefore, the proposed transaction constitutes a concentration within the meaning of Article 3(1)(b) of the EU Merger Regulation.
            3.  EU DIMENSION
            8.  The operation does not have an EU dimension within the meaning of either Article 1(2) or Article 1(3) of the Merger Regulation as in 2011 the undertakings concerned did not have a combined aggregate turnover exceeding EUR 5 000 million (Article 1(2)) and although their combined aggregate turnover exceeded EUR 2 500 million, they did not achieve a combined turnover of more than EUR 100 million in at least three Member States (Article 1(3)). 
            9.  However, on 12 October 2012, the Commission received, by means of a reasoned submission, a referral request from the Notifying Party pursuant to Article 4(5) of the Merger Regulation with respect to the transaction. The Notifying Party informed the Commission that the concentration was capable of being reviewed under the national competition laws of five Member States. [9]   
            10.  A copy of this submission was promptly transmitted to the competition authorities of the Member States and the EFTA Surveillance Authority. None of the Member States that were competent to examine the concentration indicated its disagreement with the request for referral within the period laid down by the Merger Regulation. The notified operation is therefore deemed to have an EU dimension according to Article 4(5) of the Merger Regulation.
            4.  COMPETITIVE ASSESSMENT
            11.  The proposed transaction primarily concerns the production and sale of mineral field fertilizer and different chemical products which are produced in the course of fertilizer manufacturing.
            4.1.  Relevant market definition
            4.1.1.  Mineral field fertilizers
            12.  Nitrogen ("N"), phosphorus ("P") and potassium ("K") constitute the primary plant nutrients which are needed in large quantities for agricultural applications. Fertilizers can be in single nutrient form (straight N, straight P, and straight K) or in a complex form which may contain any combination of N, P and K. This may be achieved by chemical means (compound fertilizers) or mechanically  (blended fertilizers). [10]   
             (a) Product market definition
            13.  In its previous decisions, the Commission considered that mineral fertilizers are distinct from organic fertilizers. [11]   A further distinction between field fertilizers and specialty fertilizers has also been considered.  [12] 
            14.  The Commission has also considered that N-, P- and K-fertilizers represent separate product markets; however it has left open whether any further segmentation within N, P or K fertilizers should be made, in particular between straight and compound/blended fertilizers. 
            15.  With regard to N fertilizers, there are various types of straight N fertilizers which vary in their chemical composition and in particular in their nitrogen content. In a previous decision, the Commission considered, however, that even though the production of individual fertilizers like urea, ammonium nitrate ("AN") or ammonium nitrate solutions ("UAN") may require special production facilities, and even though some fertilizers may be better suited than others for certain soils or crops, the price correlation between them shows that alternative products are able to exercise competitive pressure. [13]  
            16.  The Notifying Party submits that all N-mineral fertilizers for field application constitute one single product market since the products are interchangeable from a customer perspective and manufacturers can produce a wide range of these products. 
            17.  The results of the market investigation indicated that the majority of the Parties' competitors were of the view that N-mineral field fertilizers constitute a single market because these products are interchangeable. [14]   However, some competitors distinguished between straight and compound/blended fertilizers and some noted that different processes, techniques and materials are used to produce them. [15]   
            18.  As regards the distinction between the different types of N-straight fertilizers, the Parties' competitors indicated that the different types (i.e. AN, UAN, calcium ammonium nitrate (CAN), ammonium sulphate (AS) and ammonium sulphate nitrate (ASN)) are substitutable between each other from the demand-side with the market price for all products being mainly dependent on the respective N-content, and most of the products being interchangeable subject to different application techniques. However, these same respondents noted that the different types were not necessarily substitutable from the supply-side as they are not produced on the same machines and with the same processes and, with the exception of AN and CAN, it is not easy to switch production (in terms of time, equipment, manufacturing costs and marketing costs) between the different types of N-straight fertilizers. [16]   
            19.  The responses of customers to the market investigation indicated that there is a limited degree of substitutability between the different types of N-straight fertilizers either from the demand side or from the supply side. [17]  
            20.  For the purpose of this decision, however, the exact product market definition can be left open as the proposed transaction does not raise serious doubts as to its compatibility with the internal market under any alternative product market definition.
             (b) Geographic market definition
            21.  With regard to the scope of the relevant geographic market, the Notifying Party, in line with the Commission's previous decisions in this industry, [18]   is of the opinion that the market for N-field fertilizers is at least EEA-wide.
            22.  The results of the market investigation confirmed the Commission's previous findings as regards the scope of the relevant geographic market as competitors sell N-field fertilizers from European production facilities all over Europe, and some of them even worldwide. Moreover, customers purchase or would consider purchasing EEA-wide, or even from outside the EEA. [19]   In this regard, there were no substantial differences in relation to the types of N-field fertilizers and thus this conclusion holds true for the various types of N-field fertilizers. [20]   
            23.  In light of the above, the Commission considers that N-field fertilizers, including its different types, are at least EEA-wide in scope.
            4.1.2.  Industrial products
            24.  The production of fertilizers requires the use and production of a number of chemical compounds. It also results in certain intermediate and/or by-products. These products are used for several applications in the chemical industry and other economic activities, and are usually referred to as “industrial products” or “process chemicals” by the fertilizer industry. The industrial products relevant in the present case include (i) nitric acid, and (ii) industrial gases, namely carbon dioxide and compressed hydrogen.
            4.1.2.1.  Nitric acid
            25.  Nitric acid (HNO3) is a fundamental intermediate product in the production of fertilizers. It is an aqueous solution of hydrogen nitrate and is mostly used for the manufacture of fertilizers. Weak nitric acid is a low-concentrated solution of nitric acid (between 54% and 65%), whose main application relates to fertilizer production, "Cleaning In Place" in the dairy industry, the surface treatment of metals and the manufacture of cleaning agents.
             (a) Product market definition
            26.  In a previous decision, [21]   the Commission has considered that the weak nitric acid constitutes a distinct product market. In particular, the Commission considered three different types of nitric acid depending on its concentration: (i) weak nitric acid, (with a concentration between 54% and 65%) (ii) azeotropic nitric acid (with a concentration of approximately 68%) and (iii) concentrated nitric acid (with a concentration of 98% to 99%). 
            27.  The Parties' activities only overlap in the market for weak nitric acid. However, the Notifying Party is of the opinion that weak nitric acid does not constitute a separate product market considering that this product is merely an intermediate product within the production of nitrate fertilizer.
            28.  The results of the market investigation confirmed the Commission's earlier finding that weak nitric acid is a distinct market from azeotropic nitric acid and concentrated nitric acid. [22]  
            29.  In light of the above, the Commission considers that the market for weak nitric acid is a separate product market. 
             (b) Geographic market definition
            30.  In a previous decision, the Commission has considered the market for weak nitric acid as national, with the exception of the area of North Western Europe. The exact geographic definition however was left open. [23]  
            31.  The Notifying Party submits that if weak nitric acid were considered to be a relevant product market, its geographic scope would be at least regional (including at least Poland, Germany, the Czech Republic, Slovakia, Lithuania and Sweden) due to the current pattern of the Parties' limited sales of the product in these countries.
            32.  The results of the market investigation were somewhat mixed. Whereas the majority of weak nitric acid customers agreed with the Commission's previous conclusion that the market is national in scope, [24]   a number of customers indicated that it is wider than national, i.e. regional. [25]   Some customers also purchase weak nitric acid from neighbouring countries (customers located in Poland from Germany, Czech Republic, Slovakia; customers located in Lithuania from Poland) and some customers indicated that the maximum transport distance is up to 1000km. [26]  
            33.  For the purpose of this decision, however, the exact geographic market definition can be left open as the proposed transaction does not raise serious doubts as to its compatibility with the internal market under any alternative geographic market definition.
            4.1.2.2.  Industrial gases
            34.  In previous decisions [27]   the Commission has considered that industrial gases should be distinguished from medical and specialty gases as they are generally not interchangeable because of their different chemical and physical properties. Within these three categories, the Commission has also considered whether each gas constitutes a separate product market. In addition, the Commission has also found that the three ways in which gases (except for helium) can be distributed to end customers (tonnage, bulk and cylinders) constitute separate relevant product markets.
            35.  The Parties' activities overlap in the market for industrial gases and specifically in the market for the supply of liquid carbon dioxide to distributors and compressed hydrogen to distributors.
             Carbon dioxide (CO2)
            36.  Carbon dioxide (CO2) is a natural product contained in air. It is also a by-product of fertilizer production and more specifically of the ammonia production process. CO2 can be produced also by other industrial processes, but it must be noted that the CO2 emitted in industrial processes is not always suitable for industrial uses due to the high costs of its purification. According to the Parties, apart from ammonia production, CO2 is currently derived from other production processes such as the purification of certain synthesis gases and ethylene oxide production.
            37.  CO2 is used in a wide range of applications: in the beverage industry, especially for the production of soft drinks, in the food industry to ensure freshness and safety, welding, other chemical applications (e.g. pH control and carbonisation) and exploring for oil and gas. Carbon dioxide is indispensable as an intermediate for the production of urea (urea is produced as a result of the reaction of CO2 with ammonia).
            38.  Before raw CO2 can be used it needs to be purified and liquefied. It may also be solidified; solid CO2 is known as dry ice. Any CO2 which is not processed is emitted to the atmosphere.
             (a) Product market definition
            39.  In previous decisions, [28]   the Commission has considered that CO2 constitutes a single market. Furthermore, the Commission has distinguished between raw and liquid CO2 and has also considered the supply of liquid CO2 to distributors and the supply of liquid CO2 to end-customers (in tonnage, bulk or cylinders) to be separate markets 
            40.  The results of the market investigation confirmed that CO2 is a by-product and it does not constitute a core business for fertilizer producers. [29]   Moreover, the results of the market investigation confirmed the Commission's previous distinction between raw and liquid CO2 and that different markets could be distinguished according to distribution modus to end-customers (i.e. tonnage, bulk and cylinders). [30]   In the current case, the results of the market investigation also suggested that there are different markets for (i) the supply of liquid CO2 to distributors and (ii) the supply of liquid CO2 to end-customers. [31]  
            41.  For the purpose of this decision, however, the exact product market definition can be left open as the proposed transaction does not raise serious doubts as to its compatibility with the internal market under any alternative market definition.
             (b) Geographic market definition
            42.  With regard to the geographic market, the Commission has previously analysed the market for the supply of liquid CO2 as national and also as regional in scope (a possible region comprising Belgium and the Netherlands). The Notifying Party is of the opinion that the supply of CO2 to distributors should be considered as regional in scope comprising at least Poland and the neighbouring countries, including Germany, the Czech Republic, Slovakia and Lithuania.
            43.  The results of the market investigation suggested that raw CO2 is not transported but processed where it is produced. [32]   With regard to liquid CO2, the results of the market investigation pointed towards a national market [33]   due to relatively high transport costs (25-35% for bulk and around 50% for cylinder), [34]   although customers also buy from neighbouring countries and some even EEA-wide. [35]   Respondents also indicated that there are imports into Poland. [36]  
            44.  For the purpose of this decision, however, the exact geographic market definition can be left open as the proposed transaction does not raise serious doubts as to its compatibility with the internal market under any alternative market definition.
             Compressed hydrogen 
            45.  Hydrogen is one of the most commonly used industrial gases. 
             (a) Product market definition
            46.  In previous decisions, the Commission has considered that each gas belongs to a separate product market and that, except for helium, a further distinction can be made between distribution in tonnage, bulk and cylinders. [37]   
            47.  The Notifying Party submits that not every hydrogen producer sells its emitted hydrogen since it has to be purified and compressed first in order to be supplied for further use or production. Moreover, the Notifying Party claims that the market for compressed hydrogen is specific, considering that it is a by-product for which demand is uncertain unless there is a purchase request from a gas company/distributor, which could purchase profitable amounts of hydrogen.
            48.  The results of the market investigation confirmed that "raw" hydrogen is a by- product emitted during the production of synthesis gas and hydrogen has to be purified and compressed in order to be transported. [38]   Compressed hydrogen is produced by way of the purification of post-metallization synthesis gas stream on adsorption beds. [39]   Respondents to the market investigation also confirmed that there are many manufacturers for which hydrogen constitutes a by-product of their production such as fertilizer producers, petrochemical and plastics companies. [40]  
            49.  For the purpose of this decision, however, the exact product market definition can be left open as the proposed transaction does not raise serious doubts as to its compatibility with the internal market under any alternative market definition.
             (b) Geographic market definition
            50.  In a previous decision, the Commission has considered that for all the industrial gases (including hydrogen), the markets for tonnage were EEA-wide in scope, whereas the markets for bulk and cylinder gases were national. [41]   
            51.  The Notifying Party submits that the supply of hydrogen to distributors should be considered as regional in scope comprising at least Poland and the neighbouring countries, including Germany, the Czech Republic, Slovakia and Lithuania.
            52.  The results of the market investigation concerning the relevant geographic market were not conclusive. [42]   Although there are some indications that the market for compressed hydrogen might be national in scope, customers also indicated that there are imports into Poland from neighbouring countries and in fact they also source compressed hydrogen from abroad. [43]  
            53.  For the purpose of this decision, the exact geographic market definition can be left open as the proposed transaction does not raise serious doubts as to its compatibility with the internal market under any alternative geographic market definition.
            4.2.  Assessment
            4.2.1.  N-mineral field fertilizers
            54.  The Parties' activities overlap in the production and sale of N-mineral field fertilizers.
            55.  On the overall market for N-mineral field fertilizers, the Parties' combined market shares are below 10% both on a worldwide and EEA-wide level. For straight Nfertilizers, the merged entity will have a combined market share of [0-5]% globally and [10-20]% in the EEA. For compound/blended fertilizers containing N, the Parties' combined market shares will be [0-5]% globally and [5-10]% in the EEA The proposed transaction only leads to an affected market if individual N-straight fertilizers are considered under the narrowest possible market definition. In this case the proposed transaction would lead to an affected market for AN at EEA level with a market share of [10-20]% and an increment of [0-5]%.
            56.  According to the Notifying Party, based on an estimate of production capacities, the Parties' most important competitors in the EEA-market for AN are: Yara ([10-20]%), GPN ([10-20]%), GrowHow UK [44]   ([5-10]%), Azomures ([5-10]%), Neochim Plc ([510]%), ACHEMA JSC ([5-10]%) and Anwil ([0-5]%). 
            57.  The results of the market investigation have confirmed that there are many producers of N-mineral field fertilizers active on the EEA market, from within as well as from outside the EEA. The main EEA competitors specifically for AN named by market participants were Yara, GrowHow, GPN, Azomures, Achema, Nitrogénművek, Neofert, NEOCHIM, Ameropa, Eurochem, Acron. Competitors also indicated the presence of numerous non-EEA market players such as Gemlik and Toros (Turkey), R. Azot (Georgia), OPZ (Ukraine) and Uralchem (Russia). [45]   The market participants also confirmed that there are other potential suppliers for N-field fertilizers from outside the EEA. [46]  
            58.  Furthermore, the respondents to the market investigation also explained that there have been recent entrants in the EEA for N-field fertilizers (for AN e.g. Eurochem, Uralchem, Acron, RustaviAzot, NF Group) and some further entry is expected. [47]  
            59.  Finally, some respondents indicated that the market for N-field fertilizers is an open and global one and there are enough suppliers to sustain competition at its current high level as fertilizer markets are highly competitive and prices are driven by EEA-wide and global competition and market developments. Some respondents also indicated that they expect prices to remain at the same level and point to the Parties' small market share in the EEA, adding that if anything, the transaction will make the group more competitive.  [48]   
            60.  In view of the above, it is concluded that the proposed transaction does not raise serious doubts as to its compatibility with the internal market with respect to N-field fertilizers in general or any segment thereof.
            4.2.2.  Weak nitric acid
            61.  The Parties' combined market shares in the market for weak nitric acid only lead to one affected market if the market is considered to be national in scope. [49]   If the market is considered to be wider than national, encompassing Poland and its neighbouring countries, the Parties' combined market share decreases and this wider geographic market is not affected. [50]   
            62.  In Poland, the merged entity would have a market share of [40-50]% (with an increment of [20-30]%). The other main Polish producer is Anwil S.A. ([30-40]%). Although the merged entity would be the leading supplier of weak nitric acid in Poland, the proposed transaction is not expected to result in any adverse effects.
            63.  In the first instance, the results of market investigation have indicated that the weak nitric acid merchant market is extremely small in comparison to total production, as producers use most of the production volume (up to 100%) internally. [51]   In the case of the merging parties, ATT sold only […]% of the weak nitric acid it produced to third parties while the figure for ZAP was […]%. The sale of weak nitric acid in Poland constituted only […]% of ATT’s total turnover in 2011, and […]% of ZAP’s total turnover in 2011. 
            64.  In addition, the results of the market investigation showed that there are alternative suppliers to the Parties including Anwil (Poland), Yara (Germany), Duslo (Slovakia), Synthesia Pardubice (Czech Republic) and Achema (Lithuania). [52]   
            65.  Finally, respondents to the Commission's requests for information have broadly confirmed that they do not expect any negative impact on the market for weak nitric acid as a result of the proposed transaction as the merging parties are not major players in the market for weak nitric acid in Western Europe.  [53] 
            66.  In view of the above, it is concluded that the proposed transaction does not raise serious doubts as to its compatibility with the internal market with respect to weak nitric acid.
            4.2.3.  Industrial gases
            67.  According to the Notifying Party, the sale of industrial gases only serves to reduce the costs of the Parties' main business (fertilizer production) since they are by-products of fertilizer production process. The sale of both CO2 and hydrogen represents less than […]% of the Parties' total turnover.
            4.2.3.1.  CO2
            68.  Both ATT and ZAP emit CO2 during their production processes which they sell to global gas companies (producers and distributors of industrial gases). Raw CO2 cannot be transported and must be liquefied at the ammonia plant. This statement has been confirmed by the results of the market investigation. According to the Notifying Party, ATT's plants are located in southern Poland and ZAP's production sites in the north east meaning that there is no geographic overlap between the Parties. [54]   With regard to liquid CO2, ZAP also sells liquid CO2 to end-customers but ATT does not. Therefore, the Parties’ activities only overlap on the market for the supply of liquid CO2 to distributors.
            69.  In the narrow market for the supply of liquid CO2 to distributors in Poland, the Parties’ combined market share is [40-50]% (with an increment of [10-20]%). According to the Notifying Party, no other national CO2 producer is active on this market and the remaining amounts of CO2 are imported from abroad. [55]   This leads to the conclusion that the market is wider than national and can be considered as regional (Poland, the Czech Republic, Germany, Lithuania and Slovakia), on which the combined market share of the parties is below 15%.
            70.  Moreover, the Notifying Party submits that there would not be any overlap in the market for supply of liquid CO2 from 2013. […]. [56]   As a consequence, ATT will no longer be active on the market for liquid CO2 and only will produce raw CO2.
            71.  The results of the market investigation confirmed that there are alternative suppliers to the Parties in liquid CO2 in Poland [57]   and outside the country. [58]   Moreover, the majority of the respondents to the market investigation do not consider that the proposed transaction will have a negative impact on competition or prices with regard to the CO2 market. [59]  
            72.  In view of the above, it is concluded that the proposed transaction does not raise serious doubts as to its compatibility with the internal market with respect to CO2.
            4.2.3.2.  Compressed hydrogen 
            73.  Both Parties supply compressed hydrogen to distributors in bulk.
            74.  The proposed transaction would only lead to a horizontally affected market at national level in Poland where the Parties' combined market share is [70-80]% (with an increment of [30-40]%). On the basis of a wider regional market, the merged entity would have a market share of [10-20]% and thus the proposed transaction would not lead to an affected market. In addition, the proposed transaction would lead to vertically affected markets between the supply of compressed hydrogen to distributors and the supply of compressed hydrogen to end-customers where ZAP is active.  [60] 
            75.  The Notifying Party submitted that the proposed transaction would not lead to anticompetitive effects on the market for supply of compressed hydrogen to distributors. Firstly, there are many manufacturers for which hydrogen constitutes a by-product of their production. Secondly, demand is uncertain unless there is a purchase request from a gas company/distributor, which could purchase profitable amounts of hydrogen. Thirdly, the market is wider than national considering imports from abroad. Finally, entry into the hydrogen market is easy as the cost of such entry is not high.
            76.  Furthermore, the Notifying Party submits that the transaction will not lead to any foreclosure issues since the Parties are dependent on gas companies and they would have no incentive not to sell compressed hydrogen to gas companies/ distributors. 
            77.  The results of the market investigation confirmed the Parties' view regarding the proposed transaction. In particular, respondents to the market investigation indicated that there are alternative suppliers to the Parties outside the country. One customer indicated that "There are many opportunities to buy H2 [hydrogen] in CZ [Czech Republic] and Germany" [61]    Moreover, a vast majority of customers indicated that they import compressed hydrogen. [62]   
            78.  The Commission also notes that the gas industry is characterized by a relatively limited number of global gas groups on the buyer side such as Messer, Air Liquide and Air Products which therefore give them some leverage vis-à-vis suppliers such as the Parties.
            79.  Furthermore, as confirmed by the results of the market investigation, the production of compressed hydrogen is only ancillary to the Parties’ core activities. The production and sale of compressed hydrogen serves to reduce the cost of the production of the Parties’ core products. Therefore, the Parties are dependent on gas companies and they would have no incentive not to sell compressed hydrogen to gas companies / distributors.
            80.  Finally, the majority of the respondents to the market investigation do not consider that the proposed transaction will have a negative impact on competition or prices with regard to the market for compressed hydrogen, indicating that the sale prices of hydrogen are dependent on prices of its input gas. For example, Messer remarked that "…[it] does not see any particular threats caused by the transaction with regard to the supply of LCO2 [liquid CO2] and Hydrogen" whilst another customer confirmed that it did not expect any adverse effects on competition "as other sources exist". [63]  
            81.  In view of the above, it is concluded that the proposed transaction does not raise serious doubts as to its compatibility with the internal market with respect compressed hydrogen.
            5.  CONCLUSION
            82.  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) Joaquín ALMUNIA Vice-President
            [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 382, 12.12.2012, p. 13.
            [3] On 13 July 2012, ATT announced a tender offer to subscribe for the sale of shares representing 32% of the total number of votes at the general meeting of ZAP. This transaction was completed with the acquisition on 21 August 2012 of 10.3% of ZAP’s shares.
            [4]  ZAP's other shareholders are: Zbigniew Jakubas with affiliate undertakings (5.16%), ING OFE (5.02%) and free float.
            [5]  The offer document or prospectus was approved by the Polish Financial Supervision Commission on 21 December 2012 and published on the same day. The exchange ratio of shares is 1:2.5. 
            [6]  The Parties are of the opinion that although the Polish State Treasury has a 32.05% shareholding in ATT, the lack of a veto right or any other special rights attached to this shareholding, as well as the absence of any shareholders agreements, means that the Polish State Treasury does not exercise control over ATT.
            [7]  First, a resolution on the increase of share capital of ATT was adopted on 11 September 2012 by the management board of ATT in order to make the offer to the shareholders of ZAP. Second, on 20 September 2012, the Boards of ATT and ZAP entered into agreement setting the framework for cooperation and negotiation between ATT and ZAP with the aim of signing a Consolidation Agreement between the two companies. The terms of the Consolidation Agreement were subsequently agreed by the Parties on 14 November 2012.
            [8] Act of 15 September 2000 – the Commercial Companies Code (Journal of Laws, No. 94, item. 1037, as amended).
            [9]  The Czech Republic, Germany, Lithuania, Poland and Slovakia.
            [10] As the Parties only overlap in the N- mineral field fertilizers, P- and K-fertilizers are not further discussed in this decision.
            [11]  Case COMP/M.2524 - Hydro/SQM/ROTEM/JV.
            [12]Field fertilizers are spread on a field and diluted progressively by rain or irrigation water, while specialty fertilizers are water soluble or liquid fertilizers applied in liquid form. See Case IV/M.769 - Norsk Hydro /Arnyca.
            [13] Case No COMP/M.4730 - Yara/Kemira GrowHow.
            [14] Replies to question 6 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Competitors in fertilizers, dated 5 December 2012.
            [15] Replies to questions 7 and 8 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Competitors in fertilizers, dated 5 December 2012.
            [16] Replies to questions 10, 11 and 12 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Competitors in fertilizers, dated 5 December 2012.
            [17] Replies to question 6, 7, 8, 9, 10, 11 and 12 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Customers in fertilizers, dated 10 December 2012.
            [18] Case No COMP/M.4730 - Yara/Kemira GrowHow.
            [19]  During the market investigation, a small number of respondents submitted that the geographic market for N-fertilizers should be considered as being national in scope and that the proposed concentration would therefore result in the creation of a dominant position in Poland where it would bring together two of the three largest domestic producers. These respondents pointed inter alia to the low level of cross border trade in N-fertilizers in support of their argument and highlighted the existence of a 6.5% tariff on imports into the EU of N-fertilizers from Russia and Ukraine as well as the application of anti-dumping duties on imports of ammonium nitrate originating in Russia. According to Eurostat statistics, however, there is significant import and export of N-fertilizers into and from the European Union. In addition, there are no barriers to trade within the European Union, or indeed the EEA, that would speak in favour of markets being national in scope. On the contrary, the market investigation broadly confirmed that the geographic scope for the fertilizers market is at least EEA-wide.
            [20] Replies to question 13 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Competitors in fertilizers, dated 5 December 2012. Replies to question 12 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Customers in fertilizers, dated 10 December 2012.
            [21]  In Case No COMP/M.4730 - Yara/Kemira GrowHow.
            [22] Replies to questions 5 and 6 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Competitors in weak nitric acid, dated 6 December 2012. 
            [23]  In Case No COMP/M.4730 - Yara/Kemira GrowHow.
            [24] Replies to question 7 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Customers in weak nitric acid, dated 6 December 2012.
            [25] Replies to question 8 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Customers in weak nitric acid, dated 6 December 2012.
            [26] Replies to question 9 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Customers in weak nitric acid, dated 6 December 2012. 
            [27]  See Case No. COMP/M.4141 – Linde/BOC; M.1641 – Linde/AGA, M.1630 – Air Liquide/BOC, M.3314 Air Liquide/Messer.
            [28] Cases No COMP/M.4730 - Yara/Kemira GrowHow; M. 4141 Linde /BOC.
            [29] Replies to question 8 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Competitors in industrial gases, dated 5 December 2012.
            [30] Replies to question 12 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Competitors in industrial gases, dated 5 December 2012; and to question 12 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Customers in industrial gases, dated 5 December 2012.
            [31] Replies to question 11 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Competitors in industrial gases, dated 5 December 2012; and to question 11 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Customers in industrial gases, dated 5 December 2012.
            [32] Replies to question 16 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Customers in industrial gases, dated 5 December 2012.
            [33] Replies to question 16 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Customers in industrial gases, dated 5 December 2012.
            [34] Replies to question 19 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Customers in industrial gases, dated 5 December 2012
            [35] Replies to question 17 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Customers in industrial gases, dated 5 December 2012.
            [36] Replies to questions 20 and 21 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Customers in industrial gases, dated 5 December 2012.
            [37] Cases No COMP/M.4823 - YARA / Praxair/ JV and M. 4141 Linde/BOC.
            [38] Replies to question 13 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Competitors in industrial gases, dated 5 December 2012; and to question 13 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Customers in industrial gases, dated 5 December 2012.
            [39] Replies to question 14 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Competitors in industrial gases, dated 5 December 2012; and to question 14 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Customers in industrial gases, dated 5 December 2012.
            [40] Replies to question 15 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Competitors in industrial gases, dated 5 December 2012; and to question 15 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Customers in industrial gases, dated 5 December 2012.
            [41]  Case No COMP/M.4823 - Yara/Praxair/JV.
            [42] Replies to question 19 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Customers in industrial gases, dated 5 December 2012.
            [43] Replies to questions 20 and 21 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Customers in industrial gases, dated 5 December 2012.
            [44] Yara has a 50% interest in GrowHow UK Group Limited, a jointly controlled entity with CF Industries Inc. GrowHow UK is the result of a joint venture between Terra Industries and Kemira GrowHow dating back to 2007. Kemira GrowHow was subsequently acquired by Yara in 2007 (see case No COMP/M.4730 - Yara/Kemira GrowHow).
            [45] Replies to question 20 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Competitors in fertilizers, dated 3 December 2012; and replies to questions 18 and 19 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Customers in fertilizers, dated 4 December 2012.
            [46] For example companies from Russia, Ukraine, Uzbekistan, Kazakhstan, Serbia, Croatia, North Africa, and the Middle East.
            [47] Replies to questions 26 and 27 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Competitors in fertilizers, dated 3 December 2012.
            [48]  Replies to questions 29 and 30 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Competitors in fertilizers, dated 3 December 2012.
            [49]  The weak nitric acid market in Lithuania can be considered as technically affected, as the Parties' combined market shares will be [10-20]% with an increment of [0-5]%. According to the Notifying Party, the only weak nitric acid producer located in Lithuania is Achema JSC with an estimated market share of [60-70]%. However, there are potential regional competitors such as Arvi Fertis (Lithuania), BASF (Germany), Domo Caproleuna GMBH (Germany), Duslo (Slovakia), Dyno Nitrogen (Sweden), Hoechst AG (Germany). In view of the minor increment (less than 1%), it is considered that the proposed transaction will not have any significant impact on competition as it will not change the existing market structure to any great extent.
            [50]  The Parties estimate that their combined market share in a wider region comprising Poland, Germany, the Czech Republic, Slovakia, Lithuania and Sweden would be less than 10%.
            [51] Replies to questions 1 and 4 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Competitors in weak nitric acid, dated 6 December 2012.
            [52] Replies to questions 14 and 15 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Competitors in weak nitric acid, dated 6 December 2012. Replies to questions 12 and 14 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Customers in weak nitric acid, dated 6 December 2012.
            [53]Replies to question 17 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Competitors in weak nitric acid, dated 6 December 2012. 
            [54] According to the Notifying Party, there are alternative Polish fertilizer producers that could supply raw CO2 such as Anwil and Janikowskie Zakłady Sodowe Janikosoda S.A. In addition, the Notifying Party considers that there are other potential sources of raw CO2 coming from breweries and distilleries, cement factories, bio-utilization plants, heating plants and petrochemical companies.
            [55]  According to the trade statistics submitted by the Notifying Party, the main imports of CO2 into Poland come from Germany, Hungary, Belgium and Lithuania.
            [56] […].
            [57] Replies to questions 23 and 24 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Customers in industrial gases, dated 5 December 2012, and minutes of conference call with Messer Poland dated 20 December 2012.
            [58] Replies to question 26 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Customers in industrial gases, dated 5 December 2012.
            [59] Replies to questions 34, 35 and 36 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Customers in industrial gases, dated 5 December 2012; and minutes of conference call with Messer Poland dated 20 December 2012.
            [60]According to the Notifying Party, only compressed hydrogen may be traded and there is no trade of hydrogen which is not purified and not compressed. Moreover, the Parties use internally more than […]% of the hydrogen they produce.
            [61] Replies to questions 23, 24 and 26 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Customers in industrial gases, dated 5 December 2012; and minutes from a conference-call with Messer (Poland) dated 20 December 2012.
            [62] Replies to question 20 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Customers in industrial gases, dated 5 December 2012.
            [63] Replies to questions 34, 35 and 36 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to Customers in industrial gases, dated 5 December 2012; and minutes from a conference call with Messer (Poland) dated 20 December 2012.