CELEX: 32021M10320
Language: en
Date: 2021-11-25 00:00:00
Title: Commission Decision of 25/11/2021 declaring a concentration to be compatible with the common market (Case No COMP/M.10320 - APERAM / ELG HANIEL) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                Brussels, 25.11.2021
                                                                C(2021) 8700 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                                                                  possible the information omitted has been
                                                                  replaced by ranges of figures or a general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.
                                                                Aperam S.A.
                                                                12 C rue Guillaume Kroll
                                                                1882 Luxembourg
                                                                Luxembourg
Subject:              Case M.10320 – APERAM / ELG HANIEL
                      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 19 October 2021, the European Commission (“Commission”) received
           notification of a proposed concentration pursuant to Article 4 of the Merger
           Regulation by which Aperam S.A. (“Aperam”, Luxembourg) intends to acquire
           within the meaning of Article 3(1)(b) of the Merger Regulation sole control of ELG
           Haniel GmbH (“ELG”, Germany), by way of purchase of shares (the “Transaction”).
           Aperam is designated as the “Notifying Party” and together with ELG 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 (the ‘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’).
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)      Aperam is a global player active in the production of stainless steel flat products,
         electrical and specialty alloys steel, including nickel alloys. Aperam […] the HSBC
         Trust (C.I.) Limited3 , whose beneficiaries are members of the Mittal family (“Mittal
         Family Trust”). […].4 The ArcelorMittal group has a wholly-owned subsidiary,
         Industeel, which is also active in stainless steel flat products and nickel alloys.
         Aperam’s stainless steel plants are located in Genk and Châtelet5 and Industeel’s in
         Charleroi (all in Belgium) and Le Creusot (France).
(3)      ELG is a global player active in trading, processing and recycling raw materials for
         the stainless steel industry, as well as high performance materials such as superalloys
         and titanium. ELG’s main yards in Europe are located in Rotterdam (Netherlands),
         Duisburg and Karlsruhe (Germany), Limay (France) and San Roque (Spain).
2.       THE CONCENTRATION
(4)      The concentration consists of the acquisition of sole control by Aperam over ELG
         through the acquisition of shares. The Transaction will be implemented according to
         the terms of the Share Purchase Agreement signed on 6 May 2021. In light of the
         above, the Transaction constitutes a concentration within the meaning of Article
         3(1)(b) of the Merger Regulation.
3.       UNION DIMENSION
(5)      The undertakings concerned have a combined aggregate world-wide turnover of
         more than EUR 5 000 million (Aperam: EUR […], ELG: EUR […])6 . Each of them
         has a Union-wide turnover in excess of EUR 250 million (Aperam: EUR […], ELG:
         EUR […]), but they do not achieve more than two-thirds of their aggregate Union-
         wide turnover within one and the same Member State. The notified concentration
         therefore has a Union dimension.
4.       M ARKET DEFINITION
4.1.     Introduction – metal scrap recycling
(6)      Metal scrap is generated as a waste product, but has become an important raw
         material. Together with primary raw materials, it is used as an input in the
         production of new metal products. It is available at lower prices and carbon footprint
         than primary raw material, while its quality is generally comparable.
(7)      Several steps are necessary between the collection of metal scrap and its use in new
         metal products, as the example of ELG demonstrates.
3    Form CO, paragraph 23.
4    Form CO, paragraph 26.
5    Genk is also a cold rolling mill. Châtelet is a hot rolling mill. Aperam also produces […] stainless steel
     products in its plant Aperam Alloys Imphy in France, which is […] active in the production of nickel alloy
     products. (Form CO, paragraphs 118 and 119).
6    Turnover calculated in accordance with Article 5 of the Merger Regulation .
                                                            2
 ---pagebreak--- (8)       In a first step, ELG purchases and receives scrap from numerous local and global
          collectors. In a second step, ELG processes the collected scrap and materials. This
          includes, in particular, the examination of the scrap for radiation, any other
          hazardous or harmful elements or hollow bodies, chemical analysis of the scrap,
          changing the size of the scrap, sorting / diluting impurities and finally blending the
          processed scrap (mix of materials) to meet the customer’s specifications. In a third
          step, ELG sells the processed scrap as secondary raw material to customers: in the
          case of stainless steel scrap, to the stainless steel industry, among others to Aperam.7
(9)       Aperam and its competitors in the stainless steel industry buy the blended stainless
          steel scrap and use it in the production of stainless steel products.8 Nickel alloy scrap
          is used by Aperam and its competitors in the production of nickel alloys. Titanium
          scrap can be used as an input in nickel alloy and stainless steel products, used in
          small quantities to increase resistance to so-called intergranular corrosion or increase
          the strength of the final product.9
(10)      ELG also collects other types of metal scrap, […]. Given that ELG’s focus is on
          stainless steel scrap, nickel alloy scrap and titanium scrap, and Aperam […] buys
          stainless steel scrap and nickel alloy scrap, this Decision will focus on these three
          types of scrap.
4.2.      Market for the processing and blending of metal scrap
4.2.1. Product market
4.2.1.1. The Commission’s previous practice
(11)      In previous decisions, the Commission considered whether, within the overall
          market for trade in metal scrap, the market segment for collecting and processing
          constitutes a separate market or whether collection, processing and trade of
          processed metal scrap belong to one single market, but ultimately left the question
          open.10 The Commission has identified a market for trade in metal scrap, which it
          has divided into separate markets for trade in: (i) ferrous scrap and in (ii) non-ferrous
          scrap.11 The Commission also considered, but left open, potential sub-segments of
          non-ferrous scrap for trade in: (a) aluminium scrap, (b) copper scrap and (c) zinc
          scrap.12
7    Form CO, paragraph 72.
8    In the EEA, stainless steel is produced via the electric arc fu rnace route (“EAF”). The EAF route relies on
     stainless steel scrap as the main input for the production of stainless steel. Stainless steel can also be mad e
     through primary materials (iron ore, coke and limestone) through the blast furnace/basic oxygen furnace
     (“BOF”) route. However, this method is not used in the EEA, nor in countries such as the United States,
     Korea, Japan etc., due to the very negative environmental impact. See Form CO, paragraphs 539 – 541
     and non-confidential minutes of a call with a customer, 26 July 2021. Carbon steel has a different
     production method. It is most commonly produced via the BOF route and is produced primarily through
     primary materials.
9    Form CO, paragraph 261.
10    COMP/M.5714 –             Scholz/Scholz Austria/Kovosrot, paragraph               9, COMP/M.4495 –Alfa
     ACCIAI/Cronimet/Remondis/ TSR Group, paragraphs 16 et seq.
11 See e.g. COMP/M.5714 –Scholz/Scholz Austria/Kovosrot, paragraph 8, COMP/M.4469 –
     Scholz/Voestalpine/Scholz Austria, paragraph 10, COMP/ECSC.1358 –Scholz/Alba/Elsa.
12 See e.g. COMP/M.5714 –Scholz/Scholz Austria/Kovosrot, paragraph 8; COMP/M.4469 –
     Scholz/Voestalpine/Scholz Austria, paragraph 13.
                                                             3
 ---pagebreak--- 4.2.1.2. The Notifying Party’s view
(12)    The Notifying Party agrees with the Commission’s practice to distinguish between
        different types of metal scrap. As for the different activities, they consider that
        collection, processing and trading all form part of the same product market, arguing
        that all major players collect and process scrap metal in order to trade scrap metal. 13
        The Notifying Party also submits that no further sub-segmentation by end-use of
        grade of scrap is warranted, even though […] make a distinction between the
        stainless steel scrap grades 304 and 316. 14 The Notifying Party argues that most
        relevant suppliers offer and most relevant consumers source stainless steel grades
        304 (used for more “standard” applications e.g. household appliances), and 316
        (used for more industrial applications such as pipes in factories due to its higher
        resistance against corrosion).15
4.2.1.3. The Commission’s assessment
(13)    In line with the Commission’s previous practice, the results of the market
        investigation indicate that different types of scrap constitute different markets. The
        majority of respondents replied in the market investigation that stainless steel scrap
        and other types of metal scrap are not interchangeable in stainless steel production.16
        As several respondents explained, primary raw materials and stainless steel scrap can
        be exchanged to some extent from a technical perspective, but prices and
        environmental impact are not remotely comparable for stainless steel production in
        the EEA.17 One customer explained that in the EEA and other countries: “Stainless
        steel scrap is the main raw material in Europe and the US and other developed
        economies.” However, in other countries, “such as China, Indonesia, they use other
        raw materials(nickel pig iron etc.) and they use nickel ore and other alloys (which
        are in principle more expensive) and they also have mining capacities. The reason
        for this may be that stainless steel scrap is circular (it is recycled and reused); you
        only have large enough supplies of this in more developed countries…..” The same
        customer explained the importance of stainless steel scrap for the stainless steel
        industry: “In Europe and the US, with the importance of recycling and the need for
        sustainability, everyone needs to buy as much stainless scrap as possible. Without
        scrap there would not be enough capacity to manufacture stainless steel.”18
(14)    As for the supply side, scrap is generated as a waste product, not “produced”
        according to demand in the market. Therefore, the quantities of different types of
13  Form CO, paragraph 126.
14  The basic difference between these stainless steel scrap grades is their composition. The stainless steel
    scrap grade 304 contains typically approx. 7.5% of nickel, 15-17% of chrome and approx. 74% of iron.
    The stainless steel scrap grade 316 contains typically approx. 10% of nickel, 15-17% of chrome, approx.
    70% of iron and – this is the additional ingredient – approx. 2% of molybdenum. Given the content of
    approx. 2% of molybdenum and increased content of nickel, the stainless steel scrap grade 316 is typically
    more expensive than the stainless steel grade 304. The s tainless steel scrap grade 316 is typically used to
    produce stainless steel products of the same grade, i.e. 316 or similar grades. The molybdenum content
    results in increased corrosion resistance. Common applications of 316 stainless steel products includ e
    chemical processing and storage equipment, refinery equipment, medical devices and marine
    environments.
15  Form CO, paragraph 132.
16  Replies to question 4 and 7 of Questionnaire 2 to stainless steel scrap customers. Replies to question 5 of
    Questionnaire 1 to stainless steel scrap suppliers.
17  Reply to question 4 of Questionnaire 2 to stainless steel scrap customers.
18  Non-confidential minutes of a call with a customer, 26 July 2021.
                                                           4
 ---pagebreak---          scrap cannot change as a result of increase in demand. Suppliers of stainless and
         nickel alloy scrap are also different, which indicates that it is common in the industry
         to specialise on certain types of scrap. Given the lack of both demand- and supply-
         side substitutability, stainless steel scrap constitutes a separate market.
(15)     The same reasoning applies for nickel alloy scrap. A majority of respondents replied
         that nickel alloy scrap is not substitutable with any other types of metal scrap. 19 As a
         customer explained: “Substitution with primary raw materials is technically
         possible, but would incur a non sustainable cost disadvantage. Substitution with
         other types of metal scrap is technically impossible, since the chemical contents
         would not be appropriate for the intended production”.20 This indicates that nickel
         alloy scrap also constitutes a separate market.
(16)     Internal documents, pre-notification calls as well as the description of the scrap
         industry in the Form CO however also point to a further segmentation by activity,
         notably collection, processing (which includes sorting and crushing of scrap) and
         blending.21 In this blending process different scrap types of different materials and
         alloys are mixed in a controlled process according to the customer’s specifications
         regarding chemical composition and physical shape.22 However, a majority of
         respondents in the market investigation suggest that the same companies are active
         in all mentioned stages.23 In the words of a stainless steel scrap supplier, “a real
         difference only exist in regards to smaller competitors, which focus on the trading of
         scrap because they are too small to process the scrap.”24 In addition, the market
         investigation also found that a further sub-segmentation of the product market, such
         as by grades, e.g. 304 and 316 (as well as other relevant grades) for stainless steel
         scrap, is not warranted.25
(17)     As regards sales to customers of stainless steel scrap, the market investigation
         showed that only suppliers able to supply a certain quantity sell directly to customers
         i.e. the stainless steel producers26 , whereas smaller companies are active in collection
         and sell the scrap to larger suppliers.27 Almost all of the purchases of stainless steel
         scrap made by stainless steel producers concerns blended stainless steel scrap. 28
19  Replies to question 5 of Questionnaire 3 to nickel alloy scrap sup pliers. Replies to question 4 of
    Questionnaire 4 to nickel alloy scrap customers.
20  Reply to question 4 of Questionnaire 4 to nickel alloy scrap customers.
21  see e.g. Form CO, Annex 06.04, page 4; Annex 07.10, page 6 […]; Form CO, paragraph 75; non -
    confidential minutes of a call with a competitor,9 July 2021, paragraph 10.
22  (Form CO, paragraph 74.) Blending is the last step before which the required mix of scrap is sold to
    stainless steel or nickel alloy producers.
23  Replies to question 7 of Questionnaire 2 to stainless steel scrap customers. Replies to question 6, 7 and 8
    of Questionnaire 1 to stainless steel scrap suppliers.
24  Non-confidential minutes of call with a competitor, 23 July 2021, paragraph 4.
25  Replies to question 4 of Questionnaire 2 to stainless steel scrap customers. Replies to question 9 of
    Questionnaire 1 to stainless steel scrap suppliers. Replies to question 9 of Questionnaire 3 to nickel alloy
    scrap suppliers. Replies to question 8 of Questionnaire 4 to nickel alloy scrap customers.
26  Replies to question 6 of Questionnaire 2 to stainless steel scrap customers.
27  By way of example, ELG, as a larger supplier, not only collects scrap but also purchases from numerous
    companies active in collection, before then processing an d blending scrap for sale to its customers. See
    paragraph (8).
28  Replies to question 7 of Questionnaire 2 to stainless steel scrap customers. Replies to question 8 of
    Questionnaire 1 to stainless steel scrap suppliers.
                                                           5
 ---pagebreak--- (18)    The evidence in the Commission’s file has not provided any indication that would
        suggest that applying by analogy the Commission’s decisional practice on titanium
        scrap would not be appropriate in the present case. For the purposes of this Decision,
        the Commission will therefore analyse the market for the collection, processing and
        blending of titanium scrap.
(19)    With a view to the above, the Commission will analyse the effects of the Transaction
        on the basis of markets for the collection, processing and blending of stainless steel
        scrap, the collection, processing and blending of nickel alloy scrap and the
        collection, processing and blending of titanium scrap.
4.2.2. Geographic market
4.2.2.1. The Commission’s previous practice
(20)    In its previous decisions, the Commission found the market for trade in metal scrap
        to be at least EEA-wide.29 As regards the geographic scope of the market for
        collecting and processing of metal scrap, the Commission indicated that the
        geographic dimension is smaller than that of the trade market. It left open whether
        the markets are national or regional with respect to collection activities where
        markets might be determined according to the catchment radius of each facility
        (possible radius of approx. 200 km).30
4.2.2.2. The Notifying Party’s view
(21)    The Notifying Party submits that the geographic market for collection, processing
        and trading is at least EEA-wide: especially stainless steel and nickel alloy scrap is
        sold and sourced at least on an EEA-wide basis while properties, market conditions
        and prices are similar across the EEA. This kind of scrap is, in general, a more
        expensive scrap product compared to other metal scrap types. Thus, transport costs
        play a smaller role compared to other scrap material. Moreover, large exports to
        India and Taiwan show in the Notifying Party’s opinion that distances are not an
        obstacle for the collection, processing and trade of metal scrap. 31
4.2.2.3. The Commission’s assessment
(22)    In line with its previous practice, the Commission considers that collection of
        different metal scraps takes place on a narrower scale than the supply of this scrap to
        customers. A slight majority of stainless steel scrap suppliers active in the collection
        of stainless steel scrap replied that they usually travel between 100 and 500km from
        their facilities to collect this scrap.32
(23)    Processing and sale of blended stainless steel scrap can take place over longer
        distances, with the significant majority of suppliers processing and selling blended
29  See e.g. COMP/M.4495 -Alfa Acciai/Cronimet/Remondis/TSR Group, paragraph 27 et seq.
    COMP/M.5714 –Scholz/Scholz Austria/Kovosrot, paragraph 11, COMP/M.4781 –Norddeutsche
    Affinerie/Cumerio, paragraphs 25 et seq., COMP/M.6541 –Glencore/Xstrata, paragraphs 246 et seq.,
    COMP/M.4469 –Scholz/Voestalpine/Scholz Austria, paragraphs 14 and 15.
30 COMP/M.5714          –Scholz/Scholz    Austria/Kovosrot,         paragraph    11, COMP/M.4469  –
    Scholz/Voestalpine/Scholz Austria, paragraph 15; COMP/ECSC.1358 –Scholz/Alba/Elsa.
31 Form CO, paragraphs 148 and 151.
32 Replies to question 11 of Questionnaire 1 to stainless steel scrap suppliers.
                                                          6
 ---pagebreak---         stainless steel scrap at distances greater than 300km, with some supplying stainless
        steel scrap at distances greater than 1200km.33 […], the Parties’ data also shows that
        […]% of sales from ELG’s yard occur within a catchment area of approximately
        […] km.34 A minority of suppliers are active in smaller catchment areas, ranging
        from only 50 km to 50-300 km.35
(24)    Market participants stressed that the mode of transport (i.e. by truck, trail, barge, or
        ship) plays a key role for costs36 and hence the radius in which stainless steel scrap is
        sourced. A majority of customers indicated that prices of stainless steel scrap differ
        according to the location.37 In the words of a supplier, “prices are reliant upon
        freight costs, no matter if [stainless steel scrap] is being purchased or sold.”38 Both
        suppliers and customers of stainless steel scrap pointed to location as a key factor
        determining prices.39 The market investigation indicates that the main driver for the
        geographic area over which stainless steel scrap suppliers are active is the location of
        the customers. As noted by one supplier, “we do have all kind of distances
        depending on where our suppliers and customers are located.”40 These distances can
        be short, depending on the proximity of the scrap yard to the steel mill, or very much
        further. As noted by one stainless steel scrap supplier, “the routes to Outokumpu
        (Tornio) and Acerinox (Algeciras) are really long!”.41 For this reason, and due to the
        important role played by transport costs in the delivery of stainless steel scrap, one
        suppliers notes: “the main rationale behind opening a new yard always is: ‘go where
        the scrap or the customer is’.”42 As noted above at paragraph (23), some smaller
        stainless steel scrap suppliers are only active at distances of less than 50km or
        300km. One such supplier explained that, “our customers are situated very close to
        our facilities, less than 50km in the most of cases.”43
(25)    In summary, the results of the market investigation suggest that smaller suppliers
        generally supply at shorter distances44 whereas the larger suppliers are able to supply
        blended stainless steel scrap over much longer distances of more than 2000km
        respectively.45 The Commission therefore notes that the catchment areas at which
        some scrap suppliers operate is rather high, while noting also that many of the
        smaller stainless steel scrap suppliers are only active in certain regions.
(26)    For the purposes of the assessment of the vertical link between stainless steel scrap
        and the production of stainless steel products, the Commission considers that the
        relevant level of the supply chain at which to conduct the assessment is the
33  Replies to questions 12 and 13 of Questionnaire 1 to stainless steel scrap suppliers.
34  Annex 17, Annex 18. Form CO and Annex 1, Annex 2, reply to RFI 9.
35  Replies to question 13 of Questionnaire 1 to stainless steel scrap competitors.
36  Replies to question 12 of Questionnaire 2 to stainless steel scrap customers. Replies to question 14 of
    Questionnaire 1 to stainless steel scrap suppliers.
37  Replies to question 14 of Questionnaire 2 to stainless steel scrap customers.
38  Replies to question 16 of Questionnaire 1 to stainless steel scrap suppliers.
39  Replies to question 15 of Questionnaire 2 to stainless steel scrap customers. Replies to question 11 of
    Questionnaire 1 to stainless steel scrap suppliers.
40  Reply to question 13 of Questionnaire 1 to stainless steel scrap suppliers.
41  Reply to question 13 of Questionnaire 1 to stainless steel scrap suppliers.
42  Non-confidential minutes of a call with a stainless steel scrap supplier, 23 July 2021.
43  Reply to question 13 of Questionnaire 1 to stainless steel scrap suppliers .
44  Replies to questions 13 and 14 of Questionnaire 1 to stainless steel scrap suppliers.
45  Replies to questions 13 and 14 of Questionnaire 1 to stainless steel scrap suppliers.
                                                           7
 ---pagebreak---          processing and supply of the blended stainless steel scrap to the customer. Therefore,
         the geographic market for the processing and blending of stainless steel scrap is at
         most EEA-wide. The fact that smaller stainless steel scrap suppliers are not active
         throughout the EEA will be taken into account in the competitive assessment.
(27)     As regards the supply of nickel alloy scrap to customers, the results of the market
         investigation point to an EEA-wide market. Transportation costs also play a role,
         although they are less relevant than for stainless steel scrap, as nickel alloy scrap has
         a higher value.46
(28)     The evidence in the Commission’s file has not provided any indication that would
         suggest that applying by analogy the Commission’s decisional practice on titanium
         scrap would not be appropriate in the present case. In comparison to stainless steel
         scrap, transport costs play less of a role due to the high value of titanium scrap.47
(29)     The Commission will therefore analyse the effects of the Transaction on the basis of
         an EEA-wide market for the markets for the processing and blending of stainless
         steel scrap, nickel alloy scrap and titanium scrap, while taking into account in the
         competitive assessment that as far as stainless steel scrap is concerned, not all market
         participants are active on an EEA-wide level.
4.3.     Markets for stainless steel products and nickel alloy products
4.3.1. Product market
4.3.1.1. The Commission’s previous practice
(30)     The Commission has considered in previous cases that the distribution of steel
         products forms a separate market from the production and wholesale – thus, direct
         (ex-mills) sales – of steel products.48 Based on chemical composition, the
         Commission has distinguished between: (i) carbon steel, (ii) stainless steel, and (iii)
         speciality steels and (iv) electrical steel.49 As to the physical shape, the Commission
         has defined separate product markets for long steel products and flat products. 50
         Within flat stainless steel products, the Commission has further distinguished
         between: (i) hot rolled and (ii) cold rolled steels. 51 As regards hot-rolled products, a
         potential segmentation between hot black band and hot white band steels was left
         open.52 Within long steel products, the Commission has left open whether to further
46   Replies to question 14.2 and 15 of Questionnaire 4 to nickel alloy scrap customers. See e.g. reply to
     question 15 of Questionnaire 4 to nickel alloy scrap customers : “Higher transport costs due to longer
     transport routes increase our purchase prices if our competition is closer to the supplier. Proximity to t h e
     supplier therefore has a competitive advantage. But transport costs are not the decisive element.”
47   Non-confidential minutes of a call with a competitor, 2 September 2021.
48   See Case M.7839 - Outokumpu / Hernandez Edelstahl, paragraph 25; M.7138 – ThyssenKrupp / Acciai
     Sepciali Terni/ Outokumpu VDM, paragraph 10 et seq.
49   See Case M.8159 - ArcelorMittal / Cellino / JV, paragraph 13; Case M.7155 – SSAB / RAUTARUUKKI,
     paragraph 22; Case ECSC 1351 Usinor /Arbed/Aceralia, paragraph 13.
50   See Case M.7155 – SSAB / RAUTARUUKKI, paragraph 23; COMP/M.7138 – Thyssenkrupp / Acciai
     Speciali Terni / Outukumpu VDM, paragraph. 7.
51   See COMP/M.7138 – Thyssenkrupp / Acciai Speciali Terni / Outukumpu VDM, paragraph 7; Case
     M.8159 - ArcelorMittal / Cellino / JV, paragraph 15.
52   COMP/M.7138 – Thyssenkrupp / Acciai Speciali Terni / Outukumpu VDM, paragraph 8; Case
     COMP/M.6471 – Outokumpu/Inoxum, paragraph 136.
                                                           8
 ---pagebreak---         distinguish between: (i) ingots and billets, (ii) wire rod, (iii) hot rolled and forged
        bars, (iv) bright bars and (v) drawn wire. 53 Moreover, the Commission has defined a
        separate market for stainless steel quarto plates54 and has defined a separate market
        for stainless steel precision strip55 .
(31)    The Commission has considered a separate product market for production and sale
        of nickel alloys. Based on the shape, the Commission considered a further
        segmentation in relation to product categories such as strips, plates, wires and bars. 56
4.3.1.2. The Notifying Party’s view
(32)    The Notifying Party submits that there is no need to draw conclusions on the exact
        scope of the relevant product markets, as no competition concerns arise irrespective
        the market definition.57
4.3.1.3. The Commission’s assessment
(33)    The evidence in the Commission’s file has not provided any indication that would
        suggest that applying the Commission’s decisional practice on stainless steel
        products and nickel alloy products would not be appropriate in the present case. For
        the purposes of this Decision, the Commission will analyse the markets for: (i)
        production and wholesale of stainless steel flat products as well as for (ii) nickel
        alloy products.
(34)    The stainless steel markets where Aperam is active are (i) production and wholesale
        of stainless steel flat hot rolled black band products, (ii) production and wholesale of
        stainless steel flat hot rolled white band products, (iii) production and wholesale of
        stainless steel flat cold rolled products and (iv) production and wholesale of stainless
        steel welded tubes.
(35)    The nickel alloy markets where Aperam is active are (i) production and sale of
        nickel alloy semis, (ii) production and sale of nickel alloy bars, (iii) production and
        sale of nickel alloy wire, (iv) production and sale of nickel alloy wire rod, (v)
        production and sale of nickel alloy strip and (vi) production and sale of nickel alloy
        “plates and sheets”.
(36)    The Commission considers that for the purposes of the analysis of vertical links
        between Aperam and ELG, these are the relevant downstream markets.
4.3.2. Geographic market
4.3.2.1. The Commission’s previous practice
(37)    In previous decisions, the Commission has considered that the relevant geographic
        markets for production and wholesale of stainless steel and nickel alloys is at least
        EEA-wide in scope.58
53  See Case M.7273 - GERDAU EUROPE / ASCOMETAL, paragraph 24; Case M.6962 - RENOVA
    INDUSTRIES / SCHMOLZ+BICKENBA CH, paragraph 16.
54  Case M.5211 - Outokumpu / Sogepar, paragraph 11; Case M.4137 - Mittal /Arcelor, paragraph 21 et seq.
55  Case M.6471 – Outokumpu/ INOXUM, paragraph 201 et seq.
56  See Case M.1080 - Thyssen / Krupp, paragraph 17.
57  Form CO, paragraph 147.
                                                      9
 ---pagebreak--- 4.3.2.2. The Notifying Party’s view
(38)      The Parties submit that the market for all types of stainless steel products is at least
          EEA-wide.59 For nickel alloys, they argue that no need arises to draw conclusions on
          the exact scope of the relevant product markets, as no competition concerns arise
          irrespective the market definition.60
4.3.2.3. The Commission’s assessment
(39)      The evidence in the Commission’s file has not provided any indication that would
          suggest that applying the Commission’s decisional practice on stainless steel
          products and nickel alloy products would not be appropriate in the present case. For
          the purposes of this Decision, the Commission will analyse the markets for
          production and wholesale of stainless steel flat products and for nickel alloy products
          at EEA-wide level.61
5.        COMPETITIVE ASSESSMENT OF VERTICAL NON-COORDINATED EFFECTS
(40)      The Transaction gives rise to vertical links between the upstream supply of stainless
          steel scrap and the downstream production of stainless steel and in the upstream
          supply of nickel alloy scrap and the downstream production of nickel alloys and
          these links are assessed in Sections 5.2 and 5.3 below. Although these links do not
          give rise to affected markets based on the market shares provided by the Notifying
          Party, as further outlined in the competitive assessment below, the Commission also
          considers that the market shares do not fully represent the respective importance of
          the Parties in the respective upstream and downstream markets.
(41)      The Transaction also gives rise to a vertically affected market in collection and
          processing of titanium scrap (an input for nickel alloy products) in the EEA, assessed
          in Section 5.4 below.62
5.1.      Legal framework
(42)      According to the Commission’s Guidelines on the assessment of non-horizontal
          mergers under the Council Regulation on the control of concentrations between
          undertakings (“Non-horizontal Merger Guidelines”), foreclosure effects may occur
          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.63
58   See Case M.7839 - Outokumpu / Hernandez Edelstahl, paragraphs 30 et seq.; Case M.1080 - Thyssen /
     Krupp, paragraph 18.
59   Form CO, paragraph 201.
60   Form CO, paragraph 206.
61   The Transaction also gives rise to a negligible horizontal overlap between the Parties’ activities in relation
     to the distribution of stainless steel sheets and plates in Germany. However, as the Parties’ combined share
     remains below 20% (Form CO, footnote 5), this market will not be further discussed in this Decision.
62   The Parties’ activities marginally overlap in the upstream markets for collection and processing of
     stainless steel and in titanium scrap via Aperam’s ownership of a scrapyard in Belgium (formerly
     Cronimet Belgium but now called Aperam/ASB Recycling.[…]. (Form CO, paragraph 269).
63   Non-horizontal Merger Guidelines, paragraph 18.
                                                               10
 ---pagebreak--- (43)      In assessing the likelihood of an anticompetitive input foreclosure scenario, the
          Commission examines, first, whether the merged entity would have, post-merger, the
          ability to substantially foreclose access to inputs, second, whether it would have the
          incentive to do so, and third, whether a foreclosure strategy would have a significant
          detrimental effect on competition downstream. 64
(44)      In assessing the likelihood of an anticompetitive customer foreclosure scenario, the
          Commission examines, first, whether the merged entity would have the ability to
          foreclose access to downstream markets by reducing its purchases from its upstream
          rivals, second, whether it would have the incentive to reduce its purchases upstream,
          and third, whether a foreclosure strategy would have a significant detrimental effect
          on consumers in the downstream market. 65
(45)      Finally, vertical mergers may also give rise to the disclosure of commercially
          sensitive information regarding the upstream or downstream activities of rivals,
          where the merged entity may gain access to this information. For example, by
          becoming a supplier of a downstream competitor, a company may obtain critical
          information allowing it to prices less aggressively in the downstream market. It may
          also put competitors at a competitive disadvantage, thereby dissuading them from
          entering or expanding in the market. 66
5.2.      Stainless steel scrap
5.2.1. Market shares
5.2.1.1. Upstream market – supply of stainless steel scrap
(46)      The market for the supply of stainless steel scrap in the EEA is mostly served by
          three major players who are active across the EEA: Cronimet ([20-30]%), ELG ([10-
          20]%) and Oryx ([10-20]%). The remainder of the market is fragmented among a
          small number of more local players (e.g. Reinoxmetal in Spain, Derichebourg in
          France). This is evident from the market shares set out in Table 1 below.67
64   Non-horizontal Merger Guidelines, paragraph 32.
65   Non-horizontal Merger Guidelines, paragraph 59.
66 Non-Horizontal Merger Guidelines, paragraph 78.
67 The market shares set out in Table exclude so-called “internal use” stainless steel scrap as this has not
     been purchased from stainless steel scrap suppliers. This is stainless steel scrap that is produced by
     stainless steel producers as a by-product of their own production and then recycled again into their own
     production. See footnote 85 Form CO.
                                                          11
 ---pagebreak--- Table 1: Processing and blending of stainless steel scrap for the stainless steel industry
in the EEA in terms of volume
ELG           /             2020                          2019                     2018
Competitors
                 Volume (mt)    Market         Volume (mt)   Market     Volume (mt)    Market
                                shares (%)                   shares (%)                shares (%)
Cronimet         […]            [20-30]%       […]           [20-30]%   […]            [20-30]%
Group
ELG              […]            [10-20]%       […]           [10-20]%   […]            [10-20]%
Oryx             […]            [10-20]%       […]           [10-20]%   […]            [10-20]%
Paul Jost        […]            [0-5]%         […]           [0-5]%     […]            [0-5]%
Innovative       […]            [0-5]%         […]           [0-5]%     […]            [0-5]%
Metal
Recycling
Scholz           […]            [0-5]%         […]           [0-5]%     […]            [0-5]%
Stena            […]            [0-5]%         […]           [0-5]%     […]            [0-5]%
Recycling
Derichebourg     […]            [0-5]%         […]           [0-5]%     […]            [0-5]%
Reinoxmetal      […]            [0-5]%         […]           [0-5]%     […]            [0-5]%
GDE      Group   […]            [0-5]%         […]           [0-5]%     […]            [0-5]%
Ecore
Aperam           […]            [0-5]%         […]           [0-5]%     […]            [0-5]%
([…]68 )
Co fer m.        […]            [0-5]%         […]           [0-5]%     […]            [0-5]%
Com.Steel        […]            [0-5]%         […]           [0-5]%     […]            [0-5]%
Rizzinox         […]            [0-5]%         […]           [0-5]%     […]            [0-5]%
Theo Steil       […]            [0-5]%         […]           [0-5]%     […]            [0-5]%
Irmes            […]            [0-5]%         […]           [0-5]%     […]            [0-5]%
Met.Extra        […]            [0-5]%         […]           [0-5]%     […]            [0-5]%
Cometfer         […]            [0-5]%         […]           [0-5]%     […]            [0-5]%
Recymet          […]            [0-5]%         […]           [0-5]%     […]            [0-5]%
Systems
Acciai Mella     […]            [0-5]%         […]           [0-5]%     […]            [0-5]%
Soligon          […]            [0-5]%         […]           [0-5]%     […]            [0-5]%
Others           […]            [10-20]%       […]           [10-20]%   […]            [10-20]%
Total     scrap  […]            100%           […]           100%       […]            100%
demand
         Source: Form CO, Annex 24, Table 2 (p. 2)
68   […].
                                                      12
 ---pagebreak--- (47)     However, the Commission notes that these market shares do not represent the
         importance of the largest three scrap suppliers in the market. The large stainless steel
         producers consume large volumes of stainless steel scrap per month (for example
         Aperam sourced […]mt69 of stainless steel scrap in 2020 from stainless steel scrap
         suppliers, equating to around […]mt per month). Looking at the total volumes
         supplied by some of the smaller and mid-sized scrap suppliers, it is clear that it is
         only the larger stainless steel scrap suppliers that can fulfil the high volumes
         required by the main stainless steel producers. As noted by one market participant,
         “the market is somewhat consolidated, 4 major stainless steel producers are buying
         the majority of their monthly blended stainless steel scrap demand from 3 suppliers
         in Europe.”70
(48)     The importance of the largest two stainless steel scrap suppliers in particular
         (Cronimet and ELG) is also clear from [ELG’s internal documents].
Figure 1 – […]
[…]
         Source: Form CO, Annex 12.02, […]
(49)     Further, as noted in paragraph (17), smaller stainless steel scrap suppliers do not sell
         directly to the stainless steel producers, as only larger stainless steel scrap suppliers
         are able to fulfil the buyers’ demand for large volumes. As also noted by one
         customer, “In the EEA there are three main suppliers of stainless steel scrap.
         Besides ELG, those are Cronimet and Oryx. But there are also smaller (medium)
         suppliers…… Besides these big and medium suppliers there are local small
         suppliers but these normally sell their scrap to the big suppliers.”71 The market
         shares set out in Table 1 include a large market share ([10-20]%) for “other”
         suppliers and which has not been attributed to any additional suppliers.
5.2.1.2. Downstream market – production and wholesale of stainless steel products
(50)     In terms of the production and wholesale of stainless steel flat products, Aperam is,
         along with Outokumpu, the most important producer. As can be seen in Table 2 -
         Table 4 below, Aperam is either the largest or second largest competitor in the
         following markets.72
(51)     In the market for production and wholesale of stainless steel flat hot rolled white
         band products in the EEA, Aperam’s market share is [20-30]%, close to […]
69  Form CO, Table 101.
70  Reply to question 6 of Questionnaire 1 to stainless steel scrap suppliers.
71 Non-confidential minutes of a call with a customer, 26 July 2021.
72 Aperam is also active in production and wholesale of stainless steel flat hot rolled black band prod ucts,
    and production and wholesale of stainless steel welded tubes , but its market shares are in these
    downstream markets are below 5% at EEA-level (Form CO, Annex 26). The analysis of vertical
    relationships focuses on those downstream markets where Aperam’s market share exceeds 20%. In any
    case, the arguments why no foreclosure concerns arise are equally valid for all plausible downstream
    markets in which Aperam is active.
                                                          13
 ---pagebreak---          Outokumpu with [20-30]% and ahead of AST with [20-30]% and Acerinox of [10-
         20]%.73
(52)     In the market for production and wholesale of stainless steel flat cold rolled products
         in the EEA, Aperam’s market share is [20-30]%, only exceeded by Outokumpu with
         [20-30]% and well ahead of AST with [10-20]% and Acerinox with [5-10]%.74
(53)     In the market for production and wholesale of stainless steel quarto plates in the
         EEA, Aperam’s share is [20-30]%, followed by Outokumpu ([20-30]%), SIJ Acroni
         ([20-30]%), Acerinox ([5-10]%) and AST ([0-5]%) (see Table 4).75
(54)     The Commission also notes that the market shares set out in Table 2- Table 4 below
         may not fully represent the importance of Aperam as a downstream customer. This is
         notably because the market shares the Notifying Party provided include sales
         attributed to Marcegaglia which is not active in the production of hot rolled and cold
         rolled stainless steel products from stainless steel scrap, as well as a significant
         “other” share (up to [20-30]% for some markets), which relate to imports. 76
Table 2: Production and wholesale of stainless steel flat hot rolled white band products
in the EEA in terms of volume
                            2020                         2019                           2018
                Volume (mt)    Volume (mt)   Market          Volume (mt)   Market           Volume (mt)
                                             shares                        shares
                                             (%)mt)                        (%)mt)
Aperam          […]            [20-30]%      […]             [20-30]%      […]              [20-30]%
Outokumpu       […]            [20-30]%      […]             [20-30]%      […]              [20-30]%
Acciai          […]            [20-30]%      […]             [10-20]%      […]              [10-20]%
Speciali
Terni
Acerinox        […]            [10-20]%      […]             [5-10]%       […]              [5-10]%
Marcegaglia     […]            [0-5]%        […]             [0-5]%        […]              [0-5]%
Otelinox        […]            [0-5]%        […]             [0-5]%        […]              [0-5]%
Others          […]            [10-20]%      […]             [20-30]%      […]              [20-30]%
Total           […]            100%          […]             100%          […]              100%
market
         Source: Form CO Annex 24, Table 29 (p.13)
73   Form CO, Annex 24, Table 29. Market shares for 2020 in terms of volume. In terms of value, Aperam’s
     market share in 2020 was [20-30]% (Outokumpu: [30-40]%, AST: [20-30]% and Acerinox: [10-20]%).
     Form CO, Annex 24, Table 40.
74 Form CO, Annex 24, Table 30. Market shares for 2020 in terms of volume. In terms of value, Aperam’s
     market share in 2020 was [20-30]% (Outokumpu: [20-30]%, AST: [10-20]% and Acerinox: [5-10]%).
     Form CO, Annex 24, Table 41.
75 Form CO, Annex 24, Table 52.
76 Reply to RFI 5, Q5.
                                                      14
 ---pagebreak--- Table 3: Production and wholesale of stainless steel flat cold rolled products in the
EEA in terms of volume
                             2020                         2019                      2018
                  Volume (mt)     Market       Volume (mt)    Market      Volume (mt)    Market
                                  shares (%)                  shares (%)                 shares (%)
Aperam            […]             [20-30]%     […]            [20-30]%    […]            [20-30]%
Outokumpu         […]             [20-30]%     […]            [20-30]%    […]            [20-30]%
Acciai Speciali   […]             [10-20]%     […]            [10-20]%    […]            [10-20]%
Terni
Acerinox          […]             [5-10]%      […]            [5-10]%     […]            [5-10]%
Marcegaglia       […]             [5-10]%      […]            [5-10]%     […]            [0-5]%
Otelinox          […]             [0-5]%       […]            [0-5]%      […]            [0-5]%
Others            […]             [20-30]%     […]            [20-30]%    […]            [20-30]%
Total market      […]             100%         […]            100%        […]            100%
         Source: Form CO, Annex 24, Table 30 (p. 14)
Table 4: Production and wholesale of stainless steel quarto plates in the EEA in terms
of volume
                            2020                         2019                       2018
                 Volume (mt)    Market        Volume (mt)    Market      Volume (mt)   Market
                                shares (%)                   shares (%)                shares (%)
Aperam ([…])     […]            [20-30]%      […]            [20-30]%    […]           [20-30]%
Outokumpu        […]            [20-30]%      […]            [20-30]%    […]           [20-30]%
SIJ Acroni       […]            [20-30]%      […]            [20-30]%    […]           [20-30]%
Acerinox         […]            [5-10]%       […]            [10-20]%    […]           [10-20]%
(excluding its
German
subsidiary
VDM Metals)
Acciai           […]            [0-5]%        […]            [0-5]%      […]           [0-5]%
Speciali Terni
Others           […]            [20-30]%      […]            [10-20]%    […]           [10-20]%
(including
VDM Metals)
Total market     […]            100%          […]            100%        […]           100%
         Source: Form CO, Annex 24, Table 52 (p. 22)
(55)     Aperam is the […] buyer of stainless steel scrap in the EEA. Based on consumption
         shares provided by the Notifying Party, Aperam accounts for [20-30]% of stainless
         steel scrap consumption in the EEA, after Outokumpu, which accounts for [20-30]%.
         Other buyers of stainless steel scrap are AST ([10-20]% share of consumption),
                                                     15
 ---pagebreak---          Acerinox ([10-20]% share of consumption) and several smaller consumers (all below
         5%).77
Table 5: Stainless steel scrap consumption in the EEA in terms of volume 78
Consumer                      2020                            2019                            2018
                 Volume (mt)       Market          Volume (mt)    Market         Volume (mt)      Market
                                   shares (%)                     shares (%)                      shares (%)
Outokumpu        […]               [20-30]%        […]            [20-30]%       […]              [20-30]%
Aperam ([…])     […]               [20-30]%        […]            [20-30]%       […]              [20-30]%
Thyssenkrupp     […]               [10-20]%        […]            [10-20]%       […]              [10-20]%
(Acciai
Speciali
Termi)
Acerinox         […]               [10-20]%        […]            [10-20]%       […]              [10-20]%
Swiss     Steel  […]               [0-5]%          […]            [0-5]%         […]              [0-5]%
Group
Valbruna         […]               [0-5]%          […]            [0-5]%         […]              [0-5]%
SIJ Acroni       […]               [0-5]%          […]            [0-5]%         […]              [0-5]%
Sandvik          […]               [0-5]%          […]            [0-5]%         […]              [0-5]%
Cogne Acciai     […]               [0-5]%          […]            [0-5]%         […]              [0-5]%
Speciali
Olarra           […]               [0-5]%          […]            [0-5]%         […]              [0-5]%
BGH              […]               [0-5]%          […]            [0-5]%         […]              [0-5]%
Acería      de   […]               [0-5]%          […]            [0-5]%         […]              [0-5]%
Álava
(Tubacex)
Others           […]               [0-5]%          […]            [5-10]%        […]              [5-10]%
Total    scrap   […]               100%            […]            100%           […]              100%
demand
         Source: Form CO, Annex 24, Table 23 (p. 10)
5.2.2. Input foreclosure
5.2.2.1. The Notifying Party’s views
(56)     The Notifying Party submits that it lacks market power to have the ability to
         successfully engage in any input foreclosure strategy, as the Parties’ combined
         market share in collection, processing and trading of stainless steel scrap is below
         30% at the EEA-level. ELG accounts for only approx. [10-20]% of the EEA-wide
         market for collection, processing and trading of stainless steel scrap. Customers can
         continue to source stainless steel scrap from strong competitors upstream, such as
         Cronimet Group ([20-30]%), Oryx ([10-20]%), Paul Jost ([0-5]%) and Innovative
77   Form CO, Annex 24, Table 23.
78   The consumption shares include “internal use” stainless steel scrap, namely scrap that has been produced
     and recycled within the stainless steel producers own production.
                                                           16
 ---pagebreak---         Metal Recycling ([0-5]%).79 Aperam’s competitors would also be able to switch
        easily to alternative suppliers across the entire EEA. In addition, stainless steel scrap
        is a commodity product mostly procured on a spot basis without any brand loyalty. 80
        […].81
(57)    The Notifying Party submits that it does not have an incentive to foreclose access to
        inputs, as Aperam would prefer to source scrap from a third party supplier in the
        EEA if offered at a lower price compared to ELG (e.g. because of a transport cost
        advantage). A strategy of sourcing scrap volumes from ELG at any price would not
        be sustainable for Aperam.82 Moreover, redirecting any volumes of ELG to
        Aperam’s plants will free up volumes elsewhere and not reduce availability for
        competitors.83 Given Aperam’s limited market share at the downstream level, the
        merged entity would not be able to materially benefit from any input foreclosure
        strategy.84 Finally, [summary of Aperam’s post-merger sourcing strategy]. Instead,
        Aperam’s main objective with the Transaction is to make material flows more
        efficient and to optimise the composition of scrap for its needs. 85 Nevertheless, the
        markets are not highly concentrated and, therefore, any foreclosure strategy would
        have no (long-term) impact on effective competition. 86
5.2.2.2. The Commission’s assessment
(58)    Stainless steel scrap is the most important input for the production of stainless steel,
        accounting for approximately [40-50]% of the total cost of downstream production. 87
        While the Notifying Party argues that ELG’s upstream market shares are low and
        could not therefore give rise to any input foreclosure concerns, the Commission
        notes that for at least one customer, Acerinox, which is based in Spain, ELG is an
        important supplier due to the particularly close proximity of ELG’s scrap yard to the
        customer’s steel mill.
(59)    As observed by the Notifying Party, it is important for stainless steel producers to
        ensure that stainless steel scrap can be sourced locally: […]88 Therefore, the
        Commission’s investigation focussed on whether the Transaction could give rise to
        input foreclosure for Acerinox in particular.
(60)    The Commission’s investigation focussed on Spain, where ELG has a scrap yard in
        San Roque, Cádiz, in southern Spain. This is located only 8km from the steel mill of
        Acerinox, one of Aperam’s main competitors. Acerinox’s mill near Algeciras, Cádiz,
        in southern Spain has access to a deep port facility and Acerinox sources its stainless
        steel scrap both by container ship (with scrap shipped from Germany or the
79  Form CO, paragraphs 650 et seq.
80  Form CO, paragraph 654; paragraphs 684 et seq.; reply to RFI 9, page 2 et seq.
81  Form CO, paragraphs 612 et seq.; paragraph 676 ; paragraph 698; reply to RFI 9, page 3.
82  Form CO, paragraph 655; paragraphs 693 et seq.; reply to RFI 9, page 3.
83  Reply to RFI 9, page 4.
84  Form CO, paragraph 656.
85  Form CO, paragraph 657; reply to RFI 9, paragraphs 17 et seq.
86  Reply to RFI 9, Q7, paragraphs 49 and 50.
87  Form CO, Annex 26, Table 19. Out of Aperam’s total cost for the production of grade 304 flat stainless
    steel products in the last three years in the EEA, externally sourced scrap accounted for […]%, […]% and
    […]%. For grade 316 flat stainless steel products the share is slightly lower, with […]%, […]% and
    […]%. (Form CO, Annex 26, Table 20).
88  Reply to RFI 9, Q1, paragraph 5.
                                                          17
 ---pagebreak---          Netherlands) and also by truck from ELG’s San Roque yard. There are advantages to
         ensuring this balance of supplies of stainless steel scrap.89
(61)     In terms of ability to foreclose, stainless steel scrap is an important input for the
         downstream production of stainless steel. 90 The Commission’s market investigation
         also confirmed the importance of having scrap suppliers close to the customers’
         production facilities.91 However, the Commission notes that Oryx, the third largest
         stainless steel scrap supplier in the EEA, has recently opened a scrap yard in
         Vilanova i la Geltrú, 40 km south of Barcelona, Spain. 92 This scrap yard is around
         1000km away from Acerinox’s facilities in southern Spain and the Commission
         considers that it could provide Acerinox with an alternative source of supply of
         stainless steel scrap that is still located on the Iberian peninsula.
(62)     In terms of incentive to foreclose, the Commission notes that […]. 93 Acerinox is the
         largest stainless steel producer in Spain. The Commission notes that any attempt to
         foreclose Acerinox would necessarily entail loss of sales of stainless steel scrap at
         the San Roque yard; Aperam’s own steel mills are located in Belgium (2,210km to
         Châtelet and 2,309km to Genk)94 [Aperam’s future sourcing strategy post-merger].95
(63)     In summary, the Commission therefore considers that any input foreclosure strategy
         pursued by Aperam could not have any overall detrimental effects on competition,
         due to the possibility of Acerinox to source from alternative suppliers of stainless
         steel scrap, including in particular from Oryx’s scrap yard in Vilanova i la Geltrú.
(64)     The Commission does not consider that the merged entity would have the ability or
         incentive to foreclose any of the other downstream stainless steel producers. Either
         these producers are not currently supplied by ELG or are supplied in limited
         volumes96 or their stainless steel mills are not located in such a close proximity to
         the ELG yard as compared to Acerinox.
(65)     In view of the above, the Commission concludes that the Transaction does not raise
         serious doubts as to its compatibility with the internal market and the functioning of
         the EEA Agreement in relation to the vertical link between the supply of stainless
         steel scrap upstream and the production and wholesale of stainless steel products
         downstream on the basis of input foreclosure.
5.2.3. Customer foreclosure
5.2.3.1. The Notifying Party’s views
(66)     The Notifying Party submits that it lacks market power to have the ability to
         successfully engage in any customer foreclosure strategy, as Aperam’s market shares
89  Non-confidential minutes of a call with a customer, 26 July 2021.
90  Form CO, Annex 26, Table 19.
91  Replies to question 15 and 18 of Questionnaire 2 to stainless steel scrap customers.
92  Non-confidential minutes of a call with a competitor, 9 November 2021.
93  San Roque supplied to Acerinox […] mt in 2019 and […] mt in 2020. Annex 17 and Annex 18 from Form
    CO.
94  Reply to RFI 9, Q6, paragraph 42.
95  Reply to RFI 9, Q6, paragraph 47.
96  Replies to question 20 of Questionnaire 2 to stainless steel scrap customers; non-confidential minutes of a
    call with a customer, 22 July 2021.
                                                          18
 ---pagebreak---         in relation to production and wholesale of stainless steel are respectively below 30%
        at the EEA-wide level and a number of competitors with considerable stainless steel
        requirements remain in the market. 97 Aperam sources stainless steel scrap from […].
        In these countries there are a number of competitors including AST which has
        stainless steel production in Italy, the Swiss Steel Group which has several stainless
        steel production sites in Germany and in France, together with a number of
        additional stainless steel producers including Valbruna, SIJ Acroni, Sandvik, Cogne
        Acciai Speciali, Olarra, BGH and Aceria de Alava (Tubacex).98
(67)    The Notifying Party submits that it does not have an incentive to stop buying
        stainless steel scrap from other suppliers than ELG, as […].99
5.2.3.2. The Commission’s assessment
(68)    Aperam is an important downstream customer for stainless steel scrap as can be seen
        in Table 5. Aperam ([…]) is the second largest downstream stainless steel producer
        in the EEA, accounting for [20-30]% of consumption of stainless steel scrap in terms
        of volume in 2020. Only Outokumpu (based in Finland) is of a similar scale, with a
        [20-30]% share of consumption.100 The third and fourth players are significantly
        smaller, accounting for [10-20]% (AST, based in Italy) and [10-20]% (Acerinox,
        based in Spain) of all stainless steel scrap consumption. The next largest player
        accounts for [0-5]% of stainless steel scrap consumption (Swiss Steel) and the
        remaining [10-20]% of consumption is fragmented amongst many smaller players.101
(69)    Of the main stainless steel producers, Aperam is the only one centrally located in
        Europe, with its main production facilities in Châtelet and Genk (both located in
        Belgium) and Industeel’s production facilities in Charleroi (also Belgium) and Le
        Creusot (France). By contrast, Outokumpu’s steel plants are in Finland, Acerinox in
        southern Spain (Algeciras) and AST in central Italy (Terni). Aperam is well placed
        to receive stainless steel scrap from stainless steel scrap suppliers in the Netherlands
        and Germany where the main scrap yards are located. Due to this central location,
        Aperam sources the […] of its scrap within a […] km radius.102
(70)    While the Notifying Party argues that transport costs are insignificant, 103 this is not
        supported by the Commission’s market investigation. 104 For example, one scrap
        supplier noted that: “in terms of absolute cost, transport costs do vary
        significantly…within Europe. The difference – particularly in relation to the
        potential gross margin – shows how important the distance and the connection of
        means of transport between supplier and customer is.”105 It is clear also from data
        supplied by the Notifying Party that stainless steel scrap that has been transported
97  Form CO, paragraphs 704 et seq.
98  Form CO, paragraphs 710 and 711.
99  Form CO, paragraph 660.
100 In 2019, Aperam […] accounted for [20-30]% of stainless steel scrap consumption, compared to
    Outokumpu’s [20-30]%.
101 Form CO, Annex 24, Table 23.
102 Form CO, Annex 21.
103 See for example, Form CO, paragraphs 149 and 162.
104 Replies to question 13 of Questionnaire 1 to stainless steel scrap suppliers. Replies to question 14 of
    Questionnaire 2 to stainless steel scrap customers.
105 Reply to question 13 of Questionnaire 1 to stainless steel scrap suppliers.
                                                          19
 ---pagebreak---         over shorter distances, incurs lower transport costs than stainless steel scrap
        transported over longer distances.106
(71)    [Aperam’s future stainless steel scrap sourcing strategy].107 [Aperam’s future
        stainless steel scrap sourcing strategy].108
(72)    […]. The Commission has therefore investigated the impact of the Transaction on
        Aperam’s current stainless steel scrap suppliers and whether the Transaction may
        give rise to customer foreclosure concerns.
(73)    Over the last five years, Aperam has […] sourced its supplies of stainless steel scrap
        from the largest suppliers of stainless steel scrap, namely Cronimet, ELG and
        Oryx.109 By way of example, in 2019 Aperam sourced […]% of its total stainless
        steel scrap supplies from ELG, […]% from Cronimet, […]% from Oryx and in 2020,
        […]% from each of ELG and Cronimet and […]% from Oryx. These shares of
        sourcing have remained […] over the last five years, with Aperam sourcing the […]
        volumes from ELG and Cronimet ([…] suppliers of stainless steel scrap in the EEA)
        and approximately […]% of its total supplies from Oryx. Aperam sources […]
        volumes of stainless steel scrap from the suppliers Paul Jost and Derichebourg, for
        example in 2019 Aperam sourced […]mt from Paul Jost and […]mt from
        Derichebourg and in 2020, […]mt from Paul Jost and […]mt from Derichebourg.110
        The remainder of Aperam’s stainless steel scrap (around […]% of its total supply in
        2019, […]% in 2020) is sourced from a number of smaller suppliers.
(74)    The supply of stainless steel scrap is core to Cronimet, Oryx and Paul Jost’s
        business.111 Derichebourg is a recycling company focussed on the recycling of
        ferrous and non-ferrous metal and the supply of stainless steel scrap accounts for a
        small proportion of its total turnover. 112
(75)    The Commission investigated whether, post-Transaction, the merged entity would
        have the ability to foreclose these suppliers, by assessing whether they would have
        sufficient alternatives to sell their output.
(76)    Indeed, in light of the Transaction, market participants and in particular stainless
        steel scrap suppliers, have envisaged the possibility of needing to switch to
        alternative customers if Aperam were to reduce its purchases from them. Several are
        in negotiations with other downstream stainless steel producers. 113 For example one
        noted that: “already today we are discussing such scenarios with our customers and
106 By way of example, based on ELG’s own transport data, ELG’s cost of transport stainless steel scrap
    transported over […]km is EUR […] and is EUR […] for stainless steel scrap transported over distances
    greater than […]km. See Table 12, Form CO.
107 Form CO, paragraphs 613 – 618.
108 Form CO, paragraph 618.
109 Form CO, paragraph 553.
110 Form CO, Tables 101 and 102.
111 See replies to question 1 and 2 of Questionnaire 1 to stainless steel scrap suppliers. See also
    https://www.cronimet.de/en/expertise/materials/,          https://www.oryx.com/,     https://www.jost-
    recycling.com/en/business -fields/stainless-steel-scrap.
112 Reply to question 1 and 2 of Questionnaire 1 to stainless steel scrap suppliers.
113 Replies to question 32 of Questionnaire 1 to stainless steel scrap suppliers.
                                                           20
 ---pagebreak---         the majority is prepared to increase purchase volumes and to compensate missing
        ELG volumes.”114
(77)    However, and as noted above, Aperam is the only major stainless steel producer that
        is located centrally in Europe. Suppliers that switch their sales from Aperam to
        alternative customers such as Acerinox, Outokumpu or AST would necessarily face
        increased transport costs as these suppliers are located much further away from the
        main stainless steel scrapyards in Germany and the Netherlands. 115 Several suppliers
        therefore noted that re-arranging supplies of stainless steel scrap would increase their
        transport costs and would have a negative impact on their profitability. 116
(78)    Despite this, the Commission has found that certain suppliers were already supplying
        lower volumes to Aperam than they had in the past. For example, between the years
        2019 and 2021, the volumes that Paul Jost has supplied to Aperam have […]: […]mt
        in 2019, […] in 2020 and […] in 2021.117 The Commission therefore notes that it is
        possible for suppliers to shift their supplies to alternative customers.
(79)    Indeed, by way of example, one supplier considered that the Transaction should not
        raise concerns, because even if Aperam decided to source its scrap only from ELG in
        the future, this would provide suppliers such as themselves alternative outlets in the
        future. “For the overall market, [….] does not see a problem because the quantities
        within the market concerning supply and demand will stay the same. Even if Aperam
        should decide to source its scrap only from ELG after the merger that should not
        dramatically change the market. This is because for the quantities that Aperam
        would now source from ELG there would then be other customers (former ELG
        customers), which would need a new supplier.”118
(80)    The Commission also notes that the Transaction takes place at a time of very strong
        demand for stainless steel scrap, which should ensure a high number of available
        outlets for scrap suppliers in Europe.119 Market participants referred both to a general
        increase in demand but also to the need to ensure sustainability by ensuring the
        maximum recycling of stainless steel scrap.
(81)    On the basis that certain stainless steel scrap suppliers have already started to
        diversify their sales of stainless steel scrap and in the expectation that downstream
        customers may also need to increase their purchases from other upstream stainless
        steel scrap suppliers post-Transaction, the Commission considers that the merged
        entity would not have the ability to conduct a customer foreclosure strategy.
(82)    In view of the above, the Commission concludes that the Transaction does not raise
        serious doubts as to its compatibility with the internal market and the functioning of
        the EEA Agreement in relation to the vertical link between the supply of stainless
114 Reply to question 32 of Questionnaire 1 to stainless steel scrap suppliers.
115 By way of example of increased transport costs, ELG’s costs of transport stainless steel scrap transported
    over […]km is EUR […] and is EUR […] for stainless steel scrap transported over distances greater than
    […]km. See Table 12, Form CO.
116 Replies to question 32 of Questionnaire 1 to stainless steel scrap suppliers.
117 Form CO, Tables 101 and 102, reply to RFI 11, question 9.
118 Non-confidential minutes of a call with a competitor, 23 July 2021.
119 Replies to question 30 of Questionnaire 1 to stainless steel scrap suppliers and to question 24 of
    Questionnaire 2 to stainless steel scrap customers .
                                                          21
 ---pagebreak---         steel scrap upstream and the production and wholesale of stainless steel products
        downstream on the basis of customer foreclosure.
5.2.4. Access to commercially sensitive information
5.2.4.1. The Notifying Party’s views
(83)    The Notifying Party submits that its limited market power both upstream and
        downstream restricts the impact amount of transparency in the markets that any
        information exchange would bring about. Moreover, the lack of market power
        excludes a significant impediment of competition resulting from the Parties acting
        on the exchanged information, in particular given that the information collected
        would not be complete (in particular […]).120 Furthermore, as a reference price such
        as the London Metal Exchange or Fastmarkets is used for pricing, any possible
        information will not enable it to gain significant visibility on its competitors’ cost
        structure at the downstream level of production and wholesale of stainless steel
        products or production and direct sale of nickel alloy products. 121
5.2.4.2. The Commission’s assessment
(84)    As certain market participants raised concerns that the merged entity would have
        access to pricing and other confidential conditions related to the supply of stainless
        steel scrap,122 the Commission investigated this claim on the basis of the legal
        framework outlined in paragraph (45), but considers that no concerns arise for the
        following reasons.
(85)    The Commission observes that the Transaction would increase transparency in the
        market for the supply of stainless steel scrap […]. In particular, Aperam could
        receive access to ELG’s […].123 ELG, via Aperam, would also receive access to
        […]. The Commission considers that these conditions are not transparent; as noted
        by the Notifying Party’s own reply, […].124 Any information disclosed would
        nonetheless necessarily only relate to either the share of purchases made from ELG
        or the share of sales made to Aperam and this therefore provides a limit to the insight
        gained by the merged entity post-Transaction.
(86)    However, the Commission notes that based on the conclusions on input and
        customer foreclosure above, market participants may take steps in order to manage
        any potential disclosure of commercially sensitive information. For example,
        downstream customers may decide to limit their purchasing from ELG in order to
        reduce access to potentially sensitive information and upstream competitors may
        also decide to redirect their supplies away from Aperam and towards other
        downstream customers.
120 Form CO, paragraphs 728 et seq.
121 Form CO, paragraphs 731 et seq.; reply to RFI 9, paragraphs 28 et seq.
122 Replies to Q33, questionnaire 1 to competitors and replies to question 28 of Questionnaire 2 to stainless
    steel scrap customers.
123 Form CO, paragraphs 728 – 736.
124 Reply to RFI 9, paragraph 67.
                                                        22
 ---pagebreak--- (87)      In view of the above, the Commission concludes that the Transaction does not raise
          serious doubts as to its compatibility with the internal market and the functioning of
          the EEA Agreement based on access to commercially sensitive information.
5.3.      Nickel alloy scrap
(88)      No affected market arises for the vertical relationship between processing and
          blending of nickel alloy scrap, where ELG is active, and different nickel alloy
          products and stainless steel products for which nickel alloy scrap is an important
          input, where Aperam is active. Given concerns about input foreclosure by some
          market participants as a result of this vertical relationship, the reasons why the
          Commission considers input foreclosure unlikely will nevertheless be discussed
          below. With the exception of nickel alloy rod where Aperam’s market shares are still
          significantly below 30%, Aperam’s market shares did not exceed 10% on any of the
          downstream markets for which nickel scrap is used as an input. 125 Therefore,
          customer foreclosure can be excluded on the basis of lack of market power.
5.3.1. Market shares
5.3.1.1. Upstream market – supply of nickel alloy scrap
(89)      The market for the supply of nickel alloy scrap in the EEA is mostly served by two
          major players who are active across the EEA: Cronimet and ELG. In terms of the
          supply of nickel alloy scrap, ELG and Cronimet are the largest suppliers in the EEA
          with [10-20]% market share each. The next largest player (Siegfried Jacob) has a [0-
          5]% share, followed by Wyman Gordon (Caledonian Alloys) with [0-5]%. The
          remainder of the market is fragmented among small local players.126 The
          Commission notes that the market shares provided by the Notifying Party are based
          on estimates by ELG, […].127 The results of the market investigation indicate that
          actual market shares might diverge from the provided estimates, but would not result
          in significantly higher market shares for ELG. 128
5.3.1.2. Downstream market – production and wholesale of nickel alloy products
(90)      Aperam is the second largest buyer of nickel alloy scrap in the EEA, accounting for
          [20-30]% of nickel alloy scrap consumption in the EEA, after VDM Metals which
          accounts for [30-40]%. Other buyers account for less than [10-20]% of demand
          (Voestalpine with [5-10]% and Deutsche Nickel, Sandvik and ERAMET with [5-
          10]% each, as well as several buyers accounting for [5-10]% or less).129
125 Notably, Aperam is also active in (i) production and sale of nickel alloy semis, (ii) production and sale of
     nickel alloy bars, (iii) production and sale of nickel alloy wire, (iv) production and sale of nickel alloy
     strip and (vi) production and sale of nickel alloy “plates and sheets”, but its market shares are in these
     downstream markets are below 10% at EEA-level (Form CO, Annex 26). The analysis of vertical
     relationships focuses on those downstream markets where Aperam’s market share exceeds 20%. In any
     case, the arguments why no foreclosure concerns arise are equally valid for all plausible downstream
     markets in which Aperam is active.
126  Form CO, Annex 24, Table 25.
127  Form CO, paragraph 332.
128  Replies to question 16.1 of questionnaire 4 to nickel alloy scrap customers.
129  Form CO, Annex 24, Table 26.
                                                            23
 ---pagebreak--- (91)     In terms of nickel alloy products, Aperam’s share is relatively low in most sub-
         segments, with the exception of nickel alloy wire rod in the EEA where Aperam […]
         with [20-30]%, followed by BGH ([20-30]%), VDM Metals ([10-20]%), Sandvik
         ([5-10]%), Gebauer & Griller ([5-10]%), Deutsche Nickel ([0-5]%), Böhler ([0-5]%)
         and Carpenter Technology ([0-5]%). […].
(92)     The Notifying Party also notes that it is not in a position to estimate the total size, its
         own market share, the market shares of its competitors or imports into the EEA in
         relation to production and direct sale of the various nickel alloy products in terms of
         value in the EEA in 2018, 2019 or 2020.130
Table 6: Nickel base alloy scrap consumption in the EEA in terms of volume
Consumer                       2020                       2019                      2018
                     Volume        Market         Volume     Market      Volume        Market
                     (mt)          shares (%)     (mt)       shares (%)  (mt)          shares (%)
VDM Metals           […]           [30-40]%       […]        [20-30]%    […]           [30-40]%
Aperam               […]           [20-30]%       […]        [20-30]%    […]           [20-30]%
Böhler               […]           [5-10]%        […]        [5-10]%     […]           [5-10]%
(Voestalpine)
Deutsche Nickel      […]           [5-10]%        […]        [5-10]%     […]           [5-10]%
Sandvik              […]           [5-10]%        […]        [5-10]%     […]           [5-10]%
Aubert & Duval       […]           [5-10]%        […]        [5-10]%     […]           [5-10]%
(ERAMET Group)
Foroni               […]           [0-5]%         […]        [5-10]%     […]           [5-10]%
Valbruna             […]           [0-5]%         […]        [5-10]%     […]           [0-5]%
BGH                  […]           [0-5]%         […]        [0-5]%      […]           [0-5]%
Vacuumschmelze       […]           [0-5]%         […]        [0-5]%      […]           [0-5]%
Others               […]           [0-5]%         […]        [0-5]%      […]           [5-10]%
Total scrap demand   […]           100%           […]        100%        […]           100%
         Source: Form CO, Annex 24, Table 26 (p. 12)
130 Form CO, paragraph 337.
                                                       24
 ---pagebreak--- Table 7: Production and sale of nickel alloy wire rod in the EEA in terms of volume
                            2020                         2019                    2018
                  Volume (mt)    Market        Volume (mt)  Market     Volume (mt)  Market
                                 shares (%)                 shares (%)              shares (%)
Aperam            […]            [20-30]%      […]          [20-30]%   […]          [10-20]%
BGH               […]            [20-30]%      […]          [10-20]%   […]          [10-20]%
VDM Metals        […]            [10-20]%      […]          [10-20]%   […]          [10-20]%
Sandvik           […]            [5-10]%       […]          [5-10]%    […]          [5-10]%
Gebauer       &   […]            [5-10]%       […]          [5-10]%    […]          [5-10]%
Griller
Deutsche Nickel   […]            [0-5]%        […]          [5-10]%    […]          [5-10]%
Böhler            […]            [0-5]%        […]          [0-5]%     […]          [0-5]%
Carpenter         […]            [0-5]%        […]          [0-5]%     […]          [5-10]%
Technology
Others            […]            [10-20]%      […]          [10-20]%   […]          [20-30]%
Total     market  […]            100%          […]          100%       […]          100%
volume
        Source: Form CO, Annex 24, Table 49 (p. 21)
5.3.2. The Notifying Party’s view
(93)    As already shown above, the Notifying Party submits that it lacks market power to
        have the ability to successfully engage in any input foreclosure strategy, as the
        Parties’ combined market share in collection, processing and trading nickel alloy
        scrap is below 30% at the EEA-level. ELG accounts for only approximately [10-
        20]% of the EEA-wide market for collection, processing and trading of nickel alloy
        scrap. Customers can continue to source nickel alloy scrap from strong competitors
        upstream, such as Cronimet Group ([10-20]%), Siegfried Jacob ([0-5]%) and
        Wyman Gordon (Caledonian Alloys; [0-5]%).131
(94)    Besides, externally sourced nickel alloy scrap is in general not an as important input
        for the production of nickel alloy products as stainless steel scrap is for the
        production of stainless steel products. For producing nickel alloys, specific amounts
        of different metals and elements need to be combined. Such a stringent chemical
        composition often requires pure primary raw materials. Thus, nickel alloy products
        could be manufactured or effectively sold without nickel alloy scrap.132
5.3.3. The Commission’s assessment
(95)    The Commission considers that the Parties are not able to foreclose access to nickel
        alloy scrap. Although the market shares do not fully reflect the position of ELG in
        the upstream market, the results of the market investigation indicate that a large
        number of credible alternative suppliers are active in the upstream market. The
        customers who replied to the market investigation indicated that they sourced from
131 Form CO, paragraphs 650 et seq.
132 Form CO, paragraphs 677 and 679.
                                                    25
 ---pagebreak---          up to ten different suppliers in the past year133 and could switch to most of them if
         ELG were to reduce their supplies and increase price and/or reduce quality of their
         supplies.134 The majority of customers described switching as rather easy. According
         to one respondent, a switch “would take few days and it can be done easily”.135
         Therefore, it is unlikely that the Parties would have the ability to foreclose access to
         nickel alloy scrap.
(96)     The Commission also considers that Aperam does not have an incentive to
         significantly increase its purchases of nickel alloy scrap from ELG. First, as
         explained in paragraph (94), secondary raw material cannot be easily used to
         substitute primary raw material in the production of nickel alloys, […]. Moreover,
         unlike in stainless steel scrap, […].136 In 2020, Aperam’s re-using of nickel alloy
         scrap coming about as a by-product of Aperam’s nickel alloy production accounted
         for approx. […]% of Aperam’s nickel alloy’s raw material costs in the EEA. 137 In
         2019, Aperam’s re-using of nickel alloy scrap coming about as a by-product of
         Aperam’s nickel alloy production accounted for approx. […]% of Aperam’s nickel
         alloy’s raw material costs in the EEA. 138 Finally, many important buyers of nickel
         alloy scrap remain in the market post-Transaction to which ELG would lose sales of
         nickel alloy scrap in case it restricted its supply, or supplied at worse conditions,
         without any benefit for Aperam. Therefore, it is unlikely that the Parties would have
         the incentive to foreclose access to nickel alloy scrap.
(97)     In summary, the Commission therefore considers that any input foreclosure strategy
         pursued by Aperam could not have any overall detrimental effects on competition,
         due to the possibility of customers to source from alternative suppliers of nickel
         alloy scrap.
(98)     In view of the above, the Commission concludes that the Transaction does not raise
         serious doubts as to its compatibility with the internal market and the functioning of
         the EEA Agreement in relation to the vertical link between nickel alloy scrap, and
         different nickel alloy products and stainless steel products.
5.4.     Titanium scrap
(99)     The Transaction also results in a vertically affected market between the market for
         processing and blending of titanium scrap, where ELG is active, and Aperam’s
         activity as buyer of titanium scrap. Aperam’s share of sourcing volumes of titanium
         scrap for the purposes of its nickel alloy production remained below […]% in the
         last three years.139 Therefore, customer foreclosure can be excluded on the basis of
         lack of market power. Aperam did not source any titanium scrap for […].140
         Aperam’s market shares also did not exceed 30% on any of the downstream markets
133 Replies to question 17 of Questionnaire 4 to nickel alloy scrap customers.
134 Replies to question 20.1 and 20.2 of Questionnaire 4 to nickel alloy scrap cus tomers.
135 Replies to question 20.3 of Questionnaire 4 to nickel alloy scrap customers.
136 As the Notifying Party explains, the aerospace segment is a key area of application for nickel-base
     superalloys as well as titanium. Due to the zero-defect policy, a lot of scrap is generated during the
     production of products for the aerospace segment. […]. (Form CO, paragraph 86.)
137  Form CO, paragraph 335.
138  Form CO, paragraph 336.
139  Form CO, paragraph 282.
140  Form CO, Table 31 (p. 64); reply to RFI 11, paragraph 8.
                                                           26
 ---pagebreak---         for which titanium is used as an input (see paragraph (91)). Given that ELG’s market
        share on the upstream market exceeded 30% in 2020, the reasons why the
        Commission considers input foreclosure unlikely will be discussed below.
5.4.1. Market shares
(100) The market for collection and processing of titanium scrap in the EEA has one big
        player with a market share of [30-40]% in 2020: ELG. The next largest players are
        Recymet with a market share of [5-10]%, Cronimet Group and Co.Fer.M (both [5-
        10]%). They are followed by SOS Metals ([5-10]%) and AmeriTi Manufacturing
        Company and Aerometal (both [5-10]%). Other market players do not have market
        shares exceeding 3%.141
(101) The Commission notes that the Parties have very limited visibility on the market
        position of competitors in relation to processing and blending of titanium scrap.142
        The Commission’s market investigation did not produce any evidence that ELG’s
        market power might exceed that suggested by the market shares provided by the
        Parties.
(102) Concerning the downstream market, the market shares correspond with the one for
        nickel alloy products (see paragraph (50) and paragraph (90))143 .
5.4.2. The Notifying Party’s view
(103) The Notifying Party submits that the Parties will have no ability to foreclose access
        to titanium scrap post-Transaction. […] stainless steel scrap, not on titanium which
        is in general not an important input for nickel alloy manufacturers. 144 Second, nickel
        alloy producers can use, and easily switch to ferrotitanium (a primary alloy) and/or
        titanium scrap as sources of titanium. 145 Third, given the Parties' low market shares
        in relation to collection and processing as well as collection, processing and trade of
        this scrap in the EEA, the Transaction will not negatively affect the overall
        availability of titanium scrap for traders or manufacturers of steel products in the
        EEA in terms of general availability, price or quality. 146 Fourth, the Parties will
        continue to face numerous strong competitors in relation to collection and processing
        of titanium scrap that are not less efficient, less preferred alternatives and do not lack
        the ability to expand output.147
(104) The Notifying Party submits that the Parties will also have no incentive to foreclose
        access to titanium scrap post-Transaction. First, Aperam is not well placed to capture
        the demand diverted away from Aperam’s competitors as a result of a foreclosure
        strategy, as titanium is not an essential input in nickel alloy scrap […].148 Second,
141 Aperam also has a market share of [0-5]% via its ownership of a scrapyard in Belgium, see footnote 65.
    (Form CO, Tables 27 and 30).
142 Form CO, paragraph 256.
143 Titanium is also an input for stainless steel products, but it is purchased as part of the stainless steel scrap
    blend. […] the Commission considers the relevant downstream markets to be nickel alloy products.
144 Form CO, paragraph 287.
145 Form CO, paragraph 288.
146 Form CO, paragraph 291.
147 Form CO, paragraphs 290 et seq.
148 Form CO, paragraph 293.
                                                            27
 ---pagebreak---        since Aperam’s market share in any EEA-wide market segment for production and
       direct sale of nickel alloy products is below 30%, the Parties would not benefit from
       any price increases at these downstream markets. 149
5.4.3. The Commission’s assessment
(105) The Commission considers that the Parties are not able to foreclose access to
       titanium scrap. ELG’s market share in the upstream market for processing and
       blending of titanium scrap only […] exceeded 30% in 2020 and remained below
       30% (at [20-30]%) in 2018 and 2019. Although ELG is the clear market leader in
       collection and processing of titanium scrap, numerous competitors remain in the
       market, accounting together for around [70-80]% of the supply of titanium scrap.
       Therefore, it is unlikely that the Parties would have the ability to foreclose access to
       titanium scrap.
(106) The Commission also considers that Aperam does not have an incentive to
       significantly increase its purchases of titanium scrap from ELG. Indeed, Aperam’s
       purchases of titanium scrap only accounted for […]% of titanium sourced in the
       EEA in the last three years. This indicates that Aperam’s demand for titanium scrap
       is […], also given that like nickel alloy scrap, a large share of titanium scrap is
       generated internally, covering a large share of Aperam’s demand (see paragraph
       (96)). Moreover, Aperam uses titanium scrap […], where its downstream market
       share does not exceed 30% in any plausible market.
(107) Finally, many important buyers of titanium scrap remain in the market post-
       Transaction to which ELG would lose sales of titanium scrap in case it restricted its
       supply, or supplied at worse conditions, without any benefit for Aperam. In 2020 and
       2018, Aperam only accounted for […]% of ELG’s sales of titanium scrap to nickel
       alloy producers in the EEA and for less than […]% of its overall sales of titanium
       scrap. In 2019, sales of titanium scrap from ELG to Aperam were higher, but
       Aperam still only accounted for […]% of ELG’s sales of titanium scrap to nickel
       alloy producers in the EEA and for […]% of its overall sales of titanium scrap. 150
       For these reasons, it is unlikely that the Parties would have the incentive to foreclose
       access to titanium scrap.
(108) In summary, the Commission therefore considers that any input foreclosure strategy
       pursued by Aperam could not have any overall detrimental effects on competition,
       due to the possibility of customers to source from alternative suppliers of titanium
       scrap.
(109) In view of the above, the Commission concludes that the Transaction does not raise
       serious doubts as to its compatibility with the internal market and the functioning of
       the EEA Agreement in relation to the vertical link between titanium scrap and
       different nickel alloy products.
149 Form CO, paragraph 294.
150 Form CO, Tables 31 and 32.
                                                  28
 ---pagebreak--- 6.    CONCLUSION
(110) For the above reasons, the European Commission has decided not to oppose the
      notified concentration 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
                                                29