CELEX: 32015M7779
Language: en
Date: 2015-12-15 00:00:00
Title: Commission Decision of 15/12/2015 declaring a concentration to be compatible with the common market (Case No COMP/M.7779 - TRAFIGURA / NYRSTAR) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

Brussels, 15.12.2015
C(2015) 9606 final

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|                                                                       |To the notifying party                                                 |

Dear Sir/Madam,

Subject:    Case M.7779 - Trafigura / Nyrstar
Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/2004[1] and Article 57 of the Agreement  on  the  European  Economic
Area[2]

  1) On 11 November 2015, the European Commission received notification of  a  proposed  concentration  pursuant  to  Article  4  of  the  Merger
     Regulation by which the undertaking Trafigura Group ('Trafigura', the Netherlands) acquires with the  meaning  of  Article  3(1)(b)  of  the
     Merger Regulation de facto sole control of Nyrstar NV ('Nyrstar', Belgium)  (the  'Proposed  Transaction').[3]  Trafigura  and  Nyrstar  are
     designated hereinafter as the 'Parties' and Trafigura as the 'Notifying Party'.

       THE PARTIES

  2) Trafigura is one of the world’s leading independent commodity traders, specialising in the oil, minerals and  metals  markets.  Its  primary
     trading activities are the supply and transport of oil and petroleum products and metals and minerals. As regards  zinc,  Trafigura  is  the
     largest or second largest trader of zinc concentrate at a worldwide level (competing mainly with Glencore) as well  as  the  second  largest
     trader in zinc metal.

  3) Nyrstar is an integrated mining and metals business, with established positions in zinc and lead. In particular, Nyrstar is the largest zinc
     smelter at a worldwide level but is relatively small in zinc mining. In the EEA, Nyrstar is the second largest smelter almost  on  par  with
     EEA market leader Glencore.

       THE CONCENTRATION

  4) On 11 September 2014, Nyrstar launched a one-for-one rights issue as part of a capital raising strategy. Trafigura, which did not  hold  any
     shares in Nyrstar prior to the rights issue, acquired shares and preferential subscription rights in the market, resulting  in  a  stake  in
     Nyrstar of 10.19%. On 13 November 2014, Trafigura announced that it had increased its shareholding to 15.30%.  Trafigura  has  continued  to
     purchase shares in the market and held [20-30]% at the time of notification.

  5) The Notifying Party considers that, on the basis of historical attendance rates, its shareholding in Nyrstar is highly  likely  to  lead  to
     control over a stable majority of votes cast at future Nyrstar shareholder meetings, and that  therefore  its  acquisition  of  shareholding
     constitutes a 'concentration' within the meaning of the Merger Regulation. According to the Notifying Party, this is based on the  following
     elements:

a. From 2009 until September 2014 (when Trafigura first purchased shares in Nyrstar), attendance at shareholder meetings  ranged  from  3.57%  to
   23.67%. Attendance during the last five years has been, on average, around 12% of Nyrstar’s total share capital;

b. At the shareholder meeting on 4 December 2014 (at which time Trafigura held a percentage interest of [10-20]%, but did not vote), the  turnout
   was 15.83%. Trafigura has only voted at the most recent shareholder meeting, on 29 April 2015, when the attendance was 35.35% (of  which  [10-
   20]% was Trafigura itself);

c. The next largest (non-treasury) shareholder after  Trafigura  is  Umicore,  with  a  shareholding  of  3.17%  according  to  its  transparency
   declaration on 23 March 2011. Only two (non-treasury) shareholders apart from Trafigura hold 3% or more of Nyrstar's shares.

  6) According to the Commission Jurisdictional Notice[4], "[a] minority shareholder may also be deemed to have sole control on a de facto basis.
     … Where, on the basis of its shareholding, the historic voting pattern at the shareholders' meeting and the position of other  shareholders,
     a minority shareholder is likely to have a stable majority of the votes at the shareholders' meeting, then that large  minority  shareholder
     is taken to have sole control."

  7) The Commission observes that the historical attendance rate at Nyrstar's shareholder meetings fluctuated between 4 and 19% in the  past  six
     years (excluding Trafigura's votes). The attendance rate spiked to 23.67% only once, in 2012. According to the Notifying Party, this was due
     to Glencore acting as the reference shareholder of Nyrstar in that year. However, Glencore appears to have divested its shares by  2013  and
     can no longer be considered a reference shareholder in Nyrstar. Neither could any other  shareholder  be  considered  to  have  a  strategic
     relationship with Nyrstar. The Commission's investigation did not reveal any indications that the attendance rates  would  increase  in  the
     future.

  8) In this light, the Notifying Party's current shareholding of [20-30]% would have highly likely allowed it to have a  majority  in  any  past
     Nyrstar shareholder meeting both before and after September 2014 when Trafigura started acquiring shares in Nyrstar. More specifically, this
     shareholding would allow Trafigura to retain the majority of votes even if  the  shareholder  attendance  were  to  increase  by  further  5
     percentage points. It has to be noted that such an increase  would  have  been  substantial  in  the  case  of  Nyrstar,  as  its  remaining
     shareholders are highly dispersed, and do not appear to have any strategic links to Nyrstar.

  9) On this basis, the Commission considers that the Proposed Transaction, consisting in the acquisition of  [20-30]%  of  Nyrstar  shares  from
     various sellers in a series of transactions, constitutes a concentration within the meaning of Article 3 of the Merger Regulation.

       EU DIMENSION

 10) The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5,000 million[5] [Trafigura: EUR  94,042  million;
     Nyrstar: EUR 2,799 million]. Each of them has a EU-wide turnover in excess of EUR 250 million [Trafigura: EUR 13,570 million;  Nyrstar:  EUR
     1,246 million], but they do not achieve more than two-thirds of their aggregate EU-wide turnover within one and the same Member  State.  The
     notified operation would therefore have an EU dimension.

       COMPETITIVE ASSESSMENT

 11) The Commission's investigation has consisted notably of  the  following  investigative  steps:  (i)  telephone  interviews  with  20  market
     participants, (ii) three questionnaires (namely to customers[6], competitors of zinc metal[7] and competitors of zinc  concentrate[8])  with
     over 75 replies, and (iii) a market reconstruction exercise.

1 Introduction to the industry

i. Zinc value chain

 12) The zinc value chain is depicted below from the point of extraction (mining) to end use.

                                                        Figure 1: Zinc metal supply chain
                                                                      [pic]

Zinc ores

 13) There are zinc mines throughout the world, though the main mining areas are China, Australia and Peru. Trafigura has one mine in  Spain  and
     one mine in Peru. Nyrstar has a number mines, all outside the EEA, in Mexico, Honduras, Chile, Canada and the USA.

 14) Zinc is mined as an ore. This ore typically contains a range of other metals such as copper, lead, silver and iron. Approximately  3-11%  of
     the ore is zinc. The ore rarely contains enough zinc to be used directly and so needs to be processed.

Zinc concentrate

 15) Zinc ore is processed into zinc concentrate at or near the mine by crushing and/or grinding the zinc ore into a powder. This powder is  then
     put through a process called 'flotation' which separates the zinc concentrate from the other metals contained in the ore.  Zinc  concentrate
     has a zinc content of about 45-50%.

 16) Concentrate is regularly transported over significant distances. North America, South America  and  Australia  are  net  exporters  of  zinc
     concentrate. China, Japan, Korea and Europe are net importers of zinc concentrate.

Zinc metal

 17) The zinc concentrate is transferred to a smelter/refinery for the production of zinc metal. At smelters around the world, the conversion  of
     zinc concentrate to zinc metal is accomplished through one of two methods: (i) the  electrolytic  process  or  (ii)  the  imperial  smelting
     process.[9] Both methods begin with the elimination of most of the sulphur in the zinc concentrate through heating the zinc concentrate to a
     high temperature to convert it to an impure zinc oxide called calcine.

 18) While Nyrstar is active in the production and supply of zinc metal, Trafigura is not active in its production but only in trading.

End customers

 19) End customers (who purchase zinc metal both directly from producers and also from traders) use zinc metal in a range of end  uses  including
     galvanising, brass semis and castings, rolled and extruded products, die casting alloys and chemicals. The largest use of zinc metal is  for
     galvanizing steel and the main user of galvanised steel is the car industry.

                                                Figure 2: Global first use of consumption for zinc
                                                                      [pic]
                                                              Source: Wood Mackenzie

 20) The world consumption of zinc metal corresponds to around 13 million metric tonnes per year. China represents a large part of the zinc metal
     consumption so that the worldwide market excluding China corresponds to 7.3 million metric tonnes. EEA consumption corresponds to around one
     third of these quantities, i.e. 2.1 million metric tonnes.

ii. Price formation of zinc metal and zinc concentrate

 21) As regards price formation, the London Metal Exchange ('LME') plays a central role in metals and concentrates. The LME is a commodity market
     in which standardised contracts (in terms of e.g. volume and grade) for metal are traded on a spot and futures basis. In non-ferrous metals,
     trading on the LME covers aluminium, copper, lead, nickel, tin and zinc. There is thus a global  market  price  for  these  metals  that  is
     determined mainly on the LME.

 22) The price set on the LME acts as a benchmark for metal and metal intermediate products traded in the physical market i.e. between  suppliers
     and customers.

 23) When trading refined metal for physical supply to customers, a premium is added to the LME  price.  This  premium  reflects,  amongst  other
     factors, the logistical costs of delivery from the actual location of the metal and the metal grade/purity. The LME price reflects the metal
     grade/purity of metal meeting the LME specifications (e.g. SHG zinc metal). If a different grade/purity is delivered physically, the  premia
     will be adapted to reflect these differences in grade/purity. Thus, contrary to the LME price, the premium varies between transactions.

 24) When trading intermediate products, such as concentrates, refiners of metal, such as smelters, purchase  their  concentrate  inputs  with  a
     rebate from the LME price, referred to as a 'treatment and refining charge'. The net difference between the LME price and the treatment  and
     refining charge rebate is in effect the price that is paid to the concentrate supplier. The treatment and  refining  charge  varies  between
     transactions depending, for instance on transport costs. Zinc smelters typically also benefit from 'free' zinc  metal,  which  measures  the
     difference between the zinc recovered and sold by the smelter, and the percentage of zinc contained in the concentrate that is paid  to  the
     miner.

 25) A zinc refiner's gross margin is thus determined by the treatment and refining charges, the value of free metal and the premium  on  top  of
     the LME price for supplies of refined metal in the physical market. In addition, zinc metal smelters earn revenues  from  the  sale  of  by-
     products (e.g. sulphuric acid or different metals recovered in the smelting process). As both input and  sales  prices  are  expressed  with
     reference to the LME price, variations in the LME price do not directly affect the margin for metal refiners. Instead,  they  mainly  affect
     the price that producers of concentrate obtain.

 26) LME prices but also regional premia, 'benchmark premia' and treatment and refining charges are published by the trade  press  on  a  regular
     basis and provide a basis for pricing in the market.

 27) Producers of metal typically prefer to sell to end-customers (e.g. to maintain long  established  client  relationships  and  generate  good
     will). In addition, metal producers always have the option of selling the metal instead on the LME if the metal produced has the correct LME
     grade. The LME thus functions as a buyer of last resort for the physical metal markets.

 28) Purchasing metal on the LME entitles a buyer to a warrant that represents a unit of that metal stored in one of the LME warehouses.  When  a
     warrant is cancelled, the owner is entitled to the physical delivery of the metal from the LME warehouse where the metal is located. The LME
     thus functions as a source of last resort for the physical metal markets. However, depending on whether a  queue  exists  at  the  warehouse
     where the metal is located, physical delivery of the metal may take a significant time. In practice, few transactions are physically settled
     at the LME, with most physical trading taking place directly between suppliers and customers outside the LME.

2 Relevant markets

1 Zinc concentrate

1 Relevant product market

 29) In its previous decisional practice, the Commission has concluded that (i) zinc concentrate is not in the same product market as other metal
     concentrates and (ii) each of zinc concentrate and zinc metal constitute separate product markets.[10] In a previous  case,  the  Commission
     also considered whether zinc concentrate and zinc secondary products were part of the same product market, although this was ultimately left
     open.[11]

 30) The Notifying Party does not contest the Commission's previous conclusions in the decisions referred to in paragraph (29).

 31) According to the Commission's investigation both customers and  competitors  on  the  market  for  zinc  concentrate  considered  that  zinc
     concentrate is sold on a market for zinc concentrate whereas zinc metal, zinc metal alloys and other  concentrates  are  part  of  different
     markets.[12]

 32) As regards a possible distinction between traders and producers of zinc concentrate, customers explained that they may have a preference  to
     buy from producers since the supply is more stable and consistent.[13] However, the majority of customers stated  that  both  producers  and
     traders compete for their purchases.[14] These elements do not point to a segmentation of the market for zinc  concentrate  between  traders
     and producers.

 33) The Commission considers that, for the purpose of this decision, the exact scope of the product market can be left open since  the  Proposed
     Transaction does not give rise to serious doubts about its compatibility with  the  internal  market  under  any  plausible  product  market
     definition. Given that the Parties are not active in the production/supply of zinc secondary materials, the remainder of this decision  will
     only address zinc concentrate.

2 Relevant geographic market

 34) In previous decisions, the Commission had concluded that the relevant market for the supply of zinc  concentrate  was  worldwide  in  scope,
     given that: (i) its price is determined globally based on LME quoted prices, and (ii) zinc concentrate is transported from mines to smelting
     facilities across the globe.[15] Subsequent decisions have left open as to whether the market for  zinc  concentrate  is  considered  to  be
     worldwide or worldwide excluding Chinese production and intra-China sales.[16]

 35) The Notifying Party does not contest the Commission's previous conclusions.

 36) The Commission's investigation broadly confirmed that the market can be considered global in scope, possibly excluding China.[17]

 37) Market participants confirmed that purchases and sales of zinc concentrate are generally organized at  the  worldwide  level.[18]  Customers
     also pointed to their flexibility to redirect purchases of zinc concentrate to suppliers located in other geographical regions  in  response
     to a potential price increase in the EEA.[19]

 38) A minority of the market participants stated that the geographic market for  zinc  concentrate  should  be  considered  worldwide  excluding
     Chinese production and intra-China sales.[20] According to one competitor "Across the globe, markets are transparent and  quite  interlinked
     except local Chinese production and sales of zinc concentrates". On the one hand, none of the customers that responded to  the  Commission's
     market investigation purchased zinc concentrate from China in the last two years.[21] Moreover, none of the customers has been  buying  zinc
     concentrate from China for their production facilities located in the EEA.[22] The majority of the  competitors  of  zinc  concentrate  also
     stated that zinc concentrate on offer in China does not compete with zinc concentrate on  offer  outside  China.[23]  Furthermore,  […]  the
     industry analysts appear to report figures for China and the rest  of  the  world  separately.[24]  On  the  other  hand,  some  competitors
     maintained that sales of zinc concentrate into China influence the price and conditions of concentrate sales in other geographic areas.[25]

 39) In any case, the geographic market definition can ultimately be left open as the Proposed Transaction does  not  give  rise  to  competition
     concerns regardless as to whether the market for zinc concentrate is considered to be worldwide or worldwide  excluding  Chinese  production
     and intra-China sales.

2 Zinc metal

 40) Zinc metal is used, among other things, for galvanising, die casting alloy, oxides and chemicals, and in the brass industry.

 41) There are five commercially traded grades of zinc metal:

a. Special high grade ('SHG') zinc metal (99.995% pure), which is suitable for a wide  range  of  end  applications  including  galvanising,  die
   casting and alloy production.

b. Continuous galvanising grade ('CGG') zinc metal, used for galvanising steel.

c. Die casting alloys ('DCA'), which are alloys of SHG zinc and other non-ferrous metals, such as aluminium and copper, used  in  the  making  of
   precision parts such as sprockets, gears and connector housings predominantly in the automotive and  construction  sector,  but  also  in  the
   manufacturing sector.

d. High grade ('HG') zinc metal (99.95% pure), suitable for a similar range of end applications to SHG zinc metal (save  for  the  production  of
   casting alloys, such as DCA).

e. Good ordinary brand ('GOB') zinc metal (98.5% pure), suitable for production of alloys such as brass.

 42) SHG, CGG and DCA are the most widely produced and heavily used grades of zinc metal throughout the world. In particular,  SHG  accounts  for
     around 65% of world production and is considered as the commodity grade of zinc metal.

 43) Commodity grade zinc metal is characterised by the fact that it is a standardised product, i.e. a product which  is  suitable  for  numerous
     customers. It can therefore be traded in the LME. This contrasts with non-commodity grade zinc metal, which can only be used  by  a  limited
     set of customers.

1 Relevant product market

 44) In its previous decisional practice, the  Commission  has  concluded  that  zinc  metal  is  a  distinct  market,  because  of  its  special
     characteristics.[26] The Commission has treated zinc metal as a distinct market[27] and has stated that the market may be further  segmented
     by grades. However, the Commission has ultimately left the exact market definition open.[28]

 45) The Notifying Party submits that the exact product market can be left open in this case because no competitive concerns arise on  the  basis
     of any of the market definitions above.

 46) According to the Commission's investigation, the customers of zinc metal cannot use interchangeably SHG and other grades of zinc  metal  for
     each of their applications.[29] One customer stated that "no demand-side substitutability exists between these differing grades of zinc". As
     regards DCA, customers mentioned that "we can only use diecasting alloys (DCA) for diecasting operations"  and  "Some  applications  (higher
     corrosion resistance) needs Aluminium in the alloy". As a consequence, the large  majority  of  customers  would  not  change  the  quantity
     purchased of SHG to buy another zinc metal grade if its price increased by 5%.[30] Moreover, a majority of customers stated that  there  are
     prices differences between the different grades of zinc metal.[31]

 47) Producers of zinc metal presented balanced views about the possibility to switch the production of other  grades  of  zinc  metal  into  the
     production of SHG quickly and at a low cost.[32] One producer explained that "Depending on customer orders prior to production we can switch
     between CGG and SHG (technical limits apply)". Another one mentioned that "smelters all start with the production of SHG and then add  other
     metals to make the necessary alloys". The market investigation was thus not conclusive with respect to supply-side substitutability  between
     all grades.

 48) The Commission also investigated eventual differences between buying from traders and smelters. According to the Commission's investigation,
     some customers of zinc metal notice differences between buying from smelters as opposed to traders.[33] Elements  mentioned  in  the  market
     investigation relate for instance to the fact that: (i) traders have more flexible conditions, whereas producers may have a  better  product
     range and prices, and (ii) smelters provide long-term relationships while traders work from deal to deal.  However,  these  factors  do  not
     point to elements that render products less substitutable, but to different characteristics of otherwise similar product offerings.

 49) The exact product market definition can nonetheless be left open since the Proposed Transaction does not give rise to serious  doubts  about
     its compatibility with the internal market under any plausible product market definition regardless as to whether the market for zinc  metal
     is considered to include all the grades or each grade would constitute a separate market.

2 Relevant geographic market

 50) In previous decisions, the Commission has considered the geographic market for zinc metal to be EEA-wide in scope[34]. In  Glencore/Xstrata,
     the Commission considered that there was at least a serious possibility that the market is EEA-wide.[35]

 51) The Notifying Party does not contest such conclusion.

 52) Firstly, the main factors pointing to a EEA-wide market mentioned in previous decisions[36], namely (i) the import duties on  imported  zinc
     into the EEA (i.e. 2.5%), (ii) the reduced volume of imports into the EEA, (iii) the significant transport costs and (iv) the differences in
     regional premia, are still present in the current context of the market for zinc metal.

 53) In fact, according to the Commission's investigation, factors like the transport costs, import duties and shipping time affect  the  ability
     of importers of zinc metal to be an effective competitor in the EEA.[37] One zinc metal supplier from outside EEA stated  that  "We  do  not
     sell any zinc metal in Europe due to high freight costs". Other suppliers of zinc  metal  explained  that  "Once  the  logistics  costs  are
     included, this can make imports too expensive" and "Higher transport costs will have a negative effect on  the  profitability".  As  regards
     import duties, one competitor stated that "Import duties can have a material impact on the import price which can make them too expensive".

 54) Both customers and competitors also stated that there are  significant  price  differences  between  different  regions  in  the  world.[38]
     According to one competitor, "Regional demand and supply conditions  will  determine  regional  zinc  metal  premiums".  Another  competitor
     mentioned that "If prices are understood as premia to LME, then prices depend  on  the  regional  availability  of  metal".  Customers  also
     explained that "Premiums differ from region to region do to availability in the specific region".

 55) In the Figure below it is possible to observe the differences between the  premium  evolution  in  different  regions.  This  evidence  also
     supports a definition of the relevant geographic market that is EEA-wide in scope.

                                                        Figure 3: Evolution of zinc premia
                                                                       […]

 56) Secondly, the majority of customers and competitors explained that importers of zinc metal from free tax duty areas,  namely  Namibia,  Peru
     and Mexico, effectively compete with smelters and/or traders of zinc metal located in the EEA.[39] In fact, 91% of the  quantities  imported
     into EEA in 2014 had an origin in these three countries.[40]

 57) Nevertheless producers from these areas stated that they cannot sell in the EEA all the quantities they produce  in  those  countries  since
     their priority market is the domestic market. Therefore, in the market share  calculations  the  Commission  only  takes  into  account  the
     quantities effectively sold in the EEA from these countries.

 58) Thirdly, if a worldwide market is considered, it is likely that China should be excluded. China is a net importer of many metal  commodities
     and there are no exports from China to the EEA.[41] This is explained by the restrictions on exports from China  in  the  form  of  tariffs,
     export taxes or other export barriers. Furthermore, […] the industry analysts appear to report figures for China and the rest of  the  world
     separately.[42]

 59) In any case, the geographic market definition can ultimately be left open as the Proposed Transaction does  not  give  rise  to  competition
     concerns regardless as to whether the market for zinc metal is considered to be worldwide or  worldwide  excluding  Chinese  production  and
     intra-China sales, or most likely EEA-wide.

3 The activities of the Parties

 60) The Proposed Transaction would only give rise to horizontally affected markets for the supply of zinc metal, but not for the supply of  zinc
     concentrate. Moreover, as regards zinc metal, Trafigura is only present in the trading of SHG, and not the other zinc metal grades.

 61) The Parties' activities also overlap in the production of copper and lead concentrates, in the supply of copper metal,  gold,  lead,  silver
     concentrates, and in the supply of lead, silver, and sulphuric acid. However, none of such  relationships  gives  rise  to  horizontally  or
     vertically affected markets.

4 Assessment of potential horizontal effects in the market for zinc metal

1 Market structure

 62) For the purposes of the present decision, the Commission takes two approaches for calculating market shares of the market for zinc metal: at
     the production and at the supply level. This allows assessing market power both in terms of original access to  volumes  (production  level)
     and in terms of market relations with customers (supply level).

 63) As regards the assessment at the supply level, and with the purposes of  excluding  double  counting,  the  Commission  uses  the  following
     allocation of sales among producers and different traders. Sales volumes should be attributed to a trader, independently of  who  they  sell
     the product to, if they derive from (i) the trader’s own production, or (ii) the acquisition from a producer on  the  trader’s  own  account
     (including in particular through de facto long-term and/or exclusive off-take agreements). Consequently, also  for  sales  that  take  place
     between traders, volumes should be attributed to the trader that produced the volumes or that first procured the volumes from a producer  or
     the LME on its own account.

 64) The Notifying Party provided market shares following both the production level and supply level approach.

 65) In the market for zinc metal the Parties overlap in the supply (but not production) of zinc metal. This is because Trafigura's  main  source
     of zinc metal is other traders.

 66) Horizontally affected markets for the supply of zinc metal would only occur if the geographic scope of this market is EEA. This is  because,
     at a worldwide level, the Parties' overlap is small, with the combined market shares remaining below 10%.  The  inclusion  or  exclusion  of
     China from a potential worldwide market does not change such conclusion.

                                       Table 1: Market shares in the market for zinc metal Worldwide, 2014
|                            |Worldwide excluding China, all grades of   |Worldwide all grades of zinc                   |
|                            |zinc                                       |                                               |
|                            |Supply share (%)   |Supply volumes (metric |Supply share (%)       |Supply volumes (metric |
|                            |                   |tonnes)                |                       |tonnes)                |
|Nyrstar                     |[5-10]%            |[…]                    |[5-10]%                |[…]                    |
|Trafigura                   |[0-5]%             |[…]                    |[0-5]%                 |[…]                    |
|Combined                    |[5-10]%            |[…]                    |[5-10]%                |[…]                    |
|TOTAL                       |-                  |[…]                    |-                      |[…]                    |

 67) Table 2 below lists the production and supply market shares of the Parties as well as of their competitors in the EEA market for zinc metal,
     as estimated by the Notifying Party. Trafigura's market share is based on its total zinc sales in the EEA, which were […] metric  tonnes  in
     2014.[43]

 68) According to information provided in Table 2, the combined market shares of the Parties would correspond to [20-30]%  in  the  EEA  with  an
     increment of [0-5]%. Glencore Xstrata would still be the market leader post-transaction with a market share of [30-40]%.

 69) A factor worth noticing from Table 2 is the fact that Nyrstar's sales of zinc are significantly less than its production. This is due to  an
     existing off-take agreement with Noble, which commits in favour of the latter a sizeable portion of Nyrstar's  SHG  production.[44]  Noble's
     sales in the EEA, also shown in Table 2, stem primarily from this off-take. If these quantities were to be attributed to the merged  entity,
     its market share would reach [30-40]%.

                                          Table 2: Market shares in the market for zinc metal, EEA 2014
|                            |Production share|Production volumes (metric|Supply share (%)   |Supply volumes (metric     |
|                            |(%)             |tonnes)                   |                   |tonnes)                    |
|Nyrstar                     |[30-40]%        |[…]                       |[20-30]%           |[…]                        |
|Trafigura                   |-               |-                         |[0-5]%             |[…]                        |
|Combined                    |[30-40]%        |[…]                       |[20-30]%           |[…]                        |
|Glencore Xtrata             |[30-40]%        |[…]                       |[30-40]%           |[…]                        |
|Boliden                     |[20-30]%        |[…]                       |[20-30]%           |[…]                        |
|ZGH Boleshaw                |[5-10]%         |[…]                       |[5-10]%            |[…]                        |
|KCM AD                      |[0-5]%          |[…]                       |[0-5]%             |[…]                        |
|Noble                       |-               |-                         |[5-10]%            |[…]                        |
|Louis Dreyfus               |-               |-                         |[0-5]%             |[…]                        |
|MRI Group                   |-               |-                         |[0-5]%             |[…]                        |
|Other                       |[0-5]%          |[…]                       |[0-5]%             |[…]                        |
|TOTAL                       |100%            |[…][45]                   |100%               |[…]                        |

 70) Table 3 below lists the production and supply market shares of the Parties as well as of their competitors in the EEA  market  for  SHG,  as
     estimated by the Notifying Party.

                                              Table 3: Market shares in the market for SHG, EEA 2014
|                            |Production share|Production volumes (metric|Supply share (%)   |Supply volumes (metric     |
|                            |(%)             |tonnes)                   |                   |tonnes)                    |
|Nyrstar                     |[20-30]%        |[…]                       |[10-20]%           |[…]                        |
|Trafigura                   |-               |-                         |[5-10]%            |[…]                        |
|Combined                    |[20-30]%        |[…]                       |[20-30]%           |[…]                        |
|Glencore Xtrata             |[30-40]%        |[…]                       |[30-40]%           |[…]                        |
|Boliden                     |[20-30]%        |[…]                       |[10-20]%           |[…]                        |
|ZGH Boleshaw                |[5-10]%         |[…]                       |[5-10]%            |[…]                        |
|KCM AD                      |[0-5]%          |[…]                       |[0-5]%             |[…]                        |
|Noble                       |-               |-                         |[10-20]%           |[…]                        |
|Louis Dreyfus               |-               |-                         |[0-5]%             |[…]                        |
|MRI Group                   |-               |-                         |[0-5]%             |[…]                        |
|Other                       |[0-5]%          |[…]                       |[0-5]%             |[…]                        |
|TOTAL                       |100%            |[…][46]                   |100%               |[…]                        |

 71) If only the SHG grade is considered, the combined market share of the Parties  is  [20-30]%,  with  an  increment  of  [5-10]%.  If  Noble's
     quantities were to be attributed to the merged entity, its market share would reach [30-40]%. In either case, Glencore Xstrata would be  the
     market leader post-transaction with a market share of [30-40]%.

 72) The difference between Nyrstar's production volumes in Table 2 and Table 3 is due to the fact that Nyrstar is an important producer of  zinc
     other than SHG, such as CGG and other DCA. Conversely, Trafigura, which is a trader of zinc metal, only deals with commodity grade SHG zinc.

2 Notifying Party's view

 73) The Notifying Party submits that the Proposed Transaction would not give rise to unilateral effects (in relation to either zinc metal  as  a
     whole or SHG metal only, on either a global or EEA-wide basis) for a number of reasons, including the following:

        a. The combined market shares are not of a level that would be expected to give rise to competition concerns. Further, the impact of the
           Proposed Transaction is modest, with of an increment of no more than [5-10]% (specifically for SHG).

        b. The Parties would continue to face competition post-transaction from a range of sources, including integrated producer-traders,  such
           as Glencore Xstrata, Boliden and SGH Boleslaw, and traders, such as Noble, Louis Dreyfus and the MRI Group.

        c. The market is shaped by off-take agreements and  long  term  contracts,  which  commits  significant  proportions  of  Nyrstar's  EEA
           production to third parties, including Noble and Umicore. Trafigura believes that the off-take with Noble will expire […].

        d. Customers multi-source and would be able to switch suppliers. In addition, i) market participants maintain some reserve volumes to be
           available to meet short term requests from customers, and ii) the LME warehouses can  also  be  sources  of  metal  for  traders  and
           customers.

        e. Volumes can be easily imported or diverted back to the EEA. The Notifying Party argues that the competitive  conditions  outside  the
           EEA act as a competitive constraint on EEA traders and will continue to do so in the future.

3 Commission's assessment

 74) During the investigation, the Commission undertook a market reconstruction exercise of the zinc metal availability in the EEA  and  possible
     uses of such zinc metal. This analysis did not yield market shares for  the  Parties  materially  different  from  those  estimated  by  the
     Notifying Party: the combined market share of the Parties was around [20-30]% for zinc metal all grades and around [20-30]% for SHG only.

 75) A sizeable portion of Nyrstar's SHG market share is due to the zinc cathodes that it sells to an industrial customer.[47] Zinc in the  shape
     of cathodes is a semi-finished product that bypasses the melting and casting process (which casts the zinc metal into ingots/jumbos) and  is
     sold directly to customers as zinc cathodes. If such cathodes were excluded from the market, the combined market share of the Parties  would
     drop below [10-20]% for SHG only and below [20-30]% for zinc all grades.[48]

 76) The market reconstruction also indicated that sizeable quantities of zinc which would be in principle available in the EEA market due to EEA
     production, imports to the EEA and available stocks are actually not sold in the EEA,  but  exported  to  foreign  countries  or  stored  in
     warehouse facilities. If the market shares were computed using actual sales to EEA customers and traders, the combined market share  of  the
     Parties would be slightly higher, around [20-30]% for zinc metal all grades as well as for SHG only. If zinc metal  cathodes  were  excluded
     from actual sales, the combined market shares would again decrease significantly.

 77) The respondents to the Commission's investigation have not raised material concerns in relation to the Proposed  Transaction.  Trafigura  is
     not seen as a major player in Europe, with a limited number of medium-large customers. In this regard, one major customer  of  metal  stated
     "Trafigura is one of the biggest traders but is very small on the metal side in Europe";[49] while another sees Trafigura "as  followers  to
     the other producers / main traders (e.g. Glencore)".[50] One large metal customer "believes that the proposed transaction is mostly a change
     in ownership that will not have a significant impact on the market and on the quantities produced in Europe".[51]

 78) The Commission also concluded that Trafigura and Nyrstar are not close competitors. To this account, it should firstly  be  noted  that  the
     overlap in terms of the zinc products supplied by the Parties is rather limited as Trafigura only trades  the  commodity  grade  zinc  metal
     (SHG), whereas Nyrstar is an important supplier of CGG and DCA. Moreover, most of Nyrstar's commodity grade zinc metal is marketed by  Noble
     due the existing off-take with Nyrstar. If the zinc metal sold in the form of cathodes (around […] metric tonnes) and the zinc metal sold by
     Noble under the off-take agreements (around […] metric tonnes) are both excluded from Nyrstar's SHG production, its actual sales of SHG zinc
     are around […] metric tonnes. This could explain why the large majority of zinc customers  did  not  see  Trafigura  and  Nyrstar  competing
     intensively against each other.[52] In this respect, one large zinc customer noted that "Trafigura is currently active in Europe  but  to  a
     lesser extent than Noble, Glencore or Boliden".[53]

 79) The large majority of zinc metal customers also noted that Trafigura does not play any particular role in the  price  formation  process[54]
     and that none of the Parties have a competitive advantage over their competitors.[55] Conversely, Nyrstar was seen as playing  a  particular
     role in the price formation process in the market for zinc metal in the EEA.[56]

 80) On the basis of the above and the available evidence, the Commission concludes that it is unlikely that  Trafigura  and  Nyrstar  are  close
     competitors in the markets for zinc metal and for SHG in the EEA.

 81) The Commission's investigation also focused on the impact of the Proposed Transaction on Noble's ability to compete in the  market  in  case
     the off-take agreement with Nyrstar was ceased. In this regard, […]. These volumes can only become available to Trafigura if the current off-
     take with Nyrstar expires.[57]

 82) In this context, a hypothetical scenario can be considered where the merged entity would capture all the current customers of Noble assuming
     that they would go with the off-take volumes. The merged entity's market shares would, in that extreme case,  sum  up  to  [30-40]%  in  the
     market for zinc metal, with the merged entity becoming the largest player in the market for zinc metal  in  the  EEA  (marginally  ahead  of
     Glencore Xstrata). The corresponding market share for SHG only would be up to [30-40]%, placing the combined entity after Glencore.

 83) However, the market investigation did not provide strong indications that (i) having  an  off-take  is  necessary  to  be  able  to  compete
     effectively on the market, (ii) Noble's entry made a major impact on the market, and (iii) the replacement of  Noble  with  Trafigura  would
     lead to significant price effects.

 84) Having an off-take with a smelter was seen as important to be able to compete effectively by some market participants, but not by others. In
     this regard, one major competitor observed: "Without its offtake, Noble would not be able  to  keep  all  its  customers.  It  will  not  be
     economically feasible to source 200kt to compensate for the loss of Nyrstar volumes. Noble could find some quantities via importers and  the
     LME market, but it is doubtful whether it can replace the volumes granted by existing off-take with Nyrstar with these other sources".[58]

 85) Other traders contacted during the Commission's investigation noted that having an off-take agreement was not a pre-requisite to compete  in
     the market as there multiple sources of metal.  One competitor stated that "It is difficult but possible to do business in Europe without an
     off-take agreement. A new entrant can source zinc from the market or buy quantities from producers, traders, on the LME or from  banks"  and
     "network and commercial relationships are what matter the most" to be able to compete.[59]

 86) To this point, one zinc customer observed "any trading company can easily get zinc metal from the LME",[60] even though  LME  purchases  are
     considered more as a complementary to other zinc sources rather than a complete substitute for them: "Buying from LME warehousing is often a
     kind of "last resort" for actors in the zinc market. Depending on the market conditions buying material which is stored  in  LME  warehouses
     can be a more expensive option, than buying directly from producers. LME is often used as a complement for selling zinc  surplus  or  buying
     zinc when sourcing needs are not fully covered". [61] Another competitor observes that zinc  metal  "can  also  be  sourced  from  producers
     outside Europe such as Votorantim, Namzinc and Penoles. It is part of the commercial strategy of these companies to diversify their sales to
     avoid relying at 100% on the domestic/local market. For instance Penoles currently supplies  limited  volumes  to  Europe  but  is  able  to
     increase its exports quickly if the domestic market is doing bad. Votorantim and Penoles generally prefer to have a handful of big customers
     rather than selling very small tonnages to end customer".[62]

 87) Finally, also regarding the possibility of Noble losing its offtake with Nyrstar, one competitor observed "the possibility that Noble  loses
     its offtake has a limited importance".[63]

 88) The majority of customers believe, however, that Noble would lose a significant part of its customers  without  the  off-take.[64]  In  this
     case, according to the Commission's investigation, customers would not necessarily be expected to switch to the new company taking the  off-
     take.[65]

 89) Regarding Noble's entry in the market, only a minority of zinc metal customers observed that such  entry  was  a  positive  factor  for  the
     market.[66] Other customers mentioned lower availability of zinc metal in the EEA after Noble's entry  due  to  Noble  exporting  quantities
     outside the EEA. One major zinc metal customer noted "Noble sold and shipped mainly tonnages to China and played warehousing  games  on  the
     LME side in and outside of the EEA zone. It helps only other market participants like Glencore to keep the market tight" [67], while another
     observed "Noble opened an office in Singapore when it obtained Nyrstar off-take agreement with the intention to sell important quantities to
     Asia and especially to China"[68] and a third one "Noble is also a worldwide trading company that often does arbitrages between the LME  and
     Shanghai FX. Noble ships around 100kt from Europe to China in 2014, most of these quantities originating from  the  offtake  agreement  with
     Nyrstar"[69].

 90) Finally, considering the possible price effects of Trafigura replacing Noble in the off-take agreement with  Nyrstar,  only  relatively  few
     customers expected this to lead to higher zinc prices in the EEA.[70] In this respect, zinc metal customers observed that it would  just  be
     the replacement of a trader with another and with no impact on prices: "[…] does not think that there would be a real impact if Noble  loses
     its offtake agreement and disappears from the zinc European market".[71] Finally, none of Noble's customers expressed substantiated concerns
     in relation to the Proposed Transaction.

 91) On the basis of the above and the available evidence, the Commission concludes that the  possibility  of  Noble  losing  its  off-take  with
     Nyrstar would not significantly affect competition in the markets for zinc metal and for SHG in the EEA.

 92) During the Commission's investigation, one zinc metal customer expressed concerns in relation to Nyrstar changing its 'nature' of industrial
     player and behaving more like a trader: "Trafigura has trading philosophy, it could bring a new management model and try to  control  market
     as other big trading houses".[72] In this perspective, the Proposed Transaction would lead to the only independent smelter disappearing from
     the market.

 93) Traders are seen as being capable of exploiting arbitrage opportunities across (world) regions and/or over time, whereas industrial  players
     are more focused on the production and sale of metal as well as building  long-term  relationships  with  their  customers.  The  idea  that
     business model of traders is significantly different from that of smelters received some support during the Commission's  investigation.[73]
     One major competitor observed: "smelters' and traders' business models, smelters produce a certain quantity of zinc metal every  year.  They
     try to match this amount with their sales for every given year. Conversely, traders do not need to match production with  sales  because  of
     warehousing and financing capabilities. They are more flexible on where and when to sell".[74]

 94) It is, however, unlikely that European customers will be harmed from such a change for a number of  reasons.  First  and  foremost,  a  very
     sizeable portion of Nyrstar's production, which can be quantified around [40-50]%, is made of non-commodity zinc metal grade,  such  as  CGG
     and alloys, which are not suitable for shipping, storing in warehouses and selling on the LME, which is the market of last resort.

 95) Moreover, it should be noted that most of the commodity-zinc metal grade produced by Nyrstar was already marketed according to the  traders'
     business model, as Noble is itself a trader. Therefore, Nyrstar's volumes that could change 'nature' due to  the  Proposed  Transaction  are
     only a limited fraction of Nyrstar's production.

 96) Finally, by granting it access to Nyrstar's metal, the Proposed Transaction could also strengthen Trafigura and thus enable  it  to  compete
     more aggressively with the market leader. To this point, one market participant noted "Trafigura and Glencore are competing  a  lot  against
     each other in the different regions of the world and for the different metals. Thus,  the  transaction  by  strengthening  the  position  of
     Trafigura in Europe could have as an impact a decrease in the European prices". [75]

 97) A limited number of small zinc customers expressed concerns with the overall functioning of the market for zinc metal in the  EEA.[76]  Most
     of their concerns pointed to a limited number of options for their purchases of zinc metal and high prices. These concerns can  be  probably
     explained by the fact that the number of independent smelters in the EEA is rather limited and that such smelters do not  cover  the  entire
     EEA market. As regards to traders, given their focus on large customers and on commodity grade zinc only, Trafigura was most probably not  a
     real alternative for such customers; Noble was not a real alternative to them either due to its trading strategies.[77]  It  is  also  worth
     mentioning the recent entry of new traders, such as Concord Resources, that will likely focus on small and medium  customers.[78]  Moreover,
     imports to the EEA can be an alternative source of metal for EEA zinc customers, though to a  limited  extent.  In  fact,  despite  the  EEA
     currently being a net exporter of zinc metal,[79] until 2012 the EEA was a net importer of  zinc  metal.[80]  Between  2010  and  2013,  EEA
     imports virtually dried up as a result of the drop in the European consumption of zinc metal, and exports to China and Turkey increased.

 98) On the basis of the above and the available evidence, the Commission concludes that it unlikely that  the  Proposed  Transaction  can  be  a
     source for additional harm to the current functioning of the markets for zinc metal and for SHG in the EEA.

4 Conclusion on horizontal effects

 99) In view of the above and of all the evidence available to the Commission, and in the light of the outcome of the market  investigation,  the
     Commission considers that the Proposed Transaction does not raise serious doubts as to its  compatibility  with  the  internal  market  with
     respect to the markets for zinc metal and for SHG in the EEA.

5 Assessment of potential vertical effects

1 Market structure

100) A vertically affected market arises from the Parties’ upstream activities  in  zinc  concentrate  (production  and  trading)  and  Nyrstar’s
     downstream activities in zinc metal (over 30% production share).

101) The market shares for the market for zinc concentrate are presented in Table 4 below. As regards the worldwide market, the Parties  combined
     market share would be [0-5]% from the production point of view and [5-10]% from the supply point of  view.  Excluding  China,  the  combined
     market shares would be [5-10]% and [5-10]%, respectively.

                                    Table 4: Market shares in the market for zinc concentrate Worldwide, 2014
|%                                  |Worldwide                                      |Worldwide excluding China                         |
|(metric tonnes)                    |                                               |                                                  |
|                                   |Trafigura      |Nyrstar        |Combined        |Trafigura       |Nyrstar         |Combined        |
|Zinc Concentrate production        |[0-5]%         |[0-5]%         |[0-5]%          |[0-5]%          |[0-5]%          |[5-10]%         |
|                                   |([…])          |([…])          |([…])           |([…])           |([…])           |([…])           |
|Zinc Concentrate supply            |[5-10]%        |0%             |[5-10]%         |[5-10]%         |0%              |[5-10]%         |
|                                   |([…])          |(0)            |([…])           |([…])           |(0)             |([…])           |

2 Input foreclosure

1 Notifying Party's views

102) The Notifying Party argues that the Proposed Transaction does not raise concerns on input foreclosure for the following reasons:

a. The Proposed Transaction does not affect the ability of a rival zinc metal producer to obtain zinc concentrate  given  that  Nyrstar  was  not
   present in the supply market (only Trafigura is present with a [5-10]% market share). All the  quantities  of  zinc  concentrate  produced  by
   Nyrstar were used for internal production of zinc metal.

b. Several other alternative suppliers of zinc concentrate would continue to be available, including  Glencore  Xstrata,  Teck,  China  Minmetals
   Group and Vedanta.

c. From a production point of view the combined market shares of the Parties are even smaller (i.e. [0-5]%). Only  [10-20]%  of  Trafigura  sales
   come from its production, which implies that it needs to purchase the rest from third-party miners.

d. Almost all the customers of zinc concentrate multisource. Therefore, they could easily switch their purchases to an alternative supplier.

2 Commission's assessment

103) First, the Commission's investigation showed that the Proposed Transaction will not change significantly the structure  of  supply  of  zinc
     concentrate since Nyrstar is not active at the supply level, given that it consumes all the volumes produced  internally  or  uses  them  to
     enter into swap agreements.

104) Secondly, the Commission considers that Trafigura's position in the market for zinc concentrate supply would not  give  it  the  ability  to
     engage in an input foreclosure strategy.

105) Trafigura's market share in the market for zinc concentrate is below 10%, which implies that smelters could find alternatives in the  market
     to buy zinc concentrate in case Trafigura degrades the conditions of sale to Nyrstar competitors.

106) According to the Commission's market investigation, almost all competitors on zinc metal (most of them also customers of  zinc  concentrate)
     in the EEA do not consider that Trafigura has a competitive advantage over other suppliers of zinc concentrate.[81] Moreover, none  of  them
     considered themselves to be dependent on Trafigura as a supplier of zinc concentrate.[82] In fact, Trafigura  was  satisfying  only  a  very
     small percentage of the needs of some of these customers and for the remaining ones there  was  not  even  a  commercial  relationship  with
     Trafigura for zinc concentrate.[83] In addition, customers confirmed that they normally adopt a multi-sourcing strategy to  add  flexibility
     to the business and avoid being dependent on only few sources.[84]

107) In Trafigura's internal documents is made reference to the fact that this company has a market share above 30% in the  tradable  market  for
     zinc concentrate. This excludes (i) all the quantities that are sold directly from miners to zinc concentrate customers  and  (ii)  all  the
     quantities that are sold to traders via off-takes. This means that Trafigura could have a significant position as regards the quantities  of
     zinc concentrate that are effectively "free" in the market.

108) Trafigura argues that from the perspective of zinc concentrate customers, those are  clearly  two  key  supply  alternative  channels  which
     should not be ignored. During the Commission's investigation, EEA customers of zinc metal listed several possible alternative  suppliers  of
     zinc concentrate from whom they currently purchase zinc concentrate or from whom they would consider purchasing.[85] Some of these customers
     are also vertically integrated at the level of zinc concentrate production or have long-term contracts for the purchase of zinc concentrate.
     For instance, one zinc metal producer in the EEA explained that "On the zinc concentrate side, […] is predominantly consuming its own mining
     production" and that "it plans to further develop its recycling activities which produce secondary oxides concentrates".[86]

109) This confirms that customers of zinc concentrate use the different channels of supply as alternatives. Competitors on the  market  for  zinc
     concentrate also mentioned several other suppliers with whom they compete. These included both traders and producers.[87]

110) Thirdly, as regards the incentives to adopt an input foreclosure strategy, only two out of the 10 competitors in the market for  zinc  metal
     (purchasers of zinc concentrate) stated that Trafigura would deteriorate the supplying terms and conditions or even stop supplying to third-
     party smelters/traders of zinc concentrate in order to favour Nyrstar.[88] From these, only one competitor stated that  this  would  have  a
     negative impact on smelters or traders. Only one competitor on the market for zinc concentrate expressed the same opinion.[89]

111) Fourthly, almost all customers of zinc  concentrate  think  the  transaction  would  not  have  any  impact  on  the  total  price  of  zinc
     concentrate.[90] Customers stated that "the merger will not change the supply/demand fundamentals of the  whole  market".[91]  According  to
     another customer of zinc concentrate "the market has currently a surplus and the production volumes should continue post transaction, unless
     smelters/capacities are shut down. The only thing that may change is the identity of the trader".[92]

112) On the basis of the above and the available evidence, the Commission concludes that Trafigura would not have the ability and the  incentives
     to foreclose zinc metal competitors from access to zinc concentrate.

3 Customer foreclosure

1 Notifying Party's views

113) The Notifying Party also argues that the Proposed Transaction does not raise concerns on customer foreclosure for the following reasons:

a. Zinc concentrate suppliers would continue to have significant outlets for sales.

b. Nyrstar is a net purchaser of zinc concentrate and purchases more zinc concentrate than Trafigura supplies.  Therefore,  Trafigura  could  not
   fully satisfy Nyrstar needs.

c. Trafigura only produced […] of its total trading volumes of […] tonnes of zinc concentrate. Even if it purchased Nyrstar entire production  of
   […] tonnes, it would still need to source a significant volume from third-party suppliers of zinc concentrate.

2 Commission's assessment

114) Firstly, the Commission's investigation revealed that Nyrstar is a net purchaser of zinc concentrate given  that  its  worldwide  production
     ([…] metric tonnes) is lower than its needs ([…] metric tonnes). Some zinc concentrate suppliers confirmed that  Nyrstar  is  a  significant
     buyer of zinc concentrate.[93] However, Nyrstar represents only [10-20]% of the non-captive worldwide market (excluding China). Accordingly,
     several other outlets should be available for zinc concentrate suppliers to sell their product.

115) Secondly, Trafigura's production is very small compared with Nyrstar's needs. This implies that, if Trafigura  assumes  all  the  supply  to
     Nyrstar's needs, it would need to purchase those volumes from third-party miners. Thus, these players would still be able to sell quantities
     that will indirectly satisfy Nyrstar's needs.

116) The main effect of a customer foreclosure strategy could therefore be on traders of zinc concentrate that could lose Nyrstar as  a  customer
     if Nyrstar would only buy zinc concentrate via Trafigura. However, this strategy could also free some of Trafigura's current  customers  who
     would thus have to find alternative traders or miners to satisfy their needs of zinc concentrate. One trader of zinc  concentrate  explained
     that "Zinc concentrate traders will also lose one important customer with the transaction because  Trafigura  will  in  all  likelihood  buy
     concentrate for Nyrstar. However, there will be enough demand from other smelters, ie those currently supplied  by  Trafigura".[94]  Another
     zinc concentrate player stated "If Trafigura buys zinc concentrate for Nyrstar it will change substantially the mix in the zinc  concentrate
     market. However other mining and trading companies will be able to fill the gap of Trafigura quantities that would be moved to Nyrstar".[95]

117) Thirdly, three out of seven competitors in the market for zinc concentrate stated that, post-transaction, Nyrstar would only  purchase  zinc
     concentrate directly from Trafigura, and that this would have a significant negative effect on the suppliers.[96]  However,  most  of  these
     suppliers sold very small quantities to Nyrstar in the past. Therefore, the effect of Nyrstar not buying from them anymore is not likely  to
     be significant.

118) Fourthly, during the Commission's investigation, competitors  of  zinc  concentrate  stated  that  they  do  not  think  that  the  Proposed
     Transaction would likely have an impact on zinc concentrate total prices.[97]

119) On the basis of the above and the available evidence, the Commission concludes that the  Trafigura  would  not  have  the  ability  and  the
     incentive to foreclose zinc concentrate competitors from access to a significant part  of  the  customer  base  constituted  by  zinc  metal
     suppliers.

4 Conclusion

120) In view of the above and of all the evidence available to the Commission, and in the light of the outcome of the market  investigation,  the
     Commission considers that the Proposed Transaction does not raise serious doubts as to its  compatibility  with  the  internal  market  with
     respect to the vertical relationship between the market for zinc concentrate and the market for zinc metal.

CONCLUSION

121) For the above reasons, the European Commission has decided not to oppose the notified operation  and  to  declare  it  compatible  with  the
     internal market and with the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of the Merger Regulation and  Article
     57 of the EEA Agreement.

For the Commission
(Signed)
Margrethe VESTAGER
Member of the Commission

-----------------------
[1]   OJ L 24, 29.1.2004, p. 1 ('the Merger Regulation'). With effect from 1 December 2009, the Treaty on the Functioning of the  European  Union
('TFEU') has introduced certain changes, such as the replacement of 'Community'  by  'Union'  and  'common  market'  by  'internal  market'.  The
terminology of the TFEU will be used throughout this decision.

[2]   OJ L 1, 3.1.1994, p.3 ("the EEA Agreement").

[3]   Publication in the Official Journal of the European Union No C 386, 20.11.2015, p. 3.

[4]   Commission Consolidated Jurisdictional Notice under  Council  Regulation  (EC)  No  139/2004  on  the  control  of  concentrations  between
undertakings (2008/C 95/01), recital 59.

[5]   Turnover calculated in accordance with Article 5 of the Merger Regulation and the Commission Consolidated Jurisdictional Notice (OJ  C  95,
16.4.2008, p. 1).

[6]   Q1 – Questionnaire to customers of zinc metal.

[7]   Q2 – Questionnaire to competitors of zinc metal.

[8]   Q3 – Questionnaire to competitors of zinc concentrate.

[9]   The electrolytic process method converts calcine into zinc metal through a process of leaching, purification and  electrolysis  before  the
metal is melted and cast. The imperial smelting process method involves the sintering (crushing and mixing  into  a  fine  powder)  of  the  zinc
concentrate before it is fed into a furnace for smelting and then casting.

    [10]   Case M.6541 Glencore/Xtrata, decision of 22 November 2012; Case  M.3284  Outokumpu/Boliden,  decision  of  8  December  2003;  M.4256
    Xstrata/Falconbridge, decision of 13 July 2006; Case M.4450 Umicore/Zinifex/Neptune, decision of 26 February 2007.

    [11]   Case M.4450 Umicore/Zinifex/Neptune, decision of 26 February 2007.

    [12]   See replies to question 24 of the Q2 – Questionnaire to competitors zinc metal and to  question  9  of  the  Q3  –  Questionnaire  to
    competitors zinc concentrate.

    [13]   See replies to question 28 of the Q2 – Questionnaire to competitors of zinc metal.

    [14]   See replies to question 29 of the Q2 – Questionnaire to competitors of zinc metal.

    [15]   Case M.4256 Xstrata/Falconbridge, decision of 13 July 2006; Case M.4450 Umicore/Zinifex/Neptune, decision of 26 February 2007.

    [16]   Case M.6541 Glencore/Xtrata, decision of 22 November 2012.

    [17]   See replies to question 39 of the Q2 – Questionnaire to competitors of zinc metal and to question 20 of the  Q3  –  Questionnaire  to
    competitors of zinc concentrate.

    [18]   See replies to question 31 of the Q2 – Questionnaire to competitors of zinc metal and to question 14 of the  Q3  –  Questionnaire  to
    competitors of zinc concentrate.

    [19]   See replies to question 38 of the Q2 – Questionnaire to competitors of zinc metal.

    [20]   See replies to question 39 of the Q2 – Questionnaire to competitors of zinc metal and to question 20 of the  Q3  –  Questionnaire  to
    competitors of zinc concentrate.

    [21]   See replies to question 36 of the Q2 – Questionnaire to competitors of zinc metal.

    [22]   See replies to question 33 of the Q2 – Questionnaire to competitors of zinc metal.

    [23]   See replies to question 37 of the Q2 – Questionnaire to competitors of zinc metal.

    [24]   […] and the report CRU Monitor, Lead and Zinc concentrates.

    [25]   See replies to question 18 of the Q3 – Questionnaire to competitors of zinc concentrate.

    [26]   Case M.470 Gencor/Shell, decision of 29  August  1994;  Case  M.2062  Rio  Tinto/North,  decision  of  1  August  2000;  Case  M.2413
    BHP/Billiton, decision of 14 June 2001; Case M.4256 Xstrata/Falconbridge, decision of 13 July  2006;  Case  M.4450  Umicore/Zinifix/Neptune,
    decision of 26 February 2007.

    [27]   Case M.2062 Rio Tinto/North, decision of 01 August 2000; Case M.4450 Umicore/Zinifex/Neptune, decision  of  26  February  2004;  Case
    M.4256 Xstrata/Falconbridge, decision of 13 July 2006.

    [28]   Case M.6541 Glencore/Xtrata, decision of 22 November 2012; Case M.2348 Outokumpu/Norzink, decision of 27  March  2001;  Case  M.4256,
    Xstrata/Falconbridge, decision of 13 July 2006; Case M.4450 Umicore/Zinifex/Neptune, decision of 26 February 2007.

    [29]   See replies to question 8 of the Q1 – Questionnaire to customers of zinc metal.

    [30]   See replies to question 9 of the Q1 – Questionnaire to customers of zinc metal.

    [31]   See replies to question 7 of the Q1 – Questionnaire to customers of zinc metal.

    [32]   See replies to question 13 of the Q2 – Questionnaire to competitors of zinc metal.

    [33]   See replies to question 10 of the Q1 – Questionnaire to customers of zinc metal.

    [34]   Case M.2348 - Outokumpu/Norzink, decision of 8 December 2003; Case M.4256 - Xstrata/Falconbridge, decision of 22 November 2012;  Case
    M.4450 - Umicore/Zinifex/Neptune JV, decision of 26 February 2004; Case M.6541 Glencore/Xtrata decision of 22 November 2012.

    [35]   Case M.6541 Glencore/Xtrata, decision of 22 November 2012.

    [36]   Case M.6541 Glencore/Xtrata, decision of 22 November 2012.

    [37]   See replies to question 22 of the Q2 – Questionnaire to competitors of zinc metal.

    [38]   See replies to question 16 of the Q1 – Questionnaire to customers of zinc metal  and  question  20  of  the  Q2  –  Questionnaire  to
    competitors of zinc metal.

    [39]   See replies to question 17 of the Q1 – Questionnaire to customers of zinc metal  and  question  21  of  the  Q2  –  Questionnaire  to
    competitors of zinc metal.

    [40]   See reply to question 9 of the Commission's request for information of 4 November 2015.

    [41]   See reply to question 9 of the Commission's request for information of 4 November 2015.

    [42]   […] and the report CRU Monitor, Lead and Zinc concentrates.

[43]  The Notifying Party claimed that, if the market shares'  were  measured  according  to  the  main  methodology  used  in  Glencore/Xstrata,
Trafigura's market share in the EEA is less than [0-5]% as Trafigura was first a trader in the chain for only […] metric tonnes of zinc in  2014.
However, given that those quantities were acquired in the LME from a warehouse, the Commission considered that Trafigura was in  fact  the  first
trader to bring those quantities to the market in 2014.

[44]  See paragraph 6.42(i) of the Form CO.

[45]  The difference in the volume of production and the volume of supply results from the fact that zinc sold in the EEA can also be  originated
from imports to the EEA, purchases from the LME as well as decrements of other available stocks of metal. On  the  other  hand,  some  quantities
produced in the EEA are not sold in the EEA, namely if they are exported, sold in the LME or increment other available stocks of metal.

[46]  See previous footnote n.45.

    [47]   […].

    [48]   Trafigura estimates that 150,000 metric tonnes of Nyrstar’s estimated 2014 zinc metal production and trading (all in the EEA)  is  in
    the form of cathodes. Given that zinc cathodes are very high purity zinc metal, these have been included  in  Trafigura’s  market  size  and
    share estimates as SHG zinc metal.

    [49]   See agreed minutes of a call with a zinc customer in November 2015.

    [50]   See replies to question 39 of the Q1 – Questionnaire to customers of zinc metal.

    [51]   See agreed minutes of a call with a zinc customer on 17 November 2015.

    [52]   See replies to question 41 of the Q1 – Questionnaire to customers of zinc metal.

    [53]   See agreed minutes of a call with a zinc customer on 16 November 2015.

    [54]   See replies to question 39 of the Q1 – Questionnaire to customers of zinc metal.

    [55]   See replies to question 42 and 43 of the Q1 – Questionnaire to customers of zinc metal.

    [56]   See replies to question 38 of the Q1 – Questionnaire to customers of zinc metal.

    [57]   The existing off-take agreement between Nyrstar and Noble results from the commitments submitted by Glencore to obtain the  clearance
    of the Glencore/Xstrata transaction. […].

    [58]   See agreed minutes of a call with a zinc competitor on 3 December 2015.

    [59]   See agreed minutes of calls with a zinc competitor on 19 and 26 November 2015.

    [60]   See agreed minutes of a call with a zinc customer on 13 November 2015.

    [61]   See agreed minutes of a call with a zinc customer on 17 November 2015.

    [62]   See agreed minutes of calls with a zinc competitor on 19 and 26 November 2015.

    [63]   See agreed minutes of a call with a zinc competitor on 18 November 2015.

    [64]   See replies to question 28 of the Q1 – Questionnaire to customers of zinc metal.

    [65]   See replies to question 28.1 of the Q1 – Questionnaire to customers of zinc metal.

    [66]   See replies to question 21 of the Q1 – Questionnaire to customers of zinc metal.

    [67]   See replies to question 21 of the Q1 – Questionnaire to customers of zinc metal.

    [68]   See agreed minutes of a call with a zinc customer in November 2015.

    [69]   See agreed minutes of a call with a zinc customer on 13 November 2015.

    [70]   See replies to question 55 of the Q1 – Questionnaire to customers of zinc metal.

    [71]   See agreed minutes of a call with a zinc customer on 13 November 2015.

    [72]   See agreed minutes of a call with a zinc customer in November 2015.

    [73]   See replies to question 10 of the Q1 – Questionnaire to customers of zinc metal.

    [74]   See agreed minutes of a call with a zinc competitor on 3 December 2015.

    [75]   See agreed minutes of a call with a zinc competitor on 18 November 2015.

    [76]   See replies to question 48 of the Q1 – Questionnaire to customers of zinc metal.

    [77]   See footnote n. 67.

    [78]               See             http://www.metalbulletin.com/Article/3496642/Ex-Noble-traders-set-up-Concord-with-backing-from-Andersons-
    Ospraie.html#axzz3rxAG7T2E

    [79]   In 2014, the EEA imported at least 239,649 metric tonnes of zinc metal and exported at least 344,953 metric tonnes.

    [80]   For instance, in 2010 imports of zinc metal amounted to 377,535 metric tonnes

[81]  See replies to question 68 of the Q2 – Questionnaire to competitors of zinc metal.

[82]  See replies to question 69 of the Q2 – Questionnaire to competitors of zinc metal.

[83]  See replies to question 10 of the Q2 – Questionnaire to competitors of zinc metal.

[84]  See replies to question 66 of the Q2 – Questionnaire to competitors of zinc metal.

[85]  See replies to question 65 of the Q2 – Questionnaire to competitors of zinc metal.

[86]  See agreed minutes of a call with a zinc metal competitor on 18 November 2015.

[87]  See replies to questions 27 and 28 of the Q3 – Questionnaire to competitors of zinc concentrate.

[88]  See replies to question 84 of the Q2 – Questionnaire to competitors of zinc metal.

[89]  See replies to question 42 of the Q2 – Questionnaire to competitors of zinc metal.

[90]  See replies to question 82 of the Q2 – Questionnaire to competitors of zinc metal.

[91]  See replies to question 82 of the Q2 – Questionnaire to competitors of zinc metal.

[92]  See agreed minutes of a call with a zinc metal competitor on 18 November 2015.

[93]  See replies to question 31 of the Q3 – Questionnaire to competitors of zinc concentrate.

[94]  See agreed minutes of a call with a zinc concentrate competitor on 26 November 2015.

[95]  See agreed minutes of a call with a zinc concentrate competitor on 26 November 2015.

[96]  See replies to question 41 of the Q3 – Questionnaire to competitors of zinc concentrate.

[97]  See replies to question 39 of the Q3 – Questionnaire to competitors of zinc concentrate.

-----------------------
 In the published version of this decision, some information has been omitted pursuant to Article 17(2) of Council Regulation (EC)  No  139/2004
 concerning non-disclosure of business secrets and other confidential information.  The  omissions  are  shown  thus  […].  Where  possible  the
 information omitted has been replaced by ranges of figures or a general description.

                                                                  PUBLIC VERSION

                                                                 MERGER PROCEDURE