CELEX: 32015M7606
Language: en
Date: 2015-08-04 00:00:00
Title: Commission Decision of 04/08/2015 declaring a concentration to be compatible with the common market (Case No COMP/M.7606 - GRUPO ANTOLíN / MAGNA INTERIORS) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

Brussels, 4.8.2015
C(2015) 5599 final

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|To the notifying party:                                                |                                                                       |

Dear Sir/Madam,

Subject:    Case M.7606 – Grupo Antolín/ Magna Interiors
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 30 June 2015, the European Commission received notification of a proposed concentration pursuant to Article 4 of the Merger  Regulation
       by which Grupo Antolín-Irausa S.A. ("Grupo Antolín", Spain) intends to acquire within  the  meaning  of  Article  3(1)(b)  of  the  Merger
       Regulation sole control of the divisions responsible for the production and sale of  automotive  interiors  products  of  Magna  Interiors
       ("Magna Interiors"), a wholly-owned operating unit of Magna International, Inc. ("Magna", Canada), by way of a combined purchase of assets
       and shares (the "proposed transaction").[3] Grupo Antolín is referred to as the "Notifying Party", while Grupo Antolín and Magna Interiors
       are collectively referred to as the "parties".

       THE PARTIES

    2) Grupo Antolín is a global manufacturer and supplier of automotive interior components, including overhead systems and overhead components,
       doors, seats, lighting and trims. It is a privately-owned company incorporated in Spain.

    3) Magna Interiors is, as a wholly-owned operating unit of Magna, a global manufacturer  and  supplier  of  automotive  interior  components,
       including overhead systems and overhead components, sidewall and trim systems, cargo management systems and cockpit systems.

       THE OPERATION AND THE CONCENTRATION

    4) On 16 April 2015, Magna and Grupo Antolín announced the intention of Grupo Antolín to acquire the divisions responsible for the production
       and sale of automotive interiors products of Magna Interiors. To this end, the parties have entered into a sale and purchase agreement  by
       which Grupo Antolín will acquire the entirety of Magna Interiors by a combined purchase of all of the latter's shares of  legal  entities,
       equity interests and assets. The proposed transaction therefore constitutes a concentration within the meaning of Article 3(1)(b)  of  the
       Merger Regulation.

       EU DIMENSION

    5) The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 2 500 million [Grupo Antolín: EUR 2 232 million;
       Magna Interiors: EUR 1 965 million] and they achieve more than EUR 100 million in at least three EU Member  States  [the  Czech  Republic,
       Germany, Slovakia and the UK][4]. Each of the parties has an EU-wide turnover in excess of EUR 100  million  [Grupo  Antolín:  EUR  1  220
       million; Magna Interiors: EUR 1 015 million] and each achieves more than EUR 25 million thereof  in  the  same  aforementioned  EU  Member
       States [the Czech Republic, Germany, Slovakia and the UK]. Finally, the parties do not achieve more than two-thirds of their aggregate EU-
       wide turnover within one and the same Member State. The proposed transaction therefore has an EU dimension pursuant to Article 1(3) of the
       Merger Regulation.

       RELEVANT MARKETS

1 Product market definition

    6) The parties' activities overlap in relation to the supply of certain interior automotive components and systems to original equipment  car
       manufacturers ("OEM") and original equipment suppliers ("OES") at a global level. Within the  EEA,  the  parties'  activities  furthermore
       exclusively overlap in relation to the OEM/OES supply of interior automotive components intended for use in vehicles that weigh less  than
       six tonnes (so-called light vehicles, "LVs", including passenger cars and light commercial vehicles).

    7) In previous decisions, the Commission has identified separate relevant product markets for individual automotive components[5] as well  as
       wider markets for automotive component systems which are comprised of several individual components.[6] Furthermore,  the  Commission  has
       identified separate markets according to whether products are sold to the OEM/OES or independent aftermarket ("IAM")  channels[7]  and  to
       whether they are intended for LVs or for HCVs (heavy commercial vehicles).[8]

    8) The parties indicate that no real IAM exists for automotive interiors products. This is because  (i)  these  components  are  supposed  to
       endure the complete lifetime of the automobile; (ii) the OEMs/OESs own the intellectual property rights for the respective component, and;
       (iii) the OEMs/OESs themselves serve potential spare part demands and therefore purchase these on a fixed long-term basis from the parties
       as part of the initial supply contract. The result of the market investigation yielded support  for  the  parties'  view  about  the  non-
       existence of a real IAM for automotive interiors products. Indeed, a majority of competitors submit that no IAM  exists  for  spare  parts
       within the EEA for overhead systems, headliners, front overhead consoles and sun visors.[9] A number of OEM customers moreover explain  in
       this regard that, given the limited substitution rate of  automotive  interiors  products,  IAM  operators  are  not  interested  in  this
       business.[10]

    9) Taking into account the Commission's prior decision-making practice, the parties' activities therefore exclusively overlap in the  OEM/OES
       supply of LV automotive interiors products within the EEA and give rise  to  affected  markets  in  relation  to  the  following  interior
       components: headliners, front overhead consoles, and sun visors. Also, an  additional  plausible  separate  relevant  product  market  for
       overhead systems exists which is affected by the proposed  transaction.  Overhead  systems  are  pre-assembled  modules  consisting  of  a
       headliner, sun visors and one or more (front and rear) overhead consoles.

       Overhead systems, headliners, front overhead consoles and sun visors

   10) The Notifying Party submits that, although every car model includes a headliner and commonly sun visors  and  a  front  overhead  console,
       every overhead system includes other components and accessories as well, resulting in a different configuration for the overhead system of
       every car model.[11]

   11) The Notifying Party therefore considers that a separate relevant product market exists for  the  manufacture  and  OEM/OES  supply  of  LV
       overhead systems, of which headliners, sun visors and overhead consoles form part.

   12) The Commission has previously indeed identified a possible separate relevant product market for overhead systems  as  a  whole,  which  it
       described as "the layer of plastic or fiberglass normally covered with fabric or other textured material which lines the interior roof  of
       the car. It normally combines other roof components in the same manner as the door panel such as sound absorption material, coat hooks  or
       sun visors".[12] However, the Commission has previously  also  identified  possible  separate  relevant  product  markets  for  individual
       automotive components in general (as opposed to automotive systems/modules) and for each of headliners and sun visors in particular.[13]

   13) Headliners have been previously described by the Commission as "the interior covering for the roof of an automobile, […] usually  made  of
       polyurethane".[14] In its decision the Commission also stated that headliners are "often combined with other roof components such as  grab
       handles and sun visors to produce a complete overhead panel module", i.e. an overhead system.

   14) Sun visors have been previously described by the Commission as components  "mounted  on  the  driver  and  front  passenger  sides  of  an
       automotive interior at the point where the headliner substrates meets the front wind screen. They consist of a substrate manufactured from
       different materials such as hard board, blow-moulded plastic or expanded polypropylene, which is covered by vinyl  or  leather  and  which
       also may have different fitted features such as illuminated mirrors or covers."[15]

   15) The Commission considers on the basis of information provided by the Notifying  Party  that  overhead  consoles,  in  turn,  are  lighting
       consoles in the headliner which may include reading or courtesy lights, storage bins, conversation  mirrors,  microphones,  alarm  sensors
       etc. The Commission furthermore considers that front overhead consoles (between the sun visors) can be distinguished  from  rear  overhead
       consoles and therefore they could form part of a separate relevant product market. At the same time, the parties indicate that an  overall
       product market for all interior lighting could exist. The question of whether front and rear overhead consoles form part of the same or of
       separate relevant product markets, or whether they are part of a wider market for all interior lighting products, can be left open in  the
       present matter given that the proposed transaction is unlikely to give rise to serious doubts as to its compatibility  with  the  internal
       market under any alternative relevant product market definition. Indeed, the parties'  activities  involving  interior  lighting  products
       overlap only in relation to LV overhead consoles. What is more, Grupo Antolín does not produce any rear overhead consoles in  the  EEA  at
       all, and the aforementioned distinction between rear and front overhead consoles cannot,  therefore,  affect  the  competitive  assessment
       carried out in the next section.

   16) The Commission considers that separate relevant markets for the manufacture and OEM/OES supply of  each  of  (i)  overhead  systems,  (ii)
       headliners, (iii) sun visors, and (iv) overhead consoles are plausible, given that a majority of  the  parties'  OEM  customers  consulted
       during the market investigation confirmed that they organise separate tenders for the procurement of both overhead systems as well as  for
       each of their aforementioned constituent components.[16]

   17) The question of whether an overall relevant product market for the manufacture and OEM/OES supply of LV overhead systems or  for  each  of
       their constituent components exists, or for both, can however be left open in the present matter, as the  proposed  transaction  does  not
       give rise to serious doubts as to its compatibility with the internal market under any plausible product market definition.

2 Geographic market definition

   18) The parties submit that, in line with previous decisions by  the  Commission,[17]  the  relevant  market  for  the  supply  of  automotive
       components to the OEM/OES channel is at least EEA-wide.[18]

   19) Notwithstanding that a large part of customers consulted during the  Commission's  market  investigation  organises  their  purchasing  of
       overhead systems, headliners, front overhead consoles and sun visors at worldwide  level,  a  significant  number  of  customers  actually
       require suppliers to have manufacturing facilities near their production plants in the EEA.[19] This is likely due to  the  importance  of
       'just in time' sequencing requirements and the transportation costs,  which  the  majority  of  respondents  to  the  Commission's  market
       investigation indicate as accounting for between 5% and 10% of the total price.[20]  The  Commission  accordingly  considers  that  strong
       indications exist that the geographic scope of the markets involving the manufacture and OEM/OES supply of  LV  automotive  components  is
       limited to the territory of the EEA.

   20) However, the precise delineation of the relevant geographic scope of the affected markets can be left open in the present  matter,  as  no
       concerns arise even when taking account of the narrowest plausible geographic market definition.

       COMPETITIVE ASSESSMENT

   21) The parties' relative individual and combined positions on the various plausible markets for  automotive  interiors  components  that  are
       affected by the proposed transaction are referenced in table 1 below. In order to obtain an accurate view of the parties' strength,  given
       that these are bidding markets, it is important to assess market shares over a significant period of time, covering both past and  future.
       The Commission has therefore requested the parties to set out how they expect their market shares to develop over  the  next  three  years
       based on their on-going contracts as well as awarded contracts for future production.

|Table 1: Individual and combined market shares in the EEA for the affected relevant products[21]                                     |
|EEA (volume)    |LV headliners                            |LV front overhead consoles                 |LV sun visors                               |
|                                                                                                                                     |

   22) Based on the market share forecasts for the next three years provided by the parties, the share of the various affected plausible  markets
       is unlikely to change significantly going forward. Both Grupo Antolín and Magna Interiors expect their market shares to remain stable,  or
       be subject to a slight decrease, across the various affected markets.

   23) Table 1 also shows that the proposed transaction only adds limited increments in Grupo Antolín's share of  the  affected  markets.  It  is
       therefore unlikely that the proposed transaction will result in a significant change in Grupo Antolín's competitive strength. The  results
       of the market investigation support that conclusion, as Magna Interiors is neither perceived as a very active player nor  as  particularly
       aggressive in the tenders for the supply of the products covered by  the  affected  markets.[22]  Moreover,  the  parties'  OEM  customers
       consulted during the Commission's market investigation considered unanimously that Magna Interiors does not  constitute  an  indispensable
       supplier of any of the automotive interiors products on the affected markets.[23]

   24) The parties will furthermore continue to face, post completion of the proposed transaction, a significant number of competitors  that  are
       similar in size to Magna Interiors in each of the affected markets. The Notifying Party explained that  in  addition  to  the  competitors
       referenced in Table 1, the parties will continue to face (i) Gumotex, Fompak and Shanghai Daimay in the market for the OEM/OES  supply  of
       LV sun visors (each having a market share of between five and ten per cent); and (ii) Olsa, Sidler (Flextronics),  Fer  Fahr,  Odelo,  Il-
       Heung and JCI in the market for the OEM/OES supply of LV front overhead consoles (each having a market share of between zero and five  per
       cent). The market investigation also yielded support for the  notion  that  the  combined  entity  will,  post-merger,  continue  to  face
       significant competitive constraints, since a majority of the parties' OEM customers as well as of  their  competitors  consider  that  the
       intensity of competition in the affected markets will either increase or remain the same as a result of the proposed transaction.[24]

   25) In addition, the parties' combined past, current and projected future shares of the various affected markets show  a  consistent  downward
       trend. The Commission also confirmed that the parties are not particularly close competitors, as the vast majority  of  the  parties'  OEM
       customers consulted during the Commission's market investigation did not consider Magna Interiors a close competitor of Grupo  Antolín  in
       each of the affected markets.[25]

   26) Moreover, it appears that OEM customers are able to maintain competition during the lifetime of a vehicle platform by  engaging  in  dual-
       sourcing, which enables them to switch demand among different suppliers during the vehicle production. [26]

   27) Equally, OEM customers often demand ad-hoc price reductions in addition to those foreseen in the  initial  supply  contract.[27]  In  this
       regard, it is important to note that the parties have provided actual examples of OEMs having requested and secured price reductions  that
       were not foreseen in the original supply agreements, both in relation to LV front overhead consoles ([…] secured a  price  reduction  from
       Grupo Antolín in 2015) and in relation to LV headliners ([…] secured a price reduction from Grupo Antolín in 2014). The  majority  of  the
       parties' competitors that responded to the Commission's market investigation confirmed in this respect  that  OEM  customers  can  indeed,
       under the relevant supply agreements, obtain ad-hoc (i.e. not  contractually  pre-agreed)  price  revisions  due  to  higher  efficiencies
       throughout the lifetime of the vehicle platform.[28] These elements lend some support to the parties' claim that OEMs possess a degree  of
       bargaining power which would render it further unlikely that the proposed transaction gives rise to competition concerns.

   28) What is more, the parties claim that the suppliers in the automotive interiors components are not capacity constrained. [29]  Importantly,
       the Commission's market investigation provided some evidence for the  existence  of  spare  capacity  as  well  as  the  ability  for  the
       competitors to increase their output in the short-term (i.e. one to two years) for the products covered by the affected markets.[30]  This
       means that OEM customers will likely be able to re-allocate their demand among suppliers in order to maintain effective competition  post-
       merger.

   29) Finally, no competitive concerns were raised by the respondents to the Commission's market  investigation  in  relation  to  the  proposed
       transaction. Rather, the majority of both the parties' customers as well as their competitors that were consulted expected  the  intensity
       of competition in the various plausible affected markets for the OEM/OES supply of automotive  interiors  products  (systems  as  well  as
       components) to either remain the same or to increase as a result  of  the  proposed  transaction.[31]  At  the  same  time,  none  of  the
       respondents to the market investigation, neither the parties' competitors nor their customers expected the price  level  in  the  affected
       markets to increase as a result thereof.[32]

   30) In light of all of the foregoing, the Commission considers that the  proposed  transaction  does  not  raise  serious  doubts  as  to  its
       compatibility with the internal market in the various markets for the manufacture and OEM/OES supply of automotive interiors  systems  and
       components in the EEA.

       CONCLUSION

   31) 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),
Cecilia MALMSTRÖM
Member of the Commission

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[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 223, 08.07.2015, p. 6.
[4]   Turnover calculated in accordance with Article 5 of the Merger Regulation.
[5]   M.6714 – U-Shin / Valeo CAM (2013); M.4524 – Nemak / Hydro Castings (2007); M.4500 – Nemak / TK Aluminium “A” (2007); M.6083 – Fiat / GM  /
VM Motori JV (2011); M.1778 – Freudenberg / Phoenix / JV (2000); M.1338 – Teksid / Renault (1999); M.1189 –  Teksid  /  Norsk  Hydroproduksjon  /
Meridian (1998); M.4456 – Mahle / Dana EPG (2007); M.1907 – WOCO / Michelin (2000).
[6]   M.6714 – U-Shin / Valeo CAM (2013); M.6339 – Freudenberg & Co / Trelleborg / JV (2012);  M.5799  –  Faurecia  /  Plastal  (2010);  M.536  –
Torrington / Ingersoll (1995).
[7]   M.6714 – U-Shin / Valeo CAM (2013); M.5799 – Faurecia / Plastal (2010); M.4456 – Mahle / Dana EPG (2007).
[8]   M.7174 - FEDERAL-MOGUL CORPORATION/ HONEYWELL FRICTION MATERIALS (2014), M.4785 – Russian Machines/Magna (2007), para. 9.
[9]   Responses to question 5 of Q2 – Questionnaire to competitors.
[10]  Responses to question 4 of Q1 – Questionnaire to customers.
[11]  Form CO para. 197.
[12]  M.1518 – Lear / United Technologies (1999), para. 13.
[13]  M.1196 – Johnson Controls / Becker (1998).
[14]  M.1196 – Johnson Controls / Becker (1998), para. 11.
[15]  M.1196 – Johnson Controls / Becker (1998), para. 9.
[16]  Responses to question 3 of Q1 – Questionnaire to customers.
[17]  M.7174 - FEDERAL-MOGUL CORPORATION/ HONEYWELL FRICTION MATERIALS (2014); M.6183 – Mahle / Behr  (2011),  M.5862  –  Mahle  /  Behr  /  Behr
Industry (2010), M.4878 – Continental / Siemens VDO (2007) or M.2366 – Denso / MMC (2001).
[18]  Form CO, para. 206, 216 and 234.
[19]  Responses to question 7 of Q1 – Questionnaire to customers.
[20]  Responses to questions 6 to 8 of Q1 – Questionnaire to customers.
[21]  The parties' individual and combined shares of the plausible market for the manufacture and OEM/OES supply of LV overhead  systems  in  the
EEA are slightly lower than their shares of the various  automotive  interiors  components  markets:  Grupo  Antolin  and  Magna  Interiors  held
respective value-based shares of [20-30]% and [0-5]% in 2014. In this plausible market, the parties would face  competition  from  at  least  the
same five players mentioned in Table 1 above.

[22]  Responses to questions 23 and 25 of Q2 – Questionnaire to competitors.
[23]  Responses to question 11 of Q1 – Questionnaire to customers.
[24]  Responses to question 30 of Q1 – Questionnaire to customers; and responses to question 30 of Q2 – Questionnaire to competitors.
[25]  The majority of OEM customers does not list Magna Interiors as one of the five closest competitors to Grupo  Antolín,  not  even  in  those
cases where customers mention fewer than five competitors in total – Responses to questions 13-20 of Q1 – Questionnaire to customers.
[26]  Responses to question 12 of Q1 – Questionnaire to customers.
[27]  Responses to question 26 of Q1 – Questionnaire to customers.
[28]  Responses to question 28 of Q2 – Questionnaire to competitors.
[29]  Form CO, para. 327 and 330.
[30]  Responses to questions 10 and 21 of Q2 – Questionnaire to competitors.
[31]  Responses to question 30 of both Q1 and Q2 – Questionnaire to customers and questionnaire to competitors.
[32]  Responses to question 31 of both Q1 and Q2 – Questionnaire to customers and questionnaire to competitors.

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 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