CELEX: 32015M7479
Language: en
Date: 2015-03-16 00:00:00
Title: Commission Decision of 16/03/2015 declaring a concentration to be compatible with the common market (Case No COMP/M.7479 - KINGSPAN / STEEL PARTNERS) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

Brussels, 16.3.2015
C(2015)1903 final

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|To the notifying party:                                                |                                                                       |
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Dear Sir/Madam,

Subject:    Case M.7479 - KINGSPAN/ STEEL PARTNERS
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 9 February 2015, the European Commission received a notification of a proposed  concentration  pursuant  to  Article  4  and  following  a
    referral pursuant to Article 4(5) of the Merger Regulation by which the undertaking Kingspan Group Plc ("Kingspan", Ireland) acquires  within
    the meaning of Article 3(1)(b) of the Merger Regulation sole control of the whole of Steel Partners NV/SA ("Steel Partners", Belgium) by  way
    of purchase of shares.[3] Kingspan is hereinafter referred to as "the Notifying Party". Steel Partners is hereinafter referred to  as  "Joris
    Ide" or the "Target". Kingspan and Steel Partners are collectively referred to as the "Parties".

       THE PARTIES

 2) Kingspan is active in the manufacturing and distribution of a range of construction products, such as raised access floors, steel  frame  and
    timber frame offsite solutions, environmental and renewable fuel and water storage solutions, insulated panels, rigid insulation  boards  and
    hot water systems. Kingspan had revenues of EUR 1.9 billion in 2014, of which 59% comes from insulated panels.[4]

 3) Steel Partners is mainly active through its holding of the Joris Ide  Group  of  companies  in  the  manufacturing  of  sandwich  panels  and
    construction sheets with manufacturing facilities in Belgium, France, Germany, Hungary, Romania and Russia.

                                         Figure 1: Location of the Parties' primary facilities in Europe
                                                                      [pic]
                                                                      [pic]
   Source: Form CO

       THE OPERATION

 4) On 26 January 2015, the Parties have signed a Sale and Purchase Agreement according to which Ever 2479 Limited, a wholly-owned subsidiary  of
    Kingspan, acquires all the shares in Steel Partners.

 5) Steel Partners is currently owned by Ergon ([…]%), Bremhove NV/SA ("Bremhove") ([…]%) and [holding company X] ([…]%). All shares of  [holding
    company X] are owned by Ergon, Bremhove and certain senior managers ([…]).

 6) On the completion of the transaction, both Ergon and Bremhove will sell all their shares in Steel Partner,  […],[5]  to  Ever  2479  Limited.
    Consequently, Ever 2479 Limited will hold 91% of the shares in Steel Partner directly and […].

 7) Kingspan will therefore acquire sole control over Steel Partners, through its wholly-owned subsidiary  Ever  2479  Limited.  The  transaction
    therefore constitutes a concentration within the meaning of Article 3(1)(b) of the Merger Regulation.

       EU DIMENSION

 8) The Parties' combined worldwide turnover was EUR 2 225 million in 2013. The Parties' combined worldwide turnover does  not  therefore  exceed
    EUR 2 500 million and the thresholds of Article 1 of the EU Merger Regulation are not met. On 18 December 2014 the Notifying  Party  informed
    the Commission in a reasoned submission that the concentration was capable of being reviewed under the national competition laws  of  several
    Member States[6] and requested the Commission to examine the transaction. None of the Member  States  that  were  competent  to  examine  the
    concentration indicated its disagreement with the request for referral within the period laid down by the Merger Regulation.

 9) The notified operation therefore is deemed to have an EU dimension pursuant to Article 4(5) of the EC Merger Regulation.

       RELEVANT MARKETS

10) The Parties' activities overlap in the production and supply of (i) sandwich panels, and (ii) construction sheets (single skin profiles).

1 Relevant Product Markets

1 Sandwich panels

11) Sandwich panels are used in the construction industry mostly as cladding or roofing, for example  in  industrial  and  commercial  buildings.
    Panels can also be used for specialty applications, such as cold stores and clean rooms. Sandwich panels are  made  of  an  insulating  core,
    mainly polyurethane (PUR) foam, polyisocyanurate (PIR) foam or mineral fibre (also known as mineral wool, or rockwool), covered by two  steel
    facings.

12) Sandwich panels vary in particular according to:

  i. end use (roofing, walls, cold store etc.);

 ii. insulation properties: this is in particular determined by the type of insulation  core  (PUR/PIR  foam  core  has  much  better  insulation
     properties than mineral fibre), and its thickness. For example, as cold store sandwich panels (also  called  refrigerating  panels)  require
     superior insulation properties, only foam core is used, and their thickness typically from 60mm to 200mm (but possibly more) may  be  double
     to that of standard foam panels (typically from 30mm to 100mm)[7];

iii. fire resistance: mineral fibre sandwich panels are non-combustible and are able to meet highest  fire  safety  standards.  While  foam  core
     panels generally have lower fire resistance than mineral fibre panels, PIR foam panels have  been  developed  due  to  their  superior  fire
     resistance properties compared to PUR foam panels.

13) Sandwich panels are sold through different channels, which can be roughly divided into  direct  sales  to  end-customers  and  sales  through
    distributors. Direct sales are made to customers including  investors/end-users  of  the  building,  construction  companies  or  specialised
    builders (such as cold store installers). For large projects, sales  efforts  may  include  brand  promotion  to  decision  makers,  such  as
    architects and engineers, with the aim of influencing project specifications  in  favour  of  a  certain  sandwich  panel  brand  (so  called
    "prescriptions").

1 Past decisional practice

14)  In a previous decision,[8] the Commission found that sandwich panels constitute a separate relevant market. The  Commission  also  suggested
    that a distinction should be made between (i) standard sandwich panels  and  (ii)  refrigerating  panels,  but  ultimately  left  the  market
    definition open. Refrigerating panels were found to be primarily used to build  cold  storage  facilities  in  the  food  and  pharmaceutical
    industries, have specific properties (better insulation and resistance to fire, humidity, chemical agents, and different esthetics) and  were
    significantly more expensive than standard sandwich panels.

2 The Notifying Party's arguments

15) The Notifying Party considers that further segmentation  of  sandwich  panels  by  end-use  application  or  by  product  characteristics  is
    inappropriate in this industry. Segmentations, in particular, between roof[9] and wall  panels,  or  by  thickness  of  the  panel,  are  not
    appropriate for a range of reasons.

16) Firstly, customer demands vary widely and most orders are ad hoc and bespoke given that customer order panels in different shapes, forms  and
    sizes for the specific needs of the relevant construction or renovation project for which the panels are destined.

17) Secondly, all of the panels are produced on the very same production lines so  there  is  complete  supply-side  substitutability  for  these
    products. Importantly, there is no specialisation of suppliers for any specific type of  panel:  all  suppliers  can  and  do  provide  their
    customers with a wide range of sandwich panel products. Such flexibility is inherent in the production lines that are owned by all suppliers;
    thus each can compete for the same customers for a broad range of products and product characteristics.

18) The Notifying Party also deems that a distinction may be made between mineral fibre and foam sandwich panels, but that  this  distinction  is
    not relevant in the present case. These panels can and are being used for the same end-use applications. Historically, whilst  mineral  fibre
    panels were occasionally preferred over foam panels due to their better fire resistance  (and  acoustic)  properties,  in  recent  years  the
    technology of foam sandwich panels has improved to such an extent that this difference has diminished. Finally, the demand for mineral  fibre
    panels is relatively small, and is static if not declining.

3 Commission's assessment

19) The investigation confirmed that, for the purposes of defining a relevant product market, sandwich panels can  be  distinguished  from  other
    building materials, such as concrete and build up solutions (combining construction sheets and insulation material on site), which only  pose
    a limited constraint. [10]

20) Within the sandwich panels universe, the investigation examined whether the market could be further subdivided (i) according to the  type  of
    insulation core (PUR/PIR foam versus mineral fibre), (ii) according to the end-use of foam panels (standard foam panels for walls and roofing
    versus cold store (refrigerating) panels).

                                                        Figure 2: Types of sandwich panels

                                                                      [pic]

    PUR/PIR foam versus mineral wool

21) The investigation suggests that there is limited degree of substitutability between foam core sandwich panels and those  with  mineral  fibre
    core:

  i. Based on the differences in product characteristics (notably largely diverging  fire  resistance  and  insulation  properties),  respondents
     confirm that mineral fibre panels and foam panels are different products which meet different needs. Foam panels have far better  insulation
     features and are cheaper than mineral fibre panels, are easier to mount, serve most of the customers, but have inferior fire resistance  and
     acoustic insulation characteristics. In case of a price increase, customers are unlikely to switch from mineral fibre panels to foam panels,
     or vice-versa.[11] In a contemplated switch from foam panels to mineral fibre panels, the thickness of a mineral fibre panel would  need  to
     be almost double than that of a foam panel to compensate for the inferior insulation properties of mineral fibre  core.  As  a  consequence,
     this would not only imply that the price for mineral fibre panels would be higher than for comparable foam  panels,  but  would  require  in
     addition adaptations to the building design as well as higher installation costs. Therefore, the costs of switching  from  foam  to  mineral
     fibre panels would largely exceed a possible 5-10% price increase for foam panels. Switches from mineral wool to foam  panels  are  also  an
     unlikely reaction to a price increase. This is driven by project specifications, in particular concerning required fire resistance (and to a
     lesser degree acoustic insulation) characteristics of the materials. Mineral fibre panels are typically used for projects with  strict  fire
     safety requirements, where, in case of a price increase, switching to foam panels is not an option.[12]

 ii. Production of sandwich panels cannot be easily switched from foam core to mineral wool core, or vice versa. There is only a minor number  of
     producers with combi lines, which are able to produce both foam and mineral fibre core panels at will. In contrast, the  large  majority  of
     existing production lines can only produce either foam or mineral fibre panels.[13] Installing a new line would cost EUR  5-10  million  and
     would take 2-3 years. Producers confirmed that retrofitting foam machines to produce fibre core panels (and vice  versa)  is  possible,  but
     costly, and may imply lead times of up to 12 months, machine downtime of 1 month and an investment in a range of EUR 0.5 - 2 million.  Costs
     are even higher when adapting mineral fibre machines to produce foam core panels.

22) However, as the competitive assessment of the transaction does not give rise to serious doubts as to  its  compatibility  with  the  internal
    market under any plausible product market definition (see sections 4.2.1 and 5.1), the exact product market definition can be  left  open  in
    this case.

    Standard foam panels versus refrigerating panels

23) Within the foam core sandwich panels segment, an even narrower split could be considered based on their  end-use  application:  (i)  standard
    foam panels (used in walls and roofing) and (ii) refrigerating panels (used in cold stores). The investigation showed that these panels  were
    substitutable to a certain degree:

  i. According to the majority of competitors, refrigerating panels are distinct products from standard foam panels and satisfy different  needs.
     Correspondingly, customers largely confirm that they would not substitute refrigeration panels for standard foam panels, or vice  versa,  in
     case of a price increase.[14] The main difference is that refrigerating panels require superior thermal  insulation  properties  (translated
     into higher thickness of up to 250mm compared to standard panels which normally go up to 100mm). They are also  said  to  require  different
     product certification, different surface  finishing  (lower  esthethic  and  weatherproofing  features),  and  better  joints/air  thickness
     characteristics. For this reason, standard panels are normally not used for refrigeration ends and vice versa (except in regions  with  very
     cold climate). Contrary to the Notifying Party's assertions, certain suppliers indicated that refrigerating panels are more  expensive  than
     standard foam panels. Refrigerating panels typically use a different route to market. While standard building panels are  sold  directly  to
     construction companies or distributors, refrigerating panels are marketed via operators specialised in mounting cold stores.

 ii. Respondents generally confirmed that standard foam panel production lines can be used to also produce refrigerating panels (and vice  versa)
     without a major investment.[15] This said, there are businesses specialised in producing refrigerating panels[16] and others which claim not
     to be equipped to produce certain, or any, refrigerating panels.

24) As the transaction does not raise serious doubts as to its compatibility with the internal market even under the narrowest plausible  product
    market definitions for, respectively, refrigerating foam panels and standard  foam  panels  (see  section  5.1),  the  exact  product  market
    definition can be left open in this case.

2 Construction sheets

25) Single skin construction sheets are used in the construction industry for cladding, roofing and decking. These products do not  have  thermal
    insulation properties like sandwich panels. Single skin construction sheets are made from cold rolled galvanised or colour-coated flat carbon
    steel and come in a variety of types. These can be among other shapes corrugated, ribbed or flat.

1 Past decisional practice

26) In its recent SSAB/Rautaruukki decision[17], the Commission has found that there may be separate markets for construction sheets  by  end-use
    application, but ultimately left the market definition open. The Commission noticed (i) that there is no great difference  in  price  between
    different applications and (ii) that there is  a  high  level  of  supply-side  substitutability  between  construction  sheets.  Demand-side
    substitutability has also been acknowledged by market participants concerning sheets for roofing and those for cladding.

2 The Notifying Party's arguments

27) The Notifying Party submits that there is no need to further divide the construction sheet  market  by  end-use  application.  The  Notifying
    Party notably argues that the Commission did not reach a definite conclusion in its previous decision and that it acknowledged  a  degree  of
    supply-side substitution. The Notifying Party explains that a same production line can make many different types of  sheet  by  changing  the
    rolls on the equipment.

3 Commission's assessment

28)  As the competitive assessment of the transaction (see section 5.2) does not raise serious doubts as to its compatibility with  the  internal
    market under any plausible product market definition, the exact product market definition can be left open in this case.

2 Relevant Geographic Markets

1 Sandwich panels

1 Past decisional practice

29) In its 1999 decisions[18], the Commission considered the geographic scope of  the  sandwich  panels  to  be  Community  wide  as  there  were
    important intra-Community flows (representing approximately a third of total Community consumption)  and  no  substantial  price  differences
    between Member States. Furthermore, the Commission noted that sandwich panels appeared to be more standardised products  than  profiles.  The
    Commission took a similar approach in a 2001 decision.[19]

2 The Notifying Party's arguments

30) The Notifying Party submits that the market for sandwich panels is EEA-wide for the following reasons: (i) there are  no  significant  import
    duties or trade barriers, (ii) there are no significant variations in product requirements according to regions, (iii)  transport  costs  are
    low relative to the value of the products, (iv) there are substantial trade flows within the EU,  (v)  average  transport  distance  for  the
    Parties' products is between [200-350] and [800-1200] km depending on the facility, (vi) there are no significant  price  differences  across
    the EEA and (vii) no physical presence is required.

3 Commission's assessment

31)  Based on the feedback from market participants, the internal documents  of  the  Parties,  and  the  quantitative  elements  available,  the
    relevant market for sandwich panels appears smaller than EEA-wide, with the exception of the relevant market for  mineral  wool  panels.  The
    reasons for this conclusion will be explained in this section.

    Regional trade-flows

32) The market investigation confirmed the existence of trade flows within the EEA. For instance,  based  on  the  Notifying  Party's  submission
    intra-EU imports amount to 30% of domestic sales in Belgium, 42% in the Netherlands, and 17% in the UK.  However,  these  trade-flows  appear
    mainly of a cross-border regional nature. For instance, Kingspan does not have a facility in Belgium, but  serves  the  country  mainly  from
    France ([…]%) and the UK ([…]% - the remaining […]% is sourced from Ireland).

33) The Parties' sales overall tend to be either in the area surrounding each production facility, or  -  in  limited  instances  -  in  far-away
    locations outside the EEA on a project basis. For instance, the Parties have exports to locations such as the Middle-East and Australia.

34) Meanwhile, Joris Ide's main facility is located in Belgium. This  facility  serves  predominantly  Belgium  and  the  neighbouring  area,  as
    illustrated in Figure 3 below.

                              Figure 3: Extract from Joris Ide internal document on its market share around Belgium

                                                                       […]

   Source: Internal document of Joris Ide entitled "Joris Ide Blueprint – Final document", 3 April 2013.

35) While Joris Ide's facility is close to the UK, it stems from the above and from the Notifying Party's submission that  its  market  share  in
    the UK remains below 5%.

36) Competitors state that their exports follow similar pattern. For instance, an Austrian player also sells in  "Germany,  Croatia,  Netherlands
    and Switzerland", and has limited sales outside the EEA "for instance to Asia and New Zealand. But the local market  is  the  most  important
    one".[20] Another competitor states that "Central and Eastern Europe (Bulgaria, Hungary, Moldavia, Serbia and Slovenia) can be  reached  from
    Romania. Benelux, Poland and Czech Republic can be reached from Germany and Southern France and Portugal can be reached from Spain."[21]

37) In EEA countries, exports and imports tend to remain mainly within the same area, as illustrated by the industry report on Hungary in  Figure
    3.

                                    Figure 4: Origin of imports to/destination of exports from Hungary (2013)
                                                                   [pic]  [pic]
   Source: Neomar Consulting's "Analysis of Hungarian Sandwich Panels market", May 2014.

38) One notable exception is the sales of Southern European players into Northern Europe. Market players such as the Spanish company  Huurre  and
    Italian players for instance have some sales in Northern Europe. However, these sales remain limited in the three areas of interest  in  this
    case (see section 5.1). Furthermore, Italian companies are in fact setting up some production capacity in Germany despite a high overcapacity
    in Italy, in order to reach out to Northern Europe. This indicates that, despite the high level of spare capacity in Italy, competitors  feel
    the need to set up production in an area to compete there.

    Importance of transport distance

39) Transport distance appears quite important in the industry, and transport costs limit the main commercial reach of each  production  site  to
    its neighbouring area, which explains the trade flows observed in the previous section.

40) First, a majority of customers state that they purchase sandwich panels either locally, in  the  country  or  (cross-border)  regionally.[22]
    Most customers are open to sourcing from a neighbouring country if the price is satisfactory.[23] For customers, delivery time is key: it  is
    in the top 3 criteria driving competition, together with price and quality.[24] Customers also mention the importance of service  level.  The
    average transport distance for customers varies, but is overall between 100 and 600 km.[25] As stated  by  a  Belgian  customer,  "[Customer]
    cannot consider buying panels from Spain or Italy as transport costs are too high. Proximity is also  an  advantage  because  producers  from
    Belgium are able to supply [customer] in a short delay, which is very important in this industry."[26]

41) Similarly, competitors overall state that they sell their panels mainly regionally, in the same  and  neighbouring  countries  as  the  plant
    where they are manufacturing.[27] Competitors largely look at competition locally. As stated by a competitor "Typically the competition comes
    from cross-border regions due to the transportation cost."[28]

42) Competitors mention an average transport distance between 350 and 800 km that still allows  to  achieve  acceptable  margins.  As  stated  by
    competitors, "The estimated commercial reach of a production site is in a 500-600km radius around the plant. It is important to be  close  to
    where the consumption is."[29] "The distance is relevant factor for profitability"[30], and "in this industry, being close to the market is a
    big advantage. Transport costs are expensive and margins are very low"[31]. They state that the maximum distance would be  1  000  or  1  300
    km.[32] This is in line with the Notifying Party's statement that […]. There is also a separate category of  very  long  distance  trades  to
    outside the EU, linked to specific projects (for instance to Australia and the Middle East). On average, competitors estimate transport costs
    to be between 6 and 25% of the price.[33] Within the averages provided, it  is  stated  that  some  specialized  products  travel  more  (see
    paragraphs (54) to (58) on mineral wool panels below).

43) Secondly, internal documents of the Parties also highlight the relevance of transport distance when looking at the competitive  landscape.  A
    strategy presentation of Joris Ide shows the competitive landscape for Belgium as encompassing capacity from north of France, the Netherlands
    and west of Germany.

                                          Figure 5: Extract from Joris Ide internal document on Belgium

                                                                       […]

   Source: Internal document of Joris Ide entitled "Joris Ide Blueprint – Final document ", 3 April 2013.

44) In the same document, Joris Ide looks at competitors in a 400 km radius in relation to the setting up of its  new  factory  in  Germany.  The
    fact that Joris Ide decided to set up a plant in the south of Germany also  suggests  that  supplies  from  Belgian  plants  were  considered
    inadequate to effectively compete in the area where the new plant will operate.

                                   Figure 6: Extract from Joris Ide internal document on setting up in Germany

                                                                       […]

   Source: Internal document of Joris Ide entitled "Joris Ide Blueprint – Final document", 3 April 2013.

45) Publicly available documents from competitors indicate a similar perception of the logistics of supplying in a region.

                                                      Figure 7: Extract from Ruukki document
                                                                      [pic]
   Source: Publicly available document of Ruukki entitled "Ruukki  Construction's  operations  in  CEE,  Russia  and  Ukraine",  27-28  September
   2006.[34]

46) Furthermore, contrary to the Notifying Party's argument, operators perceive the need for sales  presence,  with  at  least  sales  office  or
    agents needed to reach potential customers in a market. For instance a Spanish competitor indicates  that  "[i]t  has  commercial  agents  in
    France and Belgium and distributors in Portugal."[35]

    Further indications of a less-than-EEA-wide market: different requirements in some Member States, and different competitive landscape

47) As explained above, transport cost is mentioned as a barrier by market participants, notably to get  imports  from  Southern  Europe  to  the
    Benelux region. But other factors limiting trade have also emerged in the course of the investigation.

48) The UK and the Irish markets are seen as largely dominated by Kingspan, which accounts for [80-90]%[36] of foam sandwich panels  capacity  in
    these two countries. "The Irish market is even more dominated by Kingspan. [Competitor] states that  potential  importers  have  not  entered
    because of logistical costs. […] Without an industrial basis in the UK, it would be difficult for a mainland supplier to  settle  in  the  UK
    market."[37] Barriers to enter the UK market are seen as very high.[38]

49) The role of brands appears to play a role, and to vary by country or region. In this respect, Kingspan is one of the  UK's  leading  business
    brands.[39]

50) Then, it is perceived by customers that Italian and Spanish players offer lower quality, or different product  specifications  (for  example,
    steel coating properties not adapted to climatic conditions in  Western/Northern  Europe)[40].  For  competitors  as  well  "[t]ypical  South
    European producers are specialized in low quality, thin panels".[41]

51) Moreover, some elements pointed to national specificities:  both  customers  and  competitors  flagged  certification/regulations  and  other
    national or local specificities.[42] Competitors flag the different regulations (for instance standards for corrosion protection  and  fire),
    but also the differences in customer industry structure. "There are many national  characteristics  such  as  climate,  regulation,  customer
    industry structure etc."[43] The certificates most frequently mentioned are the French "Avis technique" and the German "Zülassung".  However,
    competitors state that such national regulations, on top of the European norm, are common in several EEA countries.[44] In the  UK  the  LPCB
    certification is also seen as a barrier ("This norm is effectively contributing into closing UK foam panel market from the competition"[45]).
    A competitor estimates the cost of LPCB certification at GBP 80 000-100 000 upfront, with further regular testing needed.[46]

    Differences in prices and margins

52) It stems from the investigation that prices differ to some extent by region within the EEA ("price level [differences of] up to 20%"  between
    countries as stated by a competitor[47]). However it is noted that  price  differences  are  also  linked  to  different  characteristics  in
    different countries. A large majority of competitors state that they set list prices for sandwich panels at cross-border region or at  Member
    State level.[48]

53) Margins of the Parties also differ depending on the country. For instance, Joris Ide had in 2014 a […]  margin  in  a  certain  Member  State
    which was several times higher than its margin in another Member State. Kingspan had margins of […]% in  the  UK  and  Ireland  for  sandwich
    panels, compared with […]% in Belgium.[49][50]

    Specificities of mineral wool sandwich panels

54) Mineral wool panels can be distinguished from other sandwich panels for two related reasons: (i) they  are  more  expensive,  which  in  turn
    reduces the share of transport cost in the final price; and (ii) they are sold across Europe by a few players (in some cases specialized).

55) A competitor states that "The manufacturing cost for wool panels is higher"[51]. Another notes that "The price of foam panels is  lower  than
    the price of mineral wool panels. Supplying mineral wool panels is more difficult as the product is thicker and heavier, but  as  prices  are
    attractive transport costs represent a lower share of the cost. Wool panels therefore tend to travel more between countries."[52]

56) Mineral wool products are usually more frequently used in the Nordic countries. But  several  players  are  active  across  Europe,  such  as
    Trimo,[53] Ruukki, and Paroc. For instance, "[competitor]exports its  production  in  every  country  of  the  European  Economic  Area  with
    particular presence in the United Kingdom, France, Germany, Poland, Denmark, Netherlands, Czech Republic, Croatia and Slovenia."[54]A  player
    active in mineral wool further states that it is competing with competitors world-wide.[55]

57) Even in the UK, where the market is otherwise largely dominated by Kingspan and imports are limited,  competitors  without  local  production
    are also notable players for mineral wool sandwich panels.[56]

58) Therefore, in relation to mineral wool sandwich panels specifically, the relevant market is considered to be EEA-wide in scope.

4 Conclusion

59) In view of the above, with the exception of the market for mineral wool sandwich panels, the relevant market appears  likely  to  be  neither
    EEA-wide, nor national in scope. The relevant markets are very likely cross-border regions for all sandwich panels and foam  sandwich  panels
    (and sub-segments). However, as the transaction does not give rise to serious doubts as to its compatibility with the internal market neither
    at EEA-level nor at cross-border regional level (see section 5.1), the exact geographic market definition can be left open in this case.

60) The competitive analysis of cross-border regions takes as its starting point the countries  where  the  proposed  transaction  leads  to  the
    highest market shares for all sandwich panels and where concentration level is at the highest,  namely  Belgium,  Hungary,  Ireland  and  the
    United Kingdom. Based on this approach, three main regions are of interest in this case and will be analysed in section 5.1[57]:

  i. Benelux and surrounding area, consisting of Belgium, the Netherlands, Luxembourg, north of France and west of Germany[58];

 ii. The UK and Ireland;

iii. Hungary and surrounding area, consisting of Hungary and parts of the neighbouring countries[59].

61) As explained above, for mineral wool sandwich panels, the relevant market is EEA-wide in scope. The Commission will  not  address  this  sub-
    segment separately any further in this decision, as no affected market arises at EEA-level (combined market share of the Parties of  [10-20]%
    in 2013[60]). The possible segmentation of total sandwich panels (that is to say, including both foam and mineral wool sandwich panels)  will
    be assessed in section 5.1 below both at EEA and cross-regional level.

2 Construction sheets

1 Past decisional practice

62) In previous decisions, the Commission has found that the relevant geographic markets for construction sheets were national in scope.  Indeed,
    in those cases it was found that the importance of delivery times for small and medium sized  construction  projects,  the  need  to  provide
    technical assistance and after sale services to customers at construction sites, the  low  level  of  imports  into  these  countries,  price
    differences between Member States and, the existence of national standards and regulations[61] supported the view that the  relevant  markets
    are national in scope.

63) Nevertheless, these previous decisions did not differentiate between the Benelux countries, as transport costs and price differences are  not
    significant and national standards are similar between Belgium, Luxembourg and the Netherlands.[62] With regards to the Baltic  countries  it
    was also left open whether the markets are national or cross-border regional.[63]

2 The Notifying Party's arguments

64) The Notifying Party argues that the Parties' average transport distance for construction sheets is [250-350] km. This average is  lower  than
    the average for sandwich panels as load values for construction sheets are  much  lower  than  sandwich  panels.  Consequently,  it  is  less
    profitable to ship construction sheets as far as sandwich panels. The Notifying  Party  therefore  concurs  with  the  Commission's  previous
    assessment of the geographic scope for construction sheets as national in scope.

3 Commission's assessment

65) The Commission considers for the purpose of the assessment of this  case  that  the  relevant  markets  for  the  production  and  supply  of
    construction sheets are national in scope.

       COMPETITIVE ASSESSMENT

1 Sandwich panels

1 Introduction

66) As explained in the Commission's Horizontal Merger Guidelines, where the market share - in a particular product and geographical  market,  as
    assessed in section 4 of this decision – of the undertakings concerned does not exceed 25%, the Commission can presume that the concentration
    is not liable to impede effective competition on that market.[64] The Commission will apply that assumption in this case.

67) Based on the approach and segmentations set out in sections 4.1 and 4.2, the transaction would lead to the following affected markets:

  i. all sandwich panels, the potential segment for foam sandwich panels, and the potential sub-segment for standard foam  panels  at  EEA  level
     (section 5.1.3),

 ii. all sandwich panels, the potential segment for foam sandwich panels, the potential sub-segment for standard foam panels, and  the  potential
     sub-segment for refrigerating foam panels in Benelux and surrounding area (section 5.1.4),

iii. all sandwich panels, the potential segment for foam sandwich panels, and the potential sub-segment  for  standard  foam  panels[65]  in  the
     United Kingdom and Ireland (section 5.1.5),

 iv. all sandwich panels, the potential segment for foam sandwich panels, and the potential sub-segment for standard foam panels[66]  in  Hungary
     and surrounding area (section 5.1.6).

68) In relation to the calculation of shares in sections 5.1.4 and 5.1.6, the Commission's Horizontal Guidelines[67] state  that  "market  shares
    and concentration levels provide useful first indications of the market structure and of the  competitive  importance  of  both  the  merging
    parties and their competitors." As in this case the plausible geographic market is cross-border regional, and the Parties collect sales  data
    on a national level, it was not possible to break-down the data for those areas which do not encompass the entire territory of a country (for
    example, the west of Germany). For this reason, the assessment in sections 5.1.4 to 5.1.6 will in addition rely on the information concerning
    capacity and production gathered in the Commission's market reconstruction for the relevant areas.[68]

2 General arguments of the Notifying Party

69) The Notifying Party submits that the proposed transaction does not raise competitive constraints for the following reasons:  (i)  competitors
    are not capacity constrained and can easily switch production between different types of panels, therefore being able  to  react  quickly  to
    changes in demand, (ii) there are several significant competitors able to constrain the merged entity post-transaction, (iii) imports act  as
    a strong competitive constraint and the majority of key suppliers make their sale entirely through imports, and (iv) volume reductions have a
    substantial impact on profitability, meaning the Parties cannot afford to lose relatively small volumes in the event of a hypothetical  price
    increase.

3  EEA

1 Market shares and structure

70) According to the Notifying Party, at the EEA level, the proposed transaction leads to affected markets for  all  sandwich  panels,  including
    the potential segment for foam panels, and the potential sub-segment for standard foam panels.[69]

71) Again, according to the Notifying Party, the total size of the overall sandwich panels market at EEA level was 140 million sqm in  2013.  The
    same year, the Parties' sales amounted to approximately [20-30] million sqm for Kingspan and [5-10] million sqm for the Target. The  Parties'
    combined market shares for all sandwich panels at EEA level in 2013 was approximately [20-30]% with an increment of [5-10]% from the  Target.
    For foam sandwich panels, their market similarly reached [20-30]% with an increment of [5-10]% from the Target.

72) The most important sub-segment in the overall sandwich panels is the one for standard foam panels with sales amounting to approximately  [90-
    110] million sqm (70% of the overall market). At the EEA level, the Parties' combined market share for standard foam panels is [20-30]%  with
    an increment of [5-10]% from the Target.[70]

2 Commission's assessment

73) The Commission finds that the transaction is unlikely to have an anticompetitive impact on any of the plausible product markets  at  the  EEA
    level for the following reasons:

  i. Limited market shares and a number of significant competitors. The Parties together hold [20-30]% of all sandwich panel sales,  [20-30]%  of
     foam sandwich panels, and [20-30]% of sales of standard foam sandwich panels in the EEA. There is a number of other significant  competitors
     in the EEA which would continue to pose a competitive constraint on the Parties, notably ArcelorMittal and Isopan (around 10% each), as well
     as Tata Steel, Metecno, Marcegaglia, Italpannelli, Lattonedil (5-10% each). Smaller competitors include Romakowski,  Brucha,  Balex,  Huurre
     and Ruukki (1-5% each);

 ii. Competitors have significant spare capacity for both mineral fibre and foam sandwich  panels,  estimated  at  above  30%  of  their  overall
     capacities, and are thus capable of constraining the Parties’ conduct;[71]

iii. Entry of new operators (such as Falk and Rex) and expansion of established  suppliers  (Lattonedil,  Italpannelli,  Isopan)[72]  shows  that
     entry is sufficiently easy and attractive and may pose additional competitive pressure on the Parties.

4 Benelux and surrounding area

74) Both Parties have production facilities in the Benelux and surrounding area: the Target's production hubs in Zwevezele and  Manhay  (Belgium)
    and Kingspan's plants in Dunkirk (France) and Kreuztal (Germany). Kingspan also exports sandwich panels from its UK and Irish facilities into
    the Benelux and surrounding area.

1 Market shares and structure

75) The Notifying Party indicated that if the relevant geographic market for sandwich panels  was  limited  to  Belgium,  the  Parties'  combined
    market shares for total sandwich panels would amount to approximately [50-70]%, with an increment of around [10-30]% from Kingspan  (supplies
    from France and the UK) in the overall sandwich panels market. However, as the assessment of the geographic market dimension showed that  the
    market is at least cross-border regional in scope, such a market would thus not only include Belgium, but also the Netherlands,  the  western
    part of Germany, and the northern part of France. Although sales data relate to the entire territories of Germany  and  France  and  are  not
    fully representative of the areas falling within the plausible geographic market of Benelux and the surrounding area, the  Parties'  combined
    market shares appear to be generally lower outside Belgium (France – [30-40]%, increment of [10-20]%, Germany – [30-40]%,  increment  of  [5-
    10]%, the Netherlands – [30-50]%, increment of [10-30]%). Sales market shares of the Parties for the potential splits (total sandwich panels,
    total foam, refrigerating and standard foam) are listed below.

                                        Table 1: Market size and market shares of Parties in the Benelux,
                                                        France and Germany in volume, 2013

|                         |Types of sandwich panels             |Total market size                         |
|                         |                                     |in million sqm                            |
|Kingspan                 |[5-10]                               |[1-5]                                     |
|Joris Ide                |[10-20]                              |[5-10]                                    |
|Combined                 |[20-30]                              |[10-20]                                   |
|Tata                     |[5-10]                               |[1-5]                                     |
|ArcelorMittal            |[5-10]                               |[1-5]                                     |
|Falk                     |[1-5] and future capacity of [1-5]   |[1-5]                                     |
|                         |planned                              |                                          |
|Hardeman                 |[1-5]                                |[1-5]                                     |
|Salzgitter               |[1-5]                                |[1-5]                                     |
|Rex                      |Future capacity of [1-5] planned     |                                          |
|Italpannelli             |Future capacity of [1-5] planned     |                                          |

   Source: Commission's market reconstruction based on Parties' data, Parties' estimates, and competitors' data.

76) The Commission has used the Parties' data and estimates as a starting point in its competitive assessment and verified the production  shares
    and the capacity shares of the Parties and their main rivals. The results of the market reconstrucion do not differ materially from the  data
    proposed from the Notifying Party, although capacity and production as estimated by competitors was in many cases inferior to  the  Notifying
    Party's estimates. In particular, it can be observed that in the Benelux and surrounding area, the Parties  hold  [50-60]%  of  all  sandwich
    panel capacity (Kingspan: [10-20]%, Target: [30-40]%) and [40-50]% of the foam panels capacity (Kingspan: [10-20]%, Target: [30-40]%).  Their
    combined share of production in this area is below 50% for all relevant splits, as detailed below.

                             Table 3: Parties' share of capacity and production in Benelux and surrounding area, 2013

|                                             |Types of sandwich panels             |Total size in million sqm                       |
|Kingspan                                     |[10-20]                              |[10-20]                                         |
|Joris Ide                                    |NA                                   |NA                                              |
|Combined                                     |[10-20]                              |[10-20]                                         |
|Tata                                         |[1-5]                                |[1-5]                                           |
|Steadmans                                    |[1-5]                                |[0-2]                                           |
|Hemsec                                       |[0-2]                                |[0-2]                                           |
|Eurobond                                     |[0-2]                                |[0-2]                                           |

Source: Commission's market market reconstruction based on Parties' data, Parties' estimates, and competitors' data.

77) The Target has no capacity shares as it has no production facilities in the UK and Ireland, therefore there are no capacity overlaps  between
    the Parties in these two countries. The Target's sales of standard foam panels in the UK and Ireland amounted to only [0-5]  million  sqm  in
    2013.

78) With respect to foam panels, Kingspan's production in the UK and Ireland is stated to be between [5-10] million sqm to [5-10] million sqm  in
    2013. Rivals' spare capacity share for foam panels is [10-20]% or [1-5] million sqm which is significantly above the Target's sales in the UK
    and Ireland.

79) The Commission concludes from these data that the Target only is marginally present (by imports). The increment it would add  to  the  market
    position of the Notifying Party is extremely limited. The Commission therefore considers that the Target should  be  viewed  primarily  as  a
    potential competitor of the Notifying Party (see section 5.4.5.3).[87]

2 The investigation

80) In the course of the market investigation, one out of seven respondents-customers in the UK and Ireland raised concerns  about  the  possible
    effects of the proposed transaction on the market for sandwich panels.[88] A  competitor  also  expressed  concerns  regarding  the  proposed
    transaction.[89]

81) In particular, the concerned customer indicated that the  proposed  transaction  would  result  in  a  reduction  of  competition  and  price
    increases.[90] Respondents do not expect greenfield entry in the UK and Ireland due to the  LPC  fire  safety  certification  costs  and  the
    specificities of the UK channel structure.[91]

82) The majority of customers however did not express a concern. They explained that Kingspan and Joris Ide were complementary both in  terms  of
    product range and the prevailing distribution channels. Moreover, Joris Ide is seen only as a minor player in the UK and Ireland.

3 Potential competition by the Target

83) With respect to the proposed transactions removing a potential competitor in the UK and Ireland, the Horizontal  Merger  Guidelines  indicate
    that "for a merger with a potential competitor to have significant anti-competitive effects, two basic conditions must be  fulfilled.  First,
    the potential competitors must already exert a significant constraining influence or there must be a significant  likelihood  that  it  would
    grow into an effective competitive force. Evidence that a potential competitor has plans to enter a market in a significant  way  could  help
    the Commission to reach such a conclusion. Second, there must not be a sufficient number of other potential competitors, which could maintain
    competitive pressure after the merger."[92]

84) In relation to the first condition, as explained above, the Target has a very small market share in the UK and Ireland  (up  to  [0-5]%)  and
    while it has plans to increase its presence in the UK, these plans are modest. In an internal document  concerning  the  UK  market[93],  the
    Target identified three potential scenarios for improving its presence in the UK sandwich panel industry. These included […].[94]

85) Additionally, the same internal document clearly shows that […]. Accordingly,  the  Target  does  not  constitute  an  appreciable  potential
    competitive constraint on Kingspan in the UK.

86) With respect to the second condition, the Commission notes that, sufficient alternative suppliers will remain post-merger, in particular  the
    vertical integrated supplier Tata Steel ([20-30]%), as well as Steadmans ([10-20]%) and the suppliers from mainland Europe ([5-10]%, see also
    the next paragraph)[95]. In addition, the Notifying Party  submits  that  Kingspan's  main  competitor,  Tata  Steel,  has  local  production
    facilities and is therefore in a much better position to expand than the Target is. Similarly, other competitors with  production  plants  in
    the UK and who have market shares bigger than the Target, are also in a better position to expand.

87) The Notifying Party claims that the merged entity would be constrained by a number of competitors located both in and  outside  the  UK.  The
    suppliers located in the UK are Tata Steel, Eurobond, Hemsec and Steadmans, but competition in the UK and Ireland comes also  from  suppliers
    located in mainland Europe, such as Ruukki, Paroc, ArcelorMittal and Huurre.

88) The Commission agrees that indeed, Tata Steel is an important alternative supplier with  [10-20%]  of  production  in  the  UK  and  Ireland.
    Hemsec, Euroclad and Steadmans have also been identified as sandwich panel suppliers with domestic production lines in  this  market.  Ruukki
    and ArcelorMittal are importers to this market, followed by suppliers from Italy and Spain that compete for big projects, albeit to a  lesser
    extent [96]. Eurobond on the other hand is only active in mineral wool panels[97] where the Parties' activities do not overlap.

89) In view of the foregoing, it can be concluded that the proposed transaction is unlikely to significantly impede effective competition in  the
    UK through the elimination of a (primarily) potential competitor.

4 Different positioning of the Parties

90) The Notifying Party submits that the proposed transaction does not remove a significant competitive constraint in the UK and Ireland  in  the
    market for sandwich panels. First, the Target has a very small market share of up to [0-5]% in the  market  for  sandwich  panels.  Secondly,
    Kingspan targets the prescription market, whereas Target sells in the open specification market where products  are  supplied  to  meet  open
    specifications defined by the owner of the building and supplied to the main contractor or the cladding  contractor.  It  is  estimated  that
    Kingspan owns [10-20]% of the open specification market, Tata Steel owns [40-50]%, Steadmans  [20-30]%  and  imports  represent  20%  of  the
    market[98]. Finally, the large majority of the Target's sales (approximately […]%) in the UK are to caravan manufacturers, a segment in which
    Kingspan has never had any activities whatsoever; as a consequence, the remaining activities of the Target in sandwich panels in the  UK  are
    de minimis.

91) Internal documents from the Parties show that, indeed, the Target sells predominantly to caravan builders in the open  market  (approximately
    […]% of its total sales of construction materials), as well  as  distribution  traders  (approximately  […]%).  Distribution  traders  resell
    Kingspan' panels on prescribed projects and other panels on the open specification market. This clearly confirms that the  Target  is  mainly
    active in the open market, whereas Kingspan is mainly active in the prescription market.[99] During the  investigation,  customers  confirmed
    that Kingspan and the Target were complementary suppliers both in terms of product range and distribution channels.[100]

5 Entry and expansion

92) According to the Notifying Party, entry and expansion by non-UK players in the UK sandwich panel industry is realistic and  foreseeable.  All
    that is required (if not producing in-country) is the minimum LPC  certifications  and  detailed  technical  documentation  according  to  UK
    norms/standards and  a  small  but  local  technical  sales  organization  (or  agent)  to  provide  technical  assistance  according  to  UK
    norms/standards. The LPC certification is a one-time cost (approximately EUR 50-100 000 to certify sandwich panels) and  is  valid  for  five
    years.[101]

93) According to some respondents to the market investigation, the main barriers to entry in the UK and Ireland market are the cost  of  the  LPC
    certification and the logistics related to the UK channel structure.[102] One competitor indicated that, however, LPC certification is not  a
    prohibitive cost,[103] while another competitor indicated that the higher the volumes  sold,  the  easier  it  was  to  recoup  certification
    costs.[104]

94) The Commission concludes that any barriers to entry by EEA mainland  players  in  the  UK  and  Ireland  market  indeed  appears  to  be  not
    prohibitive. In particular, the estimated level of imports, which is around 17% in the UK as estimated by the Notifying Party,[105]  suggests
    that any certification and logistics costs are not as prohibitive as some of the respondents indicated. In particular, five non-UK  producers
    are supplying the UK market from Belgium, Poland, Slovenia, Spain and Finland.

6 Conclusion

95) In view of the above, the Commission concludes that the proposed transaction does not raise serious doubts as to its compatibility  with  the
    internal market in the UK and Ireland with respect to sandwich panels.

5 Hungary and surrounding area

1 Market shares and structure

96) The Notifying Party indicated that if the relevant geographic market for sandwich panels were Hungary, the Parties'  combined  market  shares
    would amount to [50-70]% (increment of [10-30]% from the Target) regarding the market for all types  of  sandwich  panels.  However,  as  the
    assessment of the geographic market dimension showed that the market is at least cross-border regional in scope, such a market would thus not
    only include Hungary, but also parts of neighbouring countries (see section 4.2). Although sales data related to the  entire  territories  of
    the neighbouring countries and are not fully representative of the areas falling within  the  plausible  geographic  market  of  Hungary  and
    surrounding area, the Parties' combined market shares appear to be generally lower outside Hungary (Croatia – [30-50]%, increment of [10-30]%
    from the Target, Czech Republic – [30-50]%, increment of [0-10]% from the Target, Austria, Italy and Slovakia - no overlap,  Romania  –  [10-
    30]%, increment of [0-10]% from Kingspan, Slovenia-[0-10]%, increment of [0-10]% from the Target).

     Table 8: Market size and market shares of Parties in Hungary, Slovakia, Romania, Croatia, Austria, Slovenia, Italy and Czech Republic in
                                                                   volume, 2013

|                                          |Types of sandwich panels             |Total market size                               |
|                                          |                                     |in million sqm                                  |
|Kingspan                                  |[1-5]                                |[1-5]                                           |
|Joris Ide                                 |[1-5]                                |[1-5]                                           |
|Combined                                  |[5-10]                               |[1-5]                                           |
|Brucha                                    |[5-10]                               |[1-5]                                           |
|Gorstal                                   |[1-5]                                |[1-5]                                           |
|Marcegaglia                               |[0-5]                                |[0-5]                                           |
|Limmont                                   |[0-5]                                |[0-5]                                           |
|Metalsheet                                |[0-5]                                |[0-5]                                           |
|Trimo                                     |[0-5]                                |[0-5]                                           |

Source: Commission's market reconstruction based on Parties' data, Parties' estimates, and competitors' data.

2 The investigation

97) During the market investigation, a limited number of customers, in particular from Hungary, raised concerns about the  proposed  transaction.
    These customers essentially stated that there are few, if any, alternative suppliers, and that a price increase would  therefore  be  likely.
    Others considered that the competitive conditions will remain the same.[106]

3 Spare capacity

98) The Notifying Party submits that there are seventeen rival plants in the region[107] with sufficient foam panels spare capacity amounting  to
    [70-80]%.

99) According to the Commission's market reconstruction, in Hungary and the surrounding area, rivals' spare capacity amounts to [60-70]%  in  the
    foam panels which is significantly higher than the capacity share increment of [5-10%]% brought about by the Target. The proposed transaction
    brings about a volume increment of around [0-5] million sqm, which is lower than the rivals spare capacity of approximately  [10-20]  million
    sqm.

100) The available spare capacity of the competitors to produce foam panels is double the combined  production  of  the  Parties  (around  [5-10]
    million sqm) in the region and sufficient to replace the Parties' combined sales (let alone the increment), should the  merged  entity  raise
    prices.

    4 Sufficient alternative suppliers

101) The Notifying Party submits that there are enough alternative suppliers that could constrain the merged  entity  post-transaction,  such  as
     Isomec (30%) and Limmont (20%) in Croatia, Trimo and Balex in the Czech Republic (with 10% in each country), Ruukki,  Isopan,  ArcelorMittal
     in Hungary, ArcelorMittal, Elcom, Isopan in Slovakia, Italpannelli, Marcegaglia and Isopan in Slovenia to name a few.

102) In addition, in Hungary, imports account for almost 60% of sales, coming mainly from Romania and Italy, with only  two  local  suppliers  in
     Hungary, namely Kingspan (Újhartyán and Felsölajos) and Metalsheet (Debrecen).

103) The Commission notes that the presence of these suppliers in the Hungary and surrounding area was confirmed by market participants.[108]  In
     an external study[109] submitted by the Parties to the Commission, the detailed analysis of  imports  (by  volume)  of  sandwich  panels  in
     Hungary shows that, as the Notifying Party claims, 50% of imports come from Romania (main importers are  Megaprofil,  Ruukki,  Plastsistem),
     16% from Italy (main importers: Kingspan, ArcelorMittal, Ruukki), 12% from  Poland  (main  importer:  Kingspan),  11%  from  Slovenia  (main
     importer: Trimo), 8% from the Czech Republic (main importer: Trimo), and the rest from Austria and Slovenia (Brucha, ArcelorMittal).

5 Entry and expansion

104) The Notifying Party submits that transport costs of sandwich panels in  Europe  are  low  relative  to  the  value  of  the  products.  More
     specifically, the Notifying Party estimates that transport costs represents less than 5-10% of all  sales  made  within  the  EU.  Therefore
     transport costs do not represent an insurmountable barrier to manufacturers switching supply between different countries within the EEA.

105) Respondents to the Commission's questionnaires from the Hungary and surrounding area identified  investment  costs,  sales  representatives,
     delivery distances, overcapacity and established commercial relationships as the main barriers to entry.[110]

106) The total market size for overall sandwich panels in Hungary was [0-5] million sqm in 2013. That same year, imports amounted to 1.6  million
     sqm,[111] therefore [70-90]% of the total sandwich panel market in Hungary is served by imports. Given the high percentage of  imports  into
     Hungary and the geographic span from which these imports come (Romania, Poland, Italy, Slovakia, Austria),  the  Commission  concludes  that
     expansion of existing suppliers (either through direct sales, distributors or sale agents) into this  region  seems  feasible  and  delivery
     distances do not seem to represent a significant barrier to entry.

6 Conclusion

107) In view of the above, the Commission concludes that the proposed transaction does not raise serious doubts as to its compatibility with  the
    internal market in the Hungary and surrounding area with respect to sandwich panels.

6 Conclusion

108) In view of the above, the Commission concludes that the proposed transaction does not raise serious doubts as to its compatibility with  the
    internal market with respect to sandwich panels.

2 Construction sheets

1 Introduction

109) As discussed in section 4.2.2, the Commission's assessment is based on national markets. There are only two countries where the  transaction
     results in affected markets, namely Austria and Hungary.

2 Austria

110) The Notifying Party estimates the construction sheet market in Austria at 2.5 million sqm. According to the Notifying  Party,  the  combined
    market share of the Parties was [40-50]% in construction sheets in 2013, with a limited increment  of  [0-5]%  from  Joris  Ide.  This  share
    dropped to [30-40]% in 2014 (Kingspan: [20-30]%, Joris Ide: [5-10]%) following closure by Kingspan of the Hoesch Austrian plant in  the  wake
    of its acquisition of Hoesch in 2012. The Notifying Party submits that these market shares are slightly lower by value.[112]

111) By end-use, the Notifying Party submits that the combined market share of the Parties in any of the possible  sub-markets  would  not  reach
    more than 40%, as illustrated in Table 11 below.

                                   Table 11: Market share of Parties and competitors in Austria in volume, 2013

|                                 |Roof                |Cladding            |Decks                    |
|Kingspan                         |25-35%              |25-35%              |10-20%                   |
|Target                           |c. 5%               |c. 5%               |c. 5%                    |
|Arcelor                          |10-15%              |10-15%              |35-40%                   |
|Lindab                           |15-20%              |15-20%              |15-20%                   |
|Pruszynski                       |15-20%              |15-20%              |0-5%                     |
|Ruukki                           |0-5%                |0-5%                |10-15%                   |
|Others                           |20-25%              |20-25%              |15-20%                   |

      Source: Notifying Party's estimates.

112) During the market investigation, one customer in Austria expressed concerns that a weakening of competition could lead  to  price  increases
    as both companies are close competitors in Austria.[113]

113) Two competitors stated that the transaction might have an impact in relation to the overall competitive landscape for  construction  sheets.
    The first one clarified that "The transaction would result in less competition in [the] short term but it is  likely  that  the  attempts  of
    price increases by the parties would fail as the entry barriers are low, product is not very complicated and competing capacity exists."[114]
    The second one noted that it expected that prices could decrease, noting that "The  last  taking  over  of  Hoesch  (Thyssen  Bautechnik)  by
    Kingspan has lead [sic] to a price decrease."[115] Competitors overall stated that Kingspan and Joris Ide were  close  competitors  (although
    Kingspan is more focused on sandwich panels), but that competitors in the EEA for construction sheets were numerous.[116] Spare  capacity  is
    also perceived to be overall high.[117]

114) The Commission notes that the combined market share of the Parties remains  limited,  notably  in  view  of  the  drop  in  Kingspan'  sales
    following the plant closure. Also, strong competitors are active on  the  market,  notably  ArcelorMittal  (market  share  estimated  by  the
    Notifying Party at [25-30]%) and Lindab ([15-20]%).

115) In view of the above, the Commission concludes that the proposed transaction does not give rise to serious doubts as  to  its  compatibility
    with the internal market in Austria with respect to construction sheets.

3 Hungary

116) The Notifying Party estimates the construction sheet market in Hungary at [0-5] million sqm. The combined market share of  the  Parties  for
     construction sheets was [20-30]% in 2013, with an increment of [10-20]% from Joris Ide. The Notifying Party submits that this  market  share
     is slightly lower by value.[118]

117) By end-use, the Notifying Party submits that the combined market share of the Parties would not reach more than [30-40]%, as illustrated  in
     Table 12 below.

                                   Table 12: Market share of Parties and competitors in Hungary in volume, 2013

|                         |Roof                |Cladding            |Decks               |
|Kingspan                 |10-15%              |10-15%              |5-10%               |
|Target                   |15-20%              |15-20%              |5-10%               |
|ArcelorMittal            |25-30%              |25-30%              |25-30%              |
|Metal sheet              |10-15%              |10-15%              |10-15%              |
|Lindab                   |10-15%              |10-15%              |20-25%              |
|Pruszynski               |5-10%               |5-10%               |5-10%               |
|Metalucon                |0-5%                |0-5%                |0-5%                |
|Kallofem                 |0-5%                |0-5%                |0-5%                |
|Ruukki                   |0-5%                |0-5%                |5-10%               |
|Others                   |0-5%                |0-5%                |0-5%                |

      Source: Notifying Party's estimates.

118) In the course of the market investigation, some Hungarian customers expressed  concerns  over  a  potential  price  increase  following  the
    transaction, as they would lose one supplier.[119] However, several other competitors were listed (Lindab, ArcelorMittal, Brucha and Ruukki).

119) Again, the Commission notes that the combined market share of the Parties remains limited. Moreover, the  market  investigation  highlighted
    the presence of several credible alternative construction sheet suppliers in Hungary. For instance, ArcelorMittal has an  important  position
    with a market share of [25-30]%. Other players such as Lindab ([15-20]%) and Metál-Sheet  ([10-15]%)  are  also  active.  As  a  consequence,
    further to the transaction, the merged entity will face enough credible competitors on the Hungarian market.

120) In view of the above, the Commission concludes that the proposed transaction does not raise serious doubts as to its compatibility with  the
    internal market in Hungary with respect to construction sheets.

4 Conclusion

121) The Commission concludes that the proposed transaction does not raise serious doubts as to its compatibility with the internal  market  with
    respect to construction sheets.

       CONCLUSION

122) 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 57, 17.2.2015, p. 6.
[4]   Publicly available Kingspan document "2014 in a nutshell", 2015  (http://www.kingspan.com/~/media/Files/K/Kingspan/documents/kingspan-in-a-
nutshell-2015.pdf ).
[5]   […].
[6]   The Notifying Party mentioned […]. […] was also capable of reviewing the transaction.
[7]   Replies to question 14 – Questionnaire to competitors (Q1).
[8]   Case M.1329 - Usinor/Cockerill (1999), paragraph 15.
[9]   The Parties also produce insulated roof tiles. The Notifying Party argues that these products are a variety of roofing panels, profiled  as
tiles and produced using the same line as sandwich panels. This was confirmed by a customer (Minutes of a call with a  customer  of  20  February
2015).
[10]  Replies to question 5 - Questionnaire to competitors (Q1) and question 8 - Questionnaire to customers (Q2).
[11]  Replies to questions 6, 7 and 8 - Questionnaire to competitors (Q1) and questions 9, 10, 11 and 12 - Questionnaire to customers (Q2).
[12]  One competitor explained that substitution was normally not possible, as "mineral wool  panels  are  taken  for  95%  because  of  the  non
combustible nature. Since foam panels do not have the same protection to fire characteristics, it would not be possible to  change  from  mineral
wall to foam [sic]." Replies to question 7.1 – Questionnaire to competitors (Q1).
[13]  Replies to questions 9, 10 and 11 - Questionnaire to competitors (Q1).
[14]  Replies to questions 12, 13, 14 and 18 - Questionnaire to competitors (Q1) and questions 13, 14, 15 and 16  -  Questionnaire  to  customers
(Q2).
[15]  Replies to questions 15, 16 and 17 - Questionnaire to competitors (Q1). For example, a producer stated that "You only have to clarify  some
construction details. From manufacturing point of view you would need only some adoptions [sic] but in fact this is  not  a  problem..".  Another
producer commented: "It is more a question of giving construction answers/ideas/details to architects. The sales and  marketing  departments  are
more challenged and not the production."
[16]  See Minutes of calls with competitors of 5 February and 4 March 2015.
[17]  Case M.7155 - SSAB/Rautaruukki (2014), paragraphs 50-56.
[18]        Cases M.1329 - Usinor/Cockerill (1999), paragraphs 22-26 and M.1595 - British Steel/Hoogovens (1999), paragraph 13.
[19]        Case M.2382 - Usinor /Arbed/Aceralia (2001), paragraphs 11-13.
[20]  Minutes of a call with a competitor of 5 March 2015.
[21]  Minutes of a call with a competitor of 4 February 2015.
[22]  Replies to question 18 – Questionnaire to customers (Q2).
[23]  Replies to questions 19.1 and 21 – Questionnaire to customers (Q2).
[24]  Replies to questions 22 and 28 – Questionnaire to customers (Q2). See also Minutes of a call with a competitor of 18 February 2015.
[25]  Replies to question 22 – Questionnaire to competitors (Q1).
[26]  Minutes of a call with a customer of 6 February 2015.
[27]  Replies to question 20 – Questionnaire to competitors (Q1).
[28]  Replies to question 24.1 – Questionnaire to competitors (Q1).
[29]  Minutes of a call with a competitor of 4 February 2015. See also Minutes of a call with a competitor of 18 February 2015.
[30]  Replies to question 24.1 – Questionnaire to competitors (Q1).
[31]  Minutes of a call with a competitor of 5 March 2015.
[32]  Minutes of a call with a competitor of 5 February 2015 and replies to question 22 – Questionnaire to competitors (Q1).
[33]  Replies to question 23 – Questionnaire to competitors (Q1).
[34]  http://www.ruukki.com/~/media/Files/Investors/Capital%20Market%20Days/Capital%20Market%20Day%202006/CMD_Hirviniemi_26092006.pdf
[35]  Minutes of a call with a competitor of 5 February 2015.
[36]  Commission's market reconstruction based on based on Parties' data, Parties' estimates, and competitors' data.
[37]  Minutes of a call with a competitor of 4 March 2015.
[38]  Minutes of a call with a competitor of 3 March 2015.
[39]  Kingspan press release "Kingspan is officially a Superbrand", 8 April 2013 (http://www.kingspan.com/media/releases/pr2013/08-04-2013.asp).
[40]  See for instance Minutes of a call with a customer of 6 February 2015, Minutes of a call with a customer # of 26 February 2015, Minutes  of
a call with a customer of 20 February 2015, and replies to question 18.1 – Questionnaire to customers (Q2).
[41]  Replies to question 25.1 – Questionnaire to competitors (Q1). See also Minutes of a call with a competitor of 18 February 2015.
[42]  Replies to question 23.1 – Questionnaire to customers (Q2), and replies to question 25.1 – Questionnaire to competitors (Q1). See also  for
instance Minutes of a call with a competitor of 3 March 2015.
[43]  Replies to question 25.1 – Questionnaire to competitors (Q1).
[44]  Replies to questions 25.1 and 27 – Questionnaire to competitors (Q1).
[45]  Replies to question 27 – Questionnaire to competitors (Q1).
[46]  Minutes of a call with a competitor of 4 March 2015
[47]  Replies to question 25.1 – Questionnaire to competitors (Q1).
[48]  Replies to question 26 – Questionnaire to competitors (Q1).
[49]  Request for information 3, 20 February 2015
[50]  The Notifying Party submits, however, that the following elements prevent a comparison of  margins  between  them  and  between  countries:
different methodologies between the Parties, a different product mix, and different distribution channels.
[51]  Replies to question 25.1 – Questionnaire to competitors (Q1).
[52]  Minutes of a call with a competitor of 4 March 2015.
[53]  Trimo is however experiencing financial difficulties and, according to market participants, Kingspan experessed an  interest  in  acquiring
Trimo. See Minutes of a call with a competitor of 4 February 2015 and Minutes of a call with a competitor of 4 March 2015.
[54]  Minutes of a call with a competitor of 4 February 2015. See also replies to question 21 – Questionnaire to competitors (Q1).
[55]  Replies to question 24 – Questionnaire to competitors (Q1).
[56]  Minutes of a call with a competitor of 4 March 2015.
[57]  While if looking at national level, France and Germany would be affected countries, Joris Ide does  not  have  any  production  in  France.
While the overlap between the Parties’ facilities within the 400km radius does lead to Northern France forming part of an affected market,  there
is no overlap of the Parties' production in Southern France such as to lead  to  an  overlap  in  a  400km  radius  around  Kingspan’s  plant  in
Perpignan. Joris Ide has recently opened a plant in Ansbach,  Germany,  but  no  affected  market  would  arise  in  a  Southern  Germany  region
encompassing Ansbach and other facilities in a radius of 400 km. This is notably due to the fact that players  such  as  Romakowski,  Tata  Steel
(Fischer) and Arcelor have facilities in the area. Similar considerations apply mutatis mutandis to geographical  regions  consisting  of  (parts
of) other Member States and their surroundings which are not further discussed in this  decision  but  where  the  concentration  might  lead  to
affected markets. That is because, inter alia, i) the estimated combined market share of the Parties there appears to be lower  than  in  any  of
the geographical areas investigated in-depth in this decision, and ii) there appear to be various competitors with non-negligible  market  shares
active in each of those possible markets (the Notifying Party mentions at least two and often more such competitors with regard to each market).
[58]  For the purposes of the assessment in this case, the Commission will look at production facilities in a 400 km radius from Brussels,  which
covers the relevant parts of France (north) and Germany (west).
[59]  For the purposes of the assessment in this case, the Commission will look at production facilities in a 400 km  radius  from  Budapest.  In
terms of capacity of competitors, this includes facilities in Austria, Croatia, Hungary, Poland (its south), Romania and Serbia.
[60]  And [10-20]% in 2014. See reply to Commission request for information RFI 7 of  4  March  2015.  For  the  definition  of  horizontally  or
vertically affected markets, see Annex 1 point 6.3 of Commission Implementing Regulation 802/2004,  as  last  amended  by  Commission  Regulation
1269/2013.
[61]  Case M.2382 – Usinor /Arbed/Aceralia (2001), paragraphs 27-30, Case M.1329 – Usinor / Cockerill (1999), paragraphs 24-26, and  Case  M.7155
      SSAB/Rautaruukki (2014), paragraphs 116-124.
[62]        Case M.1595 - British Steel / Hoogovens (1999), paragraph 12.
[63]  Case M.7155 - SSAB/Rautaruukki (2014), paragraphs 116-124
[64]  Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of concentrations between  undertakings  (OJ
C31, 5.2.2004, p.5), paragraph 18.
[65]  There is no overlap between the Parties in the refrigerating panels in the UK and Ireland.
[66]  No affected market arises in refrigerating panels in Hungary and surrounding area.
[67]  Guidelines on the assessment of horizontal mergers under the Council Regulation on the  control  of  concentrations  between  undertakings,
paragraph 8, (OJ C31, 5.2.2004, p.5).
[68]  Commission's market reconstruction based on Parties' data, Parties' estimates, and competitors' data.
[69]  Regarding the potential sub-segment for refrigerating panels, the transaction would not give rise to an affected market (in  the  sense  of
merger control rules) at the EEA level.
[70]  There are no affected markets at EEA level for either refrigerating or mineral wool panels.
[71]  Replies to question 43.4 – Questionnaire to competitors (Q1).
[72]  Replies to question 38 – Questionnaire to competitors (Q1).
[73]  Replies to question 44 - Questionnaire to customers (Q2).
[74]  Replies to question 28 - Questionnaire to competitors (Q1).
[75]  The Parties' own estimates.
[76]  Rex is planning to launch its production of sandwich panels in March 2015.  This  said,  some  market  participants  stated  that  Rex  was
currently in financial difficulties.
[77]  See for example, Target's internal document "Joris Ide Blueprint", April 2013, Bain &Company.
[78]  See reply to Commission request for information RFI 4 of 26 February 2015
[79]  Replies to question 41 - Questionnaire to competitors (Q1).
[80]  Replies to question 27 - Questionnaire to competitors (Q1) and replies to question 33 - Questionnaire to customers (Q2).
[81]  Minutes of the call with competitor of 3 March 2013.
[82]  Minutes of a call with a competitor of 3 March 2015.
[83]  Minutes of a call with a competitor of 3 March 2015.
[84]  Replies to question 38 - Questionnaire to competitors (Q1).
[85]  Minutes of a call with a competitor of 3 March 2015.
[86]  Internal documents of Joris Ide estimate foam panels at 10.1 million sqm and mineral wool panels at 0.5 million sqm.  See  Target  internal
document "UK Strategy Board 04/02/2014", slide 7. "NA" stands for "Not Applicable"
[87]  To the extent that the Target is an actual competitor of the Notifying Party, it can be noted that the  facts  explained  in  this  section
also do not lead to finding serious doubts from that perspective. For instance, the Target's market share is small. Moreover, the customers  have
possibilities to switch suppliers.
[88]  Replies to questions 43-45 - Questionnaire to customers (Q2).
[89]  Replies to questions 44-46 - Questionnaire to competitors (Q1).
[90]  Replies to questions 43-45 - Questionnaire to customers (Q2).
[91]  Replies to question 38 - Questionnaire to customers (Q2).
[92]  Guidelines on the assessment of horizontal mergers under the Council Regulation on the  control  of  concentrations  between  undertakings,
paragraph 60.
[93]  Internal document of Joris Ide entitled "UK Strategy Board 04/02/2014".
[94]  Internal document of Joris Ide entitled "UK strategy Board 04/02/2015".
[95]  Market shares for PIR panels according to Target internal document "UK Strategy Board 04/02/2014", slide 8. In this  scenario  (PIR  only),
the combined market share of the Parties would be [60-70]% wity [0-5]% increment from the Target.
[96]  Minutes of a call with a competitor of 5 March 2015.
[97]  Minutes of a call with a competitor of 4 March 2015.
[98]  See for example Target internal document "UK Strategy Board 04/02/2014", slide 10.
[99]  See for example Target internal document "UK Strategy Board 04/02/2014", slide 5.
[100]       Replies to questions 43-45 - Questionnaire to customers (Q2).
[101]       Annual audit costs are estimated at around EUR 2 400 per year.
[102]       Replies to question 23 - Questionnaire to customers (Q2).
[103]       Minutes of a call with a competitor of 4 March 2015.
[104]       Minutes of a call with a competitor of 3 March 2015.
[105]       Internal documents of Joris Ide estimate imports in the UK at 5 to 10% for foam panels and 35 to 40% for  mineral  wool  panels.  See
Target internal document "UK Strategy Board 04/02/2014", slide 7.
[106]       Replies to questions 43-44, Questionnaire to Customers (Q2).
[107]       The Notifying Party assumes an area of 700 km road distance from Budapest. See Submission on Hungary, 3 March 2015.
[108]       Replies to questions 26 and 27 – Questionnaire to Customers (Q2).
[109]       Neomar Study, "Analysis of Hungarian Sandwich Panels Market", slide 17.
[110]       Replies to question 38 – Questionnaire to Customers (Q2) and replies to question 37 – Questionnaire to Competitors (Q1)
[111]       Neomar Study, "Analysis of Hungarian Sandwich Panels Market", slide 17.
[112]       Reply to Commission requests for information RFI 2 of 17 February 2015 and RFI 7 of 4 March 2015.
[113]       Replies to question 45.1 – Questionnaire to customers (Q2).
[114]       Replies to question 46.1 – Questionnaire to competitors (Q1).
[115]       Replies to question 46.1 – Questionnaire to competitors (Q1).
[116]       Replies to questions 42 and 46.1 – Questionnaire to competitors (Q1).
[117]       Replies to question 43.4 – Questionnaire to competitors (Q1).
[118]       Reply to Commission requests for information RFI 2 of 17 February 2015 and RFI 7 of 4 March 2015.
[119]       Replies to question 45.1 – Questionnaire to customers (Q2).

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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